Sigma Healthcare : AGM Presentation to Shareholders

Growth through transformation

Annual General Meeting 13 May 2020

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 operations of the Sigma Group, including comments about Sigma's expectations of the outlook for FY2021 and future years, as at 13 May 2020.

This presentation contains forward-looking statements relating to operations of the Sigma Group that are based on management's own current expectations, estimates and projections about matters relevant to Sigma's future financial performance. Words such as "likely", "aims", "looking forward", "potential", "anticipates", "expects", "predicts", "plans", "targets", "believes" and "estimates" and similar expressions are intended to identify forward-looking statements.

References in the presentation to assumptions, estimates and outcomes and forward-looking statements about assumptions, estimates and outcomes, which are based on internal business data and external sources, are uncertain given the nature of the industry, business risks, and other factors. Also, they may be affected by internal and external factors that may have a material effect on future business performance and results. No assurance or guarantee is, or should be taken to be, given in relation to the future business performance or results of the Sigma Group or the likelihood that the assumptions, estimates or outcomes will be achieved.

While management has taken every effort to ensure the accuracy of the material in the presentation, the presentation is provided for information only. Sigma Healthcare Limited, its officers and management exclude and disclaim any liability in respect of anything done in reliance on the presentation.

All forward-looking statements made in this presentation are based on information presently available to management and Sigma Healthcare Limited assumes no obligation to update any forward-looking statements. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of any offer to buy any securities or otherwise engage in any investment activity. You should make your own enquiries and take your own advice in Australia (including financial and legal advice) before making an investment in the Company's shares or in making a decision to hold or sell your shares.

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Brian Jamieson

Chairman

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Board of Directors

David Manuel	Kathryn Spargo	David Bayes	Christine Bartlett

Ray Gunston

Michael Sammells

Mark Hooper

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Year in Review

	Medication
	management
New	Pharmacy
Distribution	network
Centres	growth
Investment in	Hospital
critical IT	network
infrastructure	growth
CW Contract

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Overview

Financial

Performance

FY20 Revenue

$3.2bn, down from

$3.9bn

FY20 Underlying

EBITDA** of $46.7m

is in line with

guidance

Trading conditions difficult to forecast beyond this due to uncertainty from COVID-19

Operational

Update

Wholesale - Ongoing Revenue* up 8.5% for the 12-months to 31 Jan 20

Pharmacy brands - Like-for-like sales up 11.7% and member pipeline strong

Sigma Hospitals -

FY20 sales up 26%, and secured contract extensions

Capital

Management

Net Debt of $146

million at 31 Jan 20

FY20 Dividend

suspended

• References to Ongoing Revenue relate to the Sigma business excluding Hep-C and sales to Chemist Warehouse
• Refer to Appendices for a Reconciliation of Reported to Underlying

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Distribution Centre investment

1. Over $220 million investment to date

1. Generational advancement in infrastructure

1. Significantly improves operational capacity and efficiency

Canning Vale WA

April 2018	February 2019	October 2019	January 2020
Berrinba QLD	Canning Vale WA	Pooraka SA	Kemps Creek NSW
$52m	$52m	$20m	$105m

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Investment in critical IT Infrastructure

ERP replacement

1. Project kicked off in Feb 20, and is expected to conclude in Q4 2021

1. Partnered with experienced System Integrators Accenture and Infosys

1. Specialist team members recruited

1. Selected SAP S/4 HANA and SAP Next Generation product suite

1. 7-10year expected payback

Capital Expenditure cycle

120

100

80

60

40

20

0

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY 23

FY 24

(A)

(A)

(A)

(A)

(A)

(A)

(A)

(F)

(F)

(F)

(F)

Capex - Business Projects

Capex - Distribution Centres

Capex - Acquisitions of Subsidiaries

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Merger proposal rejected during the year

o Full consideration given to API proposal which was ultimately rejected o API exited Sigma's share register in December 2019

o Right decision for Sigma shareholders:

• Clear road map established for Sigma's medium to long term future as standalone business
• Good progress being made on achievement of $100m of efficiency gains through Project Pivot
• Capital investment program nearing completion and already delivering strong results

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Corporate Social Responsibility

1. Continuing efforts to minimise our environmental footprint

1. Partnered with Essential Services to overcome challenges and ensure medicines were delivered to isolated areas

1. Financial and product support provided to affected communities

1. Ongoing support for Vinnies and The Summer Foundation

We have been blown away with the generosity of all the Sigma team in regard to the time spent and emotional support given to Stanthorpe and Tenterfield through this tough time.

