Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — Sigma Pharmaceuticals — FY2016 Earnings Presentation
26 slides from Sigma Healthcare's earnings presentation, Mar 23, 2016
Slide 1: Sigma Pharmaceuticals Limited Full Year Results to 31 January 2016
Sigma Pharmaceuticals Limited Full Year Results to 31 January 2016 Announced 23 March 2016
Slide 2: Important notice
Important notice 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 completeness, accuracy or rel
Slide 3: Overview
Overview Mark Hooper, CEO and Managing Director
Slide 4: Strong Earnings Growth Continues
Strong Earnings Growth Continues Revenue up Underlying# Strong Final 10.2% to EBIT up Underlying# Dividend $3.5 billion 13.7% to ROIC at increased $89.1 m 14.6% on to 3.0 cents and NPAT broader per share up 11.6% to earnings $59.2m # Refer to Appendix 2 for a reconciliation of Reported to Underlying
Slide 5: Consistently delivering on our promises
Consistently delivering on our promises Promise Delivered Grow EBIT by • Underlying# EBIT up by 13.7% 10% - 11% Grow non • Non-PBS sales revenue now approx. 35% of total PBS earnings revenue, up from 33% • Other revenue up 39.9% to $73.2m Maintain • Minimal net debt of $56.6m strong • 8-10 days impr
Slide 6: Consistent revenue and earnings growth
Consistent revenue and earnings growth # Revenue (A$million) Underlying EBIT (A$million) 3550 93 3450 88 3350 3250 83 3150 78 3050 73 2950 2850 68 FY2012 FY2013 FY2014 FY2015 FY2016 FY2012 FY2013 FY2014 FY2015 FY2016 Underlying NPAT (A$million) # Underlying ROIC and Working Capital Improvement # 80
Slide 7: Strategy delivering improved results
Strategy delivering improved results • Stabilised the core • Grown non PBS earnings • Bedded down acquisitions – performing ahead of expectations • Continued to invest to: – support core business – create base for future earnings outside PBS • Rewarded shareholders 7
Slide 8: Financial Performance
Financial Performance Jeff Sells, CFO
Slide 9: Strong earnings growth continues
Strong earnings growth continues REPORTED UNDERLYING # • Strong sales growth $m FY 2016 FY 2016 FY 2015 Variance % change • Improved Gross Profit Sales revenue 3,461.1 3,461.1 3,142.1 319.0 10.2 margin • Operating costs – Gross Profit 260.5 260.5 234.8 25.6 10.9 investment in growth Other revenue 73
Slide 10: Diversified revenue driving profit growth
Diversified revenue driving profit growth • PBS revenue up through volume growth and CHS / DDS acquisition run rate • OTC Revenue up 17.8%, and a growing proportion of total sales • Other Revenue up 39.9% – from brand member fees, improved Merchandise income, commission revenue and other service fee
Slide 11: Investing in capability to drive growth
Investing in capability to drive growth Drivers of Cost YOY Warehouse and Delivery Expenses + $11.2m 9% Full Year of CHS 30% • Sigma Logistics cost increases of 7.5% have been contained People costs within volume growth of 9.9% • Further productivity gains are still expected, to contain costs 61% Ot
Slide 12: Improvements secured for next 12 months
Improvements secured for next 12 months Working Capital $m As at 31 Jan As at 31 Jan As at 31 Jan As at 31 Jan • CCC days to reduce * Includes CHS & DDS in 2015 and 2016 2013 2014 2015 * 2016 * by a further 8-10 Trade Receivable 557 522 578 608 days in the year ahead Inventories 255 222 252 289 Trad
Slide 13: Continuing to reward shareholders
Continuing to reward shareholders • EPS accretive share buy-back – close to 10% achieved • Final dividend increased to 3.0 cents per share (fully franked) • Full Year Dividend of 5.0 cents per share (fully franked) • Current year dividend payout ratio 91% of Underlying# NPAT • Board expects to maint
Slide 14: Investment in Distribution Centres
Investment in Distribution Centres • Productivity gains continue to be achieved, with Sigma volumes up 9.9%, costs up 7.5% • New freight contracts also awarded during the year to drive operational efficiencies • Investment in key sites is required to continue productivity improvements • New NSW DC f
Slide 15: Investing for an efficient future
Investing for an efficient future Capital Expenditure (A$m) 80 60 40 20 0 FY2017 FY2018 Maintenance Investment • Investment in DC network will drive future efficiency gains, with a payback on technology spend of 4-5 years 15
Slide 16: Operational Performance
Operational Performance Mark Hooper, CEO and Managing Director
Slide 17: Australia's largest branded pharmacy footprint
Australia’s largest branded pharmacy footprint • Sigma leads market consolidation – over 700 branded pharmacies 30% • Branded pharmacy sales through Sigma up 17.9%, including Amcal, Guardian, Discount Drug Stores, Pharmasave and Chemist King • Growing compliance – Amcal and Guardian now sit at 76% B
Slide 18: Programs supporting pharmacy and Sigma profitability
Bringing it all together – Programs supporting pharmacy and Sigma profitability • Sigma Generics Program – delivering improved buying for Sigma’s customers • Financial support services for pharmacy, leveraging banking relationships • Over 800 private and exclusive label SKU’s delivering strong growt
Slide 19: CHS - Extending our market presence
CHS - Extending our market presence • Continues to perform ahead of investment case • Eastern Creek DC opened for business in October 2015 – over 8,000 square metres, CSO compliant • Provides new growth opportunities in NSW – wholesaling, hospital pharmacy, pre-wholesaling • Arrow pre-wholesaling co
Slide 20: Hospital Pharmacy – The size of the prize
Hospital Pharmacy – The size of the prize • $2.5 billion hospital pharmacy market across Australia • Currently focused in Victoria via CHS (5% national market share) • Leverage existing infrastructure • Invested in infrastructure and people during 2015/16 • Initial opportunities around Hepatitis C d
Slide 21: Outlook
Outlook Mark Hooper, CEO and Managing Director
Slide 22: Diverse earnings drivers
Diverse earnings drivers • Continued run rate gains from recent Run Rate acquisitions • Improved distribution margins post enhancement expiration of Aspen agreement • Continued growth in brand membership Will deliver EBIT Optimise • Enhanced generics buying program – SGP • Leveraging brand member co
Slide 23: Outlook remains strong
Outlook remains strong • Forecast EBIT growth of at least 5% pa for next two years • Non-PBS revenue / earnings will continue to be the driver • Stronger ROIC driven by higher earnings and 8-10 day reduction in CCC by January 2017 • High Dividend Payout Ratio expected to be maintained • Strong Balan
Slide 24: Thank you
Thank you
Slide 25: Appendix 1 – ROIC Reconciliation
Appendix 1 – ROIC Reconciliation As at 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 31-Jan-16 Net Assets (as per Balance Sheet) 832.9 676.8 682.5 669.0 610.8 572.9 578.8 568.8 573.0
Slide 26: Appendix 2 – Reported to Underlying Reconciliation
Appendix 2 – Reported to Underlying Reconciliation Financial Performance The consolidated profit attributable to shareholders was $50,502,000 compared to $52,773,000 for the prior year. The reported profit for the current year was impacted by a significant one-off item. The underlying profit before