18 August 2022
ASX Market Announcements Office
Australian Securities Exchange
Exchange Centre
20 Bridge Street,
Sydney NSW 2000
2022 ANNUAL REPORT
Attached for release is the Blackmores Limited Annual Report for the year ended 30 June
2022.
Further information on Blackmores can be found at www.blackmores.com.au.
This announcement was authorised for release by the Board of Directors.
Helen Mediati
Group General Counsel & Company Secretary
Blackmores Limited
ANNUAL REPORT 2022
‘Sister’ Esther Mercie Whellan 1920-2022
Born in Rockhampton in 1920, a young Mercie Whellan was inspired to study nursing after watching
her mother’s battle with arthritis. Mercie first met Blackmores' founder Maurice Blackmore, the father of
Naturopathy in Australia in 1946, when he treated her mother with natural remedies. With her mother’s
health having improved, Mercie began working for Maurice in Brisbane a year later, marking the
beginning of her Blackmores journey.
Mercie was known as the welcoming and reassuring front-office face in Maurice Blackmore’s Brisbane
clinic. Dressed in her nursing sister’s uniform, Mercie met with patients to identify symptoms and support
Maurice to determine the best treatment. Mercie travelled with Maurice throughout Queensland to
spread the word to country practitioners on the benefits of naturopathy.
When Maurice established a national naturopathic association, Mercie was appointed Treasurer. When
he realised his dream of opening the Australian Naturopathic College in the 1950s, Mercie became a star
pupil. Now a fully-fledged nurse and naturopath, Mercie was appointed a Company Director in 1962 and
as a trailblazer for women eventually became the Chairman of the Blackmores Board.
Mercie subsequently moved to Sydney and took on the role of General Manager, overseeing
day-to-day operations of the growing company. Affectionately known as Sister Whellan, Mercie served
as General Manager of Blackmores until she retired from day-to-day operations in 1982. More than a
manager, Mercie was a company trouble-shooter, thanks to her unparalleled knowledge of both the
company and its products.
Continuing to serve as a Company Director until the age of 72, Mercie retired in 1994, and kept in
touch with friends and employees at Blackmores throughout her retirement.
Merice is etched in our history for her professionalism, innovative spirit, loyalty and humanity and will
be fondly remembered by all Blackmores people, past and present.
The Board, Management Team and employees of Blackmores Group.
memory
IN LOVING
Contents
Year in Review
12
Chair’s Message
14
CEO’s Message
16
Growth Strategy
18
Ignite for 2024
20
Growing our Brands
26
Research and Education
30
Company Leadership
34
Board of Directors
36
Executive Team
38
Operating & Financial Review
40
Group and Divisional Financial Results
42
Operating Review
44
Corporate Governance
46
Group Risks
48
Health and Safety
54
Citizenship & Sustainability
56
Our People
58
Sustainability
60
Caring for our Communities
64
Financial Report
66
Directors' Report
68
Remuneration Report
72
Financial Statements
98
01
02
03
04
05
06
07
08
Blackmores Limited Annual General Meeting
Blackmores Limited Annual General Meeting will be held on
Thursday 20 October 2022 at 2pm AEDT at Blackmores Campus,
20 Jubilee Avenue, Warriewood, NSW 2102
ACN 009 713 437
ASX: BKL
20 Jubilee Avenue
Warriewood NSW 2102
Australia
P: +61 2 9910 5000
IR@blackmores.com.au
blackmores.com.au
SBN/ISSN
© 2022
Acknowledgement of Country
Blackmores acknowledges, and pays respect to, the past, present and future Traditional Owners of the
lands throughout Australia and extends this acknowledgement and respect to First Nations people in
all countries in which we operate. In Australia, we honour the continuing culture of the Aboriginal and
Torres Strait Islander people who contribute to the strength and capacity of our company, and their
custodianship of the natural resources on which we rely. As a company, we undertake to manage the
lands that we work on, and the resources that we rely on, in all respects.
1
driven
PURPOSE-LED,
PERFORMANCE
FOR THE PAST
90 YEARS
Blackmores was founded to give
people the choice to take control of
their health and wellbeing through the
power of nature. Our purpose remains
as it did in 1932, when visionary
naturopath Maurice Blackmore
combined nature and science to
deliver quality health solutions.
2
BLACKMORES LIMITED ANNUAL REPORT 2022
Our purpose
To give people a
choice to make living
well each day a natural
way of life.
Our mission
Combine our
knowledge of nature
and science to deliver
quality solutions to
bring wellness to
people and their pets
everywhere,
every day.
Our vision
To connect every
person on earth to the
healing power
of nature.
Our values
Known as our
PIRLS, they are
both behavioural
and aspirational,
underpinning our work
practices and decisions
and supported by
our governance
framework.
• Passion for
Natural Health
• Integrity
• Respect
• Leadership
• Social Responsibility
About
Blackmores Group
employs over 1,200 people.
Our brands
Our research and
education centre
3
Sydney, Australia –
global headquarters,
production and
distribution centres
Braeside, Victoria –
manufacturing facility
Shanghai, China – China head office
and Global Innovation Centre
200+
office-based
employees and
700+ retail
product advisors1
across Asia
820+ employees
across ANZ
Singapore – International regional office
Indonesia – joint venture
partner PT Kalbe Farma
India from Sep 2021
footprint
Our global
access to 3 billion
consumers
across Asia-Pacific
1 This includes 500+ retail product advisors managed
by third parties and 180+ retail product advisors who
are Blackmores’ employees.
2. Our workforce includes all permanent full-time and
part-time employees inclusive of the Executive team
and 180 retail product advisors who are Blackmores’
employees. Does not include retail product advisors,
managed by third parties.
4
BLACKMORES LIMITED ANNUAL REPORT 2022
1,200+
13
markets
reached
33K
global points
of distribution
3
Australia based facilities –
manufacturing, packing
and distribution
+
40
years proudly
in Asia
+
employees
2
5
Blackmores
experiences a
decade of change
as Marcus drives
expansion and
advocacy
1983 establishes the
Maurice Blackmore
Research Foundation
1985 Blackmores
Laboratories Pty
Limited floats on the
ASX
1985 Blackmores
Naturopathic Advisory
Service launched
1988 sponsors Kay
Cottee’s non–stop
unassisted solo
voyage around the
world sailing the
Blackmores First Lady
1989 the newly
named Blackmores
Limited launches
in Thailand
Maurice
Blackmore starts
his naturopathic
education and
business journey
1932 opens his first
health food store in
Brisbane and explores
herbal remedies
which he referred to
as ‘Celloid’ mineral
therapy
1934 establishes first
naturopathic training
college in Australia
Maurice continues
to lead development
of training and tools
1945 opens part–time
country clinics to train
practitioners
1947 publishes
Queensland’s first
health magazine,
The Herald of Health
Maurice expands
his education and
industry footprint
across the nation
1952 launches
The Naturopathic
Chronicle, Australia’s
first health newspaper
1954 establishes
The Australian
National Naturopathic
Association
1955 Maurice
Blackmore had almost
8,000 testimonials for
naturopathic cures,
with many published
in Writing a Wrong
The Blackmores
business continues
to grow
1962 The National
Association of
Naturopaths,
Osteopaths and
Chiropractors
(NANOC) was
formed with Maurice
Blackmore as President
1966 Maurice
Blackmore rehabilitates
run–down animals
with Celloid mineral
nutrients and turns the
horses into champions
Marcus Blackmore
becomes Managing
Director following
his father’s
retirement
1976 expansion
to Singapore and
Malaysia and launch
of Nature and Health
Journal
1978 Australian first
launch of ‘cruelty–free’
skin and hair care
products
1979 first company to
launch high potency
sustained release
vitamins
30
50
70
40
60
80
19
19
19
19
19
19
The Blackmores story
Maurice Blackmore’s belief in the health–giving properties
of herbs and minerals led him to develop a whole system of
healthcare based on naturopathic principles. Maurice Blackmore’s
son, Marcus, took the reins of the business in 1975 and furthered
the vision established by his father. Today, Blackmores and its
people look to its future paying homage to 90 years of leadership
in natural health.
6
BLACKMORES LIMITED ANNUAL REPORT 2022
Expansion
continues into
new markets,
and environment
policies come to
the forefront
1991 launches
Living Naturally
quarterly magazine
1991 Marcus
Blackmore
launches Freedom
for Health
campaign to
protect access to
complementary
medicines
1995 Blackmores
forms an
Environment
Committee
to ensure the
Company stays
at the forefront
of environmental
issues
1996 launches
website with
product and
ingredient
information
Decades of
commitment
pay off through
consumer
trust and
award–winning
performance
2000 recognised
as Australia’s Most
Trusted Vitamin
and Supplement
Brand
2001 website
recognised in
top 10 Australian
health sites
2004 acquires
naming rights
for the Sydney
Marathon Festival.
The Blackmores
Sydney Running
Festival raises
millions for charity
each year
2008 opens
Blackmores
Warriewood
Campus and
Production
Headquarters
Blackmores
launches new
services and
establishes itself
as a research and
development
leader
2012 Blackmores
Institute
established as a
centre of research
excellence
2013 honoured by
the Heart Research
Institute for 20–year
support and its role
in raising $7m for
the Heart Research
Institute
2015 signs a
joint venture with
Kalbe Farma, to
facilitate entry into
Indonesia
2017 Blackmores
and Blackmores
Foundation gift
a combined
$10m to advance
research and
education at the
National Institute
of Complementary
Medicine (NICM)
at Western Sydney
University
2018 opens
Bungarribee
Distribution Centre
in Western Sydney
2019 Blackmores
Institute publishes
Sustainable
Nutrition
Blackmores
proves resilient
and continues
growth
2020 commitment
to net zero by 2030
made as part of
our sustainability
strategy
2020 acquisition
of Braeside
manufacturing
completed
(formerly Catalent)
2021 Divestment
of Global
Therapeutics
(Fusion and
Oriental Botanicals)
2021 launches
in India
2021 (B) More
personalised
online shopping
is launched
2021 Good
Health Changes
Everything
Campaign
launched
2022 certified by
the Workplace
Gender Equality
Agency (WGEA)
2022 robotic
automation
installed in
Braeside
manufacturing
2022 commenced
rollout of Halal
certified range of
products
2022 first ever TV
campaign for PAW
by Blackmores
launches
2022
manufactured over
2.3 billion doses in
our Braeside plant
2022 celebrates
90 years
90
10
00
19
20
20
2022
2020
7
$649.5m
Group Revenue
12.8%
53.4%
Gross Margin
110bps
$56.6m
Underlying EBIT
19.0%
$31.1m
Underlying NPAT
22.6%
95 cents
Full year dividend fully franked per share
Group Financial
FY
22
snapshot
1
2
1. 12.9% in constant currency.
2. Full year dividend includes final dividend of 32 cents
per share (fully franked) combined with interim
dividend of 63 cents per share (fully franked).
3. 31.2% in constant currency.
8
BLACKMORES LIMITED ANNUAL REPORT 2022
$145.6m
China Revenue
10.6%
$215.7m
International Revenue
31.8%
$288.2m
ANZ Revenue
2.7%
17.2%
29%
Group sales from e-commerce
$82.2m
Group net cash
$17.0m
Annualised gross savings through Leading Value Position
(LVP) and OPEX
3
9
Company
FY
22highlights
Blackmores #1
in market leadership in Australia1
and Thailand2
2.3 billion
tablets and capsules produced at
Braeside in FY22
42.8 million
units bottled at Warriewood
BioCeuticals #1
leading practitioner brand in pharmacy
in Australia3
5,500
average orders processed per week at
our Bungarribee Distribution Centre
Consumer
and Brand
Operations
+520 million
consumers reached4
10
BLACKMORES LIMITED ANNUAL REPORT 2022
204,000
unique educational touchpoints
#2
in Advantage Survey for
pharmacy retail education
40+
research projects and clinical trials
4.1%
Group carbon emissions
reduction
Nature Positive
Developed a nature risk assessment
methodology aligned to global best
practice
64%
waste diverted from landfill, up from
48% in previous year
Research and
Education
Sustainability
A year of action, progress,
and connecting people to
the healing power of nature.
1. Nielsen AU Pharmacy + Grocery FYTD 2/7/22 Domestic (Retail and Practitioner).
2. IQVIA (Thailand), March 2022.
3. Nielsen AU Pharmacy + Grocery FYTD 2/7/22 Practitioner sales only.
4. Kantar Research, Awareness and Multimarket Tracker, Blackmores, June 2022.
11
Year in
Review
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
01
12
BLACKMORES LIMITED ANNUAL REPORT 2022
STRONG
FOUNDATIONS
FOR SUSTAINABLE,
PROFITABLE
growth
13
Our company celebrates its 90th anniversary this year. From its
early origins, founded by Maurice Blackmore in 1932 in Brisbane,
Queensland, it is incredible to reflect on the journey which has
created and transformed this business into an iconic Australian
company with unrivalled heritage and expertise in natural health,
operating in thirteen markets. We are immensely proud of our
significant milestone as we reflect on what we have achieved and
as we continue to further advance the opportunities and long-
term potential of this great Australian company.
We continue to live and operate in
uncertain times, with the COVID-19
pandemic continuing to test the
broader economic outlook as well
as the way we consider the value of
health. This past year has provided
its fair share of challenges. Earlier
this year, we faced devastating
floods in northern NSW and south-
east Queensland, where the local
communities continue to rebuild
their lives. The protracted conflict in
Ukraine is having a terrible impact
on millions of people and causing
uncertainty in world equity markets,
a result of uncertainty linked to
rising inflation. Throughout these
challenges, the Blackmores team
has supported and cared for our
stakeholders and each other, and
that makes me immensely proud.
