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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.