Michael Lane, Stanthorpe Pharmacy Group

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Brian Jamieson

Chairman

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Mark Hooper

CEO &

Managing Director

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Project Pivot - Delivering on target

1. Action taken to achieve $62.3m of targeted annualised benefit at 31 Jan 2020, in line with initial Year 1 expectations

1. Now anticipate some delays in realisation in Year 2 due to reinvestment to support the return of MC/CW FMCG, impacts from bushfires and COVID-19

1. Remain on target to deliver $100+m of benefits, however some realisation will now be in Year 3 (FY22)

Cumulative actions already implemented

(annualised benefits $M)

70

60

50

40

30

20

10

0 Apr-19May-19Jun-19Jul-19Aug-19Sep-19Oct-19Nov-19Dec-19Jan-20

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Chemist Warehouse FMCG contract - on track

1. Approximately $700 - $800 m annual sales (including second line PBS)

1. 4-yearsupply agreement to June 2024

o Commercially acceptable trading and credit terms to both parties

o On boarding commenced Nov 2019 with over 80% of FMCG volume now being supplied

o Expect full run rate from June 2020

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Distribution Centres

Capacity | Efficiency | Value

Berrinba QLD

Kemps Creek NSW

1. Operationalised four new Distribution Centres in the last four years with the latest automation

1. Created physical and operational capacity that absorbed the spike in volume seen through the Covid-19 peak

Sale and Leaseback

1. Have created significant increase in value that we now look to release

1. Information Memorandum released in April 2020

1. 12 expressions of interest received

1. Anticipate completion third quarter of this year

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Regulatory Environment

o Discussions continue on the Community Pharmacy Agreement and Community Service Obligation Agreement

o Engagement has been encouraging

o Seeking investment to maintain the critical national infrastructure that supports community access to essential medicines

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COVID-19 update

o Assessment completed and action taken across the business to minimise risk

o Introduced a resource hub to support our team members in the workplace and working from home

o Implemented several initiatives to support community pharmacies and their patients

o Volumes peaked in March, up 70%, with some weeks up over 80%.

o Sigma's team members and new DC network has absorbed the unprecedented demand

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Outlook

o Entered FY21 with good momentum

o Combination of actions and a more diversified business provides the platform for sustainable earnings growth

o Opportunities created as we emerge from the Covid-19 pandemic will enhance this growth profile

o No formal guidance being provided

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Incoming Chairman

Mr Ray Gunston

B.Comm (Hons), DipEd, FCPA, FTA, GAICD

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Thank you

Appendix

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	-48.2%
EBITDA Margin	0.01%	0.01%	2.28%	-2.27%	N/A
Depreciation and Amortisation	-27.3	-17.6	-13.5	-4.1	-30.4%
Non-controlling interests	0.0	-1.4	-0.9	-0.7	-77.8%
EBIT	-3.1	29.1	76.2	-47.1	-61.84%
EBIT Margin	-0.0%	0.01%	1.91%	-1.9%	N/A
Net Financial Expense	-12.7	-12.7	-11.1	-1.6	-14.4%
Tax Expense	4.3	-3.8	-18.8	15.0	79.8%
NPAT	-11.5	12.6	46.3	-33.7	-72.8%

* Refer Appendices for a reconciliation of Reported to Underlying

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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 and Amortisation	(27,258)	(13,522)
Add Depreciation and right of use assets under AASB 16	9,611	-
Underlying EBIT	30,437	77,005
Less Non-controlling interests before interest and tax	(1,372)	(855)
Underlying EBIT attributable to owners of the company	29,065	76,150

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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

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Cash Flow

0

(50,000)

(100,000)

(150,000)

(200,000)

(250,000)

(300,000)

Net

31 Jan 2019

EBITDA	Change in	Income Tax		Shares buy	Dividend	Net Cost of		Capex	Acquisitions Net Interest	Net Debt
	Working	Payment		back	Payment	Employee		Payment			31 Jan 2020
	Capital					Shares
						Scheme
OPERATIONS / WORKING CAPITAL		REWARDING SHAREHOLDERS		INVESTING

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