Annual General Meeting 15 November 2006 Dr Colin Goldschmidt Dr Colin Goldschmidt CEO and Managing Director CEO and Managing Director Sonic Healthcare Sonic Healthcare
Agenda Agenda Review of FY 2006 Review of FY 2006 � � Summary of financial performance Summary of financial performance � � Sonic’s operations through FY 2006 Sonic’s operations through FY 2006 � � Update and future outlook Update and future outlook � � Inside view of laboratory operations Inside view of laboratory operations � �
FY 2006 Highlights FY 2006 Highlights Sonic delivers record earnings result Sonic delivers record earnings result � � Sonic full- -year guidance achieved year guidance achieved Sonic full � � Australian Pathology performing strongly Australian Pathology performing strongly � � Northern hemisphere entities tracking well Northern hemisphere entities tracking well � � Result held back slightly by Imaging and NZ Pathology Result held back slightly by Imaging and NZ Pathology � � Sonic in advanced negotiations with several acquisition targets in in Sonic in advanced negotiations with several acquisition targets � � Europe and the USA Europe and the USA
2006 Financial Highlights 2006 Financial Highlights Growth Growth 2006 vs 2005 2006 vs 2005 Revenue 20% Revenue 20% EBITA 21% EBITA 21% NPAT NPAT 27% 27% Operating Cashflow 15% Operating Cashflow 15% EPS EPS 20% 20% Dividend (full- -year) year) 14% Dividend (full 14%
2006 Guidance Delivered 2006 Guidance Delivered Full Year 2006 Full Year 2006 Sonic Guidance Actuals Sonic Guidance Actuals $M $M $M $M Revenue 1,600 - - 1,670 1,670 1,656 1,656 Revenue 1,600 306 306 EBITA EBITA 300 - 300 - 320 320
Revenue 2006 Revenue 2006 2006 2006 2005 2005 Growth Growth ($M) ($M) (%) ($M) ($M) (%) Total Revenue Total Revenue 1,656 1,656 1,381 1,381 20% 20% CPL acquisition in October 2005 had positive impact on revenue growth CPL acquisition in October 2005 had positive impact on revenue g rowth � � Organic revenue growth (excluding CPL) ~7% Organic revenue growth (excluding CPL) ~7% � � Australian pathology revenue growth 8.6% Australian pathology revenue growth 8.6% � � Strong revenue growth Melbourne Pathology, Douglass Hanly Moir, Sullivan Nicolaides Strong revenue growth Melbourne Pathology, Douglass Hanly Moir, Sullivan Nicolaides � � Imaging (Australia and New Zealand) revenue growth 7.0% Imaging (Australia and New Zealand) revenue growth 7.0% � � Off- Off -shore laboratory revenue growth shore laboratory revenue growth � � TDL (UK) revenue growth over 10% TDL (UK) revenue growth over 10% � � New Zealand pathology reported lower growth rates New Zealand pathology reported lower growth rates � �
Annual Revenue Annual Revenue 2,000 1,800 1,600 1,400 $M 1,200 1,000 800 600 400 2001 2002 2003 2004 2005 2006 628 860 975 1,037 1,381 1,656 Revenue ($M)
Revenue Growth 2007 Revenue Growth 2007 Revenue growth will be enhanced by Revenue growth will be enhanced by � � Full year of CPL (acquisition in October 2005) Full year of CPL (acquisition in October 2005) � � Possible acquisitions in Europe and the USA though FY ‘07 Possible acquisitions in Europe and the USA though FY ‘07 � � Australian pathology and radiology Australian pathology and radiology � � Anticipated organic growth ~5% Anticipated organic growth ~5% � � New Zealand pathology New Zealand pathology � � Growth rates are low Growth rates are low � � Impact of potential loss of DML only from FY 2008 Impact of potential loss of DML only from FY 2008 � � Sonic labs in UK, Germany, USA Sonic labs in UK, Germany, USA � � Anticipated organic growth ~5% Anticipated organic growth ~5% � � IPN (Independent Practitioner Network) IPN (Independent Practitioner Network) � � Anticipated strong growth in FY 2007 Anticipated strong growth in FY 2007 � �
