ACCT20080: Sigma Health Limited Governance and Ethics Report

This report provides a comprehensive overview of Sigma Health Limited, examining its board structure, shareholder relations, and corporate governance practices. The analysis draws upon the company's annual reports, focusing on the board's orientation, remuneration policies, and communication strategies with shareholders and stakeholders. The report explores the application of legitimacy theory to assess the company's disclosures and understand how the company aligns with the ASX corporate principles. It investigates the composition of the board, including the independence of directors and their engagement with shareholders. Furthermore, the report delves into the company's strategic objectives, stakeholder engagement, and alignment with shareholder and stakeholder theories, including the shareholder and stakeholder theories, and Freeman's theory. The analysis considers the company's financial performance, dividend policies, and commitment to sustainable growth and shareholder returns. The report also discusses the company's responses to market changes and its efforts to foster partnerships between employees and shareholders, providing insights into Sigma Health Limited's approach to corporate governance and ethical considerations.

Running head: SIGMA HEALTH LIMITED
Sigma Health Limited
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SIGMA HEALTH LIMITED
Executive summary
In this report a detailed overview of the Sigma Healthcare Limited has been done. The report
shows the board structure of the company and gives a detailed overview of the company with its
shareholders. The report shows the various theories which has been implemented for conducting
the relation between the shareholders and the stakeholders and the company. In the annual report
of the company it has been stated that the company shows great values for the various
stakeholders and the shareholders of the company.

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Introduction
The main purpose of this report is to understand the board orientation of Sigma
Healthcare Limited and how the company treats its shareholders and stakeholders. The various
reports which has been shared by the chairman and the CEO of the company in its annual report.
The remuneration report of the company has also been discussed in the report from the annual
report which was published by the company. Information has been gathered from the annual
report of the company. The various policies of the company has been reviewed in this report.
Legitimacy theory has been used to assess the communication of the company with the
shareholders. The main outcome of the report is to understand the orientation of the board and to
get a brief overview of the association between the stakeholders of the company and the board of
the company.
Introduction of the company
Sigma healthcare Limited is a public company. It has acquired the 100th rank in the list of
the top 2000 companies of Australia. The main generation of the revenue of the company comes
from the medicines wholesaling in the Australian market. The company produced a total of
$4,077,004,000 as revenue with sales and other revenues in 2019. The managing director and
CEO of the company is Mr. Mark Hooper. Mr. Brian Jamieson is the chairman of the Sigma
Healthcare Limited. Through the various healthcare operations, Sigma Healthcare Limited
operates its wholesale, distribution of products, and retailing of the various pharmaceutical
products. The Retail Pharmacy Services of the company is associated with the operation of the
Amcal, Chemist King, Discount Drug Stores, Guardian and PharmaSave stores. The Hospital
Pharmacy Services of the company comprises of the drug distribution of the company through
the various public and private hospitals. This is carried out by the Sigma Services business. The
Supply and Logistics Services of the company consists of the Central Healthcare Group which

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helps in operating the third party services of logistics for providing and helping in the
distribution of the Pharmacy products. The various Dose Administration Aid and the various
Related Services of the company includes the medication management services. These services
are carried out by the Medical Industries Australia. Sigma Healthcare Limited has formed
alliances with various other independent pharmacy groups. The alliances with these pharmacy
groups helps in the Pharmacy Alliance, Reform and the Smarter Pharm for providing any kind of
help or assurance to various pharmacies. The company emerges in offering management services
as well as professional advices to the various tailored products which includes the area of heart
health, bones, and joints as well as the various problems regarding diabetes and respiration. The
company operates a total of 300 pharmacies under the name of Amcal Max. The company also
operates 150 other pharmacies under the name of Guardian for providing healthcare and well-
being solution for the customers. The company was found in 1912 and its headquarters is
situated in the Rowville, Australia.
Corporate governance of the company
The corporate governance of the company are set by the Board of Directors and the
Management of Sigma. The various strategic directions of the company is also controlled by the
Board of Directors of the company. The corporate objective of the company is to increase the
pay of the shareholders of the company by making a framework for accepting the risk
management. The performance of the company is dependent on the corporate governance of the
company. The company has been following the ASX corporate principles for the growth of its
corporate governance policies. According to the ASX principles the company has adopted the
recommendations for its material aspects.

