Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — Sigma Pharmaceuticals — Non-Deal Roadshow (April 2017)
32 slides from Sigma Healthcare's roadshow presentation, April 2017
Slide 1: Sigma Pharmaceuticals Limited Asia Roadshow 4-6 April 2017
Mark Hooper Iona MacPherson Gary Woodford CEO and Managing CFO Corporate Affairs Director Manager PH +61 3 9215 9632 M +61 417 399 204 Gary.Woodford@signet.com.au sigmaco.com.au SIGMA PHARMACEUTICALS LIMITED ASIA ROADSHOW 4 - 6 APRIL 2017
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: Sigma Overview
SIGMA OVERVIEW Our History Investment Metrics • E stablished in 1912 • ASX ticker - SIP (SIG from May 2017) • Listed on the ASX in 1999 • M arket Capitalisation around A$1.4billion • Dividend Yield around 4.5% • Underlying EBIT CAGR over last 3 years + 10% Our Business • ROIC over 15% • E mploy over
Slide 5: Who is Sigma
WHO IS SIGMA RETAIL PHARMACY HOSPITAL PHARMACY SERVICES SERVICES • National network of 700 branded pharmacies • Product and service delivery to hospital • Support services to pharmacy over 600 independent pharmacies • Expanding to an Australian wide presence • Resource Centre • Online presence SUPPL
Slide 6: Australian Pharmacy Industry at a Glance
AUSTRALIAN PHARMACY INDUSTRY AT A GLANCE Sigma is the largest Sigma has over Sigma’s 700+ own Sigma has a growing pharmacy wholesaler 1,300 branded branded pharmacies pre-wholesaling and and distributor in and independent have around third party logistics pharmacies – the Australia with around 20% o
Slide 7: Sigma Strategy
SIGMA STRATEGY • Create new and strengthen exisiting connections. • Grow our core, optimise our capabilities and expand our horizons. • Leverage capabilities for growth • Scale up new business models • Optimise core capabilities • Pursue leadership in • Establish differentiated adjacent markets busi
Slide 8: Underlying EBIT Exceeds $100m / ROIC Strong
UNDERLYING EBIT EXCEEDS $100M / ROIC STRONG FY17 HIGHLIGHTS Revenue (A$million) EBIT# (A$million) $4.37 billion 4500 4300 4100 3900 $100.2 million 103 98 93 3700 88 Up 26.2% Up 12.4% 3500 83 3300 3100 78 2900 73 2700 2500 68 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2012 FY2013 FY2014 FY2015 FY201
Slide 9: We Deliver on Our Promises
WE DELIVER ON OUR PROMISES PROMISE DELIVERED Grow EBIT by at • FY17 Underlying# EBIT up 12.4% least 5% for the next • Confirm previous guidance of at least 5% underlying EBIT growth for two years FY18 Grow non PBS • Non-PBS revenue up 10.2% earnings • Other revenue up 9.7% to $77.2m Maintain strong
Slide 10: Financial Performance
FINANCIAL PERFORMANCE IONA MACPHERSON, CFO
Slide 11: Underlying EBIT Surpasses $100m
UNDERLYING EBIT SURPASSES $100M • Organic growth and Other Revenue continue to drive Profit growth • R eported Operating Costs include $11.4m one off insurance settlement and doubtful debt provision of $8.3m • EBIT margin diluted by high cost / low margin Hepatitis C sales Reported Underlying# $m FY
Slide 12: Revenue Growth Drivers
REVENUE GROWTH DRIVERS Reported Underlying# $m FY 2017 FY 2017 FY 2016 Variance % Change Sales Revenue 4,366.2 4,366.2 3,461.1 905.1 26.2% Other Revenue 77.2 77.2 70.3 6.9 9.7% Sales Revenue - Up 26.2% to $4.37 bn • Blended total revenue up 6.3% excluding Hep C - OTC revenue up 10.2% - PBS revenue u
Slide 13: Gross Profit Benefits from Earnings Mix
GROSS PROFIT BENEFITS FROM EARNINGS MIX Gross Profit • Up 9.9% (incl Hep C) and 9.0% (excl Hep C) • Gross Profit margin (excl Hep C) up from 7.6% to 7.8% Sales Revenue and Gross Profit ($m) Excluding Hep C $4,000 $400 Strategy continues to target $3,500 $350 50% of earnings from $3,000 $300 non-PBS
Slide 14: Investing for Growth
INVESTING FOR GROWTH Reported Underlying# $m FY 2017 FY 2017 FY 2016 Variance % Change Operating costs -277.5 -257.9 -235.9 22.0 9.3% Warehouse and Delivery + $8.4m to $131.3m • L argely labour cost increases due to: - Volume growth of 4.0% - EBA increases, partly offset by productivity gains - Expa
Slide 15: Record Working Capital and CCC Performance
RECORD WORKING CAPITAL AND CCC PERFORMANCE • Despite 26% sales growth, Working Capital reduced by $103m • CCC reduced by 20 days (15 days excluding Hep C) • Reflects continued focus on reducing extended credit $m FY17 FY16 Trade Debtors 540,417 608,403 Inventory 322,000 288,626 Trade Creditors -475,
Slide 16: Capex to Support an Efficient Future
