12
McPHERSON’S LIMITED
ANNUAL REPORT 2015
The terms of the Heads of Agreement
with the Fackelmann Group provide a
Put Option for McPherson’s to divest
the remaining 49% of the new
Housewares venture after one, two or
three years for a consideration
comprising the sum of net asset value
and a multiple of future earnings.
Additionally, the Fackelmann Group
has a corresponding Call Option on
similar terms. The parties are not
bound to exercise these options.
CORPORATE STRATEGY
McPherson’s mission is to be a
world-class consumer products
company.
McPherson’s strategy has been to
substantially transform through
acquisition / divestment, the
establishment of new agency
partnerships and channel expansions
with the objective of diversifying away
from margin constrained channels and
increasing participation in channels
with greater profit potential.
Immediate emphasis is being placed
on further enhancing the performance
of the most recent acquisitions and
new agencies, with particular
emphasis on the Group’s portfolio of
powerful Health & Beauty brands that
have significant growth potential.
The Group’s corporate strategy
focuses on two key areas: 1) Growth
and 2) Operational Excellence.
Our Growth Strategies can be
summarised as follows:
• Innovation: Providing innovative,
high quality branded products and
services that improve the lives of
consumers;
• Agencies / licenses: new agency
partners chosen to strengthen
ranging;
• Acquisitions: having substantially
transformed through acquisitions,
the next phase is consolidation and
optimisation of the growth
potential of core acquisitions;
risks and compliance obligations are
properly identified and managed, that
insurances are adequate and that
processes are in place to ensure
compliance with regulatory
requirements.
The Managing Director is accountable
to the Board for the development and
management of the Group’s risk and
compliance frameworks and is
supported by the Chief Financial
Officer in terms of adopting
appropriate risk management and
compliance processes, including
regular and transparent reporting to
the Audit, Risk Management and
Compliance Committee. Each senior
manager is responsible for the
management of risk and compliance
with relevant laws and regulations.
The key risks are identified in a Group
risk analysis matrix which is used to:
1. Determine the effectiveness of
controls to address risks assessed
as extreme or high;
2. Isolate and report indicators of
control effectiveness;
3. Isolate and report any recent
incidents pertaining to the risk area;
4. Report recent action taken to
improve risk management;
5. Isolate any areas for potential
improvement;
6. Report how the Group’s existing
insurance program responds to
each area of risk; and
7. Assist in prioritising areas of focus
for internal audit.
The material risks that have potential
to have an effect on the Group’s
financial prospects, and how the
Group manages these risks, include:
•
Reduction in consumer demand
Given McPherson’s reliance on
consumer spending, adverse
changes to the general economic
landscape in Australasia or
consumer sentiment for the
Group’s products could impact its
financial results. This risk is
• Divestments: exiting businesses
that operate in margin constrained
channels; and
• International expansion: a platform
for growing profit and brand equity.
Our Operational Excellence Strategies
can be summarised as follows:
• Improved productivity and
efficiency through:
– Significant enhancement of IT
systems to automate processes;
and
– Substantial process
improvement.
• A strong company culture with
highly engaged employees through:
– Training and development of
high achievers; and
– Establishment of a culture of
continuous improvement.
Successful execution of these
strategies will enable us to achieve our
corporate vision which is “Making Life
Easier” for:
• Consumers: through high quality,
value for money branded products
that improve their lives;
• Customers: by providing retail
solutions through McPherson’s
products and services;
• Suppliers: through McPherson’s
growth;
• Employees: through careers,
rewards and recognition; and
• Shareholders: through earnings
growth.
RISK MANAGEMENT AND
COMPLIANCE
The Board has ultimate responsibility
for the oversight of risk management
and compliance across the Group.
Risk is an integral part of the Group’s
decision-making process and all risks
and opportunities are adequately and
appropriately assessed to ensure that
unreasonable risk exposures are
minimised. The Group’s risk and
compliance frameworks ensure that all
REVIEW OF OPERATIONS
(CONTINUED)
Immediate emphasis is being placed on further
enhancing the performance of the Group’s
portfolio of powerful Health & Beauty brands
that have significant growth potential.