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  • Sigma Healthcare Resets Merger Synergy Target With Chemist Warehouse Amidst Significant Revenue Surge

    Sigma Healthcare Resets Merger Synergy Target With Chemist Warehouse Amidst Significant Revenue Surge

    Sigma Healthcare has revised its merger synergy target with Chemist Warehouse, following a significant increase in both its top and bottom line results last year.

    New Merger Synergy Targets

    Sigma Healthcare has now set its synergy target for the merger at $100 million per annum, a substantial increase from the previous target of $60 million. The company aims to attain this goal within a span of four years.

    The last fiscal year ending June 30 saw an 82.2 per cent surge in revenue to $6 billion. Chemist Warehouse reported a 14 per cent increase in retail network sales, and a notable 11.3 per cent rise in like-for-like sales across the Australian network.

    Brand Expansion and Financial Performance

    Over the past year, Sigma increased its portfolio of proprietary and exclusive brand products, with a notable release of 269 products in the Wagner generics range last November. The sales of proprietary and exclusive label products saw an increase of over 20 per cent.

    When it comes to the bottom line, statutory earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 33.6 per cent to $824 million, while the net profit after tax (NPAT) reported a slight decline of 2.1 per cent to $530 million. However, normalized EBITDA saw a rise of 41.4 per cent to $884 million, and NPAT also increased by 40.1 per cent to $579 million.

    By June 30, the net debt stood at $752 million, significantly lower than the initial net debt range of $1 billion to $1.3 billion as indicated in the merger prospectus.

    Anticipated Growth and Future Plans

    Sigma CEO and MD, Vikesh Ramsunder, stated that the merger with Chemist Warehouse has resulted in a more robust, integrated healthcare business with enhanced scale, capability, and market reach. He emphasized that the FY25 results highlight the group’s momentum and potential for sustained growth.

    As part of its plan for the new fiscal year, Sigma intends to continue the expansion of Chemist Warehouse stores both domestically and internationally at a steady pace. It also plans to introduce new proprietary and exclusive label products to enhance margins.

    Sigma also announced the closure of distribution centres in South Guildford, WA, and Port Adelaide, SA, with services being moved to existing centres in Canning Vale and Pooraka. The company also plans to gradually close brick-and-mortar Chemist Warehouse stores in China over the next few years, focusing on achieving profitable growth, with the Chinese market being serviced through online channels thereafter.

    Questions & Answers

    What is the new merger synergy target set by Sigma Healthcare?
    The new merger synergy target set by Sigma Healthcare is $100 million per annum, up from the previous target of $60 million.

    What are Sigma Healthcare’s plans for the new fiscal year?
    Sigma plans to expand Chemist Warehouse stores in Australia and internationally, launch new proprietary and exclusive label products, and shift services from closing distribution centres to existing ones.

    What is Sigma Healthcare’s strategy for the Chinese market?
    Sigma Healthcare plans to gradually close Chemist Warehouse physical stores in China over the next few years, focusing on servicing the Chinese market through online channels.

  • Sigma half-year profit falls on restructure costs

    Sigma half-year profit falls on restructure costs

    Sigma Healthcare half-year profit tumbled 81.2 percent to $2.52 million, due to reduced input from its expiring Chemist Warehouse supply deal, as well as one-off restructuring costs tied to the commencement of its transformation program.

    The pharmaceutical retailer, which runs Amcal, Chemist King, Discount Drug Stores, Guardian pharmacies and PharmaSave, said on Thursday revenue fell 4.1 percent to $1.88 billion in the first half of FY20, while EBITDA fell 19.8 percent to $25.3 million.

    Shares in the business had fallen more than 3 percent on Friday morning to 58 cents per share.

    Sigma’s restructuring efforts have so far seen approximately 370 staff members removed, after closing its Shepparton, Newcastle and Launceston distribution centers.

    “We are… very aware of the personal impact such a transformation can have on our people and customers,” Sigma chief executive Mark Hooper said in a note to investors.

    “We have implemented a number of communication and change management programs to support those who are unfortunately impacted, and to ensure focus and resilience to drive our business.”

    According to Hooper, Sigma is entering a growth phase, though expects the ongoing progress of Project Pivot to see underlying EBITDA for FY20 hit the lower end of the previously stated guidance of $55 to $60 million.

    FY21 will remain in line with previous expectations of 10 percent growth, however.

    “Sigma’s fundamentals remain in strong shape as well continue to implement the changes to deliver sustainable benefits for our business medium to longer-term,” Hooper said.

    “We have made good progress on our business transformation program, and we are on track to deliver the $100+ million efficiency gains in line with previous guidance.”

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  • Sigma chairman Resigns after remuneration protest

    Sigma chairman Resigns after remuneration protest

    Brian Jamieson, chairman of Sigma Healthcare, has said he intends to step down within the next 12 months after shareholders protested the remuneration report at Sigma’s annual general meeting on Wednesday.

