A N N U A L R E P O R T 2 0 2 0
Connecting
people to the
healing power
of nature
Blackmores Group is an
ASX 200 publicly-listed
company employing over
1,400 people, with an
extensive presence
across Asia Pacifi c.
Founded by visionary naturopath Maurice Blackmore in
1932, our vision is to connect every person on earth to the
healing power of nature by combining our knowledge of
nature and science to deliver quality health solutions to
people and their pets everywhere, every day.
Our high-quality, evidence-based range of brands
includes Blackmores – Australia’s No.1 natural health brand;
BioCeuticals – Australia’s leading practitioner range; PAW
by Blackmores – natural health products for pets; Fusion
Health & Oriental Botanicals – Australia’s leading providers
of Chinese herbal medicine; and Impromy – our pharmacy-
based weight management program developed in
collaboration with CSIRO.
Blackmores Institute is the research and education arm
of Blackmores Group: a centre of excellence established to
improve and promote the quality use of natural medicine.
At Blackmores Group, we never compromise on quality
– always placing the health and safety of our consumers
at the heart of our business. We use premium ingredients
from around the world – developing products made to strict
Australian therapeutic goods standards at our state-of-the-
art manufacturing facility in Braeside, Victoria.
Recognising that you can’t have healthy people without
a healthy planet, we’re strongly committed to embedding
sustainability across our business. This includes a 2030 zero
carbon emissions target and giving back to the communities
in which we operate.
About Us
Contents
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A Purpose-led Organisation
page 3
Purpose, vision, mission and values
Financial Year 2020 Highlights
page 4
Introduction
page 6
Marcus Blackmore and
Brent Wallace, Chairman
CEO’s Year in Review
page 8
Company Report from
Alastair Symington, CEO
Company Leadership
page 18
The Blackmores Board and
Executive Team
Operating & Financial Review
page 22
Sustainability & Community
page 34
Financial Report
page 42
Remuneration Report
page 48
COVER
Adelynne Goh, National Sales Coordinator,
Blackmores Australia
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0 1
Purpose-led
Organisation
Our purpose is as true today as it was in
1932. Our founder, Maurice Blackmore,
gave people a choice to invest in and
take control of their health and wellbeing
through the power of nature.
OUR purpose
We exist so you have a choice to make living
well each day a natural way of life.
OUR vision
We will connect every person on earth to the
healing power of nature.
OUR mission
We combine our knowledge of nature
and science to deliver quality solutions
to bring wellness to people and their
pets everywhere, every day.
PIRLS
OUR values
Our values are the heart of our
business. Known as our PIRLS,
these are both behavioural and
aspirational – underpinning our
work practices and decisions
and supported by our
governance frameworks.
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B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0 3
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Towards
Sustainable
Growth
Georgie Allan, Marketing Coordinator, BioCeuticals
2 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
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Financial
Year 2020
Highlights
63,000
learning modules
on complementary
medicine
1 in 4
Australian
households use
our products5
2030
Net Zero
$2 million
carbon
emissions
target
33,000
raised for charity
by Blackmores
Sydney Running
Festival
points of global
distribution
Above: William Gunton, Distribution Operator, Bungarribee
Right: Jingyi Zhang, Senior Product Manager, Blackmores Australia
4 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
12 years
Most Trusted Brand
in Australia6
1. Nielsen & IQVIA, RMS/Sell Out service,
Vitamins and Dietary Supplements, Australia
Grocery Pharmacy, Total Retail Sales, Fiscal
Year 2020
2. IQVIA sell out Thailand as of Q1 2020
3. IQVIA sell in data MAT Q1/2020, Malaysia
Pharmacy Channel
4. Nielsen June 2019
5. Nielsen Homescan 21/4/20
6. Australia’s most trusted vitamin and
supplement brand as voted by Australians in
the 2009-2020 Reader's Digest Most Trusted
Brand Survey
7. IQVIA, MAT to 14 June 2020
8. Kantar Consumer Brand Health Tracking
Study November 2019
9. $18.1 million reported NPAT including
signifi cant items
#1
market share Blackmores
in Australia1, Thailand2, Malaysia3
and Singapore4
#1
practitioner brand
practitioner brand
in Australia7
#1
pet supplement
brand awareness
in Australia8
$568m
revenue
$18.7m
underlying
net profi t
after tax9
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B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0 5
3
Introduction
A M E S S A G E F R O M
M A R C U S B L A C K M O R E
My father was a visionary. Back in 1967
he said, ‘If man persists in ignoring or
defying the recycling laws of nature, he
will not avoid pollution, malnutrition or
starvation’. He would view the events
of 2020 as a wake-up call. We can’t
disrespect our interdependence on the
natural world and expect to be immune
from the consequences.
Earlier this year Australia was battling devastating bushfi res.
Then COVID-19 brought the world to a standstill. Climate
change is undermining human health and livelihoods
globally. Clearly, as our ecosystems falter we are becoming
more vulnerable to catastrophes.
For me, recent crises have served as a poignant reminder
of the importance of community and giving back. I’ve been
heartened to see people coming together to support one
another and their communities on a scale unlike any other
that I can remember.
Marking her 100th birthday this year, ‘Sister’ Mercie
Whellan, a former Blackmores General Manager and
Chairperson and life-long trusted confi dante to my father
and myself, donated $100,000 to the Rural Fire Service
(RFS) to support the Australian bushfi re recovery. My wife
Caroline and I were so touched by Mercie’s generosity and
appreciation for RFS personnel that we decided to honour
the spirit of the Blackmores Group charity matched donation
scheme by contributing an additional $100,000.
Through the personal philanthropic trust run by Caroline
and myself, we were also proud to support Quest for Life
Foundation founder and close friend Petrea King with a
$500,000 donation in support of her community bushfi re
trauma and anxiety recovery programs in rural NSW.
This spirit of giving started with my father, Maurice
Blackmore, who instilled values that are still an integral part
of our company’s DNA today. My father was a pioneering
naturopath who was passionate about the healing power
of nature. He established this company over 88 years ago
because he understood that good health relied upon a
holistic approach and a harmony of body and mind with the
natural world.
Recovering from the COVID-19 pandemic, people are
increasingly aware of optimising their health and wellbeing
and are searching for a more natural way of living. We are
witnessing a major paradigm shift from treating illness to
creating wellness.
At Blackmores Group it is our vision to connect everyone
with the healing power of nature. We exist so people have a
choice. We are the medicine of the future.
It has been a tough year for the Company. Our new CEO
Alastair Symington and his new executive leadership team
have a strong vision for the business and I am confi dent we
are 'back on the road'. The success of our recent $141 million
capital raising attests to the fact that many of our shareholders
share my optimism for the future of Blackmores Group.
I believe we will emerge from this crisis stronger than ever.
The important role of nutritional supplements in tandem
with preventative health education is undeniable. Through
Blackmores Institute we have a responsibility to educate
people about the healing power of nature and help them
build confi dence in a healthy future.
As a market leader, people depend upon us every day.
Now, more than ever, we carry an immense responsibility to
create change and to lead the industry. We offer no wonder
drug, just the resourceful use of nature.
The best of health,
Marcus C Blackmore AM
Executive Director
FY20 has been a year of signifi cant and
unparalleled change.
Last year when I wrote to you, our shareholders, I fl agged
the need to simplify the Blackmores business. In FY20 we
have very deliberately undertaken signifi cant change across
the whole organisation in order to re-set the business for
long-term success.
As we all know, 2020 has defi nitely been a year like no
other, with your Board forced to make tough decisions for
the stability and future growth of Blackmores.
We have great confi dence in Alastair who joined in
September and his reinvigorated executive leadership
team, which has strengthened our resolve in the face of the
COVID-19 global pandemic challenges.
Less than four months after Alastair had started as CEO
the Board met with his new Executive Team and agreed on
the three-year Growth Strategy that will see the Group focus
on fi ve key global consumer growth platforms.
Our strategic acquisition of the Braeside soft gel and
tablet manufacturing facility, which was settled last October,
will support our strong focus on growth and product
innovation, increased research and development, and
crucially greater control over production and quality.
We have begun to shift production from other areas to
maximise our Braeside manufacturing facility and to replace
third party contracts. This planned transition will take three
years to maximise the returns from this facility.
The other big challenge faced by the business in FY20
was a global product re-label, aligned to an Australian
Therapeutic Goods Administration (TGA) requirement.
So while this is a great marketing opportunity, producing
550 new labels in 12 markets with different regulatory
requirements was a massive and complex undertaking,
made even more challenging by COVID-19.
Driven by signifi cant increases in ingredient costs and
operational challenges with our new acquisition and other
factors including COVID-19, we revised our profi t forecast
in February to $17-$21 million after tax, with no dividends
payable. When reporting half year results, Alastair presented
his vision for the Blackmores Group and the outcomes of
the comprehensive strategic review, together with a solid
and credible plan for the business going forward.
In May, we also announced a $117 million capital raising.
While capped at $92 million for Institutional Investors, we
experienced signifi cant interest above this amount. For the
Share Purchase Plan (SPP, completed in July 2020) for retail
shareholders we expected bids up to $25 million, but these
retail bids proved so successful that we scaled up the SPP
to $49 million. We believe that the success of this $141
million capital raising sends a strong message regarding
market support for the Blackmores business and its
reinvigorated strategy.
Regardless of the current economic uncertainty, this
capital raise gives us a strong balance sheet to strategically
invest in the business – including our China business and
our signifi cant other Asia markets.
C H A I R M A N ’ S
R E P O R T
The Board appreciates your understanding during this
challenging period. We are confi dent we now have the
right strategy, the right people, and the right capability
to realise our Asia ambition, and generate sustainable
growth and profi t for all shareholders. Success now
clearly depends on delivery of that plan.
As announced at last year’s AGM after serving on
the Board since 2005 and as Chairman since 2018,
I step down very confi dent in Alastair and his team’s
clear strategic direction for the future. It has been an
honour to serve this great company for the last 15 years.
I’d also like to thank my fellow Directors, the Executive
Management Team, our global employees and all of
our shareholders for staying the course and remaining
committed to the Blackmores Group vision of a world
where every person is connected to the healing
power of nature.
Brent W Wallace
Chairman
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4
C E O ’ S
Y E A R I N R E V I E W
At the Blackmores Group we are
committed to ensuring everyone has a
choice to make living well each day a
natural way of life. This has always been
the driving force of our brands, our
people and our culture.
At this moment in history, it is more important than ever that
we deliver on our promise. This is not only to improve the
performance of our company and deliver sustainable and
profitable growth – but to do so in a way that underpins our
role in an ongoing global health challenge.
There certainly has been a lot to get across since starting
as CEO in late September 2019. As soon as I arrived
my immediate focus was to stabilise the business while
identifying the drivers of future growth.
The past year has been a difficult one. Despite continued
strong growth in our International markets, we faced
ongoing challenges in ANZ and China. In our biggest
market of Australia, we were able to grow domestic market
share, but sales remained flat due to continued stagnation
of the category. In China our business suffered from lack of
product innovation and continued competitive pressure.
With the onset of COVID-19 in China and unforeseen
setbacks related to the Braeside integration and product
re-labelling, in February, we revised our net profit after tax
I am also very proud of the rest of our team which
quickly adjusted to a remote, agile working environment.
In all markets we have continued to serve our customers
and consumers while going through immense change
and uncertainty. This resilience and passion for natural
health has always been a hallmark of Blackmores Group
and it has been no more evident than during these
unprecedented times.
Primed for recovery
Thankfully, we are emerging from the COVID-19
pandemic primed for recovery. There were several
initiatives undertaken with the Board to ensure that we
protect the balance sheet while also setting ourselves up
to win in key growth markets across Asia as per our new
strategic direction.
In June and July, we successfully raised $141 million
in capital through our placement with institutional
investors as well as our Share Purchase Plan with retail
shareholders. While some of these funds will go towards
much-needed cash reserves during what now appears
to be an extended period of severe global economic
downturn, the injection of funds also allows us to invest in
our key growth markets of India, Indonesia and China, as
well as fast track our digital transformation.
Driving productivity and cost savings to fuel growth
requires a higher standard of performance more
consistently over the long term. Productivity is the fuel to
enable us to make these critical investments, while also
delivering on our profit and cash flow objectives.
“
With the addition of our world-
class manufacturing facility at
Braeside, we have the ability to
produce three billion capsules and
tablets per annum in-house.
forecast down to $17-$21 million and took the difficult
decision to pay no dividends for the first half.
The team continued to push ahead with much needed
cost savings initiatives and whilst we delivered savings in
line with the goals set out in our Business Improvement
Plan (BIP), we were facing the impact of $17 million in
COGS increases linked to negative mix, volume, and price
variances at our Braeside plant as well as higher freight
charges and the impact of foreign exchange. Costs from the
label transition came in at $7 million, in line with estimates.
As part of an extensive operating review in February, the
decision was taken to revise our cost savings targets for the
Group. We have now committed that through initiatives
like strategic revenue management, leading value position
(LVP) and other operational efficiencies, by 2023 our cost
base will, be $50 million lower than 2020. Half of the savings
will be reinvested into strategic growth markets in Asia and
digital capabilities.
Responding to a global pandemic
2020 will go down as a year in which Blackmores was faced
with and initiated unprecedented change.
The onset of COVID-19 in China in January was
challenging, presenting a series of complications with the
inbound supply of certain raw materials as well as disruption
into and across mainland China as all cities went into hard
lockdown for a minimum of 35 days. However, in a sense we
were fortunate to experience this early exposure to help us
anticipate what lay ahead for other countries.
The initiation of our Blackmores Group COVID-19
Response Team in January ensured that we were well
prepared to communicate with all employees, customers
and suppliers as the pandemic spread. Very early on we
put plans into place to protect the health and safety of our
employees at the same time ensuring business continuity.
We continue to do our best to support local communities
and have donated product and personal protective
equipment to frontline workers and other vulnerable
communities in Australia, China, Singapore and Thailand.
While each of our markets were significantly impacted
by the ongoing devastation that the pandemic brought,
short term demand for our immune support products was
unprecedented. Bioceuticals ArmaForce emerged as the
leading product in the category. Blackmores Bio C (vitamin
C) sales were considerably up in several key markets.
In Australia we were fortunate to be considered an
essential service, enabling our manufacturing operations
to continue, and in fact step up production. It is important
to give special recognition to our people at our Braeside,
Bungarribee and Warriewood sites who, under the steady
leadership of our Chief Operating Officer Jeremy Cowan,
worked tirelessly through the COVID-19 crisis keeping our
manufacturing, production, quality control and distribution
operations running.
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C E O ’ S
Y E A R I N R E V I E W
Towards sustainable growth
After a comprehensive strategic review completed with the
Board, we launched the Blackmores Group Growth Strategy
2023 in February, which sets a clear vision for our future.
While we focus on improving the long-term health of our
business we are also conscious of the fact that we live in a
world where people and nature must thrive together. This
commitment requires that we always act responsibly. I am
proud to announce that one of our key sustainability goals is
to achieve Net Zero carbon emissions by 2030.
Our four strategic goals are:
1. Build a world-class organisation
2. Rejuvenate the Blackmores brand in Australia
3. Deliver new growth in key countries and categories
4. Win with the modern career woman in China
To achieve these strategic goals, our focus moving
forward is centred around transforming our product
portfolio to compete in fi ve key consumer growth
platforms with our three leadership brands of Blackmores,
BioCeuticals and Pure Animal Wellbeing (PAW). Our focus
is on winning with consumers and practitioners through
the strength of these brands and consumer growth
platforms, fuelled by productivity gains, and delivered by an
empowered, world-class organisation.
Underpinning our focus markets and brands, the
fi ve consumer growth platforms are Modern Parenting,
Everyday Mental Wellbeing, Move, Core and Pet
Supplements. To support these consumer growth platforms
we have established Global Business Units. These lean and
agile teams are responsible for building global marketing
strategies and tailored innovation utilising local market
insights to bring our strategy to life and fully deliver on our
commitment to consumers and achieve signifi cant long-
term value for shareholders.
Consumer Growth Platforms
We have identifi ed fi ve key priority areas of consumer demand
where we already have a presence and recognise strong
opportunities for global growth.
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5
Modern
Parenting
Supporting health
and wellness from
pre-conception
through to early
childhood
Mental
Wellbeing
Providing natural
health solutions for
stress, anxiety and
sleep disturbance
Move
Helping people
stay active for as
long as possible,
targeting arthritis,
muscle, bone and
joint health
Pet
Supplements
Helping
‘pet parents’
understand when
and how to use
pet supplements
Core
Our ‘core’
portfolio of immunity,
cold and fl u, and
multivitamins is where
consumers often
fi rst experience our
brand and where
we have the biggest
opportunity to build a
life-long connection
Consumer-led innovation
The shift from product-led to consumer-led innovation
in consumer, practitioner and animal health allows us to
raise the bar to a new standard of category excellence and
product innovation across traditional retail, professional and
direct-to-consumer channels.
Last year we launched 31 new products across the
Group, including Blackmores Cold Shield Nasal Spray
which turns into a gel in the nose creating a barrier to
shield and protect from airborne germs; Blackmores Vegan
Omega-3 Oil which is a fi sh-free source of this essential fatty
acid; BioCeuticals practitioner-only PEA Liquid with 99%
pure Palmitoylethanolamide which acts on cannabinoid
receptors; and Pure Animal Wellbeing OsteoAdvanced
which was the subject of a multi-centre trial.
To win with the modern career woman in China, we have
established an Innovation Centre in Shanghai. Here we
will integrate local market insights with proven education,
research and a high-quality Australian based manufacturing
capability to deliver superior products, not just for China but
for all modern career woman across the region.
We are excited to announce the launch of a
Blackmores premium line of new products, which will
launch in China in September 2020. Specifi cally designed
for our Modern Parenting consumer growth platform,
this range features highly targeted product formulations
meeting consumer needs across conception, pregnancy,
breastfeeding and children aged 0–12 years. This range
has a unique packaging label and visual identity which
represents the premium product positioning alongside
our heritage and mission to connect all consumers to
health and wellbeing and the healing power of nature. We
are excited to delight our consumers with this new range
and in turn generate signifi cant net sales potential.
“
A Blackmores premium line of
new products will launch in FY21,
specifi cally designed for our Modern
Parenting consumer growth platform
covering conception, pregnancy,
breastfeeding and children’s health.
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C E O ’ S
Y E A R I N R E V I E W
Building a world-class organisation
In October, we completed the acquisition of a 30,000 sqm
soft gel and hard tablet manufacturing facility at Braeside
in Victoria.
The addition of this world-class manufacturing facility
means that we become more self reliant and are now able
to produce three billion capsules and tablets per annum
in-house which is more than 70% of our volume.
The strategic importance of this acquisition in the context
of an Australian company making, packing and delivering
products to more than 12 markets in the region is unique
and a clear point of difference. The ability for us to fast-track
innovation, respond to customer demands and adapt to
change becomes a real competitive advantage, especially
as we see global supply chains shifting under an increasing
level of uncertainty and a review of many bilateral and
multilateral trade agreements.
The integration of any major manufacturing facility comes
with a series of challenges. I am very pleased with how our
Group Operations Team managed the transition. Initially
it was not only bringing planning processes and systems
online, but also onboarding more than 300 new employees
into the Blackmores Group family. From November to
January we saw minimal service disruption and were
able to retain most of the former Catalent employees.
It is important for us to execute the necessary cost
savings at Braeside, increase site output volumes, and
manage product mix to mitigate any potential variances.
These improvements are expected to take up to 36 months
with site cost variance results to improve sequentially
each year.
Leadership
The transformation of our company requires us to unlock
organisational capacity, identify breakthrough capabilities
and invest to grow.
Despite all the challenges in fi scal year 2020, I believe
we have emerged in a much better position than when
we entered, starting with stronger leadership at the
executive level.
In December we welcomed Kitty Liu as the new
Managing Director of China. For the fi rst time, this important
position reports directly to the CEO to ensure that we can
respond with ‘China speed’ to changing consumer and
customer preferences. At the same time, Dean Garvey, our
former Deputy Managing Director for Asia, was promoted
to lead our International markets (excluding China) as
Managing Director.
In January, Gunther Burghardt joined us as the new Chief
Financial Offi cer. He has already contributed so much in a
relatively short period of time including strengthening our
internal controls, building a stronger balance sheet, and
supporting the complicated integration of our Braeside
manufacturing facility.
In February, Ayumi Uyeda, with her impressive
background in global consumer health and
pharmaceuticals, moved back to Australia from the
USA to take up the role of leading our Australia and
New Zealand business unit as Managing Director.
Finally, on the eve of Australia’s COVID-19 lockdown
in March we welcomed Joanne Smith to the role of
Chief Marketing & Innovation Offi cer.
There is a series of initiatives that have been developed
to strengthen our organisation design and drive a culture
of innovation and accountability to deliver results. This
different way of working will enable greater effi ciency,
speed, and agility by moving resources closer to consumers
and retailers in our key growth markets and investing in core
capabilities. Our aim is to serve consumers, retailers and
practitioners better than the competition.
Stronger discipline combined with our unique
heritage will lead the way forward
Despite the additional cost variances which will arise from
our fi rst full year of Braeside manufacturing ownership, we
anticipate full year profi t growth in FY21. This profi t growth
will come predominantly from the second half of the fi scal
year, but given the many uncertainties associated with
COVID-19 we are not providing full year profi t outlook
for FY21.
There is great confi dence from the Board and
management that by implementing our strategic priorities,
simplifying our operating model and delivering consumer-
led innovation consistently that will put the company back
on the path to sustainable, profi table growth and restore
future dividends.
We have a wonderful opportunity to build on the vision
of our founder Maurice. One that has been delivered by
Marcus Blackmore in a way where more people than ever
before have a choice to invest in their health and wellbeing
by connecting with the healing power of nature.
As we emerge from this global health crisis, our duty to
the millions of people who rely on Blackmores Group for
natural health solutions is clear and pressing. It is up to our
team to take our strong heritage forward and realise the
opportunity to provide access to natural health solutions for
even more of the world’s population.
Wishing you good health,
Wishing you good health,
Alastair Symington, CEO
Alastair Symington, CEO
Blackmores Group
Jittra Poempoon, Production Operator
at Warriewood Campus.
Far right: Encapsulation equipment at
our Braeside manufacturing facility
“
Women represent 55% of
our executive leadership
team and pay parity is
within 1% across our
organisation.
Alastair Symington, CEO, and Diana Wei,
Medical & Product Safety Associate
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C E O ’ S
Y E A R I N R E V I E W
Our trusted relationship with consumers and customers has never been stronger.
China’s annual 618 shopping festival in June saw Blackmores’ gross merchandise
value (GMV) up 75% v LY, drawing three million unique visitors to our Tmall
Flagship Store during the event. This is the second largest global e-commerce
event behind Singles Day (11/11) and a key driver of traffi c and awareness
for all health brands.
Below: Jeremy Liu, Operation Director, Blackmores China
Blackmores Institute
Blackmores Institute, the academic and professional arm of the
Group, continues to demonstrate thought leadership in our industry.
The Institute published a white paper investigating the evidence-
based use of nutritional supplements and herbal medicines to
support immune function, as well as a green paper in partnership
with Tsinghua University on the mental wellbeing of Chinese career
women which received 43.6 billion media impressions.
The Institute also launched a new podcast series ‘Natural Health
Simplifi ed’ offering practical science-based strategies for
immunity and healthy living, which was strongly subscribed
to by healthcare, professionals and consumers alike.
Karen Latter, Healthcare Professional Educator,
Blackmores Institute
Kylie Clifton,
Graphic Design
Team Leader,
BioCeuticals
Leading the education agenda
Blackmores Institute’s education and training programs
received global recognition, including four coveted Brandon
Hall Group Awards – Gold and Bronze for our Superkids
retail training, Silver for our CMEd program for health
professionals in Malaysia, and Bronze for our Thailand retail
online education, in addition to two LearnX Awards and an
Australian Institute of Training and Development Award.
Below: Bobby Mehta, Pharmacist Educator & Trainer,
Blackmores Institute
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Bonnie Macqueen, Assistant Product Manager, PAW
14 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
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C E O ’ S
Y E A R I N R E V I E W
Paul Blackman, Production Operator, Group Operations
Fion Huang, Marketing & New Business Director, Blackmores China
Mei Nila Sari, Marketing Administrator, Kalbe Blackmores Nutrition
Christine Lennon, Business Activity Manager,
Group Marketing & Innovation
Blackmores Australia
& New Zealand
Revenue
$227 million
Blackmores
China
Revenue
$103 million
Blackmores remains the number one vitamin and dietary
supplement (VDS) brand in Australia with 16.4% market
share1 and a strong gap over our nearest competitor. For
the 12th year running, Blackmores was recognised as
Australia’s most trusted brand2 and our products are now
used in almost one in four households3.
ANZ sales of $227 million, down 14.8% to the prior year.
In terms of consumption, overall domestic sales were fl at
as immune support products increased during COVID-19,
while large segments like nutritional oils and joint, bone
and arthritis were down. The biggest impact came from
declining foot traffi c of Chinese shoppers in Australia and
the effects of COVID-19. Moving forward we see a lot of
opportunity to rejuvenate the market and drive growth.
Our ‘Move’ campaign achieved 38% revenue growth in the
muscle and energy segment, our ‘Choose Well’ campaign
drove a 10% uplift in sales across the pharmacy channel,
and our pet health business achieved baseline growth of
7% driven by the liver, behaviour and digestion segments.
Despite the impact from COVID-19 in China, our market
share gained 2% between January and June 20204.
On a full year basis, China sales of $103 million were
down 16% to the prior year – impacted by COVID-19 and
the Blackmores label transition.
From December 2019 the emphasis was on reshaping
and revitalising our China product offering while at the same
time resetting our engagement with the major e-commerce
platforms. In May, we achieved category captaincy with
Tmall and continue to make improvements in our online
experience with Kaola and JD.com. Early signs are very
positive with an outstanding 618 e-commerce event and
recruitment and conversion on all platforms well ahead of
the year prior.
Blackmores also continued to strengthen brand
awareness with participation in the second annual China
International Import Expo in Shanghai.
1 Nielsen & IQVIA, RMS/Sell Out service, Vitamins and Dietary Supplements, Australia Grocery
Pharmacy, Total Retail Sales, Fiscal Year 2020
2 2009/2020 Reader’s Digest Most Trust Survey
3 Nielsen Homescan 21/4/20
4 SmartPath Online Market Report June 2020
5 IQVIA sell out Thailand as of Q1 2020
6 IQVIA sell in data MAT Q1/2020, Malaysia Pharmacy Channel
7 Nielsen June 2019
8 BioCeuticals #1 practitioner brand in Australia – IQVIA, MAT to 14 June 2020
9 BioCeuticals is the #1 VDS Cold & Flu brand with 18% market share of Australia’s Total VDS cold and
fl u segment – IQVIA MAT to 14 June 2020
Blackmores
International
Revenue
$139 million
BioCeuticals
Group
Revenue
$99 million*
Blackmores is the number one VDS brand in Thailand5,
Malaysia6 and Singapore7, with strong sales driven by
our high-quality brand reputation and 650 in-store
product advisors.
International sales of $139 million were 30% higher
than the prior year, with growth opportunities due to the
emerging middle-class population, more sophisticated
and organised retail and a broader acceptance of the role
of natural health.
Our biggest growth market was Indonesia – 36% higher
than the prior year – where we benefi ted from the local
knowledge and distribution channels of our joint venture
partner Kalbe Farma. Blackmores Infant Formula is a
leading infant formula brand in Vietnam achieving
$20 million in sales.
BioCeuticals is the number one practitioner brand in
Australia8 and has 18% market share of Australia’s total
VDS cold and fl u segment9 with demand skyrocketing
during the COVID-19 crisis, especially for ArmaForce.
Focus on innovation and practitioner recommendation
drove sales for the year – up an impressive 7%.
We acknowledge the importance of healthcare
professionals in recommending this brand to patients.
The eighth BioCeuticals Research Symposium examined
how diet, genes and environment can infl uence
endocrine disorders, while our FX Medicine podcast
series on evidence-based and functional medicine
received 1.2 million downloads in 131 countries.
* Excludes Global Therapeutics, which is a discontinued operation.
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D I R E C T O R S ’
P R O F I L E S
1
2
3
4
5
1
Brent W Wallace
BCOMM (MARKETING), FAICD
Chairman and Independent
Non-Executive Director
Brent joined the Blackmores
Board in October 2005.
He is a founding partner of
Fiftyfi ve5, one of Asia Pacifi c’s
biggest independent strategic
marketing, brand and consumer
insight consulting fi rms.
Brent has held senior
positions in London and Sydney
advertising agencies and until
1996 was Managing Director
of Ogilvy & Mather in Australia.
Brent has more than 30 years
of international experience
in marketing, advertising and
research insights across a wide
variety of organisations and
consumer categories. In 1997,
he founded Galkal a strategy &
insight fi rm which merged with
Fiftyfi ve5 in 2018.
Brent was Chairman of
Blackmores’ Audit and Risk
Committee from 2015 until
appointed Chairman of the
Board in October 2018. He
is currently a Governor of the
World Wide Fund for Nature,
a global environmental group,
since 1993, and was a Non-
Executive Board Director
from 2006 to 2016. He is also
currently a Non-Executive Board
Director of The Environmental
Defender’s Offi ce (EDO) and
has held Board positions
on ASX-listed and unlisted
technology companies in online
procurement, education and
information.
2
Christine Holman
MBA, GAICD
Independent Non-Executive
Director
Christine joined the Board in
March 2019 and is Chairman of
the People and Remuneration
Committee and is a member of
the Audit Committee and Risk
Committee.
Christine is a professional
company director and currently,
Non-Executive Director of two
ASX listed boards, CSR Ltd and
Collins Foods.
Christine also sits on the
Boards of The McGrath
Foundation, The Bradman
Foundation, the ICC T20 Cricket
World Cup, State Library of NSW
Foundation and one Federal
Government business entity
– The Moorebank Intermodal
Company.
In her previous executive
capacity, as both CFO &
Commercial Director of Telstra
Broadcast Services, Christine
brings a deep understanding
of legacy and emerging
technologies. During her
time in private investment
management, Christine assisted
management and the Board
of investee companies on
strategy development, mergers
and acquisitions, leading due
diligence teams, managing
large complex commercial
negotiations and developing
growth opportunities.
Christine has an MBA and
Post-Graduate Diploma in
Management from Macquarie
University and is a Graduate
of the Australian Institute of
Company Directors. Christine
is a member of Chief Executive
Women (CEW).
Christine has previous
ASX-listed experience as a Non-
Executive Director with HT&E
Ltd, Vocus Ltd and WiseTech
Global Ltd.
3
David Ansell
BA (COMMUNICATION), GAICD
Independent Non-Executive
Director
David joined the Board in
October 2013 and is a
member of the People and
Remuneration Committee, the
Audit Committee and the Risk
Committee. He has enjoyed
a highly successful career in
consumer-facing organisations
in Australia, Asia and the United
States. David played a pivotal
role in the start-up years of
Foxtel, was CEO of advertising
agency Saatchi & Saatchi,
Managing Director of Mars
Incorporated in Australia, and
President of a global Mars unit
based in the United States.
David has a strong operating
and supply chain skill set and a
deep understanding of brand
and customer strategy. He is
also Managing Director and
Chairman of Jacobs Douwe
Egberts ANZ, Australasia’s
largest pureplay coffee
company, where he recently
led a major acquisition and
integration project. David is
a former Director of the peak
body of cycling in this country,
Cycling Australia, where he
served for fi ve years until
early 2020.
4
John Armstrong
BBUS, MBA, MAICD
Independent Non-Executive
Director
John joined the Board in May
2015 and is the Chairman of
the Audit Committee and the
Risk Committee. He has more
than 30 years’ experience in
various fi nancial and commercial
management roles.
His most recent executive role
was at SEEK Limited, an ASX 50
listed leading recruitment and
education provider, where he
was Chief Financial Offi cer for
over 12 years.
John’s focus was on
SEEK’s Asia operations
and investments, mergers
and acquisitions, including
directorships of SEEK’s business
in China, Zhaopin Ltd. (a US
listed company), and SEEK Asia,
which operates across South
East Asia. Prior to SEEK, he
held management roles at
Carlton & United Breweries
and commenced his career
at Ernst & Young.
John has previous ASX listed
experience as a Non-Executive
Director with Lovisa Holdings
Ltd, Melbourne IT and iProperty
Group.
5
Marcus C Blackmore AM
ND, MAICD, D UNIV, D LITT
Executive Director
Marcus has served on the
Board since October 1973. He
holds an Honorary Doctorate
from Southern Cross University
for distinguished leadership
in complementary medicines
in Australia and an Honorary
Doctorate of Letters from
Western Sydney University
for his distinguished services
to business, charity and the
broader community.
Marcus is an honorary
trustee of the Committee for
the Economic Development of
Australia (CEDA), an Alumnus of
Harvard Business School, and
an Honorary Fellow of the Heart
Research Institute.
Marcus held the position of
Blackmores Chairman up to
28 February 2017.
E X E C U T I V E
T E A M
1
Alastair Symington
BECON, PG DIP INTL. BUS, MAICD
Chief Executive Offi cer
and Managing Director
Alastair joined Blackmores as
Group CEO and Managing
Director in September 2019. He
is a global business leader and
brand builder with more than
24 years of consumer goods
experience in health and beauty
across multiple geographies.
Alastair spent 10 years in
a wide range of sales and
marketing roles with Nestlé
and Gillette in Australia, before
joining Procter & Gamble
(P&G) in 2005 and moving to
Singapore in 2008 where he
was responsible for strategy
and planning across APAC
for the beauty and grooming
categories. During this time he
led global and regional teams,
including as China Managing
Director for Wella based in
Shanghai. In 2016, Alastair
joined Coty as part of the
merger between P&G specialty
beauty brands and the former
Coty company, helping to
transform it into the third
largest beauty company in the
world. In his last role at Coty,
he was Senior Vice President
of APAC, Latin America and the
Middle East.
Alastair has a Bachelor
of Economics and a Post-
Graduate Diploma in
International Business from
Monash University, and
studied Mandarin while living
and working in Shanghai. He
is passionate about fi nding
ways to connect more people
to holistic health solutions,
believing that healthy people
and their pets naturally lead to a
healthier planet.
2
Ayumi Uyeda
Managing Director,
Australia & New Zealand
Ayumi is the Managing Director
for Blackmores’ ANZ business
responsible for our portfolio of
brands including Blackmores,
BioCeuticals and PAW. An
experienced General Manager
and pharmacist, Ayumi has held
senior roles in the consumer
health and pharmaceutical
industries across Asia Pacifi c and
the Americas. Prior to joining
Blackmores in February 2020,
she spent 14 years at Bayer
and most recently was Bayer’s
Global Head Vice President of
Aspirin & Aleve (pain and cardio
categories) based in New York.
At the age of 14, the book
Strong Medicine inspired
Ayumi to become a pharmacist.
Working in hospitals, her love
for the science was quickly
superseded by rewarding
interactions with patients. Today
Ayumi excels in building and
leading teams designed to drive
new in-market business models,
including direct-to-consumer
e-commerce and healthcare
practitioner channels. She is
also skilled at completing M&A
integrations and carve-outs and
leading international teams for
new market entry.
3
Brett Winn
Chief Information Offi cer
Brett has 25 years’ experience
delivering innovative, customer-
obsessed technology solutions
across a range of industries
throughout Asia Pacifi c. Prior
to joining Blackmores in 2016,
Brett was Chief Information
Offi cer at Medibank where
he created leading tele and
population health initiatives to
improve access to services and
reduce stress on the Australian
health system. Brett has also
held executive IT positions
at CitiPower, PageGroup,
Saatchi & Saatchi and McCann
Worldgroup.
