CSL Ltd. — Annual Report 2018

Aug 14, 2018

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CSL Limited

2018 Full Year Results 15 August 2018

CEO – Paul Perreault CFO – David Lamont

Legal Notice

Forward looking statements

The materials in this presentation speak only as of the date of these materials, and include forward looking statements about CSL Limited and its related bodies corporate (CSL) financial results and estimates, business prospects and products in research, all of which involve substantial risks and uncertainties, many of which are outside the control of, and are unknown to, CSL. You can identify these forward looking statements by the fact that they use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “may,” “assume,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Factors that could cause actual results to differ materially include: the success of research and development activities, decisions by regulatory authorities regarding approval of our products as well as their decisions regarding label claims; competitive developments affecting our products; the ability to successfully market new and existing products; difficulties or delays in manufacturing; trade buying patterns and fluctuations in interest and currency exchange rates; legislation or regulations that affect product production, distribution, pricing, reimbursement, access or tax; acquisitions and divestments; research collaborations; litigation or government investigations, and CSL’s ability to protect its patents and other intellectual property. The statements being made in this presentation do not constitute an offer to sell, or solicitation of an offer to buy, any securities of CSL.

No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including CSL). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statement will be achieved. Actual future events may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based.

Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, CSL disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in these materials shall under any circumstances create an implication that there has been no change in the affairs of CSL since the date of these materials.

Trademarks

Except where otherwise noted, brand names designated by a ™or ® throughout this presentation are trademarks either owned by and/or licensed to CSL or its affiliates.

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Delivering on Strategy

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Growth

• Ig sales +11%[1]

• IDELVION[®] exceeded forecast

• Specialty Products +24%[1]

• KCENTRA[®] & HAEGARDA[®]

• Exercised option to acquire 100% of Chinese fractionator

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Innovation

• PRIVIGEN[®] approved for CIDP in US

• HIZENTRA[®] approved for CIDP in US & EU

• Calimmune acquisition

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People & Culture

• Forbes Magazine Top 50 employer in the world

• Workforce +15%

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Seqirus

• Influenza vaccine sales +53%[1]

• Vitaeris collaboration

• CSL112 Phase 3

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Efficiency

• 27 new collection centres

• FLUCELVAX[®] quadrupled

• FLUAD[®] sales +142%[1]

• Major capital projects on track

1. Growth percentages shown at constant currency to remove the impact of exchange rate movements, facilitating comparability of operational performance. See end note for further detail.

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CSL Behring Sales FY18

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Growth
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Therapeutic Group

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Sales %
Therapy
$m Change [1]
Immunoglobulins 3,145 11%
Haemophilia 1,113 5%
Albumin 921 7%
Specialty 1,490 24%
Other 9
Total 6,678 11%
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Region

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18%
EM
9%
North
12%
America
12% Asia Pac 46%
17% US$6.7b
EU 28%
8%
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1. Growth percentages shown at constant currency to remove the impact of exchange rate movements, facilitating comparability of operational performance. See end note for further detail.

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Immunoglobulin Sales up 11%[1]

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• 13% growth[1]

• Launched CIDP US

• Increased diagnosis & awareness

• Primary Immune Deficiency

• Secondary Immune Deficiency

• Migrating CARIMUNE[®]

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• 12% growth[1]

• Most used SCIG

• ~60% new starts

• First & only SCIG in CIDP

• Launched US

• Launching EU

Growth

Ig volume by indication

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Other CIDP
SID PID
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1. Growth percentages shown at constant currency to remove the impact of exchange rate movements, facilitating comparability of operational performance. See end note for further detail.

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Haemophilia Sales up 5%[1]

Growth

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• Fast becoming standard of care

• Launched in 14 countries

• Market leader in a number of countries

• Accelerating adoption

• Competitive market

• Over 1,100 patients on product

• Market share ~40% average across key countries[2]

• Transition from HELIXATE[®] to AFSTYLA[®] delivering margin offset

1. Growth percentages shown at constant currency to remove the impact of exchange rate movements, facilitating comparability of operational performance. See end note for further detail 2.Average % share by brand as at Q1 2018 Germany, Italy, Japan, Switzerland, UK, USA (data on file)

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Albumin Sales up 7%[1]

China

• Sales up 11%[1]

• Continued expansion into Tier 2 & 3 cities

Europe

• Use of starches restricted

Growth

CHINA

• ~26,000 Hospitals:

• ~6,500 regularly purchasing CSL albumin

• ~450,000 pharmacies:

• ~2,500 regular CSL albumin sellers

- Intensive Care Unit opportunity

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1. Growth percentages shown at constant currency to remove the impact of exchange rate movements, facilitating comparability of operational performance. See end note for further detail

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Specialty Products Sales up 24%[1]

Growth

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Treated
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• Launched in 11 EU countries

• Global sales +9%[1]

• Self administration

• Most successful chronic drug launch in the US in past 5 years. ~50% US prophylactic market share

• Exceptional patient satisfaction

• Natural C1-INH protein

• 95% attack reduction

• US sales +22%[1]

• Rapid adoption in Japan

  • ~650 hospitals

  • Over 1,400 patients

  • ~1M patients on warfarin

• 99% reduction in rescue medication

1. Growth percentages shown at constant currency to remove the impact of exchange rate movements, facilitating comparability of operational performance. See end note for further detail.