    Shareholders delivered an 18 percent vote against the report during the meeting, while also opting to re-elect Jamieson, as well as David Manuel, as directors.

    The vote signalled shareholders’ frustration over Sigma’s decision to reject a takeover offer by rival healthcare business Australian Pharmaceutical Industries, as well as a protest against the remuneration report itself, which included bonuses for board members in a year that has seen Sigma’s share price fall from 80 cents per share in June 2018 to 53 cents per share.

    “This has been a defining year for Sigma,” Jamieson told shareholders at the business’s AGM.

    Over the course of the year, Sigma walked away from a supply contract with Chemist Warehouse Group, causing a major fall in the business’s share price hasn’t been recovered.

    Sigma also walked away from the proposed merger with API, which Jamieson told shareholders was “somewhat opportunistic, with Sigma at its most vulnerable” after dropping the Chemist Warehouse Group supply contract.

    “To agree to proceed may have been the easy decision, but our detailed analysis supported our view that it was not the right decision for mid to long-term shareholder value,” Jamieson said.

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  • Sigma, Tech Mahindra partner on connected car

    Sigma, Tech Mahindra partner on connected car

    Sigma Systems and Tech Mahindra have announced the launch of a connected car service subscription management platform for the automobile industry.

    The joint platform was selected and will be an integral part of a global automobile manufacturer’s connected car services program, paving the way for emerging on-board digital and IoT based applications.

    The companies said the service subscription management platform is a fully automated, cloud-based SaaS solution designed and delivered with scalable platform architecture and Open API’s.

    It consists of key Sigma portfolio products including Sigma Catalog and Sigma Order Management.

    The platform will drive consumers’ digital experience on new connectivity services while being mobile network operator agnostic and using eUICC SIM, the companies said.

    The platform will provide lifecycle management of connected car services and subscriptions manage roaming scenarios and control data consumption by driving policies and enhance end-user experience.

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  • Hansen Technologies acquires Sigma Systems for $117m

    Hansen Technologies acquires Sigma Systems for $117m

    Australia’s Hansen Technologies has agreed to acquire catalog-driven software vendor Sigma Systems for C$157 million ($116.8 million).

    Found in 1996, Sigma provides enterprise catalog-driven software products to the communications, media and high-tech sectors.

    The Toronto-based BSS firm has over 70 customers in 40 markets, including  Tier 1 telcos such as Vodafone, Liberty Global, Telstra (Australia), Altice, Cox Communications (USA), Ziggo (Netherlands), Telkomsel (Indonesia), J:Com (Japan), Inmarsat (UK), Telmex (Mexico), Tiscali (Italy), Telus (Canada), Sky (UK), EWE TEL (Germany) and ViaSat (USA).

    It has 480 employees with offices located in Toronto, London and Wales (UK) and Pune, India.

    Andrew Hansen, chief executive officer of Hansen Technologies, said the acquisition is a strategic move to enhance the company’s proposition to the telecoms, pay TV and energy verticals.

    Hansen said the company has driven an exceptional growth strategy through acquisitions over the past 10 years, achieving a compound annual growth rate of 28% over the last four years.

    “Bringing Sigma Systems onboard further strengthens our ability to provide valuable solutions to our customer base and creates new expansion opportunities to cross-sell Sigma’s software solutions into our broad base of energy customers,” he said.

    In 2018, Sigma reported revenue of C$73.1 million and an EBITDA of C$18.8 million.

    Through the acquisition of Sigma, Hansen Technologies expects to “significantly” expand its scale and scope in the telecoms sector.

    “Sigma’s proprietary products sit within or adjacent to the company’s core business of billing and customer management, and are well designed to capture growth opportunities from the rollout of new telecommunications services such as 5G,” the company said.

    The acquisition is set to close on May 31. Hansen Technologies said the acquisition will increase its pro-forma basis share of revenue from the telecoms sector to 38% from a reported 17% in 2018.

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  • Sigma confident of turnaround plan

    Sigma confident of turnaround plan

    Pharmaceutical retailer Sigma Healthcare’s net profit fell 33.1 per cent to $37 million in FY19, down from $55 million in the prior corresponding period.

    Total revenue also decreased in the year to January 31, 2019, falling 2.9 per cent to $3.98 billion, compared to $4.09 billion in FY18.

    The business declared a final dividend for FY19 of 2 cents per share, and Sigma chairman Brian Jamieson stated the business remained committed to returning a high proportion of its NPAT to shareholders.

    Sigma also shared with investors further details about Project Pivot, the turnaround initiative it unveiled after dropping its Chemist Warehouse contract in September 2018, including over $100 million of efficiency gains to be enacted over the next two years.

    “Whilst a large proportion of the cost savings come from extracting costs incurred to directly deliver services to, additional cost savings will come from a restructure of functional areas within Sigma, and changes within our DC network,” Sigma chief executive and managing director Mark Hooper said.