The Board acknowledges and thanks
the extraordinary commitment of
our people, our customers and
the communities we serve, who
have shown great resilience and
adaptability over the past
twelve months.
Despite these challenges, this
past year saw us further advance key
initiatives from our growth strategy
to deliver strong results in FY22. We
finished the year with Revenue and
net profit after tax ahead of FY21.
These consistent results are due to a
relentless focus on delivering against
our key strategic priorities. As we
manage risk, it is even clearer that
driving growth in targeted segments
and markets, continuing to simplify our
business, improving our supply chain
and focussing on key investments in
strategic priorities will drive the long-
term health of the business.
Building resilience through
diverse experiences and
perspectives
Over the past twelve months there
has been a great amount of positive
change at Blackmores.
At last year’s AGM, shareholders
appointed all current Directors which
has added significantly to the depth
and breadth of skills and experience to
the Board.
Throughout the past year, the
Directors have provided great diversity
of perspectives, strong focus, guidance
and direction to our management
team who have benefited from the
shared experience to support them
in their delivery of Blackmores’
transformation and strategic goals.
In September 2021, we announced
the appointments of Erica Mann and
Stephen Roche to the Blackmores’
Board. Erica brings significant
expertise and understanding of
complementary medicines. She has
deep global perspective in over-
the-counter healthcare products
and has worked in leadership roles
in organisations at the forefront of
health technology trends and has
navigated highly regulated, complex,
multi-channel and multi-product
environments globally. Stephen has
extensive ASX-listed experience, as
both a Director and as a CEO. He
brings over 20 years of expertise in
pharmacy, manufacturing operations
and complex supply chains to the
Blackmores’ Board. Both Erica and
Stephen have already made a valuable
contribution to the Board since their
appointments.
Chair’s Message
14
BLACKMORES LIMITED ANNUAL REPORT 2022
I would like to take the opportunity
to thank David Ansell who resigned
from the Blackmores’ Board. David
has served as a Director since 22
October 2013 and has served on all
Committees, most recently as Chair
of the People and Remuneration
Committee. Over his 9-year tenure,
David has made a significant
contribution to Blackmores which
included expansion into Asia, joint
venture with Kalbe Farma in Indonesia
and acquisition of the Braeside
manufacturing facility. We wish David
all the best for the future.
Deepening our
accountability for a world
where people and nature
thrive together
This year Blackmores signed up
to its first sustainability-linked loan
deepening our commitment to
achieve emissions reduction targets
(including scope one, scope two and
measured scope three emissions),
as well as meeting milestones to
progress an ethical supply chain.
In 2020 Blackmores committed to
reaching net zero emissions by 2030
and take steps to decarbonise our
operations.
We have made strong progress on
these commitments in the past year
reducing total emissions by a further
4.1% and improving waste diversion
from landfill from 48% to 64% in the
period. Equally important is our focus
on an ethical supply chain, where we
have introduced measures to address
the risk of exploitation, including and
acting on findings from independent
third-party audits. I would like to
acknowledge Alastair’s leadership and
commitment to the Company’s ESG
efforts, which include his appointment
as a member of the Climate Leaders
Coalition in 2022, alongside more
than 40 other Australian CEOs. Our
progress on these matters will be
detailed in the 2022 Sustainability
Report, which will be published in
September.
Pleasingly, Blackmores was named
an Employer of Choice for Gender
Equality (EOCGE) by the Australian
Government’s Workplace Gender
Equality Agency. The EOCGE citation
for Blackmores recognises the work
undertaken to achieve pay parity.
Female representation in leadership
comprises 67% of women on our
Board, 47% of women in senior
executive positions and 54% of
women in senior management
positions. We continue to support
all staff through our gender-equal
parental leave and domestic violence
policies and flexible working ‘FlexFit’
philosophy which encourages a family
friendly and flexible workplace.
Dividend
Our improved financial results for
FY22, together with Blackmores’
continued strong capital position,
enabled the Board to declare a fully
franked final dividend of 32 cents per
share bringing the full year dividend
to 95 cents per share fully franked,
up 33.8% on the prior year. The
Company’s Dividend Reinvestment
Plan (DRP) remains active.
The current discount applying
to shares issued under the plan
is 2.5%. The Board continues to
regularly review capital management
alternatives and capital management
options are considered against our
other investment initiatives including
working capital requirements for our
fast growth markets and multi-year
investments required in technology
and digital.
Confidence in the future
I continue to have great confidence
in our Company’s future, and
our strong brands and products
which enable our consumers to
take control of their health and
wellbeing.
In 2022, we achieved strong
results through a volatile
environment and remain focused
on supporting management
as they oversee the Company’s
transformation program focused
on delivery of the Ignite for Growth
FY24 objectives.
On behalf of the Board, I extend
my thanks to all our people who
have built the Company and made
it what it is today, and to our loyal
customers and suppliers and
shareholders for your continued
support. We are excited about
what can be achieved in the
coming year and look forward to
the possibilities ahead.
In good health always,
Anne Templeman-Jones
Chair, Blackmores Limited
Sydney, Australia
18 August 2022
success
15
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
We made great progress in our transformation in FY22 with
all three brands and all markets in growth for the first time in
four years. These results were achieved while continuing to
face volatility and disruption caused by floods in Australia,
lockdowns in China and rising inflationary pressure.
Our strategy to simplify operations
while targeting our investments in
growth segments and markets has
delivered improved performance
in FY22. Momentum continues to
build behind product innovation
and increased levels of advertising,
combined with expansion of
distribution across Asia.
Financial year 2022 results
I am pleased to report that for
the period ending June 30, 2022,
Blackmores Group revenue was up
12.8% to $649.5m and underlying
EBIT up 19% to $56.6m. We continue
to drive important programs linked
to portfolio simplification, continuous
improvement in our make and
bottling plants, as well as increased
productivity enabled by investments
in technology, digital and process
reengineering.
In ANZ revenue was up 2.7%
(excluding the impact of minor sales
from contract manufactured products
from Braeside, ANZ revenue increased
3.4% compared to the prior year)
vs prior corresponding period (pcp)
to $288.2m with Underlying EBIT up
7.0% vs pcp to $43.1m. The results
signal a return to growth equal to
or ahead of the market, despite
disruptions caused by lockdowns in
the first half, flooding in the second
half of the year and ongoing global
supply chain issues.
In our International segment,
revenue was up 31.8% to $215.7m
and Underlying EBIT was up 43.9% to
$29.8m. The strong result was driven
by focused operational execution
supported by new product launches,
distribution expansion and sustained
on-shelf availability. All this while
remaining agile and focused on
customer service which translated into
share gains in both COVID-19 surge
and non-surge periods.
In FY22 China revenue was up
10.6% to $145.6m and Underlying
EBIT was up 11.2% to $16.0m. This
result was despite a very difficult
second half, navigating extensive
lockdowns across China and closure of
many ports and distribution centres. In
the important 618 e-commerce sales
event in June 2022, Blackmores once
again secured a spot in the top 4 VDS
health brands on the China platforms
and was able to acquire more
customers than the same event the
year before.
The Blackmores Group as of
30 June 2022 generated strong
operating cashflow, before interest
and tax of $55.0m which was lower
than the prior year. We made the
conscious decision to increase our
finished goods inventory to improve
customer service and limit out-of-
stocks and to support our growth
in international markets as they
experienced surges brought about by
the COVID-19 pandemic. Blackmores
Group finished the year with a
consolidated net cash position of
$82.2m compared to $70.1m net cash
as at 30 June 2021.
CEO’s Message
16
BLACKMORES LIMITED ANNUAL REPORT 2022
the resilience of our people and the
culture we continue to advance, and
our focus on simplifying the business
as we digitise our operations and
better serve the communities in
which we operate.
Personally, it is a privilege to be
entrusted with leading this great
Australian health company and I am
excited about the leadership role
that Blackmores continues to play in
an ever-changing health landscape.
Alastair Symington
Group CEO and Managing Director,
Blackmores Limited
progress
Investing for efficiencies
and growth
The Group’s capital expenditure
program in FY22 focused on efficiency
and production capabilities at our
Braeside factory,cyber security, cloud-
based planning tools to ensure we
remain agile and responsive both in
terms of demand and supply, plus
work health and safety initiatives.
Capital expenditure (CAPEX)
along with other investing activities,
was $10.7m in FY22 compared
to $18.4m for the prior year. The
reduction is primarily due to $9.3m of
cloud computing expenditure being
accounted for within OPEX.
Purpose-led and
performance driven
The importance of having a choice
to make living well a natural part of
life, alongside an even greater need
for equality and diversity is no more
important than it is right now. Our
employees tell us that connection
to Blackmores’ purpose and values
drives a deeper desire for their
performance. Above all, this year
has strengthened our resolve to
being a global leader in sustainable
business practice. The past 12 months
delivered the highest revenue growth
and margins since our turnaround
commenced in 2020, despite the
ongoing significant market disruption
that has impacted our industry and
our peers. This demonstrates that the
purpose-led, future-fit business model
that we are building delivers profitable
and sustainable growth.
Healthy Planet, Healthy People
is our sustainability program which
recognises that we have both an
impact and a dependency on nature.
In FY22, we set sustainability linked
loans in place for 50% of our banking
facilities. Our key sustainability targets
are linked to the interest we pay on
these loans, which holds us to account,
provides a good incentive to deliver
the targets and is also tied to a real
financial outcome. We already have
50% of our Warriewood Campus
using renewable electricity and we
have plans to transition all Australian
facilities to 100% renewable electricity
in the next 2 years.
The resilience of our
customers, our suppliers
and our people
I want to recognise our customers and
employees who have all remained
resilient through rolling lockdowns
which have occurred across all the
cities and provinces that we serve
across the Indo-Pacific. I also want
to thank our shareholders for their
ongoing support and confidence in
our team.
We are all excited about what can
be achieved in FY23 as we continue
to build on the foundations that have
been put into place over the past 2
years. Our success is predicated on the
strength of our customer relationships,
17
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Growth
Strategy
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
02
18
BLACKMORES LIMITED ANNUAL REPORT 2022
ON 3 CORE BRANDS,
KEY MARKETS, AND
5 CONSUMER GROWTH
PILLARS
focused
19
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
growth
Ignite for
strategy
Our goals
Our winning
ambition
To connect 1 billion people
to the healing power of
nature by 2025
Our strengths
Consumers
Most loved
health brand
01
Growth
Consumption
> market
02
Value
Shareholder return
> market
05
Our People
#1 industry
employer
03
Health Leadership
Ranked #1 thought leader
in Natural Health
06
Sustainability
Net zero emission
by 2030
04
WORLD-CLASS
PEOPLE AND
CULTURE
Innovation
Winning in
Store
Winning
Partnerships
Consumer
Understanding
Education
and Thought
Leadership
Regulatory
Quality and
Safety
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BLACKMORES LIMITED ANNUAL REPORT 2022
Our 3 core
brands
Blackmores
BioCeuticals
PAW
Our focus
markets
Australia
China
South East Asia
India
5 consumer
growth pillars
Move
Modern Parenting
Everyday Mental Wellbeing
CORE
Pet Health
Ivan Dretvic, Head of IT Architecture,
with his family.
21
1 YEAR IN REVIEW
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FINANCIAL REVIEW
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SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
a
Drive growth in targeted
segments and markets
Accelerated
growth in
our targeted
segments and
market
01
Strengthen our
supply chain
Continued
investment in
efficiency and
automation
03
Simplify our operations
and reduce cost
Strong operational
improvements
through
COVID-19
volatility
02
Ignite the Australian Vitamin
and Dietary Supplements
(VDS) opportunity
Invested in ANZ
to position for
market recovery
04
Transform digital
commerce and operations
Continued
disciplined
investment in
digital capability
05
FY22 strategic highlights
Delivering against our strategic pillars and positioning
Blackmores for sustainable future growth.
F Y 2 2 S U M M A R Y
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BLACKMORES LIMITED ANNUAL REPORT 2022
achievements
1 YEAR IN REVIEW
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6 FINANCIAL REPORT
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8 FINANCIAL STATEMENTS
• Halal certified products phase 1 rollout in Indonesia and
Malaysia
• India market launch in September 2021
• Strong revenue growth in key markets of Indonesia
and Thailand
• Strong performance in China Double 11 and 618 shopping
festivals and strengthened brand awareness
• Delivered our biggest product innovation year in recent history
with more than $50m in net sales
• Braeside manufacturing increased output and
efficiency
• Improved packing capacity and efficiency at
Warriewood
• Invested in manufacturing automation delivering
efficiency and safety improvements
• Completed a sales force and marketing redesign
• Delivered procurement savings and COGS reduction
• Portfolio optimisation plan delivered
• Commenced enterprise wide process redesign
• Renewed focus on advertising and promotion
(A&P) with the launch of 3 new brand campaigns
(Blackmores, BioCeuticals, PAW)
• Improvement in Blackmores brand health measures
• Customer collaboration and execution of Joint
Business Partnerships (JBP)
• Improved Integrated Business Planning (IBP) with cloud
-based planning system – allowing us to serve our
customers better today and in the future
• Completed rollout of Oracle cloud-based Enterprise
Resource Planning (ERP) in Asia
• Expanded e-commerce presence on key platforms
Delivered
annualised
gross
savings of
$17m
in FY22
F Y 2 2 S T R A T E G I C A C H I E V E M E N T S
23
Drive growth in targeted
segments and markets
01
Strengthen our
supply chain
03
Simplify our operations
and reduce cost
02
Ignite the Australian Vitamin
and Dietary Supplements
(VDS) opportunity
04
Transform digital
commerce and operations
05
Our strategic goals
Blackmores’ transformation aims to
deliver key strategic goals by 2025.
