Mcpherson's Limited · ASX:MCP
Mcpherson's — H1 FY2015 Earnings Presentation
29 slides from Mcpherson's's earnings presentation, Feb 24, 2015
Slide 1: McPherson's Limited First Half Results Financial Year 2015
McPherson’s Limited First Half Results Financial Year 2015 Paul Maguire – Managing Director Paul Witheridge – Chief Financial Officer 24 February 2015
Slide 2: MCP 1H FY2015 Financial Overview
MCP 1H FY2015 Financial Overview » 1H FY2015 Sales Revenue of $186.6m, 3.3% above prior year – Excluding ‘McPherson’s Housewares’, which has been equity accounted from 1 Nov 2014 following the divestment of 51% to the Fackelmann Group, revenue increased by 18.1% to $168.7m – Comparable sales revenue
Slide 3: MCP 1H FY2015 Financial Overview
MCP 1H FY2015 Financial Overview » ‘Cash flow from operations before interest and tax payments’ of $19.8m, significantly above prior year ($8.5m) » EBIT Interest Cover1 of 5.0 times and Leverage Ratio2 of 2.2 for the 12 months to 31 December 2014 » Interim dividend of 6.0 cents per share fully frank
Slide 4: Strategy Update
STRATEGY UPDATE Paul Maguire Managing Director
Slide 5: Revenue Summary by Division (Aus & NZ)
Revenue Summary by Division (Aus & NZ) % OF TOTAL REVENUE REVENUE GROWTH REASONS OUTLOOK 1H FY2015 1H FY15 vs 1H FY14 Growth in HEALTH New agencies 39% 33%* revenue and & BEAUTY & acquisitions profit Growth in New products HOME APPLIANCES 18% 31%** revenue and & acquisitions profit Lower sales Produ
Slide 6: Transformation Strategy
Transformation Strategy McPherson’s stated strategy is: “to substantially transform through acquisition/divestment, the establishment of new agency partnerships and channel expansion ........diversifying away from margin constrained channels and increasing participation in channels with greater prof
Slide 7: Transformation Achievements
Transformation Achievements Over the past two years we have… ... successfully integrated 8 Earnings Per Share (EPS) accretive acquisitions; accessing synergy benefits and providing growth in profitable channels ... established agency partnerships with two prestige Beauty businesses ... divested ‘Cro
Slide 8: Transformation Timeline
Transformation Timeline Significant diversification achieved since the demerger of McPherson’s Printing in 2012 Fine Fragrances Think ‘Crown Glassware’ Agency: McPherson’s Appliances Gucci Printing Group divestment acquisition Dolce&Gabbana (MPG) demerged Hugo Boss Maseur Trilogy Agency Footcare acq
Slide 9: Transformation Benefits
Transformation Benefits » Transforming through diversification reduces risk: – Lessened exposure to foreign exchange USD purchases will reduce to 68% of total purchases in FY2015, down from 85% in FY2014 – A more profitable channel and customer mix In FY2015, the mix of business across the chann
Slide 10: Beauty Acquisitions Delivering Growth
Beauty Acquisitions Delivering Growth » Dr LeWinn’s & Revitanail – Iconic skincare brand – Beauty treatment brand – Leveraging MCP strengths – Significant growth potential » A’kin & Al’chemy – Natural skincare (A’kin) and natural haircare (Al’chemy) – Leveraging MCP strengths – Significant growth po
Slide 11: Beauty Agency Delivering Growth
Beauty Agency Delivering Growth 11
Slide 12: Prestige Agency Delivering Growth
Prestige Agency Delivering Growth 12
Slide 13: Home Appliance Acquisition Growth
Home Appliance Acquisition Growth » Think Appliances – Baumatic, Venini & D’Amani – Further diversification; increasing business in electrical retail, hardware & commercial home building » Lemair – Niche whitegoods brand 13
Slide 14: Home Appliance Agency Growth
Home Appliance Agency Growth Premium Italian cookers New agency December 2014 14
Slide 15: Housewares Partnership
Housewares Partnership » Housewares joint venture partnership established 1 Nov 2014 with the FACKELMANN Group (FMG) from Germany; (FMG 51% : MCP 49%) » FACKELMANN is a global manufacturer and distributor of kitchen, baking, home & leisure products, operating 35 manufacturing & distribution centres
Slide 16: Health and Beauty
Health and Beauty Current Status » YTD Sales growth 33% (excl’ acquisitions & new agencies sales in line with prior year) » Successful new product launches under trusted brands » Acquisitions and new agencies boosting presence in Pharmacy and Department Stores and reaffirming McPherson’s beauty indu
