McPHERSON’S LIMITED
ANNUAL REPORT 2015
7
DIVISIONAL
PERFORMANCE
Health & Beauty sales increased
by 32% and the division
contributed 44% of Group
revenue, excluding housewares,
compared with 39% the
previous year. Importantly, the
pharmacy channel contributed
23% of Group revenue, up from
16% the previous year, further
reducing our reliance on the
grocery channel.
The A’kin and Al’chemy natural
skincare and haircare brands
acquired in December 2014 and
the Trilogy agency which began
in July 2014 performed well, as
did the Dr. LeWinn’s and
Swisspers brands. Sales of the
market leading Manicare and
Lady Jayne brands were steady.
Initial sales of Procter &
Gamble’s fine fragrances
(Gucci, Dolce & Gabbana and
Hugo Boss), for which the
company was awarded the
agency in August 2014, were
lower than expected due to
delays in re-establishing
distribution; however, the
outlook for these products
has improved significantly.
The division’s brands will be
consolidated over the coming
months, reducing the total
number of brands and
product lines and providing
scope to reduce distribution,
marketing and selling
expenses. This will enable us
to boost profitability as well as
increase investment in our key
beauty brands that have
significant growth potential.
The Home Appliances division
contributed 21% of Group
revenue, excluding
housewares, and provided
further diversification into the
electrical retail, hardware and
commercial channels. Sales
were 12% higher than the
previous year, with increased
sales of Euromaid branded
products partially offset by
lower than expected sales of
the Baumatic range and by a
short delay in introducing new
products. Margins were
adversely impacted by the fall
in the AUD/USD exchange
rate. The appointment of a
new chief executive, significant
restructuring, and confirmed
new ranging in two major
retailers have materially
improved Home Appliances’
outlook for the current year.
The Household Consumables
division contributed 29% of
Group revenue, excluding
housewares. Sales increased
by 7%, driven by higher sales
of private label products, while
sales of the market-leading
Multix brand were steady.
Margins were lower due to
delays in agreeing selling price
increases with major
customers, but have now
recovered.
Additional ranging of Impulse
Merchandising products in
supermarkets resulted in a 3%
increase in sales and further
growth is expected this year.
The results of the Housewares
business in Australia,
Singapore and Hong Kong
have been equity accounted
from 1 November 2014
following the divestment of a
51% stake to the Fackelmann
Group, a global manufacturer
and distributor of kitchen,
baking, home, leisure and
bathroom products. This new
venture is working well for
both parties and its
contribution to McPherson’s
earnings on an annualised
basis is expected to increase
in the current year.
BOARD RENEWAL
In February, John Clifford
retired from McPherson’s
board following 12 years as a
non-executive director, and
Jane McKellar, an experienced
director of both public and
private companies in Australia
and overseas, was appointed
to the board.
In July 2015, David Allman
retired from the board
following 20 years as a
director, initially as managing
director and since late 2011 as
chairman. He was succeeded
as chairman by Graham
Cubbin who joined the board
in 2010 and is chairman of the
audit, risk management and
compliance committee. An
additional non-executive
director is expected to be
appointed shortly, at which
time board committee
membership will be reviewed.
The board thanks David
Allman and John Clifford very
much for their substantial
contributions to the company
over a long period.
LOOKING FORWARD
We will continue to transform
the company through growth
in our recently acquired
brands and new agencies,
further restructuring,
operating expense reductions,
brand consolidation, selling
price increases and new
product launches – all of
which are expected to
contribute to an increase in
future earnings. We will also
strengthen and grow our key
iconic beauty brands through
strong advertising and
promotional support.
We thank our employees for
their commitment and
contributions during a
challenging year and our
shareholders for their
continuing support. We are
confident that the
improvements we have made,
and continue to make, will
result in a stronger and more
profitable company.
Graham Cubbin
Chairman
Paul Maguire
Managing Director
We will continue to transform the company
through growth in our recently acquired
brands and new agencies.