Half Year Results Presentation FY2018 Care by design Ha Half Y Year R r Results ts Presenta tati tion on FY2019 | D Deuts tsche / / Cra raigs NZ C Corpor orporate Day 1 For six months ended 30 September 2018
H1 H1 F FY2019 Busin siness Hig s Highlig lights ts + WELCOMED + AWARDED + ANNOUNCED first major clinical study into the use two Gold Pins at the New Zealand the appointment of Lyndal York as of Optiflow nasal high flow therapy in Design Awards for our F&P InfoSmart Chief Financial Officer and Neville the home web application and F&P SleepStyle Mitchell as a new non-executive patient application director + INCLUDED + LAUNCHED + PROGRESSED in the Dow Jones Sustainability Asia the F&P 950 neonatal heated with construction of our two building Pacific Index and the Dow Jones humidification system into New projects in New Zealand and Mexico Sustainability Australia Index Zealand and Australia 2
Firs irst t Ha Half F lf Fin inancia ial Hig l Highlig lights ts H1 FY2019 (6 months to 30 September 2018) NZ$M PCP^ CC* Record operating revenue 511.3 +12% +8% Record Hospital operating revenue 297.3 +13% +11% Record Homecare operating revenue 211.1 +10% +6% Hospital new applications consumables revenue +24% +22% OSA masks revenue +6% +2% Gross margin (basis points increase) +77bps +22bps Record net profit after tax 97.4 +20% +14% Recurring items, consumables and accessories approximately 86% of operating revenue (H1 FY18: 87%) ^ PCP = prior comparable period * CC = constant currency 3
Hosp Hospita ital P l Prod oduct G t Grou oup H1 FY2019 Respirator ory hum humidifica cation on and nd s sup uppor ort 58% OF OPERATING REVENUE H1 FY2019 HOSPITAL AL O OPER ERATING NG REV EVENU ENUE NZ$ 13% CONSTANT CURRENCY 11% • New applications consumables* made Sur urgica cal technol chnolog ogies up 60% of H1 FY2019 Hospital consumables revenue, 55% in H1 NEW AP NEW APPLICATIONS NS* FY2018 CONS NSUMAB ABLES ES R REV EVENU ENUE • Strong customer demand for our 24% NZ$ Optiflow and AIRVO systems, driven by clinical trial results CONSTANT CURRENCY 22% • F&P 950 to be released in Europe mid- 2019, followed by US and Canada 4 *New applications = Noninvasive ventilation (NIV), Optiflow™, AIRVO™, Surgical
Hom Homecare P Prod oduct G t Grou oup H1 FY2019 CPAP t ther erapy / / O Obstructiv ive S e Sleep eep A Apnea ea ( (OSA) 41% OF OPERATING REVENUE H1 FY2019 HOMEC ECAR ARE E OPER ERATING NG REV EVENU ENUE NZ$ 10% CONSTANT CURRENCY 6% Hom ome respirator ory s sup uppor ort MASKS R REV EVENU ENUE NZ$ 6% CONSTANT CURRENCY 2% 5
Firs irst Ha t Half lf Operatin ting Resu sult lts H1 FY2019 (6 months to 30 September 2018) % of Revenue NZ$M PCP^ CC* Operating revenue 100% 511.3 +12% +8% Cost of sales 33.2% 169.7 +9% +8% Gross profit 66.8% 341.6 +13% +9% Other income (R&D grant) 2.5 0% 0% SG&A 31.2% 159.4 +11% +8% R&D 8.9% 45.7 -3% -3% Total operating expenses 40.1% 205.1 +8% +5% Operating profit 27.2% 139.0 +21% +14% Profit after tax 19.0% 97.4 +20% +14% ^ PCP = prior comparable period * CC = constant currency 6
Gross M Margin n Imp mproveme ment nts GROSS MARGIN 70% • Gross margin for the first half: 60% − increased by 77 bps to 66.8% 50% − increased by 22 bps in constant currency 40% • Primarily driven by favourable product mix • Offset by OSA price declines 30% 20% 10% 0% 2014 2015 2016 2017 2018 1H 2019 Long Term Gross Margin target Note: the long term gross margin target is based on an assumption of a continuation of the current business environment. 7
Ope perating M g Margi gin Resear arch & D Developm pment nt expe pens nses OPERATING (EBIT) MARGIN 30% • NZ$45.7M • -3% (-3% cc) compared to 1H FY18 25% • Higher one-off costs in the prior half relating to product introductions and 20% patent renewal fees • Underlying rate of R&D increasing 15% Se Selling, ng, Ge General al & Adm dministrat ative expe penses 10% • NZ$159.4M • 5% +11% (+8% cc) compared to 1H FY18 • Continuing expansion of sales teams and 0% promotional activities 2014 2015 2016 2017 2018 1H 2019 • Patent litigation expenses: $7.7M Long Term Operating margin target Note: the long term operating margin target is based on an assumption of a continuation of the current business environment. 8
Cash F h Flow a w and nd Balanc nce She heet H1 FY2019 (for the 6 months ended 30 September 2018) NZ$M Operating cash flow (+14%) 93.4 Capital expenditure (including purchases of intangible assets) 61.1 Depreciation and amortization 20.9 H1 FY2019 (as at 30 September 2018) NZ$M Net cash 14.8 Total equity 776.7 Total assets 1,044.0 % Gearing (debt/debt + equity) -2.0% 9
Gearin ring a and D Div ivid idend • Target gearing ratio* of +5% to -5% debt to debt plus equity − Gearing ratio at 30 September 2018 was GEARING* -2.0% • Increased interim dividend by 11%: − 9.75 cps + 3.792 cps imputation credit for NZ residents (gross dividend of NZ 13.542 cps) − Fully imputed − 1.721 cps non-resident supplementary dividend − Dividend reinvestment plan available for New Zealand and Australian residents. No discount will apply. 10 * Calculated using net interest bearing debt (debt less cash and cash equivalents) to net interest-bearing debt and equity (less hedge reserve).