To reach 1 billion
people by 2025.
International + China to
contribute >60% sales
and fully operational in
India and Vietnam.
F Y 2 4 S T R A T E G I C G O A L S
Ongoing portfolio
optimisation towards
more productive SKUs.
$55m in gross
annualised OPEX and
COGS savings by FY23.
Futureproof supply
chain, automation and
continuous improvement
at Braeside plant.
Deliver market-leading
customer and
practitioner
experience.
Omni-channel
excellence with
e-commerce >40% of
total group sales.
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BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
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8 FINANCIAL STATEMENTS
goals
Micah Dizon,
Production Team Leader,
Warriewood Operations
25
Cheryl Griffin,
Brand Experience Manager,
ANZ Category team
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BLACKMORES LIMITED ANNUAL REPORT 2022
Growing our Brands
Our Innovation Journey
Blackmores has a clear
innovation strategy that is
fuelled by consumer and
practitioner insights and
focused on our 5 consumer
growth pillars in targeted
segments.
Robust consumer-centric research and
planning has led to the development
of a 3-year innovation pipeline for
Blackmores Group. The pipeline will
help drive sustainable growth by
bringing new products to our markets.
The first year of this pipeline was
successfully launched in FY22 with
the combined expertise of Product
Development, Regulatory, Quality,
Manufacturing, Marketing and Sales.
This execution has delivered over
$50m in sales across our 13 markets.
International
In FY22, our International business
delivered a record number of new
and existing product launches,
contributing to strong net sales
growth.
As part of our Cultural
Customisation strategy we launched
Blackmores Multivitamins + Vitality
featuring hero ingredient Black Seed
Oil. With Black Seed Oil a highly
regarded ingredient in households
Consumer Focused Product Innovation
We have connected with over
25,000 consumers and healthcare
professionals, and over 4,000 pet
owners for insights to inform our
innovation strategy.
across Asia, we delivered the product
into Singapore, Taiwan, Korea and
launched an Ultra Refined Blackseed
Oil into Singapore and India.
In Thailand we launched our first
in market broad-spectrum probiotic
with five strains. Designed for local
conditions the product is shelf stable
and does not require refrigeration.
We continued to use consumer
insights to guide our pack choices,
including naming conventions and
pack sizes, ensuring we have the right
products, in the right channel, at the
right price.
China
Our Global Innovation centre in
Shanghai prioritised Multi-Action
Joint Ease to meet the consumer
need for relieving joint pain during
and after exercise. The product has
had a very positive consumer uptake,
overachieving on targets and paving
the way for a broader rollout across
Chinese retailers.
Australia
Innovation in this key market was
largely focused on immunity products
in response to the second year of the
pandemic.
Blackmores Bio C® + Cold Fighter
was developed to give consumers a
boost of vitamin C and Andrographis
to relieve 6 common cold symptoms.
Blackmores Daily Immune
Action is a convenient one-a-day
tablet formulated with a daily blend
of vitamin C, vitamin D, Zinc and
Elderberry for year-round immune
health support.
BioCeuticals expanded our
ArmaForce® range to include
ArmaForce® Recover and
ArmaForce® Daily Protect.
ArmaForce® grew +23.7% across the
range and the BioCeuticals brand
performed strongly.
Pet Health
Our pet health brand PAW
launched Liver Hepato, an
antioxidant liver therapy for cats
and dogs, in May 2022 as part
of their clinical range available in
veterinary clinics. This year PAW also
underwent a label refresh bringing
a new and updated look and feel to
the brand, delivering an improved
consumer shopping experience both
instore and online.
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27
Growing our Brands
Blackmores Group increased investments in our
3 power brands with highly engaging and effective
new campaigns and strong media support for
Blackmores, PAW and BioCeuticals.
Bold communication platforms and engaging
creatives, executed consistently across channels, have
maximised our consumer reach to unlock the potential
of our brands. A step change in our approach to digital
has supercharged the impact of these campaigns by
delighting our consumers and practitioners across
every touchpoint.
PAW ‘More Than Human’
The PAW campaign was based on insights that we treat
our pets like family, yet we don’t understand their health
needs in the same way. The campaign educates pet
parents about the differences between pets and people,
and showcases PAW as the leading provider of natural,
vet-approved healthcare that can both prolong the
onset of health conditions or manage them as they arise.
The campaign launched with a focus on the category's
behaviour segment – reaching 5.5 million pet owners in
its first 3 months of airing.
Capability and Development
Blackmores invested in the development of our
marketing capability with the second full year of
Vitality Brand Masters – a global program designed to
develop the skills, tools and capabilities of a world-class
marketing organisation.
We introduced a Competency Framework to guide
the development of critical skills, based on external
benchmarking tailored to our business.
We are proud to be the only company in the
Healthcare and Pharmaceutical industry, to have Vitality
Brand Masters recognised by the Australian Marketing
Institute (AMI). Through the AMI endorsement,
Blackmores marketers receive points towards their
Certified Practising Marketer (CPM) accreditation.
Blackmores ‘Good Health Changes
Everything’
This campaign is based on the universal insight that
good health is at the heart of everything we value.
It captures the transformative power of good health and
wellbeing – physically, mentally and emotionally.
Every month from February 2022, we reached
8 million+ Australians aged over 18 with this powerful
message. Our campaign for BioC® 1000 builds off
this base campaign with an immunity focused creative
communication idea of protecting your unmissable
moments.
BioCeuticals ‘Arma Yourself’
BioCeuticals set out to inspire consumers to strengthen
their immune health with its first-ever online and offline
shopper campaign for ArmaForce® ‘Arma Yourself’
connects our consumers and practitioners with the range
to prepare for winter with confidence and stay on their feet
if a cold or flu hits. The campaign has cemented
ArmaForce’s position as the number 1 practitioner grade
immune support supplement in Pharmacy1 and has
reached over 1 million Australians since the May 2022
campaign launch.
Inspiring Brand
Communication
1. IQVIA Total VMS Pharmacy Scan Sales MAT 23/07/22.
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BLACKMORES LIMITED ANNUAL REPORT 2022
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BLACKMORES LIMITED ANNUAL REPORT 2022
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Protect your
unmissable
moments
29
Research and Education
The Blackmores Institute:
Sharing knowledge, changing lives
The Blackmores Institute
is the education, science
communications and
research arm of Blackmores
Limited, driven by our vision
to be the leading authority
on natural health education
and research.
We empower our people with the
knowledge, confidence and skills, to
recommend our products with ease.
By supporting retailers, distributors,
sales staff and healthcare professionals
to make appropriate product
recommendations, we contribute
to consumer health – and to the
overarching Blackmores ambition to
bring the healing power of nature to
1 billion people.
Sound research conducted with a
range of university research partners
enables us to advance the science
in our industry and to bring new
evidence-based products to market.
A connected, global approach
to education
Producing engaging science content
and communication aligns with
business needs to keep our brand
top of mind and ensures healthcare
professionals have access to evidence-
based information and the know-how
to put their new knowledge into
practice.
Complementary Medicine
Education (CMEd) program
Since CMEd was launched in 2018,
over 2,000 pharmacists have received
full CMEd accreditation. This highly
respected course of approximately
25 hours duration is accredited by
national pharmacy authorities and
fills an important gap in pharmacist
education as they receive little
complementary medicine training in
their under-graduate courses.
CMEd accreditation is designed
to boost pharmacist knowledge of
complementary medicine ingredients
and common health conditions,
and drive confidence in delivering
personalised integrative healthcare in
their stores.
Be Certified
Be Certified is an online retail
product education program for retail
pharmacists, pharmacy assistants and
product advisors in both independent
and banner group pharmacy chains.
It highlights product benefits and
features and how to communicate
these with confidence to store
customers and employees. The
online course also provides unique
micro-credentialling opportunities
to learners, so they get rewarded for
completing the courses. In FY22 this
course successfully achieved over
55,000 completions.
BioCeuticals education
In FY22, we introduced several
new online education solutions for
BioCeuticals including Prescribing
Solutions micro courses designed for
pharmacists, and Clinical Mastery for
healthcare practitioners. Both have
been extremely successful achieving
outstanding net-promoter-scores
indicating a very high willingness to
recommend the courses to others
and strengthening BioCeuticals
brand reputation.
The BioCeuticals Symposium is
a flagship thought leadership event
supporting healthcare practitioners
to address chronic and complex
health conditions. This year’s virtual
event theme, Enhancing Mental
Wellbeing: Navigating Modern-Day
Life, provided healthcare professionals
with knowledge about key ingredients
in our range which play an important
role in helping patients improve their
mental wellbeing.
Natural Health Simplified
Natural Health Simplified is a major
online employee learning program,
comprising short videos and quizzes
about products in our ranges
including the fundamental principles
of naturopathy. By increasing
the natural health literacy of our
employees, we build their confidence
and knowledge to better their own
health and share with family, friends
and communities.
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BLACKMORES LIMITED ANNUAL REPORT 2022
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5 CITIZENSHIP &
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7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
“Our passion for
natural health, and
changing the lives of global
communities by improving health
literacy and unlocking the healing
power of nature, underpins our
research and education programs
and everything we do.”
Dr Lesley Braun
Director, Blackmores Institute
31
Research and Education
Achievements in Research
and Education
Advancing the science
of complementary and
integrative medicine
1. 40+ research projects and clinical trials
tackling health conditions like pre-diabetes,
vision issues and mental wellbeing.
2. Partnerships with over a dozen leading
universities and academic institutions across
Australia, Asia and Europe.
3. 204,921 unique touchpoints across all our
online learning activities (up by 39% on
last year).
4. 93,035 completions of our online and
virtual education courses for healthcare
practitioners, students and consumers
(up by 89.3% on last year).
5. +71 average Net Promoter Score for all
our Education training (above industry
standards).
6. Ranked #2 in Advantage Survey for
pharmacy retail education in Australia
– higher than any other VDS or
pharmaceutical company.
7. Blackmores Institute membership up 5% to
38,139 Healthcare Professionals (HCPs).
8. Exhibited at China’s CIIE as part of
Blackmores ‘future clinic’ and conducted
811 health checks.
9. Launched our first guidebook entitled
Mental Wellbeing – The Essential Guide to
Using Herbs and Nutritional Supplements.
The book proposes a supportive model of
care – the Mental Wellbeing (MWB) Spiral
– and has been the subject of numerous
keynote presentations, podcasts, articles
and thought leadership, with the aim
of supporting clinicians, patients and
consumers to meet the significant mental
health challenges in our communities.
Key research:
1. Clinical trials for pre-
diabetes, with a large
multi-centre study being
conducted in Indonesia
2. Cognition – a double-blind
study being completed in
Australia
3. Vision – a first-of-its kind
clinical trial conducted in
China
4. Preconception pregnancy
and foetal outcomes –
launch of a major research
report identifying possible
new ingredients to support
healthy development
32
BLACKMORES LIMITED ANNUAL REPORT 2022
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5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Our best-in-class research
programs and partnerships
support a global knowledge
base of complementary
medicine.
Claire Briggs,
Senior Technical Manager
Blackmores Institute
33
Company
Leadership
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
03
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BLACKMORES LIMITED ANNUAL REPORT 2022
COMMITTED
LEADERSHIP
MAKING A
difference
1 YEAR IN REVIEW
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3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
35
Board of Directors
Anne Templeman-Jones
BCOM, EMBA, MRM*, CA., FAICD
Chair and Independent Non-Executive Director
Appointed: 28 October 2020
Committees: People and Remuneration Committee,
Audit Committee, Risk and Technology Committee,
Nominations Committee
Anne brings insights and experiences from an extensive
career in executive and non- Director roles covering
financial and operational risk, compliance, regulatory,
governance and strategy across industry sectors of
banking and financial services including payments, health,
engineering services in the energy chemicals and resource
sectors, consumer goods and manufacturing.
During her 30-year executive career, Anne held a number
of leadership positions in corporate and private banking
with domestic and offshore banks.
Other current and former external appointments
Commonwealth Bank Limited and Group companies (2016
– current, Worley Limited (2017 – current), Cyber Security
Research Centre Ltd (2018-current), Trifork AG (April 2022
– current) and a Director of New South Wales Treasury
Corporation (2020 – current). Prior roles as a Non-Executive
Director G.U.D. Limited (August 2015–31 August 2021), The
Citadel Group Ltd (September 2017–May 2020).
1
Alastair Symington
BECON, PG DIP INTL BUS (MASTERS
IN ASIAN STUDIES), MAICD
Chief Executive Officer and
Managing Director
Appointed: 16 September 2019
Committees: People and
Remuneration Committee,
Risk and Technology Committee,
Audit Committee
Alastair has more than 25 years
of consumer goods experience
in health and beauty across
multiple geographies, spent
10 years with Nestlé and Gillette
in Australia, before joining
Procter & Gamble (P&G) in 2006.
Alastair led global and regional
teams, including as China
Managing Director for Wella
based in Shanghai followed
by Vice President of Global
Emerging Markets, based out of
Switzerland.
Joining Coty as part of the
merger between P&G specialty
beauty brands and the former
Coty company, had the
responsibility as Senior Vice
President of APAC, Latin America
and the Middle East his covered
a geographic zone of more
than 80 markets, $1BN USD in
revenue and 2500 employees.
2
Erica Mann
DIP. ANAL CHEM, DIP. MMKT.
MGMT., GAICD
Independent Non-Executive
Director
Appointed: 20 September 2021
Committees: Risk and
Technology Committee
Erica has extensive C-Suite
experience with a 30 year
career across complex, highly
regulated, multi-channel and
multi-product environments.
