Vita Life Sciences Limited · ASX:VLS
Vita Life Sciences — Shareholder Meeting (May 2004)
52 slides from Vita Life Sciences's shareholder meeting presentation, May 31, 2004
Slide 1: Vita Life Sciences
VITA LIFE SCIENCES MY v's Lire sciences
Slide 2: Annual General Meeting 31 May 2004
ANNUAL GENERAL MEETING 31 May 2004
Slide 3: Agenda
AGENDA 1. Welcome 2. Reports: • Chairman’s Report • MD’s Overview 3. Ordinary Business: • Receiving the financial statements and reports of the directors and auditors – Resolution 1 • Election of Directors – Henry Townsing – Resolution 2 4. Special Business: • Adopting a long term incentive plan – R
Slide 4: Overview of Unrepresentative Losses, Write Offs, et al
OVERVIEW OF UNREPRESENTATIVE LOSSES, WRITE OFFS, ET AL Year of Impact (AUD$ Million) 2002 2003 Total Adjustment to reflect changed terms of sale 14.6 14.6 Adjustment to reverse purported price increase in Malaysia 4.3 4.3 Product recall costs 4.8 4.8 Write down of receivables 4.6 4.6 Write down of i
Slide 5: Consolidated Balance Sheet as at 31st December 2003 and 2002
CONSOLIDATED BALANCE SHEET AS AT 31ST DECEMBER 2003 AND 2002 (AUD $) 2003 2002 Current As s ets Cas h 679,696 1,784,947 Receivables 2,283,795 4,030,951 Inventories 5,693,160 6,776,502 Other 844,658 390,508 Total Current As s ets 9,501,309 12,982,908 Non Current As s ets Inves tments 2,000 2,000 Prop
Slide 6: 2003 Cash Movement
2003 Cash Movement AUD$ Million Cashflow from Operation In 19.0 Outwards (28.9) Cashflow from Financing In 12.4 Outwards (3.7) Cashflow from Investing In 1.4 Outwards (0.3) Movement in 2003 Cash Position (0.1) 5
Slide 7: Profit and Loss 2003
PROFIT AND LOSS 2003 (AUD$ Million) Vita Vita Corporate VLS Medical Health Gross Sales 7.7 15.5 - 23.2 Audited PBT (2.9) (5.9) (8.4) (17.2) Add back adjustment of non core and one off expenses - Management Fee (0.8) (0.8) NDA write off (3.5) (3.5) CME write off (0.4) (0.4) Pan recall expenses (4.8)
Slide 8: Health Division Underlying Business Statement 2003
HEALTH DIVISION UNDERLYING BUSINESS STATEMENT 2003 (AUD$ Million) Audited PBT (5.9) Add Back Extraordinary Expenses Pan Product Recall Costs (4.8) Write down of Inventory (0.6) Legal (0.6) Operating Profit net of Extraordinary Expenses 0.1 Estimated revenue impact of Lost Sales 10.6 (assuming 90% of
Slide 9: Re-structure VitaHealth
RE-STRUCTURE VITAHEALTH VitaHealth group has been re-structured to: • Better reflect the operating business. • Facilitate investment into the VitaHealth group. • Facilitate listing of VitaHealth. • Facilitate more commercial banking relationships. • Add value and provide liquidity to stakeholders: •
Slide 10: Re-structure of VitaHealth
RE-STRUCTURE OF VITAHEALTH Specifically: • New banking relationship established with Maybank. • New Malaysian holding company. • New corporate structure and group balance sheet. • Negotiating with several strategic investors. • Headcount reductions in progress. 9
Slide 11: Vita Medical Group Underlying Business Statement 2003
VITA MEDICAL GROUP UNDERLYING BUSINESS STATEMENT 2003 (AUD$ Million) Sales Gross Profit Europe 5.5 3.9 Asia 0.3 0.2 Australia 1.9 1.4 Total Sales 7.7 5.5 Division Gross Profit 5.5 Less Normal Operating Expenses (3.7) Net Contribution pre Management Fees and CME and NDA Write offs 1.8 Less CME Write
Slide 12: Vita Medical
VITA MEDICAL 2002 2003 2004 (AUD $ Million) Forecast Sales 5.2 7.7 9.7 PBIT -0.4 1.8 3.3 PAS Unit Sales Generator Sales & Placements 4000 120 3500 100 3000 80 2500 2000 60 1500 40 1000 20 500 0 0 2002 2003 2004 Forecast 2002 2003 2004 Forecast VITA Medical 11