    “This work has already commenced with plans and timeframes communicated to our DC team members in March.”

    As part of these changes, Sigma will cut staff and close three distribution centres, in Shepparton, Newcastle and Launceston, by October 2019.

    The retailer recently refused an offer to merge with Priceline owner Australian Pharmaceuticals Industries on the grounds that it undervalued its long term prospects, and that the $60 million of savings the combined company was forecasted to make was not as efficient as its own $100 million savings plan.

    API countered this claim last week, stating that the cost savings Sigma cites are uncertain and unclear, and that the company has so far released little information in regards to its restructure.

    “While the Sigma Board is not philosophically against industrial consolidation, the assessment of management, the Board and our advisors was united – this proposal was not in the best interest of Sigma shareholders,” Jamieson, the company’s chairman, said.

    “Our Project Pivot review and the cost efficiencies to flow from it, along with the structural reforms we are implementing to provide step change to our operations, give us great confidence in the direction we are heading and the future of our business on a standalone basis.”

    Sigma has reaffirmed its EBITDA guidance for FY20 of $55-60 million, with the savings of Project Pivot not likely to come into effect immediately. Hooper had previously stated it was unlikely EBITDA would return to FY19 levels until FY23.

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  • API doubts Sigma plans

    API doubts Sigma plans

    The proposed merger between the owners of the Priceline and Amcal pharmacy chains is off after Sigma Healthcare rebuffed an approach by its rival.

    Amcal owner Sigma, which is restructuring after losing a contract to supply Chemist Warehouse, said on Wednesday that October’s cash-and-scrip approach by Australian Pharmaceuticals Industries had undervalued its long-term prospects.

    Instead of responding with an increased offer, API questioned Sigma’s plans and said it would now decide what to do with the 12.85 per cent stake it bought late last year.

    “The Sigma Board has chose a path to restructure its significantly downsized business, rather than pursue a merger to create a future that benefits consumers, pharmacists and both sets of shareholders,” API said.

    Sigma said it agreed the tie-up could save the combined company $60 million a year through supply chain consolidation, but that a business review completed last month found $100 million in potential savings through cost-cutting as a stand-alone company.

    It also said that a decline in API’s share price also meant the offer was worth 12 per cent less than when it was made in October.

    The offer was worth about $727 million when it was made public in December.

    API countered by saying the cost savings that Sigma was citing were uncertain and unclear, and would mostly be offset by revenue lost by Chemist Warehouse’s decision to take its business elsewhere.

    It also pointed out its offer represented a 41.8 per cent premium to the average price of Sigma shares in the month before the offer was announced.

    “API notes that very little information has been provided by Sigma in relation to its intended restructure,” API said.

    Sigma shares slumped on the development, dropping 14 per cent to 52.5 cents by 1423 AEDT, their lowest since before the merger proposal was made public.

    API shares were down 3.57 per cent, at $1.35.

    Sigma is the owner of franchise brands Amcal, Chemist King, Discount Drugs and Guardian.

    API owns the Priceline, Soul Pattinson and Pharmacist Advice brands.

  • Sigma looks to new year after rough half

    Sigma looks to new year after rough half

    Pharmacies and drug supplier Sigma Healthcare says the outlook for fiscal 2019 is more positive after a challenging first half in the current fiscal year.

    The operator of retail chains including Amcal and Discount Drug Stores has lifted its half-year net profit the six months to July 31 by 17.4 per cent to $27.8 million, but sales fell amid challenging industry conditions.

    Underlying earnings before interest and tax (EBIT) fell 8.7 per cent.

    Sigma said sales were impacted by a pull-back in sales of low-margin Hepatitis C medicines and softer consumer sentiment.

    Adjusting for the lower Hep C sales, sales revenue was down 1.4 per cent.

    Chief executive Mark Hooper says a number of factors point to a more positive outlook for fiscal 2019.

    “The signs are good that momentum is swinging back in our favour,” Hooper said in statement on Thursday.

    “This is supported by a combination of our pipeline of pharmacy brand members, service improvements and efficiency gains from Project Renew and the opening of our Berrinba distribution centre in Queensland, along with the ramp-up of new service contracts in hospitals and logistics.”

    Sigma confirmed its guidance, provided on August 11, of underlying EBIT of $90 million for the full 2018 fiscal year.

    It also has agreed to buy dose administration services provider Medication Packaging Systems (MPS) for $18.5 million.

    Hooper said the acquisition fits in with the company’s strategy of becoming a broader healthcare company and MPS provided another avenue of growth.

    “We have achieved a sustained period of above market growth over the past few years,” said Hooper. “So whilst the current year was influenced by some unexpected events, these are being addressed. This has intensified our focus on our strategy and business development pipeline, including today’s announcement of the acquisition of MPS. It also reinforces our belief that we are on the right track and can return to growth in FY19 and beyond.”