Table Of ContentWe exist to
improve the lives
of the people
we touch.
ConvaTec Group Plc
Annual Report and
Accounts 2016
ConvaTec Group Plc Annual Report and Accounts 2016
2016 highlights About us
ConvaTec is a global medical products and
technologies company focused on therapies
Financial highlights1 for the management of chronic conditions.
Revenue2 Our purpose
To improve the lives of the people we touch.
+4.0%
2016 $1,688m Our vision
To be recognised as the most respected and
2015 $1,650m successful MedTech company worldwide.
Adjusted EBIT2 Our mission
We drive for excellence in all we do – anticipating
+7.1% and addressing our customers’ needs with
advanced technologies and best-in-class
2016 $472m products and services.
2015 $437m
Adjusted EBIT margin
28.0% Overview
01 Our investment case
2015: 26.5% 02 Our values
Strategic report
Adjusted earnings per share 10 Chairman’s letter
12 Chief Executive Officer’s review
$0.13 14 Executive Committee
2015: $0.10 16 Our markets
20 Our business model
1. Certain financial measures in this Annual Report, 24 Our strategy
including adjusted results above, are not prepared in 26 Key performance indicators
accordance with IFRS. All adjusted measures are 28 Principal risks and uncertainties
reconciled to the most directly comparable measure 34 Operational review
2pr. eCpoanresdta in ta ecxccohrdaanngcee r watieth g IrFoRwSt ho nis p caaglceus l9at0e dto b 9y3 . 44 Corporate responsibility
applying the applicable prior period average 50 Chief Financial Officer’s review
exchange rates to the Group’s actual performance 52 Viability statement
in the respective period.
Governance
53 Chairman’s governance letter
54 Board of Directors
Operational highlights 56 Corporate governance report
60 Nomination Committee report
Strong franchise revenue 62 Corporate Responsibility Committee report
performance with financial results in 63 Audit and Risk Committee report
line with guidance. 66 Remuneration Committee report
83 Directors’ report
Significant margin development based 86 Directors’ responsibilities statement
on Margin Improvement Programme
execution ahead of plan. Financial review
87 Financial review
Continuing strong performance in
Advanced Wound Care (“AWC”) Financial statements
supported by our differentiated 96 Independent auditor’s report to the members of
AQUACEL® portfolio. ConvaTec Group Plc
102 Consolidated Statement of Profit or Loss
Ostomy Care showing consistent 103 Consolidated Statement of Comprehensive Loss
growth momentum following 104 Consolidated Statement of Financial Position
implementation of strategic actions. 105 Consolidated Statement of Changes in Equity
106 Consolidated Statement of Cash Flows
Successful execution of IPO and new 107 Notes to the Consolidated Financial Statements
debt refinancing at attractive terms. 143 Company Balance Sheet
144 Company Statement of Changes in Equity
145 Notes to the Company Financial Statements
Other information
150 Shareholder information
ConvaTec at a glance
Advanced Wound Ostomy
A global MedTech Care (“AWC”) Care
business, ConvaTec has
leading market positions in The Advanced Wound The Ostomy Care
Care franchise provides franchise provides
advanced wound care,
advanced wound devices, accessories
ostomy care, continence dressings and skin care and services for
products. These people with a stoma
& critical care and infusion
dressings and products (a surgically-created
devices. are used for the opening where bodily
management of acute waste is discharged),
and chronic wounds commonly resulting
resulting from ongoing from colorectal cancer,
conditions such as inflammatory bowel
diabetes, immobility and disease, bladder cancer,
venous disease, as well obesity and other
as acute conditions causes.
resulting from traumatic
injury, burns, invasive
surgery and other
causes.
Fundamental trends Key brands Key brands
driving growth – AQUACEL® – Esteem®
– Avelle™ – Esteem®+
Ageing population Increased life – DuoDERM® – Natura®
Between 2015 and expectancy – Sensi-Care® – Natura®+
2025, the number of Due to earlier detection – Aloe Vesta® – Stomahesive®
people in the world aged and more effective – Durahesive®
60 years or over is treatment, people with – InvisiClose®
projected to grow by the relevant indications
36%. By 2050, the global and chronic conditions
population of persons are, on average, living Key product Key product
over 60 is projected to longer.
more than double.
