Sigma Pharmaceuticals' bigwigs might have left investors wondering whether Australia's largest drugs maker really has woken from its state of unconsciousness.
Emerging from its month-long suspension to deliver a full-year loss of $390 million, Sigma's chief drug maker, Elmo de Alwis, and his bean counter, Mark Smith, seemed keen to leave the impression everything was hunky dory - albeit with a few minor hiccups. After all, what's $473 million in write-downs, no final dividend and a near halving of your share price in a single day?
Instead, De Alwis talked up Sigma as a "unique and diversified business". He even pointed out that Sigma's growth in the last six weeks had been encouraging. That was before a "technical problem" 30 minutes into the earnings briefing yesterday caused the line to analysts to be cut for almost 10 minutes.
Once back on the line, de Alwis - not to be confused with the furry red monster that sports an orange nose on Sesame Street - pointed out that the reason Sigma took so long to release its accounts was merely because it wanted "to make sure that what we published ... was correct".
But he wasn't too keen to take questions about whether he should swallow the medicine for Sigma's fall from grace. "No, I haven't given any consideration [to stepping down]. I don't see that as my job to do. We have a strong company that we want to maximise the performance of," de Alwis said.
"I want to focus on what my job is today, which is to run Sigma." (Whether this will be the case tomorrow may be another matter).
Besides, de Alwis said Sigma was a "strong company and is performing well", and was one in which "people should have confidence". But he did admit that the troubles over the last month had been "unfortunate and disappointing".
Shareholders might well need a good dose of Sigma's best drugs after the latest shenanigans resulted in $510 million being wiped from its market value yesterday. Sadly, April Fool's did not come a day early.
PRAYER FOR TIGER
Ten's blockbuster MasterChef is not the only saucy program that the TV network's chief executive, Grant Blackley, is hoping will help boost its earnings this year. Blackley revealed at Ten's profit briefing yesterday that he simply could not wait for Tiger Woods to return to the Australian Masters later this year.
We're sure the executive chairman, Nick Falloon, is also keener on seeing Woods as a supreme golfer rather than Woods the train wreck. Falloon has been spotted on a few occasions at the Terrey Hills Golf and Country Club working on his three iron.
PEPPERCORNS
Geoffrey Kinghorn and David Veal might want to start looking for a day job. That's because a payout for their stakes in subsidiaries associated with the failed Allco Finance Group's aircraft leasing business might not bear as much dosh as they would hope.
The pair have been fighting China's HNA Group in the Federal Court for control of the aircraft leasing business through the special-purpose subsidiaries associated with it.
But HNA's lawyer, Mark Leeming, SC, revealed yesterday it is planning to seek a court order for Veal and Kinghorn - the son of the Allco founder John Kinghorn - to sell all of their ordinary shares to the Chinese outfit. "We want this court to have ordered to us the ordinary shares, and we'll pay $1 or $2," Leeming told the court.
Given that most of the 35 subsidiaries have only two shares apiece, a payout to Veal and Kinghorn on HNA's terms would amount to $134 between them at most.
That might just be enough to give the pair a day at the Easter Show.
GOOD LEAVER
OZ Minerals's former boss Andrew Michelmore might not have picked up a "termination payment" but he still clipped his ticket on the way out to the Chinese state-owned Minmetals last June.
Sure, Michelmore did live up to his pledge to surrender his rights to a termination payout to appease shareholders. But he still pocketed a one-off payment of $475,000 and almost 144,000 OzMinerals shares worth $134,000 for his last months in the top job. And because Michelmore was a "good leaver", as OZ Minerals put it in its annual report, he also kept his Zinifex and OZ performance rights.
That was on top of his basic salary of $876,111 for just more than five months work at the operator of the Prominent Hill mine in South Australia. All up, Michelmore's total pay tallied a tad more than $2 million last year, compared with $1.2 million in 2008.
Among his underlings to switch to Minmetals, the ex-OZ beancounter, David Lamont, and the former chief operating officer, Brett Fletcher, pocketed one-off payments of almost $93,000 and $136,000 respectively. Of course it's all relative. Not even Michelmore can forget the $8.4 million kiss-off in 2008 to the former boss of OZ, Owen Hegarty.
Then again, Michelmore did preside over a $8 billion slump in the company's market capitalisation and a $2.5 billion full-year loss.
DINNER TALK
Theresa Gattung, Telecom New Zealand's ex-boss, has become more sceptical about cold calls.
