Slide 1: First Half Results Release Financial Year 2016
For personal use only McPherson’s Limited First Half Results Release Financial Year 2016 Paul Maguire – Managing Director Paul Witheridge – Chief Financial Officer 23 February 2016
Slide 2: MCP 1H2016 - Financial Overview
MCP 1H2016 - Financial Overview Overall 1H2016 Sales Revenue of $168.3m, 8.9% below prior year For personal use only Sales revenue excluding the partially divested Housewares business 6.2% above prior year, impacted by: Growth in Health & Beauty and Home Appliances Brand consolidation and SK
Slide 3: MCP 1H2016 - Financial Overview: Net debt and dividend
MCP 1H2016 - Financial Overview Net debt at 31 December 2015 $92.8m, gearing 46.4% For personal use only Net debt and gearing projected to be significantly lower at 30 June 2016 after application of an estimated $20m in proceeds from McPherson’s Housewares divestment to reduce debt Interim div
Slide 4: Strategy Update
For personal use only Strategy Update Paul Maguire Managing Director
Slide 5: Trading commentary
Trading commentary For personal use only Retail trading conditions favourable Commercial building approvals trending upwards Margins adversely impacted by the weak AUD Strong branded revenue across all divisions helped offset the weak AUD Easing commodity prices in 1H2016 partially offset
Slide 6: Divisional revenue summary (Aus & NZ)
Divisional revenue summary (Aus & NZ)* SHARE OF REVENUE For personal use only REVENUE GROWTH REASONS OUTLOOK 1H2016 1H16 vs 1H15 Growth in HEALTH New products and 48% 11% revenue and & BEAUTY new ranging profit Growth in HOME New products and 23% 18% revenue and APPLIANCES new ranging profit Multix
Slide 7: Company transformation
Company transformation McPherson’s is substantially transforming through For personal use only acquisition & divestment and the establishment of new agency partnerships; increasing participation in more profitable categories, channels and markets McPherson’s is a consumer centric organisation commit
Slide 8: Transformation benefits
Transformation benefits Lessened exposure to foreign exchange For personal use only A more profitable channel and customer mix 1H2015 Revenue 1H2016 Revenue Hardware Export Hardware Export 2% 1% 1% 1% Independents 15% Independents 18% Commercial 6% Commercial Grocery Grocery 5% 39% Dept. Stores
Slide 9: Company transformation timeline
Company 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 Aug Ma
Slide 10: Transformation progress
Transformation progress For personal use only Acquisitions Partnerships Divestment New Products Performance Improvement 10
Slide 11: Home Appliances Acquisition
Home Appliances Acquisition ‘Home Appliances’ business acquired, inclusive of the For personal use only Euromaid and Baumatic brands providing growth via diversification into electrical retail, hardware and commercial building 11
Slide 12: Acquisitions: Beauty brands
Acquisitions Beauty brands For personal use only Dr LeWinn’s skincare A’kin natural skincare & haircare Leveraging McPherson’s strengths Expansion in Pharmacy channel Significant growth potential 12
Slide 13: Beauty Agency Partnership: Trilogy
Beauty Agency Partnership with Trilogy natural skincare For personal use only Partnership 13
Slide 14: Beauty Agency Partnership: Procter & Gamble Fine Fragrances
Beauty Agency Partnership with Procter & Gamble Fine Fragrances For personal use only Partnership 14
Slide 15: McPherson's Housewares Divestment
McPherson’s Housewares For personal use only Divestment 51% of ‘McPherson’s Housewares’ divested to FACKELMANN (Germany) Nov 2014 to establish a JV Remaining 49% share divested to FACKELMANN, effective 31 March 2016, reducing McPherson’s debt by $20 million Divestment benefits McPherson’s cust
Slide 16: New Products
New Products Pipeline of innovative new products across all divisions For personal use only Innovation 16
Slide 17: Performance improvement
Performance improvement >$10 million in annualised benefit from: Performance Improvement For personal use only Price Increases Organisational Redesign Product Cost IT System Savings In progress… …brand consolidation, product rationalisation and digital transformation 17