As Blackmores’ Chief
Information Offi cer, Brett is
responsible for technology
and digital solutions aimed
at customer outcomes and
innovation, while driving
operational effi ciencies across
the Group. He has a MBA from
the University of Technology
Sydney and is passionate
about championing company
culture to achieve world-
class outcomes. Brett was
named CEO Magazine's Chief
Information Offi cer of the Year
in 2018.
4
Cecile Cooper
Company Secretary and
Director of Corporate Affairs
Cecile is an accountant and
Company Secretary with more
than 30 years of commercial
experience. She is responsible
for Blackmores’ Board
administration, secretariat,
governance, risk management
and compliance. She has held
a variety of senior positions
within Blackmores, including
Business Manager for Product
Development, Marketing
and Sales.
Cecile is a Chartered
Secretary and a Certifi ed
Practicing Accountant with
a Bachelor of Business
(Accounting) and a Graduate
Diploma of Applied
Corporate Governance from
the Governance Institute of
Australia. She is a graduate
of the Australian Institute of
Company Directors, serves
on the Governance Institute
of Australia’s Legislation
Review Committee, and is the
Chairman of CCNB Limited,
a not-for-profi t community
care organisation. Cecile was
awarded the Rotary Paul
Harris Fellow in 2015.
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E X E C U T I V E
T E A M
E X E C U T I V E
T E A M
5
Dean Garvey
Managing Director, International
An experienced commercial
operator, Dean is responsible
for driving international growth
across our Asia markets
(excluding China), including
new entries through direct
investment or distribution
partners. He is based at our
international hub in Singapore,
leading a team of almost
800 people in Hong Kong,
Indonesia, Kazakhstan, Korea,
Malaysia, Pakistan, Singapore,
Taiwan, Thailand and Vietnam.
Prior to this Dean was
Blackmores’ Deputy Managing
Director Asia since 2014,
spearheading our joint venture
with Kalbe Farma in Indonesia of
which he is President Director.
Dean is passionate about
learning about new cultures
and helping pioneer the natural
health industry in Asia. Before
joining Blackmores, he was
General Manager for Sales &
Marketing at Vodafone Australia
and held senior roles in M&A
advisory both in-house with
SingTel Optus and professional
services fi rms. Dean has degrees
in commerce and chemical
engineering from the University
of Sydney and is a Chartered
Accountant.
6
Gunther Burghardt
Chief Financial Offi cer
Gunther Burghardt was
appointed CFO in January
2020. He is a successful fi nance
and business leader with more
than 25 years’ experience in
the consumer goods, food and
beverage industries. His diverse
global career includes leading
teams in fi nance and information
technology and in commercial
and operations functions.
Prior to joining Blackmores,
Gunther was Executive Vice
President, Operations, at
Treasury Wine Estates (TWE),
based in California, USA. At
TWE he also held various senior
fi nance roles in Asia, Eastern
Europe and Oceania, including
Group CFO. Gunther has also
held senior roles at Mondelez
International (formerly Kraft
Foods), Reckitt Benckiser and
Procter & Gamble.
Gunther holds a Bachelor
of Business Administration,
Finance and Accounting from
Wilfrid Laurier University in
Canada and has fellowship from
the University of Melbourne
Graduate School of Accounting
and industry partnerships.
Originally from Canada, he
enjoys being active in the
great outdoors and believes
pets improve wellbeing and
engagement with life.
7
Jane Franks
Chief People Offi cer
Jane joined Blackmores in
October 2018 in a newly
created CPO role, responsible
for developing and executing
the Blackmores’ people
strategy. As guardian of the
employee value proposition,
she delivers a strategic focus
on culture, capability and
talent across all global markets.
Passionate about people and
making a difference, Jane is an
accomplished executive with 20
years’ experience in the fi nancial
services and consumer products
sectors across HR, strategy and
business management roles.
She has a strong track record
of building partnerships to
improve business performance
through change and
transformation, improving
leadership and organisational
capabilities of the future and
embedding rigorous talent
practices.
Prior to joining Blackmores,
Jane was HR Director for Diageo
Australia and before that held
senior roles across the Westpac
Group for over 15 years. She
has a Bachelor of Business
and membership of the
Australian Institute of Company
Directors and Australian Human
Resources Institute.
8
Jeremy Cowan
Chief Operations Offi cer
Jeremy joined Blackmores in
July 2018 and has a strong
record of generating value
through supply chain strategies
and continuous improvement.
His exceptional leadership
and strategy capability is
linked to extensive functional
and technical acumen
across end-to-end supply
chain, encompassing sales
and operations planning,
manufacturing, logistics and
procurement. He is skilled at
developing high performing
teams and nurturing positive
workplace cultures.
Prior to joining Blackmores,
Jeremy was Asia Pacifi c
Procurement Director of
Nando’s and before that
enjoyed a 20-year career with
Mars Incorporated in various
Director roles across multiple
segments based in both
Australia and the USA. A keen
triathlete who completed his
fi rst full Iron Man race in 2018,
Jeremy has a Bachelor of
Commerce degree from Deakin
University with an Accounting
and Economics major.
9
Joanne Smith
Chief Marketing and
Innovation Offi cer
Holding a stellar track record
in global brand building and
innovation, Joanne drives
marketing excellence and
consumer-led innovation for
Blackmores and is a proud
champion of holistic health. With
over two decades of commercial
and global marketing leadership
expertise, Joanne’s key strengths
include business and brand
development, consumer-centric
global growth strategies and
transformational organisational
change.
Prior to joining Blackmores
in March 2020, Joanne was
Global Marketing Director at
DuluxGroup, driving the Selley’s
brand across Australia, NZ, Asia
and the UK. She has also held
executive marketing positions
with other well-known consumer
brands, including Regional
Director for Johnson & Johnson
(Asia) and Global Marketing
Director for Unilever (USA)
leading the Dove brand globally.
Joanne has a Bachelor’s degree
in Marketing from the University
of Technology Sydney and
a MBA with an International
Business major.
10
Kitty Liu
Managing Director, China
With a strong marketing
pedigree and reputation for
great brand strategy and
business growth, Kitty has more
than two decades of experience
with blue chip multi-national
organisations including General
Mills, Mead Johnson, Yum! and
Unilever. She has successfully
implemented omni-channel
strategies across e-commerce,
including JBP experience with
Alibaba and Tencent. As VP,
Marketing Strategy & Sales
Operation for Mead Johnson
Nutrition, she reshaped the
infant and child nutrition
product portfolio and sales
strategy in China, achieving
double-digit top line growth
by gaining share in the winning
channels of e-commerce B2C
and mother and baby store
chains.
Kitty’s roll-up her sleeves
approach to leadership
combined with a MBA means
she is passionate about
delivering results and keen to
foster a performance culture
where all team members feel
supported to reach their full
potential. She is a fi rm believer
in gender equity and the
importance of building a strong
pipeline of talent to support
future business growth.
11
Adjunct Associate
Professor Lesley Braun
Director, Blackmores Institute
Lesley is an Adjunct Associate
Professor at the National Institute
of Complementary Medicine
(Western Sydney University)
and has held various positions
at The Alfred Hospital, Monash
University and RMIT University.
She was Vice President of the
National Herbalists Association
of Australia, an Academic Board
Member of Endeavour College,
and former member of key
industry groups including the
Australian Therapeutic Goods
Advisory Council, Advisory
Committee for Complementary
Medicine, the National E Health
Transition Authority (NeHTA)
medicines terminology group,
Clinical Oncological Society
of Australia and Advisory
Committee for the Australasian
Integrative Medicine Association.
Lesley is a current member of
the Menzies Research Catalyse
Program, Pharmaceutical
Society of Australia, Australian
Institute of Company Directors,
Australia China Business Council
Health, and Medical Research
working group, International
Women’s Forum. She also sits
on course advisory committees
for the nutrition degrees at
Endeavour College and Think
Group. Lesley is the main author
of four best-selling textbooks
including Herbs and Natural
Supplements – an evidence-
based guide, founding Editor-
in-Chief of the journal Advances
in Integrative Medicine, and
was a regular columnist for the
Australian Journal of Pharmacy
for 20 years. She was named
CEO Magazine’s Health &
Pharmaceutical Executive of the
Year in 2018.
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6
Operating
& Financial
Review
01
02
03
04
05
FINANCIAL
REVIEW
GROUP &
DIVISIONAL
RESULTS
OPERATING
REVIEW
GROUP
RISK
GOVERNANCE
AND SAFETY
Jamie Haua, Distribution Operator,
Export Dispatch Team, Bungarribee
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In January 2020, I was excited to join
Blackmores, a company that has been a
pioneer in the fi eld of natural medicines
and supplements and with a legacy that
stretches back many decades.
Blackmores’ vision, to connect every person on earth to the
healing power of nature, is an inspiring one. In addition to
our position as the leader of the vitamins and supplements
category in our home market of Australia, Blackmores has
signifi cant potential to grow the business across multiple
Asian markets for many years into the future.
Blackmores: the start of a turnaround
It is also clear, however that Blackmores is a turnaround
story in progress, and the FY20 year saw some signifi cant
headwinds which led us to reduce our profi t outlook in
February to a full year underlying NPAT in the range of
$17-$21 million. While COVID-19 resulted in an increase in
demand for our immunity products, this was offset by impacts
to retail foot traffi c in some markets including ANZ and lower
than expected sales from February to April in China.
Separately, the acquisition of the Braeside manufacturing
plant, which was completed at the end of October 2019 saw
adverse product mix and volume variances in the second
half of the fi scal year as Blackmores began to integrate this
facility. In the long term, the acquisition of Braeside will not
only protect important product registrations in several Asian
growth markets but will also ensure that we can continue to
control the high quality of the products we produce –
a hallmark of the Blackmores name.
In the next two to three years, however, the business
must mitigate the impact of these cost variances with the
$50 million effi ciency program we outlined in February
(annualised savings by 2023 compared to the 2020 base
year). Half of this will come from COGS savings and the
other half from operating expense effi ciencies. We have laid
the foundations for these effi ciency programs in the second
half of FY20 and we project that they will contribute to profi t
growth in FY21 and beyond.
H2 was about laying foundations for the return to
sustainable growth
While our overall fi nancial results for FY20 are clearly not
acceptable, I am very pleased with the measures we have
put in place in the second half to start the delivery of our
strategic growth programs. This will place Blackmores on
a path to sustainable profi t growth in the future. I was also
encouraged by the strong response to our capital raising
from institutional and retail shareholders alike. The funds
raised left us with a leverage ratio of 0.7x Net Debt to
EBITDA as at 30 June 2020, and this was before the receipt
of $49 million in additional funds from the Shareholder
Purchase Plan which closed in early July.
This capital raising ensures that Blackmores has very
strong unutilised liquidity available to enable the Company
to withstand unforeseen events in the future, and has
suffi cient capacity to invest in its growth and effi ciency
priorities.
Full year FY20 results
While total global full year Net Sales were down 3% to
$568 million (excluding the Global Therapeutics business
which is now shown as an asset held for sale), the business
saw unprecedented growth in the immunity space. The
BioCeuticals brand and International markets grew 7%
and 30% respectively compared to the prior year. China
and Australia however continued to feel the effects of the
decline due to regulatory changes and COVID-19 related
impacts on both overseas sales to domestic consumers and
retail foot traffi c, as well as the FY20 destocking related to
the label transition.
When all non-trading profi t impacts are excluded,
Blackmores has posted an underlying NPAT of $18.7 million.
This result is down 65% compared to the prior year. The
reported NPAT was $18.1 million.
We purchased our Braeside Facility in October 2019
giving rise to $63 million in total assets including a bargain
purchase gain of $6.2 million (which is included in reported
but not underlying NPAT). At the full year FY20 there were
$10 million of adverse variances from Braeside as well as
$7 million of adverse purchased price variance and
COVID-19 related sea and freight variances.
Cash generated from operations prior to interest and
taxes was $75.9 million during the FY20 fi nancial year,
representing an increase of $24.1 million from the prior
fi nancial year. The solid operating cash fl ow in tandem
with the proceeds of the institutional placement funded
higher levels of capital expenditure and investment,
most notably the Braeside facility in Victoria. Our gearing
ratio reduced from 31% to 11% and we also maintain
considerable headroom against our leverage covenants
with a year-end leverage ratio of close to 0.7x Net Debt
to EBITDA.
Higher average net debt during the year and the
closure of interest rate swaps in conjunction with the
capital raising resulted in an increase in net interest costs
during FY20. The much stronger cash and debt positions
after the capital raise led us to expect favourable changes
in our gearing and leverage ratios in FY21 and leave us
well positioned with high levels of available liquidity.
Looking to the future
The second half of FY20 also saw us starting to build
important capabilities in strategic revenue management;
we began to optimise our investments in trade spend
while also announcing to our customers a price increase
designed to offset the cost increases of the materials
which we purchase to manufacture our products
(the price increase is effective in mid Q2 FY21). We
will continue to invest in these strategic revenue
management capabilities, and along with LVP and active
mix management they will help us ensure that that we
improve our gross profi t margins from their FY20 position.
Wishing you health and wellbeing,
Gunther Burghardt, CFO
Gunther Burghardt, CFO
Blackmores Group
Cash fl ow and balance sheet
Our cash conversion of 150% was very strong, as improved
planning processes and robust management of receivables
provided benefi ts in net working capital. This also occurred
as the business dealt with historically-created overstock
positions via non-cash provisions.
Net assets increased by $99 million in the reporting
period. This increase is driven by the acquisition of Braeside
as we acquired over $63 million of assets. Our debt levels
dropped by $34 million after the receipt of funds from the
institutional placement.
Current assets were fl at on prior year, however cash
increased $23 million due to the capital raise and accounts
receivable were down $46 million as the Company chose
to reduce stock levels in a few of its largest customers
compared to the prior year-end. The current asset values
also include all assets (current and non-current) for Global
Therapeutics and IsoWhey/Wheyless as they were held
for sale at year end. The investment property at 15 Jubilee
Avenue in Warriewood has also been moved into current
assets for the year ended 30 June 2020 as the Board
approved the sale of the unused piece of property adjacent
to our head offi ce. This sale is expected to close during
FY21. Inventory levels are down on the prior year due
to a strong focus in the business on forecast accuracy as
part of the Integrated Business Planning (IBP) process.
Additional stock provisions were put in place in the second
half as we transitioned BioCeuticals products into the
Australian inventory management system and consolidated
our warehouse footprint. We exited our Eastern Creek
warehouse as part of this program in July and August
2020, which will simplify our supply network and provide
effi ciencies within the FY21 year.
Non-current assets increased by $68 million to
$253 million. Property, Plant and Equipment increased by
$58 million, including $49 million in the acquisition
of Braeside. Goodwill and intangibles decreased by
$17 million largely due to the transfer of Global
Therapeutics to assets held for sale. A $29 million ‘right of
use asset’ was also recognised in accordance with the
AASB 16 Leases standard.
Current liabilities decreased by $18 million due to the
timing of our payments to suppliers.
Non-current liabilities decreased by $13 million to
$119 million. While we recognised a lease liability of
$20.6 million in non-current liabilities as part of the new
Lease accounting standard, our debt levels decreased
by $34 million due to the injection of $92 million from
the capital raise in June which both reduced debt and
increased cash balances.
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G R O U P & D I V I S I O N A L
R E S U LT S
In a year of signifi cant change, Blackmores Group delivered
revenue of $568 million, which is 3% lower than the previous year,
and a Net Profi t After Tax (NPAT) of $18.1 million.
The reported NPAT includes one-off costs associated with redundancy and restructure, Braeside acquisition, costs
associated with the divestment of the discontinued operation. Excluding all these items and the Bargain Purchase gain for
Braeside the underlying NPAT was $18.7 million.
Our International business had sales growth of 30% with double digit growth in Malaysia, Singapore and Indonesia.
BioCeuticals shows sales growth of 7% with immunity products driving sales. Despite the great performance in these
segments, Blackmores continues to feel the impact of the decline in Chinese-infl uenced sales. This year we not only had a
decline in the export market to China due to regulatory changes, but also in-country sales were impacted by COVID-19 and
also sales phasing as part of the roll out of our new Blackmores labels. The China-infl uenced sales in our Australian retailers
were also in decline.
While our Australia domestic business was impacted by COVID-19, we still managed to maintain market share.
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Australia &
New Zealand
Blackmores
China
Blackmores
International
BioCeuticals
Group
Sales in the China segment
are comprised of key export
accounts and in-country
sales. Sales were down
16% across the total
segment. China in-country
sales to e-commerce
platforms were down
8% due to the impact of
COVID-19, and a reduction
in inventory levels and sales
to some key customers to
enable smooth sell-through
of our new labels in coming
months. The export business
continued to be impacted
by regulatory changes and
was down 30%.
The EBIT in China for
FY20 was negligible as
we continued to invest
more in brand growth and
organisational capabilities,
as well as taking some stock
provisions.
Our international business
which includes all markets
outside of ANZ and China
has seen strong growth
with sales 30% higher than
the prior year. Malaysia,
Singapore and Indonesia
all had double digit growth
with Indonesia growing
by 36%. The success of
Infant Formula in Vietnam
contributed $20 million
to revenue. Hong Kong
and Korea experienced
a drop in sales due to far
fewer travellers from China
purchasing VDS products in
the local markets.
EBIT in this segment
posted strong growth
of 92%, propelled by
the operating leverage
associated with strong net
revenue growth, coupled
with solid gross profi t
margins and well-controlled
costs.
BioCeuticals sales grew,
due to increased interest
in immunity products
as a result of COVID-19.
BioCeuticals increased
their sales in the second
half of the year by 12% on
the same period last year.
The Global Therapeutic
brand is removed from the
BioCeuticals Group in the
reports as it is held for sale
at year end.
BioCeuticals remains
the clear market leader in
practitioner-only products
with market share of 82.5%3,
up 1.6pt to the prior year.
EBIT was down 15.4%
on prior year due to the
transition to Braeside
manufacturing, some
inventory provisions
and transfer to the new
offi ce space closer to the
CBD Sydney.
Australia and New Zealand
sales of $227 million were
below the prior year result
of $267 million. New
Zealand was 4% higher
than prior year. However
Australia continued to be
impacted by the lower
retail foot traffi c of Chinese
shoppers and the effects
of COVID-19.
Blackmores continues
to be the number one VDS
brand in Australia, growing
market share to 16.4%1
(15.7% FY19) and was voted
the most trusted brand2 for
the twelfth year in a row by
the Reader’s Digest.
Blackmores brought new
products into the category
with successful launches
of Vitamin C + Elderberry
Gummies, Vegan Omega-3
Oil, our Probiotic Plus range,
and nasal sprays for cold
and allergies.
EBIT was down 49%
compared to last year
due to the increase of
raw material costs and
the additional costs from
Braeside as we began
to integrate the new
manufacturing facility.
26 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
1. Nielsen & IQVIA, RMS/Sell Out service, Vitamins and Dietary Supplements,
Australia Grocery Pharmacy, Total Retail Sales, Fiscal Year 2020
2. 2009/2020 Reader’s Digest Most Trust Survey
3. IQVIA Scanout Data Domestic & Exporting Performance, Vitamins and Dietary
Supplements, MAT to 13 June 2020
Revenue1
$568 million
The Group delivered
revenue of $568
million across all
divisions and brands,
a 3% decrease on the
prior year.
EBIT1
$29 million
Earnings before
interest and taxes of
$29 million was down
62% compared to the
prior year.
Reported
NPAT2
$18.1 million
Net profi t after tax
(NPAT) attributable
to shareholders of
Blackmores of $18.1
million, down 66%
on the prior year.
EPS2
103.5 cents
Earnings per share
(EPS) of 103.5 cents,
was down 70% on the
prior year.
Dividends
per share
0 cents
No dividend was paid
for the year ending
30 June 2020.
800
700
600
500
400
300
200
100
160
140
120
100
80
60
40
20
100
80
60
40
20
600
500
400
300
200
100
500
400
300
200
100
01
Australia & New Zealand
16
17
18
19
20
R E V E N U E
$227
million
394
500
400
300
200
100
0
02
China
270
267
267
227
R E V E N U E
$103
million
16
17
18
19
20
143
117
122
103
73
150
120
90
60
30
0
03
International
16
17
18
19
20
R E V E N U E
$139
million
139
107
82
68
61
150
125
100
75
50
25
0
16
17
18
19
20
04
BioCeuticals Group
R E V E N U E
$991
million
120
100
80
60
40
20
0
87
92
99
74
65
16
17
18
19
20
1. Excludes Global Therapeutics as it was an asset held for sale.
2. Includes Global Therapeutics.
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Blackmores Group is a geographically diverse company
with operations across 12 markets. We have 16 offi ce
locations and are accountable to more than 20 regulatory
authorities who infl uence our product ranges and how
we communicate with our consumers.
Group headquarters is located at the Blackmores Campus
at Warriewood, on Sydney's Northern Beaches, a 25,000
square metre purpose-built facility where most of our
products are packaged and quality checked.
Consolidating our warehousing
Now in its third year of operation, our Bungarribee
Distribution Centre in Western Sydney has doubled the
Group’s warehouse footprint. The facility is critical to our
customer service, being purposefully designed for high
levels of automation and to maximise workfl ow and
effi ciencies.
To start realising the true benefi ts of this site, we closed
our Eastern Creek Warehouse and transitioned all brands
to Bungarribee and onto one fi nancial and supply planning
IT platform. The consolidation of our warehouse operations
will deliver $3.7 million in annualised savings as well as
improve order response times.
Integrated Business Planning (IBP)
Our newly implemented IBP process continued to evolve.
IBP is the central planning process through which
we will signifi cantly increase our ability to match demand
with supply and launch innovation. We have clearly started
to see business benefi ts over the last 12 months, with
more predictable demand, improved customer service
and stock levels, and ongoing and steady improvement in
working capital.
Leading Value Position (LVP)
Our LVP work identifi ed areas across our business where
value can be unlocked to help fuel our refreshed strategy
and ambitions. This important work will continue into FY21,
with a strong focus on improving effi ciencies, reducing
waste and creating a leaner and more agile business.
COVID-19 supply
We congratulate our Group Operations and Supply teams
for managing a very complex and unpredictable response
to COVID-19. Supply of raw materials, packaging and
consumables and distribution within our markets was
challenging during the height of the pandemic.
We experienced unprecedented demand for our
immunity products and despite some stock shortages early
on, we adapted quickly, achieving operational continuity
and output for high stock availability to fulfi l customer
and consumer demand. Much of this was due to our new
Braeside facility (see opposite page) which allowed us to
scale up quickly.
Commitment to an ethical supply chain
We have a high reliance on natural resources and
accordingly have a strong sustainability charter. Our
supply chain deals with 1,000 ingredients, 600 product
formulations and approximately 1,500 individual product
units. You can read more about our commitment to an
ethnical supply chain in our Sustainability section on
pages 36-37.
Continuous coater machine, the fi rst
of its kind in Australia, generating
350 kilograms of tablets per hour at
our Braeside manufacturing facility
the fi rst to go high speed. However, when demand for our
immunity products skyrocketed the capacity to switch to
our popular immunity lines was invaluable.
Owning our own factory gives us greater production
and product design capability, assurance of supply and
ownership of intellectual property. It also allows us to
rapidly vary production lines to comply with individual
country safety and quality requirements, fast tracking
registration and entry into new markets. For many
Asia markets, product registration is linked to the
factory of manufacturer so owning our own plant
gives greater certainty.
In particular, Braeside will enable us to develop a
Halal certifi ed range of products for our growth market
of Indonesia where local laws require a wide range of
products including vitamins and dietary supplements
to be Halal certifi ed. This will have fl ow-on benefi ts in
other markets with large Muslim populations keen for
Blackmores Halal, including Malaysia and Singapore.
Braeside manufacturing capability and
competitive advantage
A major FY20 milestone for Blackmores Group was the
offi cial handover of Catalent Australia’s manufacturing plant
with its 300 employees, located at Braeside in Victoria.
Braeside gives us signifi cant manufacturing capability
and the capacity to vertically integrate our supply chain –
which will be a great competitive advantage. In the
18 months leading up to the 25 October 2019 handover
from Catalent to Blackmores’ ownership, there were some
signifi cant volume swings within the product mix at the
Braeside site from both Blackmores as well as existing
Catalent customers. Optimal product mix is critical to
overall effi ciency of the factory, and we therefore have some
ongoing work to do on this which sits hand-in-hand with
our maturing IBP process to unlock the full potential of
this great facility.
Since acquiring Braeside, our Demand and Supply team
have focused on introducing the right volume and mix of
products to optimise the facility, successfully transferring
100 of our products to the factory.
Our three-year program to drive effi ciencies and
optimise the facility has included the installation of a new
high-volume, state-of-the-art tablet press and continuous
coater, a technological fi rst in Australia. Specialising in solid
dose tablet manufacturing, this innovative technology has
vastly improved effi ciency, producing up to 250,000 tablets
per hour from a single machine which effectively doubles
our capacity. Our popular Blackmores Glucosamine
Sulphate 1500 and BioCeuticals ArmaForce products were
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0 4
G R O U P R I S K S
There are various risks that could have a material impact on the achievement of
Blackmores’ strategic and future prospects. Below are those risks that Blackmores
considers of greatest materiality to the business, and existing mitigations.
Risks
Description
Response
Risks
Description
Response
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Laws, regulations
and geopolitical
landscape
Climate and
sustainability
Brand and
reputation
Blackmores operates in a highly regulated
industry in all markets in which goods
are manufactured and sold. Varying
geopolitical landscapes and regulations
impact many aspects of our operations,
including taxation, production,
manufacturing, pricing, marketing,
advertising, distribution and product sales.
Remaining compliant with, abreast of
and responsive to changes (some of
which can signifi cantly impact the nature
of operations in these markets) requires
diligent and ongoing monitoring by the
business.
• Blackmores Compliance Framework, ERM Framework and supporting
company policies, standards and procedures
• Specialised and experienced resources and teams – both in-market and
within corporate operations to oversee and educate stakeholders of
relevant regulatory requirements
• Executive Team oversight via the Risk, Assurance and Compliance
Committee (RACC); and, where required, targeted external and internal
audit reviews
• Third party specialist advisors for new and emerging markets
• Relationships and active engagement (where relevant) with key
government, industry and regulatory bodies to stay abreast of regulatory
changes
• Flexible supply chain practices and specialised technical and quality team
oversight
• Diversifi ed category and product base
• Diversifi ed customer base and route to market
Our high quality and sustainability
standards together with limited availability
of natural ingredients, puts pressure on the
continuous supply of some key products
Blackmores’ ability to effectively respond to
and manage the impacts of climate related
change and changing markets as a result
of global warming may impact access to
some raw materials.
• Strong sustainability charter and science-based approach to
understanding the resilience of key ingredients
• Regular climate-related scenario assessments undertaken to progress
ongoing adaptive measures
• Specialised and experienced internal sourcing and procurement teams
overseeing Supplier Quality Assurance (SQA) and selection program
• Strengthened supplier relationships and contracts balancing volume
requirements and broadening raw material supplier base
• Flexible manufacturing via a combination of Blackmores-owned facilities
and outsourced arrangements
• Improved demand planning and forecasting technology and processes
• Defi ned company (and brand specifi c) values, mission and strategy
supported by company policies, standards and procedures
• Supplier Quality Assurance (SQA) and selection program, long term
supplier relationships, and Chain of Responsibility audits and training
• Specialised and experienced technical quality / assurance / product safety
teams overseeing over 30 tests and quality assessments on every product
• Product supply chain traceability technology and ongoing testing over the
shelf life of every production batch
• Crisis Management, Business Continuity, Disaster Recovery, Complaints
Handling and Product Recall procedures
• Consumer advisory line supporting all consumer product information
queries
• Consumer insights and innovation team monitoring brand health, media
(including social/digital) and consumer trends
• Brand and intellectual property protection strategies
• Information Security Policy, supporting framework and specialised
resources
• Restricted and segregated management of sensitive business / supplier /
customer data
• Ongoing technology and software updates with the incorporation of
security services
• Data classifi cation and encryption (where relevant)
• Compliance program and annual employee cyber / information security
training to educate users and prevent cyber attacks
• Periodic user access and general system vulnerability / penetration testing
• Crisis, Business Continuity and Disaster Recovery Plans
The strength of Blackmores’ brand portfolio
is key to business success. Managing the
reputation of brands, and mitigating events
that may damage brands (e.g. inaccurate
media coverage, product quality issues,
counterfeit product, third-party supplier
negligence or incidents, unsatisfactory
supplier performance etc.) is critical to
Blackmores’ ongoing success.
Data and
information
security
Data/information security is essential
to protect business critical intellectual
property and data privacy. Continuing
advances in technology, systems and
communication channels mean increasing
amounts of private and confi dential data
are now stored electronically. This, together
with increasing cyber-crime, heightens the
need for robust data security measures.
30 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
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Financial and
treasury
Major events in fi nancial markets (e.g.
currency, interest rates, FX, cost of capital,
banking/commercial credit etc.), economic,
political, social and/or major business
event (e.g. product recall, pandemic etc.)
can signifi cantly impact the business’
profi tability, cash fl ow and results.
• Treasury policy and supporting processes
• Monthly 12 month rolling analysis and projections of fi nancial results
including scenario analysis across key factors (e.g. leverage ratios, FX
movements etc.)
• Hedging of FX exposures (as required)
• Diversifi ed supply base, customer base and route to market
• Active and ongoing reviews and assessments of customer risk
Our ability to hold suffi cient liquidity
to ensure the fulfi lment of all payment
obligations, and the management of
capital and availability of funding, are
important requirements to support
business operations and growth.
Key partnerships
Blackmores relies on select key markets
and customers (distributors and retailers)
to support sales and delivery of strategic
initiatives.
Suboptimal performance of these markets
or key customers, and/or detrimental shifts
in market power, could have a signifi cant
impact on Blackmores’ ability to deliver
against strategic initiatives.
• Multi-regional and diversifi ed customer base with a focus on continued
channel expansion
• Focus on Blackmores’ brand health, category growth through innovation,
continued marketing focus and customer loyalty initiatives driving
demand
• Defi ned and formally agreed customer terms of engagement
• Investment in strong and multifaceted customer relationships via joint
business planning processes to support and align internal and partner
incentives
• Quarterly performance reviews
Business
transformation
The business continues to focus on
transformation initiatives that support
effective and effi cient end-to-end
processes. Delivery of these initiatives will
be critical to Blackmores’ ability to optimise
our existing asset base while sustaining
growth.
• Defi ned company, brand and market focused strategy, targets and
implementation plan
• Execute Team led Transformation Offi ce overseeing resource allocation
and governance of key projects and initiatives
• Defi ned people and culture strategy and initiatives including workforce
planning, leadership framework, talent management and training
program
People and culture Blackmores’ ability to deliver on strategic
• Defi ned and implemented people and culture strategy and supporting
targets is reliant on retaining and attracting
experienced, skilled, and motivated
talent. It also requires strong, resilient, and
effective leaders as the business grows at
pace.
Consumer and
marketplace
Unanticipated changes in consumer
preferences and demand, or competitive
pressures that signifi cantly alter the market
landscape (e.g. growth online channels,
acquisitions, aggressive price wars) can
have adverse effects on the business’
ability to capture growth opportunities or
effectively manage inventory and supply.
Signifi cant
business
interruption
Blackmores’ scope of operations exposes it
to a range of business disruption risks, such
as environmental catastrophes, pandemics,
natural and man-made hazards and
incidents, or politically motivated violence.
Signifi cant business disruption could
result in Blackmores’ sites or employees
being harmed or threatened, loss of key
infrastructure, impacts to supply chain,
manufacturing and inventory shortages or
loss, and fi nancial or reputation loss.
programs
• Rolling 12-18 months workforce and succession planning process
• Talent management cycle
• Incentive and reward programs aligned to Blackmores’ vision and growth
initiatives
• Defi ned leadership framework and standards
• Focused attraction and retention to prioritise skills and capabilities critical
to business growth
• Dedicated consumer insights and innovation teams tracking consumer
trends, conducting product research, and managing innovation pipeline
• Defi ned strategic focus on high growth categories, markets and channels
• Brand portfolio and product strategy, including pricing guidelines,
portfolio rationalisation, prioritisation and targeted investment in
consumer marketing
• Integrated business planning processes, including portfolio reviews
and global volume alignment processes
• Trusted brand positioning and strong consumer loyalty
• Competitor and marketplace monitoring
• Online channel development and capability uplift, joint business partner
planning, and direct to consumer marketing
• Crisis, Business Continuity and Disaster Recovery plans and training
• Primarily cloud-based, resilient and failover safe IT systems supporting
remote working capabilities
• Dedicated health and safety team oversight, audit programs and training
• Preventative repair and maintenance program
• Multi-regional and global sourcing and production capability
• Comprehensive insurance program
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G O V E R N A N C E
A N D S A F E T Y
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so does the importance of rigorous
corporate governance, compliance,
risk management and product safety.
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In accordance with our commitment to continuous
improvement, we enhanced our overall governance
framework in FY20 by strengthening focus on risk
management throughout the organisation.
This included:
• Separating the Board Audit and Risk Committees
• Reviewing the Board and Committee Charters
• Establishing a Risk, Assurance and Compliance
Committee comprised of Executive Team members
• Enhancing our Group Risk Management Framework
• Aligning our Group Risk Profi le with our refreshed
strategy
• Launching a ‘Speak Up’ portal powered by Whispli
to empower our people and others to safely – and
anonymously if needed – report any inappropriate,
unethical or improper conduct in our workplace or
supply chain.
Work Health & Safety
We decentralised our WH&S Committee structure to
increase focus on safety at each of our sites globally,
with plans underway to adopt a new WH&S Management
System to help us better identify and manage
workplace risks.
We experienced fewer safety incidents (65 v 82 in
FY19), but more Lost Time Injuries (LTI) (10 v 8). Distribution
remains our greatest safety risk with 22 incidents and
4 LTI, however improvements are expected following the
consolidation of our warehousing in modern, automated
facilities at Bungarribee.
Our 12-month rolling safety schedule focused on priority
areas including the prevention of strains and sprains,
manual handling practices, mental health and site safety
checks. To embed our safe workplace culture, employees
completed mandatory quarterly learning modules on our
B!Safe, B!Healthy Policy, mental health and wellbeing, and
ergonomics to support teams working from home through
the COVID-19 pandemic.
Mental health and Employee Assistance Program
Blackmores Group recognises that mental wellbeing is
every bit as important as physical health and fi tness. We
have 39 employees across key sites trained as accredited
Mental Health First Aiders by Mental Health First Aid
Australia to provide fellow co-workers with initial support,
referrals to professional help, and on-site assistance in a
crisis situation. Our Benestar Employee Assistance Program
provides our people with free and confi dential counselling
services to help them overcome any stress and challenges
and achieve optimal wellness.
Product safety
As Australia’s most trusted VDS brand committed to best-
in-class consumer healthcare, Group product safety and
pharmacovigilance is core to our business and the integrity
of our global brands.
Our Pharmacovigilance and Product Safety Program is
underpinned by a legal and regulatory framework which
governs the safety analyses of our products from research
and development through to post-marketing monitoring.
We recently invested in a new quality management system,
with enhanced features to rapidly identify any consumer
reaction trends and ensure compliance reporting to the
regulators. We remain dedicated to not merely comply with
regulations, but to uphold consistent safety principles across
our entire portfolio.
COVID-19:
Ensuring our
people’s safety
and wellbeing
Following the global outbreak of COVID-19 in January,
Blackmores Group quickly assembled a fully resourced
Business Continuity Management Team (BCMT) comprised
of senior functional leaders operating within the Australian
Inter-Service Incident Management System framework to
steer our business response, and we were one of the fi rst
Australian companies to disclose the expected impact on
our fi nancial performance.