Slide 13: Re-structure of Vita Medical
RE-STRUCTURE OF VITA MEDICAL • Vita Medical has been financing: • VitaHealth • Vimed - Suspended • Corporate • New Drug Application - Suspended • Headcount reduced by 6 people. • New CEO appointed - David Rundell. • New European structure being put in place. VITA Medical 12
Slide 14: Technegas - New Drug Application
TECHNEGAS - NEW DRUG APPLICATION • Possibility to enter US market still there – programme is being revisited. • FDA regulators difficult to deal with: • Issues of protocol have been raised • Issues of appropriate comparator have been raised • Cost of application is substantial. • Time lines uncertai
Slide 15: Vimed Biosciences - Suspended
VIMED BIOSCIENCES - SUSPENDED • Research and Development initiatives suspended to preserve cash. • Dr David Shaw has returned to USA. • Negotiating with the ANU regarding the future of Vimed: • Intellectual property rights • If no commercial agreement can be reached, Vimed may be placed into adminis
Slide 16: Underlying Business Statement 2003: Corporate and Other
UNDERLYING BUSINESS STATEMENT 2003 CORPORATE AND OTHER Audit PBT (8.4) Made up of: Write back of investments in Subsidiaries (3.0) Non Core Legal (0.7) Foreign Exchange Loss (0.9) Vimed Annual Costs (1.1) Finance and Borrowing Charges (1.7) Wages & Salaries (0.8) Professional Fees (0.1) Occupancy (0
Slide 17: Re-structure of Vita Life Sciences
RE-STRUCTURE OF VITA LIFE SCIENCES • Resignation of Managing Director. • Corporate has been reduced from 5 people to 1.2 people. • Corporate office has been closed. 16
Slide 18: Summary
SUMMARY 1 • In ’02 and ’03, AUD $47.6 million of “specials” hit our P & L: • Borrowings up, cash from working capital • Investments (Vimed, NDA) on hold • Expenses cut • Balance sheet damaged as well. 17
Slide 19: Summary
SUMMARY 2 • But the underlying businesses have value: – Vita Medical • AUD$1.77 million PBIT at 23% PBIT/Sales • Sales growth (’03 versus ’02) +~45% – VitaHealth • Arguably B/E in ’03 at operating line • “Lost” sales of AUD $10 million would have generated a profit 18
Slide 20: 19
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Slide 21: Business Road Map
BUSINESS ROAD MAP • Objectives: • Quickly nurse business back to financial health. • Expedite brand recovery from severe PAN impact and voluntary recall with minimum investment. • Enhance shareholders’ value. 20
Slide 22: Strategies
STRATEGIES • Focus on ‘rebuilding’ primary markets based on: • Experienced, professional and committed team • Strong brand portfolio and market strength 21
Slide 23: People
PEOPLE • Right-sized organisation. • Staff cost reduction in 2004 over 2002 is S$2.5m. • Strive for highest level of customer service and product knowledge - two Herbs of Gold representatives won the inaugural CHC Industry ‘Best Sales Rep of 2004’ Award. 22
Slide 24: Focus on Re-building Key Markets
FOCUS ON RE-BUILDING KEY MARKETS 3 Key Markets Market Recovery Our Current Position Australia 90% No. 2 brand in health food channel Malaysia 80% Top 3 leading brand Singapore 70% Strengthened from No.3 to No.1 23
Slide 25: Focus on Re-building Key Markets
FOCUS ON RE-BUILDING KEY MARKETS • Will remain focused in 3 primary markets with 90% turnover contribution. • Secondary markets include: • Indonesia: Top 3 brand • Philippines: Appointed distributor to roll out 10 exclusive VitaHealth outlets in first year • Indochina: Focus on Vietnam and Myanmar 2
