Options to extend are often resides with client (CW). Especially...

Options to extend are often resides with client (CW). Especially 1 year extensions are incase client falls behind on their new contract tendering out.

I have never seen this reside with supplier.

Tendering out now may not be an issue provided CW has an effective start day after contract is completed with SIG.

To me this will mean trade receivables will reduce come F18 H2.

Cash conversion higher as asset turns to cash. However, sales may fall 2-3 months near end of term as CW prepares to buy from someone else.

At the end of the day who else will supply CW given the stink they have created in terms of PR. Everyone in industry now knows they are untrustworthy.

So end of the day CW may not get the breadth of supplies that SIG has provided. Going to Sandoz maybe for limited product range and they may in up with more contracts to manage and greater overheads.

CW administers one big contract or 3-5 small contracts becomes greater work. Anyways I think SIG will manage with CW.

Not to mention it could turn the screws on CW with expansion of its discount drugstore brand.