Sonic Healthcare Limited · ASX:SHL
Sonic Healthcare — FY2002 Earnings Presentation
27 slides from Sonic Healthcare's earnings presentation, Aug 22, 2002
Slide 1: 2001/2 Financial Results
2001/2 Financial Results Colin Goldschmidt Managing Director 22 August 2002
Slide 2: Sonic Summary
Sonic Summary ! Strong growth in 2002 " Revenue up 37% " Organic market share growth in Australian pathology " Earnings up 33% (EBITA) ! Sound operations " Synergies and rationalisation flow to bottom line " Melbourne Pathology outperforms " Exceptional result in 2nd Half (esp. 4th Quarter) ! TDL (U
Slide 3: 2002 Results Summary
2002 Results Summary 2002 2001 Change Revenue $M 859.8 627.9 +37% EBITDA $M 183.7 131.9 +39% EBITA $M 146.7 110.6 +33% NPAT $M 33.8 26.2 +29% NPAT* $M 83.2 56.4 +47% EPS* cents 33.3 28.1 +19% Cash Generated $M 146.7 67.2 +118% * Before Amortisation of Intangibles
Slide 4: Balance Sheet Summary
Balance Sheet Summary 2002 2001 Receivables (current) $M 108.6 109.0 Intangibles (net) $M 1,189.7 915.9 Amortisation of Intangibles $M 49.4 30.3 Interest-bearing Senior Debt* $M 442.3 407.4 Total Interest-bearing Debt $M 515.3 466.6 Interest Cover (EBITA / Net Interest) X 4.7 4.5 Equity $M 837.5 608
Slide 5: Dividend and DRP
Dividend and DRP ! Final Dividend " 16 cents per share, fully franked " 13 cents in 2001 ! Full-year Dividend " 20 cents per share, fully franked " 17 cents in 2001 " Increase of 17.6% ! Record Date: 4 September ! Payment Date: 19 September ! DRP suspended until further notice
Slide 6: Annual Revenue ($M)
Annual Revenue ($M) 1,000 900 860 800 700 628 600 $M 500 387 400 300 200 174 100 0 1999 2000 2001 2002 Revenue 174 387 628 860
Slide 7: Pathology Revenue Growth
Pathology Revenue Growth Sonic Total Annual Revenue Sonic Australian Pathology Revenue 1,000 900 860 ! Organic Revenue Growth of 800 Australian Pathology = 6.32% 700 628 " Acquisitions excluded 600 $M 500 " AHC contract loss excluded 387 Sonic market share gain 400 ! 300 200 174 " Sonic growth 6.32%
Slide 8: EBITA ($M)
EBITA ($M) 160.0 146.7 140.0 120.0 110.6 100.0 $M 80.0 70.8 60.0 40.0 35.9 20.0 0.0 1999 2000 2001 2002 EBITA 35.9 70.8 110.6 146.7 Note: EBITA includes SciGen
Slide 9: NPAT (Normalised)
NPAT (Normalised) 90.0 83.2 80.0 70.0 60.0 56.5 50.0 $M 40.0 32.7 30.0 20.0 21.5 10.0 0.0 1999 2000 2001 2002 NPAT 21.5 32.7 56.5 83.2 NPAT (Normalised) = NPAT before Amortisation of Intangibles
Slide 10: 10 Year EPS* History
10 Year EPS* History 35.0 30.0 25.0 20.0 Cents per share 15.0 10.0 5.0 0.0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 EPS* 2.1 5.7 5.8 8.0 9.5 11.8 16.7 21.7 28.1 33.3 *Earnings per Share (before Amortisation of Intangibles)
Slide 11: 2003 Guidance
2003 Guidance 2002(A) 2003(F) Low High Revenue ($M) 860 970 980 EBITA ($M) 147 172.0 176.4 EBITA Margin (%) 17.1 17.75 18.00 ! Assumes no new acquisitions ! Assumes current foreign exchange rates
Slide 12: EBITA Margins
EBITA Margins 1999 20.7% Sonic pre-SGS acquisition (NSW and SA pathology operations only). 2000 17.9% SGS acquisition in December 1999. SGS EBITA margins 13.8% at time of acquisition. Sonic margins diluted. 2001 (1stHalf) 17.3% Early SAT synergies commencing to flow. First full year of SGS dilution
Slide 13: EBITA Margin Improvement in 2nd Half
EBITA Margin Improvement in 2nd Half ! Seasonal variation " 2nd half better than 1st half ! Melbourne Pathology turnaround " 1st half EBITA margin ~8% " 2nd half EBITA margin ~15% ! Margin improvement in other lower margin acquisitions " IML, Cairns, Townsville, Clinipath, E-Path ! Organic revenue g
Slide 14: Margin Expansion: Case Study I
Margin Expansion: Case Study I Melbourne Pathology (MP) ! EBITA margins in years prior to merger ~10% ! 1st Half 2002 margin ~8% ! 2nd Half 2002 margin ~15% " Outperformance " 15% - highest in MP’s history! " Anticipate >15% in 2003 ! MP Transformation " New laboratory " New workflow " New IT system
