Annual General Meeting 24 November 2005 Dr Colin Goldschmidt CEO and Managing Director
Current Status FY 2004/5 - Record financial results � FY 2005/6 - Tracking to Sonic’s guidance range � after 4 months Service levels and reputation outstanding � Organic growth fuelled by strong global pathology � and radiology demand Platforms for growth in UK, German, USA markets � Company in strong position to drive shareholder � value into the future
Financial Year 2005 Highlights Growth 2005 vs 2004 Revenue 33% EBITA 33% NPAT 34% Operating Cashflow 40% Core* EPS 21% EPS 31% Dividend (full-year) 20% *Core = Before amortisation of intangibles
2005 Guidance Delivered Sonic Guidance Actuals $M $M 1,382 Revenue 1,330 - 1,370 261 EBITA 245 - 260 Sonic issued a profit upgrade in February 2005
Revenue Growth 2005 2004 Growth ($M) ($M) (%) Total Revenue 1,382.4 1,037.4 33.3% Acquisitions completed in FY 2005 – IPN, Endeavour Healthcare/Accord � Pathology Organic growth (non-acquisition) in 2005 ~7% � CPL acquisition (30 September 2005) in USA will boost 2006 revenue growth � Strong organic revenue growth ongoing �
Sonic Healthcare Annual Revenue 1,800 1,600 1,400 1,200 1,000 $M 800 600 400 200 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006(F) 33 41 47 58 89 133 147 174 387 628 860 975 1,037 1,382 1,635 Revenue ($M) = Forecast 2006 Revenue
Sonic Healthcare Revenue Split IPN 5% Radiology 20% Pathology 75%
2006 Guidance 2005 Actuals 2006 Guidance Growth $M $M % Revenue 1,382 1,600 – 1,670 18.3% EBITA 261 300 – 320 18.8% � Sonic tracking to 2006 guidance range after 4 months � Growth calculated using mid-point of 2006 guidance � Includes full year of IPN � Includes CPL acquisition from 1 October 2005 � Assumes constant currency exchange rates
Dividends 2005 2004 Change Interim Dividend $0.13 $0.10 30% Final Dividend $0.23 $0.20 15% Full Year Dividend $0.36 $0.30 20% Dividend fully franked at 30% � Dividend Reinvestment Plan currently suspended �
Full-year dividend 11 Year History 40 35 30 25 Cents per 20 Share 15 10 5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 3 4 5 9 14 15 17 20 25 30 36 Dividend (cents)
Core Earnings per Share 55 52.6 50 43.4 45 40 37.8 33.3 35 Cents 30 27.5 per share 25 21.7 20 16.7 15 11.8 9.5 10 8.0 7.0 6.7 5 2.1 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Core Earnings = Before amortisation of intangibles
10 Years Double-digit EPS Growth! SHL - Core Earning per Share Growth (%) 50% 42% 40% 30% 30% 27% 24% 21% 21% 19% 20% 15% 14% 14% 10% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Core EPS = Earnings per Share before Amortisation of Intangibles
$10.00 $12.00 $14.00 $16.00 $0.00 $2.00 $4.00 $6.00 $8.00 31/01/90 31/07/90 31/01/91 Share Price (Jan 1990 - Nov 2005) 31/07/91 31/01/92 31/07/92 31/01/93 Sonic Healthcare 31/07/93 31/01/94 31/07/94 31/01/95 31/07/95 31/01/96 31/07/96 31/01/97 31/07/97 31/01/98 31/07/98 31/01/99 31/07/99 31/01/00 31/07/00 31/01/01 31/07/01 31/01/02 31/07/02 31/01/03 31/07/03 31/01/04 31/07/04 01/31/05 07/31/05
Equity Raising / Share Purchase Plan Successful capital raising of $225 million in October 2005 � Proceeds used to retire debt associated with CPL acquisition � Priced at $14.54, a 3.5% discount to prior day’s closing price � Share Purchase Plan � Opportunity for loyal shareholders to participate in equity raising � Currently open, closes 1 December 2005 � Purchase price set at $13.99 per share (lesser of placement price and 3% discount to market) � Maximum subscription per holder - $5,000 � Senior syndicated debt facility � Re-negotiation under way � More flexibility and head room � Lower costs � Sonic now well placed to fund acquisitional growth �
Sonic Healthcare – International Expansion Germany 2004 United Kingdom 2002 United States 2005 Hong Kong 2001 New Zealand 1999 Australia 1987 Sonic Core EPS performance 1997 1998 1999 2000 2001 2002 2003 2004 2005 4