The BCMT were guided by the core principle of
ensuring the safety and wellbeing of our people. During the
Response Phase we developed and implemented protocols
to protect the health of employees in all affected markets
and ensure the continuity of our operations functions in
Australia. Our Board Directors were appointed to working
groups to assist management and met weekly.
Offi ce staff worked from home with the global business
adapting well to operating in a virtual environment. This was
supported by regular high level communication updates
from the CEO and BCMT, as well as a ‘Stories of our People
from the Frontline’ series aimed at inspiring resilience,
connectivity and continuity across the business throughout
the pandemic.
A global employee sentiment survey conducted in
May showed that 91% of our people felt the Company
had prioritised employees' health and safety during the
crisis and 88% felt well informed about the pandemic
and how it affected the business. Despite working from
home, 92% of employees said they felt well connected
with colleagues which was in part enabled by the high
uptake of remote video technology.
In early June, our ANZ business entered the Recovery
Phase, with some offi ces re-opening in accordance with
the latest Government and Health Authority advice,
including increased cleaning regimes and social
distancing measures.
Although consumer activity decreased and overall
sales fell as a result of COVID-19 there was huge demand
for our immunity products, underscoring the trust
consumers place in the Blackmores brand. Entering
FY21, we look forward to the Thrive Phase and emerging
from this health crisis with an even stronger mission to
connect every person to the healing power of nature.
George O'Neil, Global Marketing Director – Core and
Christine Sidebottom, Head of Medical & Product Safety
Alex Lintner Nolan, Social Media Manager, Blackmores Australia
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7
Sustainability,
Community &
Our People
01
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SUSTAINABILITY
COMMUNITY
OUR PEOPLE
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S U S T A I N A B I L I T Y
In 2019, Blackmores
Group committed to a
program to progress
our four sustainability
goals including clear
commitments and
targets. These are
aligned to the
biggest environmental
and social risks, impacts
and opportunities for our
Group and are guided by
the UN Sustainable
Development Goals.
Improve
community
health and
wellness
Nurture a
values-driven
culture that
makes a positive
contribution
to the
community
Create a safe
and healthy
workplace
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The acquisition of the Braeside
manufacturing facility has grown
our environmental footprint
signifi cantly, challenging the
achievement of these targets.
Nevertheless, the Group
remains committed to
delivery of the targets.
Progress towards
Net Zero carbon
emissions by
2030
Deliver
sustainable
packaging
solutions
Transition to
renewable
energy
Optimise
material
recycling and
recovery
Healthy People,
Healthy Planet
Embed high
business
standards
Take action
on climate
change
Invest in
research and
education
Value diversity,
inclusion and
equality
Commit to an
ethical supply
chain
Adopt
sustainable
sourcing
standards
Partner with
others to make
a difference
Reconnected with
nature at our fi rst
Forest Bathing event
Re-homed 300kg of clothes
at the Blackmores Campus
Clothing Swap for the Planet
Key Highlights
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3
7
Began the transition to
renewable energy at our
major sites. By the end
of 2020, a minimum of
50% of power to the
Blackmores Campus, and
20% at Braeside, Surry
Hills and Bungarribee sites,
will be green sources.
Executive Team and key
senior management
developed a Group
Climate Resilience Action
Plan spearheaded by
a 3-4 Degree Scenario
Planning Workshop.
4
Blackmores Group
recognised with the
CMA Sustainability
Award 2019.
6 Added better
recycling
information to
more than 100
products and
assessed 193
products using
the Australasian
Recycling Label
PREP tool.
Blackmores Sydney Running Festival in September 2019
adopted new ‘greener event’ principles which eliminated
7,000 single-use plastic bottles, disposed of 300,000
biodegradable cups at a specialised waste plant and
added new recycling facilities at the recovery village.
1,000 kilograms of discarded clothing was donated to
charity and the event reached the milestone of $20 million
raised for charities since the event started.
2
5
In May 2020,
Blackmores Group
committed to Net
Zero carbon
emissions by 2030.
Progressed Partnering
for People initiative to
assess and address the
risk of modern slavery
in our supply chain,
including the release of
our enterprise level
Human Rights Policy.
8
Partnered industry-wide
to address modern
slavery risk through
Complementary
Medicines Australia’s
Modern Slavery
Working Group.
Top left: Amie Skilton, Senior
Educator, BioCeuticals
Bottom right: Colin Dimitroff,
Environment & Sustainability
Manager
Inspired the next
generation to take
Climate Action
36 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
Educated staff to be Recycling
Ninjas in National Recycling
Week masterclasses
9 New bulk tablet transfer technology at Blackmores’
Braeside manufacturing facility eliminated the need
for 20 tonnes of cardboard and kept 21,000 single use
plastic bags out of landfi ll.
10 Educated 39 suppliers
with webinars on
addressing modern
slavery risk.
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E As a values-led company, giving back to improve people’s
wellbeing is at the heart of what we do. Blackmores Group
strives to make a difference by building healthier communities
across Asia Pacifi c and supporting charitable organisations who
are helping to create a brighter future.
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In Australia, we responded to the catastrophic bushfi re
season which destroyed more than 6.3 million hectares of
land. Through matched employee donations, online sales
proceeds and staff bake sales, Blackmores Group donated
more than $85,000 to Australian Red Cross and local
charities involved in the recovery process.
In Indonesia, we continued our two-year partnership
with Bumi Sehat Foundation to support maternal and child
health for rural communities in Aceh, Bali and Papua by
delivering culturally appropriate health education and
essential pregnancy nutrients.
In Thailand, our annual Keep Running Keep Wellbeing
in-store campaign saw 7,543 pairs of shoes donated to rural
school children and our ongoing B for Earth initiative saw
consumers return 20,455 empty Blackmores bottles to be
recycled, with proceeds funding education scholarships
for nine disadvantaged students, noting that the regular
nutrition component of this program was paused due to
COVID-19 restrictions.
International Women's Day 2020 was
celebrated by our people across Asia Pacifi c.
2
1
4
5
The 2020 Blackmores Mercie Whellan
Women+Wellbeing Awards shone an inspirational light
on women who have made an outstanding contribution
to the health of others, with a focus on mental wellbeing.
These awards were held to coincide with International
Women's Day, which was celebrated by our people across
the business.
Our BioCeuticals team provided practitioner-only
products to Hands On Health Australia, an interdisciplinary
healthcare charity reaching 30,000 patients worldwide per
year, and sponsored an Aboriginal Women’s Retreat with
our qualifi ed naturopaths and nutritionists volunteering
their time. We also provided leadership mentoring through
the Growth Project, helping small charities maximise their
impact on the world.
1. Gregory Howard, Regulatory Affairs Associate 2. Marinah Azam,
Demand Planner, Blackmores International 3. George Casha, Bungarribee
Distribution Manager 4. Christina Ly, CI Engineer, Braeside 5. Golnoosh
Torabian, Regulatory Affairs Associate 6. Sarah Tait, Quality Compliance
Offi cer 7. Panomprai Bunchai, Product Advisor, Blackmores Thailand
8. Tanveer Mannan, IT Applications Services Manager
3
8
6
7
Responding to a global pandemic
COVID-19 created an unprecedented global pandemic,
forcing millions of health and emergency workers onto
the frontline. Blackmores Group threw our support
behind this tireless workforce, helping protect their
wellbeing with product care packages.
In Australia, we joined hands with #Feed the Frontline,
providing ER and ICU hospital workers Blackmores Bio C
for immunity and Vitamin E Cream to repair skin damage
caused by continuous handwashing.
In China, we extended this support to emergency
crew, couriers and sanitation workers, as well as
honoured health workers with a Blackmores Wishing
Tree at the Shanghai Nightlife Festival hosted by the
China International Import Expo Bureau.
In Singapore, we supported the city’s most
vulnerable population by donating Blackmores
Bio C to migrant workers.
In Thailand, we joined a national people’s initiative,
the ‘Happiness Pantry’, contributing food and products.
Blackmores Sydney Running Festival
2019 was a record-breaking year for the Blackmores Sydney Running Festival, with over
40,000 participants achieving their health and fi tness goals and 17,000 people jumping
aboard our online training program. More than $2 million was raised for charity, with
the event underpinned by sustainable initiatives including refi llable water stations and
biodegradable cups. We also launched a national partnership with parkrun, with almost
400 weekly events across the country encouraging people to exercise regularly in nature.
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0 3
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As a purpose-led, performance-driven organisation,
Blackmores Group strives to create remarkable employee
experiences through supporting a diverse and inclusive
culture, creating leadership that inspires high performance,
and providing everyone with opportunities to achieve their
professional, personal and wellbeing goals.
Our diverse and inclusive culture
As pioneers in natural health and champions of wellbeing,
Blackmores has a fundamental responsibility to our people
to support a culture where all perspectives are heard,
valued and respected. By embracing individuality, a diverse
and inclusive culture allows employees to optimise their
wellness and overall contribution to the business. It also
ensures a genuine refl ection and understanding of our
very diverse consumer base across all of our current and
future markets.
In FY20, we progressed towards attaining a Workplace
Gender Equality Agency (WGEA) citation and becoming a
WGEA Employer of Choice for Gender Equality (EOCGE)
by implementing gender equality policies, improving
female representation in senior leadership – now at 54%
in Australia, and reducing pay gaps now proudly within
1% across the organisation.
With a 70% female workforce and 55% female Executive
Team, we believe it’s important to have women in decision-
making positions yet equally important to stand side-by-
side with men championing positive change. Our fl exible
working ‘FlexFit’ philosophy and gender-equal policies for
parental leave and domestic violence are major enablers for
women and parity, while also supporting gender equity and
showing all employees they are valued.
Leadership success factors
Our leadership inspires an empowering and winning culture
consistent with our values, underpinned by Leadership
Success Factors which are built into everything we do
to help guide our people towards the behaviours and
capabilities needed to positively impact the organisation.
1. Relentless focus on the future
2. Make it happen
3. Invest in people
4. Empower and inspire
Delivering faster growth through optimal capability
We are investing in our people through innovative, tailored
learning journeys focused on the holistic and functional
skills required to succeed. Our development philosophy of
70% on-the-job learning, 20% coaching and mentoring, and
10% structured training empowers our people to build and
improve capability to support their growth and fulfi lment.
Enabled by digital learning communities, our programs
launched in FY20 – which will be embedded throughout all
our markets in FY21 – included:
• Resilience in the Workplace: Improving self-awareness
and mental agility via a collaborative seven-day digital
course;
• Blackmores Faculty: Drawing on in-house expertise
to design and deliver tailored development programs
including our Group Sales Capability Curriculum and
Group Marketing Curriculum.
Integrating our Braeside team
We welcomed 300 new team members at Braeside,
implementing a ‘people, culture, change’ strategy to
successfully integrate critical talent across manufacturing,
product development and supply chain with almost
100% retention. Braeside employees are included in core
Group policies and benefi ts and covered by one of three
Enterprise Agreements, including the broader Blackmores
& BioCeuticals Working Together Agreement for offi ce staff.
Employee engagement surveys for continuous
workplace improvement
Blackmores Group is continuously improving our
workplace culture based on employee sentiment, deeming
this especially critical through periods of change and
transformation. Our regular and diverse channels of
employee feedback include quarterly ‘pulse’ check-in
surveys to gain ongoing real-time insight. While some gain
comfort to share their voice via these confi dential surveys,
we also offer our people opportunities to engage in robust
round-table discussions with our CEO and Executive Team
as an equally valuable channel.
3
5
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1. Noah Nofo'Akifolau, Team Leader, Bungarribee 2. Ketkanok
Surintaraporn, Sales Administrative; Krishanat Phattayakorn,
Commercial Analyst; and Kasorn Pungwirawat, Supply Chain
Manager – Blackmores Thailand 3. Matt Riley, E-Commerce
Manager, Blackmores Australia; Michelle Gough, Financial
Controller & Investor Relations Manager; and Kiran Hajos,
Human Resources Director ANZ 4. Ian Gonzaga, Technical
Support, BioCeuticals, and Georgie Allan, Marketing
Coordinator, BioCeuticals 5. Lauren Dewsbury, Technical
Support, BioCeuticals 6. Kane Mangan, Outbound CRM,
BioCeuticals, with Polar.
40 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0 41
8
Financial
Report
2020
P A G E
43
44
48
72
5 YEAR HISTORY
DIRECTORS’
REPORT
REMUNERATION
REPORT
AUDITOR’S
INDEPENDENCE
DECLARATION
73
78
80
81
INDEPENDENT
AUDITOR’S
REPORT
DIRECTORS’
DECLARATION
CONSOLIDATED
STATEMENT OF
PROFIT OR LOSS
AND OTHER
COMPREHENSIVE
INCOME
CONSOLIDATED
STATEMENT
OF FINANCIAL
POSITION
82
83
84
127
CONSOLIDATED
STATEMENT OF
CASH FLOWS
CONSOLIDATED
STATEMENT OF
CHANGES IN
EQUITY
NOTES TO THE
FINANCIAL
STATEMENTS
COMPANY
INFORMATION
Georgie Allen, Marketing Coordinator, BioCeuticals and
Ian Gonzaga, Technical Support, BioCeuticals
5 Y E A R
H I S T O R Y
$’000
Revenue1
2020
2019
2018
2017
2016
568,353
588,914
579,535
530,550
595,705
Earnings before interest, tax, depreciation and
amortisation (EBITDA)1,8
Depreciation and amortisation1
Earnings before interest and tax (EBIT)1,8
Net interest expense1
Profi t before tax
Income tax expense
Discontinued operations
Gain/(loss) attributable to non-controlling interests
Profi t after tax attributable to shareholders of
Blackmores Limited (Reported NPAT)2
Net debt
Shareholders’ equity
Total assets
Current assets
Current liabilities
Net tangible assets (NTA)
Cash generated from operations
Number of shares on issue (’000s)7
Earnings per share (EPS) – basic (cents)2
Ordinary dividends per share (DPS) (cents)
Share price at 30 June
NTA per share
Cash conversion ratio3
Return on shareholders’ equity4
Return on assets5
Dividend payout ratio
Gearing ratio6
EBIT to revenue ratio
Effective tax rate
Current assets to current liabilities (times)
Net interest cover (times)
Gross interest cover (times)
% change on prior year
Revenue
EBITDA
EBIT
NPAT
EPS
DPS
50,676
21,293
29,383
5,913
23,470
7,411
2,962
907
87,322
10,768
76,554
4,995
71,559
20,947
2,818
(39)
106,556
8,848
97,708
3,931
93,778
27,281
2,726
(782)
90,773
8,223
82,550
4,182
78,372
22,962
2,618
(985)
151,766
7,032
144,734
1,810
142,924
43,179
274
12
18,114
53,469
70,005
59,013
100,008
37,345
305,295
561,132
307,862
135,006
233,815
75,870
18,678
103.5
-
$77.95
$12.52
149.7%
5.9%
5.6%
-
10.9%
5.2%
31.6%
2.28
5.0
4.8
(3.5%)
(42.0%)
(61.6%)
(66.1%)
(70.4%)
(100%)
94,484
207,292
493,624
308,222
153,205
122,508
51,806
17,362
309.2
220
$78.95
$7.06
59.3%
25.8%
16.0%
71.2%
31.3%
13.0%
29.3%
2.01
15.3
14.6
1.6%
(18.1%)
(21.6%)
(23.6%)
(27.9%)
(27.9%)
49,532
192,875
464,850
302,507
174,467
123,860
90,131
17,227
406.4
305
$142.50
$7.19
81.5%
36.3%
22.3%
75.0%
20.4%
16.9%
29.1%
1.73
24.9
23.4
9.2%
17.4%
18.4%
18.6%
18.6%
13.0%
44,717
177,541
412,174
258,662
142,556
107,369
95,310
17,226
342.6
270
$95.84
$6.23
100.7%
33.2%
20.2%
78.8%
20.1%
15.6%
29.3%
1.81
19.7
18.9
(10.9%)
(37.8%)
(40.6%)
(41.0%)
(41.0%)
(34.1%)
17,793
178,263
443,362
294,624
192,279
116,484
123,022
17,225
580.6
410
$131.39
$6.76
80.8%
56.1%
39.4%
70.6%
9.1%
24.3%
30.3%
1.53
80.2
63.9
54.1%
93.6%
101.0%
114.8%
114.5%
102.0%
1. Excluding the discontinued operation (Global Therapeutics).
2. Including the discontinued operation.
3. Calculated as cash generated from operations divided by EBITDA.
4. Calculated as net profi t after tax divided by closing shareholders’ equity.
5. Calculated as EBIT divided by average total assets.
6. Gearing ratio is calculated as net debt divided by the sum of net debt and shareholders’ equity.
7. Number of shares on issue at year end.
8. The Group adopted AASB 16 Leases effective 1 July 2019 resulting in an increase to EBITDA of $7,283 and EBIT of $531 for continuing operations in FY20.
Prior periods have not been restated, refer to note 3.7 in the fi nancial report.
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Directors’
Report
2020
D I R E C T O R S ’ R E P O R T
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
DIRECTORS’ SHAREHOLDINGS
The following table sets out each Director’s relevant interest in all fi nancial instruments issued by Blackmores as at the date
of this report:
DIRECTORS
David Ansell
John Armstrong
Marcus Blackmore
Christine Holman
Alastair Symington1
Brent Wallace
Total
FULLY PAID ORDINARY SHARES
SHARE RIGHTS
1,413
1,213
3,659,102
2,913
18,536
12,715
3,695,892
-
-
-
-
35,622
-
35,622
1. A Symington’s holdings include 13,650 Restricted Shares and 35,622 Share Rights under the Executive Performance Share Plan.
SHARE RIGHTS GRANTED TO DIRECTORS AND SENIOR EXECUTIVES
Selected Senior Executives are invited annually by the Board to participate in the Executive Performance Share Plan (EPSP). Under this
plan, eligible Senior Executives are granted rights to acquire shares in Blackmores.
Refer to the Remuneration Report on pages 48 to 71 for more details
Executive Director
Alastair Symington
Senior Executive
Gunther Burghardt
Total
20201
NUMBER
35,622
6,098
41,720
1. Includes rights granted under the 2020 fi nancial year (FY20) Long-Term Incentive Plan (LTI). Rights vest provided specifi c performance objectives and hurdles are met
over the three-year period commencing 1 July 2019 to the year ending 30 June 2022.
SHARE OPTIONS
During and since the end of the fi nancial year, no share options were in existence and no new share options were granted to
Directors or Senior Executives of Blackmores.
REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Information about remuneration of Directors and Key Management Personnel is set out in the Remuneration Report of this Directors’
Report, on pages 48 to 71.
COMMITTEE MEMBERSHIPS
As at the date of this report, the Company had an Audit Committee, a Nominations Committee, People and Remuneration
Committee and a Risk Committee. Members of the Board acting on the Committees during the year were:
Audit1:
John Armstrong, Chairman
David Ansell
Christine Holman
Jackie McArthur2
Brent Wallace
Nominations:
Brent Wallace, Chairman
David Ansell
John Armstrong
Marcus Blackmore
Christine Holman
Jackie McArthur2
Helen Nash3
Alastair Symington4
People and Remuneration:
Christine Holman, Chairman5
David Ansell
Jackie McArthur2
Helen Nash3
Brent Wallace
Risk1:
John Armstrong, Chairman
David Ansell
Christine Holman
Brent Wallace
1. The Audit and Risk Committee was renamed Audit Committee and a separate Risk Committee was created effective February 2020.
2. Jackie McArthur resigned as a Non-Executive Director 5 August 2019.
3. Helen Nash resigned as a Non-Executive Director 5 August 2019. Ms Nash was the Chairman of the People and Remuneration Committee.
4. Alastair Symington joined as an Executive Director 16 September 2019.
5. Christine Holman was appointed Chairman of the People and Remuneration Committee 12 August 2019.
44 B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
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45
D I R E C T O R S ’ R E P O R T
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
COMPANY SECRETARIES
Cecile Cooper, BBus, Dip Inv Rel (AIRA), CPA, GAICD. Company
Secretary and Director Corporate Affairs. Ms Cooper joined
Blackmores in 1991. As Company Secretary, Ms Cooper is
responsible for company secretarial and corporate governance
support across the Group. She has held a variety of positions
within Blackmores and her experience includes financial and
management experience including enterprise resource planning
system implementations, design of business reporting solutions,
business management, risk management and compliance.
Ms Cooper is the Chairman of CCNB Ltd.
Group Legal Counsel, Nimalan Rutnam B.Com (Madras); LL.B
(Hons) (London); LL.M (Sydney) joined Blackmores in 2018. He
has extensive experience in the FMCG, Life Sciences & Health
Care sectors and has legal experience across the UK, Asia,
Australia & New Zealand both whilst he was General Counsel
at Procter & Gamble Australasia (2002-2012) and as Managing
Principal of his legal & corporate Advisory practise (2012-2017)
advising clients such as Mars; iNova Pharmaceuticals, Bausch
& Lomb; Coty; Kelloggs, JDE Coffees, Adventist Healthcare
& Biersdorf. Nimalan has served on the Boards of several
Industry Associations and Not for Profit Organisations, namely,
The Grameen Foundation, The Sydney Peace Foundation (a
foundation of the Sydney University) & Together For Humanity.
Nimalan was also a Visiting Scholar at the Department of Peace
& Conflict Studies, Faculty of Arts & Political Sciences, Sydney
University. Nimalan is a qualified Barrister at law (England &
Wales); a Solicitor of the High Court of Australia & the Supreme
Court of NSW and a Public Notary. Nimalan is a member of the
Law Society of NSW and The Law Council of Australia.
PRINCIPAL ACTIVITIES
The principal activity of the Blackmores Group in the course of
the financial year was the development, sales and marketing
of natural health products for humans and animals including
vitamins, and herbal and mineral nutritional supplements. The
Blackmores Group has operations in Australia, New Zealand
and Asia.
RESULTS
The Financial Report for the years ended 30 June 2020 and
30 June 2019 and the results herein have been prepared in
accordance with Australian Accounting Standards.
The statutory net profit after tax (NPAT) (in thousands)
of the Blackmores Group for the financial year was $18,114
(2019: $53,469).
A review of the operations of the Blackmores Group during the
financial year and the results of those operations is set out in the
Operating and Financial Review on pages 22 to 33 inclusive.
DIVIDENDS
The amounts paid or declared by way of dividend since the start
of the financial year are:
• A final dividend of 70 cents per share fully franked in respect
of the year ended 30 June 2019, as detailed in the Directors’
Report for that financial year, was paid on 12 September 2019
• On 24 August 2020, Directors declared that no dividend will
be paid for the year ended 30 June 2020.
This will bring total ordinary dividends to nil cents per share fully
franked (2019: 220 cents per share fully franked) for the full year.
GROUP STRATEGY
A refreshed strategy was approved during the 2020 financial
year. Activities across the Group for the 2020 financial year were
re-aligned to four key priorities:
1. Build a world-class organisation
2. Rejuvenate the Blackmores brand in Australia
3. Deliver new growth in key countries and categories
4. Win with the modern career woman in China
Launched in February 2020, we are confident that our new
strategic direction will deliver significant long-term value for
shareholders.
CHANGES IN STATE OF AFFAIRS
During the financial year, there was no significant change in the
state of affairs of the Blackmores Group other than that referred
to in the Consolidated Financial Statements or notes thereto and
elsewhere in the Annual Report of the Blackmores Group for the
year ended 30 June 2020.
EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
Sale of Wheyless & IsoWhey Brands
On 14 August 2020, Blackmores Group entered into an asset sale
agreement to sell the IsoWhey and Wheyless brands. The sale price
of $1.09 million covers the IsoWhey/Wheyless brands, product
formulas, customer agreements and digital assets. There are no
people transferring with the sale. An additional payment will be
made to cover the value of stock transferring with the sale. The
transaction is expected to complete before 14 September 2020.
Sale of 15 Jubilee Avenue Warriewood, NSW
On 5 August 2020 , Blackmores entered a contract for sale of land
with an 180 day settlement period for the investment property at
15 Jubilee Avenue Warriewood, NSW 2102 for $5.2 million
ex GST. The transaction is expected to complete in February 2021.
Share Purchase Plan
On 8 July 2020, Blackmores completed a Share Purchase Plan
which was announced on 27 May 2020. This plan raised $49
million, a total of 669,812 new fully paid ordinary shares. The
shares were issued at $72.50 a share on 14 July 2020. This
completed the $141 million Equity Raise which consisted of a
$92 million Institutional placement completing 28 May 2020 and
the Share Purchase Plan of $49 million completed 8 July 2020.
Impact of COVID-19 Pandemic
The full impact of the COVID-19 pandemic continues to evolve
at the date of this report. Management is actively monitoring the
global situation and its impact on the Group's financial condition,
liquidity, operations, suppliers and industry. Given the daily
evolution of the COVID-19 outbreak and the global responses
to curb its spread, the Group is not able to estimate the effects
of the COVID-19 outbreak on its results of operations, financial
condition or liquidity for the 2020-21 financial year.
Although the Company cannot estimate the length or gravity
of the impact of the COVID-19 outbreak at this time, if the
pandemic continues, it may have a material adverse effect on
the Company’s results of future operations, financial position and
liquidity for 2020-21.
Final dividend
No final dividend was declared as described in note 4.5.
D I R E C T O R S ’ R E P O R T
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
There has not been any other matters or circumstances, other
than that referred to in the Consolidated Financial Statements
or notes thereto, that has arisen since the end of the financial
year, that has significantly affected, or may significantly affect, the
operations of Blackmores Limited, the results of those operations,
or the state of affairs of the Blackmores Group in future financial
years.
CORPORATE GOVERNANCE AND RISK
In recognising the need for the highest standards of corporate
behaviour and accountability, the Board of Blackmores Ltd
endorses the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations. The Company’s
Corporate Governance Statement is available on the Blackmores
website at blackmores.com.au (go to ‘Investor Centre’, then click
on ‘Governance & Board of Directors).
The material risks that could affect Blackmores’ future financial
performance and their potential impacts are set out in the
Operating and Financial Review on page 22 to 33.
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial year, Blackmores paid a premium in respect
of a contract insuring the Directors, the Company Secretary
and all Executive Officers of the Blackmores Group against any
liability incurred in their role as Director, Company Secretary or
Executive Officer to the extent permitted by the Corporations
Act 2001. The contract of insurance prohibits disclosure of
the nature of the liability and the amount of the premium.
Blackmores has not otherwise, during or since the end of the
financial year, indemnified or agreed to indemnify an Officer or
auditor of the Blackmores Group against a liability incurred as
such an Officer or auditor.
DIRECTORS’ MEETINGS
The number of Directors’ meetings held (including meetings of Committees of Directors) during the financial year are as follows:
BOARD OF
DIRECTORS
AUDIT & RISK
COMMITTEE1
RISK
COMMITTEE1
NOMINATIONS
COMMITTEE
PEOPLE AND
REMUNERATION
COMMITTEE
DIRECTORS
HELD ATTENDED
HELD ATTENDED
HELD ATTENDED
HELD ATTENDED
HELD ATTENDED
David Ansell
John Armstrong3
Marcus Blackmore3
Christine Holman
Jackie McArthur2, 4
Helen Nash2, 5
Alastair Symington2, 3, 6
Brent Wallace
24
24
24
24
2
2
22
24
23
24
24
23
2
2
22
24
4
4
4
-
-
N/A
4
4
4
4
-
-
3
4
2
2
-
2
-
-
N/A
2
2
2
-
2
-
-
2
2
9
9
9
9
-
-
9
9
9
9
9
9
-
-
9
9
4
N/A
N/A
4
-
-
N/A
4
4
3
1
4
-
-
3
4
1. The Audit and Risk Committee was renamed Audit Committee and a separate Risk Committee was created effective February 2020.
2. Reflects the number of meetings held during the time that the Director held office or was a member of the Committee during the year.
3. Attendance at committee meetings as invitees.
4. Jackie McArthur resigned as a Non-Executive Director 5 August 2019.
5. Helen Nash resigned as a Non-Executive Director 5 August 2019.
6. Alastair Symington joined as an Executive Director 16 September 2019.
STATEMENT OF NON-AUDIT SERVICES
The Directors are satisfied that the provision of non-audit services during the year by the auditor (or by another person or firm on
the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note
7.2 to the Consolidated Financial Statements.
Directors have accepted a statement from the auditor that it is satisfied that the provision of these services did not breach the
independence standards included in the Corporations Act 2001. Based on this statement from the auditor and having regard to
the nature and fees involved in the provision of these non-audit services, the Directors are satisfied that the provision of non-audit
services during the year by the auditor (or other person or firm on the auditor’s behalf) did not compromise the audit independence
requirements of the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration is set out on page 72 of this Annual Report.
ROUNDING OFF AMOUNTS
In accordance with the Australian Securities and Investments Commission (ASIC) Corporations Instrument 2016/191, the amounts in
the Directors’ Report and the Financial Report are rounded off to (and expressed in) the nearest thousand dollars, unless otherwise
indicated.
Amounts in the Remuneration Report are actual dollars.
46
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Key Points
• Blackmores’ remuneration
structure aligns Senior
Executive remuneration to
Group performance.
• Jackie McArthur and
• Gunther Burghardt
Helen Nash resigned as
Non-Executive Directors on
5 August 2019.
commenced in the role of
Chief Financial Officer on
6 January 2020.
• FY20 Short-Term Incentives (STI)
were not paid to the Executive
Director and Executive Team,
including the CEO, as the
gateway NPAT performance
hurdle was not met.
• Long-Term Incentives (LTI) were
not awarded in the year as the
achievement of the three-year
EPS growth targets for the FY18
plan, granted in November
2017, were not met.
• No LTI vested in relation to
FY19 or FY20 LTI plans.
• The Executive Team, including
the CEO, received no increase
to Fixed Annual Remuneration
(FAR) during the year, with
the exception of the Chief
Operations Officer whose
salary was adjusted to take into
account an increased portfolio,
including responsibility for the
Braeside manufacturing facility
and supply chain.
• Non-Executive Director fees
were not increased in FY20.
• Blackmores’ long-standing
profit share scheme which
aligns the remuneration of
all employees to profits of
the Group paid out at $1.5
million, equivalent to 4 days
incremental salary. This
compares to FY19 in which
$5 million was paid out,
equivalent to 15 days’
incremental salary.
• Peter Osborne ceased in the
• Ayumi Uyeda commenced
in the new role of Managing
Director Australia and New
Zealand on 5 February 2020.
• Joanne Smith commenced in
the new role of Chief Marketing
and Innovation Officer on
2 March 2020.
• A minimum shareholding
requirement for both Non-
Executive Directors and the
Executive Team including
the CEO, was put in place
commencing June 2020 and
August 2020 respectively.
• A review of the reward
framework for FY21 was
undertaken by the People and
Remuneration Committee to
align remuneration outcomes
considering the materially
changed business performance
in FY20, current economic
environment and execution of
the new Blackmores strategy
that envisages a three-year
transformation program.
role of Managing Director Asia
on 20 December 2019.
• Aaron Canning ceased in the
role of Chief Financial Officer
on 6 January 2020.
• Considerable changes have
been made to the Executive
Team over the past 12 months
to execute Blackmores’ new
strategy and transformation
program. Each role has
been filled with strong high
performing leaders with
multi-market transformation
experience, and a deep
connection to Blackmores’
vision, values, and purpose.
New Executive Team members
appointed over the past 12
months are listed below.
• Alastair Symington commenced
in the role of Chief Executive
Officer and Managing Director
on 16 September 2019.
• Dean Garvey, formerly in the
role of Deputy Managing
Director Asia, was appointed
to the new role of Managing
Director International on
1 December 2019.
• Kitty Liu commenced in the
new role of Managing Director
China on 1 December 2019.
Letter from the Chairman of the People and Remuneration Committee
Dear Shareholder,
I am pleased to present to you our 2020 Remuneration Report.
This report outlines FY20 performance and remuneration
outcomes for Blackmores’ Key Management Personnel (KMP)
who include the Chief Executive Officer (CEO), the Chief
Financial Officer (CFO), Executive and Non-Executive Directors.
Aggregated remuneration information has also been provided
for the direct reports to the CEO (Other Executives). Our
remuneration structure is linked to the achievement of year-on-
year profit growth and shareholder returns.
FY20 was a challenging year for the Company, which dealt with
issues related to the bush fires in Australia, the global COVID-19
pandemic, as well as a label transition on its largest brand
(Blackmores). In addition, while the acquisition of the Braeside
manufacturing facility will help Blackmores protect its vital
product registrations in many Asian markets, the initial months
of Blackmores’ ownership of the site (since late October 2019),
highlighted adverse product mix and volume variances which
will need to be resolved over time. The combination of these
factors led to a full year FY20 underlying NPAT of $18.7 million
which was down 65% compared to the prior year. When one-off
costs and benefits outside of normal trading are taken into
account (such as restructuring, capital raise costs and exclusion
of a one-time gain related to the purchase of land, assets and
intangibles at Braeside, as well as JobKeeper), the resulting
reported NPAT for full year FY20 after one-time P&L impacts was
$18.1 million which was down 66% compared to the prior year.
Net Sales, including Global Therapeutics, decreased by 4%
with the impact of the decline in overseas sales to domestic
consumers trade felt in both halves of the year in China and
ANZ, (as well as COVID-19 impacts on non-immunity products
in the second half (H2) of FY20), partly offset by robust growth in
Indonesia and a number of other South East Asian markets.
At the time of the half year (H1) results released in February
2020 and for a few months afterwards, the acquisition of
Braeside created pressure on Blackmores’ senior leverage
ratios. To ensure its sustainability and adequate unutilised debt
facilities, the Company embarked on a capital raising program
which resulted in the issuance of $92 million in shares as part
of an institutional placement in early June. An additional Share
Purchase Plan, which closed in early July (just after the 30 June,
2020 balance sheet date) brought in an additional $49 million of
capital which will leave the majority of Blackmores’ debt facilities
unutilised by the end of July 2020.
In the context of this performance, while the business paid a
minor amount of profit share in the first half (H1) of FY20, it did
not pay any profit share to its employees in the second half (H2)
of FY20 nor did it make any payments as part of its Short-Term
Incentive (STI) plan as the hurdles were not met. Long-Term
Incentive (LTI) plans issued in FY20 or prior year did not accrue
in the current year as both Return on Invested Capital (ROIC)
and EPS measures were down compared to the prior year and
below the minimum thresholds required under the LTI plan.
The CEO, CFO, Executive Director and the Other Executives,
therefore, did not receive an award under the STI or LTI plans
in FY20.
The appointment of Alastair Symington as Blackmores’ new
Chief Executive Officer and Managing Director brings the
right mix of knowledge, multi-market experience and skill that
is required to drive the Blackmores Group’s growth strategy
and seize on the opportunities available in the business across
the APAC region. The appointment of Gunther Burghardt as
Blackmores’ Chief Financial Officer and the other newly hired
members of Blackmores’ Executive Team aligns with the strategy
of attracting best in class talent to support Blackmores’ growth
strategy and transformation program.
The Blackmores Board is committed to a process to renew
its composition in an orderly fashion over the medium term,
having already announced that the current Board Chairman,
Brent Wallace, intends to step down from the Board. The Board
is in advanced discussions to appoint a new, independent
Non-Executive Chairman and to recruit a further independent
Non-Executive Director. Upon completion of the transition,
Blackmores will have a Board comprising an independent,
Non-Executive Chairman and a clear majority of independent,
Non-Executive Directors.
