Oktober 14 2013 Agenda 2012/13 in brief Disclaimer - - PowerPoint PPT Presentation

Welcome to Ambu’s 2013 Investor Briefing

Oktober 14 2013

• 2012/13 in brief
• GPS finish
• Climbing New Heights
• Look at key growth drivers
• A US perspective
• Q&A

Agenda

2

Disclaimer Forward-looking statements, especially such relating to future sales and operating profit, are subject to risks and

• uncertainties. Various factors, many of which are outside

Ambu’s control, may cause the actual development of the company to differ materially from the expectations contained in this presentation. Factors that might affect such expectations include, among others, changes in healthcare, in the world economy and in exchange rates.

Q4 Highlights

• Best quarter ever and a strong finish of the year
• 42% revenue increase; 8% organic growth
• Momentum regained in the US with an organic

growth rate of 9%

• Economies of scale from King Systems

acquisition starts to materialize

• 31% increase of EBIT to DKK 59m before

special items

• Net working capital reduced to 27% of 12

months revenue and approaching long term targets

3

Revenue

Q4 11/12 Q4 12/13 Q2 12/13

EBITDA b.s.i.

Q4 11/12 Q4 12/13 Q2 12/13

DKK 81m DKK 401m

Cost ratio (%)

Q4 11/12 Q4 12/13 Q2 12/13

33.7%

2012/13 in brief

4

• Acquisition of King Systems
• US main market – revenues doubled
• Strong anaesthesia product offering completed
• Foundation for cross selling opportunities
• Organizational efficiencies and scale effects
• Launches in visualisation market
• aScope 3 in Europe & US FDA clearance
• King Vision single-use blade
• One-stop shopping in PMD
• Full electrode portfolio
• Optimized production in UK

Growth rates above market in all in all business areas

9% 13% 66%

Growth rates

Anaesthasia PMD Emergency Care

47% 42% 11%

FY revenue split

5

Anaesthesia

• 5% organic growth
• Growth regained after integration
• Largest-ever contract with HPG

Patient Monitoring & Diagnostics

• 6% organic growth
• Effect from full electrode portfolio
• Double-digit growth in Neurology

Emergency Care

• 9% organic growth driven by

neck collars and manikins

Organic growth rates stated in local currency

Strong growth in all markets

16% 13% 69%

Growth rates

USA Europe Rest of World

42% 48% 10%

Revenue split

6

USA

• 3% organic growth
• Integration of King Systems
• Dedicated sales forces

Europe

• 8% organic growth
• Ambu winning market shares
• Challenging markets

Rest of World

• 11% organic growth
• Sales efforts paying off in Asia
• Foothold in South America

Organic growth rates stated in local currency

Strong focus on integration in 2013

Financials and full-year outlook

Strong revenue growth from acquisitions

8

Financial results

9

King Systems contribution

242m

(7.5 mth.)

DKKm

2011/12 2012/13 Revenue 1,045 1,383 Gross profit 570 679 Gross Margin (%) 54.5 49.1 Capacity costs (416) (518) EBIT before special items 151 161 EBIT-margin before special items (%) 14.4 11.6 Special items (6) (61) Financials, net (1) (30) Net result 110 48

Rate of costs

37.5%

(vs. 40.1%) Dividend

1.25

(31% of net result)

DKKm

2011/12 2012/13 Cash flow from operations 158 122 Cash flow from investments (47) (54) Free cash flow before acquisition 111 68 Cash flow from acquisitions (31) (704)

Free cash flow Before special items

114m

Strong balance sheet

10

• Improved working capital ratio
• Solid financing at attractive interest rates

and listing of corporate bonds before year- end

• Sufficient un-used credit facilities to cover

current plans

DKKm

2011/12 2012/13 Total assets 949 1,891 Working capital 354 417 Net Interest Bearing Debt (NIBD) 57 721 Gearing (NIBD/EBITDA b.s.i.) 0.3 3.1 Equity ratio (%) 70,1 35,3

20 25 30 35 40 08/09 09/10 10/11 11/12 12/13

Working capital ratio

(%, 12 mth. annualised revenue)

71 7 697

Debt structure

(DKKm)

Short-term bank debt Long-term bank debt Corporate bonds

Full-year 2013/14 outlook

11

Guidance Assumptions Revenue ~DKK1.6bn

• Continue to gain market shares
• Cross sale effecta
• Cross sales King Systems-Ambu products
• Launching new higher-margin products

Organic growth

~5-7%

• Ambu will continue to outgrow markets

EBIT-margin

~12-14%

• Global efficiencies
• Price pressure
• DKK 40m synergies from King Systems

FCF before acquisitions, milestone payments etc.

