Life after the near death experience in 2010 for Sigma Pharmaceuticals as the company reported another 12 month heap of red ink, but the shares rose.
The company yesterday said it cut its loss for the year to $235.38 million for the year to January 31, 2011 from a net loss of $398.28 million in the 2009-10 financial year.
The result includes a non-cash impairment charge of $258.3 million to the group’s goodwill.
Sigma said underlying earnings before interest and tax for the combined healthcare division and pharmaceuticals division of $129.2 million.
The board said a special fully franked dividend of 15c a share would be paid on May 11, 2011.
That was the news that saw the shares jump 15% to a day’s high of 48c, before they eased to end up 4.5c at 46c.
In the statement, Sigma said the December announcement that a major supplier had withdrawn from the Australian full line wholesaling model had resulted in the projected decrease of up to 15 per cent of Sigma’s wholesale sales revenue.
"Sigma worked quickly to identify and implement mitigating strategies for Pfizer’s decision such as costs savings and further reductions in customer trading terms and discounts, to offset the potential impact of this change and PBS (Pharmaceutical benefits scheme) reform on its future earnings," the company said.
Following the sale of the pharmaceuticals division, Sigma said it is focused on its full line wholesaling and retail pharmacy operations.
"Our healthcare business has performed well during a challenging period for Sigma," the company said.
Sigma chairman Brian Jamieson said in the statement that the board considered it "appropriate" to pay a special dividend to shareholders following the sale of the pharmaceutical division.
He said Sigma shareholders had supported the company through its recent difficulties.
The company’s results include a full year of activities from the pharmaceutical division which was sold to Aspen Asia Pacific on January 31.
The company said its ongoing healthcare business remains ‘‘sound and profitable," with full year 2010-11 sales revenue up 6.6% to $2.9 billion and underlying full-year EBIT for healthcare was $46.7 million.
Sigma’s managing director Mark Hooper said while the reported net loss was "disappointing," it was pleasing to see the healthcare business continue to grow and remain stable despite the recent challenging times.
"With the business stabilised, we can concentrate on reinvigorating our core operations, in both wholesale and retail,’’ Mr Hooper said.
"A culture of responsiveness and innovation will place the company well to meet industry’s ongoing change."
Mr Hooper said Sigma had a ‘‘clear financial model’’ as it seeks ‘‘profitable growth with due regard to key metrics including return on investment".
Sigma has also negotiated an extension of its Waratah trade receivables debt facility for a further three-year term and increased the facility to $200 million.