As President & Head of Bayer’s
Global Consumer Health
Division Erica directed every
aspect of one of the world’s
leading global consumer
selfcare companies. Prior to
joining Bayer, Erica was the
Global President and General
Manager of Pfizer (Wyeth)
Nutrition.
1
2
3
4
5
6
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BLACKMORES LIMITED ANNUAL REPORT 2022
Erica brings a strong
understanding of
complementary medicines,
naturopathic principles and deep
experience in over-the-counter
therapeutic goods. Erica chaired
the board of the World Self-
Medication Industry, a body that
sets standards and guidelines
for the design and labelling of
non-prescription medicines
and dietary supplements and
held executive positions on
the boards of South African
Pharmaceutical Manufacturers’
Association, Medicines Australia
and the International Association
of Infant Food Manufacturers.
Other current and former
external appointments
Currently Non-Executive Director
of Kellogg Company (NYSE: K),
Perrigo Company PLC (NYSE:
PRGO) and Supervisory Board
Member at Koninklijke DSM
N.V (AMS: DSM). She recently
completed Berkeley Law
School’s ESG certificate course.
Fortune named Erica to the list
of the 50 Most Powerful Women
International in 2016 and 2017.
Erica was also selected by Nelson
Mandela to participate in the
Trade Mission to the UK in 1996.
3
Stephen Roche
BBUS (FINANCE AND BANKING),
FAICD
Independent Non-Executive
Director
Appointed: 20 September 2021
Committees: Chair, People
and Remuneration Committee
from 12 April 2022, People
and Remuneration Committee,
Audit Committee, Nominations
Committee
Stephen has extensive board
and senior executive/CEO
experience in strategy (including
customer and marketing),
business development and
supply chains across pharmacy,
healthcare, retail and consumer
markets. Significantly, he has
over 20 years’ experience in
Australian and New Zealand
pharmacy markets, including
serving as Deputy Chairman
of the National Pharmaceutical
Services Association.
1 YEAR IN REVIEW
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Stephen was previously
Managing Director of
Bridgestone Australia & New
Zealand, and was Managing
Director and CEO of ASX listed
Australian Pharmaceutical
Industries Limited (from August
2006 until February 2017). He
has also held senior executive
roles at Mayne and Faulding
extending across health
and primary care services,
distribution and business
development.
Other current and former
external appointments
Stephen is currently a Non-
Executive Director of Myer
Family Investments Pty Ltd and
ASX listed Baby Bunting Limited
and a Director of the Adelaide
Football Club.
Vice Chairman, Bridgestone
China & Asia Pacific (2020–2021)
and the founding Chairman
of the Priceline Sisterhood
Foundation (2015-2018), Non-
Executive Director of Epworth
Healthcare (2017-2018) and
Gold Cross Products and
Services (2004 – 2007).
4
Wendy Stops
BAPPSC (INFORMATION
TECHNOLOGY), GAICD
Independent Non-Executive
Director
Appointed: 28 April 2021
Committees: Chair Risk and
Technology Committee, People
and Remuneration Committee,
Nominations Committee, Audit
Committee (until 12 April 2022)
Wendy draws from her deep
executive leadership and
management skills in global
information technology and
operational, quality and risk
management expertise, with
senior executive leadership roles
in Asia Pacific and globally.
Other current and former
external appointments
Non-Executive Director with
the Coles Group and Fitted for
Work, Council Member of the
University of Melbourne, Chair
of the Industry Advisory Board
for the Melbourne Business
School’s Centre for Business
Analytics, Member of the
Digital Experts Advisory Panel
for the Department of Prime
Minister and Cabinet’s Digital
Taskforce, Member of the AICD’s
Governance of Technology &
Innovation Panel and of Chief
Executive Women’s Leaders
Program Committee.
Wendy was previously a
Non-Executive Director of
the Commonwealth Bank of
Australia (2015-2020) and
Altium Ltd (2018-2019).
5
Sharon Warburton
BBUS (ACCOUNTING AND
BUSINESS LAW), FCA, FAICD, FAIB
Independent Non-Executive
Director
Appointed: 28 April 2021
Committees: Chair
Audit Committee, Risk and
Technology Committee,
Nominations Committee
Sharon has extensive board
and executive experience in
corporate strategy, Australian
and international business
operations, finance, accounting,
and risk management, along
with significant expertise in
governance and remuneration
across the mining, retail,
property, and infrastructure
sectors.
Other current and former
external appointments
Non-Executive Director and
Chair of the Audit and Risk
Committee of Wesfarmers
Limited, Non-Executive Director
of Karlka Nyiyaparli Aboriginal
Corporation RNTBC, Northern
Star Resources Limited, Thiess
Group Holdings Pty Limited and
Worley Limited.
Sharon has also been a part-time
member of the Takeovers Panel
since 2015 and is an Adjunct
Professor in Leadership and
Strategy at Curtin University’s
Faculty of Business and Law
6
David Ansell*
BA (COMMUNICATION), GAICD
Independent Non-Executive
Director
Appointed: 22 October 2013
Board Committees: until
12 April 2022 Chair of
People and Remuneration
Committee and Board Risk
and Technology Committee,
from 12 April 2022 People
and Remuneration Committee
David brings to his Board
roles, strong operating
experience, end to end
supply chain management,
deep consumer and customer
understanding and broad
industry experience, locally
and globally.
David enjoyed a highly
successful executive
career in consumer-facing
organisations in Australia,
Asia and the United States.
He played a pivotal role in
the startup years of FOXTEL,
was CEO of Advertising
Agency, Saatchi & Saatchi and
Managing Director of Mars
Incorporated in ANZ.
Most recently, David was
Managing Director of JDE
Peets, Australia and New
Zealand’s largest pure play
coffee Company. During his
time at JDE Peets he led the
acquisition of Campos Coffee
in Australia and the Brew
Group in NZ.
Other current and former
external appointments
A former Director of Cycling
Australia, currently Chair of
Campos Coffee and Taylors
Wines.
* David Ansell resigned from
the Blackmores Limited Board,
effective 30 June 2022.
37
Executive Team
Alastair Symington
Group Chief Executive Officer and
Managing Director
Lesley Braun
Director, Blackmores Institute
Cecile Cooper
Chief Governance Officer
Jane Franks
Chief People Officer
Andrew Fuary
Chief Operations Officer^
Dean Garvey
Managing Director, International
Patrick Gibson
Chief Financial Officer*
Kitty Liu
Managing Director, China
Helen Mediati
Group General Counsel
John Rosair
Managing Director, Australia and New
Zealand and Global Pet
Joanne Smith
Chief Marketing and Innovation Officer
* Patrick Gibson commenced 1 March 2022, replacing Gunther Burghardt.
^ Andrew Fuary commenced 14 June 2022, replacing Jeremy Cowan.
Kris Ellis
Chief Information Officer
38
BLACKMORES LIMITED ANNUAL REPORT 2022
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6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Alastair Symington, Chief Executive Officer
with Chief Operations Officer, Andrew Fuary.
39
Operating
& Financial
Review
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
04
Group and Divisional Financial Results
42
Operating Review
44
Corporate Governance
46
Group Risks
48
Health and Safety
54
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BLACKMORES LIMITED ANNUAL REPORT 2022
INVESTING IN
EFFICIENCY AND
growth
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41
Group and Divisional
Financial Results
Revenue growth was driven
predominantly by International up
31.2% (in constant currency), China
up 10.6% and Australia up by 2.7%
compared to the prior year. Gross
margin improved by 110 bps from
an optimisation of price, product mix,
trade spend, and Cost of Goods Sold
(COGS) efficiency programs, despite
supply chain challenges impacting the
cost and availability of raw materials.
Group Underlying EBIT improved
by 19.0% (21.4% in constant currency)
from a 43.9% increase in International,
11.2% in China and a 7.0% increase in
our largest segment ANZ. Corporate
expenses were higher due to continued
strategic investment in transformation
projects including Cloud-IT projects and
regulatory costs.
The International business
experienced a particularly strong first
half growth with demand for immunity
products coinciding with a spike in
COVID-19 cases in Indonesia and
Thailand. China continued to focus on
cross border ecommerce, resulting
in strong growth over key shopping
festivals. Growth in the ANZ business
was driven by brand investment
across our 3 brands, and an increased
demand for our immunity products
along with strong channel execution.
We have continued to see a structural
change in the VDS market driving a
shift from traditional channels to online.
Our Asia markets including China, now
represent 55.6% of Group sales.
Australia and New Zealand
Australia and New Zealand revenue
of $288.2m was up 2.7% on the prior
year. Excluding the impact of minor
sales from contract manufactured
products from Braeside, ANZ revenue
increased 3.4% compared to the
prior year. Reported EBIT increased
7.0% to $43.1m through gross margin
improvement and cost containment,
partially offset by increased investment
in advertising and promotion. Gross
margin improvement was driven
by COGS efficiencies and mix
improvements and efficiencies in
trade spend.
Sales in the first half were impacted
by COVID-19 flow on effects including
border closures, reduced retail foot
traffic from lockdowns and lower
sales from international students
and visitors. The second half saw a
strong recovery supported by the
investment in our brands, delivering
product innovation and execution of
our channel strategy in order to set
Blackmores up for long term growth.
Supply chain disruptions resulted
in out of stocks on certain products,
although this impact was reduced in
the second half.
All Australian brands contributed to
revenue growth with BioCeuticals and
PAW growing strongly compared to
prior year.
Blackmores, BioCeuticals and PAW
brand health measures remain strong,
and we retain our number one position
in Australia in our key segments.
Blackmores is the most trusted VDS
brand in Australia3 for the 14th year
running and the leading VDS brand4.
International (excluding China)
Our International business delivered
strong revenue growth of 31.2% at
constant currency (31.8% at actual FX)
to $215.7m, with reported EBIT growth
of 43.9% to $29.8m.
The strong result was driven by
significant revenue growth across
our key markets of Indonesia, 36.7%
and Thailand, 33.3%. All International
markets delivered growth in the
year, supported by increased brand
awareness, new product launches
and higher consumer demand for
immunity products, accelerated by
COVID-19. Top line growth has also
been supported by the investment in
more than 700 Product Advisors as well
as more targeted price/pack initiatives
to deliver net sales per unit uplift.
The Blackmores brand continues to
gain market share and distribution in
key international markets. In Thailand
we are the leading brand in the VDS
market5 and have moved into the top
3 brand position in Indonesia6.
In September 2021 Blackmores
commenced trading in India through
a launch on Amazon with key
products, subsequently expanding
into other online marketplaces and
e-pharmacies. We also entered a
distribution partnership with Udaan,
a business-to-business e-wholesaler
beginning with top independent
pharmacies in key cities.
Market innovation included the
launch of 61 products across the
region. Good progress is being made
with our Halal strategy across South
East Asia two thirds of our Indonesian
range has the coveted Majelis Ulama
Indonesia (MUI) Halal logo and
Singapore at more than half the range.
China
China revenue was up 10.6% to
$145.6m (10.6% in constant currency),
which contributed to reported EBIT
of $16.0m, up 11.2% over prior year.
This was despite on-going strict
lockdowns in key cities in China. The
result was driven by Free Trade Zone
(FTZ) growth and strong performance
across e-commerce platforms was
strong in both the Double 11 and 618
key shopping festivals despite more
challenging trading conditions. This
performance is a result of ongoing
investment in innovation as well as
local capabilities to deepen cross
border e-commerce (CBEC) and
digital health performance. Key
categories driving growth being
premium Fish Oil and Eye Care.
Pleasingly we maintained performance
in the pregnancy segment, despite
market declines in this area.
Blackmores remained in the
top 4 VDS7 brands across all CBEC
platforms in China during the year.
Blackmores delivered Statutory revenue of $649.5m up 12.9%1
driven by growth in all segments, with Underlying EBIT up 19.0%
and Statutory Net Profit After Tax (NPAT) of $30.6m2, up 27.8%.
1 In constant currency.
2. Attributed to shareholders of Blackmores
Limited, from Continuing Operations.
3. 2009-2022 Reader's Digest Most Trusted
Brand Surveys.
4. Nielsen AU Pharmacy + Grocery FYTD 2/7/22
Domestic (Retail and Practitioner).
5. IQVIA (Thailand), March 2022.
6. IQVIA (Indonesia), March 2022.
7. Smartpath Data 2/8/22.
42
BLACKMORES LIMITED ANNUAL REPORT 2022
1. Excluding Discontinued operations.
2. 12.9% in constant currency.
3. FY20 – FY22 reflects the accounting standard clarification on upfront
configuration and customisation costs incurred in implementing
SaaS arrangements. Includes Continuing operations only.
4. Underlying is a non-Statutory measure of financial performance
derived from Statutory results, after adjustment for material
one-off items that are non-recurring in nature, which the Board has
determined do not reflect the on-going operations of the Group.
A reconciliation between Underlying EBIT to Statutory EBIT is
presented in note 2.2.2 to the Financial Statements. 2018 statutory
and underlying financial results were consistent.
Underlying
NPAT3,4
100
200
300
400
500
600
700
20
21
22
18
19
20
40
60
80
18
19
20
21
22
20
40
60
80
100
120
18
19
20
21
22
20
40
60
80
18
19
20
21
22
Revenue1
Underlying
EBIT3,4
Statutory
NPAT
$649.5 million
The Group delivered
revenue of $649.5m
across all divisions and
brands, up 12.8%2 on
the prior year.
$31.1 million
Net profit after
tax attributable to
shareholders of
$31.3m, up 22.6%
on the prior year
compared to $25.4m.
$56.6 million
Earnings before
interest and tax of
$56.6m was up 19.0%
compared to the prior
year.
