Slide 1: Full Year Results Release Financial Year 2016
For personal use only McPherson’s Limited Full Year Results Release Financial Year 2016 Paul Maguire – Managing Director Paul Witheridge – Chief Financial Officer 22 August 2016
Slide 2: MCP FY2016 - Financial Overview
MCP FY2016 - Financial Overview Underlying Results* For personal use only Brand consolidation – fewer, bigger brands Revenue (Comparable) 1.3% Range rationalisation – exiting of lower $312.6m margin product ranges EBIT Improvement in revenue quality 14.2% $25.7m Growth despite significant AUD de
Slide 3: Summary Bridge of Growth in Underlying EBIT FY15 to FY16
Summary Bridge of Growth in Underlying EBIT FY15 to FY16 ($m) 1.0 For personal use only Increased Housewares JV contribution 5.2 Volume Increase / Product 5.1 Mix (13.1) FY16 Price 1.7 Product EBIT FY15 Increases Sourcing $25.7m EBIT Savings Commodity $22.5m Cost Reductions 7.0 AUD/USD Currency (3.7
Slide 4: MCP FY2016 Financial Overview – Significant Items
MCP FY2016 Financial Overview – Significant Items Significant Items A$m FY2016 FY2015 For personal use only Profit from divestment of Housewares 2.0 - Inventory rationalisation and restructuring costs (4.4) (4.1) Closure of Impulse Merchandising Division (1.4) - Bond buyback cost (0.3) - Legal and a
Slide 5: MCP FY2016 - Financial Overview
MCP FY2016 - Financial Overview For personal use only Underlying Cash Conversion* $34.2m operating cash flow before 118% interest and tax payments Net Debt Improvement in receivables and 35.4% $49.9m inventory profile Gearing $9.8m inflow from divestment net of 12.0pp 32.3% investments Improved
Slide 6: MCP FY2016 - Financial Overview
MCP FY2016 - Financial Overview For personal use only Normalised EBIT Interest Cover* 0.8 times EBIT* / Interest* 4.5 times Normalised leverage Ratio* 1.2 times Net Debt / EBITDA* 1.9 times Final dividend of 2.0 cents per share fully franked Total dividend of 8.0 cents per share fully franke
Slide 7: Strategy Update
For personal use only Strategy Update Paul Maguire Managing Director
Slide 8: McPherson's makeover
McPherson’s makeover For personal use only McPherson’s is a consumer centric organisation committed to providing consumers with innovative, high quality branded products that improve their lives McPherson’s has substantially transformed through acquisition & divestment and the establishment of meani
Slide 9: Divisional revenue summary (Aus & NZ)
Divisional revenue summary (Aus & NZ)* SHARE OF REVENUE For personal use only REVENUE GROWTH REASONS OUTLOOK FY2016 FY16 vs FY15 Growth despite a Growth in HEALTH program of brand 47% 3% revenue and & BEAUTY consolidation & range profit rationalisation Growth in HOME New products & revenue (excl’ 24
Slide 10: Percentage of revenue by division
Percentage of revenue by division 100% 5% 4% For personal use only 90% 27% 32% 21% 24% 80% 70% 17% 12% 60% 29% 25% 50% 28% 25% 40% 30% 45% 47% 20% 28% 31% 10% 0% FY13 FY14 FY15 FY16 Health & Beauty Household Consumables Home Appliances Housewares & IMD 10
Slide 11: McPherson's transformation timeline
McPherson’s transformation timeline Diversification achieved through acquisitions, divestments and new agencies For personal use only Divestment McPherson’s Printing Acquisition New Agency Demerger (Fine Fragrances) Acquisition New Agency HOUSEWARES Acquisition Division remaining 49% divested Feb Au
Slide 12: McPherson's - repositioned for growth
McPherson’s - repositioned for growth From MCP Today For personal use only A consumer products business with four A consumer products business with only three divisions and a reliance on the grocery channel divisions, focused on profitable growth across a (up until 2012 a Printing business was part
Slide 13: Business transformation outcomes
Business transformation outcomes Lessened exposure to foreign exchange (FY16 USD purchases 62% of total) For personal use only A more profitable channel and customer mix FY2015 Revenue FY2016 Revenue Hardware Export Hardware Export 2% 1% 2% 1% Independent Independent Electrical Electrical 15% 18
Slide 14: Business transformation progress
Business transformation progress For personal use only Brands Partnerships New Products New Markets Performance Improvement Divestment
Slide 15: Essential Beauty
Essential Beauty Brands For personal use only Manicare beauty tools Lady Jayne hair accessories Market leading heritage brands Powerful brands with mass distribution Growth through new products and channel expansion Advertising investment from Oct 2016 15
Slide 16: Advanced Beauty
Advanced Beauty Brands For personal use only Dr. LeWinn’s cosmeceutical skincare New formulations and packaging Innovative new products Growth through channel and market expansion Significant advertising investment throughout FY2017 to deliver growth 16
Slide 17: New Brand Communication
New Brand Communication For personal use only $2.5 million advertising spend in FY2017 Increasing brand awareness Increasing product trial Strengthening consumer engagement TV & Print Out of Home DIGITAL SOCIAL & INFLUENCERS (Appointment Viewing) (Store proximity) (Always On) (Always On) TOP
Slide 18: The new face of Dr. LeWinn's
The new face of Actress, Anna Bamford, appointed For personal use only brand ambassador August 2016 Best know for her role in hit TV show ‘Wonderland’, for which Anna received a Logie Award nomination for Most Outstanding Newcomer Recently on-stage at the prestigious Sydney Theatre Company along
Slide 19: Natural Beauty
Natural Beauty Brands For personal use only A’kin natural skincare & haircare New packaging Oct 2016 New products Oct 2016 Growth through channel and market expansion Significant advertising investment to deliver growth in 2HFY2017 19
Slide 20: Natural Beauty - agency partnership
Natural Beauty - agency partnership Successful partnership continues with Trilogy natural skincare For personal use only Partnerships 20
