Sonic Healthcare Limited · ASX:SHL
Sonic Healthcare — Shareholder Meeting (November 2006)
27 slides from Sonic Healthcare's shareholder meeting presentation, Nov 15, 2006
Slide 1: Annual General Meeting 15 November 2006
SONIC HEALTHCARE Annual General Meeting 15 November 2006 Dr Colin Goldschmidt CEO and Managing Director Sonic Healthcare
Slide 2: Agenda
: ~ Agenda -e Review of FY 2006. «Summary of financial performance «.Sonic’s operations through FY 2006 ..~ e Update and future outlook e _ Inside view of laboratory operations ISON ie
Slide 3: FY 2006 Highlights
FY 2006 Highlights Sonic delivers record earnings result Sonic full-year guidance achieved Australian Pathology performing strongly ~-Northern hemisphere entities tracking well Result held back slightly-by Imaging and NZ Pathology Sonic in advanced negotiations with several acquisition targets in Eu
Slide 4: 2006 Financial Highlights
- 2006 Financial Highlights Growth 2006 vs 2005 Revenue 20% EBITA 21% NPAT 27% Operating Cashflow 15% EPS 20% Dividend (full-year) 14% ISON
Slide 5: 2006 Guidance Delivered
ISON 2006 Guidance Delivered . Full Year 2006 =| Sonic Guidance | —_ Actuals — uM $M Revenue 1,600 - 1,670 1,656 EBITA 306 300 - 320
Slide 6: Revenue 2006
ISON Revenue 2006 | 2006 =| 2005. Growth MMO (%) Total Revenue 1,656 20% 1,381 CPL acquisition in October 2005 had positive impact on revenue growth Organic revenue growth (excluding CPL) ~7% Australian pathology revenue growth 8.6% Strong revenue growth Melbourne Pathology, Douglass Hanly Moir, Sul
Slide 7: Annual Revenue
~ Annual Revenue 1,656 2006 2005 1,384 "2004 4,037 2003 975 2002 860 2001 628 Revenue ($M) ISON
Slide 8: Revenue Growth 2007
Revenue Growth 2007 : e Revenue growth will be enhanced by =” Full year of CPL (acquisition in October 2005) = Possible acquisitions in Europe and the USA though FY ‘07 ~e. Australian pathology and radiology =” Anticipated organic growth ~5% e New Zealand pathology « Growth rates are low ; « Impact
Slide 9: Earnings Growth
Earnings Growth es . : . : = Mi vement FY2000 | FY 2005_ : s seas oO EBITA ($M) 306.0 253.0 21% NPAT ($M) 172.0 135.4 27% EPS (cents) | - 58.6 48.9 20% Cash Generation ($M) 247.2 214.1 15% NOTE: All comparatives have been adjusted to conform with AIFRS, as required __ ISON EE
Slide 10: Earnings per Share
ISON EE : - Earnings per Share 60.0 50.0 “40.0 Cents '-.39.0 per share 20.0 “lod 1996 | 1997 | 1998 2001 2002 2004 2005 2006 [Core EPS (cents)| 8.0 | 9.5 | 11.8 27.5 33.3 43.4 48.9 58.6
Slide 11: EPS Growth
_ EPS Growth 50% 42% 40% — . 30% oe 80% 3% 27% eS . ~ Se so% 21% 21% ~ a90% 14% 14% 15% “Ht | : li 0% 4 : 1996 1997 1998 1999 --- 2000 2001 2002 -.- 2003 2004 2005 2006 ISON EE
Slide 12: Earnings Margins
ISON Earnings Margins FY2000 «=| sO 2005 EBITA Margin “18.5% “183% .. Australian pathology EBITA margin growth of 60. basis points e Global pathology EBITA margin growth, excluding CPL, of 50 basis points e ~ Adverse impacts.on Sonic margins in ’06 year « .. Radiology margins impacted by wage pressu
Slide 13: 2007 Guidance
ISON EE 2007 Guidance e Revenue growth -« Organic growth ~5% «- “Revenue growth including CPL ~9% e Earnings growth * Earnings per share growth ~ ~10% “Guidance excludes new acquisitions and possible DML outcomes _
Slide 14: Final Dividend
Final Dividend. 2006 =| «-2005—« | Change Interim Dividend $0.15 $0.13 15% Final Dividend $0.26 $0.23 13% ‘| Full Year Dividend $0.41 $0.36 14% e.- Dividend fully franked at 30% e Record Date 5 September 2006 e. Payment Date 19 September.2006 «Dividend Reinvestment Plan remains suspended ISON EE
Slide 15: Australian Pathology
Australian Pathology Revenue growth of Australian pathology division strong Market share gains in NSW and Victoria Outperformance by large Australian. labs ‘Sonic Australian pathology delivers margin expansion of 60 basis points «Information sharing and synergy.capture « . Strong pathologist and man
Slide 16: New Sonic Superlab