$30.6 million
Net profit after tax
attributable to
shareholders of $30.6m,
up 7.0% on the prior year
compared to $28.6m
(excluding Discontinued
operations up 27.8%).
50
100
150
200
250
300
350
20
21
22
18
19
Dividends
per share
95 cents
Dividend represents
payout ratio of 60%
for the year ending
30 June 2022.
0
100
200
300
400
354
359
326
281
288
0
40
80
120
160
200
240
82
107
164
216
139
International
Revenue $216 million
Australia and New Zealand
Revenue $288 million
0
30
60
90
120
150
143
122
103
132
146
China
Revenue $146 million
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
2018
2019
2020
2021
2022
43
Operating Review
Overview
We continued to execute against our growth strategy to
return Blackmores to sustainable, profitable growth and to
create value for our shareholders whilst mitigating impacts
of the second year of the pandemic.
Key highlights over the year included:
• Adapting and operating whilst managing global supply
chain challenges, labour shortages and ongoing COVID-19
pandemic-related work health and safety challenges.
• COGS savings program delivered an additional $11m
in FY22.
• A continued relentless focus on quality across Blackmores
Group. Improvements in quality processes, laboratory
management and testing methodology underpin the
highest possible quality standards in our industry.
• A strong focus on employee health and wellbeing, and
business continuity, through the COVID-19 pandemic
has meant no reported onsite cases of COVID-19 in
our operations teams. In addition to this, we saw a 22%
reduction in our number of Lost Time Injuries (LTI’s) and
42% reduction in our severity index.
Integrated Business Planning (IBP)
Our IBP process is designed to support our customer
service levels (to help support our customers receiving the
products they want, when they want them), while balancing
and optimising our inventories and working capital. In the
past year we continued our IBP maturity improvement to
deliver streamlined workflows, accelerated innovation for
growth, and optimised make versus buy decisions for our
product portfolio. We have invested in a world-class cloud-
based technology for our IBP system which we anticipate
will drive improvement in all facets of IBP.
Performance highlights
and challenges
Braeside Manufacturing
Braeside delivered a solid performance across all metrics
and maintained full production without interruption
to ensure supply to our valued customers. The site
manufactured 2.3 billion doses of soft gel capsules and
solid dose tablets, representing approximately 60% of
Blackmores’ total volume. Braeside delivered on its COGS
objectives through its Continuous Improvement programs.
Major capital investment projects at Braeside included:
• Installation of a state-of-the-art automated robotic tray
tipping system, unique in the soft gel industry globally
– targeted at improving production efficiency and
reducing employee work health and safety risk.
• Upgraded sprinkler system with a 400,000 litre fire water
tank and two back up diesel-powered high-volume water
pumps to mitigate fire risk.
• Other capital works to improve efficiency, safety, and
quality.
About Blackmores
Group Operations
Accountable to 20+
regulatory authorities
Key Australian Operational Facilities
Braeside Manufacturing, VIC
30,000sqm soft gel and hard tablet
manufacturing facility producing
approximately 60% of our volume.
Warriewood Operations, NSW
A purpose-built 25,000sqm facility where
the majority of our products are packaged,
and quality checked.
Bungarribee Distribution
Centre, Western Sydney, NSW
A 16,000sqm warehouse processing
5,500 orders per week.
Continuous
improvement in quality
processes, laboratory
management and testing
methodology underpin
the highest possible
quality standards in our
industry.
16 sites across
13 markets
44
BLACKMORES LIMITED ANNUAL REPORT 2022
Warriewood Operations
The site successfully maintained full operational continuity
throughout the COVID-19 pandemic and delivered on all
key metrics. Major achievements include:
• Packed over 42.8 million units exceeding its monthly
output record four times throughout the year. The
highest output exceeded the previous record by 19%.
• Delivered on COGS savings commitments through its
Continuous Improvement initiatives.
• Built capability in our people through leadership
development training by TAFE NSW and an Operations
Development Day.
• Recorded only 1 Lost Time Injury (LTI) for the entire year.
Bungarribee Distribution Centre
The Distribution Centre maintained full operational
continuity throughout the year, supporting both domestic
and international markets through the second year of the
pandemic. The facility was able to adapt to fluctuations in our
business, driven by volatile demand across markets as they
went in and out of lockdown restrictions throughout the year.
Freight capacity continued to be constrained during a
challenging year which added complexity and cost to our
operation. Like many businesses, our logistics operations
have experienced unprecedented freight and associated
cost pressures which we have navigated, to minimise impact
on our Profit and Loss (P&L) and our customers.
Group Quality
This financial year Blackmores saw a reduction of 40% in
consumer complaints related to product quality, making
it a standout year. All our sites also maintained their Halal
certification along with achieving Vegan certification for our
BioCeuticals range. Importantly, the Operations team have
embarked on their continuous improvement journey with
one of the first steps being to digitise our work processes
with an aim of reducing effort and improving efficiencies.
Adapting our Supply Chain
The pandemic drove significant changes in demand for
immunity products that impacted local and international
markets. Our teams worked with our manufacturing
partners on a supply solution that kept these important
immunity products such as Bio C®, 1000 Vitamin D3 1000
IU, and Bio Zinc available in all our markets.
A stringent focus on working conditions in our facilities
delivered zero disruption or downtime due to COVID-19
pandemic restrictions. Whilst the global supply chain –
inbound and outbound – was marked by unpredictable
COVID-19 related delays or setbacks with materials
providers and or logistics services, our maturing Integrated
Business Planning (IBP) IBP process, supported our FY22
performance and growth across Australia, China, and
International markets.
Operational Workplace Health and Safety
In FY22, every facility was 100% operational and incurred
zero downtime due to COVID-19. We supported our
people in every part of our operations so that, in turn,
we could protect our ability to make and sell products
and respond to fluctuating market demands.The
highly regulated Good Manufacturing Practice (GMP)
production environment along with COVID-19 protocols
and procedures in place at Braeside, Warriewood,
and Bungarribee provided our people with one of the
safest possible working environments throughout the
COVID-19 pandemic.
Procurement and Strategic Sourcing
The Procurement and strategic sourcing team at
Blackmores is responsible for sourcing all direct and
indirect spend within the organisation. This includes
packaging, product, ingredients and services, logistics
and agency spend. In FY22 strategic sourcing continued
to deliver strong results for Blackmores Group, including:
• $6m in cost reduction initiatives to help offset
prevailing inflationary headwinds.
• Increased dual sourcing coverage of our top 40 bulks
to 83% of volume doses to support business continuity
and unlock capacity for growth outside of Braeside.
• Executed >$100m in renewed agreements with
strategic partners in our value chain.
• Continued governance around ethical sourcing,
coordinated 4 Sedex Members Ethical Trade Audits
(SMETA); 13 of the 17 due corrective and preventive
actions were closed in the reporting period. Current
risk assessments have been completed for 98% of Tier
One Direct suppliers.
COGS Savings and continuous improvement
Our Leading Value Position (LVP) program has multiple
workstreams across the Supply Chain. The LVP now
in its 3rd year is evolving Blackmores’ culture to one
of challenging how and why we do things, to help
fuel our growth. The program identifies where value
can be unlocked in the business through Continuous
Improvement initiatives across our supply chain –
including our direct and indirect spend categories.
Commencing in FY21, with a target of $30m of value
over 3 years. We have so far delivered annualised gross
savings of $13m and $11m respectively in FY21 and FY22
and have set a goal of $12m for FY23, bringing the total
expected savings to $36m over 3 years.
“The highly successful 3 Year LVP program
is accelerating a Continuous Improvement
mindset, fueling future growth at Blackmores.”
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
45
Corporate Governance
Our Board and all levels of management are committed to
continuously improving our governance practices in line
with the needs of our business and stakeholders, aligning
accountability and stronger risk management within the
business.
Our corporate governance framework, illustrated on
this page, strives to achieve the right balance between
accountability, delegation and oversight to ensure effective
and timely decision making.
The Board is responsible for setting Blackmores’ strategic
direction, ensuring good governance and oversight and
instilling a culture that considers and fairly balances the
needs of all our stakeholders.
Responsibility for Blackmores’ day-to-day management
and performance is delegated by the Board to the CEO
and from the CEO to other levels of management via a
comprehensive delegation of authority framework.
While the Board is responsible for establishing and
maintaining the corporate governance framework, good
governance is the responsibility of the management team
and all employees.
This Corporate Governance Statement was approved by
the Board of Blackmores on 17 August 2022 and describes
the corporate governance practices of the Company as at
that date and for the reporting period to 30 June 2022.
The Blackmores Corporate Governance Statement can
be found at: http://www.blackmores.com.au/about-us/
investor-centre/corporate-governance
Approach to Corporate Governance
Corporate Governance Framework
CEO
Responsible for day-to-day operations of Blackmores and for
implementing our strategy and business plans.
Leadership Team
Responsible for leading our people and translating our strategies
and plans into clear deliverables and expectations.
Our People
Responsible for daily execution against deliverables
and expectations.
Audit
Committee
Nominations
Committee
People and
Remuneration
Committee
Risk and
Technology
Committee
Board
OUR STAKEHOLDERS
OUR POLICIES, SYSTEMS & PROCESSES
OUR VALUES (PIRLS)
OUR STRATEGY & RISK MANAGEMENT
Independent
assurance and
advice
Provided by:
External Audit,
Internal Audit
Delegation and
oversight
Accountability
and reporting
46
BLACKMORES LIMITED ANNUAL REPORT 2022
46
BLACKMORES LIMITED ANNUAL REPORT 2022
Robust and effective governance and risk management frameworks are essential to our ability to deliver on our
purpose and strategy. Applying these fundamental principles through the Board renewal process enabled us to
identify the uplift in that was needed across a combination of disciplines. The Blackmores Board skills matrix below
sets out the current skills and experience we consider essential to the effectiveness of the Board and its Committees.
We will continue to use this framework to identify potential Board candidates in our ongoing renewal process with a
commitment to and focus on improving the way we operate to achieve our goals.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Board skills and experience
Blackmores Board skills matrix
Skill and experience
Relevance to Blackmores
Leadership
Leading successful business outcomes and high
standards of corporate governance, as demonstrated
by sustained success in a senior leadership role such
as CEO level or similar position in an organisation of
significant size or complexity.
Setting strategy, driving performance
in senior leaders for effective decision
making.
6
Manufacturing, supply chain and
consumer products
Deep experience in manufacturing, logistics,
distribution channels and/or consumer products
sectors particularly in Asia.
Appreciation of the operating
environment, including opportunities,
challenges and constraints for our
business.
3
3
Health
Experience in the health sector (services or regulator)
or consumer health products. Exposure to regulation
in health sector (for example, TGA or similar regulator in
overseas jurisdictions).
Appreciation of the framework within
which our business operates, including
key industry concepts and regulation.
2
1
3
Strategy/global perspective
Having a global perspective through exposure or
responsibility for leading international operations,
particularly in the Asia-Pacific region.
Insight into and ability to shape our
approach to harnessing key growth
opportunities outside Australia.
1
5
Enhanced customer or consumer outcomes
Experience in understanding the needs of customers
and/or consumers and how technology can enhance
outcomes.
Ensuring customer and consumer needs
are front of mind at all levels.
1
5
Governance
Experience as a Non-Executive Director or a CEO of at
least two other listed entities (Australia or overseas) and
an understanding of legal and regulatory frameworks
underpinning corporate governance principles.
Understanding of the local and offshore
listed environment and associated
corporate governance frameworks to
operate effectively as a director.
1
5
Digital technology and operations
Experience in technology strategies and innovation and
how they can be utilised to deliver greater efficiency
and customer experience. Understanding of the cyber
security risks and oversight is included in this.
Supporting our technology strategy and
cyber security strategy.
4
2
Financial acumen
Understanding of the financial drivers of the business,
experience in financial accounting, reporting, corporate
finance and internal controls, and capital markets.
Assessing financial and capital
management initiatives, particularly in
addressing complex issues.
3
3
Risk management
Experience in identifying, assessing and monitoring
systemic, or emerging risks, strategic risks and both
operational and financial risks.
Assessing our risk profile and monitoring
our decision making to ensure we
operate within our risk appetite and
adapt to new risks as they emerge.
3
3
Environment, Social and Governance (ESG)
Understanding potential sustainability, governance and
environmental risks and opportunities.
Influencing decision making to support
sustainable practices from both an
operating perspective and with good
governance, to bring about positive
environmental, business and community
outcomes.
3
3
Merger and Acquisitions (M&A)
Experience in due diligence and execution of major
acquisitions, divestments, and mergers, including
strategy, due diligence, valuation and/or integration.
Assessment of inorganic growth
opportunities in the context of our
organic growth strategy.
1
1
4
People and culture
Oversight of the Group culture and The Code of
Conduct.
Understanding organisational culture,
succession planning and remuneration
and reward frameworks.
3
3
Stakeholder management
Experience in building and maintaining trusted
and collaborative relationships with governments,
regulators and/or community partners.
1
5
Practiced/direct experience
High competency, capability, knowledge and experience
Awareness
47
Group Risks
Blackmores operates in a dynamic
and evolving environment of science,
naturopathy and health care. Our
operations, domestic, international, and
digital, continue to present both inherent
and strategic opportunities and risks that
could materially impact the business.
Part of a strong governance framework is understanding
the risks that have the potential to have the greatest impact
on our business. In FY22, we have focused on establishing
an enhanced approach to tracking our performance versus
appetite against risks and opportunities, both current and
emerging, and putting in place response strategies that
ensure we protect our brands, our business and our people.
Risk Management Framework
Overseen by the Board and the Board Risk and
Technology Committee, Blackmores risk management
framework supports the identification, management and
reporting of material risks, current and emerging. Risks and
opportunities that have the potential to impact the delivery
of business plans and objectives are assessed using a risk
framework that considers the likelihood and consequence
of occurrence using consistent risk assessment criteria.