Sonic UK Pathology - History Sonic acquires TDL in 2002 � Sonic acquires Omnilabs in 2003 � Omnilabs merges into TDL in 2004 � TDL relocates to new laboratory facility in 2004 � Sonic/TDL secures major public-private partnership with � UCLH in 2004 UK Government decision to outsource pathology and � radiology contracts from NHS to the private sector
UK Pathology - TDL NHS outsourcing update � Pathology outsourcing tenders delayed due to election and focus on � radiology tenders and primary care outsourcing Pathology tenders expected in first half 2006 � TDL performing well in Harley Street market � TDL – UCLH joint venture progressing well � TDL referrals to Schottdorf successfully established �
German Pathology - Schottdorf Sonic acquired 56% interest in Schottdorf Group in 2004 � Schottdorf business achieved outstanding results in FY 2005 � Strong volume growth and efficiencies � Acquisition earnout of €8.1 million paid in full � Acquisition opportunities in private pathology sector � Evolving opportunities in German hospital pathology market �
Sonic – Germany Synergies UK – Germany synergies already established � Esoteric pathology specimens transported from TDL to Schottdorf daily � Additional revenue to Schottdorf � Lower testing costs for TDL � Better service delivery and turnaround times � Acquisition opportunities in Germany � Consolidation of market with efficiency gains � Schottdorf infrastructure with Sonic’s financial backing � German Public Hospital Pathology � Requires a combined Sonic-Schottdorf approach � A substantial opportunity �
Sonic’s Experience in Germany Excellent impression of German business market � Similar business culture and standards � Strong legal and accounting systems � No major legislative, tax or legal hurdles � Language � Not an issue � Everyone speaks excellent English! � Financing the transaction � Some difficulty in 2004 � German banks had tightened exposure to mid-sized businesses � ANZ Bank played a key role in refinancing the leveraged position � Dresdner Bank joined and also provided debt funding for the deal � Formality – a steep learning curve for Australians! � Investment has performed well �
Clinical Pathology Laboratories (CPL) Sonic acquired 82% of CPL on 30 September 2005 for ~US$312 million � CPL is the largest regional independent laboratory in the USA � CPL’s core market is Texas, with newly established markets in Ohio � and Virginia (Washington DC area) Annual revenue of ~US$190 M (~A$250 M) per annum � CPL has a proven, experienced and committed management team � Diverse and loyal customer base � 15 year history of strong growth � CPL has a unique doctor-focused operating model � Sonic and CPL have very similar cultures and values � CPL offers a unique and compelling platform for Sonic in the US
CPL History 1948 – 1989 Forerunner of CPL, Austin pathologist group � 1990 – 1997 Expansion into San Antonio, Dallas � 1999 Acquisitions of Seguin Labs and Waco Medical Group Lab � 2000 Acquisitions of labs in Houston, Dallas, Denton, Victoria � 2001 CPL recapitalises with entry of private equity fund � 2002 Expansion into Oklahoma, Arkansas, Louisiana � 2003 Acquisition of labs in Ohio and Virginia � 2004/5 Further small acquisitions in South West and Ohio � CPL has shown strong organic growth over the past 15 years
CPL Geographic Markets CPL South West CPL ’ s core market • Texas, Oklahoma, Arkansas, Louisiana • South West laboratory market estimated at US$1.3 billion annually • CPL has around 15% share of Texas market (population 22 million) • Major referrals from Austin, Dallas and San Antonio • Extensive network of local pathologist relationships • Strong and recognised reputation for excellent customer service • CPL Mid-Atlantic Acquisition of Fairfax Medical Laboratories, Chantilly, Virginia � Full service laboratory, medium size � Services local area, including Washington D.C. � Expansion opportunities in D.C., Baltimore and other areas � CPL Mid-West Acquisition of Pathology Laboratories, Inc (PLI), Toledo, Ohio � Full service laboratory, medium size � Potential to service Detroit, Cleveland, Chicago �
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