Slide 21: Prestige Beauty - agency partnership
Prestige Beauty - agency partnership Successful partnership continues with P&G Fine Fragrances For personal use only Partnerships Dolce&Gabbana fragrances to be exited October 2016 due to P&G selling the brand licence 21
Slide 22: New product development
New product development Pipeline of innovative new products across all divisions For personal use only New Products 22
Slide 23: New market development
New market development New Markets For personal use only • China expansion opportunity evaluated for Dr. LeWinn’s skincare and A’kin skincare & haircare • Chinese consumer research conducted and ‘hero’ products identified • Multi-channel approach to distribution • Communications plan commencing Sep
Slide 24: Channel development - digital transformation
Channel development - digital transformation Digital transformation is technology enabling For personal use only innovation, creativity, and growth Driven by our strategic objectives as well as consumer expectations McPherson’s Health & Beauty is now e-commerce capable, with Demandware our chosen te
Slide 25: Digital and e-commerce benefits
Digital and e-commerce benefits For personal use only Digital technology allows us to sell Digital content helps build more across multiple online retailers and meaningful consumer relationships territories and gives consumers and facilitates different ways of greater access to products marketing Co
Slide 26: Performance Improvement
>$12 million profit benefit in FY16 from: Performance Improvement Price increases For personal use only Organisational re-design and operational initiatives Product cost savings Technology improvements 26
Slide 27: McPherson's Housewares Divestment
McPherson’s Housewares For personal use only Divestment 51% of ‘McPherson’s Housewares’ divested to FACKELMANN (Germany) Nov 2014, establishing a joint venture Remaining 49% share divested to FACKELMANN, effective 31 March 2016, reducing McPherson’s debt by $20 million Divestment part of McPhe
Slide 28: Outlook
For personal use only Outlook
Slide 29: Health & Beauty division
Health & Beauty division Current Status For personal use only Revenue 3% ahead of prior year Significant brand consolidation and product range rationalisation now complete Successful new products under trusted brands boosting McPherson’s presence in Beauty Closure of Impulse Merchandising bu
Slide 30: Household & Personal Care division
Household & Personal Care division Current Status For personal use only ‘Household & Personal Care’ division established July 2016 to leverage Grocery channel expertise Market leadership maintained by Multix, Swisspers and Moosehead in FY2016 Profit impacted by: Unfavourable effect of weak A
Slide 31: Home Appliances division
Home Appliances division Current Status Outlook Excellent customer and supplier network Initiatives to offset weak AUD and Masters impact: For personal use only New products launched Price increases Commercial building approvals strong Growth from recent new ranging Revenue up 13% but
Slide 32: Summary
Summary Significant growth in underlying earnings achieved despite currency headwinds For personal use only Substantial reduction in debt and gearing Emphasis on growing our more profitable, market leading brands FY2017 to benefit from retail price increases, reduced operational expenditure, sourcin
Slide 33: For personal use only
For personal use only
Slide 34: Appendix: Financial Performance for the Year Ended 30 June 2016
For personal use only Appendix McPherson’s Limited Financial Performance for the Year Ended 30 June 2016 Paul Witheridge Chief Financial Officer
Slide 35: Group Financial Summary for FY2016 (Underlying)
Group Financial Summary for FY2016 Underlying (i.e. excluding significant non-recurring items) June 2016 June 2015 For personal use only ($A million) ($A million) Sales 312.6 349.1 10.5% Sales decrease EBITDA 28.5 25.2 13.3% EBITDA increase Depreciation & amortisation (2.8) (2.7) EBIT 25.7 22.5 14.2
Slide 36: Group Financial Summary for FY2016 (Statutory)
Group Financial Summary for FY2016 Statutory (i.e. including significant non-recurring items) For personal use only June 2016 June 2015 ($A million) ($A million) PBT excluding non-recurring items 18.9 16.4 Non-recurring items as outlined in presentation (4.3) (5.2) Statutory PBT 14.6 11.2 Income tax
Slide 37: Overview of Group Balance Sheet
Overview of Group Balance Sheet June 2016 June 2015 For personal use only ($A million) ($A million) Inventories 59.8 57.8 Receivables 44.8 55.0 Assets held for sale (inventories) - 19.7 Payables (48.8) (60.4) Net working capital 55.8 72.1 Property, plant & equipment 5.8 5.5 Investments (49% of House
Slide 38: Group Operating Cash Flows
Group Operating Cash Flows For personal use only June 2016 June 2015 ($A million) ($A million) Cash flows from operations Receipts from customers (inclusive of GST) 354.7 382.8 Payments to suppliers and employees (inclusive of GST) 320.5 (363.3) Net cash inflows from operations before interest and t
Slide 39: Group Investing and Financing Cash Flows
Group Investing and Financing Cash Flows June 2016 June 2015 For personal use only ($A million) ($A million) Cash flows from investing activities Payments for purchase of property, plant and equipment (2.9) (2.0) Payments for acquisition of business assets (8.5) (8.1) Payments for purchase of intang
Slide 40: FX Hedging (Australia)
FX Hedging (Australia) Comprehensive FX hedging program in place using Options, Forward Exchange Contracts For personal use only (FEC’s) and Collars: Options Protect downside with premium cost but allow upside benefit FEC’s Fixed rate with lost forward points Collar Improved downside protection in e
Slide 41: Non-IFRS measures and Disclaimer
McPherson’s Limited 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 revi