ISON EE New Sonic “Superlab” Sydney, Australia Building works well underway and ahead of schedule Project tracking to budget Completion in-second half of calendar 2007 17,000 square metres of lab and office space State-of-the-art design and workflows “Designed for high volume and high efficiency Wil
Slide 17: Sonic Imaging
Sonic Imaging e. Radiology division revenue growth at market growth level e Queensland X-Ray continues to outperform e . Margins impacted negatively by wage pressures » World-wide shortage of Radiologists and. technicians » .“*Head-hunting” of Radiologists =» Renegotiation of employment contracts e
Slide 18: Sonic Imaging - Future
Sonic Imaging - Future e _ Demand for radiology services increasing — CT and MRI e Solutions to wage pressure issues : ~« Sonic has.an outstanding team of Radiologists and radiology technicians «Novel incentive-based productivity model-in process ~... = New model will drive revenue growth, improve e
Slide 19: Medicare Funding Agreements
ISON EE Medicare Funding Agreements -Australian Pathology and Radiology Expenditure on pathology and radiology (other than MRI) have exceeded the reimbursement “cap” Additional funding is justified where increased outlays are due to changes. in government policy Fee negotiations (pathology and radio
Slide 20: IPN
ISON EE IPN Strong financial result for FY 06. Operational rejuvenation + .-Dr Malcolm Parmenter, CEO ~ energy and great vision for IPN »--GP.numbers growing in existing centres “Increasing GP approval of IPN model Solid future growth expected «_-.Focus.on filling existing centres =». New centres «F
Slide 21: New Zealand Laboratory Contract Update
ISON EE New Zealand Laboratory Contract Update ~ Sonic operates 4 laboratory. companies. in N.Z Diagnostic: Medlab (DML) -. Auckland Contract awarded to Labtests Auckland from 1 July 2007 »---Sonic/DML in legal challenge.over contract decision Medlab-South —Christchurch:and South Island Christchurch
Slide 22: DML
ISON EE DML Auckland Community Laboratory Contract DML challenges decision to award contract to new operator =. Judicial Review postponed to February 2007 : DML’s case: « Process to award contract was flawed «Quality of service will be reduced «Conflict of interest associated with decision Transitio
Slide 23: Off-shore Pathology
Off-shore Pathology e TDL — The Doctors Laboratory (U.K.) « Strong revenue and EBITA growth in FY 2006 «Margin expansion due to enhanced operational performance ~« TDL-UCLH partnership progressing well ». Growth anticipated to continue e -Schottdorf Group (Germany) «Solid performance through *06 yea
Slide 24: UK Pathology — NHS Outsourcing
UK Pathology — NHS Outsourcing e Public Private Partnership with UCLH operating well «.. Improved efficiencies « A showcase for other NHS opportunities e.- Lord Carter report on.NHS.outsourcing « ~ Recommends change to current system «Encourages private sector involvement « .. Proposes pilot schemes
Slide 25: Update FY '07
Update FY ‘07 e- After-first quarter trading, Sonic expects to achieve its full-year guidance e Second half expected to be significantly stronger than first half --s.Private fee increases in late first half FY °07 »-DVA fee increase effective 1 November 2006 (increased from 85%.to 100% of Schedule F
Slide 26: Future Growth
ISON EE ~ Future Growth Off-shore acquisitions Sonic has completed ~50 acquisitions in its 20 year history. «All successfully integrated into Sonic structure «.. Measured approach the key to successful acquisition strategy 3 major off-shore acquisitions : + TDL (UK) - 2002 «=. Schottdorf (Germany) -
Slide 27: The Future
Sonic Healthcare The Future Forming partnerships with like-minded diagnostic organisations world-wide Expanding presence in Europe.and USA Fostering staff fulfilment and service excellence Maintaining financial strength SONIC HEALTHCARE “We take it personally”
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