Slide 26: Focus on Re-building Key Markets
FOCUS ON RE-BUILDING KEY MARKETS • Future Strategic Markets: • China: Exploring JV opportunity • India: Exploring licensing agreement • Europe: First foray into Europe - Robovites in July ’04 • Our aim is to be a leading health supplements player in the Asia Pacific region. 25
Slide 27: Focus on Re-building Key Markets
FOCUS ON RE-BUILDING KEY MARKETS • Build incremental sales: • Strategic alliance (Efamol in Australia) • Consider strategic acquistions • Grow organically Launch VitaScience Launch HOG as (pharmacy brand in flanking brand in Australia) Singapore 26
Slide 28: Brands
BRANDS • Continue to invest prudently in building three world-class brands: – VitaHealth (Superbrand in Singapore and Malaysia) – Herbs of Gold – Robovites • Strong brands attract premium price positioning and higher brand loyalty retention. • Help us stand out from the competitive clutter. 27
Slide 29: New Product Innovation
NEW PRODUCT INNOVATION Example 1: Primolin GLA • Double Strength 21% GLA • Unique liquid dosage form 28
Slide 30: New Product Innovation
NEW PRODUCT INNOVATION Example 2: VitaYoung • 100% natural anti-aging product derived from plants 29
Slide 31: New Packaging Upgrade
NEW PACKAGING UPGRADE • For both flagship brands - Herbs of Gold and VitaHealth. • Need to rejuvenate/ refresh brand presentation → customers/ trade to re-assess the brand in a more positive/renewed light post PAN. • Enhance branding and premium quality image. 30
Slide 32: New Packaging Upgrade
NEW PACKAGING UPGRADE HOG VitaHealth • New packaging without boxes can reap us potential annualised S$300K savings in Malaysia. 31
Slide 33: Re-sourcing
RE-SOURCING • 100% re-sourcing post PAN should be completed by July ‘04 - with 10% deleted. • Suppliers evenly spread out in USA, Australia, Europe and Malaysia. • In some cases, at reduced prices, e.g. annualised $200K savings from Sphere alone. • New Maybank RM4m LC facility will help us purchase
Slide 34: Technegas
TECHNEGAS DAVID RUNDELL VITA MEDICAL LIMITED 33 VITA Medical
Slide 35: My Background
MY BACKGROUND • Graduated from RMIT - 1977 • Staff NMT - Queen Victoria Medical Centre Melbourne, 1977-1981 • Chief NMT- Radclin Medical Imaging Melbourne, 1981-2000 • National Product Manager - ADAC Nuclear Medicine Products, IBA Cyclotrons, Hologic BMD - Insight, Sydney 2000 - 2002 • Sales & Marke
Slide 36: This business is profitable but needs to grow
VITA MEDICAL LTD 2003/2004 2003 - Sales $ 7.7 million - PBIT $ 1.77 million (23% of sales) March ’04 - Net Sales 3.0% ahead of budget - Inventory $326K less versus year end 2003 “This business is PROFITABLE but needs to grow” VITA Medical 35
Slide 37: 2003 Sales by Region - Globally
2003 SALES BY REGION - GLOBALLY Generators PAS Australia/NZ 27 (12 in ’02) + 6.5% Europe 46 (35 in ’02) Flat Asia 11 (8 in ’02) Flat (China >15 installed, Korea 8 in 2 years) Canada 11 New Market (20 for ’04) (239 Boxes for ’04) VITA Medical 36
Slide 38: Growth Plans/Actions 2004
GROWTH PLANS/ ACTIONS 2004 Australia/NZ 90% -95% Market Share – Small growth Europe Stimulate market – Incentive Plan Asia More focussed regional management China/Japan/Korea – ↑ sales Canada Growth - 20 sales ‘04 Latin America 1st Generators installed Argentina May ’04 Chile & Mexico within 2004 US
Slide 39: Future Plans
FUTURE PLANS 1. We need to find more products: – Radiopharmaceuticals – Other Medical Devices – PET – Cyclotrons 2. Company Consolidation: – Nuclear Medicine Super Company VITA Medical 38
Slide 40: Key Points