Slide 17: Home Appliances
Home Appliances Current Status » Home Appliances is providing customer and channel diversification; in electrical retail, hardware & commercial » 1H FY2015 adversely affected by product rationalisation & inventory clearance post the Think acquisition » Sales in Masters and the Kitchen Channel slower
Slide 18: Household Consumables
Household Consumables Current Status » YTD Sales 5% ahead of prior year » Profit impacted by: – protracted negotiations prior to the acceptance of price increases – product cost increases ex-Asia – AUD decline & high raw material costs – increased ‘customer support’ required Outlook » Market leaders
Slide 19: Outlook
Outlook » Consistent trading conditions anticipated » Underlying pre-tax profit for the full year 5%-10% above FY2014 » AUD currency devaluation will require mitigation through price increases » Health & Beauty and Home Appliances to benefit from the full year effect of acquisitions, new agencies an
Slide 20: McPherson's Limited Results for the Half Year Ended December 2014
McPherson’s Limited Results for the Half Year Ended 31 December 2014 Paul Maguire – Managing Director Paul Witheridge – Chief Financial Officer Mission To be a world class consumer products company through 1st choice brands for consumers and by being a 1st choice partner for customers and suppliers
Slide 21: Appendix: McPherson's Limited Financial Performance
APPENDIX McPherson’s Limited Financial Performance Results for the Half Year Ended 31 December 2014 Paul Witheridge Chief Financial Officer
Slide 22: Group Financial Summary for H1 FY2015
Group Financial Summary for H1 FY2015 Excluding non-recurring items December December 2013* 2014* ($A million) ($A million) Sales 180.6 186.6 3.3% Sales increase EBITDA 19.6 17.7 Depreciation & amortisation (1.4) (1.4) (10.2)% EBIT decrease EBIT 18.2 16.3 Interest (3.3) (3.3) Interest cover 5.0 time
Slide 23: Group Financial Summary for 1H FY2015 Statutory
Group Financial Summary for 1H FY2015 Statutory (i.e. including non-recurring items) December 2013* December 2014* ($A million) ($A million) NPBT excluding non-recurring items 14.8 13.0 Non-recurring items: - Impairment of intangibles (80.0) - - Restructuring costs (1.1) (1.4) - Contingent considera
Slide 24: Non-Recurring Items
Non-Recurring Items The following non-recurring items are included in statutory profit before tax: December December 2013 2014 ($A million) ($A million) Impairment of intangibles (80.0) - Contingent consideration adjustment - 1.7 Restructuring costs – housewares disposal, redundancies and inventory
Slide 25: Overview of Group Balance Sheet
Overview of Group Balance Sheet December 2013 December 2014* ($A million) ($A million) Inventories 72.8 60.2 Receivables 74.7 63.4 Assets held for sale (inventories) - 17.0 Payables (46.9) (70.3) Net working capital 100.6 70.3 Property, plant & equipment 7.3 5.9 Investment in joint venture - 7.9 Int
Slide 26: Group Operating Cash Flows
Group Operating Cash Flows December 2013* December 2014 ($A million) ($A million) cash flows from operations Receipts from customers (inclusive of GST) 182.1 203.2 Payments to suppliers and employees (inclusive of GST) (173.6) (183.4) Net cash inflows from operations before interest and tax 8.5 19.8
Slide 27: Group Investing and Financing Cash Flows
Group Investing and Financing Cash Flows December 2013 December 2014* ($A million) ($A million) cash flows from investing activities Payments for acquisition of business assets (23.0) (8.0) Payments for purchase of property, plant and equipment (0.8) (1.5) Payments for purchase of intangibles (0.6)
Slide 28: FX Hedging (Australia)
FX Hedging (Australia) » Comprehensive FX hedging program in place using Options, Forward Exchange Contracts (FECs) and Collars: Options Protect downside with premium cost but allow upside benefit FEC’s Fixed rate with lost forward points Collar Improved downside protection in exchange for limiting
Slide 29: Non-IFRS measures and Disclaimer
McPherson’s Limited First Half Results Financial Year 2015 Non-IFRS measures The non-IFRS measures used by the Company are relevant because they are consistent with measures used internally by management to assess the operating performance of the business. The non-IFRS measures have not been subject