ALIGNING REMUNERATION WITH BUSINESS
PERFORMANCE AND STRATEGY
Over recent years, the Committee has continued to work hard to
ensure that the total remuneration structures incentivise delivery
of the strategy and provide remuneration outcomes which
are aligned with shareholder returns. Benchmarking reviews
of the CEO, Executive Team, Executive Directors and Non-
Executive Directors have ensured that remuneration has been
commensurate with the appropriate peer group to retain and
attract key personnel.
Under the FY20 STI plan, the Group needed to achieve
threshold NPAT performance of $53.4 million in addition to
the Board determining that appropriate standards had been
achieved with regards to brand reputation, safety and quality.
These acted as quantitative and qualitative gateways under the
plan. Performance of the Group against pre-determined annual
targets and individual performance determined the amount of
STI award available to each Senior Executive. A portion of STI
awards was to be deferred into performance rights, above a
threshold award amount of $50,000. Half of the amount above
the $50,000 threshold was to be delivered in cash and the other
half deferred into performance rights. These rights were to vest
into shares based on continuous employment after one year.
Under the FY20 LTI plan, an additional measure of Return
on Average Invested Capital (ROIC), was introduced to the
plan. Alongside the Earnings Per Share (EPS) measure, the
introduction of the ROIC measure provides further alignment
with enhancement of shareholder returns. The two measures are
equally weighted 50/50 and the outcome of each measure is
calculated at the end of the three-year LTI performance period.
48
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Letter from the Chairman of the People and Remuneration Committee (cont.)
Letter from the Chairman of the People and Remuneration Committee (cont.)
4. Profit Share plan
Under the long-standing Profit Share plan, up to 10% of NPAT
is paid to employees of Blackmores. In FY20, a payment of
$1.5 million, equivalent to 4 days incremental salary, based on
profit of $18 million for the first half of the year. Based on full
year profit of $18.1 million, no further Profit Share payment
was made in the second half of the year. Therefore, Profit
Share for the full year remains at the four days incremental
salary of $1.5 million. This compares to FY19 in which the
equivalent of 15 days’ incremental salary was paid, being
a total of $5 million.
5. Impact of COVID-19 on remuneration
There has been no unintended variable reward outcome in
FY20 for the Executive Team, including the CEO as a result of
the COVID-19 pandemic. Significantly higher costs associated
with manufacturing and other factors, including the COVID-19
pandemic, has had a material impact on the Blackmores
Group results in FY20; however, the Blackmores Board has
not used discretion by awarding STI, LTI, or any other incentive
or bonus payment to the Executive Team.
While navigating the challenges the business has faced
over the year, the immediate priority has been to protect
Blackmores’ cash position. In consultation with the Board,
Blackmores made the difficult decision to introduce a 20%
reduction in hours and remuneration for all Australian and
New Zealand based employees, with the exclusion of specific
roles directly involved in ‘Make, Pack, Check and Deliver’
tasks that are critical in our ability to supply our customers.
These terms also applied to the Board and Executive Team
members.
This took effect from 1 May 2020 and was anticipated to
remain in place for four months to 3 September 2020. Since
the introduction of the reduced pay and hours conditions,
Blackmores became eligible under the Australian Federal
Government’s JobKeeper program, which enabled a
reduction to the time period of reduced pay and hours from
four months to just six weeks, and as such, employees went
back to full pay from 15 June 2020. The total amount received
for JobKeeper in FY20 in Australia and a similar scheme in
Singapore was $1 million.
With uncertainty surrounding the pandemic, in the spirit of
Blackmores and in line with the Company values, we greatly
appreciate the shared sacrifice of Blackmores’ employees and
we were very pleased to be able to lift the reduced conditions
much earlier than we had originally anticipated.
FY21 Reward Framework Review
With the change in CEO and Executive Team, a revised Group
Strategy and a material change in business performance in
FY20, the People and Remuneration Committee, on behalf of the
Board, engaged Ernst & Young to support a review of the STI and
LTI framework.
Proposed changes to the Remuneration Framework following
the independent Ernst & Young review are noted below under
FY21 Changes.
KEY OUTCOMES FOR FY20 REMUNERATION
1. Fixed remuneration
With the exception of the Chief Operations Officer, whose
salary was adjusted to take into account an increased
portfolio, including responsibility for the Braeside
manufacturing facility and supply chain, there was no increase
in FY20 to the fixed remuneration of the current Executive
Team, including the CEO. The fixed remuneration of new
members of the Executive Team appointed during the course
of FY20 was benchmarked based on independent work
undertaken by Mercer in FY19.
2. STI plan
Group NPAT performance in FY20 did not meet the gateway
threshold requirement set by the Board for the FY20 STI plan
to be activated. As a result, there were no awards made to the
Executive Team, including the CEO. The FY20 NPAT threshold
set by the Board was $53.4 million and the NPAT achieved
for FY20 was $18.1 million. The Board considers that the STI
outcomes highlight the strong alignment between financial
performance, shareholders’ interests and remuneration
outcomes.
3. LTI plan
The LTI plan has a three-year performance period. The FY18
plan did not vest due to the threshold performance hurdle
of 5% three-year compounded annual growth rate (CAGR) in
EPS not being met. As such, no vesting of performance rights
occurred in FY20. The FY19 and FY20 plans are three-year
plans. The total remuneration for the financial year, the details of
which are shown on page 65, includes an accounting expense
reversal for all vested and unvested performance rights
calculated using the value of the number of rights that could
vest over the three-year performance period of each LTI plan.
As outlined in the previous section, an additional measure of
ROIC was introduced to the FY20 plan. The EPS and ROIC
measures in the FY20 plan are equally weighted 50/50. The
EPS measure has a threshold performance hurdle of 5%
three-year CAGR in EPS. In order to receive the maximum
award under the EPS measure, an achievement of 10% CAGR
is required. The ROIC measure has a threshold performance
hurdle of 18.1% three-year ROIC. In order to receive the
maximum award under the ROIC measure, an achievement
of 21% ROIC is required. The hurdles ensure that Senior
Executive reward is aligned with increasing shareholder value,
a continuous focus on the successful achievement of long-
term strategic goals and long-term retention of key executive
management.
6. Board and committee review
3. FY21 LTI reward framework
An external Board review is conducted bi-annually and
was last completed during FY18. This was an extensive
review with all Board members and the Executive Team
involved. This provided the Directors with both collective
and individual feedback. The Board strongly believes that
a high-performance culture starts in the Boardroom and
the review has helped provide the Board and Executive
Team with some focus areas to action over the past two-
year period. This included elevating culture to the Board
Charter in FY20, with culture being included in the Board
agenda, supporting Board and management interactions
with extended leadership team participation in meetings. An
external independent performance review of Board and the
Committees will be conducted in FY21.
Under the FY21 LTI plan, the two performance measures of
EPS and ROIC (excluding the outcome of the contingent
liability detailed in note 7.4 in the notes to the Consolidated
Financial Statements) will be maintained as dual measures
of LTI outcomes, split 50/50. Outcomes will be paid in equity
in the form of performance rights. The performance period
to remain unchanged at three years commencing 1 July
2020 to 30 June 2023. The measurement period will use a
CAGR approach, which means that FY23 CAGR outcome
will determine vesting for FY21. No dividends are paid on
unvested shares. LTI value will be determined based on a
dollar value divided by the VWAP for 14 trading days prior to
and 14 trading days after, the announcement of the Group’s
audited financial results in August 2020.
7. KMP assessment
Due to changes in organisation and Executive Team structure
in FY20, a process to review and assess Key Management
Personnel (KMP) was undertaken for FY20 KMP disclosure
purposes. The review used the definition of KMP from the
Australian Accounting Standard (AASB 124) Related Party
Disclosures to inform the assessment of each Executive Team
role against the definition. KMP for FY20 disclosure purposes,
are listed in the Introduction section of the Remuneration
Report, including ‘Other Executive’ Team members, who
are non-KMP and have been included in the Remuneration
Report for non-KMP aggregated reporting purposes.
EPS measure
Performance Level
Below Threshold
Threshold
Between Threshold
and Target
Target
Stretch
ROIC measure
Annual EPS
Growth Rate
10%
10%
10% -15%
15%
25%
Vesting %
0
50%
50% - 100% pro rata
Capped at 100%
Capped at 100%
FY21 CHANGES
1. There will be no increases to the fixed remuneration of the
current Executive Team members, including the CEO, in FY21.
2. FY21 STI reward framework
Under the FY21 STI plan, STI awards will be delivered to the
Executive Team as 50% cash and 50% equity in the form of
performance rights, which will be deferred. No dividends are
paid on unvested shares. A Gateway threshold performance
level of 90% of reported EBIT (excluding the outcome of the
contingent liability detailed in note 7.4 in the notes to the
Consolidated Financial Statements) must be met before the
plan will activate. Performance measures will comprise Group
financial, Group strategic and Group non-financial targets,
weighted 70%, 20%, 10%, respectively. The Group financial
measures will comprise Reported EBIT, Net Sales and Total
Average Working Capital + Cash Conversion, weighted 50%,
25%, 25% respectively. The Group strategic measures will
be aligned to the 2023 strategy, linked to FY21 deliverables
and the Group non-financial measures will be aligned to
key strategic pillars and current priorities including culture,
safety and sustainability goals. Threshold, target and stretch
performance measures have been set. Corresponding
payout levels are at a minimum of 50% of STI outcome at
threshold, and up to a maximum total payout opportunity,
as applicable to each Executive Team member. The deferred
STI value in equity will be determined based on a dollar
value divided by the VWAP for 14 trading days prior to and
14 trading days after the announcement of the Company’s
audited financial results in August 2021.
Performance Level
ROIC %
Vesting %
Below Threshold
Threshold
Between Threshold
and Target
Target
Stretch
Less than 7%
7%
0
50%
7% - 9%
9%
11%
50 -100% pro rata
Capped at 100%
Capped at 100%
LTI payout outcomes (% of FAR)
Threshold
CEO
50%
Executive Team 10%
Senior Manager 5%
Target
100%
20%
10%
Stretch
200%
80%
40%
4. There will be no increase in Non-Executive Director fees
in FY21, with the exception of the Board Chairman fee as
outlined below and in section 8 of the report. All other Non-
Executive Director fees have remained static since 1 July 2018.
5. An independent review of Non-Executive Director fees was
conducted in FY20. As a result of the current Board Chairman
fee being below the 50th percentile of companies in the peer
group, the Board has decided to increase the Chairman fee
to $305,000 per annum, inclusive of superannuation, on the
appointment of the new Chairman. The total Directors’ pool
remains unchanged at $1,300,000 and allows for six
Non-Executive Directors.
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6. Upon the appointment of the new Board Chairman, Marcus
Blackmore will step down as Executive Director and will
become a Non-Executive Director. At that time, he will be paid
in accordance with Non-Executive Director fees and any rights
to LTI will be forfeited. Current Non-Executive Director fees
are provided in section 8 of the report and the projected FY21
annualised Non-Executive Director fees are $1 million.
7. Minimum shareholding requirements
In order to assist in aligning the interests of Non-Executive
Directors and the Executive Team including the CEO with the
interests of the Company’s shareholders, the Board approved
a Minimum Shareholding Requirement (MSR) Policy Guideline
in June and August 2020, respectively. Under the guideline,
Non-Executive Directors and the Executive Team, including
the CEO are encouraged to build minimum shareholding in
the Company and maintain it during their tenure. In summary,
the policy requires Non-Executive Directors to build minimum
shareholding equal to 100% of the annual Non-Executive
Director base fees including superannuation but not including
Committee fees, within 3 years of their appointment. For
determining whether the minimum shareholding has been
met, the calculation is based on the share price at the time
of purchase. For the CEO and the Executive Team, the policy
requires shareholdings equal to 100% and 50% respectively
of their total fixed remuneration within 5 years of their
appointment.
I would like to take this opportunity to thank all the employees
at Blackmores for their commitment and support through what
can only be described as an extraordinary year in the history
of the Company. The future is challenging but exciting, and
together with a world class team, and the support of our loyal
shareholders, I have no doubt that we will deliver on our
FY23 Strategy.
On behalf of the Board and Committee, I invite you to read the
2020 Remuneration Report and welcome your feedback on
our approach to and disclosure of Blackmores’ remuneration
arrangements.
Christine Holman
Chairman, People and Remuneration Committee
1/
2/
3/
4/
5/
6/
7/
8/
9/
Introduction
Senior Executive Remuneration Outcomes Table
Remuneration Governance and Framework
Senior Executive Remuneration Structure
Performance and Remuneration Outcomes
Senior Executive Remuneration Tables – Statutory
Employment Contracts
Non-Executive Directors’ Remuneration
Non-Executive Directors’ and Senior Executive Transactions
1/
INTRODUCTION
The Directors of Blackmores Limited present the Remuneration Report for the Blackmores Group. The report outlines Blackmores’
remuneration framework and the outcomes for the year ended 30 June 2020 (FY20) for Blackmores’ Key Management Personnel.
The report has been prepared in accordance with the requirements of section 300A of the Corporations Act 2001. In this report the
following terms and phrases have the meanings indicated below:
Directors – Executive Directors and Non-Executive Directors.
Executive Directors – Marcus Blackmore and the Chief Executive Officer.
Senior Executives – Executive Directors and the other executives defined as KMP who have authority and responsibility for planning,
directing and controlling the activities of the Blackmores Group, directly or indirectly.
Key Management Personnel (KMP) – CEO and CFO, Executive Directors and Non-Executive Directors
Other Executives (non-KMP) – Executive Team members who are not KMP as defined by AASB 124.
Executive Team – Senior Executives and Other Executives (non-KMP).
Exercised – Owned.
Granted – Assigned to, but not yet vested.
Vested – Met performance and service criteria and available to be exercised, but not yet owned.
Key Management Personnel
The following table lists all the current Key Management Personnel (KMP) and their titles as at 30 June 2020:
Non-Executive Directors
David Ansell
John Armstrong
Non-Executive Director and member of the Audit Committee, Risk Committee, People and Remuneration
Committee and Nominations Committee
Non-Executive Director, Chairman of the Audit Committee, Risk Committee and member of the Nominations
Committee
Christine Holman
Non-Executive Director, Chairman of the People and Remuneration Committee (effective 12 August 2019),
member of the Audit Committee, Risk Committee and Nominations Committee
Brent Wallace
Non-Executive Director, Chairman of the Board, Chairman of the Nominations Committee, member of the
Audit Committee, Risk Committee and People and Remuneration Committee
Executive Directors
Marcus Blackmore
Executive Director, Interim Chief Executive Officer (from 1 April 2019 until 16 September 2019) and member
of the Nominations Committee
Alastair Symington
Chief Executive Officer and Managing Director (joined 16 September 2019) and member of the
Nominations Committee
Senior Executive
Gunther Burghardt
Chief Financial Officer (joined 6 January 2020)
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Other Executives (non-KMP)
Current Other Executives (non-KMP) and their titles as at 30 June 2020 are listed in the following table. These executives are not KMP as
defined by AASB 124. In some cases, where aspects of remuneration apply to other senior roles within Blackmores, the term ‘executive’
is also used.
Other Executives (non-KMP)
Lesley Braun
Director of Blackmores Institute
Cecile Cooper
Company Secretary and Chief Governance Officer
Jeremy Cowan
Chief Operations Officer
Jane Franks
Chief People Officer
Dean Garvey
Managing Director International
Kitty Liu
Managing Director China (joined 1 December 2019)
Joanne Smith
Chief Marketing and Innovation Officer (joined 2 March 2020)
Ayumi Uyeda
Managing Director Australia and New Zealand (joined 5 February 2020)
Brett Winn
Chief Information Officer
FY19 Remuneration Report feedback
At the FY19 AGM, Blackmores recorded a yes vote of 96.1% on the resolution to adopt the FY19 remuneration report. Feedback
received from shareholders indicated that some disclosures lacked transparency and some remuneration practices may have been out
of alignment with market practice and shareholder expectations. The Board takes these concerns seriously and has proactively sought to
address shareholder concerns. The following table summarises the concerns raised and how Blackmores has addressed those concerns.
Subject
Key concerns
Actions to address key concerns
CEO contract and
Remuneration
• The CEO’s fixed remuneration was higher
than the median for total fixed remuneration
of the Company’s index bracket peers in
FY19.
• High fixed remuneration is viewed with
scepticism as such remuneration is not
directly linked to performance and may
serve as a crutch when performance has
fallen below expectations.
• We acknowledge that the CEO’s total target reward was
higher than peers, however the Board is satisfied that the
remuneration level was appropriately benchmarked and
positioned – aligned with the strategy of attracting world
class talent with the right mix of knowledge, multi-market
experience and skills that are required to drive Blackmores’
growth strategy and transformation program.
• In FY21, The CEO’s remuneration mix at maximun reward
is set at 23% (Fixed Remuneration), 31% (STI/Profit share)
and 46% (LTI) which is balanced and strengthens the link
between performance and reward outcomes.
• As outlined in the report, there will be no increase to the
CEO’s fixed remuneration in FY21 and no variable reward
payable if threshold achievement outcomes are not met
under Blackmores’ Short-Term and Long-Term incentive plans.
Disclosure of STI
financial targets
• There is insufficient disclosure and
• FY20 STI disclosures, are outlined in the Chairman’s
introductory letter on page 50, item number 2.
• FY21 STI changes are outlined in the Chairman’s
introductory letter on page 51, item number 2.
transparency on STI financial targets and
the assessment of outcomes which causes
difficulty for shareholders to determine
whether targets are sufficiently rigorous and
aligned with shareholder expectations.
• The Company has not provided specific
disclosures regarding performance hurdles
under the STI plan, particularly in terms of
the actual financial targets and outcomes
under the ‘individual objectives’ component.
Disclosure of LTI
performance hurdles
• The Company has not disclosed the EPS and
ROIC performance hurdles that apply to the
CEO’s FY20 LTI grant for which it is seeking
approval for at the 2019 AGM.
• At the time, the delay in disclosure was due to the
acquisition of Catalent Australia’s manufacturing facility
in Braeside, Victoria, pending the full financials upon
completion of the acquisition in late October 2019.
• The detail was subsequently disclosed in February 2020
and is provided on page 62.
• FY21 LTI hurdles are provided in the Chairman’s
introductory letter on page 51, item number 3.
Subject
Key concerns
Actions to address key concerns
Minimum shareholder
requirements
• Minimum shareholder requirements are not
disclosed. What is Blackmores’ policy on
minimum shareholder requirements?
Board structure
• What are the changes to Board structure?
• A minimum shareholder requirement policy guideline
has been approved by the Board for both Non-Executive
Directors, the CEO and the Executive Team and is outlined
in the Chairman’s introductory letter on page 52, item
number 7.
• Changes to Blackmores’ Board structure in FY21 is outlined
in the Chairman’s introductory letter on pages 49 and 52,
item number 6.
NED Fee Review
• NED fees in excess of median
• An independent review of Non-Executive Director fees was
conducted in FY20 by Ernst & Young.
• As a result of the review, NED fees including Committee
fees which are in line with the 50th percentile of companies
in the peer group will remain at current levels with no
changes in FY21, which is two years in a row that fees have
remained static.
• The review found that the current Board Chairman fee
is below the 50th percentile of companies in the peer
group and as such the Board has decided to increase
the Chairman fee to $305,000 per annum, inclusive of
superannuation, on the appointment of the new Chairman.
• The total Directors’ pool remains unchanged at $1,300,000
and allows for six Non-Executive Directors.
• Benchmarking the CEO’s remuneration
• Blackmores has not disclosed benchmarking data; rather
CEO & KMP
Benchmarking
along with other executive KMP is
not adequately disclosed resulting in
inconsistent assessment of pay against the
market and the Company’s policy.
overall practice.
• CEO and Executive Team remuneration were structured on
work conducted by Mercer in FY19.
• That benchmarking was used to determine the
remuneration packages of the CEO and Executive Team.
• As such, no specific benchmarking was done in FY20 for the
CEO or the new Executive Team members.
• FY21 fixed remuneration will remain unchanged and stay at
FY20 levels for the CEO and the Executive Team.
• In FY21, benchmarking will be undertaken of the CEO and
the Executive Team remuneration by the Board.
• Detail on the amount of profit share paid in FY20 and FY19
is outlined in the Chairman’s introductory letter on page 50,
item number 4.
• As currently designed, profit share ensures that all
employees of Blackmores share in the profits of the
Company in a fair and equitable way.
• There are no accrual or payment of dividends on unvested
share rights.
Profit Share
This year, the Company has not disclosed
the portion of FY19 NPAT distributed to
employees but notes that this is the equivalent
of 15 days’ incremental salary (FY18: 26 days).
The accrual of
Dividends
Accrual of dividends on unvested shares is
inconsistent with shareholder interests and
local market practices, noting that there can
be no assertion of any present entitlement to
dividends prior to determination of vesting,
when the participant satisfies the vesting
conditions.
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2/
SENIOR EXECUTIVE REMUNERATION OUTCOMES TABLE
The following table has been provided to disclose additional non-statutory information to assist shareholders in understanding the
total value of the remuneration of the Senior Executives, who were KMP of Blackmores during the year.
The table sets out the remuneration that the KMP became entitled to during FY20 and that was either paid or payable during the
financial year or will be paid subsequent to the end of the year.
The remuneration outcomes prepared in accordance with accounting standards as required by the Corporations Act 2001 are
contained on page 65 of the report. The totals in the statutory remuneration table on page 65 of the report differ to the following table.
This is because of the following:
1. Leave movements – the statutory remuneration table shows annual leave and long service leave entitlements due to an increase in
the statutory provisions rather than cash payment.
2. Share-based payments – the accounting standards require the share-based payments expense to be calculated using the fair value
of the shares at grant date, amortised over the relevant performance and service period. Included in the statutory remuneration
table is the FY20 portion of the fair value of rights granted in FY18, FY19 and FY20 under the LTI plan and the Staff Share Plan.
Vesting of FY19 and FY20 rights under the LTI plan and the FY20 rights under the Staff Share Plan remain subject to performance
and service conditions being met in the future.
The FY17 rights under the LTI plan were forfeited as the performance conditions were not met. Both the statutory remuneration table
and the following outcomes table include nil value for the FY17 LTI awards.
The FY18 rights under the LTI plan have forfeited as the performance conditions were not met. Both the statutory remuneration table
and the following outcomes table include nil value for the FY18 LTI awards.
The FY19 rights under the staff share plan which have vested were valued at $141.95 in the statutory remuneration table. This differs to
the following outcomes table, which includes the FY19 share plan awards valued at $89.68, which was the share price on the
31 July 2019 vesting date.
Other Executives (non-KMP)
The following table has been provided to disclose non-statutory remuneration information to assist shareholders in understanding
the total value of the remuneration of Other Executives who are members of the Executive Team, but were not KMP of Blackmores
during the year.
The table sets out the remuneration to which the non-KMP executives became entitled during FY20 and that was either paid or
payable during the financial year or will be paid subsequent to the end of the year.
SALARY AND
FEES
$
STI AND PROFIT
SHARE
$
NON-
MONETARY1
$
OTHER2 SUPERANNUATION
$
$
TOTAL
$
EQUITY THAT
TOTAL
VESTED REMUNERATION
RECEIVED
$
DURING 20203
$
20204
20195
3,053,489
1,780,566
38,133
239,995
283,320
130,979
5,215
4,143
130,372
97,524
3,510,529
2,253,207
2,870
3,702
3,513,399
2,256,909
‘Non-monetary’ includes benefits such as relocation and accommodation benefits and any fringe benefits tax paid on these benefits.
1.
2. Other’ includes insurance and superannuation membership fees.
3. The equity that vested in FY20 year relates to the FY19 Staff Share Plan grant. The value disclosed is based on the share price on the vesting date 31 July 2019. The
equity that vested in FY19 year relates to the FY18 Staff Share Plan grant. The value disclosed is based on the share price on the vesting date 31 July 2019.
4/5. Being the first year of aggregated reporting, the change in quantum of total remuneration between 2019 and 2020 is exaggerated due to changes in the inclusion
and exclusion of Executives in KMP and Executives who have departed the business during the course of FY19 and FY20. It was always envisaged that the first year of
aggregated reporting would reflect such a disparity. FY21 will provide a more balanced and consistent comparison to FY20 to ensure shareholders have line of sight
to total Other Executives (non-KMP) Remuneration.
SALARY AND
FEES
$
STI AND PROFIT
SHARE
$
NON-
MONETARY1
$
OTHER2 SUPERANNUATION
$
$
TOTAL
$
EQUITY THAT
TOTAL
VESTED REMUNERATION
RECEIVED
$
DURING 20203
$
354,857
361,616
974,007
Executive Directors
Marcus Blackmore4
2020
2019
Alastair Symington5
2020
Senior Executive
Gunther Burghardt6
2020
274,122
Former Executive Director
Richard Henfrey7
2019
Former Senior Executives
Aaron Canning8
2020
2019
David Fenlon9
2019
Peter Osborne10
2020
2019
Total
2020
2019
2,840,437
2,868,083
830,392
603,809
407,059
571,288
609,317
722,053
5,588
20,954
10,314
40,582
4,836
-
21,003
20,531
396,598
443,683
9,687
42,041
300,000
21,003
1,346,738
-
33,912
36,855
20,139
-
-
10,501
318,535
15,398
794,445
-
-
-
-
-
396,598
443,683
1,346,738
318,535
794,445
8,796
32,945
2,930
-
2,923
2,600
11,066
23,131
432,774
629,964
2,870
3,702
435,644
633,666
35,157
9,519
-
-
-
20,531
674,524
-
674,524
-
-
839,725
637,519
3,049
3,702
842,774
641,221
-
-
89,197
70,240
307,759
2,600
63,573
79,591
3,334,370
3,180,135
5,919
7,404
3,340,289
3,187,539
9,333
33,710
33,404
159,621
1. ‘Non-monetary’ includes benefits such as relocation and accommodation benefits
5. Alastair Symington joined as Chief Executive Officer and Managing Director
and any fringe benefits tax paid on these benefits.
2. ‘Other’ includes insurance and superannuation membership fees for Marcus
Blackmore and Aaron Canning. $300,000 for Alastair Symington is contractual
sign-on cash payment made to Mr Symington following commencement of
employment.
3. The equity that vested in FY20 year relates to the FY19 Staff Share Plan grant.
The value disclosed is based on the share price on the vesting date 31 July 2019.
4. Marcus Blackmore’s number of days worked increased in FY19.
on 16 September 2019.
6. Gunther Burghardt joined as Chief Financial Officer on 6 January 2020,
7. Richard Henfrey ceased as an Executive Director on 29 March 2019.
8. Aaron Canning ceased as a Senior Executive on 6 January 2020
9. David Fenlon ceased as a Senior Executive on 30 June 2019.
10.Peter Osborne ceased as a Senior Executive on 20 December 2019.
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REMUNERATION GOVERNANCE AND
FRAMEWORK
Remuneration governance
People and Remuneration Committee
The primary responsibility of the People and Remuneration
Committee (the ‘Committee‘) is to make recommendations to
the Board on remuneration strategy and policy for KMP and
other executives of Blackmores that are in the best interests of
Blackmores and its shareholders. This includes recommendations
related to Non-Executive Director fees, Executive remuneration,
Short-Term Incentive (STI) and Long-Term Incentive (LTI) schemes.
The Committee also advises the Board on remuneration
policies and practices for the Company. The responsibilities
of the People and Remuneration Committee are set out in the
Committee’s charter, which can be viewed or downloaded from
the Company’s website at blackmores.com.au (go to ‘Investor
Centre’, then click on ‘Governance and Board of Directors’). The
charter is reviewed annually by the Committee and the Board.
The People and Remuneration Committee currently
comprises three independent Non-Executive Directors who
have experience in both remuneration governance and the
Blackmores business.
The members during FY20 were Helen Nash (Committee
Chairman, resigned 5 August 2019), Christine Holman
(Committee Chairman, from 12 August 2019), David Ansell,
Jackie McArthur (resigned 5 August 2019) and Brent Wallace.
Advisors to the Committee
The People and Remuneration Committee has established
protocols for engaging and dealing with external advisors and
these are included in the Committee’s charter. The Committee
obtains specialist external advice about remuneration structure
and levels. The advice is used to support its assessment of
the market to ensure that Senior Executives, Executive Team
members and Non-Executive Directors are being rewarded
appropriately, given their responsibilities and experience.
Executive remuneration packages are also reviewed annually
against suitable benchmarks to ensure that an appropriate
balance between fixed and incentive pay is achieved.
During the financial year, the Committee engaged Ernst &
Young to provide advice on performance-based remuneration.
The Board was satisfied that the advice received was free from
any undue influence by KMP or other executives to whom
the advice may relate, as the established protocols were
observed and complied with and all remuneration advice and
recommendations were provided to the Committee Chairman.
The fee paid for the service in FY20 was $62,000.
Remuneration framework
The remuneration framework links remuneration to both the
Group’s performance and the individual’s performance and
behaviour and provides the opportunity to share in the success
and profitability of Blackmores in alignment with increased
shareholder wealth. The remuneration framework is included
in Blackmores’ remuneration structure and policies and the key
elements of this framework are illustrated here:
Blackmores’ Remuneration Framework
Rewards the achievement of strategic goals, financial targets
and operational performance and behaviour gateway
Attracts and retains talented Senior Executives and Directors
4/
SENIOR EXECUTIVE REMUNERATION STRUCTURE
In determining the mix of Senior Executive remuneration, the Board aims to find a balance between:
• Fixed (not at risk) and performance (at risk) remuneration
• Short and long-term remuneration
• Remuneration paid in cash and deferred equity.
Aligns Senior Executives to the enhancement of Blackmores’
earnings and shareholder wealth
Blackmores’ target of fixed and at-risk components of the current Senior Executives’ remuneration is disclosed in the report as a
percentage of total target annual remuneration for FY20 and is as follows:
On Target Remuneration Mix
Fixed Remuneration1
STI / Profit Share
LTI2
BLACKMORES’ REMUNERATION STRUCTURE
Fixed Remuneration – Not At Risk Component
Fixed Remuneration – Targeted to be reasonable and fair,
taking into account Senior Executives’ responsibilities and
experience benchmarked against companies with relative
size and scale of Blackmores’ operations.
Performance-based Remuneration – At Risk Component
Short-Term Incentives (STI) – Comprises cash payments (and
where applicable there is a deferral of a portion of the award
into equity), linked to clearly-specified annual Group targets
and individual objectives and behaviours. This element
of remuneration is considered to be an effective tool in
promoting the interests of Blackmores and its shareholders.
The STI scheme is designed around appropriate Group level
performance benchmarks based on quantitative and qualitative
gateway measures and a Group STI pool is determined based
on three key performance measures: Group NPAT, Group Net
Sales, and Group Operating Cash Conversion.
Staff Share Plan – Participation is open to Senior Executives
as well as all permanent staff. Under the plan, staff can elect
annually to participate and purchase shares. At the end of the
financial year, Blackmores may provide an additional benefit
by matching these purchased shares on a pre-determined
matching ratio, subject to capping of the total cost. Exercise of
the matched shares is at no cost and vesting takes place once
the service condition has been met.
Profit share – Executive Directors and Senior Executives
participate in the same cash-based profit share plan as all
eligible permanent staff. The scheme allocates up to 10% of
Group NPAT to eligible employees.
Long-Term Incentives (LTI) – Participation is open to Executive
Directors and Senior Executives determined to be eligible
by the Board. Under this plan, rights to acquire shares in
Blackmores are granted annually to eligible Senior Executives
at no cost and vest provided specific performance hurdles are
met. In the case of Marcus Blackmore (Executive Director) and
Kitty Liu (Managing Director China), a cash equivalent is paid in
lieu of shares
Special Long-Term Incentives (SLTI) – From time to time the
Board may offer ‘one-off’ SLTIs to particular Executive Directors
and Senior Executives in addition to the LTI. There are currently
no SLTIs in place, nor recommended for FY21.
CEO
37%
26%
37%
CFO
At maximum levels of STI and LTI, the mix of remuneration elements expressed as a % of total remuneration3 is as follows:
Remuneration Mix at Maximum Reward
CEO
23%
31%
46%
CFO
56%
33%
11%
34%
39%
27%
1. Fixed remuneration includes cash, non-monetary benefits and superannuation.
2. LTI value is expressed as the % of Fixed Annual remuneration as at the start of the three-year performance period.
3. Total is the Aggregate Reward (Fixed Annual remuneration plus STI plus Profit Share plus LTI).
Fixed Annual Remuneration (FAR)
FAR includes base salary, superannuation, and any non-monetary benefits such as motor vehicle benefits (including fringe benefits tax).
The Committee and the Board conduct an annual review of remuneration at the end of each financial year for Senior Executives.
The process incorporates a comprehensive assessment of market benchmarking, and individual and Company performance.
Senior Executives received no increase to FAR during the FY20 year.
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Short-Term Incentives (STI) – performance conditions
Specific information relating to the actual annual performance awards is set out in the table on page 66.
Staff share plan – performance conditions and operation
Specific information relating to the actual annual performance awards is set out in the table on page 66.
What is the annual
incentive and
who is eligible to
participate?
The STI plan provides eligible employees with a cash award for annual performance against measured targets set
at the beginning of the performance period. Eligible employees include the Executive Directors, Senior Executives
and other nominated employees. Where applicable to the amount of award payable, there is a deferral of a
portion of the cash award into equity.
Chief Executive Officer
Chief Financial Officer
% of FAR
What is the
amount the
eligible employee
can earn?
Target
Maximum
60
120
50
100
What were the
performance
conditions for
FY20?
Gateway measures: In order for any STI to be paid, certain minimum threshold levels of performance (gateways)
at the Group level must be met for:
1. Quantitative: Group Net Profit after Tax (NPAT); and
2. Qualitative: A discretionary gateway determined by the Board to decide whether Blackmores has performed
satisfactorily in the areas of brand reputation, safety, and quality.
Group STI pool: Once the gateways have been achieved, a Group STI pool is determined based on three key
performance measures:
• Group NPAT (weighting: 50% of the overall pool)
• Group Net Sales (weighting: 25% of the overall pool)
• Group Operating Cash Conversion (weighting: 25% of the overall pool)
Each of the above three measures has its own corresponding threshold, target and stretch performance levels
and corresponding payout level.
Local Market / Functional pool: Each local market / function is then allocated a proportion of the Group pool
relative to other markets / functions.
Individual assessment: Individual performance is rated against individual KPIs and an individual bonus payment
multiplier is used to determine an individual’s STI % outcome.
Why were these
performance
measures
chosen?
NPAT performance over prior year is a well-recognised measure of financial performance and a key driver of
shareholder returns. It is the primary measure considered by Directors in determining the level of dividend
payments to shareholders.
Group measures ensure that employees are working towards overall Group objectives and performance. The
pool funding mechanism is based on overall Group performance against three key business metrics.
Individual performance drives performance at local market/function level which contributes to Group level
performance. The plan aims to drive a performance culture and allows for greater differentiation at both the
local market/function and individual levels and recognises contributions that have led to success of the broader
Blackmores Group.
Blackmores’ policy is that STI awards will only be paid when Blackmores meets the required gateway and
performance hurdles.
In addition, Senior Executives are not awarded any STI in the instance of the lowest personal performance
assessment.
When are
performance
conditions
tested?
Performance conditions are tested and calculated by Blackmores at the end of the financial year, verified by
Blackmores’ auditors and published in the Group’s Financial Statements before any payment is made. This
method was chosen to ensure transparency and consistency with disclosed information.
The person to whom a Senior Executive reports to assesses that individual’s performance by reviewing his or her
individual objectives, key tasks and performance indicators and the extent to which they have been achieved.
Individual objectives are set at the start of each financial year and are formally reviewed every six months. The
Board reviews performance assessments for KMP.
