McPHERSON’S LIMITED

 ANNUAL REPORT 2015  

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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.