Life Pharmacy is expecting big things as franchise expert Andrew
Bagnall joins the board
KEY POINTS:
Gulliver's Travel founder Andrew Bagnall will be a "significant force" in Life Pharmacy's push to expand its franchise business, says the company's new chief executive.
Philip Ingham, who will take over from acting chief executive Des Flynn on August 1, said Bagnall's capital and his experience in building up brands and franchises would be key to Life's aim to drive growth rapidly by expanding its franchise businesses.
Bagnall, who sold his 26.82 per cent stake in Gulliver's Travel last year, yesterday won shareholder approval to be issued $5.25 million for a stake of just over 19 per cent through his investment company Segoura.
Under the agreement, Life Pharmacy will grant Segoura an option to subscribe for up to 50.1 per cent of Life's entire issued share capital for a period of up to two years at a subscription price of 75c a share in the first year and 8.25c a share in the second year.
Bagnall, who is in Europe and could not be contacted, founded Gulliver's Travel in 1976. It became the first listed travel company on the NZX in 2005.
His relationship with Life Pharmacy started when the company approached him this year to help finance its bid to take over Pharmacy Brands.
The bid failed, but Bagnall agreed to buy into Life Pharmacy through Segoura.
Life Pharmacy owns the Life Pharmacy brand and a 49 per cent stake in 16 of the 21 Life Pharmacy stores, and one non-Life Pharmacy store.
It is keen to improve its performance after a $6.6 million loss in the year to March 31 and its failed takeover bid.
Ingham, who was headhunted from his job as chief executive of global merchandise development for A.S. Watson Health and Beauty, said Life's focus on expanding pharmacy franchises made sense.
Franchises were quick way of building scale, and were common in New Zealand.
New Zealand's pharmacy ownership regulations require pharmacists to retain control of 51 per cent of a pharmacy. Ingham said it was probable that more pharmacists would be happier owning their own franchise than working under 51-49 per cent ownership.
Life Pharmacy chairwoman Liz Coutts said yesterday the company's decision to expand its franchise business had "clarity and inevitability".
She told told shareholders at the annual meeting yesterday that the company could not achieve the growth targets it had set with its current 20 Life Pharmacy franchises.
A greater focus on franchises would substantially increase revenue and give the Life Pharmacy brand a significantly greater "share of voice".
It would also enable the company to spread the cost of loyalty, weight loss and hearing programmes and initiatives over a greater number of franchise businesses, she said.
