Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — FY2018 Earnings Presentation
28 slides from Sigma Healthcare's earnings presentation, Mar 22, 2018
Slide 1: Sigma Healthcare Limited Full Year Results to 31 January 2018
For personal use only Sigma Healthcare Limited Full Year Results to 31 January 2018 Announced 22 March 2018 ASX Ticker: SIG
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 1. Overview 2. Financials and Capital Management 3. Business Development 4. Outlook
Slide 4: Business Update - building a better future
Business Update - building a better future For personal use only • Challenging year but we remain confident in our strategy • Investment program – critical infrastructure program progressing ahead of plan and below budget. Our new Berrinba Distribution Centre (DC) in Queensland is now operational •
Slide 5: Continuing to reward shareholders
Continuing to reward shareholders For personal use only Revenue (A$m) - CAGR 5.8% Underlying# - NPAT (A$m) - CAGR 3.5% 3900 $3.7 3700 $59.9 70.0 billion 3500 million 60.0 3300 50.0 Steady 3100 Down 40.0 10.5% 30.0 2900 20.0 10.0 2700 0.0 2500 13 14 15 16 17 18 20 20 20 20 20 20 13 14 15 16 17 18 FY
Slide 6: Our Promises
Our Promises For personal use only Promise Delivered Grow EBIT by at least 5% • FY18 Underlying# EBIT down 10.0% for the next two years • Impacted by lower sales from softer consumer spend and exit of a customer group • In line with revised guidance × ✓ Grow non-PBS earnings • Growth in non-PBS earn
Slide 7: Financial Performance
For personal use only Financial Performance Iona MacPherson, CFO
Slide 8: Group Financial Performance
Group Financial Performance • Excluding Hep-C sales revenue was steady with growth able to offset other conditions For personal use only • Other revenue continued to grow, largely reflecting the mps acquisition REPORTED UNDERLYING $m FY2018 FY2018 FY2017 Change Sales Revenue 4,129.8 4,129.8 4,366.2
Slide 9: Revenue and Gross Profit Drivers
Revenue and Gross Profit Drivers For personal use only Sales Revenue (ex Hep-C): steady at $3.7bn • Hospitals and other revenue growth offset customer loss and slower market conditions including codeine rescheduling • Like for like sales in our Amcal brand were up around 2.0% Other Revenue: Up 8.2%
Slide 10: Operating Costs - Investment in Growth
Operating Costs - Investment in Growth For personal use only Warehouse and Delivery: Up 10.0% to $145.1m • More than half the increase driven by expanded operations - new CHS DC in WA and mps • Includes dual operating costs in Queensland for Berrinba and Mansfield • Balance reflects labour cost incr
Slide 11: Cash conversion cycle remains strong
Cash conversion cycle remains strong For personal use only • ROIC continues to be a strong focus as we move through our current investment cycle. • CCC influenced by ramp up in inventory in preparation for new supply contracts. FY18 FY17 Underlying ROIC# - remains a core focus Trade Debtors (Excl. H
Slide 12: Cash Flow - Rewarding Shareholders and Investing for Growth
For personal use only $ 000’s N (125,000) (100,000) (75,000) (50,000) (25,000) 0 25,000 50,000 70,000 100,000 125,000 150,000 31 et Ja De n bt 20 at 17 8.7m EB IT D A W in k o r cr in ea g se Ca in pita W AP l in ork cr in ea g se Ca in pit AR al W or In kin cr g In ea C ve s ap nt e i ita or n l y
Slide 13: Other Financial Metrics
Other Financial Metrics For personal use only Capex • $95m in FY18 • DC in Berrinba QLD operational from end February 2018 • DC in Canning Vale WA about 50% complete • FY19 capex for ongoing construction of Canning Vale and commencement of DC in NSW expected to be around $120m Debt/Interest • $113.6
Slide 14: Dividend payout ratio maintained
Dividend payout ratio maintained For personal use only Dividend 6.0 Dividend History 100% • F inal dividend of 2.5 cents per share 90% Dividend Payout Ratio (DPR) 5.0 (fully franked) 80% 70% 4.0 • Payout ratio 88.7% of Underlying# NPAT 60% (96.5% of Reported NPAT) 3.0 50% Cents 40% • E quates to a y
Slide 15: Business Development Initiatives