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Efficiency

CSL PLASMA

• Total CSL collection centres 206

• 27 centres opened during FY18

• Unmatched in the industry

• 35% of total US centre openings in FY18

• New Donor Management System delivering faster donations

• Modest upward pressure on CPL

• US economic growth driving wage pressure

Efficiency

MANUFACTURING

• Group wide capital projects on track

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Innovation

TRANSPLANT

• Emerging franchise

• High unmet need

• Leverages existing products

• Vitaeris collaboration

140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

Innovation

No. of US Patients Undergoing Transplant Annually Compared With No. of Patients on the Waiting List

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2000 2015
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Source: Global Observatory on Donation and Transplantation (GODT).

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Innovation

CSL112

• Phase 3 study commenced:

• ~17,400 patients

• 40 countries

• First patient enrolled March 2018

• Futility #1, 1Q 2020

CSL730

• Fc Multimer:

• Provides improved target binding

• Phase 1 trial commenced

Innovation

GENE THERAPY

• Calimmune acquisition

• Proprietary stem cell gene therapy platform

• Differentiating technology:

• Cytegrity

• Select+

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Seqirus Revenue FY18

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Seqirus
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Category Region
$m
1,200 20%
+30% [1]
1,000 EM
6%
3PL Other
800
Fluad
78%
600 North
TIV 11% Asia Pac
US$1.1b America
(ADJ 3PL) 22% 61%
400 QIV
Pandemic
200
EU
11%
0
FY17 FY17a FY18
Switch to QIV & Fluad Pandemic earnings growth 6%
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Switch to QIV & Fluad

Pandemic earnings growth

1. Growth shown at constant currency to remove the impact of exchange rate movements, facilitating comparability of operational performance. See end note for further detail.

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Seqirus – Operational Highlights

Seqirus

FLUCELVAX[®]

• Innovative use of cell-derived starting viruses

• Production up four fold, with plans to further boost antigen capacity

• Real world data showing potential for better effectiveness than traditional options

• EU launch preparation for 2019/20 season

OTHER

• Continued shift in sales towards FLUAD[®] and QIV products

• Strong growth in pandemic stockpiling and reservation fees

• Approval of FLUAD[®] in the UK and Australia

• The only recommended vaccine for 65+ in the UK for 2018/19 season

• Liverpool formulation suite complete, fill & finish on track for 2020/21

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Financials David Lamont - CFO

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– Financial Highlights NPAT

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NPAT
$1,729m
FX $16m
NPAT
$1,713m
$1,337m @CC [1]
+28%
@CC¹
FY17 FY18
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1 Constant Currency (CC) removes the impact of exchange rate movements facilitating comparability of operational performance. See end note for further detail.

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– Financial Highlights Group

Full year ended Jun	FY17	FY18	FY18	Change
US$ Millions	Reported	Reported	at CC1	%
Total Revenue	6,947	7,915	7,717	11%1
EBIT	1,779	2,380	2,358	33%1
EBIT margin	25.6%	30.1%	30.6%
NPAT	1,337	1,729	1,713	28%1
Cashflow from Operations	1,247	1,902	-	53%
ROIC	24.5%	25.9%	-	-
EPS ($)	2.94	3.82	3.79	29%1
DPS ($)	1.36	1.72	-	26%

1 Constant Currency (CC) removes the impact of exchange rate movements facilitating comparability of operational performance. See end note for further detail.

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– Financial Highlights Segments

CSL BEHRING

SEQIRUS

US$ Millions	FY17 Reported	FY18 Reported	Change % at CC1
Sales	5,835	6,678	11%
Other Revenue	188	149	(21%)
Total Revenue	6,023	6,827	10%
EBIT	1,958	2,328	17%
EBIT margin	32.5%	34.1%

US$ Millions	FY17 Reported	FY18 Reported	Change % at CC1
Sales	781	910	15%
Other Revenue	143	178	22%
Total Revenue	924	1,088	16%
EBIT	(179)	52
EBIT margin	(19.4%)	4.8%

1 Constant Currency (CC) removes the impact of exchange rate movements facilitating comparability of operational performance. See end note for further detail.