Does the Board
have an Executive
Clawback Policy?
The Board has adopted a Clawback Policy that is applicable to KMP with a view to further aligning the interests
of KMP with the long-term interests of Blackmores. In the event of any deliberate misstatement or manipulation
of results in the Financial Statements for any of the immediately preceding three financial years after assessment,
the Board may require that KMP to repay all or a part of the STI award and withhold the payment or allocation of
all or a part of an unpaid STI.
What is the annual
incentive and who is
eligible to participate?
All eligible permanent staff in the Group, including Senior Executives, can elect to contribute between
$1,000 and $10,000 to be used to purchase shares in the Company. At the end of the financial year,
the Company will normally provide a benefit by applying a matching ratio to the shares purchased by
each participant for that financial year.
What is the amount the
Senior Executive can earn?
The total benefit an Executive can earn is determined by the number of matched shares the Company
will provide. This number is subject to the maximum capped total cost to the Company.
What were the
performance conditions
for FY20?
Why were these
performance measures
chosen?
When are performance
conditions tested?
In order to be eligible to receive matching shares, an Executive must be employed by the Company
at 30 June and have purchased shares during the year which remain in the plan as at the vesting date
(which is normally 31 July).
The matching ratio is normally one share for every three shares purchased during the financial year.
The total cost to the Company is capped at $500,000 for the matched shares.
For FY20, the Company did not apply the matched shares component of the Staff Share Plan.
When Senior Executives increase their shareholding in Blackmores, their interests become more
directly aligned with those of Blackmores’ other shareholders.
Matched shares are provided following completion of the annual service period and subject to
vesting (vesting date is normally 31 July and the issuing of matched shares normally occurs no later
than 15 August).
Profit share – performance conditions and operation
Specific information relating to the actual annual performance awards is set out in the table on page 66.
What is the annual
incentive and who is
eligible to participate?
All eligible permanent staff in the Group, including Senior Executives, participate in a profit share plan,
whereby up to 10% of Group NPAT is allocated to all eligible permanent Group staff on a pro-rata basis
by reference to their Fixed Annual Remuneration. The profit share plan is in addition to the STI award.
What is the amount the
Senior Executive can earn?
The amount distributed is a percentage of Group NPAT. As the amount is distributed on a pro-rata
basis, the amount earned in any year depends on both the Group NPAT achievement and the total
number of employees and salaries in the calculation. The approximate maximum amount of Fixed
Annual Remuneration that can be earned is 17%.
What were the performance
conditions for FY20?
Under the Company’s Collective Agreement, up to 10% of Group NPAT is allocated to staff.
Why were these
performance measures
chosen?
NPAT is a well-recognised measure of financial performance and a key driver of shareholder returns.
Using NPAT as an incentive performance measure ensures that incentive payments are aligned with
Blackmores’ business strategy and objectives.
When are performance
conditions tested?
Profit share is paid twice a year based on Blackmores’ NPAT calculation.
All employees, including Senior Executives, may purchase up to $1,000 of Blackmores’ shares each
year under the Staff Share Acquisition Plan with money that would have otherwise been received
under the profit share plan.
Long-Term Incentives (LTI) – performance conditions
Specific information relating to the actual annual performance awards is set out in the table on page 66.
What is the annual incentive
and who is eligible to
participate?
Eligible employees are invited annually by the Board to participate in the Executive Performance Share
Plan (EPSP). Under this plan, eligible employees are granted rights to acquire shares in Blackmores.
Eligible employees include the Executive Directors, Senior Executives and other nominated
employees.
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Long-Term Incentives (LTI) – performance conditions
Long-Term Incentives (LTI) – performance conditions (cont.)
What is the amount
the eligible employee
can earn?
% of target performance
Measure: Rate of EPS growth
Less than 5
5
5 to 10
10
Greater than 10
0
50
50 – 100 pro rata
100
100
Chief Executive Officer
Senior Executives
% of FAR
Measure: Return on Average Invested Capital
Less than 18.1
18.1
18.1 to 21
21
Greater than 21
0
50
50 – 100 pro rata
100
100
0
10
10 – 40 pro rata
40
40
0
10
10 – 40 pro rata
40
40
What were the
performance condition
for FY20?
Why were these
performance measures
chosen?
How does the EPSP
operate?
• Three-year Earnings Per Share (EPS) CAGR. Weighting: 50%
• Three-year Return on Average Invested Capital (ROIC). Weighting: 50%
The three-year performance period for the EPS and ROIC measures is FY20 – FY22.
EPS performance measure:
•
In determining the EPS performance measure for Blackmores’ LTI plan, the Board has recognised
EPS growth to be the key driver of shareholder value, influencing both share price and the capacity
to pay increased dividends.
Growth in EPS is simple to calculate and basing the vesting of rights on EPS growth encourages
Senior Executives to improve Blackmores’ financial performance. As Senior Executives increase their
shareholding in Blackmores through awards received under the EPSP, their interests become more
directly aligned with those of Blackmores’ other shareholders.
ROIC performance measure:
• The introduction of ROIC performance measure will allow Blackmores to assess its efficiency
at allocating the capital under its control to profitable investments, giving a sense of how well
Blackmores is using its money to generate returns. ROIC focuses on managing both the financial
returns and the invested capital base used to generate those returns.
ROIC, alongside a traditional profitability measure such as EPS, provides a means to base the level of
profitability generated – once capital has been taken into account. It ensures alignment with the long-
term focus on return and ensures improvement of execution standards.
The value of rights granted to eligible employees is equivalent to a percentage of their base
remuneration at the time of grant.
The number of rights granted equals the value of rights divided by:
• The volume weighted average price of Blackmores’ shares for the five-day trading period
commencing seven days after Blackmores’ results in respect of the prior financial year results
announced to the ASX, less
• The amount of any final dividend per share declared as payable in respect of the prior financial year.
The rights will automatically exercise following vesting, audit clearance of the 2022 Financial
Statements, Board approval and the first trading window. These Blackmores shares are issued to
participants at zero cost.
The number of shares issued is identical to the number of rights exercised. In the case of Marcus Blackmore
(Executive Director) and Kitty Liu (Managing Director China), a cash equivalent is paid in lieu of shares.
Where regulations prohibit an equity-based plan, a cash equivalent is awarded.
When are performance
conditions tested?
Compounded annual growth in EPS and ROIC is calculated at the end of the three-year performance
period and verified with reference to Blackmores’ audited Financial Statements prior to determining the
number of rights that will vest. This method was chosen as it is an objective test that is easy to calculate
and ensures transparency and consistency with public disclosures.
What happens if the
eligible employee ceases
employment during the
performance period?
If an executive ceases employment during the three-year performance period, the rights lapse. In
certain circumstances the Board has discretion to allow a portion of rights to vest for a ‘good leaver‘.
Does the Board have an
Executive Clawback Policy
The Board has adopted a Clawback Policy that is applicable to KMP with a view to further aligning
the interests of KMP with the long-term interests of Blackmores. In the event of any deliberate
misstatement or manipulation of results in the Financial Statements for any of the immediately
preceding three financial years, after assessment, the Board may require KMP to repay all or a part of
the LTI award, forfeit all or any unvested LTI; and withhold all or part LTI to the extent it has not been
given to that KMP.
5/
PERFORMANCE AND REMUNERATION
OUTCOMES
Performance Incentives – Actual Performance
2020 Financial Year
DIVIDEND PER SHARE (CENTS)
500
400
300
200
100
0
SHARE PRICE ($)
RETURN ON EQUITY (%)
2016
2017
2018
2019
2020
150
120
90
60
30
0
77.9
60
50
40
30
20
10
0
5.9%
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
*Includes Global Therapeutics
Short-Term Incentives (STI)
Similar to previous years, NPAT achievement was selected as the key Group performance measure for the STI awards in respect of
FY20. The Directors also include strategic measures for the STI awards to align with the key strategic objectives in a year. In respect
of FY20, the Directors selected Group Net Sales and Group Operating Cash Conversion as other strategic measures.
Blackmores’ FY20 statutory NPAT of $18.1 million represented a 66% decrease on prior year. A requirement of the STI plan is year-
on-year growth and as a result there were no STIs awarded to Senior Executives in FY20 (2019: $0).
This award is included under the ‘STI and Profit Share’ column in the remuneration disclosures table on page 65.
Blackmores’ NPAT and Net Sales over the past five years are shown in the following graphs:
NET SALES ($M)
NPAT ($M)
700
600
500
400
300
200
100
0
587
100
80
60
40
20
0
18.1
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
*Includes Global Therapeutics.
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Long-Term Incentives (LTI)
EPS achievement was selected as the Group performance measure for the LTI awards in previous years. Under the FY20 LTI plan, an
additional measure of Return on Average Invested Capital (ROIC), was introduced to the plan. The two measures (EPS and ROIC) are
equally weighted 50/50.
The LTI plan includes a three-year performance period. Due to a failure to meet the EPS performance hurdle, there were no FY18 LTI
awards eligible to vest in FY20. The FY19 and FY20 awards were not eligible to vest in the current year.
The total remuneration for the financial year, the details of which are shown on page 65 includes an accounting expense of nil
(2019: expense reversal of $504,006) for these performance rights. This amount has been calculated based on an assessment of the
achievement of the performance hurdle over the three-year performance period and represents one-third of the total value of the
unvested rights. In the case of Marcus Blackmore (Executive Director) and Kitty Liu (Managing Director China), a cash equivalent is paid
in lieu of shares.
309
EPS (CENTS)
ROIC (%)
600
500
400
300
200
100
0
70
60
50
40
30
20
10
0
103.5
6.3
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
CEO remuneration outcomes – Five-year history
The Group’s remuneration framework is designed to
reward Senior Executives based on the achievement
of the Group’s performance goals and to share in the
success and profitability of Blackmores in alignment with
increased shareholder wealth. The history of the CEO
performance-related remuneration over the past five
years illustrates this linkage to business performance.
Alastair Symington was appointed CEO during FY20 and
the non-awarding of FY20 STI and LTI is based on the
performance hurdles for the Company not being met.
ROIC
STI EARNED AS A % OF MAXIMUM
$M
120
100
80
60
40
20
0
STI earned as a
% of maximum
100
80
60
40
20
0
2016
2017
2018
2019
2020
Net profit after tax (NPAT)
STI
ROIC %
LTI AWARDED AS A % OF MAXIMUM
70
60
50
40
30
20
10
0
LTI awarded as a
% of maximum
100
80
60
40
20
0
Cents
600
500
400
300
200
100
0
2016
2017
2018
2019
2020
ROIC (first introduced as a measure for LTI in 2020)
LTI
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LTI awarded as a
% of maximum
100
80
60
40
20
0
2016
2017
2018
2019
2020
Earnings per share (EPS)
LTI
6/
SENIOR EXECUTIVE REMUNERATION TABLES – STATUTORY
The following table discloses the remuneration outcomes of the Senior Executives of Blackmores for the financial year ended
30 June 2020. The table has been prepared in accordance with Section 300A of the Corporations Act 2001 and has been audited.
The amounts in the statutory tables differ to the remuneration table on page 56 because of the following:
1. Leave movements – annual leave and long service leave movements due to an increase in the statutory accruals rather than cash
payments.
2. Share-based payments – The accounting standards require share-based payments expense to be calculated using the fair value of
the shares at grant date, amortised over the relevant performance and service period. The statutory remuneration table includes the
accounting value for LTI grants for the FY18 year which did not vest and the FY19 and FY20 years which have not yet vested.
SHORT-TERM EMPLOYMENT BENEFITS
SALARY
STI AND
AND FEES PROFIT SHARE1
$
$
NON-
MONETARY2
$
OTHER3
$
POST-
EMPLOYMENT
BENEFITS
SUPER-
ANNUATION
$
OTHER
LONG-TERM
EMPLOYMENT
BENEFITS
SHARE-
BASED
PAYMENT
OTHER4
$
PERFORMANCE
RIGHTS5,6
$
TOTAL
$
Executive Directors
Marcus Blackmore7
2020
2019
Alastair Symington8
2020
Senior Executive
Gunther Burghardt9
2020
Former Executive Director
Richard Henfrey10
2019
Former Senior Executives
Aaron Canning11
2020
2019
David Fenlon12
2019
Peter Osborne13
2020
2019
Total
2020
2019
354,857
361,616
5,588
20,954
15,150
40,582
-
-
21,003
20,531
974,007
9,687
42,041
377,899
21,003
274,122
-
33,912
13,238
10,501
-
-
-
-
-
(15,031)
396,598
428,652
- 1,424,637
-
331,773
663,209
36,855
20,139
57,837
15,398
15,560
(286,137)
522,861
381,499
544,974
8,796
32,945
5,853
-
23,185
46,557
12,466
23,131
42,680
5,844
378
(70,674)
474,857
582,777
558,260
35,157
9,519
50,446
20,531
8,091
(71,306)
610,698
717,857
585,785
9,333
33,710
-
-
28,048
52,787
-
-
-
-
402
(53,464)
755,640
618,818
2,702,342
2,713,844
33,404
159,621
96,956
70,240
442,370
207,627
64,973
79,591
42,680
29,495
780 3,383,505
(496,612) 2,763,806
1. ‘STI and profit share’ includes amounts paid by way of profit share in December 2019.
2. ‘Non-monetary’ includes benefits such as relocation and accommodation benefits and any fringe benefits tax paid on these benefits.
3. ‘Other’ shown in short-term employment benefits relates to provisions for annual leave, with the exception of the $377,899 amount showing for Alastair Symington,
of which $77,899 relates to provision for annual leave and $300,000 relates to contractual sign-on cash payment made to Mr Symington following commencement
of employment.
4. ‘Other’ shown in long-term employment benefits relates to provisions for long service leave.
5. The FY20 share-based payments include the LTI plan and represent the FY20 portion of the fair value of rights granted in FY18, FY19 and FY20. The FY18 rights
have not vested and there is nil value included in FY20 as the performance conditions were not met. Vesting of the FY19 and FY20 rights remains subject to
performance and service conditions as outlined on page 62.
6. The FY20 share-based payments include the Staff Share Plan and represent the FY20 portion of the fair value of rights granted in FY19.
7. Marcus Blackmore’s LTI plan is paid as a cash equivalent in lieu of shares. Mr Blackmore’s performance rights are valued on the share price at 30 June 2019 ($89.91).
Other KMP are valued at fair value at grant date. This difference reflects Mr Blackmore’s LTI plan being paid as a cash equivalent.
8. Alastair Symington joined as Chief Executive Officer and Managing Director on 16 September 2019.
9. Gunther Burghardt joined as Chief Financial Officer on 6 January 2020.
10. Richard Henfrey ceased as an Executive Director on 29 March 2019.
11. Aaron Canning ceased as a Senior Executive on 6 January 2020.
12. David Fenlon ceased as a Senior Executive on 30 June 2019.
13. Peter Osborne ceased as a Senior Executive on 20 December 2019.
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
1
O
U
R
M
I
S
S
I
O
N
2
I
H
G
H
L
I
G
H
T
S
3
I
N
T
R
O
D
U
C
T
I
O
N
4
R
E
V
I
E
W
’
C
E
O
S
Y
E
A
R
I
N
5
L
E
A
D
E
R
S
H
I
P
C
O
M
P
A
N
Y
6
O
P
E
R
A
T
I
N
G
R
E
V
I
E
W
7
&
C
O
M
M
U
N
I
T
Y
S
U
S
T
A
I
N
A
B
I
L
I
T
Y
8
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
9
R
E
M
U
N
E
R
A
T
I
O
N
R
E
P
O
R
T
65
2 0 2 0 R E M U N E R A T I O N R E P O R T
2 0 2 0 R E M U N E R A T I O N R E P O R T
100.0%
0.0%
0.0%
0.0%
1. Amounts included in remuneration for the financial year represent the amount related to the financial year based on achievement of personal goals and satisfaction of
Performance related remuneration
Statutory Performance-related Remuneration Table
The following table shows an analysis of the non-performance and performance-related (STI, Profit Share and LTI) components of the
FY20 remuneration mix detailed in the Statutory Remuneration table.
NON-PERFORMANCE-
RELATED REMUNERATION1
%
STI AND
PROFIT SHARE
%
PERFORMANCE
TOTAL PERFORMANCE-
RIGHTS2,3 RELATED REMUNERATION
%
%
Executive Directors
Marcus Blackmore
2020
2019
Alastair Symington4
2020
Senior Executive
Gunther Burghardt5
2020
Former Executive Director
Richard Henfrey6
2019
Former Senior Executives
Aaron Canning7
2020
2019
David Fenlon8
2019
Peter Osborne9
2020
2019
Total
2020
2019
98.6%
98.6%
99.3%
1.4%
4.9%
0.7%
0.0%
-3.5%
0.0%
1.4%
1.4%
0.7%
147.7%
7.0%
-54.7%
-47.7%
98.1%
106.5%
105.9%
98.7%
103.2%
99.0%
112.2%
1.9%
5.7%
5.8%
1.3%
5.4%
1.0%
5.8%
0.1%
-12.1%
-11.7%
0.1%
-8.6%
0.0%
-18.0%
1.9%
-6.5%
-5.9%
1.3%
-3.2%
1.0%
-12.2%
1. Non-performance-related remuneration includes the accounting expense from all of the columns in the ‘Statutory Remuneration Table’ other than ‘STI and Profit Share’
and the LTI ‘Performance Rights’.
2. Performance Rights includes the LTI plan and represents the FY20 accounting expense of the FY20 portion of the rights granted in FY18, FY19 and FY20. The FY20
portion of the FY19 rights includes a reversal of the amount amortised in FY19.
3. Performance Rights includes the Staff Share Plan and represents the FY20 accounting expense of the FY20 portion of the rights granted in FY20.
4. Alastair Symington joined as Chief Executive Officer and Managing Director on 16 September 2019.
5. Gunther Burghardt joined as Chief Financial Officer on 6 January 2020.
6. Richard Henfrey ceased as an Executive Director on 29 March 2019.
7. Aaron Canning ceased as a Senior Executive on 6 January 2020
8. David Fenlon ceased as a Senior Executive on 30 June 2019.
9. Peter Osborne ceased as a Senior Executive on 20 December 2019.
Short-Term Incentives
The following tables shows the details of the STI cash bonuses awarded as remuneration to Executive Directors and Senior Executives
that were paid for the financial year ended 30 June 2020.
Executive Directors
Marcus Blackmore
Alastair Symington4
Senior Executive
Gunther Burghardt5
Former Senior Executives
Aaron Canning6
Peter Osborne7
STI
INCLUDED IN
REMUNERATION1,3
% OF STI AWARD
AS A MAXIMUM
STI AWARD
% OF MAXIMUM
STI AWARD
FORFEITED2
-
-
-
-
-
-
-
-
-
-
100
100
100
100
100
performance criteria.
2. Amounts forfeited are due to the performance or service criteria not being met in relation to the current financial year.
3. The awards are paid according to the table on page 60.
4. Alastair Symington joined as Chief Executive Officer and Managing Director on 16 September 2019.
5. Gunther Burghardt joined as Chief Financial Officer on 6 January 2020.
6. Aaron Canning ceased as a Senior Executive on 6 January 2020.
7. Peter Osborne ceased as a Senior Executive on 20 December 2019.
Share-based payments
The table below outlines the shares and rights over ordinary shares in the Company that were granted as compensation to Executive
Directors and Senior Executives during FY20 and FY19. The fair value of awards is calculated in accordance with AASB 2 Share-based
Payments.
(a) LTI plan
NAME
GRANT
VESTED
EXERCISED6
END OF
HOLDING
LOCK
NUMBER OF
RIGHTS
DATE
FAIR VALUE
PER RIGHT
$
TOTAL FAIR
VALUE1
$
SHARE
PRICE
$
MAXIMUM
VALUE2
$
NUMBER
OF
% OF
NUMBER
RIGHTS3 GRANTED
DATE
NUMBER
OF RIGHTS
VALUE4
$
VALUE5
DATE
VALUE OF
RIGHTS NOT
VESTED
$
Executive Director
Alastair Symington6 31/10/19
13,650
86.56
1,181,544
73.26
1,000,000
19/12/19
35,622
81.47
2,902,124
84.74
3,018,608
-
-
-
-
-
-
-
-
-
-
-
-
09/22
08/22
6,098
75.29
459,118
77.23
470,949
-
-
-
-
-
-
08/22
Senior Executive
Gunther Burghardt7
26/6/20
Former Senior Executives
Aaron Canning8
17/11/16
3,383
99.19
335,560
113.90
385,324
17/11/17
3,824
144.39
552,147
162.13
619,985
16/11/18
3,186
124.21
395,733
128.00
407,808
Peter Osborne9
17/11/16
2,352
99.19
233,295
113.90
267,893
17/11/17
2,935
144.39
423,785
162.13
475,852
16/11/18
3,015
124.21
374,493
128.00
385,920
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
08/19
08/20
08/21
08/19
08/20
08/21
-
619,985
407,808
-
475,852
385,920
1. The total value of rights granted in the year is the fair value of the rights calculated at the time of grant. This amount is allocated to remuneration over the vesting period
(i.e. FY20 grant over 1 July 2019 to 30 June 2022).
2. Disclosure of maximum value is required under Section 300A of the Corporations Act 2001. The value disclosed represents the underlying value of shares at the time of
grant multiplied by the number of rights granted to each individual. The minimum value of rights awarded is zero if performance conditions are not achieved.
3. The number of rights vested is equal to the number of rights exercised and the number of shares issued; vesting occurs on 30 June and shares are issued in
September following audit clearance of the Group’s results and Board approval.
4. Value of rights vested is equal to the fair value per right multiplied by the number of rights vested.
5. Value of rights at exercise is equal to the number of rights exercised multiplied by the share price at exercise date.
6. Alastair Symington joined as Chief Executive Officer and Managing Director on 16 September 2019. 13,650 number relates to grant of contractual sign-on shares.
7. Gunther Burghardt joined as Chief Financial Officer on 6 January 2020.
8. Aaron Canning ceased as a Senior Executive on 6 January 2020.
9. Peter Osborne ceased as a Senior Executive on 20 December 2019.
66
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
1
O
U
R
M
I
S
S
I
O
N
2
I
H
G
H
L
I
G
H
T
S
3
I
N
T
R
O
D
U
C
T
I
O
N
4
R
E
V
I
E
W
’
C
E
O
S
Y
E
A
R
I
N
5
L
E
A
D
E
R
S
H
I
P
C
O
M
P
A
N
Y
6
O
P
E
R
A
T
I
N
G
R
E
V
I
E
W
7
&
C
O
M
M
U
N
I
T
Y
S
U
S
T
A
I
N
A
B
I
L
I
T
Y
8
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
9
R
E
M
U
N
E
R
A
T
I
O
N
R
E
P
O
R
T
67
2 0 2 0 R E M U N E R A T I O N R E P O R T
2 0 2 0 R E M U N E R A T I O N R E P O R T
(b) Staff share plan
Non-Executive Director fees (inclusive of superannuation) for FY20 include:
GRANT
VESTED
EXERCISED
NAME
DATE
NUMBER OF
RIGHTS
FAIR VALUE
PER RIGHT
$
TOTAL FAIR
VALUE1
$
NUMBER OF % OF NUMBER
NUMBER
GRANTED OF RIGHTS2
DATE
RIGHTS1
VALUE
$
Former Executive Director
Richard Henfrey2
31/7/18
Former Senior Executives
Aaron Canning3
Peter Osborne4
31/7/18
31/7/18
23
32
34
141.95
3,265
31/7/19
141.95
141.95
4,542
4,826
31/7/19
31/7/19
-
-
-
-
-
-
-
-
-
-
-
-
1. The total value of rights granted in the year is the fair value of the rights calculated at the time of grant. This amount is allocated to remuneration over the vesting period
(i.e. FY19 grant over 1 July 2018 to 31 July 2019).
2. Richard Henfrey ceased as an Executive Director on 29 March 2019 and his rights balance reflects holdings as at that date.
3. Aaron Canning ceased as a Senior Executive on 6 January 2020 and his rights balance reflects holdings as at that date.
4. Peter Osborne ceased as a Senior Executive on 20 December 2019 and his rights balance reflects holdings as at that date.
7/
EMPLOYMENT CONTRACTS
The remuneration and other terms of employment are covered in employment contracts. No contract is for a fixed term.
Termination
Executive Directors’ and Senior Executives’ contracts can be terminated by Blackmores or by the Senior Executive providing notice
periods as shown in the following table.
Name
Notice Periods/Termination Payment
CEO and CFO
Six months’ notice (or payment in lieu).
May be terminated immediately for serious misconduct.
Executive Director
and Senior
Executives
Three months’ notice (or payment in lieu).
May be terminated immediately for serious misconduct.
Redundancy Payments1
Years of continuous service
Termination payments
Up to one year
Two weeks’ pay.
Between one and 10 years
Two weeks’ pay plus an additional three weeks of pay for each completed
year of service.
10 years or more
29 weeks’ pay plus an additional three weeks of pay for each completed year
of service following 10 years capped at a maximum of 52 weeks of pay.
1. For the purposes of calculating the amount payable for Senior Executives, one week of pay is the average amount received by the individual as wages or salary over the
four weeks of employment immediately preceding termination of employment.
8/
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Non-Executive Directors receive fixed annual fees comprising a Board fee, Committee fee and Committee Chair fee as applicable. No
incentive-based payments are awarded to Non-Executive Directors.
Blackmores makes superannuation contributions on behalf of Non-Executive Directors in accordance with statutory obligations and
each Non-Executive Director may sacrifice their fees in return for additional superannuation contributions paid by Blackmores.
At a meeting held on 25 October 2018, shareholders determined the maximum total Non-Executive Director fees payable, including
Committee fees, to be $1,300,000 per year, to be distributed as the Board determines. The pool value remains unchanged and allows
for six Non-Executive Directors.
Compensation arrangements for Non-Executive Directors are determined by Blackmores after reviewing published remuneration
surveys and market information. As reported in the FY18 Annual Report, the Company has grown significantly in size, scope and
complexity over recent years. As a result, salary and fee levels were adjusted in a staged approach over several years.
In line with market capitalisation, and following a review of relevant external benchmarks, base fees for Non-Executive Directors were
increased in FY19 by 18% and Committee fees by 11% effective 1 July 2018. There was no increase in FY20. Fees are in line with the
50th percentile of companies in the peer group, with the exception of the Board Chairman fee which is below the 50th percentile.
FEES
Board
Audit and Risk1
People and Remuneration
Nominations
CHAIRMAN
$
279,615
21,900
21,900
-
2020
MEMBER
$
142,350
10,950
10,950
-
CHAIRMAN
$
279,615
21,900
21,900
-
2019
MEMBER
$
142,350
10,950
10,950
-
1. The Audit and Risk Committee was renamed Audit Committee. Risk Committee was created February 2020. There are no additional fees for the Risk Committee.
The total annual Non-Executive Director remuneration for the Board of three (2019: six) Non-Executive Directors for FY20 was
$803,690 (2019: $1,063,979).
The following table discloses the remuneration of the Non-Executive Directors for the financial year ended 30 June 2020.
SHORT-TERM
EMPLOYMENT
BENEFITS
POST
EMPLOYMENT
BENEFITS
FEES AND ALLOWANCES
$
NON-MONETARY1
$
SUPERANNUATION
$
TOTAL
$
Non-Executive Directors
David Ansell
2020
2019
John Armstrong
2020
2019
Christine Holman2
2020
2019
Brent Wallace3
2020
2019
Former Non-Executive Directors
Stephen Chapman4
2019
Jackie McArthur5
2020
2019
Helen Nash5
2020
2019
Total
2020
2019
146,538
146,688
146,538
146,688
155,116
42,692
254,000
227,592
-
-
134
-
-
-
-
6,219
13,921
13,935
13,921
13,935
14,736
4,055
20,882
19,481
160,459
160,623
160,593
160,623
169,852
46,747
274,882
253,292
97,692
12,453
7,778
117,923
17,308
146,692
17,308
149,904
736,808
957,948
-
-
-
-
1,644
13,935
1,644
14,240
18,952
160,627
18,952
164,144
134
18,672
66,748
87,359
803,690
1,063,979
1. ‘Non-monetary’ includes benefits and any applicable fringe benefits tax.
2. Christine Holman joined as a Non-Executive Director on 18 March 2019 and was appointed Chairman of the People and Remuneration Committee on 12 August 2019.
3. Brent Wallace was in the role of Chairman from 25 October 2018.
4. Stephen Chapman was in the role of Chairman from 1 March 2017 to 25 October 2018 and resigned as a Non-Executive Director on 27 November 2018.
5. Jackie McArthur and Helen Nash resigned as Non-Executive Directors on 5 August 2019.
1
O
U
R
M
I
S
S
I
O
N
2
I
H
G
H
L
I
G
H
T
S
3
I
N
T
R
O
D
U
C
T
I
O
N
4
R
E
V
I
E
W
’
C
E
O
S
Y
E
A
R
I
N
5
L
E
A
D
E
R
S
H
I
P
C
O
M
P
A
N
Y
6
O
P
E
R
A
T
I
N
G
R
E
V
I
E
W
7
&
C
O
M
M
U
N
I
T
Y
S
U
S
T
A
I
N
A
B
I
L
I
T
Y
8
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
9
R
E
M
U
N
E
R
A
T
I
O
N
R
E
P
O
R
T
69
68
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
2 0 2 0 R E M U N E R A T I O N R E P O R T
2 0 2 0 R E M U N E R A T I O N R E P O R T
Loan disclosures
There were no loan balances exceeding $100,000 due from KMP during or at the end of the financial year (2019: $nil).
Other transactions with Key Management Personnel
Transactions entered into during the year with KMP of Blackmores Limited and the Group are on the same terms and conditions as
employees or customers dealing on an arms-length basis which includes:
•
the receipt of dividends on their shareholdings, whether held privately or through related entities or through the employee share
plans in the same manner as all ordinary shareholders
•
terms and conditions of employment
• purchases of goods and services
• expense reimbursement.
No interest was paid to or received from KMP.
Signed in accordance with a Resolution of the Directors made pursuant to s298(2) of the Corporations Act 2001.
On behalf of the Directors
Brent Wallace
Chairman
Dated in Sydney, 24 August 2020
9/
NON-EXECUTIVE DIRECTORS AND SENIOR EXECUTIVE TRANSACTIONS
Equity holdings
During FY20 and FY19 there were no share options in existence. There have been no share options issued since the end of the
financial year.
Shares
The table below outlines the fully paid ordinary shares of Blackmores Limited held by KMP.
Fully paid ordinary shares of Blackmores Limited
Non-Executive Directors
David Ansell
John Armstrong
Christine Holman
Brent Wallace
Executive Directors
Marcus Blackmore
Alastair Symington2
Senior Executive
Gunther Burghardt3
Former Non-Executive Directors
Jackie McArthur4
Helen Nash4
Former Senior Executives
Aaron Canning5
Peter Osborne6
Total
BALANCE AT
30/6/19
NUMBER
RECEIVED ON
SETTLEMENT
OF RIGHTS
NUMBER
NET CHANGE
OTHER1
NUMBER
BALANCE AT
30/6/20
NUMBER
1,000
800
1,500
12,302
4,010,042
-
-
600
1,487
-
-
-
-
-
-
-
-
-
-
-
1,000
-
1,000
800
2,500
12,302
(351,766)
18,123
3,658,276
18,123
500
500
-
-
600
1,487
23,269
7,838
4,058,838
32
34
66
2,082
(7,427)
(337,488)
25,383
445
3,721,416
1. Includes shares issued under the Company’s Staff Share Plans.
2. Alastair Symington joined as Chief Executive Officer and Managing Director on 16 September 2019. These shares include 13,650 restricted shares.
3. Gunther Burghardt joined as Chief Financial Officer on 6 January 2020.
4. Jackie McArthur and Helen Nash resigned as Non-Executive Directors on 5 August 2019 and their share balance reflects holdings at that date.
5. Aaron Canning ceased as a Senior Executive on 6 January 2020 and his share balance reflects holdings as at that date.
6. Peter Osborne ceased as a Senior Executive on 20 December 2019 and his share balance reflects holdings as at that date .
Rights to shares
The table below outlines the rights to fully paid ordinary shares of Blackmores Limited held by KMP:
BALANCE
AS AT 1/7/19
GRANTED AS
COMPEN-
SATION EXERCISED
NET OTHER BALANCE AS
AT 30/6/20
CHANGE
BALANCE
VESTED AT
VESTED
BUT NOT
30/6/20 EXERCISABLE
VESTED
AND
RIGHTS
VESTED
EXERCISABLE DURING YEAR
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
Executive Director
Alastair Symington1
Senior Executive
Gunther Burghardt2
Former Senior Executives
Aaron Canning3
Peter Osborne4
Total
-
35,622
-
6,098
-
-
-
-
35,622
6,098
7,042
5,984
13,026
-
-
41,720
(32)
(34)
(66)
(7,010)
(5,950)
(12,960)
-
-
41,720
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
34
66
1. Alastair Symington joined as Chief Executive Officer and Managing Director on 16 September 2019.
2. Gunther Burghardt joined as Chief Financial Officer on 6 January 2020.
3. Aaron Canning ceased as a Senior Executive on 6 January 2020.
4. Peter Osborne ceased as a Senior Executive on 20 December 2019.
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O
U
R
M
I
S
S
I
O
N
2
I
H
G
H
L
I
G
H
T
S
3
I
N
T
R
O
D
U
C
T
I
O
N
4
R
E
V
I
E
W
’
C
E
O
S
Y
E
A
R
I
N
5
L
E
A
D
E
R
S
H
I
P
C
O
M
P
A
N
Y
6
O
P
E
R
A
T
I
N
G
R
E
V
I
E
W
7
&
C
O
M
M
U
N
I
T
Y
S
U
S
T
A
I
N
A
B
I
L
I
T
Y
8
R
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P
O
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T
F
I
N
A
N
C
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L
9
R
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M
U
N
E
R
A
T
I
O
N
R
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P
O
R
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71
Auditor’s Independence Declaration
Independent Auditor’s Report
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Independent Auditor’s Report
Independent Auditor’s Report
74
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Independent Auditor’s Report
Independent Auditor’s Report
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Directors’ Declaration
The Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
(b) in the Directors’ opinion, the attached Financial Statements are in compliance with International Financial Reporting Standards, as
stated in note 1.2 to the Financial Statements;
(c) in the Directors’ opinion, the attached Financial Statements and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true and fair view of the fi nancial position and performance of the
Group; and
(d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by ASIC Corporations Legislative Instrument
2016/785. The nature of the deed of cross guarantee is such that each company that is party to the deed guarantees to each creditor
payment in full of any debt in accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order
applies, as detailed in note 6.2 to the Financial Statements will, as a group, be able to meet any obligations or liabilities to which they are,
or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Brent Wallace
Chairman
Dated in Sydney, 24 August 2020
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Financial
Statements
FOR THE FINANCIAL YEAR ENDED
30 JUNE 2020
01
General
Information
p84
02
Our
Operations
p86
03
Our
Investments
p98
04
Our
Financing
p108
05
Our Financial Risk
Management
p112
06
Our Group
Structure
p118
07
Other
p124
Page
80
81
82
83
Consolidated Statement of Profi t or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
1.1 Reporting entity
1.2 Statement of compliance
1.3 Basis of preparation
1.4 Basis of consolidation
1.5 Application of new and revised standards
2.1 Revenue and other income
2.2 Segment information
2.3 Profi t for the year
2.4 Other fi nancial information
2.5 Working capital
2.6 Income taxes
2.7 Provisions
2.8 Remuneration structure
3.1 Property, plant and equipment
3.2 Investment property
3.3 Goodwill and intangible assets
3.4 Commitments for expenditure
3.5 Business combinations
3.6 Assets held for sale and discontinued operations
3.7 Leases
4.1 Capital management
4.2 Financing facilities
4.3 Interest-bearing liabilities
4.4 Issued capital
4.5 Shareholder returns
5.1 Categories of fi nancial instruments
5.2 Financial risk management objectives
5.3 Foreign currency risk management
5.4 Interest rate risk management
5.5 Credit risk management
5.6 Liquidity risk management
5.7 Fair value measurements
6.1 Parent entity information
6.2 Subsidiaries
6.3 Joint operations
7.1 Related party and Key Management Personnel disclosures
7.2 Remuneration of auditor
7.3 Contingent assets
7.4 Contingent liabilities
7.5 Events after the reporting period
7.6 Approval of fi nancial statements
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
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C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R
L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E
C O N S O L I D A T E D S T A T E M E N T
O F F I N A N C I A L P O S I T I O N
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
AS AT 30 JUNE 2020
Revenue
Other income
Gain arising from bargain purchase
Revenue and other income
Raw materials and consumables used
Employee benefits expenses
Selling and marketing expenses
Depreciation and amortisation expenses
Operating lease rental expenses
Facility outgoings
Professional and consulting expenses
Repairs and maintenance expenses
Freight expenses
Bank charges
Licences and registrations
Impairment of financial assets
Loss on derecognition of receivables
Insurance
Stamp duty
Other expenses
Total expenses
Earnings before interest and tax
Interest revenue
Interest expense
Net interest expense
Profit before tax
Income tax expense
Profit after tax from continuing operations
NOTES
2.1
2.1
3.5
2.3
2.6.1
2020
$’000
20191
$’000
568,353
4,537
6,243
579,133
235,876
160,760
58,506
21,293
-
7,845
14,847
9,234
14,173
1,063
6,218
1,725
227
6,088
1,801
10,094
549,750
29,383
258
(6,171)
(5,913)
23,470
(7,411)
16,059
588,914
4,551
-
593,465
235,269
143,504
67,270
10,768
7,077
5,872
12,261
7,221
13,927
1,233
4,204
(269)
-
1,690
179
6,705
516,911
76,554
258
(5,253)
(4,995)
71,559
(20,947)
50,612
Profit from discontinued operations
3.6
2,962
2,818
Profit/(loss) attributable to:2
Owners of the parent
Non-controlling interests
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign controlled entities
Net loss on hedging instruments entered into for cash flow hedges (net of tax)
Other comprehensive expense for the period, net of tax
Total comprehensive income for the period
Total comprehensive income / (expense) attributable to:2
Owners of the parent
Non-controlling interests
EARNINGS PER SHARE
From continuing operations
– Basic earnings per share (cents)
– Diluted earnings per share (cents)
From continuing and discontinued operations
– Basic earnings per share (cents)
– Diluted earnings per share (cents)
18,114
907
19,021
53,469
(39)
53,430
(503)
(905)
(1,408)
2,629
(509)
2,120
17,613
55,550
16,696
917
17,613
55,578
(28)
55,550
4.5.1
4.5.1
4.5.1
4.5.1
86.6
86.6
292.9
292.9
103.5
103.5
309.2
309.2
Notes to the Consolidated Financial Statements are included on pages 84 to 125.
