Sonic Healthcare Limited · ASX:SHL

Sonic Healthcare — Shareholder Meeting (November 2003)

26 slides from Sonic Healthcare's shareholder meeting presentation, Nov 27, 2003

  1. Slide 1: Annual General Meeting

    Annual General Meeting 27 November 2003 Dr Colin Goldschmidt Managing Director

  2. Slide 2: FY 2003 Highlights

    FY 2003 Highlights ¾ Revenue growth 13% ¾ NPAT growth 20% ¾ EPS growth 13.5% ¾ EBITA margin expansion 0.7% (70 basis points) ¾ Full year dividend 25 cents per share ¾ Expanding UK pathology operations ¾ Sonic set for ongoing growth

  3. Slide 3: 2003 Guidance Delivered

    2003 Guidance Delivered Sonic Guidance Sonic Actuals Full Year 2003 Revenue $970 - 980M $974.8M EBITA $172 - 176M $173.1M EBITA % 17.75 - 18.00% 17.76%

  4. Slide 4: Update FYTD 2004

    Update FYTD 2004 4 Months to 31 October ¾ Revenue and earnings currently in line with full-year FY2004 guidance ¾ ~3% fee increase for Australian pathology from 1 December 2003

  5. Slide 5: 2004 Guidance

    2004 Guidance 2003 Actuals 2004 Guidance Growth* $M $M % Revenue 974.8 1,020 – 1,035 5.4% EBITA 173.1 185 - 195 9.8% 2004 Guidance ƒ Growth* calculated using mid-point of 2004 guidance ƒ Includes Omnilabs acquisition (loss in first half) ƒ Intangibles amortisation $59-60 million ƒ Assumes no new acq

  6. Slide 6: Revenue

    Revenue 2003 2002 Growth ($M) ($M) (%) Total Revenue 974.8 859.8 13.4% ¾ Acquisitions have contributed to revenue growth ¾ Organic revenue growth ~ 5.9% (excluding acquisitions) ¾ Australian and UK pathology particularly strong

  7. Slide 7: Annual Revenue Year History

    Annual Revenue 10 Year History 1,200 1,028(F) 975 1,000 860 800 628 $M 600 387 400 174 147 200 133 58 89 47 0 2004(F) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 (F) = mid-point of Sonic market guidance 2004 (F) assumes no new acquisitions

  8. Slide 8: Sonic Revenue Growth

    Sonic Revenue Growth ¾ Market growth ¾ 5% Pathology/Radiology Funding Agreement ¾ Pathology Industry Q1 2.1% growth ¾ Imaging Industry Q1 2.9% growth ¾ Market share growth ¾ Growing average fee ¾ More services per patient ¾ More complex testing in Sonic Pathology ¾ More complex modalities in Sonic I

  9. Slide 9: Australian Medicare Growth Data

    Australian Medicare Growth Data FY2003 v FY2002 Services Episodes Total Fees Paid (Tests/Items) (Patients) ($) Australian Pathology (FY 2003) 4.2% 2.4% 4.6% Australian Imaging (FY 2003) 3.7% n/a 5.0% ¾ Medicare data reflect broad industry growth rates ¾ Pathology – current status ¾ Growth tracking a

  10. Slide 10: Earnings

    Earnings FY 2003 FY 2002 Change EBITDA $M 213.9 183.7 16.4% EBITA $M 173.1 146.7 18.0% Core* NPAT $M 99.5 83.2 19.6% NPAT $M 40.9 33.8 21.0% Core* EPS cents 37.8 33.3 13.5% *Core = Before Amortisation of Intangibles

  11. Slide 11: Core Earnings per Share

    Core Earnings per Share Double-digit EPS Growth last 8 Years 40.0 35.0 30.0 25.0 Cents 20.0 per share 15.0 10.0 5.0 0.0 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

  12. Slide 12: Earnings Margins

    Earnings Margins 2003 2002 EBITDA Margin 21.9% 21.4% EBITA Margin 17.8% 17.1% ¾ Margin expansion in FY2003 ¾ Revenue growth and marginal profit ¾ Ongoing cost management in practices ¾ Inter-practice synergies ¾ Improved performance at Melbourne Pathology ¾ TDL (UK) strong performance ¾ SciGen demer