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Margin Growth

TAILWINDS

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%
40
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EBITDA Margin

• rCOAGs sales growth

• Helixate supply conclusion

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35
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30
25
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Seqirus
formation
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• Specialty products growth

• IG mix shift

• Seqirus – transition to profitability

HEADWINDS

• Increase in plasma CPL

• US labour cost growth

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Investing for Growth

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$M Capital Expenditure
1,400
1,200
1,000
800
600
400
200
0
FY17 FY18 FY19 Est
Maintenance Growth
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DRIVERS

• New products

• Growth in existing products

• New facilities and modernization

• Expansion of FLUAD manufacturing

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Capital Allocation

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FY18
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R&D
Dividends
Share
M&A
buybacks
Growth
Capex
Maint
M&A Capex
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• Dividends +26%

• Residual share buyback program

• 2/3 capex growth related

• R&D expensed not capitalised

• 50% of R&D directed towards new product development

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Delivering Shareholder Returns

Net Profit After Tax / Earnings per Share

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$m $
2,000 4.00
1,800 3.80
1,600 3.60
1,400 3.40
1,200 3.20
1,000 3.00
800 2.80
600 2.60
400 2.40
200 2.20
0 2.00
2014 2015 2016 2017 2018
Net Profit After Tax (millions) – USD Earnings Per Share – USD
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Total Dividends per Share

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$
1.80
1.70
1.60
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
2014 2015 2016 2017 2018
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Outlook for FY19[1]

• Continued strong demand for plasma and recombinant products

• Margin growth from plasma product mix shift, specialty and recombinant products growth & conclusion of HELIXATE[®] supply

• CSL's collections growth expected to outpace the market but supply remains a limiting factor

• ~30 to 35 centre openings in FY19

• Modest increase in plasma costs anticipated

NPAT ~$1,880m to $1,950m[2]

up ~10 - 14% on FY18 underlying[3] NPAT

Revenue growth~9%[2]

• Seqirus tracking to plan

• Ongoing investment to support growth:

• Capital expenditure FY19 ~$1.2 - $1.3 billion

• 1 For forward looking statements, refer to Legal Notice on page 2

• 2 Constant Currency (CC) removes the impact of exchange rates movements to facilitate comparability

• 3 See end note for further detail

• R&D up ~$150 - $200 million to ~10% of revenue following commencement of CSL112 Phase 3

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Financial Appendix

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CSL Behring Revenue

Year ended June	Jun 2017	Jun 2018	Jun 2018	Change
US$ Millions			CC1	%1
Immunoglobulins	2,774	3,145	3,065	11%
Albumin	840	921	896	7%
Haemophilia
- Recombinants	461	533	514	12%
- Plasma	562	580	557	-1%
Specialty	1,174	1,490	1,454	24%
Other sales (mainly plasma)	24	9	8
Total Product Sales	5,835	6,678	6,494	11%
Other Income	5	24	23
Royalties & Licence Revenue	183	125	125
Total Revenue	6,023	6,827	6,642	10%

1 Constant Currency (CC) removes the impact of exchange rate movements to facilitate comparability. See end note for further detail.

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Seqirus Revenue

Year ended June	Jun 2017	Jun 2018	Jun 2018	Change
US$ Millions			CC1	%1
QIV	163	342	341	109%
TIV	218	195	189	-13%
Adjuvanted	57	140	138	142%
Other / In-licence	343	233	232	-32%
Total Product Sales	781	910	900	15%
Pandemic	94	118	114	21%
Royalties & Licence Revenue	20	20	18	-10%
Other Income	29	40	43
Total Revenue	924	1,088	1,075	16%

Influenza vaccines +53% [1]

1 Constant Currency (CC) removes the impact of exchange rate movements to facilitate comparability. See end note for further detail.

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Notes

(#) Constant currency removes the impact of exchange rate movements to facilitate comparability of operational performance for the Group. This is done in three parts: a) by converting the current year net profit of entities in the group that have reporting currencies other than US Dollars, at the rates that were applicable to the prior comparable period (translation currency effect); b) by restating material transactions booked by the group that are impacted by exchange rate movements at the rate that would have applied to the transaction if it had occurred in the prior comparable period (transaction currency effect); and c) by adjusting for current year foreign currency gains and losses. The sum of translation currency effect, transaction currency effect and foreign currency gains and losses is the amount by which reported net profit is adjusted to calculate the operational result.

Summary NPAT

Reported net profit after tax $1,728.9m Translation currency effect (a) $ (54.7m) Transaction currency effect (b) $ 53.1m Foreign Currency (gains) & losses (c) $ (14.4m) Constant currency net profit after tax * $1,712.9m

a) Translation Currency Effect $(54.7m)

Average Exchange rates used for calculation in major currencies (Twelve months to Jun 17/Jun 18) were as follows: USD/EUR (0.84/0.92); USD/CHF (0.97/0.99).

b) Transaction Currency Effect $53.1m

Transaction currency effect is calculated by reference to the applicable prior year exchange rates. The calculation takes into account the timing of sales both internally within the CSL Group (ie from a manufacturer to a distributor) and externally (ie to the final customer) and the relevant exchange rates applicable to each transaction.

c) Foreign Currency Gains ($14.4m)

Foreign currency gains recorded during the period.

Summary Sales

Reported sales $7,587.9m Currency effect $ (193.8m) Constant currency sales* $7,394.1m

FY18 Underlying Net Profit After Tax Reported net profit after tax $1,728.9m One-off favourable Cost of Goods sold item $ 32.0m FY18 Underlying Net Profit after Tax $1,696.9m

• Constant currency net profit after tax and constant currency sales have not been audited or reviewed in accordance with Australian Auditing Standards.

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26

CSL Limited

Contact:

Mark Dehring VP Investor Relations

 +61 3 9389 3407

 mark.dehring@csl.com.au

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