1. In accordance with AASB 5 non-current assets held for sale and discontinued operations, the comparatives have been restated for discontinued operations that have
arisen during the year. Refer to note 3.6.
2. The discontinued operations had no profit/(loss) or other comprehensive income/(expense) relating to non-controlling interests.
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Receivables
Inventories
Other assets
Derivative assets
Assets held for sale
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Investment property
Goodwill and intangible assets
Deferred tax assets
Other financial assets
Amounts advanced to related parties
Total non-current assets
Total assets
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Lease liabilities
Provisions
Other liabilities
Liabilities directly associated with assets held for sale
Derivative liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Interest-bearing liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
CAPITAL AND RESERVES
Issued capital
Reserves
Retained earnings
Equity attributable to shareholders of Blackmores Ltd
Equity attributable to non-controlling interests
Total equity
Notes to the Consolidated Financial Statements are included on pages 84 to 125.
NOTES
2020
$’000
2019
$’000
2.5.1
2.5.3
2.5.4
3.6
3.1
3.7
3.2
3.3
2.6.2
2.5.5
3.7
2.7
3.6
4.3
3.7
2.6.2
2.7
4.4
47,655
97,859
120,716
10,963
12
30,657
307,862
139,244
28,894
-
63,756
19,627
1,749
-
253,270
561,132
101,846
1,855
7,186
14,797
882
6,676
1,764
135,006
85,000
20,632
10,559
1,449
1,847
119,487
254,493
306,639
24,516
143,877
125,104
14,370
355
-
308,222
80,754
-
2,160
80,489
16,532
1,867
3,600
185,402
493,624
134,529
3,028
-
9,777
5,132
-
739
153,205
119,000
-
11,810
1,137
753
132,700
285,905
207,719
146,388
3,112
155,795
305,295
1,344
306,639
53,039
4,363
149,890
207,292
427
207,719
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C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
C O N S O L I D A T E D S T A T E M E N T O F
C H A N G E S I N E Q U I T Y
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (net of promotional and other rebates)
Payments to suppliers and employees
Cash generated from operations
Interest and other costs of finance paid
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Proceeds from disposal of property, plant and equipment
Payments for business combinations
Payments for property, plant and equipment
Payments for intangible assets
Dividends received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank borrowings
Repayments of bank borrowings
Proceeds from other borrowings
Repayments from other borrowings
Repayments of lease liabilities
Dividends paid
Proceeds from the issue of share capital (net of transaction costs)
Net cash from/(used) in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance of cash held in foreign currencies
Cash and cash equivalents at the end of the year
Cash held by continuing operations
Cash held by discontinued operations
NOTES
20201
$’000
20191
$’000
691,877
(616,007)
75,870
692,861
(641,055)
51,806
(6,172)
(7,620)
62,078
(6,719)
(25,255)
19,832
3.5
3.1
3.3
258
88
(56,512)
(22,793)
(592)
36
(79,515)
258
1066
(8,595)
(14,735)
(5,154)
23
(27,137)
953,000
(987,000)
7,478
(6,143)
(7,962)
(9,917)
90,991
40,447
1,449,000
(1,416,000)
279
-
-
(39,925)
-
(6,646)
23,010
24,516
133
47,659
2020
$’000
47,655
4
47,659
(13,951)
36,468
1,999
24,516
2019
$’000
24,509
7
24,516
2.5.1
2.5.1
NOTES
2.5.1
3.6
Notes to the Consolidated Financial Statements are included on pages 84 to 125.
1. The above Consolidated Statement of Cash Flows includes both continuing and discontinued operations. Amounts relating to discontinued operations are disclosed in
note 3.6
EQUITY-SETTLED
EMPLOYEE
BENEFITS
RESERVE
CASH FLOW
FOREIGN
CURRENCY
HEDGING TRANSLATION
RESERVE
RESERVE
ATTRIBUTABLE
TO OWNERS OF
NON-
RETAINED BLACKMORES CONTROLLING
INTEREST
EARNINGS
LTD
TOTAL
EQUITY
$’000
$’000
$’000
$’000
$’000
$’000
$’000
ISSUED
CAPITAL
$’000
Balance as at 1 July 2018
37,753
3,739
188
1,999
149,196
192,875
455 193,330
Profit/(loss) for the period
Other comprehensive income/(expense)
for the period (net of tax)
Total comprehensive income for the year
Dividends declared
Share-based payments benefit
Issue of shares under Dividend Reinvestment
Plan (DRP)
Issue of shares under employee Long-Term
Incentive plans (net of on-market purchases and tax)
-
-
-
- 53,469
53,469
(39)
53,430
-
-
-
-
-
-
-
(1,236)
12,616
-
2,670
(2,436)
(509)
(509)
2,618
2,618
-
53,469
2,109
55,578
11
(28)
2,120
55,550
-
-
-
-
-
-
(52,541)
-
(52,541)
(1,236)
-
-
(52,541)
(1,236)
-
-
-
12,616
(234)
-
-
-
12,616
-
Balance as at 30 June 2019
53,039
67
(321)
4,617
149,890
207,292
427 207,719
Balance at 1 July 2019
Profit for the period
Other comprehensive income/(expense)
for the period (net of tax)
Total comprehensive income for the period
Dividends declared
Share-based payments benefit
Issue of shares under Dividend Reinvestment
Plan (DRP)
Issue of shares under employee Long-Term
Incentive plans (net of on market
purchases and tax)
Issue of shares under Capital Raise
(net of transaction costs)
53,039
-
-
-
-
-
67
-
-
-
-
234
2,291
-
67
(67)
90,991
-
(321)
-
(905)
(905)
-
-
-
-
-
4,617 149,890
18,114
-
207,292
18,114
427 207,719
19,021
907
(513)
(513)
-
18,114
(1,418)
16,696
10
917
(1,408)
17,613
-
-
-
-
-
(12,209)
-
(12,209)
234
2,291
-
-
-
-
-
-
-
-
(12,209)
234
2,291
-
90,991
- 90,991
Balance as at 30 June 2020
146,388
234
(1,226)
4,104 155,795
305,295
1,344 306,639
Notes to the Consolidated Financial Statements are included on pages 84 to 125.
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01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
01 General
Information
Blackmores Limited (the Company) is a public company listed on the Australian
Securities Exchange (trading under the symbol ‘BKL’), incorporated in Australia
and operating across Australia, New Zealand and Asia.
Blackmores Limited’s registered offi ce and
its principal place of business is as follows:
20 Jubilee Avenue
Warriewood
NSW 2102
Telephone +61 2 9910 5000
The Group’s principal activity is the development,
manufacture, sales and marketing of health products
for humans and animals, including vitamins, and
herbal and mineral nutritional supplements.
1.1 REPORTING ENTITY
Blackmores Limited (the Company) is a company domiciled in Australia. The Consolidated Financial Report (Financial Report) of
Blackmores as at and for the twelve months ended 30 June 2020 comprises Blackmores and its subsidiaries (the Group).
The Consolidated Annual Financial Report of the Group as at and for the year ended 30 June 2020 is available upon request from the
registered offi ce of Blackmores at 20 Jubilee Avenue, Warriewood, NSW 2102 or online at blackmores.com.au.
1.2 STATEMENT OF COMPLIANCE
These Financial Statements are General Purpose Financial Statements which have been prepared in accordance with the Corporations
Act 2001 and Accounting Standards and Interpretations and comply with other requirements of the law.
The Financial Statements comprise the Consolidated Financial Statements of the Group. For the purposes of preparing the
Consolidated Financial Statements, the Company is a for-profi t entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the
Financial Statements and notes of the Company and the Group comply with International Financial Reporting Standards (‘IFRS’).
The Financial Statements were authorised for issue by the Directors on 24 August 2020.
1.3 BASIS OF PREPARATION
The Consolidated Financial Statements have been prepared on the basis of historical cost, except for certain non-current assets and
fi nancial instruments that are measured at revalued amounts or fair values, as explained in the following accounting policies. Historical
cost is generally based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian
dollars, unless otherwise noted.
The accounting policies and methods of computation in the preparation of the Consolidated Financial Statements are consistent with
those adopted and disclosed in the Consolidated Financial Statements for the year ended 30 June 2019, unless otherwise stated.
The Company is a company of the kind referred to in ASIC Corporations Instrument 2016/191, and in accordance with that Instrument
amounts in the Financial Statements are rounded off to the nearest thousand dollars, unless otherwise indicated.
Accounting policies
Goods and services tax
Revenues, expenses and assets are recognised excluding goods and services tax (GST), or equivalent. The net amount of
GST recoverable from, or payable to, the taxation authorities is included within receivables or payables. Operating cash
fl ows are included in the Consolidated Statement of Cash Flows inclusive of GST. GST in relation to investing of fi nancing
activities which is recoverable from, or payable to, the taxation authorities is classifi ed within operating cash fl ows.
Foreign Currencies
Individual Controlled Entities
The individual Financial Statements of each Group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purpose of the Consolidated Financial
Statements, the fi nancial results and fi nancial position of each Group entity are expressed in Australian Dollars (‘$’), which
is the functional currency of the Company, and the presentation currency for the Consolidated Financial Statements.
1.3 BASIS OF PREPARATION (CONT.)
Accounting policies
Foreign Currency Transactions
In preparing the Financial Statements of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At the
end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Foreign Operations
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing at the end of the reporting period. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates fl uctuate signifi cantly, in which case the
exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
1.4 BASIS OF CONSOLIDATION
The Consolidated Financial Statements incorporate the Financial Statements of the Company and entities (including structured entities)
controlled by the Company and its subsidiaries. Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above. Where necessary, adjustments are made to the Financial Statements of subsidiaries
to bring their accounting policies into line with those used by other members of the Group. All intragroup assets and liabilities, equity,
income, expenses and cash fl ows relating to transactions between members of the Group are eliminated in full on consolidation.
1.5 APPLICATION OF NEW AND REVISED STANDARDS
In the current year, the Group has applied AASB 16 Leases which was effective for an annual period that began on or after 1 January
2019. AASB 16 Leases replaced existing accounting requirements for leases under AASB 117 Leases.
Under previous requirements, leases were classifi ed based on their nature as either fi nance leases, which are recognised on the
Consolidated Statement of Financial Position, or operating leases, which are not recognised on the Consolidated Statement of Financial
Position.
Under the current standard, the Group’s accounting for operating leases as a lessee resulted in the recognition of a right-of-use (ROU)
asset and an associated lease liability on the Consolidated Statement of Financial Position. The lease liability represents the present
value of future lease payments, with the exception of low value and short-term leases. An interest expense is also recognised on the
lease liabilities and a depreciation charge will be recognised for the ROU assets. The Group’s accounting for leases as a lessor remains
unchanged under AASB 16. The Group has adopted AASB 16 retrospectively from 1 July 2019, but has not restated comparatives for
the 2019 reporting period as permitted under the specifi c transitional provisions in the standard.
On 1 July 2019, the Group had non-cancellable undiscounted operating lease commitments of $33,585 predominantly relating to its
retail premises, warehousing facilities and distribution centres. In accordance with the standard, $32,092 has been recognised as ROU
assets and $32,114 in associated lease liabilities. As disclosed in note 3.7, the impact of the new standard materially ‘grossed-up’ the
Group’s Consolidated Statement of Financial Position impacting key fi nancial ratios.
EFFECTIVE FOR
ANNUAL PERIODS
BEGINNING
ON OR AFTER
EXPECTED TO BE
INITIALLY APPLIED
IN THE FINANCIAL
YEAR ENDING
1.5.1 Standards and interpretations in issue, not yet adopted
AASB 2018-6 Amendments to Australian Accounting Standards - Defi nition of a Business
AASB 2018-7 Amendments to Australian Accounting Standards - Defi nition of a Material
AASB 2019-1 Amendments to Australian Accounting Standards - References to the
Conceptual Framework
1-Jan-20
1-Jan-20
30-Jun-21
30-Jun-21
1-Jan-20
30-Jun-21
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01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
02 Our
Operations
Blackmores is a leading natural healthcare company across the Asia Pacifi c
region. Blackmores' operations include product innovation and formulation,
sourcing of the highest quality ingredients, quality programs to ensure
compliance with standards of goods manufacturing and the marketing, sales
and distribution of products to customers and consumers.
2.1 REVENUE AND OTHER INCOME
Sales (net of discounts)
Promotional and other rebates
Revenue
Other income
Gain arising from bargain purchase
Revenue and other income
Key estimates and judgements
NOTE
2020
$’000
2019
$’000
712,880
(144,527)
568,353
724,565
(135,651)
588,914
4,537
4,551
3.5
6,243
579,133
-
593,465
Promotional and other rebates
Recognition of rebate accruals at balance date requires management to exercise signifi cant judgement with respect to the
amount of required accruals based on a combination of actual and forecast customers' sales volumes for the period as well as
growth and/or contributions by customers towards promotional activities.
For the year ended 30 June 2020 the continuing operations within the Group recognised promotional and other rebates of
$144,527 (2019: $135,651) which have been charged against sales revenue as disclosed in the Consolidated Statement of Profi t
and Loss and Other Comprehensive Income.
Accruals for promotional and other rebates as at 30 June 2020 are included within Other creditors and accruals in note 2.5.5.
Other Income
Other income relates to government grants and assistance income including JobKeeper, Job Support Scheme (JSS) and R&D tax
credits as well as dividend income, asset disposals and exchange variances. Refer to note 7.3.
Accounting policies
Revenue
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for discounts, estimated
customer returns and promotional and other rebates which are considered variable consideration.
Sale of goods
Revenue from the sale of goods is recognised when the performance obligation of the sale has been fulfi lled and control of the
goods has been transferred to the customer. Specifi cally, revenue from the sale of goods is recognised when goods are delivered
and legal title is passed.
Sale of goods on consignment
Revenue from the sale of goods on consignment is recognised upon the sale of the goods by the consignee. Control of the goods
remains with Blackmores until such time as the goods are sold by the consignee.
Discounts, promotional and other rebates
The amount of revenue recognised for a transaction is net of any discounts, promotional and other rebates, which includes growth
rebates, and /or contributions to customers towards promotional activities.
2.2 SEGMENT INFORMATION
Information reported to the Group's Chief Operating Decision Maker (CEO) for the purpose of resource allocation and assessment of
segment performance is largely focused on geographical regions. The reportable segments under AASB 8 are as follows:
ANZ
Comprising the Blackmores, Pure Animal
Wellbeing and Impromy brands sold
across Australia and New Zealand,
including the benefi t of sales made to
customers which are ultimately intended
for Asian markets and manufacturing within
our Braeside facility acquired in Oct 2019.
CHINA
Comprising Blackmores and Pure Animal
Wellbeing brand in China (in country) and
China Export Division.
BIOCEUTICALS GROUP
Comprising the BioCeuticals practitioner
brands, IsoWhey and Wheyless. Oriental
Botanicals and Fusion Health brands form
part of the discontinued operations and
are excluded from the Group for segment
reporting.
INTERNATIONAL
Comprising the Blackmores and Pure
Animal Wellbeing brands in Thailand,
Malaysia, Singapore, Hong Kong (China),
Taiwan (China), Korea, Indonesia, Vietnam,
Pakistan and Kazakhstan.
CORPORATE COSTS
Those costs which cannot be reliably
allocated to a specifi c segment, or which
have been incurred for long-term growth
opportunities.
2.2.1 Revenue by segment
ANZ
China
BioCeuticals Group1
International
2020
$’000
2019
$’000
227,369
102,933
98,924
139,127
568,353
266,989
122,249
92,315
107,361
588,914
1. BioCeuticals Group has been adjusted to exclude Global Therapeutics which is classifi ed as a discontinued operation.
The Group has one customer who contributed more than 10% of the Group's revenue in the year (2019: One).
Included in revenue of the Group is revenue of $145,978 (2019: $143,873) which arose from sales to the Group's largest customer.
This customer is within both the ANZ and BioCeuticals Group segments.
2020
$’000
25,563
244
11,777
14,333
(22,534)
29,383
2019
$’000
49,782
21,465
13,928
7,479
(16,100)
76,554
2019
2020
2.2.2 EBIT by segment
ANZ
China
BioCeuticals Group1
International
Corporate costs
1. BioCeuticals Group has been adjusted to exclude Global Therapeutics which is classifi ed as a discontinued operation.
2.2.3 Revenue history by segment
300
250
200
150
100
50
0
S
N
O
I
L
L
I
M
$
267
227
122
139
103
107
ANZ 1
China
International
99
92
BioCeuticals
Group1
1. BioCeuticals Group has been adjusted to exclude Global Therapeutics which is classifi ed as a discontinued operation.
86
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
87
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
02 Our
2.3 PROFIT FOR THE YEAR
Operations
2.5 WORKING CAPITAL
2.5.1 Cash and cash equivalents
Cash and cash equivalents (as presented in the Consolidated Statement of Financial Position)
Cash and cash equivalents (included within assets held for sale)
2020
$’000
47,655
4
2019
$’000
24,516
-
PROFIT FOR THE YEAR HAS BEEN ARRIVED AT AFTER CHARGING:
NOTE
2020
$’000
2019
$’000
Accounting policy
Cash and cash equivalents comprise cash -on-hand and cash-at-bank and call deposits with an original maturity of three months or less.
Employee benefi ts expense
Defi ned contribution plans
Redundancy payments
Other employee expenses
Share-based payments:
Equity-settled share-based payments
Cash-settled share-based payments
Other:
Provision for stock obsolescence
Interest rate swaps cancelled due to capital raise
Bargain gain arising on acquisition of Catalent
Acquisition costs – Catalent including stamp duty
Transformation costs
Share placement costs
Professional fees on divestment – Global Therapeutics
2.4 OTHER FINANCIAL INFORMATION
Cost of goods sold
9,098
2,844
148,584
7,520
1,818
135,418
234
-
160,760
(1,236)
(16)
143,504
16,357
3,864
925
3.5
(6,243)
3,146
2,288
531
425
-
-
-
-
-
-
2020
$’000
2019
$’000
280,592
252,703
Cost of Goods Sold (COGS) represents the Group’s internal measurement for the cost of goods sold in the period. It differs from
the cost of raw materials and consumables used measure, in that it includes the allocation of direct labour and overheads relating to
production at the Braeside facility and packing at the Warriewood facility. In the statutory presentation in the Statement of Profi t or Loss,
which is presented by nature, these costs appear within employee benefi ts, depreciation and amortisation and other expense line
items. Since the acquisition of Braeside and the Group’s move into manufacturing, COGS provides additional useful information for the
users of our Financial Statements to understand the costs associated with our operations and how they compare to prior periods.
2.5.2 Reconciliation of profi t after tax to net cash fl ows from operating activities
Profi t after tax
Non-cash expenses
Depreciation and amortisation
Net loss /(profi t) on disposal of property plant and equipment
Non-cash income
Revaluation of investments
Investing cash fl ow items
Interest revenue
Dividend income
Proceeds from disposal of property, plant and equipment
Decrease/(increase) in assets
Receivables
Inventories
Other current assets
Deferred tax assets
Amounts advanced to related parties
(Decrease)/increase in liabilities
Trade and other payables
Current tax liabilities
Current provisions
Other current liabilities
Non-current provisions
Other non-current liabilities
Deferred tax liabilities
Increase/(decrease) in equity
Foreign exchange translation of controlled entities
Equity-settled share-based payments expense
Payment for on market share purchase
Loss recognised on cash fl ow hedges, net of tax
Other items
Net cash infl ows from operations
2020
$’000
2019
$’000
19,021
53,430
21,497
443
10,874
(658)
100
(63)
(258)
(36)
(88)
(258)
(23)
(1,066)
44,115
1,468
3,254
(3,417)
3,600
6,911
(21,139)
(863)
(3,942)
-
(30,993)
(1,173)
5,536
(4,250)
312
1,094
3,177
(26,035)
(1,218)
1,712
1,047
(92)
270
2,469
(503)
234
(67)
(905)
(83)
62,078
2,629
(1,236)
(2,670)
(509)
262
19,832
88
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
89
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
02 Our
2.5 WORKING CAPITAL (CONT.)
Operations
2.5.3 Current receivables
Trade receivables
Allowance for doubtful debts
Allowance for claims
Other debtors
Goods and services tax recoverable
Ageing of trade receivables past due not impaired
0-30 days past due date
31-60 days past due date
61-90 days past due date
>90 days past due date
Ageing of impaired receivables
0-30 days past due date
31-60 days past due date
61-90 days past due date
>90 days past due date
Allowance for doubtful debts
Balance at the beginning of the fi nancial year
Assets obtained through business combinations
Assets held for sale
Increase/(decrease) to allowance
Amounts written off as uncollectable
Balance at the end of the fi nancial year
2020
$’000
98,355
(4,127)
(3,220)
2,091
4,760
97,859
11,881
946
69
118
13,014
6
9
494
3,618
4,127
3,230
19
(318)
2,921
(1,725)
4,127
2019
$’000
143,833
(3,230)
(2,443)
2,040
3,677
143,877
19,853
2,765
2,336
2,987
27,941
29
38
39
3,124
3,230
6,173
-
(34)
(3,178)
269
3,230
As at 30 June 2020 the Group has two customers (2019: two customers) each comprising amounts greater than 5% (2019: 5%) of the
total trade receivables balance. These customers owe the Group more than $31,643 (2019:$55,000) and accounted for approximately
32% (2019: 39%) of all receivables owing.
Accounting policy
Trade and other receivables are recognised initially at fair value and are subsequently measured at amortised cost using the
effective interest method, less an allowance for impairment. They generally have terms of up to 60 days.
An allowance for doubtful debts is recognised for expected credit losses for trade receivables. The expected credit losses are
estimated using a matrix based on the Group's historical credit loss experience, shared risk characteristics and days past due
adjusted for any material changes to the customers' future credit risk. The historical loss rate is then adjusted for current and
forward-looking macroeconomic information affecting the Group, including the impact of the COVID-19 pandemic.
The allowance for doubtful debts is the difference between the asset's carrying amount and the future expected credit losses.
Refer note 5.5 for more detail on how the Group manages credit risk.
Customers who wish to trade on credit terms are subject to extensive credit verifi cation procedures. Receivables balances are
monitored closely and management takes appropriate steps if a receivable becomes overdue and/or impaired.
2.5 WORKING CAPITAL (CONT.)
2.5.4 Inventories
Ingredients
Raw materials
Finished goods
2020
$’000
2019
$’000
26,449
27,711
66,556
120,716
19,304
33,022
72,778
125,104
The provision at balance date to cover inventory write downs is $16,357 (2019: $7,924) and is included in the balance above.
Key estimates and judgements
Management must exercise judgement regarding the provision for inventory write downs. Management assesses slow
moving or obsolete inventory on a regular basis and a provision is raised to write-down inventory to its net realisable value.
Signifi cant judgement is required in estimating the value of slow moving and potentially obsolete inventory as many items
have a limited shelf life. Furthermore, there is uncertainty over changes in consumer preferences and spending patterns,
which are primarily driven by wider trends in the wellness sector. This could have an impact on the level of inventory provision
required. In addition, there is a recoverability risk associated with new product launches regarding forecasting of demand,
including the possible change in demand between the time the inventory order is placed with the supplier and the ultimate
date of sale of the inventory to the customer.
Management have considered the implications of COVID-19 and extended holding periods of inventory which could impact
the value of slow moving and potentially obsolete inventory, as well as resulting in additional holding costs. As a result,
additional provisions have been recognised in 2020.
Accounting policy
Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate proportion of fi xed and
variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each class of inventory,
with the majority being valued on a fi rst-in-fi rst-out basis. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs necessary to make the sale.
2.5.5 Trade and other payables
Trade payables1
Other creditors and accruals
Goods and services tax (GST) payable
2020
$’000
2019
$’000
46,414
50,927
4,505
101,846
79,360
51,603
3,566
134,529
1. The average credit period on purchases ranges from 30 to 90 days from the end of the month of invoice. The Group has fi nancial risk management policies in place to
ensure all payables are paid within the credit time frame.
Accounting policy
Refer to note 5 Our Financial Risk Management.
90
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
91
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
02 Our
2.6 INCOME TAXES
Operations
2.6.1 Income tax recognised in profi t or loss
Current tax
Current tax expense
Adjustments recognised in the current year adjustments in relation to the current tax of prior years
Deferred tax
Charge relating to the origination and reversal of temporary differences
Current year adjustments in relation to prior years' deferred tax
Total income tax expense
Income tax expense is attributable to:
Profi t from continuing operations (as reported in the Consolidated Statement of Profi t or Loss)
Profi t from discontinued operations (refer note 3.6)
Total income tax expense
Reconciliation between tax expense and profi t before income tax
Profi t before income tax expense - continuing operations
Profi t before income tax expense - discontinued operations (refer note 3.6)
Profi t before income tax expense
Income tax expense using the Australian corporate tax rate of 30%
Tax effect of amounts which are not deductible / (taxable) in calculating taxable income
Non deductible expenses
Tax concessions
Tax losses recognised
Tax losses not recognised
Impact of differences in offshore tax rates
Other
Adjustments relating to prior years
Income tax expense
2020
$’000
2019
$’000
5,554
(551)
19,847
(469)
3,059
689
8,751
7,411
1,340
8,751
23,470
4,302
27,772
8,332
1,290
(335)
-
451
(346)
(779)
8,613
138
8,751
1,969
768
22,115
20,947
1,168
22,115
71,559
3,986
75,545
22,663
470
(281)
(914)
314
(774)
338
21,816
299
22,115
The tax rate used for the 2020 and 2019 reconciliations is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profi ts under Australian tax law.
2.6 INCOME TAXES (CONT.)
2.6.2 Deferred tax balances
Deferred tax balances arise from the following:
Temporary differences 2020
Property, plant and equipment
Prepayments and other
Provisions
Accruals
Cash fl ow hedges1
Foreign currency monetary items
Capitalised expenses
Indefi nite life intangible assets
Carried forward tax losses2
Other
OPENING
BALANCE
$’000
(387)
(31)
7,077
3,867
427
(68)
(4)
(10,741)
2,804
1,778
4,722
TRANSFERRED TO
MOVEMENT DIFFERENCES ACQUISITIONS HELD FOR SALE
$’000
FILING
$’000
$’000
$’000
(984)
148
2,509
26
489
(425)
572
-
549
175
3,059
473
75
162
129
-
146
212
-
(169)
(339)
689
(885)
(147)
1,462
129
-
-
-
(1,864)
-
(2,203)
(3,508)
3
-
(306)
(19)
-
-
-
4,428
-
-
4,106
CLOSING
BALANCE
$’000
(1,780)
45
10,904
4,132
916
(347)
780
(8,177)
3,184
(589)
9,068
1. Cash fl ow hedges movement was recognised in other comprehensive income.
2. Unutilised tax losses were recognised as deferred tax assets during 2020. The recognition was dependent on future taxable profi ts of the relevant entities in excess of the
profi ts arising from the reversal of existing taxable temporary differences. The likelihood of suffi cient future taxable profi ts is supported by historic increases in sales and
operating profi ts of the relevant entities and further projected increases prior to expiry of the losses.
Temporary differences 2019
Property, plant and equipment
Prepayments and other
Provisions
Accruals
Cash fl ow hedges1
Foreign currency monetary items
Capitalised expenses
Indefi nite life intangible assets
Carried forward tax losses2
Other
OPENING
BALANCE
$’000
(522)
(26)
6,242
3,520
286
(541)
(14)
(9,339)
1,788
1,855
3,249
TRANSFERRED TO
MOVEMENT DIFFERENCES ACQUISITIONS HELD FOR SALE
$’000
FILING
$’000
$’000
$’000
(36)
(5)
804
(279)
141
470
(13)
-
1,297
(272)
2,107
171
-
31
626
-
3
23
-
(281)
195
768
-
-
-
-
-
-
-
(1,402)
-
-
(1,402)
-
-
-
-
-
-
-
-
-
-
-
CLOSING
BALANCE
$’000
(387)
(31)
7,077
3,867
427
(68)
(4)
(10,741)
2,804
1,778
4,722
1. Cash fl ow hedges movement was recognised in other comprehensive income.
2. Unutilised tax losses were recognised as deferred tax assets during 2019. The recognition was dependent on future taxable profi ts of the relevant entities in excess of the
profi ts arising from the reversal of existing taxable temporary differences. The likelihood of suffi cient future taxable profi ts is supported by historic increases in sales and
operating profi ts of the relevant entities and further projected increases prior to expiry of the losses.
Presented in the Consolidated Statement of Financial Position as follows:
2020
$’000
2019
$’000
19,627
(10,559)
16,532
(11,810)
Accounting policy
Income tax payable represents the amount expected to be paid to taxation authorities on taxable income for the period,
using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of
previous years.
Deferred tax asset
Deferred tax liability
92
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B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
93
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
02 Our
2.6 INCOME TAXES (CONT.)
Operations
2.6.3 Unrecognised deferred tax assets
The following tax losses have not been brought to account as deferred tax assets:
Capital (no expiry date)
Revenue (expiry FY20: 2021-2030)
2020
$’000
2019
$’000
1,959
1,036
2,995
1,035
26
1,061
Accounting policy
Deferred tax arises when there are temporary differences between the carrying amount of assets and liabilities and the
corresponding tax base of those items. Deferred taxes are not recognised for temporary differences relating to:
• the initial recognition of assets and liabilities that is not a business combination affecting neither taxable income nor
accounting profi t;
the initial recognition of goodwill; and
•
•
2.7 PROVISIONS (CONT.)
Accounting policy
Provisions are recognised when the Group has:
• A present obligation (legal or constructive) as a result of a past event and
• It is probable that the Group will be required to settle the obligation, and
• When a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured
using the cash fl ows estimated to settle the present obligation, its carrying amount is the present value of those cashfl ows (where
the time value of money is material).
When some or all of the economic benefi ts required to settle a provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably.
A liability is recognised for benefi ts accruing to employees in respect of wages and salaries, annual leave and long service leave
when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefi ts are measured at their nominal values using the remuneration rate
expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefi ts are measured as the present value of the estimated future cash
outfl ows to be made by the Group.
2.8 REMUNERATION STRUCTURE
investments in subsidiaries where the Group is able to control the timing of the reversal of the temporary difference, and it is
probable that they will not reverse in the foreseeable future.
2.8.1 Key Management Personnel compensation
The aggregate compensation made to Key Management Personnel of the Group and Company is set out below:
Deferred tax assets are recognised to the extent that it is probable that future taxable amounts will be available against which the
assets can be utilised. During the year ended 30 June 2020, deferred tax assets of $123, $1,920 and $28 were recognised with
respect to tax losses incurred by Pat Health Limited, Blackmores China and Blackmores Taiwan respectively (In 2019, Deferred tax
assets of $250 and $459 were recognised with respect to tax losses incurred by Blackmores International and Blackmores Taiwan
respectively. No tax losses were recognised as deferred tax assets for Pat Health Limited and Blackmores China).
Deferred tax assets and liabilities are measured at the tax rates expected to apply to the periods when the asset is realised or the
liability is settled based on tax rates and tax laws that have been enacted or substantively enacted by reporting date.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
2.7 PROVISIONS
Current
Employee benefi ts
Other
Non-current
Employee benefi ts
2020
$’000
2019
$’000
13,906
891
14,797
9,005
772
9,777
1,449
1,137
Short-term employee benefi ts
Post-employment benefi ts
Other long-term benefi ts
Share-based payments
2020
$
2019
$
4,012,014
131,721
42,680
780
4,187,195
4,127,952
166,950
29,495
(496,612)
3,827,785
The compensation of each member of the Key Management Personnel of the Group and a discussion of the compensation policies
of the Company are detailed in the Directors' Report and Remuneration Report which accompany these Consolidated Financial
Statements.
2.8.2 Share-based payments
Accounting policy
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the
equity instrument at the grant date. Fair value is measured by use of the Black-Scholes model. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting and holding lock periods, based on the Group’s estimate of equity instruments that will eventually vest with a
corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profi t or loss over the
remaining vesting period, with corresponding adjustment to the equity-settled employee benefi ts reserve. For cash-settled share-
based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the
end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured,
with any changes in fair value recognised in profi t or loss for the year.
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95
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
02 Our
Operations
2.8 REMUNERATION STRUCTURE (CONT.)
Executive and Employee Share Option Plan
The Executive Performance Share Plan was approved at the Blackmores Annual General Meeting in October 2018. Participation is open
to Senior Executives as determined eligible by the Board. Under this plan, rights to acquire shares in the Company are granted annually
to eligible Senior Executives at no cost and vest provided specifi c performance hurdles are met.
