Annual Report 2019 Care by design - Fisher & Paykel Healthcare

Annual Report 2019 | Care by design

1969

A world of care

Our first humidifier began with three people, in one city and a can-do prototype made from a humble fruit preserving jar. In the 50 years since, we've transformed from across town to across continents. Our work is all about talented people working together to solve problems so that millions of patients can have healthier, more restful, productive lives. 50 years of care today, many more from tomorrow.

2019

care

collaboration

BEYOND can-do

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We know that when great people come together with a can-do attitude and an utmost sense of care, lives are changed.

Annual Report 2019

Fisher & Paykel Healthcare Corporation Limited

Annual Report 2019 3

Helping approximately 14 million patients in more than 120 countries, our world of care continues to expand, grow and develop.

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Contents

OVERVIEW OF OUR BUSINESS DETERMINING OUR MATERIAL MATTERS FINANCIAL AND BUSINESS HIGHLIGHTS CHAIRMAN'S REPORT CEO'S REPORT HOSPITAL / HOMECARE OVERVIEW OUR STRATEGIES ? GLOBAL REACH ? CHANGING CLINICAL PRACTICE ? BETTER PRODUCTS ? SUSTAINABLE, PROFITABLE GROWTH OUR BOARD OUR EXECUTIVE MANAGEMENT TEAM FINANCIAL COMMENTARY FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS AUDITOR'S REPORT SOCIAL RESPONSIBILITY & GOVERNANCE FIVE YEAR SUMMARY GLOSSARY GRI CONTENT INDEX DIRECTORY

This report covers the financial year ended 31 March 2019 and is dated 27 May 2019. The report has been approved by the Board and is signed on behalf of Fisher & Paykel Healthcare Corporation Limited by Tony Carter, Chairman and Lewis Gradon, Managing Director and Chief Executive Officer.

5 10 12 14 16 20 22 22 24 26 28 30 32 35 39 43 67 70 99 102 103 105

TONY CARTER, CHAIRMAN

LEWIS GRADON, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Constant currency information contained within this report is non-conforming financial information, as defined by the NZ Financial Markets Authority (FMA) and has been provided to assist users of financial information to better understand and assess the company's financial performance without the impacts of spot financial currency fluctuations and hedging results, and has been prepared on a consistent basis each financial year. A reconciliation between reported results and constant currency results is available on page 36 of this report. The company's constant currency income statement framework can be found on our website at is.

Annual Report 2019

About this report

Welcome to Fisher & Paykel Healthcare's 2019 Annual Report ? A World of Care.

We are privileged to be in an industry where the work we do has a direct impact on improving people's lives, right around the world. Last year, we estimate that our products were used in the treatment of approximately 14 million patients.

Our report this year underlines our primary focus on producing innovative healthcare devices that improve the health and quality of life for people all over the world, something that we have been doing for the last 50 years. We also recognise the importance of sustainable, profitable growth which will enable us to continue to deliver new innovations and improved patient outcomes for many years into the future.

Fisher & Paykel Healthcare see corporate social responsibility and sustainability as inextricably linked to the way we do business. We know that strong financial performance cannot be achieved without looking after our people, suppliers and customers. And being financially successful means we can continue to be a major contributor to medical care, to our communities and economies through areas such as tax and employment, and to return a portion of profits to our shareholders as dividends. Our awareness of the reciprocal nature of this is what we believe positions our company for long-term, sustainable and profitable growth.

This report is designed to meet the evolving needs and requirements of a wide range of stakeholders. In previous years we have prepared separate reports, including a separate Corporate Governance Statement, detailing our governance, sustainability and social responsibility practices. This year we have incorporated all of these topics within this one report. As with all areas of our business, we are constantly looking for continuous improvement opportunities and would welcome feedback on this report. Please address any questions, comments or suggestions to investor@fphcare.co.nz.

Digital versions of this report, and of our previous annual, interim and sustainability reports, are available at investor-reports.

Fisher & Paykel Healthcare Corporation Limited

OUR BUSINESS AT A GLANCE

Fisher & Paykel Healthcare is a leading designer, manufacturer and marketer of products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea.

Our medical devices and technologies are designed to help patients get better faster. We help patients transition to less acute care settings, help them recover more quickly and provide solutions that can assist them to avoid more acute conditions. We also provide the ability for many patients to be treated in the home rather than the hospital.

Product innovation is essential to our success. Since 1969, when our first prototype respiratory humidifier was developed, we have focused on continuous development and innovation. Our aim is to lead the way in the development of medical devices and technologies, and our products are considered leaders in their respective fields.

We are driven by our purpose of improving care and outcomes through inspired and world leading healthcare solutions. Assisting clinicians around the world to deliver the best possible patient care through continuous product improvement, pioneering new therapies and changing clinical practice is key to our success.

Annual Report 2019 5

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HOW OUR BUSINESS WORKS

RESEARCH & DEVELOPMENT Our R&D is based in New Zealand. The team spends many hours in hospitals, and with patients and clinicians, in order to develop better technology that enhances patient care. We typically invest around 9?10% of our revenue in R&D annually.

PATIENTS Each year millions of patients are treated with our products in over 120 countries. Seeking to understand our patients' needs is what drives our R&D programme.

CUSTOMERS We work with thousands of healthcare professionals, including doctors, clinicians and nurses, giving them the products and tools to deliver the best possible care. Our largest markets (in order of size) are North America, Europe, and Asia Pacific.

The needs of our customers and their patients drive

everything we do. We call this Care by Design.

Annual Report 2019

THERAPIES 60% of our operating revenue is from products and systems used in hospitals in invasive ventilation, non-invasive ventilation, nasal high flow therapy and surgery. The remainder is from products used in home environments to treat patients suffering from obstructive sleep apnea and those in need of respiratory support.

MANUFACTURING We manufacture in NZ (approximately 66%) and Mexico (approximately 34%). The co-location of engineering, quality, manufacturing, marketing and clinical teams facilitates collaboration and an awareness of the medical device process from concept and design right through to how our products are used by patients.

SUPPLY CHAIN We have distribution centres located around the world and a network of distributors. We use air, sea, road and rail freight, with a focus on sustainable and cost effective methods of transportation. We source materials from all over the world and look for socially responsible partners to support our growth.

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