Sonic Healthcare Limited · ASX:SHL
Sonic Healthcare — H1 FY2004 Earnings Presentation
21 slides from Sonic Healthcare's earnings presentation, Feb 19, 2004
Slide 1: Interim Results Half Year to 31 December 2003
Interim Results Half Year to 31 December 2003 Colin Goldschmidt Managing Director 19 February 2004
Slide 2: Sonic Half Year Summary
Sonic Half Year Summary (1 July – 31 Dec 2003) ! Excellent first half performance " EBITA up 13.6% " Core Net Profit up 14.1% (net profit up 35%) " Core EPS up 12.4% " EBITA margin 18.3% (up from 17.0%) ! Solid start to second half " January EBITA strong ! Full-year guidance unchanged " Revenue, EBI
Slide 3: Revenue
Revenue 6 Months ended 6 Months ended Movement 31.12.03 31.12.02 % $’000 $’000 Total Revenue 509,859 485,531 5.0% ! Organic revenue growth " Sonic Australian diagnostics growth at or above market " New Zealand pathology growth rates lower than Australia " Sonic UK pathology growth strong " Excluding
Slide 4: Sonic Revenue Split H1, 2004
Sonic Revenue Split H1, 2004 Radiology 27% Pathology 73%
Slide 5: Earnings Growth
Earnings Growth 6 Months ended 6 Months ended Movement 31.12.03 31.12.02 % EBITA ($’000) 93,545 82,356 13.6% Core NPAT ($’000) 55,345 48,506 14.1% Core EPS (cents) 20.8 18.5 12.4% NPAT ($’000) 25,720 19,101 34.7% EPS (cents) 9.78 7.37 32.7% Cash Generation ($’000) 81,508 66,167 23.2% Core = Before A
Slide 6: EBITA Margins
EBITA Margins 6 Months ended 6 Months ended Sonic 31.12.03 31.12.02 EBITA Margin 18.3% 17.0% EBITDA Margin 22.3% 21.2% ! Margin expansion continues " Revenue growth with marginal profit " Entity cost reduction initiatives " Sonic synergy initiatives (benchmarking, IT, sales/marketing, purchasing, ce
Slide 7: Sonic Margin Expansion
Sonic Margin Expansion 20.0% 18.8% 19.0% 18.3% 17.8% 18.0% 17.1% 17.0% 17.0% 15.7% H1 16.0% Full Year 15.0% 14.0% 13.0% 12.0% 2002 2003 2004 = Full-year 2004 EBITA margin forecast derived from upper range of Sonic revenue and EBITA guidance
Slide 8: 2004 Guidance Unchanged
2004 Guidance Unchanged 2003 Actuals 2004 Guidance Growth* $M $M % Revenue 974.8 1,020 – 1,035 5.4% EBITA 173.1 185 - 195 9.8% Trending towards upper end of full-year guidance range Notes ! Growth* calculated using mid-point of 2004 guidance ! Includes Omnilabs (loss in first half) and SDSG (from De
Slide 9: Pathology Operations
Pathology Operations ! Pathology division performing above expectation ! Largest four entities all outperforming budgets " Douglass Hanly Moir Pathology (New South Wales) " Sullivan Nicolaides Pathology (Queensland) " Melbourne Pathology (Victoria) " Diagnostic Medlab (Auckland) ! Margin expansion s
Slide 10: Radiology Operations
Radiology Operations ! Sonic Imaging division improving performance " H1 2004 margins up on H1 2003 margins " H1 2004 margins up on full-year 2003 margins ! Queensland X-Ray performing particularly well ! Industry growth low in first half, impacting margin growth ! Synergistic acquisitions (eg SDSG,
Slide 11: Interim Dividend
Interim Dividend 2004 2003 Movement $ $ % Interim Dividend 0.10 0.08 25.0% Final Dividend (Forecast) 0.20 (F) 0.17 17.6%(F) Full Year Dividend (Forecast) 0.30 (F) 0.25 20.0%(F) !Dividend fully franked at 30% !Record Date " 3 March 2004 !Payment Date " 17 March 2004 !Dividend Reinvestment Plan suspen
Slide 12: Balance Sheet Summary
Balance Sheet Summary 31.12.03 30.6.03 31.12.02 Receivables (current) $M 106.6 111.4 100.3 Intangibles (net) $M 1,097.3 1,111.1 1,170.6 Total Interest-bearing Debt $M 538.1 561.3 608.7 Equity $M 842.5 831.3 838.1 Interest Cover (EBITDA / Net Interest) X 6.7 5.9 5.7 Gearing (Net I.B. Debt / Equity) %
Slide 13: Australian Pathology Funding
Australian Pathology Funding ! Current Agreement: Government funding for total industry capped at 5% growth p.a. ! Agreement Term : 1 July 1999 – 30 June 2004 ! 3.3% fee increase from 1 December 2003 " Applied to all pathology test items " Intended to adjust growth to agreed target by 30 June 2004 !
Slide 14: Australian Radiology Funding
Australian Radiology Funding ! New 5 year funding agreement in operation since 1 July 2003 ! Government funding cap for total industry growth: " 2003/4 – 5.5% " 2004/5 – 5.3% " 2005/6 – 5.0% " 2006/7 – 5.0% " 2007/8 – 5.0% ! H1 industry growth rate 3.8% (per HIC statistics) ! Private billing unrestr
Slide 15: Sonic IT
Sonic IT ! Roll-out of Sonic proprietary software ongoing " Pathology software – Apollo " Radiology software – Apollo RIS ! Apollo roll-out : Pathology " Sullivan Nicolaides Pathology – successful launch July 2003 " Diagnostic Services (Tasmania) – successful launch December 2003 " Southern.IML Path
Slide 16: UK Pathology
UK Pathology ! TDL business stable and strong ! Omnilabs merger completed and successful " Staff reductions " Property amalgamations " Equipment rationalisation ! Laboratory relocated to new facility in Whitfield Street " Completed and successful " State-of-the-art equipment and premises ! TDL – UCL
Slide 17: Sonic Healthcare Current Status
Sonic Healthcare Current Status ! Medical Diagnostics Company " Pathology " Radiology ! Large business " Pathology and Radiology are complex operations " ~$1 Billion annual revenue " Growth history and expectation " > 11,000 employed staff ! Customer services outstanding " Tens of thousands of refer
Slide 18: Sonic Core Values
Sonic Core Values " Commit to service excellence " Treat each other with respect and honesty " Demonstrate responsibility and accountability " Strive for continuous improvement " Maintain confidentiality
Slide 19: Future Growth
Future Growth ! Australia " Market growth in diagnostics ~5% p.a. " Market share growth, especially pathology " Synergistic acquisitions ! New Zealand " Market growth " Market share growth ! U.K. pathology " Ongoing private pathology growth " Further joint ventures with NHS ! European pathology
Slide 20: Summary
Summary ! Outstanding first half result ! Strong start to second half ! Trending towards upper end of full-year guidance range " Revenue " Earnings " Margins ! Dependable business model " Revenue growth and profit drivers " Infrastructure and goodwill well established ! Growth opportunities " Austra
Slide 21: Sonic Healthcare
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