CHEMIST retailer Terry White Group has posted a healthy doubling of underlying earnings over the past year, aided by the acquisition of the Chemplus network in 2015.
The Brisbane-based Terry White Group, which is close to finalising an even bigger merger with rival chain Chemmart this month, has revealed a 107 per cent surge in earnings before interest, tax, depreciation and amortisation to $7.71 million in FY16.
This has translated into a 50 per cent increase in net profit after tax to $1.84 million. The result was built on a 47 per cent lift in revenue to $70.57 million, while net operating cash inflow increased by 116 per cent to $7.15 million.
Terry White Group says the South Australian-based Chemplus network had delivered significant benefits to the group over the year including a broader distribution base for higher-margin private label products.
Terry White Group CEO Anthony White (pictured) says the Chemplus network acquisition last year delivered increased sales across all categories for pharmacy owners and provided the group with 'proven merger capability'.
The company is now moving towards a game-changing merger with Chemmart, which is owned by the dual-listed New Zealand company EBOS Group (ASX:EBO).
The merger is expected to create one of Australia's largest retail pharmacy networks with a combined retail turnover of $2 billion.
The deal, which will boost the group's pharmacy network to 500, involves EBOS Group selling its Chemmart assets to Terry White Group and paying $18 million cash for a 50 per cent stake in the merged entity.
The merger is being put to a shareholder vote on September 30 and is expected to be finalised by early October.
"The size of this merger is unprecedented in the Australian pharmacy industry and will deliver significant scale benefits to our pharmacy owners and their customers," says White.
"Through the merger, we will build upon our strong market position and harness our collective strengths and capabilities to create a new force within the industry through the combination of the Terry White Chemists, Chemplus and Chemmart networks."
White sees a bigger Terry White Group playing a larger role in the broader healthcare industry.
"The merger with Chemmart will allow us to build upon and leverage the best of what each of the respective networks has been delivering in health and health services, to expand the scope of pharmacists within the combined group into other areas of health," he says.
White has earmarked further expansion of the pharmacy network over the next 12 months, which he says will be 'transformational' for the group.
"We expect the current consolidation in the industry to continue in the short to medium term and this will present potential future opportunities for the group," he says.
"We are well placed and have a strong balance sheet to support further planned mergers with likeminded pharmacies to increase our market share and competitiveness, to ultimately achieve enhanced financial performance and a strengthened market position.
"We are confident that the merger with Chemmart will deliver continued earnings improvement through increased scale and will position us to achieve our long term vision of becoming Australia's strongest retail pharmacy network."
Terry White Group, an unlisted public company, is paying a final dividend of 5c per share for a total payout of 8c in FY16.
Hear more about Anthony White's plans to grow Terry White Group into the largest pharmacy network in Australia at the Brisbane Business News Breakfast Series on Wednesday 28 September.
For more information or to book, CLICK HERE.
Bookings close this Friday 23 September.
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