  13. Slide 13: Sonic Healthcare Operations

    Sonic Healthcare Operations ¾ Large and complex business ¾ ~$1 Billion annual revenue ¾ > 11,000 employed staff ¾ Customer services outstanding ¾ Accuracy, consistency, turnaround times ¾ Reputation underpins Sonic’s value ¾ Operational management ¾ Stable, experienced, committed, passionate team ¾

  14. Slide 14: Sonic Management Structure

    Sonic Management Structure Sonic Healthcare Board of Directors PSEC Sonic ISEC Pathology CEOs Managing Director Imaging CEOs Sonic Finance Director Sonic Sonic Sonic Sonic Sonic Sonic Sonic Spec. Finance Operations Marketing IT Commercial HR Projects

  15. 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% ¾ Final Dividend ¾ 17 cents per share, fully franked ¾ Full-year Dividend ¾ 25 cents per share, fully franked ¾ 20 cents in 2002 ¾ Increase of 25% ¾ Dividend yield 3.8

  16. Slide 16: Dividend Year History

    Dividend 10 Year History 30.0 25.0 20.0 Cents per 15.0 Share 10.0 5.0 0.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Dividend (cents) 2.0 3.0 4.0 5.0 9.0 14.0 15.0 17.0 20.0 25.0

  17. Slide 17: Australian Pathology Funding Agreement

    Australian Pathology Funding Agreement ¾ Fee increase of ~3% announced 24 November 2003 ¾ Effective 1 December 200 ¾ Applied uniformly across all pathology items ¾ Designed to lift growth to agreed 5% industry growth level by 30 June 2004 ¾ Exact increase pending modelling ¾ New Pathology Funding Ag

  18. Slide 18: Australian Radiology Funding Agreement

    Australian Radiology Funding Agreement ¾ New 5 year Memorandum of Understanding commenced 1 July 2003 ¾ Funding growth rates ¾ 2003/4 – 5.5% ¾ 2004/5 – 5.3% ¾ 2005/6 – 5.0% ¾ 2006/7 – 5.0% ¾ 2007/8 – 5.0% ¾ Magnetic Resonance Imaging (MRI) funding included in agreement ¾ Industry growth of 2.9% in Q

  19. Slide 19: Corporate Governance

    Corporate Governance ¾ Sonic working towards compliance with ASX recommendations ¾ Nominations Committee ¾ Established 3 July 2003 ¾ 2 Independent Directors / 1 Executive Director ¾ Function to review Board structure ¾ Two executive Directors have retired ¾ Plan to appoint one non-executive Director

  20. Slide 20: Sonic U.K. Expansion

    Sonic U.K. Expansion ¾ Three Transactions to date ¾ Acquisition of TDL – April 2002 ¾ Acquisition of Omnilabs – July 2003 ¾ Joint venture with UCLH – August 2003 ¾ UK pathology market ~£2 Billion pa ¾ England and Ireland opportunities

  21. Slide 21: Whitfield St Laboratory

    Whitfield St Laboratory ¾ Floor space 3,400 m² in total ¾ ~700m² for Autolab ¾ Balance split between TDL and UCLH operations ¾ Consolidation of 5 existing TDL/Omnilabs sites ¾ Fitout of Whitfield St facility almost complete ¾ Relocation in December 2003 ¾ Significant excess capacity ¾ TDL continues

  22. Slide 22: TDL-UCLH Joint Venture

    TDL-UCLH Joint Venture ¾ Major strategic move for Sonic ¾ A significant Public Private Partnership in the NHS ¾ Joint venture agreement for automated pathology ¾ First of its kind in the UK ¾ JV structured as a cost sharing arrangement ¾ Cost savings from scale, automation, lab design, workflow etc

  23. Slide 23: Sonic International Strategy

    Sonic International Strategy ¾ To partner with established players in suitable offshore markets ¾ TDL platform an ideal base for expansion in UK ¾ Private Pathology Market ¾ NHS Market ¾ Omnilabs and UCLH transactions provide evidence of incremental growth opportunities ¾ European pathology markets

  24. Slide 24: Future Strategy

    Future Strategy ¾ Australia and New Zealand ¾ Organic growth and marginal profit ¾ Efficiency gains from existing operations ¾ Synergistic acquisitions in pathology and radiology ¾ UK pathology ¾ TDL organic growth and marginal profit ¾ TDL/Omnilabs/UCLH merger benefits ¾ NHS and Private market expa

  25. Slide 25: Thank you

    Thank you

  26. Slide 26: Sonic Healthcare Limited

    SONIC HEALTHCARE LIMITED @

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