Increasing prevalence
of chronic conditions
Several chronic diseases
that can be related to
lifestyle, such as diabetes
and obesity, are on the
rise.
AQUACEL® Dressings The Natura® Accordion Flange
Our AQUACEL® family of The Natura® Accordion Flange
products includes AQUACEL® is designed to make ostomy
Ag+ Extra™ dressing and the pouch application much easier
AQUACEL® Foam range of and more comfortable while
dressings. delivering the clinically-proven
skin and leak protection of
ConvaTec Moldable
Technology™.
Front cover photo
Helen Bracey, Advocate Lead for our Ostomy UK and
Ireland business. Read more about Helen on page 39.
Where we operate
Continence & Critical Infusion
Care (“CCC”) Devices
Countries
The CCC franchise The Infusion Devices
provides products for franchise provides 100+
people with urinary disposable infusion
continence issues sets to manufacturers Manufacturing sites
related to spinal cord of insulin pumps for
injuries, multiple diabetes and similar
sclerosis, spina bifida pumps used in 9
and other causes. The continuous infusion
franchise also supplies treatments for other Employees
devices and products conditions such as
used in intensive care Parkinson’s disease.
units and hospital In addition, the
8,500+
settings. franchise supplies a
range of products to
hospitals and the home
healthcare sector.
Key brands Key brands Revenue
– GentleCath™ – inset®
– Flexi-Seal™ – comfort™
– UnoMeter™ – neria® $1,688.3m
2015: $1,650.4m
Key product Key product Group revenue Group revenue
by franchise $m by geography $m
1. 3. 1.
4.
3. 2.
2.
1. Advanced Wound Care 1. EMEA
$559.5m 33% $726.4m 43%
2. Ostomy Care 2. Americas
$512.1m 30% $829.4m 49%
GentleCath™ Intermittent comfort™ 3. Continence & Critical Care 3. APAC
Urinary Catheter The comfort™ infusion set is a $356.5m 21% $132.5m 8%
The GentleCath™ Intermittent flexible soft cannula infusion 4. Infusion Devices
Urinary Catheter is designed to set with a disconnect option, $260.2m 16%
make catheter insertion as insertion site window and
smooth and easy as possible discreet design for comfortable
for the user. wear.
Our investment case
– Leading market positions in large
and structurally growing markets
– D iversified chronic care business
with strong brands and
differentiated products
– I nnovative pipeline and proven
clinical performance
– Focused on efficiency, strong
cash generation and solid
financial performance
Annual Report and Accounts 2016 ConvaTec Group Plc 01
Overvie w – 01 tS rategic report – 10 Governance – � Financial revie w – � Financial statements – � Other inof rmation – 1�0
Our purpose,
values and
behaviours define
everything we do.
Together they
help us create
a stronger
business.
02 ConvaTec Group Plc Annual Report and Accounts 2016
Our values
Welcome to ConvaTec.
Our core purpose, to improve the lives
of the people we touch, is at the heart
of everything we do. We are committed
to helping people with chronic health
conditions lead the life they want and
achieving this in a way that benefits our
shareholders and our other stakeholders.
As we enter the next phase of our
development as a public company and
execute our strategy to deliver sustainable
performance and growth, our values-based
culture will help drive success.
We will continue to:
– p rioritise care for our customers,
anticipating and responding to their needs;
– d rive innovation and excellence to find
solutions that enable people with chronic
conditions to live the life they want; and
– e arn trust by delivering quality products
and services, executing on our plans and,
at all times, acting responsibly and with
integrity.
CPahuielf M Eoxeracuviteivce Officer
Annual Report and Accounts 2016 ConvaTec Group Plc 03
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Our values
Our values in action
Caring
for people
We are passionate about
improving people’s lives and
we put people at the centre
of everything we do.
Maximum Innovations
comfort for designed
customers for users.
and patients.
04 ConvaTec Group Plc Annual Report and Accounts 2016
Annual Report and Accounts 2016 ConvaTec Group Plc 05
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Our values
Our values in action
Driving
innovation and
excelence
We are dedicated to finding
innovative solutions that
anticipate and address our
customers’ needs and to
delivering best-in-class
execution.
06 ConvaTec Group Plc Annual Report and Accounts 2016