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Composition of the board
According to the latest annual report of the company, the majority of the board structure
including the chairman are independent Directors of the company. This has been implemented
under the board charter. The shareholders of the company are greatly helped by the company
policies. This states that the company policies are in contrast with the policies of the
shareholders. The shareholders and the stakeholders of the company are the main concern of the
company according to their policies. For aligning the interests of the non-executives of the
company, 25 per cent of the post-tax fees of the no-executive directors of the company are used
for the purchase of the sigma shares in the market in every three months. The security holders of
the company are engaged to receive various communication from sigma and the various
securities which are registered economically by the company. The share trading policy of the
company is applied for the directors of the company as well as the employees and the contractors
who are associated with the company. The design of the company has been implemented in such
a way that it protects the directors, employees as well as the associates of the company against
the act of insider training. The insider training states that the people who are associated with the
non-public pricing must be prohibited from dealing in the security matter as well as passing on
the information of the company to others. In march 2019, the company has announced that it is
unable to forward a proposal for the according to the Australian Pharmaceutical industries which
states that two companies must merge with each other on the basis of the interest of the
shareholders. The remunerations structure of the company has been hardly changed from the last
eight years. The remuneration structure of the company states that the company must support the
rebuilding and the growth phase of the shareholders of the company. The outcomes of the
remuneration report of the company correctly aligns with the various outcome and interest of the
company. The remuneration strategy of the company keeps on evolving the retention and the

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motivation of the shareholders of the company by the help of providing high performance and
sustainable creative values for the shareholders of the company.
Reports from the chairman and the CEO
The CEO of the company reports directly to the chairman of the company and the
chairman of the company has been responsible for the various executive matters which
comprises the business of the company.
Remuneration report
As allowed by the constitutional laws the company indemnifies its directors and officers.
According to the report the company has paid premium insurance to its directors and officers.
The following list shows the directors’ relevant interest in the shares:
The following list shows the number of meetings which has been conducted during the year and
the number of number of the board members who has attended it:

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Board orientation
The chief objective and goal of the company is to have a long tern sustainable growth and
shareholder returns. The various stakeholders of the company which includes the sigma team
members, the security holders of the company, the customers as well as the suppliers of the
company products. Since the end of last year a structured timeline has been implemented for
enhancing the transition of the chemist warehouse (CW) to other suppliers. Due to this reason
job reduction has been announced in the various regional distributional centers like Shepparton
(Victoria), Newcastle (New South Wales) and Launceston (Tasmania) by the end of the third
quarter of 2019. As it was disclosed by the company to the ASX, on 14th December 2018, it has
received an indicative proposal from the Australian Pharmaceuticals Industries (API) for
acquiring all the various shares of the company with the scheme of 0.31 API shares along with
$0.23 cents in cash for each and every sigma share (Annual report,2019). By the end of the last
year the directors of the company have decided to pay a final dividend which comprises of 2.0
center for every share (Annual report,2019). The ex-dividend date according to the annual report
is on 3rd April, 2019, it expected to be paid by 29th April. The total amount which needs to be
paid is $21.2 million. Other than the things which has been discussed there has not been any kind
of circumstances which has rose since 31st January, 2019 which can have substantial

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consequence on the company’s operations and the state of affairs of the group. The company
takes up an active agenda and the timetable for engaging with the political stakeholders of the
company. The remunerations policies of the company help in fostering a partnership between the
employees of the company and the shareholders of the company through the ownership of the
employees in the segment of the market shares (Annual report,2019). There is a direct link of the
shareholders of the company with the shareholders in the aspect of financial or strategic goals of
the company for delivering value of the relationship. The external auditor of the company is
invited for answering the various question of the shareholders regarding the audit relationship.
The financial and strategic goals of the company provide a value for the shareholders of the
company. The policy of the company outlines with the various procedures and guidelines of the
company values for the group compilation of the legal and regulatory applications of the ASX
rules (Annual report,2019). The security of the company is effected by the material price and
value of the company’s products. The shareholder communications policy of the company states
that the company has an effective communication with the shareholders. The agreement of the
company with its shareholders includes the various briefings, meetings and various events. This
program of the company includes the scheduling of the various ad-hoc briefs with the
institutional private investors of the company. The investors of the company from Australian
Shareholder Association provides and facilitates the two-way relationship of the company with
the investors of Sigma healthcare limitedThe main objective of the group is to manage the capital
and safeguard the various abilities for continuing to provide the various benefits to the
shareholders and stakeholders of the company (Annual report,2019). For adjusting the capital
structure of the company the amount of the dividends which the company pays to the
shareholders might be adjusted by the company. The return capitals of the shareholders other