DKK 100-120m

• Strong focus on managing working capital

Gearing (NIBD/EBITDA)

~2.5

• Continued reduction of working capital and

improved EBITDA

DKK 40m of synergies will be delivered

• Synergies from manufacturing
• Introduction of higher margin business
• Lower rate of costs due to scale effects

New strategy launched

13

GP GPS Fou

• ur

r Strategy rategy

We come out of the GPS Four journey as a transformed & stronger company

Year 1 Building a platform Cost optimisation Focus on growth The Destination Year 2 Year 3 Year 4

• Launching GPS Four
• Establishing STs
• Establishing global

R&D

• Expanding factory in

Xiamen

• Launching aScope
• Moving DK

production to Penang

• Updating the Ambu

brand

• HQ in one location
• Starting Five Star

Leadership

• Establishing product

lifecycle system

• Agile
• Acquiring

Unomedical’s electrode business

• Establishing

European distribution centre

• Implementing HR

management system

• SuccessFactors
• Movex US and EMEA
• Reaching 1 billion

turnover

• Acquiring King

Systems

• Re-branding

cardiology

• Getting NICE

recommendation

• Reaching share price

above 200

• Concluding GPS

Four

GPS Four achievements

Global and world class manu- facturing

Sales presence in Australia, Brazil, China, India and Malaysia

Ended legal strife with LMA Strong and focused sales force

Business IT backbone

Growth- driving products

From small cap to mid cap share

Global R&D

From analogue to digital

GPS

Global

• From local to global manufacturing, R&D, IT, RA and sales

GPS

Positioning

• From niche position to dominant player
• From follower to first-mover
• From internal focus to customer focus

GPS

Systems

• From few and isolated systems to many global systems
• From investments to daily use
• From product sales to solution selling

Ambu – a transformed company

Sales in million DKK EBIT EBIT% Cash flow 76m DKK 161m DKK 12.5% 11,6% (Ambu well above 16%) 58m DKK 114m DKK

877m DKK 1,383 m DKK

2009 2013

Solid shareholder creation

From 112 to 255 in GPS Four

Acquisitions fit and make us stronger

Strong growth platforms

Anaesthesia PMD

Circuits Bite blocks Visualisation Resuscitators Regional Anesthesia Face & laryngeal masks

A truly global company

Global manufacturing, logistics, IT and R&D

Cost ratio down from 40% to 37,5% Unique market position

Sales in EMEA, USA and Asia increased

20%,300% and 100% respectively Profitable growth

DKK 1.4bn revenue

15% EBIT in “old” Ambu ahead of time Real innovation

15% of revenue from new products

(should have been 30%) A great place to work

An attractive place to work; focus on

performance and fun; 1000 new colleagues A better home

Three acquisitions in 4 years

  

÷

 

GPS Four successfully completed

Price pressure; competition in mature markets Complex customer structure Focus on hospital standards and workflows Increased focus

• n costs and

benefits Shift to lower- priced products

Market challenges going forward

Ambu needs to pay even more attention to important macro trends

Shift in buying power

And we are on the big players’ radar

Ambu must learn to act under the rules of a big player

• Shorter window of opportunity

– quicker responses

• Sharper communication

against our value claims can be expected

• More visibility

– What we say and do as individuals can have major impact on Ambu

That is why we must reiterate

• ur customer approach

Relationship Enhanced

• ffering

Best in class service

Train ourselves to become a valuable solutions partner Present solutions with clinical and health economical benefits Provide excellent service and customer care

The new strategy Our targets and how we will reach them

Beyond 2 billion

• Go beyond the 2 billion DKK mark
• Grow EBIT to 22% and EBITDA to 28%
• Double market cap to 5 billion DKK

Climbing to revenues of DKK 2bn

Expand visualisation platform with new products

1

Optimise ‘Ambu Classic’ offering and improve cross-selling

2

New channels & market segments

3

Drive Anaesthesia penetration with combined offering

4

Partnering to adjacent businesses

5

Commercial innovation

Improving profitabillilty

Innovation for premium price products Pricing

• ptimisation

Synergy effects and economies

• f scale

Operational

• ptimisation:

Lowest costs in industry

From 11.6% to 17-18% EBIT margins within 4 years;

How we will conquer the peaks

Our priorities

• Dominant player in

anaesthesia and PMD

• Fulfil economics of scale
• Commercialisation of

innovation and high ROI

• Strong global organisation with

highly motivated people

How we will conquer the peaks

Our recipe

• The most focused sales

teams in our two key segments

• Full control of the value chain

from R&D, to Operations and Sales

• Lowest production costs in

industry

How we will conquer the peaks

Our investments

• Sales that can drive significant profitable

growth

• Platforms or products that will make us no. 1,

2 or 3

• Manufacturing that will reduce costs
• Systems that make us more profitable &

customer oriented

• Companies that support our strategic
• bjectives
• People that strengthen our business

Leading the way in Visualisation

Ambu markets a complementary range of single-use visualisation scopes to assist clinicians in successful and cost effective airway management procedures.

