Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — FY2020 Earnings Presentation
28 slides from Sigma Healthcare's earnings presentation, Mar 25, 2020
Slide 1: Growth through transformation
Growth through transformation Full Year Results 25 March 2020
Slide 2: Important notice
Important notice This presentation for Sigma Healthcare Limited and its subsidiaries (Sigma Group) is designed to provide: • an overview of the financial and operational highlights for the Sigma Group for the 12-month period ended 31 January 2020; and • a high level overview of aspects of the operat
Slide 3: Mark Hooper, CEO & Managing Director – Agenda
Mark Hooper CEO & Managing Director 1. Overview 2. Operational update 3. Business Transformation and Investment 4. Community Support 5. Outlook 3
Slide 4: Overview
Overview Financial Operational Business Capital People and Performance Update Transformation Management Culture FY20 Underlying Wholesale - Ongoing Project Pivot – Team member EBITDA** of $46.7m Revenue* up 8.5% delivered engagement has is in line with for the 12-months to Net Debt of $146 annualise
Slide 5: Re-basing our ongoing business
Re-basing our ongoing business What we said to expect in 2H20 What we delivered in FY20 Total Sales Revenue o Will only include 3 months sales of o Exit successfully managed. some FMCG products to CW Subsequent return of CW FMCG o Ongoing revenue* to continue growth progressing well. at similar leve
Slide 6: Capital Management
Capital Management Cash Conversion Cycle Underlying ROIC 60 20% 50 15% 40 o ROIC impacted by 30 10% the timing and 20 5% nature of business 10 0% investments ahead 0 of the financial returns and lower earnings Capex 120 o Anticipate CCC to FY20 FY19 100 276,786 553,426 stabilise just below Trade Deb
Slide 7: Announced Sale and Leaseback
Announced Sale and Leaseback o Sigma invested approximately $160 million in land and building (excluding automation) over the last 4 years o Provided control over the design and build o Actively assessing options - Indicative valuations show a significant uplift in value (>$100m) o Part or full sale
Slide 8: Operational Update
Operational Update 8
Slide 9: Sigma Wholesale – strong sales pipeline
Sigma Wholesale – strong sales pipeline Strong sales pipeline heading Onboarded new customers into FY21, including new CW who represent over $180m Agreement (approx. $800m) and annualised sales, with minimal extended Pharmacy Alliance customer losses. Agreement (approx. $500m). Customer engagement D
Slide 10: Chemist Warehouse FMCG contract – on track
Chemist Warehouse FMCG contract – on track o Approximately $800 m annual sales (including second line PBS) o 4-year supply agreement to June 2024 o Commercially acceptable trading and credit terms to both parties o On boarding commenced Nov 2019 with over 60% of FMCG volume now being supplied o Expe
Slide 11: Sigma Retail – customer focused brands
Sigma Retail – customer focused brands o Like for like sales in our brands up 11.7% for FY20, with strong buying compliance from members o Pipeline of prospective members is strong 600+ o Launched Amcal + Life clinic and WholeLife Pharmacy and Healthfoods brand pharmacy members o Guardian won the 20
Slide 12: Expanding our market presence
Expanding our market presence Sigma Hospitals o FY20 Sales up 26%, with National Monthly Annual Turnover (MAT) growth of 13.95%, above total market growth of 5.03% o Now approaching 10% national market share - Approx 20% market share in Vic and WA, and expanding presence in NSW, Qld and SA Third/Fou
Slide 13: MPS – leading national presence
MPS – leading national presence o MPS is the leading Dose Administration Aid (DAA) business in Australia Total current market size $1.9bn Only 25% of potential customers use DAA’s. o Three TGA approved facilities providing the highest quality assurance standards available in Expansion the market – a
Slide 14: Business Transformation and Investment
Business Transformation and Investment 14
Slide 15: Project Pivot – Delivering on target
Project Pivot – Delivering on target o Action taken to achieve $62.3m of targeted annualised benefit at 31 Jan 2020, in line with initial Year 1 expectations o Now anticipate some delays in realisation in Year 2 due to reinvestment to support the return of MC/CW FMCG, impacts from bushfires and COVI
Slide 16: Distribution Centre investment program
Distribution Centre investment program o Drives operational efficiency, adds capacity and reduces our costs to serve o All new DC business cases were developed and approved having assessed the impacts of different Chemist Warehouse contract outcomes o Has provided the infrastructure to deal with the
Slide 17: Investment in critical IT Infrastructure
Investment in critical IT Infrastructure ERP Enterprise CRM o Project kicked off in Feb 20, and is expected to o Project commenced in Oct 19 conclude in Q4 2021 o Rolling out the leading Salesforce solution to replace o Partnered with experienced System Integrators multiple disparate legacy systems
Slide 18: Community support
Community support 18
Slide 19: Drought and Bush fires
Drought and Bush fires o Significant logistical effort from our team in partnership with Essential Services to overcome challenges and ensure medicines were delivered to isolated areas o Approx. $85,000 donated to support affected communities o Partnered with suppliers to donate approximately $60,00
Slide 20: COVID-19 update
COVID-19 update Risk management Operational impact o As a CSO approved medicines supplier, we are o Significant increase in volumes – ongoing an essential service to support the health of revenue** for March to date up 50% on last year Australian patients o Volumes up approximately 80% on March expe
Slide 21: Outlook
Outlook 21
Slide 22: Outlook
Outlook o Strong start to the year, with COVID-19 influencing volumes o Underlying business continues to have a positive growth outlook, but timing and quantum will continue to be impacted by COVID-19 o Formal guidance for FY21 is not being provided at this time o Will provide an update on sales and
Slide 23: Appendix
Appendix
Slide 24: Group Financial Performance
Group Financial Performance REPORTED UNDERLYING* $m FY2020 FY2020 FY2019 Variance Change Sales Revenue 3,244.3 3,244.3 3,976.8 -732.5 -18.4% Gross Profit 215.0 215.0 273.2 -58.2 -21.3% Other Revenue 98.1 98.1 99.5 -1.4 -0.01% Operating Costs -288.9 -255.4 -282.2 16.0 5.7% EBITDA 24.2 48.1 90.5 -43.6
Slide 25: Reported to Underlying Reconciliation
Reported to Underlying Reconciliation $m FY20 FY19 Reported EBITDA 24,200 76,550 Add Back (before tax) Restructuring and dual operating costs 39,662 13,115 Due Diligence and Legal Costs (4,261) 863 Impact of Adoption of AASB 16 (11,517) - Underlying EBITDA 48,084 90,528 Less Reported Depreciation an
Slide 26: Reported to Underlying Reconciliation
Reported to Underlying Reconciliation $m FY20 FY19 Reported NPAT (12,330) 36,520 Add Back (after tax) Restructuring and dual operating costs 27,763 9,180 Due Diligence and Legal Costs (2,983) 604 Impact of Adoption of AASB 16 157 - Underlying NPAT 12,607 46,304 Sigma Healthcare Limited FY20 Results
Slide 27: Cash Flow
Cash Flow 0 (50,000) (100,000) (150,000) (200,000) (250,000) (300,000) Cash Net Debt EBITDA Change in Income Tax Shares buy Dividend Net Cost of Capex Acquisitions Net Interest NetCash Net Debt 31 Jan 2019 Working Payment back Payment Employee Payment 31 Jan 2020 Capital Shares Scheme OPERATIONS / W
Slide 28: Thank you
Thank you