Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — Sigma Pharmaceuticals — FY2014 Earnings Presentation
28 slides from Sigma Healthcare's earnings presentation, Mar 27, 2014
Slide 1: Results Presentation for the Full Year ended 31 January 2014
For personal use only Sigma Pharmaceuticals Limited Results Presentation for the Full Year ended 31 January 2014 Mark Hooper – CEO & Managing Director Jeff Sells – Chief Financial Officer 27 March 2014 Australia’s Partner of Choice for Health, Beauty and Wellbeing
Slide 2: Important notice
Important notice For personal use only The material that follows is a presentation of general information about Sigma's activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. No representation or warranty is made as to its com
Slide 3: Today's presentation
Today’s presentation For personal use only Overview Mark Hooper Financial summary Jeff Sells Business update Mark Hooper 3
Slide 4: Overview
For personal use only Overview Mark Hooper Chief Executive Officer & Managing Director Sigma Pharmaceuticals Limited 4
Slide 5: Our 2013/14 results overview
Our 2013/14 results overview For personal use only Sales volume up 3.3% Revenue up 1.1% to $2.97bn Reported EBIT $70.3m ($23.1m pcp) Underlying EBIT $71.2m ($71.1m pcp) Reported NPAT $53.5m ($18.7m pcp) Underlying NPAT down 2.2% to $51.1m Professional Services boards in all Amcal and Guardian stores
Slide 6: Sigma acquires CHS
Sigma acquires CHS For personal use only • Sigma has agreed to purchase CHS for $24.5 million with potential for a further earn-out payment in June 2015 • CHS is earnings accretive from year 1 • Current annual sales revenue of over $200 million • Provides Sigma with an opportunity to diversify its s
Slide 7: Financial summary
For personal use only Financial summary Jeff Sells Chief Financial Officer Sigma Pharmaceuticals Limited 7
Slide 8: Full year 2014 income statement
Full year 2014 income statement For personal use only • Sales revenue up by 1.1%, despite PBS price disclosure reform (volume grew by 3.3%) Revenue • Like for like growth would have been 4.1% % Change $m FY 2014 FY 2013 Variance Sales revenue 2,973.5 2,942.4 31.1 1.1% • Gross margin up to 7.3% fro
Slide 9: Reconciliation from Reported to Underlying Earnings
Reconciliation from Reported to Underlying Earnings For personal use only $m FY2014 FY2013 EBIT as per Financials 70.3 23.1 Add back: Net litigation settlement expense 3.7 48.0 Add back: Acquisition expenses 0.7 - Add back: Harrisons provision for doubtful debts 7.4 - Less: Profit on sale of Clayton
Slide 10: Operating costs – Warehouse & Delivery efficiency gains
Operating costs – Warehouse & Delivery efficiency gains For personal use only • Flat expense at $102.3 million compared to $101.9 million in the prior year ˗ volumes compared to the prior year grew by 3.3% ˗ wage increases from EBA negotiations and utility prices fully absorbed ˗ productivity gains
Slide 11: Operating costs – re-investment to grow income
Operating costs – re-investment to grow income For personal use only Sales & Marketing • Cost increases relate to additional resources added to Category Management offset in income, Multi Channel, Private Label product development and launches • Increased capability in these areas added to Merchandi
Slide 12: Record cash collection
Record cash collection For personal use only As at As at As at As at Working Capital $m 31 Jan 31 Jan 31 Jan 31 Jan 2011 2012 2013 2014 Trade Receivables 641 593 557 522 Inventories 225 214 255 222 Trade Creditors -251 -312 -376 -327 Total Working Capital 615 495 436 417 Days Sales Outstanding 75 76
Slide 13: Underlying ROIC now approaching 15%
Underlying ROIC now approaching 15% For personal use only $'000 Record ROIC and Working Capital Improvement 650,000 15% 600,000 13% 550,000 11% 500,000 9% 450,000 7% 400,000 5% Total working capital ROIC Notes re ROIC calculation: 1 January 2011 EBIT is calculated on an underlying basis for the cont
Slide 14: Capital management update
