McPHERSON’S LIMITED
ANNUAL REPORT 2015
13
addressed through keeping abreast
of economic and consumer data /
research, innovative product
development and brand building.
•
Workplace health and safety
Given the physical nature of the
Group’s operations, workplace
health and safety are of paramount
importance. Significant effort and
attention have been placed on
internal policies and processes to
ensure that employees are aware of
their legal obligations and the
productivity benefits that come
from working safely. A tone of
safety first is set at the top of the
organisation and is reinforced
through commitment of resources
including a dedicated workplace
health and safety officer.
•
Foreign currency fluctuation
The Group sources the majority of
its inventory in currencies other
than Australian dollars, with the US
dollar the predominant sourcing
currency. Consequently, significant
fluctuations in the AUD / USD
currency cross can materially
impact the Group’s result. The
Board has established, and
regularly reviews, the Group’s
foreign currency hedging policy
with the objective of mitigating
short to medium term foreign
currency risk.
•
Raw material price fluctuation
A material proportion of the
Group’s inventory prices is
influenced by movements in
commodities such as resin and
aluminium. Such commodity prices
are denominated in US dollars and
historically are correlated with
movements in the AUD / USD
cross. This correlation provides a
degree of natural hedge against the
profit impact of movements in the
AUD / USD cross; consequently
separate risk mitigation measures
are not utilised to manage this risk.
•
Loss of a major customer or
deranging of a major product range
A significant proportion of the
Group’s sales is to two customers in
the grocery channel. The delisting
of a material product range by one
of these customers could materially
reduce McPherson’s profitability. In
order to mitigate this risk, the
Group strives to provide superior
customer service, product
innovation and competitive pricing.
It is also pursuing a strategy of
channel diversification, as
demonstrated by the recent
acquisitions in Health &
Beauty and Home Appliances.
•
Deficiency in product quality
As a supplier of branded consumer
products to retailers, the Group has
an exposure to product faults
leading to liability claims and
product recalls. To control this risk,
the Group adopts stringent quality
control and supplier verification
procedures. In addition, it holds
adequate product and public
liability insurance and product recall
insurance.
•
Compliance with debt facility
undertakings
A significant portion of the Group’s
capital requirement is in the form of
debt facilities supplied by Financial
Institutions that require the Group
to comply with various
undertakings, including specific
financial ratios or covenants, in
order for the Group to continue to
access facilities. The Group seeks
to adopt a debt structure that in
both quantum and terms, has
sufficient capacity for it to
withstand a short term decline in
earnings or assets, that may impact
its ability to meet its various debt
facility undertakings.
GROUP FINANCIAL SUMMARY
NOTE
2015
2014
7
2013
2012
2011
Sales
1,2
$000’s
349,069
352,697
299,189
276,246
289,934
Operating profit before tax
1,3
$000’s
16,362
20,001
18,655
26,423
37,260
Income tax expense
1,3
$000’s
(4,400)
(5,749)
(5,598)
(7,758)
(11,100)
Operating profit after tax
1,3
$000’s
11,962
14,252
13,057
18,665
26,160
Statutory profit after tax
$000’s
8,840
(67,039)
(33,319)
17,028
19,499
Operating cash flow
4
$000’s
19,453
33,941
27,553
33,575
57,815
Shareholders’ funds
5
$000’s
98,738
92,765
167,795
172,941
200,798
Return on average shareholders’ funds
1,6
%
12.5
10.9
7.7
10.0
13.2
Underlying earnings per share (EPS)
1,3
Cents
12.4
15.4
16.9
25.4
35.9
Statutory earnings per share (EPS)
Cents
9.2
(72.4)
(43.2)
23.5
27.1
Dividends per share (fully franked)
Cents
8.0
11.0
17.0
17.0
26.0
Net debt
$000’s
77,192
74,700
69,589
76,666
56,544
Gearing (net debt / (net debt + shareholders’ funds))
%
43.9
44.6
29.3
30.7
22.0
Note 1: Results for 2011 and 2012 exclude results from the Group’s former Printing business.
Note 2: Sales are net of customer allowances.
Note 3: Excludes non-recurring items.
Note 4: Operating cash flow before interest and tax.
Note 5: Shareholders’ funds at the end of the financial year.
Note 6: Calculated using operating profit after tax and excluding non-recurring items.
Note 7: The 2014 balances have been restated as noted in this report.