The risk framework incorporates a ‘Three Lines of
Accountability’ model for managing risks and controls
and considers both financial and non-financial risks
across strategy, operations, and compliance. Over the
last 12 months, we have observed and responded
to shifts including (but not limited to), escalating
geopolitical uncertainty, ongoing COVID-19 pandemic
interventions, climate and sustainability opportunities,
digital transformation, significant lifestyle, and culture shifts
particularly regarding workplace flexibility, heightening
cyber security threats, macroeconomic instability and
growing focus on lifestyle, health and wellbeing factors.
The content and status of risk profiles and mitigation
plans is considered and updated, in line with changes to
our environment and operations, through regular reviews
by management. All employees are responsible for
making risk-based decisions and managing risk within our
Board approved risk appetite and specific limits.
The Board reviews Blackmores material risks each
quarter, including status against risk appetite, and assesses
the effectiveness of the Company’s risk management
framework annually, in accordance with the ASX Corporate
Governance Principles and Recommendations.
The material risks faced by the Group that may impact
our ability to achieve our key strategic priorities are
outlined in the material risk section on page 50.
Overview
Wei Ou, Business Development Director,
Blackmores China
48
BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Risk Governance Overview
The diagram below sets out an overview of risk governance
and management at Blackmores across the Three Levels
of Accountability together with key responsibilities of the
Board, Executive Team, Group Risk and the business.
1st line of accountability
PEOPLE AND OPERATIONS
BOARD OF DIRECTORS
(Assisted by Board Committees)
Sets and
communicates
expectations for
risk management
Endorses mission,
values, strategy
and Code of
Conduct
underpinning our
culture and ways
of working
Owns and manages risks.
Business Units
Strategy
People and Culture
Safety and Wellbeing
Sustainability
Legal and Finance
Approves risk
policy, framework
and appetite
and ensures
appropriate
processes are in
place
Provides
oversight of
risk exposures
and response
plans
Monitors the
effectiveness of
overall governance
program
Sets business direction,
manages and resolves
material business risk
issues, and reports to
the Board as required
Provides
recommendations to the
Board on risk policy,
frameworks, appetite, and
processes via Executive
Risk, Assurance and
Compliance Committee
Manages risks and fosters
a proactive risk culture
and accountability for
management of risk
within agreed appetite
levels
Implements effective
risk management
within business units
and across major
projects
EXECUTIVE TEAM
THREE LINES OF ACCOUNTABILITY
2nd line of accountability
Oversees and sets frameworks
and standards. Monitor risk and
provide assurance.
Group Risk Function
Compliance
3rd line of accountability
Provides independent assurance
of frameworks and controls
effectiveness.
Internal Audit
External Audit
OVERSIGHT FUNCTIONS
INDEPENDENT ASSURANCE
Risk Leadership
49
Group Risks
Blackmores continued to enhance our risk management approach, enabling
the business to better manage areas of uncertainty and complexity across our
operations. The broader impacts of the COVID-19 pandemic for both global and
domestic economies and businesses continues to unfold and change the risk
landscape, requiring ongoing response and management across many of our
existing material risks to minimise impacts. We have been adapting our response
and taking an agile approach in the way we work and decisions we make.
We remain vigilant when considering our responses and the impact on team
members, customers, suppliers, regulatory requirements, and the communities
we serve.
Below describes the specific key material risks where the Board and
management focus their efforts. It includes a mix of existing and emerging risks that
could materially impact the execution and success of Blackmores Group strategy.
Risk Priorities
Risks
Description
Key actions we are taking
Laws,
regulations
and
geopolitical
landscape
Blackmores operates in a
highly regulated industry in
all markets in which goods
are manufactured and sold.
Changing geopolitical
landscapes and regulations
in each of these jurisdictions
may impact many aspects of
our operations, including tax
assessments and dividend
payments to the Group and
all aspects of the supply chain
(access to raw materials,
production, manufacturing,
pricing, marketing, advertising,
labour, distribution and product
sales).
Remaining compliant with,
abreast of and responsive
to changes requires diligent
monitoring and responsiveness
by the business.
• We have a defined Compliance Framework, Risk Management Framework
and Assurance program, supported by company policies, standards and
procedures.
• We employ specialised and experienced resources and teams (Legal, Quality,
Regulatory, Safety) to oversee and educate stakeholders of relevant regulatory
requirements and monitor potential changes. Where required, we also engage
specialist advisors to support legal and regulatory oversight for new and
emerging markets.
• Our Executive Risk, Assurance and Compliance Committee (RACC), the Board
Risk and Technology Committee (BRTC) and the Board, provide oversight of key
aspects of our legal and regulatory frameworks and operations.
• We actively engage with key government, industry and regulatory bodies to stay
up-to-date with regulatory and policy changes
• We employ a formal supplier selection process, and flexible supply chain
practices are overseen by specialist technical and quality resources.
• We have strategically expanded our international operations beyond our
primary markets to diversify and lessen key market dependencies.
• Our customer base, supply base, route to market and product base is
strategically diversified and we continue to focus on reducing key partner and
supplier dependencies and establish dual sourcing for key inputs to mitigate the
impact of any unanticipated regulatory or geopolitical changes.
Reputation
and brand
The strength of Blackmores
brand and its portfolio is key to
business success.
Managing the reputation of
brands, and mitigating events
that may damage brands (for
example, inaccurate media
coverage, product quality issues,
counterfeit products, third
party supplier negligence or
incidents, unsatisfactory supplier
performance) is critical to
Blackmores’ ongoing success.
• Blackmores takes pride in its company values and mission, ensuring that our
strategy (supported by company policies, standards and procedures) remains
consistent with these core values.
• Our marketing principles are clearly defined and aligned internal review and
approval processes oversee all product claims, marketing, and communications
material development.
• We utilise a structured Supplier Quality Assurance (SQA) and selection program,
have many long-term supplier relationships and apply audits and training.
• Through our acquisition of the Braeside manufacturing plant, we are
increasingly gaining more control over our end-to-end supply chain.
• We employ specialised and experienced technical, quality assurance and
product safety teams overseeing over 30 tests and quality assessments on every
product.
• Blackmores ensures product supply chain traceability technology, intellectual
property protection strategies, tamper evident bottle seals, and ongoing testing
over the shelf life of every production batch.
• We are compliant with and subject to periodic external certification audits
and accreditations (Therapeutics Goods Administration (TGA) and equivalent
overseas bodies).
• We maintain current Crisis Management, Business Continuity, Disaster Recovery,
Complaints Handling and Product Recall policies and procedures. Our
consumer advisory line responds to all consumer product information queries.
• Our consumer insights and innovation team monitor brand health, media
(including social/digital) and consumer trends, sharing timely insights with
relevant teams.
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BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Risks
Description
Key actions we are taking
Cyber security
and data
management
Data and 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 confidential data are
now stored electronically. This,
together with increasing cyber-
crime, heightens the need for
robust data security measures.
• Our specialised Cyber Security and supporting teams monitor, assess and
respond to continually evolving cyber threats to keep pace with changing
security needs.
• The business uses ongoing technology and software updates, including
automated patching with incorporated security services to protect our data
and technology services.
• Blackmores ensures restricted and segregated management of sensitive
personal, business, supplier, and customer data. We have defined data
governance, classification, and encryption (where relevant) standards.
• Our Security Awareness program includes annual employee cyber /
information security training and phishing simulations, user access reviews,
vulnerability management and penetration testing across the Group’s
information systems to continually assess our cyber exposure.
• The business has implemented and tested disaster recovery procedures
to be followed in the event of a cyber incident to restore critical services.
Additionally, external independent cyber-attack simulations and
assessments provide ongoing insights to improve overall Group security.
• We have uplifted IT Security Governance by implementing new security
policies and guidelines and have an ongoing program of work with the
objective to continually enhance cyber security and data management
across the organisation.
• Blackmores collaborates with a range of government and industry bodies
to provide insights and support to strengthen our cyber resilience.
People and
culture
Blackmores’ ability to deliver
on strategic targets is reliant
on retaining and attracting
experienced, skilled, and
motivated people.
It also requires strong, resilient,
and effective leaders as the
business grows at pace.
• Our Code of Conduct, people and culture strategy and supporting
programs work to create an environment that attracts and retains people
consistent with and aligned to our stated values and mission.
• We have a rolling workforce and succession planning process, and an
established people and performance management cycle including
employee development, career planning and capability mapping.
• Our incentive and reward programs are aligned to Blackmores’ vision
and growth initiatives, and actively used to celebrate team member
performance and contribution.
• We use our leadership capability program to ensure our culture is driven
by a consistent tone from the top and aligned incentives.
• Our attraction and retention program is prioritised towards skills and
capabilities critical to business growth.
Safety, health
and wellbeing
Blackmores cares about the
physical and psychological
safety, health and wellbeing of
our customers, team members
and business partners, including
employees of our suppliers.
We are committed to creating a
safe and supportive environment
for everyone working with, using,
and impacted by our products
and brand.
Throughout the COVID-19
pandemic and in the last 2 years
in particular, Blackmores has
ensured that measures were
in place to protect our team
members and business partners
as a matter of priority.
• Safety, health, and wellbeing is at the heart of the Blackmores business. We
emphasise and embed it in everything we do, from our values and mission
to our day-to-day operations.
• We have defined employee safety and wellbeing policies supported
by frameworks, standards, and procedures. All facilities are fitted and
equipped with relevant personal protective equipment to meet our
defined standards. We also have established flexible workplace and work
from home policies and procedures in place as well as secure remote
working capabilities.
• We have established safety, health, and wellbeing focused leadership
training programs, KPIs and periodic monitoring and reporting. Our team
members have ongoing access to mental health and wellbeing resources
and support, and all complete safety, health and wellbeing induction and
periodic refresher training.
• Our supply chain processes include embedded safety, health and
wellbeing standards that apply to our supplier strategy and selection
procedures.
• The business is trained in current Crisis, Business Continuity and Disaster
Recovery procedures in the event of an emergency. This and other related
business resilience policies, frameworks, and standards, have been
updated to reflect learnings from the pandemic that strengthen responses.
• Blackmores actively monitors and is guided by Government directives
and trusted sources advice. A range of responses has been established
throughout the pandemic including activation of our Business Crisis
Management Team (BCMT) to specifically address employee and business
partner safety and wellbeing needs throughout the COVID-19 pandemic.
• We count on everyone within the Group and supply chain to act in
accordance with laws, our code of conduct and our values. We have an
established and confidential whistle-blower portal available for employees
and external stakeholders to raise concerns over unethical or illegal
conduct.
51
Group Risks
Risks
Description
Key actions we are taking
Consumer and
marketplace
Unanticipated changes in
consumer preferences and
demand, or competitive
pressures that significantly alter
the landscape (for example,
online channel growth,
acquisitions, aggressive price
wars) can have adverse effects
on the businesses ability to
capture growth opportunities or
effectively manage inventory
and supply.
• Our strategy is focused on growth categories, markets and channels,
investing in strong and multifaceted customer relationships via joint
business planning processes. Customer demand and demand shifts
(particularly during the COVID-19 pandemic) are closely monitored,
including the use of digital applications used by our in-market product
advisors in our Asian markets.
• Our integrated business planning (IBP) processes include portfolio reviews
and global volume alignment processes, to best manage inventory and
safety stock in line with demand. As part of our response to COVID-19
driven changes in demand and supply chain disruption that resulted in
increased “out of stocks”, we increased our safety stock in all markets and
rapidly adapted production to meet demand shifts.
• Our brand portfolio and product strategy include consistent pricing
guidelines, product prioritisation via portfolio rationalisation and targeted
investment in consumer marketing.
• Our online channel development and capability uplift initiatives, joint
business partner planning, and direct to consumer marketing programs are
building our digital channel in line with shifting consumer trends.
• Our ‘Blackmores Institute’ research and education centre of excellence, is
dedicated to finding new evidence-based solutions that support the quality
use of natural medicine to improve public health.
• Our consumer insights and innovation teams track consumer trends,
conduct product research, and manage our innovation pipeline to ensure
we are focused on current consumer health and wellness needs.
Significant
business
interruption
Blackmores’ current scope of
operations could expose it to
a range of business disruption
risks, such as environmental
catastrophes, pandemics (such
as Covid-19), natural and man-
made hazards and incidents, or
politically motivated violence or
actions.
Significant business disruption
could impact Blackmores’ sites,
employees, key infrastructure,
supply chain, financial outcomes,
or reputation.
• Blackmores maintains current and cyclically updated Crisis, Business
Continuity and Disaster Recovery plans, supported by training and
simulations for relevant team members.
• The business uses primarily cloud-based, resilient and failover safe IT
systems that also support remote working capabilities.
• We continuously monitor and respond to threats to continuity of operations
via embedded ‘business as usual’ processes including site audit, repair
and maintenance, our health and safety framework, compliance, risk and
assurance programs, multi-regional sourcing and production strategy,
IBP process and safety stock maintenance, market, political and media
monitoring insights.
• Blackmores maintains comprehensive insurance coverage to minimise
the financial impact of unforeseen events and enable timely recovery to
business-as-usual operations.
Climate and
nature related
Blackmores strict 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
is key to the Company’s values,
commitments, and growth
initiatives.
• Blackmores has defined a strong Sustainability Charter and science-based
approach to understanding the resilience of key ingredients.
• Our sustainability program includes defined and tracked commitments
for sustainable sourcing, packaging, waste management and process
efficiencies, clean energy, and net zero carbon emissions (by 2030).
• We undertake regular climate-related scenario assessments to progress
ongoing adaptive measures.
