Aust Pharma Sweetens Shareholders After Failed Sigma Bid

By Glenn Dyer | More Articles by Glenn Dyer

Australian Pharmaceutical Industries (API) has lifted interim dividend 7.1% to 3.75 cents a share for the six months to February 28 after reported a steady underlying after-tax profit of $26.8 million.

Statutory net profit for the half (including financing costs associated with the Sigma Healthcare share purchase and Clear Skincare acquisition) was $25.0 million, up just $100,0000 from the first half of 2018-19.

The higher dividend represents a payout ratio is 77% for the half, up from 69% at the same time last year. Directors said, “the continued increase in the dividend reflects the confidence of the API Board in the future performance of the company.”

But it was probably also an increase to keep shareholders happy after the company spent up to buy $12% of Sigma Healthcare ahead of the rejected takeover attempt in the half year.

The shares ended up 2% at $1.52.

Total revenue for the six months was up 6.6% to $1.98 billion after adjusting out the impact of Hepatitis C medicines and PBS Reforms.

Underlying earnings before interest tax depreciation and amortisation was $60.5 million, up 3.0% on the first half a year ago.

And looking to the current second half year, CEO Richard Vincent said in yesterday’s statement:

“We have a highly complementary portfolio of assets with an attractive growth outlook, which combined during the half to deliver improved earnings and NPAT.

“The business had a solid performance, with Priceline Pharmacy returning to positive like-for-like sales growth, our Consumer Brands business expanding once again, and effectively bedding in our Clear Skincare acquisition.

A small question mark was the blowout in debt – from $25.1 million at the end of February 2018 to $262.0 million at the end of February 2019.

That was due to the cost of purchasing the 12.95% stake in Sigma Healthcare and the acquisition of Clear Skincare.

“The financing costs of the investment in Sigma are offset by dividend payments over a 12-month period. An increase in working capital delivered improved sales, although the timing of the sales promotions and debt collections saw the company’s cash conversion cycle decline by 5.2 days on the PCP,” according to yesterday’s statement.

API is 19.3% owned by Washington H Soul Pattinson.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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