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issues of the company debts might be solved by reducing the dividend shares (Jones,Wicks &
Freeman,2017). The company follows up the shareholder theory for maximizing the profits of
the shareholders. The company follows the main traditional purpose of a company in maximising
the return of the funds to its shareholders (Mansell,2013). Following the stakeholder theory the
company understands that the stakeholders of the company are merely the shareholders of the
company. The stakeholder ecosystem consists of anyone who are associated with the company
which includes the employees of the company, environmentalists and others (Harrison &
Wicks,2013). In the annual report of the company, it has acknowledged the importance of the
shareholders and the stakeholders of the company. According to the freemen’s theory the main
success of the company lies in the satisfaction of the stakeholders associated with the company
(Hörisch,Freeman & Schaltegger,2014). For forming a better and stronger base of a company it
needs to satisfy all its shareholders and stakeholders. The corporate governance framework of the
company states that the various stakeholders and the shareholders who are associated with the
company states that they must be treated with utmost importance. The stakeholder and the
shareholder theories which is followed by the company to develop its relationship with the
stakeholders and the shareholders of the company has been followed very with utmost important
by the company. The non-controlling interest of the company measures the shareholders’
proportion for getting the fair value of the assuming identifiable assets of the company. The
board structure of the company have been very robust from the beginning and reviewing the
yearly report of the company it has shown that the company has maintained a very good
orientation of the board for performing better in the long run.
Interpretation of the Company Communications using Legitimacy Theory
The Legitimacy Theory is the most conferred theories to light up the idea of charitable
social as well as environmental revelations in business correspondence. The theory comprehends

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the conduct of the organization in implementing, communicating and developing social
responsibility policies. In this fast-paced world, the new social, environmental and ecological
moves dictate to the governments just as to the organisations, to regard the guidelines, qualities,
and standards. The Legitimacy Theory plays the job of a legitimate factor for the divulgence of
environmental information. The principle presumption of the theory is satisfying the
association's social agreement, which empowers the acknowledgment of its targets. This, in turn,
necessitates the appropriation of a Corporate Social Responsibility (CSR) technique that
influences the different areas of an activity, incorporating into specific management
bookkeeping. Legitimation strategy is a significant component that impacts the view of the
organisation by its stakeholders. The idea of legitimacy is significant in examining the
connections among organizations and their working environment. Legitimacy is accomplished
by exhibiting that organizations' activities are associated with social qualities. In addition to this,
the sustainability of the theory depends upon the heritage of the management that connects the
traditional norms and values with the present day morals and ethics.
Deegan (2002) used the Legitimacy Theory to embrace the themes linked with social as
well as environmental reporting (SAR). He also made a reference to the contemporary trends that
takes place in social as well as environmental accounting research. Moreover, it was found that
motivation for disclosure attracted considerable research attention.
Deegan, Rankin, and Tobin (2002) examined whether CSR can be observed as a
determinant of business social revelation and vice versa of BHP Ltd which is one of the biggest
Australian companies. To conduct the research, an analytical model was adopted.

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Milne and Patten (2002) explored the role of environmental discoveries in producing an
effect on the investors of the chemical industry. It examines both the negative as well as the positive
effects that surrounds the chemical firms’ accountabilities for toxic waste.
Conclusion
To conclude, a detailed description has been provided on the Sigma HealthCare Limited
to understand the board orientations of the company and to get a clear understanding and idea of
how the company answers back to its stakeholders. Sigma Healthcare being one of the top
companies in the country, has generated a hefty sum of revenue over the last couple of years
stating its positing in the market. The company operates in a lot of geographical locations as
Amcal Max and Guardian to provide good healthcare to its citizens at an economical rate. In
addition to this, the corporate objective of the company and the arrangement of the board has
been discussed too which includes reports from the CEO and the Chairman. Lastly, the
clarification of the company in accordance with the Legitimacy Theory has been described as
well.

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Reference list
Annual report. (2019). Retrieved 18 September 2019, from
http://investorcentre.sigmahealthcare.com.au/static-files/fd3f3246-7660-4fbd-85ab-
679f8a52ef4c.
Deegan, C. (2002). Introduction: The legitimising effect of social and environmental disclosures
- a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282-
311.
Deegan, C., Rankin, M., & Tobin, J. (2002). An examination of the corporate social and
environmental disclosures of BHP from 1983–1997. Accounting, Auditing &
Accountability, 15(3), 312-343.
Deegan, C., Rankin, M., & Tobin, J. (2002). An examination of the corporate social and
environmental disclosures of BHP from 1983–1997. Accounting, Auditing &
Accountability, 15(3), 312-343.
Harrison, J. S., & Wicks, A. C. (2013). Stakeholder theory, value, and firm
performance. Business ethics quarterly, 23(1), 97-124.
Hörisch, J., Freeman, R. E., & Schaltegger, S. (2014). Applying stakeholder theory in
sustainability management: Links, similarities, dissimilarities, and a conceptual
framework. Organization & Environment, 27(4), 328-346.
Jones, T. M., Wicks, A. C., & Freeman, R. E. (2017). Stakeholder theory: The state of the
art. The Blackwell guide to business ethics, 17-37.