• Specialised and experienced internal sourcing and procurement teams
oversee the Supplier Quality Assurance (SQA) and selection program as
part of our ethical and sustainable supply chain program.
• Blackmores have worked to strengthen supplier relationships and contracts
and continues its aim to broaden our raw material supplier base and
substitute raw materials.
• We aim to have flexible manufacturing options via a combination of
Blackmores' owned facilities and outsourcing arrangements.
Business
transformation
The business continues to focus
on transformation initiatives that
support effective and efficient
end-to-end processes. Delivery
of these initiatives will be critical
to Blackmores’ ability to optimise
our existing asset base and drive
efficiencies while sustaining
growth.
• Blackmores has defined multi-year business transformation initiatives
including key process optimisation and supporting information technology
and digital system upgrades aligned to the business strategic growth
ambitions.
• Our business transformation program is supported by an approved capital
investment plan, and Executive-led Enterprise Program Management Office
(EPMO) overseeing resource allocation and governance of key projects
and initiatives, with further oversight by the Board Risk and Technology
Committee on behalf of the Board.
• Our people and culture strategy and initiatives, including workforce
planning, the leadership framework, talent management and training
program is aligned to our business transformation initiatives.
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BLACKMORES LIMITED ANNUAL REPORT 2022
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BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Risks
Description
Key actions we are taking
Financial and
treasury
Major events in financial markets
(for example, fluctuations to
currency, interest rates, cost of
capital, banking/commercial
credit), economic, political, social
and/or major business events
(product recalls, pandemics
like COVID-19) can significantly
impact the business' profitability,
cash flow and results.
Our ability to hold sufficient
liquidity to ensure the fulfilment
of all payment obligations, and
the management of capital
and availability of funding, are
important requirements to
support business operations and
growth.
• Board and management have introduced a defined capital management
plan that provides a governance structure as it relates to decisions on capital
and operating expenditure, cashflow monitoring and dividends to ensure the
ability to deliver the strategic plan.
• We have a defined and established Treasury Policy and supporting processes
to effectively manage treasury risks including liquidity, funding, interest rates,
foreign currency, and funding risks. These risks are managed within the day-
to-day operations of the Treasury function and overseen by the Board Audit
Committee.
• Financial targets are set and regularly reviewed to measure progress. This
includes monthly updates to our 12-month rolling analysis and projections
of financial results including scenario analysis across key factors (for example,
leverage ratios, and FX movements). This enables the business to proactively
manage risks and pursue opportunities.
• The business’ diversified supply base, customer base and routes to market
also act as natural hedges to many financial risks, and are risk assessed by the
business during selection and onboarding.
• Blackmores has established processes and controls embedded within
financial operations to support the production of financial statements. These
processes are also subject to reviews and independent audits, the results of
which are reported to the Board Audit Committee.
Michelle Fernandez,
RISE Program Manager and
Tom Bailey, Group Capability Manager,
People and Culture
53
Health and Safety
The health and safety of communities and
employees is our highest priority. Our risk
management framework seeks to identify
and mitigate risks in areas like Work Health
and Safety (WHS) and product safety. This
approach best protects our consumers,
people, brands and business. This work
also boosts our strategy to future-proof our
supply chain and provide a market-leading
customer and practitioner experience.
Work Health and Safety
We gained a deeper understanding of our WHS system
through audits and inspections across our sites, with the
aim of implementing a new WHS system in the coming year
aligned to the ISO 45001 standard.
Our reporting culture has been supported by targeted
training on incident reporting, investigation and risk
assessment. As a result, we have significantly decreased the
severity of Lost Time Injuries (LTI) across Blackmores sites.
When injuries have occurred, the root causes of the incident
are analysed to prevent reoccurrence.
A new injury triage system was introduced to ensure
employees have access to fast, trusted medical treatment
for injuries sustained at work. Our employees can access
qualified medical staff via a free telephone number,
and through referrals to accredited medical clinics for
appropriate care.
We have committed to improving safety and emergency
management for operational facilities across all Blackmores
sites. Measures include installing new sprinkler systems and
updating water pumps for fire safety, and flood mitigation
plans in Victoria, Australia.
Employee Wellbeing and Safety Service
As part of our commitment to employee health and
wellness, Blackmores has partnered with a new wellbeing
and safety support service provider. All employees can
access free and confidential 24/7 safety, medical and
mental health support.
Alongside care from clinical professionals such as
mental health first aiders, emergency doctors and clinical
psychologists, Sonder includes real-time, location-based
safety features to ensure the safety of our employees when
travelling.
Product Safety and Pharmacovigilance
Blackmores is committed to best-in-class clinical practice
and excellence in consumer healthcare. Product safety
through a pharmacovigilance program is integral to our
position as a trusted vitamin and dietary supplement
brand. In 2021-2022 our safety team reviewed over 340
ingredients and 448 products across our Blackmores,
BioCeuticals and PAW portfolios.
Our safety processes include monitoring reported
adverse reactions on a global scale, with robust response
plans in place. We have also collaborated closely with our
China platform business partners to bolster adverse reaction
monitoring.
We continue to prioritise excellence in clinical
assessments of evidence-based medicine to deliver a
superior consumer and practitioner experience.
COVID-19 Health and Safety
In FY22, our Business Continuity Management Team
(BCMT) continued to steer our business response to the
COVID-19 pandemic. Comprised of senior functional
leaders operating within the Australian Inter-Service Incident
Management System framework, the BCMT act to prioritise
the safety and wellbeing of all our employees, particularly in
markets impacted by the COVID-19 pandemic.
Blackmores implemented a Group-wide COVID-19 Safe
Policy aligned with government policy, which cascaded
from senior functional leaders to inform development of
localised work plans and procedures at all Blackmores sites.
Implementation included daily Rapid Antigen Testing, split
shifts, mask-wearing, increased sanitary cleaning, hygiene
stations, daily assessments and COVID-19 pandemic
reporting. This strong focus on employee health and
wellbeing – and business continuity – ensured Blackmores
provided the safest possible workplace through the year.
Overview
RISE is a unique
initiative developed by
Blackmores using our deep
naturopathic knowledge. The
suite of online courses and tools
support both the physical and
mental health of our employees.
Read more about RISE
on page 58.
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BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Hoang-Ahn Tran,
Distribution Operator,
Blackmores Bungarribee
Distribution Centre
55
Citizenship &
Sustainability
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
05
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HEALTHIER,
SUSTAINABLE
COMMUNITIES
building
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
57
Our People
In a year that demanded agile responses to
external challenges our key priorities were:
supporting our people through the ongoing
COVID-19 pandemic; enabling connection;
maintaining performance; and ensuring
we prioritised growth, development and
connecting to our purpose.
RISE
RISE is our employee wellbeing program which was launched
in FY22. Open to all employees across the globe, RISE is
anchored in holistic wellbeing – that is physically and mentally
thriving, emotionally balanced, socially connected, and
growing personally and professionally.
Underpinned by naturopathic principles, the program
offers information, education and activities across a range
of wellbeing pillars. The program incorporates personal,
professional and community initiatives, including a purpose-
built employee program from the Blackmores Institute. RISE
has generated a 12% improvement in employee wellbeing.
Activities include:
• partnerships with Ripen and Healthy Minds for mental
wellbeing training and resources, and an online
Wellness Hub for naturopathic insights
• launch of ‘Move in March’ to encourage employee
activity and raise funds for UNICEF
• offering universal access to in-house naturopathic experts.
Diversity, equity, inclusion and belonging (DEIB)
Blackmores takes pride in our diverse workforce that
increasingly reflects the consumers we serve and
communities we operate in. Over the past year we
advanced our commitment to DEIB by:
• forming a DEIB Steering Committee to support
Group initiatives
Gender equity
Blackmores was proud to be recognised this year by the
Workplace Gender Equality Agency (WGEA) in Australia
with an Employer of Choice for Gender Equality (EOCGE)
citation. This reflects our commitment to equality for all
genders, and WGEA insights have informed our global
gender equality ambition.
We pleasingly remain ahead of our gender
representation targets, exceeding our 2025 gender equity
targets. We shifted our target to 40% female, 40% male
with 20% capacity for flexibility inclusive of male, female
and non-binary employees, reflective of WGEA targets
and general industry shifts.
Category
Actual Numbers
Ratios
Female
Male
Grand
total
Female
Male
Board (non-
executive)
4
2
6
67%
33%
Executive
Team
6
6
12
50%
50%
Senior
Management
31
35
66
47%
53%
• introducing B!Longing as a pillar under RISE, to engage
with International Women’s Day, Mardi Gras, R U OK?
Day and Pride Month
• using International Men’s Day to share men’s health
education resources
• cultural celebrations in all locations
• offering multi-language options in key communications
and employee surveys
• creating learning opportunities around the importance of
DEIB to people and performance.
Building culture in a hybrid world
At Blackmores we conduct quarterly and annual engagement
surveys which provide ongoing feedback on everyday
experiences and workplace culture. The key drivers of
employee engagement remain priority focus areas for us.
We know our commitment to purpose is vital, and so too is
our investment in building capabilities and ensuring the right
people are in the right roles.
Growth and development
Blackmores continues to invest in core capabilities that build
resilience and future proof our business while ensuring
Blackmores remains an employer of choice.
We are investing in our Sales teams with the Blackmores
Commercial Academy and have seen a significant increase
in leadership effectiveness through our Senior Leadership
Coaching program. We also offer an internal leadership
program ‘Blackmores Way of Leading’ covering topics such
as coaching and feedback.
Our Finance Masterclass focused on building capability
across our global Finance team and aims to equip all roles
with future focused competencies.
Over 982 employees participated in our resilience and
wellbeing programs with several markets including ANZ
and China conducting internal lunch and learn sessions to
continuously upskill their teams with future facing skills.
2022 AFR Boss Best Places To Work
Blackmores was named as one of the best places to work
in the Manufacturing and Consumer Goods industry. The
award recognises Blackmores' commitment to creating a
working environment that prioritises wellbeing through our
RISE program.
Blackmores Group proudly employs 1200+
permanent full-time, part-time, and fixed-term
employees in 13 markets across Asia-Pacific
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BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
We have accelerated
flexible and digital working
to balance efficiency,
collaboration and productivity
with workplace connection
and social engagement.
RISE Pillars
Zachary Gallagher, Advisory
Naturopath, ANZ Practitioner team
59
Healthy
people
Healthy
planet
Healthy
communities
Wellbeing: Advance evidence-
based complementary medicines
and ensure a healthy workforce.
Equality: Foster a diverse and
inclusive culture.
Health Education: Deliver better
health outcomes by empowering
people with knowledge.
Climate: Reach Net Zero Emissions
by 2030 and ensure a resilient supply
chain and operational footprint.
Biodiversity: Understand Nature-
based dependencies and support
Nature-positive solutions.
Circularity: Optimise packaging
recyclability and waste reduction.
Giving: Support healthy and vibrant
communities everywhere we operate.
Source Responsibly: Understand
our extended supply chain to protect
people and the environment.
Partner for Change: Collaborate for
greater impact across our industry
and value chain.
Sustainability
This considers our
guiding principles to:
1. Tread lightly
2. Respond to our
changing world
3. Source
responsibly
4. Create a fair,
safe, inclusive
and sustainable
workplace
5. Support
community
health
...and addresses
them through
ambitions and
goals aligned to
three focus areas.
Blackmores continues to accelerate
our sustainable transformation by
addressing the material impacts of
our business, and on our operations.
Towards a world where people
and nature thrive together
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BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Net Zero Emissions by 2030
• Total Group carbon emissions
down by 4.1% even as reporting
boundaries expanded to capture
international offices for the first time.
• Commenced a ‘hydrogen ready’
feasibility study at the Braeside
manufacturing facility.
• Progressed Braeside energy
efficiency projects including
upgrades to existing air handling
units.
• Installed low emission LED lighting
at the Warriewood Campus.
• Continued fleet transition to
cleaner fuel sources, with 100%
hybrid vehicles and are trialling
two electric vehicles (EV).
• First EV charging stations installed
at the Warriewood Campus.
Climate Action
• Blackmores CEO Alastair
Symington joined the Australian
Climate Leaders Coalition, a cohort
of 40+ cross-sectoral Australian
CEOs committed to influence
climate action.
• The Blackmores Partnering for
Adaptation program continued
to quantify the impact of climate
change on ingredients, and to
support disclosures in line with the
recommendations of the Task-
force for Climate-related Financial
Disclosures (TCFD).
Biodiversity
• Explored Nature-related impacts
of Australian facility operations
and supply chains – including
evaluating a key ingredient against
the Task-force for Nature-related
Financial Disclosures (TNFD) beta
framework.
Waste diversion
• 64% of waste now diverted
from landfill through improved
management (up from 48% in
prior corresponding period)
and initiatives to support further
improvements underway.
Value Chain Emissions
• Preliminary measurement and
materiality assessment of Scope
3 (Value Chain) greenhouse gas
emissions, with a commitment
to deepen understanding and
data collection to support future
reduction targets.
Sustainable Packaging
• Life Cycle Assessments of major
packaging formats delivered
insights to inform a more
sustainable packaging footprint.
Ethical Sourcing
• Progressed onsite ethical and
sustainable trading audits with four
key suppliers.
• Partnering for People program
continued to build with 13 of the
17 due corrective actions raised
from audits closed during the
reporting period.
Sustainable Sourcing
• Adopted a Sustainable Palm
Oil Standard and progressed
formulation improvements
aligned to sourcing that protects
human rights, species loss and the
environment.
Corporate Citizenship
• Supported people in need by
contributing over $400,000 in
financial and product donations.
