Sonic Healthcare Limited · ASX:SHL
Sonic Healthcare — Shareholder Meeting (November 2003)
26 slides from Sonic Healthcare's shareholder meeting presentation, Nov 27, 2003
Slide 1: Annual General Meeting 27 November 2003
ISONIC |IHEALTHCARE ILIMITED Annual General Meeting 27 November 2003 Dr Colin Goldschmidt Managing Director
Slide 2: FY 2003 Highlights
FY 2003 Highlights Revenue growth 13% NPAT growth 20% EPS growth 13.5% EBITA margin expansion 0.7% (70 basis points) Full year dividend 25 cents per share Expanding UK pathology operations Sonic set for ongoing growth VV VV VV WV
Slide 3: 2003 Guidance Delivered
2003 Guidance Delivered Sonic Guidance | Sonic Actuals Full Year 2003 Revenue $970 - 980M $974.8M EBITA $172 - 176M $173.1IM EBITA % 17.75 - 18.00% 17.76%
Slide 4: Update FYTD 2004 Months to October
Update FYTD 2004 4 Months to 31 October > Revenue and earnings currently in line with full-year FY2004 guidance > ~3% fee increase for Australian pathology from 1 December 2003
Slide 5: 2004 Guidance
2004 Guidance | Revenue EBITA — so. 2. 2004 Guidance Growth* calculated using mid-point of 2004 guidance Includes Omnilabs acquisition (loss in first half) Intangibles amortisation $59-60 million Assumes no new acquisitions
Slide 6: Revenue
Revenue 2003 =| 2002 +| Growth — : oo 8 ee Total Revenue 974.8 859.8 13.4% > Acquisitions have contributed to revenue growth > Organic revenue growth ~ 5.9% (excluding acquisitions) > Australian and UK pathology particularly strong
Slide 7: Annual Revenue Year History
Annual Revenue 10 Year History 1,200 1,028(F) 1,000 860 800 628 $M 600 387 400 147 k 200 59 133 y Tt wn wo ~ 2 oO Q Sel nN m ec oO an a a io a [=7 i=} ° Oo = ao an a a a a [=7 i=} Qo o t a g 2} 2 sy a R AQ a Si 3 c=) N 2004 (F) = mid-point of Sonic market guidance / 2004 (F) assumes no new acquisiti
Slide 8: Sonic Revenue Growth
Sonic Revenue Growth > Market growth > 5% Pathology/Radiology Funding Agreement > Pathology Industry Qi 2.1% growth > Imaging Industry Q1 2.9% growth > Market share growth > Growing average fee More services per patient More complex testing in Sonic Pathology More complex modalities in Sonic Imaging
Slide 9: Australian Medicare Growth Data
Australian Medicare Growth Data FY2003 v FY2002 | Australian Pathology (FY 2003) | __ | | Australian Imaging (FY2003) | 3.7% > Medicare data reflect broad industry growth rates > Pathology - current status > Growth tracking at 2.9% (Qi, FY 2004) > 3% fee increase to correct funding agreement undersh
Slide 10: Earnings
Harnings | FY 2003 | FY 2002] Change EBITDA $m | 213.9 183.7 16.4% EBITA SM 173.1 146.7 18.0% Core* NPAT gm | 995 83.2 19.6% NPAT $M. 40.9 33.8 21.0% Core* EPS ents | 378 33.3 13.5% *Core = Before Amortisation of Intangibles
Slide 11: Core Earnings per Share
Core Earnings per Share Double-digit EPS Growth last 8 Years Cents 20.9 per share 15.0 10.0 5.04 0.0 7 1996 1997 1998 1999 | 2000 2001 2002 | 2003 Core EPS (cents)| 8.0 9.5 11.8 16.7 21.7 27.5 33.3 37.8 Core EPS = Earnings per Share before amortisation of intangibles
Slide 12: Earnings Margins
Earnings Margins 2003 2002 EBITDA Margin 21.9% 21.4% EBITA Margin 17.8% 17.1% > Margin expansion in FY2003 Revenue growth and marginal profit Ongoing cost management in practices Inter-practice synergies Improved performance at Melbourne Pathology TDL (UK) strong performance SciGen demerger > Margin
Slide 13: Sonic Healthcare Operations
Sonic Healthcare Operations Large and complex business > $1 Billion annual revenue > > 11,000 employed staff Customer services outstanding » Accuracy, consistency, turnaround times Reputation underpins Sonic’s value Operational management > Stable, experienced, committed, passionate team » Pro-activ