The fair value of rights granted is calculated in accordance with AASB 2 ‘Share-based Payments’. Under the Company Executive
Performance Share Plan, during the year the Company granted entitlements to an allocation of ordinary shares provided specifi c
performance objectives and hurdles are met over the three-year period commencing 1 July 2019 to the year ending 30 June 2022.
If the performance and employment vesting conditions are met, the minimum number of rights that could be vested under the
entitlement is 24,964 (2019: 5,937) and the maximum number of rights that could be vested is 107,148 (2019: 44,196). Several grant
dates applied to these rights; as a result, the following fair values applied to the number of rights listed below.
Share rights series
Grants in the 2020 year
Granted – Long-Term Incentives
Granted – Long-Term Incentives
Grants in the 2019 year
Granted
NUMBER
OF RIGHTS
GRANT
DATE
EXPIRY
DATE
EXERCISE FAIR VALUE AT
GRANT DATE
PRICE
23,226
83,922
26-Jun-20
19-Dec-19
30-Jun-22
30-Jun-22
N/A
N/A
$75.29
$81.47
44,196
16-Nov-18
30-Jun-21
N/A
$124.21
The following reconciles the share-based arrangements outstanding at the beginning and end of the year:
Balance at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Balance at the end of the year
Exercisable at the end of the year
2020
WEIGHTED
AVERAGE
OF RIGHTS EXERCISE PRICE
NUMBER
2019
WEIGHTED
AVERAGE
OF RIGHTS EXERCISE PRICE
NUMBER
102,783
107,148
(63,422)
-
-
146,509
146,509
N/A
99,472
44,196
(24,341)
(16,544)
-
102,783
102,783
N/A
Share rights are vested at 30 June three years after grant and shares are subsequently issued in September of that year following audit
clearance of the Group's result and Board approval.
2.8 REMUNERATION STRUCTURE (CONT.)
The allocation is based on a percentage of the Senior Executives’ and Senior Managers’ base remuneration and the allocation varies
depending on the actual EPS growth delivered and ROIC for the relevant year as follows:
Percentage of participant’s base remuneration
2020 rate of EPS growth
Less than 5%
5%
5% to 10%
10%
Greater than 10%
1. Chief Executive Offi cer refers to Alastair Symington
Percentage of participant’s base remuneration
2019 rate of EPS growth
5.0%
5.0% to 10.0%
10.0%
10.0% to 25.0%
Greater than 25.0%
1. Chief Executive Offi cer refers to Richard Henfrey.
2020 ROIC1
Less than 18.1%
18.1%
18.1% to 21%
Greater than 21%
Pro-rata between
pro-rata between
pro-rata between
Pro-rata between
CHIEF
EXECUTIVE
OFFICER1
OTHER SENIOR
COMPANY
EXECUTIVES MANAGEMENT
SENIOR
0%
50%
0%
10%
50% to 100% 10% to 40%
40%
40%
100%
100%
0%
5%
5% to 20%
20%
20%
CHIEF
EXECUTIVE
OFFICER1
OTHER SENIOR
COMPANY
EXECUTIVES MANAGEMENT
SENIOR
25%
10 %
25% to 50% 10% to 20%
20%
5%
5% to 10%
10%
50% to 150% 20% to 80% 10% to 40%
50%
150%
80%
40%
CHIEF
EXECUTIVE
OFFICER2
OTHER SENIOR
COMPANY
EXECUTIVES MANAGEMENT
SENIOR
0%
50%
0%
10%
50% to 100% 10% to 40%
40%
100%
0%
5%
5% to 20%
20%
1. ROIC measure was introduced to the plan in FY20. Refer Remuneration Report for details regarding ROIC measures on page 62.
2. Chief Executive Offi cer refers to Alastair Symington.
Share-based conditions
The number of shares to be issued to a Senior Executive is determined by dividing the percentage amount of base remuneration
calculated in accordance with the above by:
• the weighted average price of the shares for the fi ve day trading period commencing seven days after Blackmores’ results in
respect of the prior fi nancial year are announced to the ASX, less
•
the amount of any fi nal dividend per share declared as payable for the prior fi nancial year.
Staff share acquisition plans
The Group has established two staff share acquisition plans.
The fi rst plan is open to all eligible employees including Senior Executives and enables them to purchase up to $1,000 of Blackmores
shares tax free (subject to taxable income thresholds) each year with money that would have otherwise been paid as profi t share.
699 shares were issued during the year ended 30 June 2020 (2019: 551 shares). In July 2020, nil shares (2019: 695 shares) will be
issued to employees, including Senior Executives, for profi t share entitlement that would otherwise have been paid in cash during the
year ended 30 June 2020.
The second plan is open to all eligible employees including Senior Executives and enables them to purchase up to $10,000 of
Blackmores shares each year out of after-tax pay. For every three purchased shares acquired using the employees’ contributions,
subject to employment vesting conditions and capping applied under the plan, the Company will provide one extra share. The vesting
date for the year ended 30 June 2020 is 31 July 2020. The maximum cost of the shares provided by the Company for the 2020 fi nancial
year has been set at $500,000.
Options plan
At 1 July 2019 and at 1 July 2018 there were no share options outstanding. None were issued during the year ended 30 June 2020
(2019: nil) and as at 30 June 2020 (2019: nil) there were no unexercised share options. The compensation of each member of the Key
Management Personnel of the Group and a discussion of the compensation policies of the Company are detailed in the Remuneration
Report on pages 48 to 71.
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97
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
03 Our
Investments
The Blackmores Group carries investments in property, plant and equipment,
investment property, goodwill and intangible assets.
3.1 PROPERTY, PLANT AND EQUIPMENT
Year-ended 30 June 2019
Cost
Accumulated depreciation
Net carrying amount
Movement
Net carrying amount at the beginning of the year
Additions
Disposals and write-offs
Depreciation
Other (including foreign exchange movements)
Net carrying amount at the end of the fi nancial year
FREEHOLD LAND
AND BUILDINGS1
$’000
PLANT AND
LEASEHOLD
EQUIPMENT IMPROVEMENTS
$’000
$’000
TOTAL
$’000
49,487
(9,660)
39,827
90,575
(52,501)
38,074
5,682
(2,829)
2,853
145,744
(64,990)
80,754
41,117
-
(360)
(930)
-
39,827
32,466
13,573
(48)
(8,014)
97
38,074
2,678
1,162
-
(971)
(16)
2,853
76,261
14,735
(408)
(9,915)
81
80,754
Assets under construction included above
-
8,074
368
8,442
Year ended 30 June 2020
Cost
Accumulated depreciation
Net carrying amount
Movement
Net carrying amount at the beginning of the fi nancial year
Transferred to assets held for sale
Assets obtained through business combinations (refer to note 3.5)
Additions
Disposals and write-offs
Depreciation
Other (including foreign exchange movements)
Net carrying amount at the end of the fi nancial year
FREEHOLD LAND
AND BUILDINGS1
$’000
PLANT AND
LEASEHOLD
EQUIPMENT IMPROVEMENTS
$’000
$’000
TOTAL
$’000
77,877
(10,998)
66,879
123,671
(56,459)
67,212
8,068
(2,915)
5,153
209,616
(70,372)
139,244
39,827
-
28,000
393
-
(1,341)
-
66,879
38,074
(226)
21,475
18,665
(365)
(10,434)
23
67,212
2,853
(42)
-
3,686
(166)
(1,181)
3
5,153
80,754
(268)
49,475
22,744
(531)
(12,956)
26
139,244
Assets under construction included above
-
12,092
-
12,092
1. Freehold land and buildings includes $25,688 of non-depreciable land (2019: $12,488).
3.1 PROPERTY, PLANT AND EQUIPMENT (CONT.)
Accounting policies
Carrying value
The Group’s property, plant and equipment are measured at cost less accumulated depreciation/amortisation and accumulated
impairment losses. The cost of property in the course of construction includes borrowings, holding and development costs until
the asset is complete.
Depreciation
Assets are depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are amortised over the
shorter of the remaining period of the individual leases or the estimated useful life of the improvement to the Group. Useful lives
are reassessed each reporting period.
Freehold land and property in the course of construction are not depreciated. The expected useful lives are as follows:
Buildings
Plant and equipment
Leasehold improvements
25-40 years
4-10 years
3-10 years
Proceeds from sale of assets
The gross proceeds from asset sales are recognised at the date that control transfers to the purchaser. The net gain/(net loss) is
recognised in the Consolidated Statement of Profi t or Loss and Other Comprehensive Income.
Impairment
Property, plant and equipment are tested for impairment in accordance with the policy for impairment of non-fi nancial assets
disclosed in note 3.3.
3.2 INVESTMENT PROPERTY
Cost
Movement
Net carrying amount at the beginning of the fi nancial year
Transferred to assets held for sale
Net carrying amount at the end of the fi nancial year
NOTE
3.6
2020
$’000
2019
$’000
-
2,160
2,160
(2,160)
-
2,160
-
2,160
On 29 January 2020, the Directors authorised the sale of the land at 15 Jubilee Avenue, Warriewood NSW 2102 which was acquired
as an investment property during the fi nancial year ended 30 June 2010. The land was sold subsequent to year-end. Refer to note 7.5.
Accounting policies
Investment property is defi ned as property held to earn rental income and/or for capital appreciation. It is measured initially at
its cost, including transaction costs such as legal fees and property transfer taxes. Deprecation is not charged on Blackmores’
Investment Property as it related to non-depreciable land. The investment property is tested annually for impairment. No
impairment losses have been recognised on the investment property and the Directors are confi dent that the carrying
amount of the investment property will be recovered in full. Investment property is derecognised upon disposal with any
resulting gain or loss being recognised in the profi t and loss in the period in which the property is derecognised.
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99
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
03 Our
Investments
3.3 GOODWILL AND INTANGIBLE ASSETS
Year ended 30 June 2019
Cost
Accumulated amortisation
Net carrying amount
Movement
Net carrying amount at the beginning of the year
Assets obtained through business combinations
Additions
Amortisation
Other (including foreign exchange revaluation)
Net carrying amount at the end of the fi nancial year
Allocated to cash generating unit
BioCeuticals
Global Therapeutics
Blackmores Australia
China
International
Year-ended 30 June 2020
Cost
Accumulated amortisation/impairment
Net carrying amount
Movement
Net carrying amount at the beginning of the fi nancial year
Transferred to assets held for sale
Assets obtained through business combinations
Additions
Amortisation
Impairment
Other (including foreign exchange movements)
Net carrying amount at the end of the fi nancial year
Allocated to cash generating unit
BioCeuticals
ANZ
China
International
Braeside
GOODWILL
$’000
BRANDS
$’000
OTHER
INDEFINITE LIFE
INTANGIBLE
ASSETS1
$’000
OTHER
INTANGIBLE
ASSETS2
$’000
TOTAL
$’000
34,500
-
34,500
30,244
-
30,244
7,515
-
7,515
13,261
(5,031)
8,230
85,520
(5,031)
80,489
29,461
5,039
-
-
-
34,500
20,849
7,597
6,054
-
-
34,500
28,613
1,631
-
-
-
30,244
15,313
13,300
1,631
-
-
30,244
5,490
-
2,025
-
-
7,515
264
1,160
3,091
3,000
-
7,515
2,648
3,327
3,129
(959)
85
8,230
680
-
6,166
-
1,384
8,230
66,212
9,997
5,154
(959)
85
80,489
37,106
22,057
16,942
3,000
1,384
80,489
26,903
-
26,903
16,041
-
16,041
6,355
(300)
6,055
21,055
(6,298)
14,757
70,354
(6,598)
63,756
34,500
(7,597)
-
-
-
-
-
26,903
20,849
6,054
-
-
-
26,903
30,244
(14,203)
-
-
-
-
-
16,041
14,410
1,631
-
-
-
16,041
7,515
(1,160)
-
-
-
(300)
-
6,055
264
2,791
3,000
-
-
6,055
8,230
-
7,202
592
(1,285)
-
18
14,757
636
5,721
-
1,198
7,202
14,757
80,489
(22,960)
7,202
592
(1,285)
(300)
18
63,756
36,159
16,197
3,000
1,198
7,202
63,756
1. Other Indefi nite life intangible assets relate to registrations, trademarks, and formulations.
2. Other intangible assets relate to patents, capitalised website costs, customer relationships, royalty streams and licenses.
3.3 GOODWILL AND INTANGIBLE ASSETS (CONT.)
Critical judgements and estimates
The ranges of rates used in determining recoverable amounts are set out below:
Long-term growth rate
Post-tax discount rate (BioCeuticals, ANZ)
Post-tax discount rate (Braeside)
2020
%
2.0
5.6
16.4
2019
%
2.0
6.9
-
The Group believes that any reasonably possible change in the key assumptions applied would not cause the carrying value of
assets to exceed their recoverable amount and result in a material impairment based on current economic conditions and Cash
Generating Unit (CGU) performance.
The recoverable amount of the CGU is determined on a value-in-use calculation. This calculation uses cash fl ow projections
based on the fi ve-year plan approved by management and endorsed by the Board, and also uses a terminal value calculation.
Budgeted sales growth is expected to be in line with sales growth in the category. Budgeted margins are expected to remain
consistent.
The Braeside Manufacturing plant represents a separate CGU and in accordance with AASB 136 Impairment of Assets,
Blackmores conducted an impairment test on the site at 30 June 2020 by assessing its Value In Use (VIU).
A discounted cash-fl ow methodology was used to estimate the expected future economic benefi ts discounted to present value.
Blackmores used a WACC of 16.4% which included a risk free rate of 2.6% and a pre-tax cost of debt of 2.9%.
The assumptions on growth relate to the incremental revenue expected from increased utilisation of current site capacity from
FY21 onward. Braeside is also a Halal registered site which is supportive of its volume growth potential in the future and its
valuation. The implied headroom of the CGU, estimated by comparing the VIU with the carrying value of the CGU as at valuation
date, is $59.4 million. No impairment is required in the year ended 30 June 2020.
Accounting policies
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the share of the net identifi able assets
acquired. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Intangible assets
Intangible assets are measured at cost less accumulated amortisation and impairment losses (if any).
Where acquired in a business combination, cost represents the fair value at the date of acquisition. Intangible assets with fi nite
lives are amortised on a straight-line basis over their estimated useful lives.
An internally-generated intangible asset arising from development is only recognised once the feasibility, intention and ability
to complete the intangible asset can be demonstrated. Any expenditure on research activities is recognised as an expense
when incurred. Useful lives are reassessed each period. The useful lives of intangible assets have been assessed as follows:
Patents
Research partnerships
Customer relationships
20 years
14 years
10 years
Customer database and royalty streams
Software and capitalised website development
5 years
2-3 years
Impairment
Intangible assets are tested for impairment in accordance with the policy for impairment of non-fi nancial assets disclosed in this note.
Impairment of non-fi nancial assets
The carrying amounts of the Group’s property, plant and equipment (refer to note 3.1), goodwill and intangible assets (refer to
note 3.3) are reviewed for impairment as follows:
Property, plant and equipment and fi nite life intangibles – When there is an indication that the asset may be impaired (assessed
at least each reporting date) or when there is an indication that a previously recognised impairment may have changed
Goodwill and indefi nite life intangibles – At least annually and when there is an indication that the asset may be impaired.
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01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
03 Our
Investments
3.3 GOODWILL AND INTANGIBLE ASSETS (CONT.)
Accounting policies (cont.)
Calculation of recoverable amount
In assessing impairment, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any).
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to dispose (FVLCTD). For an
asset that does not generate largely independent cash infl ows, the recoverable amount is assessed at the cash generating unit
(CGU) level, which is the smallest group of assets generating cash infl ows independent of other CGUs that benefi t from the use
of the respective asset. Goodwill is allocated to those CGUs or groups of CGUs that are expected to benefi t from the business
combination in which the goodwill arose, identifi ed according to operating segments and grouped at the lowest levels for which
goodwill is monitored for internal management purposes.
An impairment loss is recognised whenever the carrying amount of an asset or its CGU exceeds its recoverable amount.
Impairment losses are recognised in the Consolidated Statement of Profi t or Loss and Other Comprehensive Income. Impairment
losses recognised in respect of a CGU will be allocated fi rst to reduce the carrying amount of any goodwill allocated to the CGU
and then to reduce the carrying amount of other assets in the CGU on a pro-rata basis to their carrying amounts.
Reversal of an impairment
An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
3.4 COMMITMENTS FOR EXPENDITURE
Catalent Business Combination1
Not longer than 1 year
Capital projects
Not longer than 1 year
Promotional Services
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Sponsorship
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Research and Development Contracts
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
1. Blackmores Limited completed the acquisition of Catalent Australia on 25 October 2019.
2020
$’000
2019
$’000
465
48,000
5,451
19,867
1,067
360
1,427
48
10
58
1,599
1,417
31
3,047
1,246
750
1,996
65
-
65
2,762
4,688
600
8,050
3.5 BUSINESS COMBINATIONS
Acquisition of Catalent Australia
On 25th October 2019, Blackmores Ltd confi rmed settlement on the acquisition of Catalent Australia's manufacturing facility in
Braeside Victoria.
The acquisition cost includes a completion payment of $33,000 and a further capital payment of $23,512 attributable to upgrades and
expansions since April 2018 and customary working capital adjustments.
A fi nal payment of $465 is expected to be made in relation to taxation adjustments.
The acquisition represents Blackmores' expansion into soft-gel and tablet manufacturing and will support the Group's strong focus on
growth and product innovation in addition to protecting the Group's portfolio of brands.
Consideration Transferred
Assets acquired at the date of acquisition
Current assets
Cash at bank
Receivables
Inventories
Other assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total assets
Current liabilities
Trade and other payables
Provisions
Non-current liabilities
Deferred tax liabilities
Provisions
Other liabilities
Total Liabilities
Identifi able net assets
NOTE
2020
$’000
56,977
2,533
11,235
16,024
495
30,287
49,475
7,202
1,442
58,119
88,406
15,345
4,603
19,948
4,951
287
-
5,238
25,186
63,220
Gain arising from bargain purchase
Consideration paid or payable in cash
Less: Fair value of the identifi able net assets acquired
Gain arising from bargain purchase
56,977
63,220
6,243
2.1
At the date of this report the accounting for the business combination is fi nal, except for tax balances which are considered provisional.
Impact of acquisition on results of the Group
The impact of the acquisition on the results of the Group for the year ended 30 June 2020 included recognition of a gain resulting
from the bargain purchase of $6,243 in the Consolidated Statement of Profi t and Loss and Other Comprehensive Income. Acquisition-
related costs amounting to $3,146 are not included as part of the consideration transferred and have been recognised as an expense
in the Consolidated Statement of Profi t and Loss and Other Comprehensive Income. The adverse impact of the acquisition on the
operating results of the Group for the year ended 30 June 2020 was $9,629 and considered material.
The bargain gain resulted primarily as a result of increases in property values between contract execution in April 2018 through to
settlement in late October 2019.
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103
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
03 Our
Investments
3.6 ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
At the half-year ended 31 December 2019, Blackmores announced the divestment of non-core brands as part of the new strategy.
As a result, the Board approved to divest The Global Therapeutics business (which includes the Fusion and Oriental Botanicals brands)
and the IsoWhey and Wheyless brands. Negotiations with several interested parties have subsequently taken place. These operations
are expected to be sold within the next 12 months, and have been classifi ed as assets held for sale and presented separately in the
Consolidated Statement of Financial Position.
The Global Therapeutics business was a separate CGU and is presented as a discontinued operation and presented separately in the
Consolidated Statement of Profi t and Loss and Other Comprehensive Income. The profi t for the Global Therapeutics business for the
reporting period is set out below including comparative information.
Prior to the year end, the Board also approved for management to sell the Investment Property 15 Jubilee Warriewood, NSW 2102.
This is also held as an asset held for sale in the Consolidated Statement of Financial Position. Refer to note 7.5 Events after the
reporting period.
Revenue
Other income
Revenue and other income
Raw materials and consumables used
Employee benefi ts expenses
Selling and marketing expenses
Depreciation and amortisation expenses
Operating lease rental expenses
Facility outgoings
Professional and consulting expenses
Repairs and maintenance expenses
Freight expenses
Bank charges
Licences and registrations
Impairment of fi nancial assets
Insurance
Other expenses
Total expenses
Earnings before interest and tax
Interest revenue
Interest expense
Net interest expense
Profi t before tax
Income tax expense
Profi t after tax from discontinued operation
1. Blackmores Limited completed the acquisition of Catalent Australia on 25 October 2019.
2020
$’000
2019
$’000
19,190
(83)
19,107
7,886
4,149
1,153
204
-
2
151
3
358
84
185
318
119
191
14,803
4,304
-
(2)
(2)
4,302
(1,340)
2,962
20,588
241
20,829
8,718
5,342
1,346
106
69
26
222
10
353
109
218
34
96
194
16,843
3,986
-
-
-
3,986
(1,168)
2,818
3.6 ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (CONT.)
The following assets and liabilities of the disposable group are classifi ed as held for sale at 30 June 2020.
GLOBAL
THERAPEUTICS
INVESTMENT
PROPERTY
ISOWHEY/
WHEYLESS
BRANDS
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Receivables
Inventories
Other assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Goodwill and intangible assets
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
Lease liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Lease liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Cash fl ows from/(used in) discontinued operations
Cashfl ow from operating activities
Casfl ows from investing activities
Cashfl ow from fi nancing activities
Net decrease in cash and cash equivalents
4
1,903
2,691
153
4,751
193
42
22,057
322
22,614
27,365
1,689
517
25
2,231
17
4,428
4,445
6,676
20,689
TOTAL
4
1,903
2,920
153
4,980
2,353
42
22,960
322
25,677
30,657
-
-
-
-
-
2,160
-
-
-
2,160
2,160
-
-
229
-
229
-
-
903
-
903
1,132
-
-
-
-
-
-
-
-
1,689
517
25
2,231
-
-
-
-
2,160
-
-
-
-
1,132
17
4,428
4,445
6,676
23,981
2020
$’000
2019
$’000
4,856
(4,746)
(113)
(3)
2,710
(2,723)
-
(13)
104
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105
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
03 Our
3.7 LEASES
Investments
Right-of-use assets
Year-ended 30 June 2020
Cost
Accumulated depreciation
Net carrying amount
Movement
Net carrying amount at the beginning of the fi nancial year
Assets obtained through business combinations
Additions
Depreciation
Disposals
Other (including foreign exchange movements)
Net carrying amount at the end of the fi nancial year
Lease liabilities
Current
Non-current
Total lease liabilities
Amounts recognised in the profi t and loss
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term or low value assets
PROPERTY
$’000
PLANT AND
EQUIPMENT
$’000
FLEET
$’000
TOTAL
$’000
31,557
(5,675)
25,882
2,647
(477)
2,170
1,356
(514)
842
35,560
(6,666)
28,894
-
-
31,585
(5,699)
-
(4)
25,882
-
2,398
248
(476)
-
-
2,170
-
-
1,424
(577)
-
(5)
842
-
2,398
33,257
(6,752)
-
(9)
28,894
6,031
18,767
24,798
717
1,526
2,243
438
339
777
7,186
20,632
27,818
2020
$’000
Continued Operations
2020
$’000
Disontinued Operations
6,752
531
1,786
81
2
10
Cash fl ow
The cash outfl ow during the year for leases relating to continued operations was $8,358. The cash outfl ow relating to discountinued
operations was $105.
MATURITY ANALYSIS $’000
Continued operations
Discontinued operations
Year 1
7,186
25
Year 2
5,210
11
Year 3
5,188
6
Year 4
4,700
-
Year 5
Onwards
Total
2,641
-
2,893
-
27,818
42
The Group has adopted AASB 16 retrospectively from 1 July 2019, but has not restated comparatives for the 2019 reporting period,
as permitted under the specifi c transitional provisions in the standard. The reclassifi cations and the adjustments arising from the new
leasing rules are therefore recognised in the opening balance sheet on 1 July 2019.
(a) Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classifi ed as ‘operating
leases’ under the principles of AASB 117 Leases. These liabilities were measured at the present value of the remaining lease payments,
discounted using the lessee’s incremental borrowing rate as of 1 July 2019. The weighted average lessee’s incremental borrowing rate
applied to the lease liabilities on 1 July 2019 was 2.63%.
3.7 LEASES (CONT.)
(Operating lease commitments disclosed as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate of at the date of initial application)
Less short-term / low value leases recognised on a straight-line basis as an expense
Lease liability recognised as at 1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
30 June 2019
$’000
33,585
(1,471)
32,114
7,283
24,831
32,114
The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been
applied. Other right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or
accrued lease payments relating to that lease recognised in the Consolidated Statement of Financial Position as at 30 June 2019. There
were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.
Recognised right of use assets
2020
$’000
2019
$’000
28,894
21,359
The recognised right-of-use assets primarily relate to property but also include plant and equipment and fl eet.
The change in accounting policy affected the following items in
the balance sheet on 1 July 2019.
Right-of-use assets – increase by $32,092
Lease liabilities – increase by $32,114
The net impact on retained earnings on 1 July 2019 was not material.
(i) Practical expedients applied – In applying AASB 16 for the
fi rst time, the Group has used the following practical expedients
permitted by the standard:
- the use of a single discount rate to a portfolio of leases with
-
reasonably similar characteristics
the accounting for operating leases with a remaining lease term
of less than 12 months as at 1 July 2019 as short-term leases
- the exclusion of initial direct costs for the measurement of the
right-of-use asset at the date of initial application, and
- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application. Instead, for
contracts entered into before the transition date, the Group relied
on its assessment made applying AASB 117 and Interpretation
4 Determining whether an Arrangement contains a Lease.
(b) The Group’s leasing activities and how these are accounted for
The Group leases various offi ces, warehouses, equipment and
cars. Rental contracts are typically made for fi xed periods of 3
to 8 years but may have extension options as described below.
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions.
Until the 2020 fi nancial year, leases of property, plant and
equipment were classifi ed as either fi nance or operating leases.
Payments made under operating leases (net of any incentives
received from the lessor) were charged to the Consolidated
Statement of Profi t or Loss and Other Comprehensive Income on
a straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset
and a corresponding liability at the date at which the leased asset
is available for use by the group. Each lease payment is allocated
between the liability and fi nance cost. The fi nance cost is
charged to the Consolidate Statement of Profi t or Loss and Other
Comprehensive Income over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net present
value of the following lease payments:
- fi xed payments (including in-substance fi xed payments), less
any lease incentives receivable
- variable lease payments that are based on an index or
a rate, initially measured using the index or rate at the
commencement date
- amounts expected to be payable by the lessee under residual
value guarantees
- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and
- payments of penalties for terminating the lease, if the lease
term refl ects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit
in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with
similar terms and conditions.
Right-of-use assets are measured at cost comprising the amount
of the initial measurement of lease liability, any lease payments
made at or before the commencement date less any lease
incentives received, any initial direct costs, and restoration costs.
Payments associated with short-term leases and leases of low-
value assets are recognised on a straight-line basis as an expense
in the Consolidated Statement of Profi t or Loss and Other
Comprehensive Income. Short-term leases are leases with a lease
term of 12 months or less. Low-value assets primarily comprise of
IT related equipment.
(i) Extension and termination options – Extension and
termination options are included in a number of property and
equipment leases across the Group. These terms are used to
maximise operational fl exibility in terms of managing contracts.
The extension and termination options held are exercisable only
by the Group and not by the respective lessor.
Critical judgements in determining the lease term
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise
an extension option, or not exercise a termination option.
Extension options (or periods after termination options) are only
included in the lease term if the lease is reasonably certain to be
extended (or not terminated).
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01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
04 Our
Financing
The Group manages its capital to ensure that entities in the Group will be able
to continue as a going concern while maximising the return to stakeholders
through optimisation of the debt and equity balance.
4.1 CAPITAL MANAGEMENT
The capital structure of the Group consists of net debt and equity.
The Group operates globally, primarily through the Company and subsidiary companies established in the markets in which the Group
trades. None of the entities within the Group is subject to externally imposed capital requirements.
Operating cash fl ows are used to maintain and expand the Group's production and distribution assets, as well as make the routine
outfl ows of tax, dividends and repayment of maturing debt. The Group's policy is to raise capital centrally, using a variety of capital
market issues and borrowing facilities, to meet anticipated funding requirements.
The Group's Audit and Risk Committee reviews the capital structure of the Group on a semi-annual basis. Based upon recommendations
of the Committee, the Group will balance its overall capital structure through the payment of dividends. new share issues and share buy-
backs as well as the issue of new debt or redemption of existing debt with third parties and, if appropriate, related parties.
Gearing ratio
The gearing ratio at the end of the fi nancial year was as follows:
Debt
Cash and cash equivalents
Net debt
Equity
Total capital
Gearing ratio
(Net debt as a % of total capital)
2020
$’000
2019
$’000
85,000
(47,655)
37,345
305,296
342,641
119,000
(24,516)
94,484
207,292
301,776
10.9%
31.3%
4.2 FINANCING FACILITIES
Unsecured revolving letter of credit facility under Common Terms Deed
Unsecured revolving term debt facility under Common Terms Deed
Unrestricted access was available to the Group at the reporting date to the following unused lines of credit:
Bank loan facilities
Bank overdrafts
2020
$’000
2019
$’000
10,879
85,000
95,879
-
119,000
119,000
204,121
5,000
209,121
181,000
5,000
186,000
Receivables purchase agreement
The Group has entered into an uncommitted non-recourse receivables purchase agreement to sell certain domestic receivables,
from time to time, to an unrelated entity in exchange for cash. The receivables are derecognised where the risks and rewards of
the receivables have been transferred. As at 30 June 2020, receivables totalling $2.31 million had been sold under this
arrangement (2019:Nil).
Debt facilities
Total debt facilities as at 30 June
2020 are as follows:
Undrawn facilities
$204 million
68%
Drawn facilities
$96 million
32%
Maturity profi le
The maturity profi le of existing bank loan facilities by fi nancial year is as follows:
S
N
O
I
L
L
I
M
$
S
U
A
180
160
140
120
100
80
60
40
20
0
170
70
60
2021
2022
2023
2024
Facility expires by Financial Year
108
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B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
109
Bank loan facilities may be drawn at any time, subject to the terms of the lending agreements. The above facilities are subject
to certain fi nancial covenants and undertakings. No covenants have been breached during the fi nancial year (2019: Nil).
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
04 Our
4.3 INTEREST-BEARING LIABILITIES
Financing
Non-current
Unsecured at amortised cost
Bank loan
2020
$’000
2019
$’000
85,000
119,000
Funding activities
In April 2019, Blackmores Limited entered into new funding arrangements with Bank of China, HSBC Bank Australia Limited, National
Australia Bank and Westpac Banking Corporation with maturity dates of April 2022, April 2023 and April 2024 respectively. The funds
are available for general corporate purposes.
4.3.1 Reconciliation of liabilities arising from fi nancing activities
Interest-bearing liabilities
Balance at the start of the year
Net cash (outfl ows) / infl ows
Balance at the end of the fi nancial year
Accounting policies
2020
$’000
2019
$’000
119,000
(34,000)
85,000
86,000
33,000
119,000
All bank loans are initially recognised at the fair value of the consideration received, less directly attributable transaction costs.
After initial recognition, interest-bearing loans are subsequently measured at amortised cost, using the effective interest method,
with interest expense recognised on an effective yield basis.
4.4 ISSUED CAPITAL
2020
ISSUED
CAPITAL
$’000
2019
NUMBER
2020
NUMBER
Fully paid ordinary shares
Balance at beginning of fi nancial year
Issue of shares under Executive and Employee Share Plans (note 2.8)
Issue of shares under Dividend Reinvestment Plan (DRP)
Issue of shares under Capital Raise
Transaction costs
Balance at end of fi nancial year
17,361,515
14,345
33,077
1,268,966
-
18,677,903
53,039
67
2,291
92,000
(1,009)
146,388
17,226,619
17,099
117,797
-
-
17,361,515
Fully paid ordinary shares carry one vote per share and carry a right to dividends.
2019
ISSUED
CAPITAL
$’000
37,753
2,670
12,616
-
-
53,039
Employee share plans
Further details of the Group's Executive and employee share plans are contained in note 2.8 to the Consolidated Financial Statements.
4.5 SHAREHOLDER RETURNS
4.5.1 Earnings per share
From continuing operations
Profi t attributable to shareholders of Blackmores Limited
WANOS1 used in the calculation of basic EPS2
WANOS1 used in the calculation of diluted EPS2
Basic EPS
Diluted EPS
From continuing and discontinued operations
Profi t attributable to shareholders of Blackmores Limited
WANOS1 used in the calculation of basic EPS2
WANOS1 used in the calculation of diluted EPS2
Basic EPS
Diluted EPS
2020
$’000
2019
$’000
15,152
50,651
Number
17,494,831
17,494,831
Cents
86.6
86.6
Number
17,295,235
17,295,256
Cents
292.9
292.9
18,114
53,469
Number
17,494,831
17,494,831
Cents
103.5
103.5
Number
17,295,235
17,295,256
Cents
309.2
309.2
1. Weighted average number of ordinary shares.
2. The variance in the WANOS used in the calculation of the basic EPS and the diluted EPS is attributable to employee share plans.
4.5.2 Dividends
Recognised amounts
Fully paid ordinary shares
Final dividend for year ended 30 June 2019 (2019: 30 June 2018)
– fully franked at 30% corporate tax rate
Interim dividend for year ended 30 June 2020 (2019: 30 June 2019)
– fully franked at 30% corporate tax rate
Unrecognised amounts
Fully paid ordinary shares
Final dividend for year ended 30 June 2020 (2019: 30 June 2019)
– fully franked at 30% corporate tax rate
4.5.3 Franking account balance
Adjusted franking account balance
4.5.4 Shareholder returns history
S
T
N
E
C
600
500
400
300
200
100
0
2020
CENTS PER
SHARE
TOTAL
$’000
2019
CENTS PER
SHARE
TOTAL
$’000
70
12,209
155
26,587
-
70
-
12,209
150
305
25,954
52,541
-
-
2020
$’000
2019
$’000
31,202
29,591
Earnings per share
Dividends per share
Dividend payout ratio (DPR)
%
100
90
80
70
60
50
40
30
20
10
0
D
P
S
2016
2017
2018
2019
2020
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01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
05 Our Financial Risk
Management
5.1 CATEGORIES OF FINANCIAL INSTRUMENTS
CLASSIFICATION
Amortised cost
Amortised cost
Fair value through profi t or loss
Fair value through profi t or loss
NOTE
2.5.1
2.5.3
5.7
5.7
2020
$’000
2019
$’000
47,655
97,859
1,382
12
24,516
143,877
1,503
355
Fair value through profi t or loss
Amortised cost
Amortised cost
5.7
4.3
2.5.5
1,764
85,000
101,846
739
119,000
134,529
Financial assets
Cash and cash equivalents
Receivables
Unquoted equity investments
Derivative fi nancial assets
Financial liabilities
Derivative fi nancial liabilities
Interest bearing borrowings
Trade payables
Accounting policies
Financial instruments
Financial assets and fi nancial liabilities are recognised when a Group entity becomes a party to the contractual provisions of the
instrument. Financial assets and fi nancial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of fi nancial assets and fi nancial liabilities (other than fi nancial assets and fi nancial liabilities at fair value
through profi t or loss) are added to or deducted from the fair value of the fi nancial assets or fi nancial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to the acquisition of fi nancial assets or fi nancial liabilities at fair value
through profi t or loss are recognised immediately in profi t or loss.
5.1.1 Financial assets
The Group classifi es its fi nancial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through other comprehensive income, or profi t or loss); and
• Those to be measured at amortised cost.