KEY POINTS • Vita Medical is a profitable business. • There is still a big opportunity for Technegas within the global market. • We need new products to enhance the business. VITA Medical 39
Slide 41: 2004 1st Quarter Update
4 VITA LIFE SCIENCES 2004 18? QUARTER UPDATE 40
Slide 42: VLS - Summary of Operating Performance
VLS – SUMMARY OF OPERATING PERFORMANCE 2004 Q1 EBIT Actual Budget (AUD$ Million) Vita Medical 1.03 0.67 VitaHealth (0.47) (0.33) Corporate** (0.92) (1.05) Vimed* (0.16) (0.16) Total before abnormals (0.52) (0.87) ______ _____ * Actual results for Vimed include estimates of redundancy and associated
Slide 43: VitaHealth - Financial Performance
VITAHEALTH - FINANCIAL PERFORMANCE 2004 Q1 Actual Budget Sales SGD Margin SGD Margin (SGD$ Million) Malaysia 1.67 59% 1.57 62% Singapore 1.15 52% 1.03 64% Australia 1.53 42% 1.94 46% Other 0.24 0.17 Total 4.59 4.71 EBIT (0.62) (0.43) • 13 re-registered product lines in March (5 in February). • New d
Slide 44: Vita Medical - Financial Performance
VITA MEDICAL - FINANCIAL PERFORMANCE 2004 Q1 Actual Budget Gross Gross Sales AUD Margin AUD Margin (AUD million) Europe 1.69 80% 1.52 83% Australia 0.38 82% 0.35 69% Asia 0.11 N/A 0.17 N/A Other 0.14 0.21 Total 2.32 2.25 EBIT 1.03 0.67 • Generators placed and sold slightly below budget YTD (Actual 1
Slide 45: VLS - Summary of Cash Flow
VLS – SUMMARY OF CASH FLOW 2004 Q1 Actual Pre-Initiative CASH FLOW FROM OPERATIONS Forecast (AUD$ Million) - Vita Medical 0.70 0.06 - VitaHealth* (0.39) (1.47) - Corporate (0.59) (0.59) - Vimed (0.12) (0.30) -NDA (0.09) (0.15) -Other non operating cash outflow -Legal Health (0.31) (0.52) -Legal Corp
Slide 46: Update on PAN Dividend from Administrator
UPDATE ON PAN DIVIDEND FROM ADMINISTRATOR • Uncertain amount and timing: - Current estimate is 10 cents on the dollar within two months (approximately AUD$750.0) - Remainder subject to further negotiation and longer timeframe to pay out 45
Slide 47: Update on Litigation
UPDATE ON LITIGATION PANG • Case running now. • Closing submission by end of June. • Verdict to follow within several months. • Verdict/damages/recovery. NORDION • Hearing for directions in France in June. Expecting a date to be set for trial to begin. • Australian case presently on hold. 46
Slide 48: Initiatives
INITIATIVES • Partial sale of VitaHealth: • Vital • Other • IPO for VitaHealth • Partner for VML NDA • Resolve future of Vimed 47
Slide 49: Thank You
4 VITA LIFE SCIENCES Thank You
Slide 50: Reconciliation from Year End Management Accounts
RECONCILIATION FROM YEAR END MANAGEMENT ACCOUNTS Management Accounts December 2003 ( 10.0) Add: - Herbs of Gold revenue recognition ( 0.6) - Write down of other asset ( 0.3) - Additional legal provision ( 0.3) - Hong Kong PAN ( 0.7) - Carrying value of NDA ( 2.2) - Carrying value of Vimed ( 3.1) - Y
Slide 51: VitaHealth - Current Structure
VITAHEALTH – CURRENT STRUCTURE (100% owned subsidiaries) Vita Life Sciences Limited Vita Corporation Vita Health Lab Pte Limited (Aust) Pty Limited Vita Health Laboratories Vita Health Laboratories Swiss Bio Pharma Vita Health Lab. Indochina Herbs of Gold Pte Limited (Singapore) HK Limited Sdn Bhd (
Slide 52: Vita Healthcare Asia Pacific - Proposed Restructure
VITA HEALTHCARE ASIA PACIFIC - PROPOSED RESTRUCTURE Vita Life Sciences Limited 90% 79% 10% Vital BioTech Vita Healthcare Asia Holding Ltd Pacific Sdn Bhd 21% 100% 100% 100% 100% 100% Swiss Bio Vita Healthcare VitaHealth VitaHealth Joint Venture Pharma Sdn Asia Pacific Laboratories Herbs of Company L