In her book Bird on a Wire, Gattung recalls Optus's chief linesman, Paul O'Sullivan (aka "POS"), and Rothschild heavyweight Trevor Rowe inviting her to dinner at the Shangri-La in Sydney back in December 2004. POS wanted to chat about Optus buying AAPT.
A month after their rendezvous, Gattung said the Irishman sent her a letter "proposing that we jointly explore options, including the creation of a joint venture between Telecom NZ's businesses in Australia and SingTel Optus".
It got Gattung excited enough to spend the next 10 months looking at "every possible permutation of a deal". But POS rang in October 2005 to say that he would not be putting any firm offer on the table for AAPT.
As it turned out, AAPT wouldn't have been one of the best buys for Optus. A year later Telecom NZ was forced to write down the value of its Australian subsidiary by more than $1.1 billion.
SPEED GUN
Still reeling from the resignation of the chief inspector Eric Mayne, those who will take the reins in the market supervision team at the ASX seem to have been left scrambling to see if anyone can use the speed gun. Given the ASX's inability to issue a speeding ticket to itself after a substantive fall in its share price over the last three days, we suspect they are still reading the instructions on the box. Or could it be something to do with plans to allow foreign operators to run exchanges in Australia?
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Frequently Asked Questions about this Article…
What caused Sigma Pharmaceuticals' dramatic share price fall and how big was the market value hit?
Sigma Pharmaceuticals reported a full‑year loss of $390 million, took about $473 million in write‑downs and declared no final dividend. Those results, combined with recent operational troubles, triggered a near‑halving of its share price in a single day and wiped roughly $510 million from its market value.
Why did Sigma delay releasing its accounts and were there problems during the earnings briefing?
Sigma said it delayed publishing its accounts because it wanted to make sure what was published was correct; the company had also been suspended for about a month before releasing results. During the earnings briefing a technical problem cut the line to analysts for almost 10 minutes, which interrupted the update.
What did Sigma's CEO Elmo de Alwis say about management stability and company performance?
CEO Elmo de Alwis described Sigma as a "unique and diversified business," said recent growth had been encouraging, and told analysts he had not considered stepping down—adding he wanted to focus on running Sigma. He also admitted the last month's troubles were "unfortunate and disappointing."
How do Sigma's write‑downs and the lack of a final dividend affect shareholders?
The $473 million of write‑downs and the decision to pay no final dividend directly reduce reported earnings and cash returned to shareholders for the year. Those outcomes can weigh on investor confidence and help explain the sharp share‑price decline noted in the company’s results.
Can TV hits like MasterChef or a celebrity appearance (e.g. Tiger Woods) materially affect a broadcaster’s earnings?
Broadcasters such as Ten see popular programs and high‑profile events as revenue drivers. Ten’s chief executive Grant Blackley highlighted that MasterChef is a blockbuster and said he’s hoping a return by Tiger Woods to the Australian Masters will help boost the network’s earnings this year.
What is the Allco/HNA dispute and what could it mean for investors in the aircraft leasing subsidiaries?
Former Allco executives Geoffrey Kinghorn and David Veal are fighting China’s HNA Group in Federal Court over control of the aircraft‑leasing business held in special‑purpose subsidiaries. HNA is seeking a court order to acquire ordinary shares and indicated it would pay $1 or $2. Because most of the 35 subsidiaries have only two shares each, HNA’s proposed terms could result in a token payout—reported as at most $134 between the two men—illustrating how litigation outcomes can sharply limit recoveries for holders of such shares.
What did OZ Minerals’ departing CEO Andrew Michelmore receive and what does the article report about his tenure?
Andrew Michelmore received a one‑off payment of $475,000 plus almost 144,000 OZ Minerals shares worth about $134,000 for his last months in the job. He also had a basic salary of $876,111 for just over five months, and his total pay last year was a tad more than $2 million (up from $1.2 million in 2008). The article notes he presided over an $8 billion slump in market capitalisation and a $2.5 billion full‑year loss at the company.
Are there investor concerns about ASX market supervision after recent events?
Yes. The article reports the resignation of the ASX’s chief inspector Eric Mayne and says the market supervision team appears to be scrambling. It also notes the ASX experienced a substantive fall in its own share price over three days and suggests questions about whether the exchange can or will police itself — mentioning possible plans to allow foreign operators to run exchanges in Australia.
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