Doubtful debt hits Sigma earnings
Sigma Pharmaceuticals’ full-year earnings are expected to hit just over $100 million, a growth of 12% on the previous year.
However, the growth in EBIT (earnings before interest and tax) for the 12 months to 31 January could effectively be lost as the company posts a one-off accounting adjustment of $20 million.
The adjustment includes a doubtful debt of around $8.5 million owed by a “single group pharmacies”, says the company, which is concerned the group could go into receivership or administration.
The remaining $11.4 million is a claw-back of the money insurers paid for a settlement with investors who launched a class action in relation to misleading profit guidance.
Sigma and its insurer reached an agreement after former CEO Elmo De Alwis and CFO Mark Smith pleaded guilty to falsifying company accounts.
EBIT is now expected to be “broadly in line” with the