CAPEX TO SUPPORT AN EFFICIENT FUTURE • Capex of $30m in FY17, largely driven by Berrinba investment • Land acquired in Canning Vale WA in February 2017, with capex to build over the next 18 months • Strong financial returns from automation – circa 5 year payback • FY18 also includes investment in IT
Slide 17: Rewarding Shareholders
REWARDING SHAREHOLDERS Final dividend • Maintained at 3.0 cents per share (fully franked) • Improved full year dividend of 5.5c per share up from 5.0c per share (fully franked) • Payout ratio 89% of Underlying# NPAT • Equates to a fully franked yield of over 6.4%* EPS accretive share buy-back • Buy
Slide 18: Operational Performance
OPERATIONAL PERFORMANCE MARK HOOPER, CEO AND MANAGING DIRECTOR
Slide 19: Strong Like for Like Sales
STRONG LIKE FOR LIKE SALES • Like for Like sales to Sigma branded pharmacies up 8.2% (excluding Hep C) • 700 branded pharmacies across Australia representing around 20% of consumer spend • Continued strong emphasis on brand consistency
Slide 20: Integrated Engagement
INTEGRATED ENGAGEMENT Sigma has invested in turnkey solutions that arm our pharmacy members with the tools, training, knowledge and know how to differentiate our brands. Custo First mer S Customer Premiu ervice oards m Dashb l nne terin Ros Cha ulti g M Pr s M omo m ra ric ar ke tion og ne tin s Pr
Slide 21: Next Generation Retail Platform
NEXT GENERATION RETAIL PLATFORM Investing in a Microsoft cloud solution to provide a leading integrated platform for pharmacy management – Dispensing, POSBOS, Retail Management and Professional Services $ V.I.P Unified view of customers $ V.I.P Reduced cost of doing business ONE SYSTEM, DISTINCT BRA
Slide 22: DC Investment Update
DC INVESTMENT UPDATE •Q ueensland DC - Construction on track - Expected to be operational towards the end of FY2018 - $65m capital expenditure (including land) -S ome additional transition costs will be incurred including for duplicate facilities • Western Australia DC - Land acquired in Canning Val
Slide 23: Hospital Pharmacy – A National Focus
HOSPITAL PHARMACY – A NATIONAL FOCUS • Pharmaceutical hospital wholesaling market exceeds $3.3bn* Symbion • Cemented our Victorian 6% base CH2business5% Sigma/CHS - approximately 20% marketOthers share 29% • Listed as a supplier on the New South Wales Health Pharmaceuticals Tender - over 130 account
Slide 24: Extending Our Reach in Asia
EXTENDING OUR REACH IN ASIA • Launched 6 June 2016, partnering with Azoya • Sales to China have more than doubled initial expectations • Ready to launch into Hong Kong
Slide 25: Our New Identity
OUR NEW IDENTITY • Changing to better reflect our business and our strategy • Subject to shareholder vote at AGM on 3 May 2017 • Will also change ASX code from SIP to SIG on 4 May 2017
Slide 26: Outlook
OUTLOOK MARK HOOPER, CEO AND MANAGING DIRECTOR
Slide 27: Sustained Pipeline of Growth
SUSTAINED PIPELINE OF GROWTH Performance Drivers FY 2017 FY 2018 FY 2019 FY 2020 Core Business Organic Growth Business DC optimisation program Improvements Project Renew Improved retail compliance and buying programs New Business Hospitals/3PL growth Acquisitions and expansion into adjacencies Deliv
Slide 28: Outlook
OUTLOOK • FY18 - Maintaining Underlying EBIT growth expectation of at least 5%, off a bigger base • Given ongoing investment in business improvements, growth profile likely to be weighted to second half • Non-PBS revenue / earnings will continue to be the driver • ROIC will remain strong but we are
Slide 29: Thank You
THANK YOU
Slide 30: Appendix 1 – ROIC Reconciliation
APPENDIX 1 – ROIC RECONCILIATION $m 31/01/15 31/07/15 31/01/16 31/07/16 31/01/17 Net Assets 573.0 550.1 553.7 551.0 538.6 (as per Balance Sheet) Less: Cash and cash equivalents -34.3 -45.6 -17.4 -40.8 -24.4 Add back: Interest bearing liabilities1 0.6 60.5 74.1 96.0 33.2 Capital employed 539.3 564.9
Slide 31: Appendix 2 – Reported to Underlying Reconciliation
APPENDIX 2 – REPORTED TO UNDERLYING RECONCILIATION Financial performance The Group consolidated net profit after tax (NPAT) for the year ended 31 January 2017 of $53,184,000 was up 5.3% from the prior year ($50,502,000). 31/01/17 31/01/16 $’000 $’000 Reported NPAT attributable to owners of the compa
Slide 32: Appendix 2 – Reported to Underlying Reconciliation
APPENDIX 2 – REPORTED TO UNDERLYING RECONCILIATION 31/01/17 31/01/16 $’000 $’000 Reported EBIT 80,955 80,071 Add back: Litigation settlement expense after tax 11,368 - Provision for doubtful debtors - single pharmacy group 8,262 - Additional contingent consideration from prior year acquisitions - 7,
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