For personal use only Business Development Initiatives Mark Hooper, CEO and Managing Director 1. mps acquisition 2. DC investment program 3. Sigma Hospital services
Slide 16: mps – Strong Growth Opportunities
mps – Strong Growth Opportunities For personal use only Dose administration aids (DAA) are a significant Government focus area for improved medication management Expansion market market growing to approx. 3m by 2026 • Strong alignment with Sigma’s broader healthcare strategy Addressable market appro
Slide 17: DC Investment Update - Berrinba, QLD
DC Investment Update - Berrinba, QLD For personal use only Construction and automation now complete • Transition from Mansfield to Berrinba commenced 26 February 2018 • Dual operating costs incurred for a period as well as one-off redundancies of up to $5m to be booked in FY19 • Expect to be fully o
Slide 18: DC Investment Update – Canning Vale, WA
DC Investment Update – Canning Vale, WA For personal use only Construction well advanced • Approx $55m investment (including land and buildings) • 15,000 square metre facility • Strong payback metrics from automation • Anticipated completion late 2018 18
Slide 19: DC Investment Update - Kemps Creek, NSW
DC Investment Update - Kemps Creek, NSW For personal use only Construction ready to commence • Approx $110m investment (including land and buildings) • 40,000 square metre facility • DC construction to commence in April 2018 • Detailed design work well underway • Anticipate becoming fully operationa
Slide 20: Sigma Hospital Services
Sigma Hospital Services For personal use only Now a national presence • Latest IMS data (January 2018) has wholesale market for the year at $2.6b (down from $3.3b due to declining Hep C market) • Sigma market share growth – Monthly Annual Turnover market share now above 7% • Successful in recent con
Slide 21: Outlook
For personal use only Outlook Mark Hooper, CEO and Managing Director
Slide 22: Setting the foundations for our future
Setting the foundations for our future For personal use only Performance Drivers FY18 FY19 FY20 Core business Organic growth × ✓ BAU improvements DC optimisation program Investment phase Investment phase ✓ Project Renew Investment phase ✓ ✓ Improved retail compliance and buying programs In progress
Slide 23: Outlook
Outlook For personal use only • FY19 – Confirming current guidance of Underlying EBIT of $90m • High Dividend Payout Ratio expected to be maintained • Share buy-back remains in place, but likely to be less active given capital expenditure program • Business has been structurally re-aligned in March
Slide 24: Thank you
For personal use only Thank you
Slide 25: Appendix – ROIC Reconciliation
Appendix 1 – ROIC Reconciliation For personal use only $m 31/1/2014 31/1/2015 31/1/2016 31/01/17 31/1/2018 Net Assets 578.8 573.0 553.7 538.6 515.3 Less: Cash and cash equivalents -67.5 -34.3 -17.4 -24.4 -82.2 Add back: Interest bearing liabilities 0.0 0.6 74.1 33.2 195.8 Adjusted for One-Off Items
Slide 26: Appendix – Reported to underlying reconciliation
Appendix 2 – Reported to underlying reconciliation For personal use only 31 January 2018 31 January 2017 $’000 $’000 Reported EBIT 83,747 80,955 Add back: Restructuring and dual operating costs before tax 3,715 - Acquisition and due diligence costs before tax 3,199 - Litigation settlement expense be
Slide 27: Appendix – Reported to underlying reconciliation
Appendix 2 – Reported to underlying reconciliation For personal use only 31 January 2018 31 January 2017 $’000 $’000 Reported EBITDA 92,834 89,242 Add back: Restructuring and dual operating costs before tax 3,715 - Acquisition and due diligence costs before tax 3,199 - Litigation settlement expense
Slide 28: Appendix – Reported to underlying reconciliation
Appendix 2 – Reported to underlying reconciliation For personal use only 31 January 2018 31 January 2017 $’000 $’000 Reported NPAT attributable to owners of the company 55,059 53,184 Add back: Restructuring and dual operating costs after tax 2,601 - Acquisition and due diligence costs after tax 2,23