Sigma Healthcare Ltd · ASX:SIG
Sigma Healthcare — Sigma Pharmaceuticals — H1 2017 Earnings Presentation
25 slides from Sigma Healthcare's earnings presentation, September 2016
Slide 1: Half Year Results to 31 July 2016
Sigma Pharmaceuticals Limited Half Year Results to 31 July 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: Sustained growth across all key financial indicators
Sustained growth across all key financial indicators 1H17 Highlights Revenue $2.15 Up 28.1% billion EBIT # $48.4 Up 17.0% million NPAT # $31.7 Up 14.5% to million ROIC # 15.9 Up from 15.2% percent # Underlying. Refer to Appendix 2 for a reconciliation of Reported to Underlying 4
Slide 5: Consistently delivering on our promises
Consistently delivering on our promises Promise Delivered Grow EBIT by at 1H17 Underlying# EBIT up 17.0% least 5% for the next two years Grow non PBS Non-PBS earnings continue to grow earnings Other revenue up 24.2% to $39.2m Maintain strong Minimal net debt of $55.3m and still expect to be
Slide 6: Financial Performance
Financial Performance Jeff Sells, CFO
Slide 7: Strategy delivers continued double digit growth
Strategy delivers continued double digit growth REPORTED UNDERLYING Organic growth and $m 1H 2017 1H 2017 1H 2016 Variance % change Other Revenue Sales revenue 2,146.0 2,146.0 1,675.0 471.0 28.1% continue to drive Profit growth Gross Profit 141.8 141.8 126.2 15.6 12.4% Other revenue 39.2 39.2 31.5
Slide 8: Strong revenue growth
Strong revenue growth Sales Revenue – Up 28.1% to $2.15 bn Excluding Hep C, Sales up 7.8% 50% of growth from non PBS sales Sales to Sigma branded pharmacies up 7.2% (excluding Hep C) Other Revenue – Up 24.2% to $39.2m Brand compliance driving growth in supplier rebates Merchandising income cont
Slide 9: Continued diversification drives improved performance
Continued diversification drives improved performance $2,400 Sales Revenue and Gross Profit ($'m) $200 Non-PBS Revenue $2,200 $180 Up 11.5% on 1H16 $2,000 Up 58% since 1H13 Diversification reduces earnings $160 $1,800 $1,600 $140 seasonality $1,400 $120 $1,200 $100 $1,000 $80 $800 $60 Gross Pr
Slide 10: Investing for current and future growth
Investing for current and future growth Warehouse and Delivery Expenses + $4.7m to $64.2m Volume growth of 5.2% Labour costs/EBA, partly offset by productivity gains Expanded CHS operations, including new Eastern Creek DC Redundancy costs from closure of Rockhampton DC Sales and Marketing Ex
Slide 11: Record low Cash Conversion Cycle (CCC)
Record low Cash Conversion Cycle (CCC) $'000 July'11 July'12 July'13 July'14 Jul'15 Jul'16 Trade Receivable $580,902 $580,687 $549,418 $586,745 $622,595 $694,271 CCC reduced by 10 Inventories $274,845 $224,081 $249,990 $283,751 $291,502 $337,639 days Trade Creditors -$334,199 -$344,503 -$353,312 -
Slide 12: Investing for an efficient future
Investing for an efficient future Forecast Capital Expenditure (A$m) 80 70 60 50 40 30 20 10 0 FY17 FY18 FY19 FY20 Maintenance Investment Maintenance Capex broadly matches D&A Capex of $8.1m in 1H17, expect $32m in 2H17 Land and buildings fully funded by Sigma DC technology - 4 to 5 year pay
Slide 13: Continued focus on capital management
Continued focus on capital management Interim dividend increased to 2.5 cents per share (fully franked) payout ratio 85.2% of Underlying# NPAT equates to a fully franked yield of over 6.5%* EPS accretive share buy-back since Oct 2012 - 9.6% achieved (113.4m shares) VWAP of $0.73 per share
Slide 14: Operational Performance
Operational Performance Mark Hooper, CEO and Managing Director
Slide 15: The largest Retail Pharmacy footprint
The largest Retail Pharmacy footprint Sigma leads market consolidation – o Over 700 branded pharmacies o More than 500 independent pharmacies Sigma has almost 20%# pharmacy retail market share o equates to $3bn of retail sales o five percentage points ahead of the next largest player Like for
Slide 16: Sigma brand member support
Sigma brand member support Sigma offers more than 30 structured programs to support its unique retail footprint of more than 700 branded pharmacies Deliver improved buying for Sigma customers Financial support services for pharmacy, leveraging banking relationships Largest range of Private and
Slide 17: Continued investment in Distribution Centres
Continued investment in Distribution Centres Queensland DC – o Construction commenced in April 2016 o Expected to be operational in last quarter of CY2017 o $65m capital expenditure Network optimization review continues Key outcomes o Expanded capacity and capability o Step change in productiv
Slide 18: Hospital Pharmacy – the opportunity
Hospital Pharmacy – the opportunity Market Size by State Pharmaceutical hospital wholesaling market exceeds $3.0bn* 1% o Mkt growth +34%*, with Hep C drugs having a NSW significant impact on market 3% 13% VIC 29% 6% QLD SA Sigma / CHS presence continues to show strong TAS growth 22% WA 26% NT o up
Slide 19: Our entry into China
Our entry into China Launched 6 June 2016; Operational partnership with Azoya, driving strong visitation numbers; Over 7,000 SKU’s available, leading to strong breadth of products being sourced; No fulfilment or FX risk to Sigma; First half sales double expectations 19
Slide 20: Outlook
Outlook Mark Hooper, CEO and Managing Director
Slide 21: Sustained pipeline of growth
Sustained pipeline of growth Performance Drivers FY17 FY18 FY19 FY20 Organic Growth Core business DC optimisation program BAU improvements Project Renew Improved retail compliance and buying programs Hospitals/3PL growth New business Acquisitions and expansion into adjacencies Deliver at least 5% pe
Slide 22: Continued momentum drives strong outlook
Continued momentum drives strong outlook FY17 - Upgrading forecast Underlying EBIT growth to 10% FY18 - Maintaining Underlying EBIT growth expectation of at least 5% Non-PBS revenue / earnings will continue to be the driver Stronger ROIC driven by higher earnings and reduction in CCC Stron
Slide 23: Thank you
et {jit a Thank you
Slide 24: 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 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 31-Jul-16 Net Assets (as per Balance Sheet) 832.9 676.8 682.5 669.0 610.8 572.9 5
Slide 25: Appendix 2 – Reported to Underlying Reconciliation
Appendix 2 – Reported to Underlying Reconciliation Financial Performance The Group consolidated net profit after tax (NPAT) for the half year ended 31 July 2016 of $23,881,000 was up 26.4% from the prior period ($18,886,000). ^ includes share of profit/(loss) of equity accounted investees after tax
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