Slide 1: Full Year Results Release FY17
For personal use only Laurence McAllister Managing Director MCPHERSOWN S Est. 1:6:6.0 Full Year Results Release FY17 23 August 2017 Paul Witheridge Chief Financial Officer
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3 For personal use only
Slide 4: Financial Update
For personal use only Financial Update
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Slide 6: Closure of Impulse Merchandising Division
For personal use only Closure of Impulse Merchandising Division Revenue from continuing operations $279.5m 10.6% Reduction in low margin private label and agency sales Improved contribution margins Earnings before interest and tax $24.0m 0.5% Reduced selling and distribution costs Adverse AUD/US
Slide 7: EBIT/profit before tax bridge FY16 to FY17
For personal use only Reduction in cooperative 0.2 advertising Various Others FX Impact costs 2.5 Reduction in 1.4 Reduction in selling and borrowing distribution (6.4) 2.6 costs costs $19.6m $17.1 Improvement 3.0 in contribution (0.8) margins Reduction in Home Appliances EBIT i) Demise of significa
Slide 8: Significant Items
Significant Items A$m FY2017 FY2016 For personal use only Impairment of Home Appliances intangibles (12.0) - Impairment of Revitanail brand (6.9) - Impairment of New Zealand business segment (2.7) - Restructure costs (1.6) (5.8) Bond buy back costs (1.2) (0.2) Profit on divestment of IMD Singapore 0
Slide 9: Cash conversion, net debt and gearing
For personal use only $30.8m operating cash flow before Underlying Cash Conversion* 113% interest and tax payments Strong operating cashflow Net Debt $36.4m 27.0% Improved working capital efficiency Gearing 29.2% 3.1pp Strong financial platform ROFE ** 15.4% 0.6pp Solid return on funds employe
Slide 10: Operational Update
For personal use only Operational Update
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Slide 12: Health, Wellness and Beauty
HEALTH WELLNESS BEAUTY For personal use only HAPL 22% H,W& B Net Sales 61% Agency Contribution 17% 12 Source: Industry Revenue Complimentary Medicines Australia 2015 (2017 Est), Cosmetics/Toiletry retailing IBISWorld 2017 Est
Slide 13: Focus beyond dispensing to front of shop
For personal use only Traditional Focus beyond High Aging Channels dispensing to Growth Population sales flat front of shop over 4 years China seeking high quality AU and NZ H,W & B Brands 13
Slide 14: Health & Wellness and Beauty industry revenue
For personal use only H&W $4.6 Bill +15% >66% 1.3 Mill Australians use Est. Industry revenue People add CM to CAGR complimentary 2017-18 existing treatments medicine(CM)) Beauty $4.0 Bill +3.2% Est. Industry revenue CAGR 2017-18 14
Slide 15: Brand Portfolio & Re-Investment Priorities
Brand Portfolio & Re-Investment Priorities DR:WOLFF ee BEAUTY DRLEWINNS' Maa [ Akin] LADY JAYNE’ I ¢ RRevitanalt: o y ass deh . GS EYLURE Qa goodness = nvestment Priorities DRLEWINNS: [Akin] Pmoricre f 15
Slide 16: Complementary medicines category value and growth
200 Bubble Size = Category Value Mn AUD For personal use only 180 Avg. = 0.03% 160 Nutritional Oils Bone Health 140 Multi Vitamins Value MAT Mar’2017 120 Arthritis (Mn AUD) 100 Intestinal Health Pregnancy 80 Cold & Flu Relief 60 Muscular Support Cystitis Relief Iron Deficiency Sinus & Hayfever Heart
Slide 17: Refreshing visual identity and packaging of brands
Executing on strategy by refreshing the visual identity and packaging of our brands DRLEWINNS' } RLEWINNS' [kin] a BEFORE | | | | | | oiewf Ty DRLEWINNS' 17
Slide 18: Focus on key pharmacy customers
For personal use only • Increased commercial focus and execution capabilities with our “big 6” customers • Driving mutual growth through joint business planning 100 80 Priceline CWH 60 • Pharmacy channel sales more than Ind PHY doubled in the past six years 40 20 0 FY 11 FY 12 FY 13 FY 14 FY 15 FY16
Slide 19: Karen Murrell and Dr Wolff partnerships