The classifi cation depends on the Group’s business model for managing fi nancial assets and the contractual terms of the cash
fl ows. For assets measured at fair value, gains and losses will either be recorded in profi t or loss or other comprehensive income.
For investments in debt instruments, this will depend on the business model in which the investment is held.
Loans and receivables
Assets that are held for collection of contractual cash fl ows where those cash fl ows represent solely payments of principal and
interest are measured at amortised cost.
Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest income is
recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be
immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
(including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the debt instrument, or (where appropriate) a shorter period, to the net
carrying amount on initial recognition.
Impairment of fi nancial assets
In relation to the impairment of fi nancial assets, AASB 9 requires an expected credit loss model. The expected credit loss model
requires the Group to account for expected credit losses and changes in those expected credit losses at each reporting date.
The Group measures the loss allowance for trade receivables using the simplifi ed approach under AASB 9 at an amount equal to
the lifetime expected credit losses. A lifetime expected credit loss allowance has been calculated for trade receivables through
the use of an expected credit loss model. The model is based on the Group's historical credit loss experience, shared credit risk
characteristics and days past due adjusted for any material expected changes to the customers' future credit risk.
The carrying amount of trade receivables is reduced through the use of an allowance account. When a trade receivable is
considered uncollectable, it is written off against the allowance account.
112
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
5.1 CATEGORIES OF FINANCIAL INSTRUMENTS (CONT.)
Derecognition of fi nancial assets
The Group derecognises a fi nancial asset when the contractual rights to the cash fl ows from the asset expire, or when it transfers
the fi nancial asset and substantially all the risks and rewards of ownership of the asset to another party.
5.1.2 Financial liabilities and equity instruments
Classifi cation as debt or equity
Debt and equity instruments are classifi ed as either liabilities or as equity in accordance with the substance of the contractual
arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Non-derivative fi nancial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and subsequently
measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The
effective interest method is a method of calculating the amortised cost of a fi nancial liability and of allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected
life of the fi nancial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Derecognition of fi nancial liabilities
The Group derecognises fi nancial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the fi nancial liability derecognised and the consideration paid and
payable is recognised in profi t or loss.
Derivative fi nancial instruments
The Group enters into a variety of derivative fi nancial instruments to manage its exposure to interest rate and foreign exchange
rate risk, including forward foreign exchange contracts and interest rate swaps. Further details of derivative fi nancial instruments
are disclosed in notes 5.3 and 5.4 to the Consolidated Financial Statements. Derivatives are initially recognised at fair value on the
date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting
gain or loss is recognised in profi t or loss immediately unless the derivative is designated and effective as a hedging instrument, in
which event, the timing of the recognition in profi t or loss depends on the nature of the hedge relationship.
Hedge accounting
The Group designates certain hedging instruments, which include derivatives and non-derivatives in respect of foreign currency
risks, as either fair value hedges, cash fl ow hedges or hedges of net investments in foreign operations. Hedges of foreign exchange
risk on fi rm commitments are accounted for as cash fl ow hedges. At the inception of the hedge relationship the entity documents
the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy
for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash fl ows of the hedged item
attributable to the hedged risk. Notes 5.3 and 5.4 sets out details of the fair values of the derivative instruments used for hedging
purposes. Movements in the hedge reserve in equity are also detailed in the Consolidated Statement of Changes in Equity.
Cash fl ow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash fl ow hedges is recognised
in other comprehensive income and accumulated under the heading of cash fl ow hedging reserve. The gain or loss relating to
the ineffective portion is recognised immediately in profi t or loss, and is included in the ‘other gains and losses’ line item. Amounts
previously recognised in other comprehensive income and accumulated in equity are reclassifi ed to profi t or loss in the periods
when the hedged item is recognised in profi t or loss, in the same line of the Consolidated Statement of Profi t or Loss and Other
Comprehensive Income as the recognised hedged item. However, when the hedged forecast transaction results in the recognition
of a non-fi nancial asset or a non-fi nancial liability, the gains and losses previously recognised in other comprehensive income and
accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-fi nancial asset
or non-fi nancial liability. Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging
instrument expires or is sold, terminated, or exercised, or when it no longer qualifi es for hedge accounting. Any gain or loss
recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in profi t or loss. When a forecast transaction is no longer expected to occur, the gain
or loss accumulated in equity is recognised immediately in profi t or loss.
5.2 FINANCIAL RISK MANAGEMENT OBJECTIVES
The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international
fi nancial markets and monitors and manages the fi nancial risks relating to the operations of the Group. The Group seeks to minimise
the effects of currency risk and interest rate risk by using derivative fi nancial instruments to hedge these risk exposures. The use
of fi nancial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written principles
on foreign exchange risk, interest rate risk and the use of fi nancial derivatives. Compliance with policies and exposure limits is
reviewed internally on a continuous basis. The Group does not enter into or trade fi nancial instruments, including derivative fi nancial
instruments, for speculative purposes.
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
113
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
05 Our Financial Risk
Management
5.3 FOREIGN CURRENCY RISK MANAGEMENT
Sources of risk
Risk management
The Group undertakes transactions denominated in foreign currencies; consequently, exposures to
exchange rate fl uctuations arise.
Exchange rate exposures are managed within approved policy parameters utilising forward exchange
contracts.
Blackmores undertakes transactions denominated in foreign currencies which exposes it to foreign exchange rate risk. The currencies
which Blackmores has a material exposure to include the United States Dollar (USD), Euro (EUR), New Zealand Dollar (NZD) and
Canadian Dollar (CAD). It also undertakes transactions in Swiss Franc (CHF), Korean Won (KRW), Malaysian Ringgit (MYR), Thai Baht
(THB) and Taiwan Dollars (TWD), amongst others. Blackmores enters into derivative fi nancial instruments to manage this risk, including
forward foreign exchange contracts.
CURRENCY
USD
EUR
NZD
CAD
Other
LIABILITIES
2020
$’000
LIABILITIES
2019
$’000
8,094
485
1,598
165
604
12,447
399
2,000
834
495
ASSETS
2020
$’000
2,039
31
669
-
10
ASSETS
2019
$’000
1,102
-
2
-
236
The table above excludes the impact of derivatives.
Fluctuations in the Australian dollar relative to the USD, EUR, NZD, CAD or other foreign currencies may impact on Blackmores’ cash
fl ows, fi nancial performance and profi tability. The following table details the Group’s sensitivity to a 10% increase and decrease in the
Australian Dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally
to Key Management Personnel and represents management’s assessment of the possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period
end for a 10% change in foreign currency rates. A positive number below indicates an increase in profi t or equity where the Australian
dollar strengthens 10% against the relevant currency. For a 10% weakening of the Australian dollar against the relevant currency, there
would be a comparable impact on the profi t or equity, and the balances below would be negative.
CURRENCY
USD impact
EUR impact
NZD impact
CAD impact
Other impact
PROFIT / (LOSS)
10% INCREASE
2020
$’000
2019
$’000
10% DECREASE
2020
$’000
2019
$’000
550
(71)
84
15
54
1,031
36
182
76
16
(673)
(188)
(103)
(18)
(66)
(1,261)
(44)
(222)
(93)
(20)
The table above excludes the impact of derivatives.
The following forward foreign exchange contracts were still open at the reporting date, in local currency:
CURRENCY
USD
MYR
THB
NZD
CAD
KRW
NOTIONAL PRINCIPAL AMOUNT
2019
$’000
2020
$’000
FAIR VALUE
2020
$’000
25,505
-
-
1,170
-
-
14,160
3,838
5,780
5,210
632
1,101
(1,316)
-
-
(2)
-
-
2019
$’000
252
(26)
(227)
39
14
(8)
In conjunction with the capital raising during the period, the Group reviewed its forecasted debt levels over the next two years and
this has resulted in some hedge ineffectiveness. As a result of this ineffectiveness, a loss of $925 (2019: nil) was reclassifi ed from other
comprehensive income to the Income Statement. Amounts reclassifi ed are recorded within other income and expenses. There was no
other material ineffectiveness of hedging relationships.
114
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
5.4 INTEREST RATE RISK MANAGEMENT
Sources of risk
The Group is exposed to interest rate risk as it borrows funds on a fl oating interest rate basis.
Risk management
The risk is managed by the Group by the use of interest rate swap contracts.
The following table sets out the Group’s exposure to interest rate risk.
Financial liabilities
Borrowings
Interest rate swaps1
Net exposure
1. Represents the notional amount of the interest rate swaps.
The following table sets out the Group’s exposure to interest rate risk.
2020
$’000
2019
$’000
(85,000)
30,000
(55,000)
(119,000)
53,000
(66,000)
Outstanding fi xed or fl oating contracts
Less than 1 year
1 to 2 years
2 to 5 years
> 5 years
AVERAGE CONTRACTED
FIXED INTEREST RATE
2020
%
2019
%
NOTIONAL
PRINCIPAL AMOUNT
2020
$’000
2019
$’000
FAIR VALUE
2020
$’000
2019
$’000
-
-
0.88%
-
0.88%
2.21%
2.38%
1.44%
0.00%
1.95%
-
-
30,000
-
30,000
23,000
10,000
20,000
-
53,000
-
-
(433)
-
(433)
(23)
(277)
(202)
-
(502)
The interest rate swaps settle on a quarterly basis. The fl oating rate on the interest rate swaps is the Australian bank bill swap bid rate.
All interest rate swap contracts are designated as cash fl ow hedges.
The Group will settle the difference between fi xed and fl oating interest on a net basis.
All other fi nancial assets and liabilities (in the current and prior fi nancial years) are non-interest-bearing.
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at the reporting date and the stipulated change taking place at the beginning of the fi nancial year and held constant
throughout the year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to Key Management
Personnel and represents management’s assessment of the possible change in interest rates.
For the year ended 30 June 2020, if interest rates had been 50 basis points higher or lower and all other variables were held constant,
the Group’s net profi t would decrease by $821 (2019: $648) or increase by $821 (2019: $648) respectively as a result of changes in the
interest rates applicable to commercial bank bills.
For the year ended 30 June 2020, if interest rates had been 50 basis points higher or lower and all other variables were held constant,
the Group’s other equity reserves would increase by $306 or decrease by $310 respectively (2019: increase by $370 or decrease by
$375 respectively), mainly as a result of the changes in the fair value of the interest rate swap.
There has been no change to the manner in which the Group manages and measures the risk from the previous year.
Interest rate swap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between fi xed and fl oating rate interest amounts
calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the
fair value of variable rate debt. The fair value of interest rate swaps at the end of the reporting period is determined by discounting the
future cash fl ows using the curves at the end of the reporting period and the credit risk inherent in the contract and is disclosed below
The average interest rate is based on the outstanding balances at the end of the fi nancial year.
The Group entered into $40,000 of new interest rate swaps during the 2020 fi nancial year (2019: $30,000), $23,000 matured during
the year (2019: $30,000) and $40,000 were terminated during the 2020 fi nancial year (2019: $17,000).
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
115
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
05 Our Financial Risk
Management
5.5 CREDIT RISK MANAGEMENT
Sources of risk
The Group is exposed to counterparty credit risk from trade and other receivables.
Risk management
The information used to determine creditworthiness is supplied by independent rating agencies where
available and, if not available, the Group uses publicly available fi nancial information, trade references
and their own trading record to rate their major customers. Ongoing credit evaluation is performed on
the fi nancial condition of accounts receivable. The credit risk on liquid funds and derivative fi nancial
instruments is limited because the counterparties are banks with sound credit ratings assigned by
international credit-rating agencies. The carrying amount of fi nancial assets recorded in the Consolidated
Financial Statements, net of any allowances for losses, represents the Group’s maximum exposure to credit
risk. The Group’s increased exposure to credit risk is commensurate with the impact of COVID-19 on a
global basis. This has resulted in an increased level of payment default risk in comparison to prior years.
The Group continues to manage and measure risk with respect to the collectability of all receivables.
5.6 LIQUIDITY RISK MANAGEMENT
Sources of risk
Exposure to liquidity risk derives from the Group’s operations and from external interest bearing liabilities
that it holds.
Risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has
established an appropriate liquidity risk management framework for the management of the Group’s
short-term, medium-term and long-term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and banking facilities and through the continual
monitoring of forecast and actual cash fl ows.
Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative fi nancial liabilities with agreed repayment
periods. The tables have been drawn up based on the undiscounted cash fl ows of fi nancial liabilities based on the earliest date on
which the Group can be required to pay. The tables include both interest and principal cash fl ows.
WEIGHTED AVERAGE
EFFECTIVE INTEREST RATE %
2020
Trade and other payables
Borrowings
Lease liabilities
2019
Trade and other payables
Borrowings
-
1.57
2.63
-
2.63
<1 YEAR
$’000
1-5 YEARS
$’000
>5 YEARS
$’000
TOTAL
$’000
101,846
-
7,186
109,032
134,529
-
134,529
-
85,000
17,739
102,739
-
119,000
119,000
-
2,893
2,893
101,846
85,000
27,818
214,664
-
-
--
134,529
119,000
253,529
There has been no change to the Group's exposure to liquidity risks or the manner in which it manages and measures the risk from the
previous year.
5.6 LIQUIDITY RISK MANAGEMENT (CONT.)
The following table details the Group's liquidity analysis for its derivative fi nancial instruments. The table has been drawn up based on
the undiscounted net cash infl ows/(outfl ows) on the derivative instrument that settle on a net basis and the undiscounted gross infl ows/
(outfl ows) on those derivatives that require gross settlement. When the amount payable or receivable is not fi xed, the amount disclosed
has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the reporting date.
<1 MONTH
$’000
1-3 MONTHS
$’000
3 MONTHS
TO 1 YEAR
$’000
1-5 YEARS
$’000
>5 YEARS
$’000
TOTAL
$’000
2020
Net settled:
Interest rate swaps
2019
Net settled:
Interest rate swaps
(53)
(54)
(160)
(210)
-
(477)
(95)
(55)
(166)
(222)
-
(538)
5.7 FAIR VALUE MEASUREMENTS
The Directors consider that the carrying amounts of fi nancial assets and fi nancial liabilities recognised at amortised cost in the
Consolidated Financial Statements approximate their fair values.
Valuation techniques and assumptions applied for the purpose of measuring fair value
The fair values of fi nancial assets and fi nancial liabilities are determined as follows:
• the fair value of fi nancial assets and fi nancial liabilities with standard terms and conditions and traded on active liquid markets are
determined with reference to quoted market prices;
• the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available, a discounted cash
fl ow analysis is performed using the applicable yield curve for the duration of the instruments for non-optional derivatives and
option pricing models for optional derivatives; and
• the fair value of other fi nancial assets and fi nancial liabilities (excluding derivative instruments) are determined in accordance
with generally accepted pricing models based on discounted cash fl ow analysis using prices from observable current market
transactions.
Fair value measurements recognised in the Consolidated Statement of Financial Position
The following table provides an analysis of fi nancial instruments that are measured subsequent to initial recognition at fair value,
grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
Financial assets
Unquoted equities
Foreign exchange derivatives
Financial liabilities
Foreign exchange derivatives
Interest rate derivatives
2020
$’000
2019
$’000
1,382
12
1,394
1,372
392
1,764
1,503
355
1,858
267
472
739
Level 3
Level 2
Level 2
Level 2
116
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
117
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
06 Our Group
Structure
6.1 PARENT ENTITY INFORMATION
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Reserves
Total equity
Financial performance
Profi t for the year
Other comprehensive income
Total comprehensive income
6.1.1 Commitments for expenditure – parent entity
Catalent transaction1
Not longer than 1 year
IT infrastructure and software
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Capital projects
Not longer than 1 year
Promotional services
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Sponsorship
Not longer than 1 year
Research and development contracts
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
1. Blackmores Limited acquired Catalent Australia on 24 October 2019.
2020
$’000
2019
$’000
102,850
278,813
381,663
174,576
175,291
349,867
87,563
108,756
196,319
105,969
136,791
242,760
146,388
39,315
(359)
185,344
53,039
54,102
(34)
107,107
2,577
(905)
1,672
32,032
(509)
31,523
465
48,000
3,420
2,851
6,271
2,494
6,271
8,765
5,451
19,867
1,020
360
1,380
1,030
730
1,760
20
65
1,487
1,229
-
2,716
2,440
4,270
600
7,310
6.1 PARENT ENTITY INFORMATION (CONT.)
Guarantees entered into by the Parent Entity in relation to the debts of its subsidiaries
The Company has provided Letters of Support in relation to Pat Health Ltd, Blackmores International Pte. Ltd and Blackmores
(Taiwan) Ltd, all wholly-owned subsidiaries of the Group. The Directors have a reasonable expectation that the Company will have
suffi cient fi nancial accommodation to enable payment of the subsidiaries' debts as and when they fall due for a period of at least
12 months from the date of signing the local Financial Statements of the abovementioned entities.
6.2 SUBSIDIARIES
NAME OF ENTITY
Blackmores Nominees Pty Limited
Pat Health Limited
Blackmores Beijing Co., Limited
Blackmores China Co. Limited
Blackmores (Taiwan) Limited
Pure Animal Wellbeing Pty Limited
Blackmores (New Zealand) Limited
Blackmores (Singapore) Pte Limited
Blackmores (Malaysia) Sdn Bhd
Blackmores Holdings Limited
Blackmores Limited
Blackmores Korea Limited
Blackmores International Pte. Limited
PT Kalbe Blackmores Nutrition1
FIT-BioCeuticals Limited
FIT BioCeuticals (NZ) Limited2
PharmaFoods Pty Limited2
FIT-BioCeuticals Limited
FIT-BioCeuticals (HK) Limited
Hall Drug Technologies Pty Limited2
Blackmores SPV Co Pty Limited
New Century Herbals Pty Limited2
Global Therapeutics Pty Limited2
Blackmores Japan Limited
Catalent Australia Holdings Pty Ltd2
Catalent Australia Pty Ltd 2
COUNTRY OF
INCORPORATION
OWNERSHIP INTEREST
2019
2020
%
%
PRINCIPAL ACTIVITY
Australia
100
Hong Kong (China) 100
100
China
100
China
100
Taiwan (China)
100
Australia
100
New Zealand
100
Singapore
100
Malaysia
100
Thailand
100
Thailand
100
Korea
100
Singapore
50
Indonesia
100
Australia
100
New Zealand
Australia
100
United Kingdom 100
Hong Kong (China) 100
100
Australia
100
Australia
100
Australia
100
Australia
100
Japan
100
Australia
100
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
0
0
Management of employee share plans
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Holder of intellectual property for PAW
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Holding company
Marketing of natural health products
Marketing of natural health products
Regional head offi ce
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Holding company
Holding company
Marketing of natural health products
Marketing of natural health products
Marketing of natural health products
Holding company
Manufacturing of natural health products
1 PT Kalbe Blackmores Nutrition is consolidated into the Group at 100%, and the 50% of profi t or loss attributable to non-controlling interests is recognised in equity.
2 These wholly-owned subsidiaries have entered into a deed of cross guarantee with Blackmores Limited pursuant to ASIC class order 98/1418 and are relieved from the
requirements to prepare and lodge an audited fi nancial report.
118
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
B L A C K M O R E S A N N U A L R E P O R T 2 0 2 0
119
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
06 Our Group
Structure
6.2 SUBSIDIARIES (CONT.)
6.2.1 Controlled entities
The Consolidated Statement of Profi t or Loss and Other Comprehensive Income and the Consolidated Statement of Financial Position
of the entities party to the deed of cross guarantee are:
Revenue
Other income
Gain arising from bargain purchase
Revenue and other income
Raw materials and consumables used
Employee benefi ts expenses
Selling and marketing expenses
Depreciation and amortisation expenses
Operating lease rental expenses
Facility outgoings
Professional and consulting expenses
Repairs and maintenance expenses
Freight expenses
Bank charges
Licences and registrations
Impairment of fi nancial assets
Loss on derecognition of receivables
Insurance
Stamp duty
Other expenses
Total expenses
Earnings before interest and tax
Interest revenue
Interest expense
Net interest expense
Profi t before tax
Income tax expense
Profi t after tax from continuing operations
Profi t from discontinued operations
Other comprehensive income
Items that may be reclassifi ed subsequently to profi t or loss:
Net (loss)/gain on hedging instruments entered into for cash fl ow hedges (net of tax)
Other comprehensive expense for the period, net of tax
Total comprehensive income for the period
2020
$’000
20191
$’000
467,747
2,675
6,243
476,665
235,001
121,924
23,348
17,317
-
5,920
11,031
7,753
6,902
907
5,823
1,613
227
5,832
1,755
8,139
453,492
23,173
59
(5,927)
(5,868)
17,305
(5,344)
11,961
493,693
2,740
-
496,433
235,239
105,101
35,240
9,388
4,870
4,388
8,630
5,707
6,962
1,086
3,948
-
-
1,573
112
5,311
427,555
68,878
197
(5,339)
(5,142)
63,736
(18,808)
44,928
2,962
2,818
(905)
(905)
(509)
(509)
14,018
47,237
1. In accordance with AASB 5 non-current assets held for sale and discontinued operations, the comparatives have been restated for discontinued operations that have
arisen during the year. Refer to note 3.6.
6.2 SUBSIDIARIES (CONT.)
6.2.1 Controlled entities (cont.)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Receivables
Inventories
Other assets
Derivative assets
Assets held for sale
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Investment property
Goodwill and intangible assets
Deferred tax assets
Other fi nancial assets
Total non-current assets
Total assets
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Lease liabilities
Provisions
Other liabilities
Liabilities directly associated with assets held for sale
Derivative liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Interest-bearing liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
CAPITAL AND RESERVES
Issued capital
Reserves
Retained earnings
Total equity
2020
$’000
2019
$’000
11,231
86,375
101,192
8,867
12
30,657
238,334
138,108
26,667
-
52,235
10,424
8,247
235,681
474,015
79,398
-
7,954
14,902
391
6,676
918
110,239
85,000
17,614
5,251
1,538
321
109,724
219,963
254,052
-
123,609
101,537
10,796
-
-
235,942
78,708
-
2,160
75,984
8,390
3,959
169,201
405,143
101,124
2,194
-
9,176
478
-
-
112,972
119,000
-
11,374
1,137
35
131,546
244,518
160,625
146,388
3,858
103,806
254,052
53,039
4,240
103,346
160,625
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01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
06 Our Group
Structure
6.3 JOINT OPERATIONS
Bemore Partnership Pty Ltd
There have been no transactions in the partnership during the year ended 30 June 2020.
In 2016, Blackmores set-up a joint operation as a 50:50 partnership with Bega Cheese Limited, Bemore Partnership Pty Ltd to facilitate
the Group's entry into the nutritional foods category.
During the fi nancial year ended 30 June 2020, Bemore Partnership Pty Ltd was deregistered following suspension of the operations of
the partnership in 2018.
Bega Cheese Limited continues to supply Blackmores Group with infant formula and the Blackmores Group continues to market and
sell infant formula through its subsidiaries.
Accounting policy
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
assets, and obligations for liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties
sharing control.
When a Group entity undertakes its activities under joint operations, the Group, as a joint operator, recognises its share of
assets, liabilities, revenue and expenses in its fi nancial statements.
07 Other
7.1 RELATED PARTY AND KEY MANAGEMENT PERSONNEL DISCLOSURES
7.1.1 Equity interests in subsidiaries
Details of the percentage of ordinary shares held in controlled entities are disclosed in note 6.2 to the Consolidated Financial
Statements.
7.1.2 Loan disclosures
There were no loan balances exceeding $100,000 due from Key Management Personnel during or at the end of the fi nancial year
(2019: nil).
7.1.3 Other transactions with Key Management Personnel
Key Management Personnel received dividends on their shareholdings, whether held privately or through related entities or through
the employee share plans in the same manner as all ordinary shareholders.
No interest was paid to or received from Key Management Personnel.
7.1.4 Related party transactions
The immediate parent and ultimate controlling party of the Group is Blackmores Limited (incorporated in Australia). Balances
and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on
consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed
below.
Trading transactions
During the year, Group entities did not enter into any trading transactions with related parties that are not members of the Group
(2019: $nil).
Other related party transactions
During the fi nancial year ended 30 June 2020, the following transactions occurred between the Group and its other related parties:
• Fiftyfi ve5 Pty Ltd, a company of which Brent Wallace is a Director, performed certain consulting services for the Company for which
fees of $62,876 (2019: $255,818) were charged.
.
Balances with related parties
No balances were outstanding at the end of the fi nancial year with related parties that are not members of the Group (2019: nil).
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01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
01
GENERAL
INFORMATION
02
OUR
OPERATIONS
03
OUR
INVESTMENTS
04
OUR
FINANCING
05
OUR FINANCIAL
RISK MANAGEMENT
06
OUR GROUP
STRUCTURE
07
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2020
7.5 EVENTS AFTER THE REPORTING PERIOD
Sale of Wheyless & IsoWhey Brands
On 14 August 2020, Blackmores Group entered into an asset sale agreement to sell the IsoWhey and Wheyless brands. The sale
price of $1.09 million covers the IsoWhey / Wheyless brands, product formulas, customer agreements and digital assets. There are
no people transferring with the sale. An additional payment will be made to cover the value of stock transferring with the sale. The
transaction is expected to complete before 14 September 2020.
Sale of 15 Jubilee Avenue Warriewood, NSW
On 5 August 2020, Blackmores entered a contract for sale of land with an 180 day settlement period for the investment property at
15 Jubilee Avenue Warriewood, NSW 2102 for $5.2 million ex GST. The transaction is expected to complete in February 2021.
Share Purchase Plan
On 8 July 2020, Blackmores completed a Share Purchase Plan which was announced on 27 May 2020. This plan raised $49 million,
a total of 669,812 new fully-paid ordinary shares. The shares were issued at $72.50 a share on 14 July 2020. This completed the
$141 million Equity Raise which consisted of a $92 million institutional placement completed 28 May 2020 and the Share Purchase Plan
of $49 million completed 8 July 2020.
Impact of COVID-19 pandemic
The full impact of the COVID-19 pandemic continues to evolve at the date of this report. Management is actively monitoring the global
situation and its impact on the Group's fi nancial condition, liquidity, operations, suppliers and industry. Given the daily evolution of
the COVID-19 outbreak and the global responses to curb its spread, the Group is not able to accurately estimate the effects of the
COVID-19 outbreak on its results of operations, fi nancial condition or liquidity for the 2020-21 fi nancial year.
Although the Group cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues
it may have a material adverse effect on the Group’s results of future operations, fi nancial position and liquidity for 2020-21.
Final dividend
No fi nal dividend was declared as described in note 4.5.
Other than the foregoing, no other matter or circumstance has arisen since 30 June 2020 that has signifi cantly affected or may signifi cantly
affect the consolidated entity's operations, the result of those operations, or the consolidated entity's state of affairs in future years.
7.6 APPROVAL OF FINANCIAL STATEMENTS
The Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 24 August 2020.
07 Other
7.2 REMUNERATION OF AUDITOR
Auditor of the parent entity
Auditing or reviewing the Financial Statements
Taxation services
Other non-audit services1
Network fi rm of the parent company auditor
Auditing or reviewing the Financial Statements
Taxation services
Other non-audit services1
2020
$
2019
$
455,534
61,000
48,500
565,034
322,170
-
55,511
377,681
320,774
90,801
98,068
509,643
285,255
17,278
18,620
321,153
The auditor of Blackmores Limited is Deloitte Touche Tohmatsu.
1. Other non-audit services is comprised of fees in relation to the provision of consulting services and assurance services.
7.3 CONTINGENT ASSETS
Blackmores Limited determined that from June 2020 it satisfi ed the eligibility criteria for the Federal Government’s JobKeeper payment,
a scheme to provide businesses that suffered a downturn in revenue as a result of COVID-19 with wage support to their employees. The
key eligibility criteria for JobKeeper payment is that a business’ turnover (calculated with reference to GST turnover as defi ned under the
GST Law) is forecasted to decrease by a minimum percentage compared to the comparative period in 2019. Blackmores forecasted that
its June 2020 revenue decreased by more than the requisite percentage compared to June 2019. Based on these forecasts, Blackmores
Limited was eligible for a $2 million JobKeeper payment for June 2020 and this was received on 17 July 2020.
The external sales to third parties for the Blackmores entity did decrease in June 2020 compared with the prior year broadly in line
with the forecasts created in early May by management which forecasted JobKeeper eligibility, in part due to COVID-related out of
stocks on immunity products experienced in that month and also as it made sense to fi nish the year with lower inventory in key trading
partners as COVID-19 is causing higher variability in sales to consumers of products within the portfolio. However due to a technicality
in the JobKeeper legislation, the value of foreign-issued shares from Blackmores capital raising in early June appeared on its business
activity statement as “GST-free Supply” and meant that the revenue decline compared to prior year shown on the business activity
statement was lower than the revenue decline from external trading. Blackmores is reaching out to the relevant authorities to
resolve this unintended consequence of capital raisings and its impact on JobKeeper legislation, but until this is resolved it has
excluded $1.4 million of pre-tax income from JobKeeper related to the Blackmores entity in its 2020 accounts. Included within the
year-end accounts are the BioCeuticals JobKeeper amounts (the business was eligible based on May month actual results due to
COVID-19 related out of stocks of Armaforce), as well as benefi ts from the Singapore based Job Support Scheme (JSS). Total benefi ts
from these two programs included in the year-end accounts are $1 million pre-tax recorded in other income, and these have been
excluded from Underlying NPAT (but are included in Reported NPAT).
Given the uncertainty surrounding the eligibility, Blackmores has not recognised the June 2020 JobKeeper payment in its
Consolidated Statement of Profi t and Loss for the year ended 30 June 2020 or recognised as an asset in the Consolidated Statement of
Financial Position at 30 June 2020.
7.4 CONTINGENT LIABILITIES
Blackmores has been in discussions with a relevant authority in one of the countries in which it trades pertaining to the historical use of
and compliance with export classifi cation codes and related exemptions claimed under free trade agreements between the periods of
2009 to 2014. These discussions have been ongoing for over 4 years. The relevant authority has issued assessments for approximately
$11 million (AUD). In the year ended 30 June 2020, corresponding bank guarantees totalling $11 million (AUD) have been issued by
the Group. Blackmores has initiated an appeal process for these assessments. Blackmores considers that it has correctly interpreted
and complied with all relevant requirements under the free trade agreement and continues to pursue all legal avenues of objection.
It remains unclear when a resolution to this matter will be reached. As at the date of signing, based on current legal advice received
no legal liability exists in relation to the assessments under applicable laws of that jurisdiction. A reliable estimate of potential risks or
probable outfl ows, if any, cannot be determined. Accordingly, applying AASB 137 Provisions, Contingent Liabilities and Contingent
Assets, no liability has been recorded in the accounts at 30 June 2020.
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Additional
Information
Number of holders of equity securities as at 29 July 2020
Ordinary share capital
19,347,715 fully paid ordinary shares are held by 17,829 shareholders.
All issued ordinary shares carry one vote per share, and are entitled to participate in dividends.
There are no options in existence.
There are no restricted securities.
There is no current on-market buy-back.
Distribution of holders of equity securities
SPREAD OF HOLDINGS
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Holdings less than a marketable parcel
Substantial shareholders
FULLY PAID ORDINARY SHAREHOLDERS
Marcus C Blackmore
FIL Limited
NO. OF ORDINARY SHAREHOLDERS
16,109
1,527
103
76
14
17,829
622
NUMBER
PERCENTAGE
3,659,102
1,511,394
18.91%
7.81%
Twenty largest holders of quoted equity securities as at 29 July 2020
FULLY PAID ORDINARY SHAREHOLDERS
NUMBER
PERCENTAGE
Mr M C Blackmore
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Blackmore Foundation Pty Limited
BNP Paribas Nominees Pty Ltd (Agency Lending A/C)
Mrs E M Whellan
BNP Paribas Nominees Pty Ltd (DRP)
Mrs P G Wright
Rathvale Pty Limited
Marcus Blackmore Holdings P/L (Blackmore S/F A/C)
Mr R Shepherd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
Powerwrap Limited (Scheme - IML Trades A/C)
Netwealth Investments Limited (Wrap Services A/C)
Mr John Taylor
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)
Ms Margaret Dittman
Total
3,409,525
2,260,308
2,179,596
924,934
792,806
696,535
207,007
150,347
143,422
121,824
113,088
99,230
88,179
53,786
46,235
39,800
35,465
33,303
32,191
11,427,581
17.62
11.68
11.27
4.78
4.10
3.60
1.07
0.78
0.74
0.63
0.58
0.51
0.46
0.28
0.24
0.21
0.18
0.17
0.17
59.07
Company
Information
Company Secretary
The Company Secretaries are Cecile Cooper and
Nimalan Rutnam.
Principal Place of Business
20 Jubilee Avenue
Warriewood NSW 2102
Telephone +61 2 9910 5000
Registered Office
20 Jubilee Avenue
Warriewood NSW 2102
Telephone +61 2 9910 5000
Share Registry
Computershare Investor Services Pty Limited
Level 3,
60 Carrington Street
Sydney NSW 2000
(GPO Box 7045 Sydney NSW 1115)
Telephone +61 2 8234 5000
Facsimile +61 2 8234 5050
Annual Report Mailing
Shareholders who do not want the Annual Report or who are
receiving more than one copy should advise the share registrar
in writing. These shareholders will continue to receive all other
shareholder information.
The Annual Report is available on our website at blackmores.com.
au (go to ‘Investors’, then click on ‘Annual Reports’).
To Consolidate Shareholdings
Shareholders who want to consolidate their separate
shareholdings into one account should advise the share registrar
in writing.
Investor Information
Securities analysts and institutional investors seeking
information about the Company should contact Michelle Gough
Group Financial Controller and Investor Relations Manager on
+61 2 9910 5308.
COMPANY INFORMATION
Board of Directors
Securities Exchange Listing
Blackmores Limited’s ordinary shares are quoted by the Australian
Securities Exchange Limited, listing code BKL.
Directors who are Executives of the Group:
Marcus Blackmore
Alastair Symington
Direct Payment to Shareholders’ Bank Accounts
Dividends may be paid directly to bank, building society or credit
union accounts in Australia. These payments are electronically
credited on the dividend date and confirmed by mail. The
Company encourages you to participate in this arrangement, so
please contact our share registry.
Directors who are not Executives of the Group:
David Ansell
John Armstrong
Christine Holman
Brent Wallace (Chairman of Directors)
Change of Address
Shareholders who have changed address should advise our
share registrar in writing.
Tax File Number
There may be benefit to shareholders in lodging their tax file
number with the share registry.
Shareholder Discount Plan
Shareholders can buy products for personal use at 30% off the
recommended retail price. All shareholders have been given
details of the plan, but please contact the Company Secretary on
+61 2 9910 5137 if you would like more information.
Corporate Governance Principles
The Corporate Governance Principles adopted by the Board are
available on our website at blackmores.com.au (go to ‘Investors’,
then click on ‘Corporate Governance’) or contact the Company
Secretary.
Auditor
Deloitte Touche Tohmatsu
Solicitor
David Lemon
Blackmores Online
Blackmores has a popular website containing information on a
more natural approach to health and the Company in general.
The address is blackmores.com.au.
The Blackmores Investor App is downloadable by texting the
word ‘Blackmores’ to 0400 813 813 (Aust and NZ).
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The FSC® label on this Annual Report
ensures responsible use of the
world’s forest resources.
The paper is manufactured from
100% post-consumer recycled
paper in a process chlorine free
environment under the ISO 14001
environmental management system.
NOTES
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Design: xandercreative.com.au
Blackmores Limited
Australia’s Leading Natural Health Company
ACN 009 713 437
20 Jubilee Avenue
Warriewood NSW 2102 Australia
Phone: +61 2 9910 5000
Fax: +61 2 9910 5555
blackmores.com.au