Earnings Growth Earnings Growth Movement Movement FY 2006 FY 2005 FY 2006 FY 2005 % % EBITA ($M) EBITA ($M) 306.0 306.0 253.0 253.0 21% 21% NPAT ($M) NPAT ($M) 172.0 135.4 27% 172.0 135.4 27% EPS (cents) EPS (cents) 58.6 48.9 20% 58.6 48.9 20% Cash Generation ($M) Cash Generation ($M) 247.2 247.2 214.1 214.1 15% 15% NOTE: All comparatives have been adjusted to NOTE: All comparatives have been adjusted to conform with AIFRS, as required conform with AIFRS, as required
Earnings per Share Earnings per Share 60.0 50.0 40.0 Cents 30.0 per share 20.0 10.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 8.0 9.5 11.8 16.7 21.7 27.5 33.3 37.8 43.4 48.9 58.6 Core EPS (cents)
EPS Growth EPS Growth 50% 42% 40% 30% 30% 27% 24% 21% 21% 20% 19% 20% 15% 14% 14% 10% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Earnings Margins Earnings Margins FY 2006 FY 2005 FY 2006 FY 2005 EBITA Margin 18.5% 18.3% EBITA Margin 18.5% 18.3% Australian pathology EBITA margin growth of 60 basis points Australian pathology EBITA margin growth of 60 basis points � � Global pathology EBITA margin growth, excluding CPL, of Global pathology EBITA margin growth, excluding CPL, of � � 50 basis points 50 basis points Adverse impacts on Sonic margins in ’06 year Adverse impacts on Sonic margins in ’06 year � � Radiology margins impacted by wage pressures Radiology margins impacted by wage pressures � � New Zealand pathology margins impacted by low revenue growth New Zealand pathology margins impacted by low revenue growth � � Lower margin acquisitions – Lower margin acquisitions – IPN, CPL IPN, CPL � �
2007 Guidance 2007 Guidance Revenue growth Revenue growth � � Organic growth ~5% Organic growth ~5% � � Revenue growth including CPL ~9% Revenue growth including CPL ~9% � � Earnings growth Earnings growth � � Earnings per share growth ~10% Earnings per share growth ~10% � � Guidance excludes new acquisitions and possible DML outcomes Guidance excludes new acquisitions and possible DML outcomes
Final Dividend Final Dividend Change Change 2006 2005 2006 2005 Interim Dividend $0.15 $0.13 15% Interim Dividend $0.15 $0.13 15% Final Dividend $0.26 $0.23 13% Final Dividend $0.26 $0.23 13% Full Year Dividend Full Year Dividend $0.41 $0.41 $0.36 $0.36 14% 14% Dividend fully franked at 30% Dividend fully franked at 30% � � Record Date 5 September 2006 Record Date 5 September 2006 � � Payment Date 19 September 2006 Payment Date 19 September 2006 � � Dividend Reinvestment Plan remains suspended Dividend Reinvestment Plan remains suspended � �
Australian Pathology Australian Pathology Revenue growth of Australian pathology division strong Revenue growth of Australian pathology division strong � � Market share gains in NSW and Victoria Market share gains in NSW and Victoria � � Outperformance by large Australian labs Outperformance by large Australian labs � � Sonic Australian pathology delivers margin expansion of 60 basis points Sonic Australian pathology delivers margin expansion of 60 basis points � � Information sharing and synergy capture Information sharing and synergy capture � � Strong pathologist and management team, committed to success Strong pathologist and management team, committed to success � �
New Sonic “Superlab” New Sonic “Superlab” Sydney, Australia Sydney, Australia Building works well underway and ahead of schedule Building works well underway and ahead of schedule � � Project tracking to budget Project tracking to budget � � Completion in second half of calendar 2007 Completion in second half of calendar 2007 � � 17,000 square metres of lab and office space 17,000 square metres of lab and office space � � State- -of of- -the the- -art design and workflows art design and workflows State � � Designed for high volume and high efficiency Designed for high volume and high efficiency � � Will enable growth and further centralisation of testing Will enable growth and further centralisation of testing � �
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