Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — H1 2020 Earnings Presentation
24 slides from Sigma Healthcare's earnings presentation, Sep 5, 2019
Slide 1: Sigma Healthcare Limited Half Year Results
Sigma Healthcare Limited Half Year Results to 31 July 2019 Announced 5 September 2019
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 & Managing Director 1. Key Highlights 2. Financial Performance 3. Business Transformation 4. Outlook 3
Slide 4: Key Highlights
Key Highlights Financial Business Investment and Capital People and culture Performance Transformation growth Management ▪ Half Year Results ▪ Project Pivot on ▪ QLD and WA ▪ Net Debt fell from ▪ Team member are as expected target to deliver Distribution Centres $243m at year end engagement ▪ Ongoin
Slide 5: Financial Performance and Capital Management
Financial Performance and Capital Management Iona MacPherson Chief Financial Officer 5
Slide 6: Group Financial Performance
Group Financial Performance Significant changes currently being implemented through Project Pivot will materially re-base Sigma’s ongoing business. Sales Revenue REPORTED UNDERLYING** ▪ Total sales reflect transition of 3 tranches of CW $m 1H2020 1H2020 1H2019 Variance Change FMCG product during the
Slide 7: Re-basing our ongoing business
Re-basing our ongoing business What to expect in 2H20 What to expect in FY21 Total Sales Revenue ❖ Will only include 3 months sales of ❖ No material sales to CW some FMCG products to CW ❖ Ongoing revenue* growth for remaining ❖ Ongoing revenue* to continue growth portfolio at similar level to FY20 a
Slide 8: Working Capital Management
Working Capital Management Cash Conversion Cycle ❖ Reduction in CCC includes the release of around $150 60 million of working capital from CW to 31 July 2019, 50 partly offset by other BAU working capital movements 40 ❖ Balance of working capital release from CW will flow in 30 20 2H20 (subject to f
Slide 9: Cash Flow
Cash Flow Working Capital release flowing through REWARDING OPERATIONS / WORKING CAPITAL SHAREHOLDERS INVESTING 9
Slide 10: Capex and Debt Profile
Capex and Debt Profile ❖ Capex Program largely completed by end of FY22 – including ERP ❖ 1H20 Net Debt of $192.3m – expect circa $120-$130 million by end of FY20 ❖ Assumes continuation of high dividend payout ratio Capex Net Debt 120 300.0 100 250.0 80 200.0 60 150.0 40 100.0 20 0 50.0 FY14 (A) FY1
Slide 11: Business Transformation and Investment Program
Business Transformation and Investment Program Mark Hooper CEO & Managing Director 11
Slide 12: Critical infrastructure Ahead of schedule & below budget
Critical infrastructure Ahead of schedule & below budget Berrinba DC Canning Vale DC Queensland Western Australia ❖ Fully operational from April 2018 ❖ Fully operational from ❖ Significantly improved efficiency February 2019 and effectiveness ❖ Smooth transition in first six months Pooraka DC – in f
Slide 13: Kemps Creek DC - On Track
Kemps Creek DC - On Track New South Wales ❖ Build and fit out is complete ❖ Automation on track for testing from October ❖ CHS 3PL is now live and operating ❖ On track for full operations from January 2020 ❖ Within budget and on time SCALE CAPACITY EFFICIENCY 13
Slide 14: Investment in the future of health care
Investment in the future of health care 51% ownership 100% ownership ▪ Digital intelligence to support ▪ Acquired the Cura packing business pharmacy ▪ Programs to support better 51% ownership ▪ MPS supporting 50,000 aged care beds patient care ▪ Recognition and Rewards program ▪ TGA approved facilit
Slide 15: Project Pivot – Delivering on target
Project Pivot – Delivering on target MC/CW Transition Operating efficiencies Smart spend programs Implementation will 60% of efficiency gains 30% of efficiency gains 10% of efficiency gains deliver ▪ DC network and logistics ▪ Range optimisation ▪ Robust zero based ▪ Approx. 60% of optimisation budg
Slide 16: Project Pivot – Delivering on target continued
Project Pivot – Delivering on target continued CW Transition to date: ❖ Scheduled medicine (circa $1.1bn net sales) - transitioned on 1 July 2019 ❖ FMCG products (circa $0.7bn net sales) - is transitioning in 5 equal tranches - 3 tranches completed in April, May and July. Final 2 tranches are schedu
Slide 17: One off Costs of Business Transformation
One off Costs of Business Transformation Project Pivot one off costs Project Pivot: 20 18 ❖ One-off costs of $17.3 million incurred in 1H20 16 14 ❖ Total one-off costs for Project Pivot now expected to be up to $40 million (previously $35 million) mainly reflecting higher $ million 12 10 redundancy
Slide 18: Customer strategy a strong focus
Customer strategy a strong focus “We are committed to ensuring positive outcomes for our customers.” ❖ Whilst a number of internal changes have been made, our focus on customer centricity has resulted in positive improvements in our Net Promoter and Net Easy Scores ❖ We have seen significant improve
Slide 19: Employee Engagement
Employee Engagement Building communication, change capability & resilience ❖ Empowering team members to understand how they ‘manage themselves through change’ via our new online training module and interactive workshops ❖ We are learning to look at change in a new way which helps us take action and
Slide 20: Dividend & Share Buy-back Program
Dividend & Share Buy-back Program Dividend: Dividend History ❖ Interim dividend of 1.0 cent per share fully franked 6.0 100.0% ❖ Payout ratio of 95% of Underlying NPAT** (421% of 5.0 95.0% Reported NPAT) 4.0 90.0% 3.0 85.0% Share Buy-back: 2.0 80.0% ❖ No buy-back activity in 1H20 due to capital inve
Slide 21: Outlook
Outlook ❖ Confident the total $100+ million annualised efficiency gains will be delivered from Project Pivot ❖ A slight lag in realising some benefits mainly due to ongoing support provided to CW through delayed transition ❖ As a result FY20 underlying EBITDA will be towards the low end of previous
Slide 22: Thank you
Thank you
Slide 23: Appendix 1
Appendix 1 31 July 2019 31 July 2018 Reconciliation of reported and Underlying EBIT and EBITDA $000 $000 Reported EBIT 12,688 25,320 Add: Reported depreciation and amortisation 12,606 6,199 Reported EBITDA 25,294 31,519 Add back: Restructuring and dual operating costs before tax 18,635 8,700 1 Litig
Slide 24: Appendix 2
Appendix 2 ROIC Reconciliation - $’m As at As at As at As at As at 31-Jul-15 31-Jul-16 31-Jul-17 31-Jul-18 31-Jul-19 Net Assets 550.1 551.0 532.9 501.2 494.6 Less Cash and cash equivalents -45.6 -40.8 -23.2 -21.6 -123.5 Add back interest bearing liabilities 60.5 96.0 96.0 200.8 315.8 Adjusted for on