Slide 18: Digital transformation
Digital transformation Digital transformation is technology enabling innovation, For personal use only creativity, and growth Driven by our strategic objectives and consumer expectations Helps build meaningful relationships with consumers based on their actions Leverages McPherson’s capabili
Slide 19: Digital transformation impacts McPherson's across
Digital transformation impacts McPherson’s across: For personal use only Platforms / Technology Syndication Marketing Customer & Consumer Big Data Product Relationships 19
Slide 20: Outlook
For personal use only Outlook
Slide 21: Health and Beauty division
Health and Beauty division Current Status For personal use only Revenue 11% ahead of prior year Successful new products under trusted brands Acquisitions and new agencies boosting McPherson’s presence in Pharmacy and Department Stores and reaffirming McPherson’s beauty industry credentials Out
Slide 22: Home Appliances division
Home Appliances division For personal use only Current Status Excellent customer and supplier network New products launched 2H2015 and 1H2016 Commercial building approvals up Revenue up 18% but margins adversely affected by weak AUD Uncertainty around business in Masters Outlook Initiati
Slide 23: Household Consumables division
Household Consumables division For personal use only Current Status Multix branded revenue up 1% and market leadership maintained Profit impacted by: Unfavourable effect of weak AUD Delayed acceptance of price increases Increased ‘promotional support’ required Favourable lower commodity
Slide 24: Outlook summary
Outlook summary Price increases, operational initiatives and reduced operational For personal use only expenditure will improve profit in FY2016; however, currency downside risk remains longer term Health & Beauty and Home Appliances to benefit from new products and continued growth Multix to
Slide 25: For personal use only
For personal use only
Slide 26: Appendix: Financial Performance
For personal use only APPENDIX McPherson’s Limited - Financial Performance Results for the Half Year Ended 31 December 2015 Paul Witheridge Chief Financial Officer
Slide 27: Group Financial Summary for H1 FY2016
Group Financial Summary for H1 FY2016 Excluding non-recurring items For personal use only 1H2015* 1H2016* ($A million) ($A million) Sales 184.7 168.3 8.9% Sales decrease EBITDA 16.8 17.3 Depreciation & amortisation (1.4) (1.3) EBIT 15.4 16.0 3.6% EBIT increase Interest (3.3) (3.6) Interest cover 4.4
Slide 28: Group Financial Summary for 1H FY2016 (Statutory)
Group Financial Summary for 1H FY2016 Statutory (i.e. including non-recurring items) For personal use only 1H2015* 1H2016 ($A million) ($A million) NPBT excluding non-recurring items 12.1 12.4 Non-recurring items: - Contingent consideration adjustments 1.7 1.5 - Restructuring costs (1.4) (0.2) - Oth
Slide 29: Overview of Group Balance Sheet
Overview of Group Balance Sheet 31 December 2014* 31 December 2015 ($A million) ($A million) For personal use only Inventories 62.0 75.2 Receivables 58.2 59.0 Assets held for sale (inventories) 17.0 - Payables (70.3) (51.2) Net working capital 66.9 83.0 Property, plant & equipment 5.9 6.1 Investment
Slide 30: Group Operating Cash Flows
Group Operating Cash Flows 1H2015 1H2016 For personal use only ($A million) ($A million) Cash flows from operations Receipts from customers (inclusive of GST) 203.2 186.4 Payments to suppliers and employees (inclusive of GST) (183.4) (185.5) Net cash inflows from operations before interest and tax 1
Slide 31: Group Investing and Financing Cash Flows
Group Investing and Financing Cash Flows 1H2015 1H2016 For personal use only ($A million) ($A million) Cash flows from investing activities Payments for acquisition of business assets (8.0) (6.6) Payments for purchase of property, plant and equipment (1.5) (1.9) Payments for purchase of intangibles
Slide 32: Non-IFRS measures and Disclaimer
McPherson’s Limited For personal use only Non-IFRS measures 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