Slide 14: Sonic Management Structure
Sonic Management Structure PSEC _ Pathology CEOs SEC Amaging CEOs Sonic | Sonic =| Sonic sonic | Sone CC | Sor Operations|| Marketing || IT 0 | Commercial HR
Slide 15: Dividend FY 2003
Dividend FY 2003 2003 =| «2002 ~+| Change Interim Dividend $0.08 $0.04 100% Final Dividend $0.17 $0.16 6% Full Year Dividend $0.25 $0.20 25% > Final Dividend » 17 cents per share, fully franked > Full-year Dividend » 25 cents per share, fully franked » 20 cents in 2002 >» Increase of 25% > Dividend
Slide 16: Dividend Year History
Dividend 10 Year History 30.0 25.0 20.0 Cents per 15.0 Share 10.0 - al oo B 1994 | 1995 | 1996 | 1997 B Dividend {cents)| 2.0 | 3.0 | 4.0 | 5.0 | 9.0 | 14.0
Slide 17: Australian Pathology Funding Agreement
Australian Pathology Funding Agreement > Fee increase of ~3% announced 24 November 2003 > > > > Effective 1 December 200 Applied uniformly across all pathology items Designed to lift growth to agreed 5% industry growth level by 30 June 2004 Exact increase pending modelling > New Pathology Funding Ag
Slide 18: Australian Radiology Funding Agreement
Australian Radiology Funding Agreement > New 5 year Memorandum of Understanding commenced 1 July 2003 > Funding growth rates 2003/4 - 5.5% 2004/5 - 5.3% 2005/6 - 5.0% 2006/7 - 5.0% 2007/8 - 5.0% vvwvyY ¥ > Magnetic Resonance Imaging (MRI) funding included in agreement > Industry growth of 2.9% in Qi
Slide 19: Corporate Governance
Corporate Governance > Sonic working towards compliance with ASX recommendations > Nominations Committee > Established 3 July 2003 > 2 Independent Directors / 1 Executive Director Function to review Board structure > Two executive Directors have retired » Plan to appoint one non-executive Director b
Slide 20: Sonic U.K. Expansion
Sonic U.K. Expansion > Three Transactions to date > Acquisition of TDL - April 2002 > Acquisition of Omnilabs - July 2003 > Joint venture with UCLH - August 2003 > UK pathology market ~£2 Billion pa >» England and Ireland opportunities
Slide 21: Whitfield St Laboratory
Whitfield St Laboratory >» Floor space 3,400 m2? in total >» ~700m2? for Autolab >» Balance split between TDL and UCLH operations > Consolidation of 5 existing TDL/Omnilabs sites > Fitout of Whitfield St facility almost complete > Relocation in December 2003 » Significant excess capacity > TDL conti
Slide 22: TDL-UCLH Joint Venture
TDL-UCLH Joint Venture > Major strategic move for Sonic > A significant Public Private Partnership in the NHS > Joint venture agreement for automated pathology > First of its kind in the UK > JV structured as a cost sharing arrangement » Cost savings from scale, automation, lab design, workflow etc
Slide 23: Sonic International Strategy
Sonic International Strategy >» To partner with established players in suitable offshore markets > TDL platform an ideal base for expansion in UK > Private Pathology Market > NHS Market > Omnilabs and UCLH transactions provide evidence of incremental growth opportunities > European pathology markets
Slide 24: Future Strategy
Future Strategy > Australia and New Zealand > Organic growth and marginal profit > Efficiency gains from existing operations > Synergistic acquisitions in pathology and radiology >» UK pathology > TDL organic growth and marginal profit > TDL/Omnilabs/UCLH merger benefits > NHS and Private market exp
Slide 25: Thank you
Thank you
Slide 26: |SONIC
|SONIC
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