For oreig ign Ex Exchange Eff Effects ts • 50% of operating revenue in USD (FY18: 51%) and 19% in €. Year to 3 1 M arch Hedging position for our main exposures (as at 2 FY19 FY20 FY21 FY22 FY23 FY24 FY25-27 6th November 2 018) - - - USD % cover of expected exposure 95% 75% 50% 10% USD average rate of cover 0.681 0.668 0.654 0.660 - - - EUR % cover of expected exposure 95% 70% 50% 40% 35% 25% 5% EUR average rate of cover 0.604 0.572 0.542 0.522 0.509 0.500 0.471 Hedging cover percentages have been rounded to the nearest 5% 6 months ended 30 September 2016 2017 2018 NZ$M NZ$M NZ$M Reconciliation of Constant Currency to Actual Income Statements Profit before tax (constant currency) 106.9 109.1 126.1 Spot exchange rate effect (0.6) (5.5) 6.6 Foreign exchange hedging result 9.7 10.4 (2.1) Balance sheet revaluation (4.8) 0.1 5.3 Profit before tax (as reported) 111.2 114.1 135.9 11
Profit ofit & Los oss b s by Cu Curr rrency 1H FY2019 (for the 6 months ended 30 September 2018) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY 1% 7% 20% 9% 30% 3% 0% 42% 46% 50% 12% 0% 35% 19% 26% NZD USD EUR MXN Other NZD USD EUR MXN Other NZD USD EUR MXN Other 12
Overview 13
Fish isher & r & P Paykel l He Health lthcare at a a G Gla lance Glob obal al l lead eader er in r res espirat ator ory humidificat ation on Glob obal al p pres esen ence dev evices 37 Our people are 294 • Medical device manufacturer with leading located in 37 of our people positions in respiratory care and obstructive countries in Europe sleep apnea 1,314 of our people in North America • 45+ years’ experience in changing clinical 308 practice to solutions that provide better clinical of our people 2,258 outcomes and improve effectiveness of care in the rest of the world of our people in New Zealand • Estimated US$6+ billion and growing market opportunity driven by demographics Stron ong finan ancial al p per erfor orman ance • Significant organic long-term growth • Continued target, and history of, doubling our opportunities in respiratory care, OSA, COPD and revenue (in constant currency terms) every surgery 5 to 6 years • Large proportion (86%) of revenue from • Targeting gross margin of 65% and operating recurring items, consumables and accessories margin of 30% • High level of innovation and investment in R&D • Growth company with targeted dividend pay-out with strong product pipeline ratio of approximately 70% of net profit after tax • High barriers to entry Consiste Co stent growth st strate tegy 14
~US$ ~US$6+ B Billion illion a and Growin ing Mark rket O t Oppor ortu tunit ity HOSPITAL HOMECARE Home CPAP Hospital Non-invasive Invasive Surgical Respiratory Support Therapy Ventilation Respiratory Support Ventilation Humidification “NEW APPLICATIONS” Applications outside of invasive ventilation 15
Our Asp Aspir iration tion OUR ASPIRATION: Sustainably DOUBLING our constant currency revenue every 5-6 years. 16
Mark rkets & ts & P Prod oducts ts • Hospital REVENUE BY PRODUCT GROUP 12 MONTHS TO 30 SEPTEMBER 2019 − Heated humidification 1% − Respiratory care − Neonatal care − Surgery • Homecare 41% − Masks − Flow generators − Data management tools − Respiratory care in the home Recurring items, consumables and Hospital accessories approximately 86% of Homecare operating revenue (1HFY18: 87%) Distributed & Other 17
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