Karen Murrell – All Natural Lipsticks partnership For personal use only • Domestic and export strategic partnership • Bundling opportunities with other brands • Potential to add margin that can be recycled into other brands Dr Wolff – European Alliance partnership • All products have a unique brand
Slide 20: Kingsgrove DC facility
• Kingsgrove DC Facility is a significant enabler to reinvest in McPherson’s brands For personal use only • Delivered significant efficiencies to free up supply chain capacity • Next steps will be about building on the platform for the future; Strategy , Planning & Sales & Key Account Export Researc
Slide 21: A'kin UK/EU and China Tmall distribution
For personal use only • Specialise in natural, good value – mid tier skincare and health brands • Working together to drive A’kin in the UK and EU • 5 star Tmall TP store operator • Secured the opening of Akin’s Official Tmall • A’kin has been positioned as a store. straightforward and simple • Targ
Slide 22: Outlook
For personal use only Outlook
Slide 23: McPherson's, a journey of profitable growth
For personal use only ‘McPherson’s, a journey of profitable growth…’ 23
Slide 24: Appendix
For personal use only Appendix
Slide 25: Management team
For personal use only Laurence Paul David Smith Brett Owers Sarah Tully Lori Pirozzi Byron Stone McAllister Witheridge Business New Business HR Director National Field Sales Managing CFO Development Commercial Accounts & Director Director Director Finance Export Director Director Donna Mary Mark Bra
Slide 26: Income statement
For personal use only Sales 279.5 312.6 10.6% decrease in Sales Cost of Goods Sold 160.1 179.5 Gross Contribution 119.4 133.1 Expenses 92.1 106.4 13.4% decrease in Expenses EBITDA 27.3 26.7 2.2% increase in EBITDA Depreciation & amortisation (3.3) (2.8) EBIT 24.0 23.9 0.5% increase in EBIT Interest
Slide 27: Non-recurring items reconciliation
For personal use only NPBT excluding non-recurring items 19.6 17.1 Non-recurring items: - Impairment of intangibles (21.6) - - Restructuring costs (1.6) (5.8) - Bond buy back costs (1.3) (0.2) - 49% share of Housewares JV profit* - 1.8 - Gain on Sale of Housewares JV - 2.0 - Other non-recurring item
Slide 28: Cash flows from operations
For personal use only Cash flows from operations Receipts from customers (inclusive of GST) 312.3 354.7 Payments to suppliers and employees (inclusive of GST) (281.5) (320.5) Net cash inflows from operations before interest and tax 30.8 34.2 Net interest and borrowing costs paid (5.2) (6.3) Income t
Slide 29: Investing and financing cash flows
For personal use only Cash flows from investing activities Payments for acquisition of business assets - (8.5) Payments for purchase of property, plant and equipment (1.6) (2.9) Payments for purchase of intangibles (0.3) (1.0) Proceeds from sale of business assets 0.5 18.3 Net cash outflows from inv
Slide 30: Funds employed and gearing
For personal use only Inventories 59.3 59.8 Receivables 40.2 44.8 Payables (48.6) (48.8) Net working capital 50.9 55.8 Property, plant & equipment 4.9 5.8 Intangibles 93.0 115.1 Provisions & other net liabilities (13.5) (15.3) Total funds employed 135.3 161.4 Net financial debt (36.4) (50.0) Net tax
Slide 31: Top shareholders
Rank Investor Holding (shares) Holding (%) Cumulative (%) For personal use only 1 Investors Mutual 9,800,000 9.4 9.4 2 Microequities 7,525,667 7.2 16.6 3 Dimensional Fund Advisors 5,125,548 4.9 21.5 4 Mr Paul J Maguire 2,433,143 2.3 23.8 5 Adam Smith Asset Mgt 2,229,201 2.1 25.9 6 TBF Investment Mgt
Slide 32: Non-IFRS measures and disclaimer
Non-IFRS measures For personal use only The non-IFRS measures used by the Company are relevant because they are consistent with measures used internally by management to assess the operating performance of the business. The non-IFRS measures have not been subject to audit or review. Disclaimer State