Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — Sigma Pharmaceuticals — H1 2016 Earnings Presentation
25 slides from Sigma Healthcare's earnings presentation, Sep 10, 2015
Slide 1: Half Year Results to 31 July 2015
For personal use only Sigma Pharmaceuticals Limited Half Year Results to 31 July 2015
Slide 2: Important notice
Important notice For personal use only The material provided 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 complet
Slide 3: Overview
For personal use only Overview Mark Hooper, CEO and Managing Director
Slide 4: Sustaining the momentum
Sustaining the momentum For personal use only The implementation of our strategic plan continues to deliver consistent and 2.0 cents sustainable growth NPAT up per share 23.3% dividend EBIT up 23.5% Other Revenue up 56.6% Revenue up 11.5% EBIT and NPAT based on underlying results. Refer Half Year re
Slide 5: Consistently delivering on our promises
Consistently delivering on our promises For personal use only Promise Delivered Grow non PBS earnings • Non-PBS sales revenue now approx. 43% of total revenue (incl Private & Exclusive Label), up from 40% • Other revenue up 56.6% to $33m Invest for growth • CHS/DDS acquisitions performing ahead of e
Slide 6: Financial Performance
For personal use only Financial Performance Jeff Sells, CFO
Slide 7: Strong earnings performance
Strong earnings performance REPORTED UNDERLYING For personal use only $m 1H 2016 1H 2016 1H 2015 Variance % change Sales revenue 1,675.0 1,675.0 1,502.2 172.8 11.5% Gross Profit 124.5 124.5 111.0 13.5 12.2% Other revenue 33.2 33.2 21.2 12.0 56.6% Operating costs (112.8) (112.8) (95.1) 17.7 18.5%
Slide 8: One off CHS accounting adjustment
One off CHS accounting adjustment For personal use only • Initial cash consideration paid to vendors of $49.9m • Estimated contingent consideration booked in January 2015 of $37.4m Initial acquisition based on expected business results to 30 June 2015 (earn-out) Accounting • In the period to 31 July
Slide 9: Delivering more than boxes
Delivering more than boxes For personal use only Sales Revenue – Up 11.5% to $1.67 bn Gross Profit – Up 12.2% to $124.5m • Sigma sales growth 7.5% with volumes up 12.0% • Balance of sales growth from 6 months contribution of CHS • PBS reform had a negative impact on sales of around 4% • Private and
Slide 10: Maintaining cost effectiveness
Maintaining cost effectiveness For personal use only Warehouse and Delivery expenses – Up 12.2% to $59.5m • Full 6 months of CHS contributed one-third of cost increase • Sigma costs up 8.5% versus 12.0% increase in volumes • Business as usual cost inflation largely offset by 2% productivity improvem
Slide 11: Record ROIC of 15.2%
Record ROIC of 15.2% ROIC has more than doubled For personal use only $'000 July'11 July'12 July'13 July'14 Jul'15 since January 2011 Trade Receivable $580,902 $580,687 $549,418 $586,745 $622,596 Inventories $274,845 $224,081 $249,990 $283,751 $291,501 Sustainable level of working Trade Creditor
Slide 12: Continuing to reward shareholders
Continuing to reward shareholders For personal use only Share Buy-Back – close to 10% achieved • Buy-back continued during the half, with 12.5 million shares bought and cancelled at a cost of $9.9m • Since October 2012, 110.5 million shares bought back at an average price of $0.73 • Buy-back program
Slide 13: Funding outlook
Funding outlook For personal use only Capital Expenditure • FY16 capex expected to reach $10m including CHS Sydney distribution centre • FY17 capex expected to reach $40-$50m with commencement of Brisbane DC Tax • Tax payments have now returned to a normalised level • Prior large one off deductions
Slide 14: Operational Performance
For personal use only Operational Performance Mark Hooper, CEO and Managing Director
Slide 15: CHS/DDS – ahead of expectations
CHS/DDS – ahead of expectations Performing ahead of investment case For personal use only • • Diversified income mix across wholesaling, retail services, pre-wholesaling and hospitals • Construction of the new DC in Eastern Creek is complete – on target for opening in late October 2015 • Provides en
Slide 16: Strong retail network
Strong retail network • A broad range of solutions available For personal use only for pharmacists • Collective strength of over 700 branded pharmacy partners • Strategic long term partnerships supporting over 600 independent pharmacies • Provides the platform for enhanced buying and services based
Slide 17: Brand standards drive improved performance
Brand standards drive improved performance For personal use only • Compliance to brand standards up 52% since 2013 • Pharmacies that improved compliance to brand standards achieved incremental improvement in average sales: Below 40% 1.5% sales growth 50% 3.5% sales growth Over 80% 7.0% sales grow
Slide 18: Programs supporting pharmacy profitability
Programs supporting pharmacy profitability • Sigma generics buying program established, providing For personal use only enhanced returns for Sigma and its customers • Majority of Amcal and Guardian network now using Signal to deliver live pharmacy data analytics • Successful launch of Sigma Financia
Slide 19: Private and Exclusive label products
Private and Exclusive label products • Sales of non-PBS product up 13%, with Boots products For personal use only market leader in category • Earnings up 15% • Over 800 SKU’s with sales growth options ahead • Rachael Finch now the beauty ambassador for Amcal and Guardian brands 19
Slide 20: Outlook
For personal use only Outlook Mark Hooper, CEO and Managing Director
Slide 21: Addressing outcomes of 6CPA and CSO changes
Addressing outcomes of 6CPA and CSO changes • 6CPA is a positive result for our For personal use only pharmacy customers Growth in Private and Exclusive • Wholesaler revenue continues to Label Expand be impacted by price disclosure Managing Hospitals costs distribution business • Discounts continue
Slide 22: Sigma's investment proposition
Sigma’s investment proposition Strong For personal use only Balance Sheet Investing in organic and Shareholder Business acquisitive Returns Investment growth strengthens our market position to support our customers, diversify our Profitability Customer income stream, & ROIC Profitability and provide
Slide 23: Outlook
Outlook For personal use only Majority of initial uplift from CHS/DDS acquisitions has cycled through in 1H16 FY16 earnings growth expected to be consistent with FY15 growth The combination of organic growth, Non-PBS and services based income will deliver an ongoing platform for earnings growt
Slide 24: Thank you
For personal use only Thank you
Slide 25: Appendix – ROIC Reconciliation
Appendix 1 – ROIC Reconciliation For personal use only As at As at As at As at As at As at As at As at As at As at $'m 31-Jan-11 31-Jul-11 31-Jan-12 31-Jul-12 31-Jan-13 31-Jul-13 31-Jan-14 31-Jul-14 31-Jan-15 31-Jul-15 Net Assets (as per Balance Sheet) 832.9 676.8 682.5 669.0 610.8 572.9 578.8 568.8
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