Growth in single-use visualisation devices is fuelled by 3 key challenges in hospitals

1: Cook T et al., NAP4 - 4th National Audit Project of The Royal College of Anaesthetists and The Difficult Airway Society, Major complications of airway management in the United Kingdom, Report and findings, March 2011 2: Culver DA et al. Am J Respir Crit Care Med 2003, 167:1050-1056

• Significant investments associated with reusable scopes limit

availability.

• Immediate access to a fiberscope for airway inspection or for difficult

airway management is a recurrent problem.

• Probability of failed intubation given unexpected difficult airway if no

scope available is 16.6%.¹

Product availability

• Clinical evidence shows that routine cleaning and sterilisation do not

effectively remove biofilm from endoscope channels.²

• Multi resistant bacteria have become a general problem in hospitals

worldwide.

Cross contamination & Multi resistant bacteria

• Worldwide HTA organizations evaluate medical devices for evidence
• f safety, efficacy and cost effectiveness.
• New technology has to prove cost-efficiency before being taken into

consideration for adoption.

Cost effectiveness

Product availability and training enhances patient safety

• Insufficient availability of equipment for

management of the difficult airway and the proper training in the use of this equipment were considered among major contributing factors to poor patient outcomes.¹

• More than 70 out of 200 recommendations

in the NAP 4 report highlighted the need for availability of airway equipment.¹

• 13% of airway deaths were associated with

difficult tracheal intubation.¹

Comments

Availability of the aScope in situations where reusable FOB are not available may lower the risk of these consequences

1: Cook T et al., NAP4 - 4th National Audit Project of The Royal College of Anaesthetists and The Difficult Airway Society, Major complications of airway management in the United Kingdom, Report and findings, March 2011

Reduced risk of cross contamination improves patient care

• More than 59 published articles reporting

almost 1000 patients cross-contaminated by reusable endoscopes.¹

• At least 3 deaths are documented directly

related to Bronchoscopy-Related Cross- Contamination.

• Decontamination of reusable bronchoscopes

is laborious, time-consuming and requires meticulous attention to detail.

• Increased attention is being paid to the risks in

patient safety and costs associated with healthcare-associated infections.

• HAI prevalence is highest in patients admitted

to the ICU.²

Comments

With single use bronchoscopes there is no risk of Cross-Contamination

HAI – Healthcare associated infections 1: Culver DA et al. Am J Respir Crit Care Med 2003, 167:1050-1056 2: PPS of HAI and antimicrobial use in European acute care hospital 2011-12

Comments

• The market for fibre- and video-optic

endoscopy has been continuously increasing within the last years.

• Compared to previous aScope versions,

aScope 3 addresses new clinical procedures as Thoracic Anaesthesia and Bronchoscopy with high additional potential.

• Main market players for reusable scopes

are Olympus, Karl Storz and Pentax.

aScope 3 targets a business potential of almost 3m procedures annually

Cost focus enables more patient care per dollar spent

• The National Institute for Health and Care

Excellence (NICE), the independent HTA in UK, evaluates the medical, economic and ethical issues related to the use of a technology.

• NICE provides guidelines to help NHS

adopting medical technology based on clinical efficacy and cost impact.

• aScope is the first airway management

device which has been officially recommended by NICE.

• The potential cost savings from using

aScope comes from avoiding the cost of consequences of a delayed/failed intubation.

• In NICE’s opinion “aScope is about spending

to save”.

Comments

“aScope’s immediate availability may present clinical and economic values for the NHS”.

Video laryngoscopy market is expected to continue growing significantly

• Video laryngoscopes has created a lot of

attention in recent years in the anesthesia community as a valuable tool in managing the airway, especially in difficult airway cases

• This has resulted in a wider adoption of

video laryngoscopes and also increased

• usage. In the US as many as 19% of all

intubations are today done with video assistance in some facilities

• The market size is closely liked to the

number of VL intubations and the cost- per-intubation

• Given the continued conversion the

market for VL will be growing to anywhere between 150 – 300 million USD towards 2020.