Capital management update For personal use only • Final 2.0 cents per share fully franked (pcp 2.0 cents) • Total fully franked dividends in last three years – 28 cents Dividends • Franking credit balance exhausted for remainder of 2014 • Interim franked dividend therefore unlikely in second half •
Slide 15: Business update
For personal use only Business update Mark Hooper Chief Executive Officer & Managing Director Sigma Pharmaceuticals Limited 15
Slide 16: The pharmacy industry landscape
The pharmacy industry landscape For personal use only PBS under pressure from Government Decrease in Decrease in reform generics discounts wholesaler discounts DRIVES THE NEED FOR CHANGES IN Competitive Competition from General retail THE PHARMACY supermarkets market place and online trading environ
Slide 17: Consistent themes are emerging
Consistent themes are emerging For personal use only “The generics windfall profit window is closing, and relying on generics as a single profit maintenance strategy will not be sustainable. Pharmacies need to invest and restructure, moving away from transacting and reacting to a ‘customer-centric m
Slide 18: Making Sigma a "partner of choice"
Making Sigma a “partner of choice” For personal use only Implemented improved Operational Capabilities • Retail offer, supply chain and service delivery Launched structured Professional Services program Extended Private and Exclusive Label product range Multi Channel launched 18
Slide 19: Sigma launches Professional Services platform
Sigma launches Professional Services platform For personal use only • Sigma is taking a leadership position in a “structured Professional Services” program • We see pharmacy as the “Third Pillar of Primary Healthcare” • Professional Services is a key enabler in changing the pharmacy model • Builds a
Slide 20: Sigma Professional Services
Sigma Professional Services For personal use only Vision Accessible healthcare for all Australians Objective To be the leading provider of pharmacy-led healthcare solutions for all Australians through the largest pharmacy-led network Rationale Sigma will differentiate its brands - Amcal and Guardian
Slide 21: Private and Exclusive Label product range
Private and Exclusive Label product range For personal use only Providing a point of differentiation with products exclusive to Amcal and Guardian Launched 100 Private Label and Exclusive brands to Amcal and Guardian in the last 12 months; 200 in the pipeline Global sourcing agreements established 2
Slide 22: Industry leading Multi Channel offer
Industry leading Multi Channel offer For personal use only • Launched July 2013 New Amcal • Pharmacy membership growing & Guardian • Early signs positive sites • Store specific web and Facebook pages for every pharmacy Still to come • Order scripts online – second • Centralised warehouse half 2014 •
Slide 23: Closing remarks
Closing remarks For personal use only • CHS acquisition ˗ improves market share ˗ earnings accretive from year 1 • Sigma revenue growth ˗ to continue above market ˗ PBS growth expected to be flat to slightly negative • Delivering benefits from ˗ investment in operational capability ˗ structured Prof
Slide 24: Questions?
For personal use only Questions? 24
Slide 25: Appendices
For personal use only Appendices 25
Slide 26: Non IFRS measures
Appendix 1 Non IFRS measures For personal use only • ASIC Regulatory Guide 230 Disclosing non-IFRS information In December 2011, ASIC issued Regulatory Guide 230. To comply with this Guide, Sigma Pharmaceuticals Limited is required to make a clear statement about the non-IFRS information included in
Slide 27: ROIC performance
Appendix 2 ROIC performance For personal use only As at As at As at As at $m 31 Jan 2011 31 Jan 2012 31 Jan 2013 31 Jan 2014 Net assets 832.9 682.5 610.8 578.8 Less: Cash and cash equivalents (556.9) (148.6) (112.7) (67.5) Add: Interest bearing liabilities1 354.8 35.0 30.0 - Capital employed 630.8 5
Slide 28: For personal use only
For personal use only