Slide 15: Margin Expansion: Case Study II
Margin Expansion: Case Study II SGS Medical Group ! SGS Acquisition 1 December 1999 ! SGS EBITA Margin 13.8% at acquisition ! SGS EBITA Margin 16.4% in FY 2002 17 16.4 16 15 EBITA % 14 13.8 13 12 1999 2002
Slide 16: Margin Expansion: Case Study III
Margin Expansion: Case Study III Southern.IML Pathology 25 20 ! IML Acquisition 6 July 2001 ! IML EBITA margin 6.5% at 15 acquisition EBITA % ! Southern Pathology merged with 10 IML to form Southern.IML Pathology ! S.IML EBITA margin >20% in 2nd 5 half 2002 0 Southern + S.IML 1st 6 S.IML 2nd 6 IML M
Slide 17: Pathology Fee Agreement
Pathology Fee Agreement ! Tracking within parameters of Agreement " 3 year total spend ~$3.5 billion " ~0.2% ($6.4 million) variation from agreed industry spend ! No fee reduction envisaged ! Published Medicare growth rates are not comparable with the 5% “Cap” " Health Program Grants " Private insur
Slide 18: Sonic Imaging
Sonic Imaging ! Imaging providing ~25% of Sonic’s annualised revenue ! All entities tracking in line with budget " SKG margin expansion excellent since acquisition ! Imaging Sonic Executive Committee (ISEC) " Coordination of operations and synergies ! RADSATS " Formation of 8 Radiology SATs " Platfo
Slide 19: Radiology Fee Agreement
Radiology Fee Agreement ! Industry expenditure tracking close to agreed parameters ! No fee reduction envisaged ! Agreement expires 30 June 2003 ! Industry and Government anticipate new “cap” agreement
Slide 20: UK Acquisition - TDL
UK Acquisition - TDL ! Business tracking strongly ! Organic revenue growth " 2002 Annual Growth 16% " 2003 (F) Annual Growth ~20% ! Forecast 2003 Revenue ~£21 million ! Forecast 2003 EBITA of ~£7million
Slide 21: TDL Operations
TDL Operations ! Excellent service provision and market standing ! Strong financial performance ! Sonic/TDL exploring NHS and private market expansion " A medium term strategy " Strategy does not require further UK acquisition in short term ! New laboratory under consideration – Capex <£1 million !
Slide 22: SciGen
SciGen ! SciGen spin-out plan in progress " 65% of SciGen to be owned by Sonic shareholders " Sonic to inject cash of ~$23 million (net) ! De-merger process " Capital reduction and distribution in specie " New demerger tax provisions expected to apply ! Timetable " Documents to be lodged with ASIC s
Slide 23: SciGen Operational Update
SciGen Operational Update ! Vietnam " Hepatitis B Vaccine registration completed " Opportunity for Government contract " Significant private market " Staff recruitment - Country Manager, Regional Manager, Sales Team ! India " Insulin registration expected September 2002 " Contracts signed for sales,
Slide 24: Foundation Healthcare Alliance
Foundation Healthcare Alliance ! Alliance agreement and equity transferred to the newly restructured Foundation/Lifecare entity ! Sonic achieving significant revenue growth from Foundation medical centres ! Alliance plus Equity value " Auditors have signed off on the DCF valuation " Valuation uses c
Slide 25: Sonic Business Strengths
Sonic Business Strengths ! Sonic Reputation – Strong position in Australia, NZ, UK, HK ! Sonic Business Model – Stable, ethical and growing ! Sonic Management – Experienced and stable ! Sonic Core Values – Respecting our people ! Diagnostic Markets - Stable and growing ! UK Acquisition – TDL financi
Slide 26: Conclusion
Conclusion ! Revenue growth ongoing ! Earnings growth ongoing ! Margin expansion ongoing 2002(A) 2003(F) Growth (%)* Revenue $860M $970-980M 13.4% EBITA $147M $172-176M 18.4% EBITA Margin 17.1% 17.75-18.00% *Growth rate based on mid-point of range Forecasts assume no new acquisitions
Slide 27: Sonic Healthcare Limited
SONIC HEALTHCARE LIMITED @