*potential market value if conversion from DL to VL continues, market value calculation is an average cost-per-use x # VL intubations

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 2015 2016 2017 2018 2019

VL share of ETT placements

DL VL

Comments

Product platforms are highly competitive, presenting significant growth potential

• Fast and simple setup in critical

situations

• Light weight and self-contained

Portable

• Low initial investment and

running costs

• Single-use blades allow

economical use

Affordable

• Robust, full-colour, non-glare

display

• Quality design

Durable

• Instant availability
• Ready to use

Accessible

• No risk of cross-contamination

Sterile

• Portable & fast set-up time
• Short learning curve
• Elimination of cleaning & repair

Easy

We are mountaineers

Ambu a US perspective

Steven Block Vice President Sales USA

Agenda

• US Sales Organization
• Integration status
• Competitive landscape
• Key initiatives and focus

The Merger with King Systems allowed for a stronger and more focused sales organization Ambu USA Anesthesia PMD

• 43 Outside AMs
• 6 RSD
• 4 Clinical sales

specialists

• 3 GPO/IDN RVPs
• Direct sales model
• 6 RSM
• Distributor sales

model

• 1 inside sales

manager

• 16 inside sales

representatives

• Telesales model

Hospitals and ASCs Pre-hospital Emergency services Dr’s Offices and hospitals

EMS 70% 10% 20%

• 3 focused sales organizations
• Anesthesia sales force has reduced territories which increase customer face time

Integration of King Systems sales organization is proceeding as planned

Sales force and back office functions integrated. New management team in place. Key focus on systems integration. Implemented new sales organization and structure Created GPO/IDN team to improve access to GPO contracts and to strengthen relationships to major strategic accounts

1 2 3 4 5

New sales and marketing management team in place Investment in new training organization and process to strengthen clinical knowledge New 4 year strategy in place

Ambu US is now a leading Anesthesia and Airway Management company

Ambu value proposition

• The most dedicated

anesthesia company with a dedicated direct anesthesia sales force

• The broadest range of

difficult airway management products

• A leader in visualization

products (aScope & King Vision platforms)

• Increased relevance to

customers and GPOs

• Brand synergies

A stronger product portfolio Access to a bigger market

EMS & PMD

Market Position KV in EMS

1

Cardiology EMS

1

Collars

1

Neuro- physiology

2

IOM

2

54

ANESTHESIA

Market Position Circuits

1

Face masks*

1

Laryngeal masks

2

Resus- citators

1

Disposable flexible intubation

1

Ambu US post merger have stronger market leader positions in Anesthesia and EMS

Platform/ Product Current Ambu Market share aScope3

<1%

King Vision

2%

Aura

12%

Pain pumps

<1%

We have the growth platforms to build market share in the coming 4 years Our new growth platforms represent a US market potential

• f more than

$700m

Company Competitive segments Recent Activity

Masks Laryngeal masks Circuits Resuscitators Pain pumps Launched Trulite Laryngoscope Acquired LMA, Ultimate Medical and Eon Surgical. Anesthesia circuits Masks Laryngeal masks Resuscitators Increase emerging market exposure and invest in new product development Anesthesia circuits Masks Resuscitators Acquired Omnimed and launched 21 new products. Resuscitators Carefusion completed acquisition of Angus Medical. Video laryngoscopes McGrath launches EMS version

Anesthesia competitors

XXXX

Key initiatives in Ambu US

Ambu US has a strong foundation for future growth

New 4 year strategy in

• place. Strategic focus

and clarity A more focused sales

• approach. Accelerate

new growth platforms Increased investment in training and sales

• specialists. Build brand

awareness Increased investment in GPO and IDN relationships New product launches in Anesthesia, EMS and PMD Investment in systems and sales tools

We know where we have to go and how to get there….

Great Products Great Service Improve training Improve & Invest in marketing

Strategic clarity

• High quality—zero defects
• Innovative—best in class
• Cost effective—best value
• Clinical support—help customers achieve
• ptimal value and efficacy
• Responsive customer service
• No backorders
• Sell value not price
• Become trusted clinical advisors
• Efficiently manage time and territory
• Increase investment
• Build brand awareness and identity
• Increase brand equity
• Maintain strategic

focus

• Align resources

accordingly

• Increase market

share in all focus categories

• Increase margin

structure

• Leverage

synergies

Q&A

60

READ MORE AT WWW.AMBU.COM For further information, please contact: CEO Lars Marcher, lm@ambu.com or +45 5136 2490 CFO Michael Højgaard, miho@ambu.com or +45 4030 4349

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