Safety
• Enhanced Work Health and Safety
(WHS) systemisation and training.
• Strong COVID-19-Safe response
focused on employee safety and
operational continuity.
• New Employee Assistance
Program for Australia and New
Zealand employees.
Education and Research
• 12,811 accredited health
education touchpoints.
• Natural health training delivered
to 393 employees with 13,500
education modules completed.
• Invested in research with leading
academic and research institutions.
Diversity and Inclusion
• Recognised by the Workplace
Gender Equality Agency (WGEA)
as a Best Place to Work – affirming
Group commitments to equity and
diversity.
• Introduced a commitment to
honour First Nations culture and
approaches to health and nature as
our sustainability program evolves.
• Formed a Diversity, Equity, Inclusion
and Belonging (DEIB) Steering
Committee to drive our DEIB
initiatives.
Healthy
planet
Healthy
people
Healthy
communities
PROGRESS
PROGRESS
PROGRESS
61
Sustainability
Last year Blackmores aligned 50% of
its loan facilities to sustainability targets
via market Sustainability Linked Loan
Principles.
Under the loan agreement1, Blackmores is rewarded
for achieving ambitious emissions reduction targets
as well as meeting ethical supply chain milestones to
address the risk of exploitation.
There are growing requirements for
business to understand and disclose their
impacts and dependencies on nature, and
to take action to protect and restore nature
and biodiversity.
Assessing an organisation’s impacts, dependencies and
associated physical and transition risks, is fast emerging as
an imperative for:
• managing business continuity and supply chain risk
• aligning with imminent disclosure recommendations
including the Task-force for Nature-related
Financial Disclosures.
Our dependency on nature
All businesses depend on nature, particularly a
company like Blackmores as we source many raw
materials from agricultural land, forests and oceans.
Understanding nature-related risks and
opportunities
Blackmores has partnered with Pollination – a leading
climate and nature advisory firm – to conduct a proof of
concept. The strategic Nature-based Risk Assessment
focused on a high value natural ingredient; validating the
risk assessment methodology and supplier engagement
approach before rollout to other key ingredients.
Key milestones to address nature impacts in the year
include:
• development of a Nature Risk Assessment Framework
• pilot Framework to assess a material herbal ingredient
• nature risk assessments undertaken at Blackmores’
major facilities.
Learn more about sustainability at Blackmores in our
2022 Sustainability Report to be released in September at
blackmoressustainability.com.au
Bolstering sustainability
governance through finance
Biodiversity – Partnering for Nature
Increasing
accountability for
our sustainability
goals across the
business will support
our achievement of
them.
1. Sustainability Linked Loans – 50% of Blackmores loan facilities and relate to
Tranche A $75m maturing March 2025. The second Tranche B maturing March 2027.
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BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Our dedicated
employees
participated in numerous
environmental initiatives
in their local communities,
with a 66% increase in
participation in employee
volunteering initiatives
and wellness days.
Renee Boyd, Ethical Sourcing Manager,
Group Operations
63
Caring for our
communities
Eastern Australia flood support
Blackmores offered support as Eastern Australian floods
impacted communities across NSW and Queensland
including donating A$20,000 to flood-affected families via
the Rotary Club of Manly.
Pharmacy and allied health customers affected by
the floods were offered a 40% discount on the entire
Blackmores and BioCeuticals range to ensure fast restocks
and support community health.
Those impacted by the northern NSW floods in March
2022 had access to free naturopathic clinics. Naturopath
Sally Mathrick of Sparkle Well played an integral role in
coordinating a holistic recovery program supported by
fundraising, volunteer practitioners, and donations of
Blackmores products.
As part of our longstanding support of the Quest for
Life Foundation, founded by Petrea King, we funded a
series of free trauma-recovery and wellbeing workshops in
NSW and Victoria.
Flood relief in Malaysia
In 2021, floods devastated eight states across Malaysia.
As part of Blackmores Malaysia’s Project Kindness, we
partnered with the Malaysian Red Crescent Society and
donated MYR20,000 to boost flood relief efforts.
A team of Blackmores volunteers packed and distributed
500 boxes of essentials to flood-affected communities
across Klang Valley.
Better health for Thailand
In August and September 2021, Blackmores supported
the Australian-Thai Chamber of Commerce (AustCham)
to provide packages to six CARE Hubs. The packages
included medical supplies, masks, sanitisers, Blackmores
Bio C 1000 mg, and daily essentials. We contributed
THB100,000 to fund care package delivery to 2,709
families.
Our donation of THB135,000 to the Ramathibodi
Foundation supports the medical school hospital to offer
treatment regardless of social status. Marking Ramadan
in April, Blackmores supplied products including Koala
Multivitamin + Mineral to promote the good health of
children across two orphanages. Blackmores donated
THB100,000 in May 2022 to BaanGerda, a non-profit
organisation caring for over 70 children born with HIV
or orphaned by AIDS.
Partnering to support disadvantaged
communities in Indonesia
Blackmores Indonesia donated over 20,000 bottles of
vitamins to mums and children as part of a program
to boost both nutrition and environmental efforts in
underprivileged Indonesian communities. Partnerships
are critical to our charitable endeavours: we worked
with FoodCycle Indonesia to donate grocery packs
to disadvantaged people impacted by the COVID-19
pandemic, and with E-Recycle Indonesia and Guardian
chemist to reduce plastic waste in landfill. A joint campaign
encouraged Guardian customers to trade their empty
vitamin bottles for a Blackmores discount voucher.
Partner Member status for Blackmores
Blackmores was inducted as a Partner Member of the Rotary
Club of Manly in June 2022. This reflects our significant
contribution to community health and wellbeing. From a
Christmas hamper drive that started over 40 years ago, to
ongoing support through flood events, we’re proud to be
recognised by Rotary.
Better outcomes at women’s health centres
Blackmores donated a range of products via respected
naturopath Dr Ses Salmond to support Women’s Health
Centres in Western Sydney and the Wirringar First Nations
Women’s Centre in Brewarrina. This partnership reflects our
commitment to community health and wellbeing, and to
supporting First Nations health outcomes by reconnecting
to the healing power of nature.
China volunteers through lockdown
Our China team were impacted by lengthy lockdowns
to curb surging COVID-19 cases. The team continued to
support community wellbeing by volunteering in their
respective compounds, delivering food and assisting
healthcare professionals to organise compulsory testing.
Raising funds for bowel cancer awareness
Four Australian and New Zealand offices took part in the
Big Blackmores Bake-Off which raised over A$4000
for the Jodi Lee Foundation (Australia) and Bowel Cancer
New Zealand.
Men’s health support
In support of men’s health issues, Blackmores raised over
A$10,000 for Australian-based charity, Movember, through
educational health seminars.
Creating community
Blackmores continued to prioritise the wellbeing of all
Group employees and foster a sense of community.
During COVID-19 pandemic lockdowns in Australia,
we built a Virtual Connection Space for employee
communication and support.
As a values-led organisation, we are dedicated
to the ongoing promotion of wellbeing in the
communities where we operate.
64
BLACKMORES LIMITED ANNUAL REPORT 2022
64
BLACKMORES LIMITED ANNUAL REPORT 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Edgar Cabal,
Senior Procurement Category Manager,
Group Operations
65
Financial
Report
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
06
5 Year History
67
Directors’ Report
68
Remuneration Report
72
Auditor’s Independence Declaration
92
Independent Auditor’s Report
93
Directors’ Declaration
97
Financial Statements
98
Notes to the Financial Statements
104
Company Information
145
66
BLACKMORES LIMITED ANNUAL REPORT 2022
5 Year History
$’000
2022
2021
2020
2019
2018
Statutory results:
Revenue1
649,521
575,916
568,353
588,914
579,535
Earnings before interest, tax, depreciation and
amortisation (EBITDA)1
82,299
71,643
44,485
87,322
106,556
Depreciation and amortisation1
26,341
25,853
19,396
10,768
8,848
Earnings before interest and tax (EBIT)1
55,958
45,790
25,089
76,554
97,708
Net interest expense
2,653
3,528
5,913
4,995
3,931
Profit before tax
53,305
42,262
19,176
71,559
93,778
Income tax expense
14,750
13,398
6,123
20,947
27,281
Discontinued operations
-
4,650
2,962
2,818
2,726
Gain/(loss) attributable to non-controlling interests
7,933
4,895
907
(39)
(782)
Profit after tax attributable to shareholders of
Blackmores Limited (NPAT)
30,622
28,619
15,108
53,469
70,005
Underlying results:
Underlying Revenue2
649,521
575,916
568,353
588,914
579,535
Underlying EBIT2,3
56,602
47,614
31,400
76,554
101,612
Underlying NPAT2,4
31,075
25,384
15,702
52,120
70,005
Net (cash)/debt
(82,193)
(70,054)
37,345
94,484
49,532
Shareholders’ equity
396,527
373,156
299,499
207,292
192,875
Total assets
590,825
549,181
550,831
493,624
464,850
Current assets
374,449
321,629
303,357
308,222
302,507
Current liabilities
159,912
144,172
130,501
153,205
174,467
Net tangible assets (NTA)
305,740
265,534
182,458
122,508
123,860
Cash generated from operations
55,040
80,390
69,629
51,806
90,131
Number of shares on issue (’000s)5
19,430
19,366
18,678
17,362
17,227
Earnings per share (EPS) – basic (cents)
157.9
148.1
86.4
309.2
406.4
Ordinary dividends per share (DPS) (cents)
95
71
-
220
305
Share price at 30 June
$70.40
$73.47
$77.95
$89.91
$142.50
NTA per share
$15.74
$13.71
$9.77
$7.06
$7.19
Cash conversion ratio6
66.9%
112.2%
156.5%
59.3%
81.5%
Return on shareholders’ equity7
7.7%
7.7%
5.0%
25.8%
36.3%
Return on assets8
9.8%
8.3%
4.8%
16.0%
22.3%
Dividend payout ratio
60.0%
47.9%
-
71.2%
75.0%
Gearing ratio9
(26.1%)
(23.1%)
11.1%
31.3%
20.4%
EBIT to revenue ratio
8.6%
8.0%
4.4%
13.0%
16.9%
Effective tax rate
27.7%
31.7%
31.9%
29.3%
29.1%
Current assets to current liabilities (times)
2.34
2.30
2.32
2.01
1.73
Net interest cover (times)
21.1
13.0
4.2
15.3
24.9
Gross interest cover (times)
19.7
12.5
4.1
14.6
23.4
% change on prior year (Statutory basis)
Revenue
12.8%
1.3%
(3.5%)
1.6%
9.2%
EBITDA
14.9%
61.1%
(49.1%)
(18.1%)
17.4%
EBIT
22.2%
82.5%
(67.2%)
(21.6%)
18.4%
NPAT
7.0%
89.4%
(71.7%)
(23.6%)
18.6%
EPS
6.6%
71.5%
(70.5%)
(27.9%)
18.6%
DPS
33.8%
NMF
(100.0%)
27.9%
13.0%
1. Excluding Discontinued operations.
2. Attributed to shareholders of Blackmores Limited, excluding minority interest. Presented on a continuing basis.
3. Underlying EBIT from 2019 to 2022 is a non-Statutory measure of financial performance derived from Statutory EBIT, after adjustment for material one-off items that are
non-recurring in nature, which the Board has determined do not reflect the on-going operations of the Group. A reconciliation between Underlying EBIT to Statutory
EBIT is presented in note 2.2 to the Financial Statements. 2018 statutory and underlying financial results were consistent.
4. Underlying NPAT from 2019 to 2022 is the after tax impact of Underlying EBIT. 2018 statutory and underlying NPAT results were consistent.
5. Number of shares on issue at year end.
6. Calculated as cash generated from operations divided by EBITDA.
7. Calculated as net profit after tax divided by closing shareholders’ equity.
8. Calculated as EBIT divided by average total assets.
9. Gearing ratio is calculated as net debt divided by the sum of net debt and shareholders’ equity.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
67
67
Directors’
Report
2022
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
68
BLACKMORES LIMITED ANNUAL REPORT 2022
Directors’ Report
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
DIRECTORS’ SHAREHOLDINGS
The following table sets out each Director’s relevant interest in all financial instruments issued by Blackmores as at 30 June 2022.
DIRECTORS
FULLY PAID ORDINARY SHARES
SHARE RIGHTS
David Ansell (retired 30 June 2022)
2,000
-
Christine Holman (resigned 28 July 2021)
2,913
-
Erica Mann
1,488
-
Stephen Roche
-
-
Wendy Stops
2,500
-
Alastair Symington
18,536
96,924
Anne Templeman-Jones
902
-
Sharon Warburton
897
-
Total
29,236
96,924
SHARE RIGHTS GRANTED TO DIRECTORS AND SENIOR EXECUTIVES
Selected Senior Executives are invited annually by the Board to participate in the Executive Share Plan (ESP).
Under this plan, eligible Senior Executives are granted rights to acquire shares in Blackmores.
Refer to the Remuneration Report on page 90 for more details.
The following table sets out all rights granted to Directors and Senior Executives during the year ended 30 June 2022.
20221
NUMBER
Executive Director
Alastair Symington
22,938
Senior Executive
Gunther Burghardt
7,421
Patrick Gibson
9,538
Total
39,897
1. Includes rights granted under the 2022 financial year (FY22) Long-Term Incentive Plan (LTI) and Short-Term Incentive Plan (STI). Provided specific performance
objectives and hurdles are met rights vest over the three-year period commencing 1 July 2021 to the year ending 30 June 2024.
SHARE OPTIONS
During and since the end of the financial 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 72 to 91.
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 and Technology Committee. Members of the Board acting on the Committees during the year were:
Audit
Sharon Warburton, Chair
Stephen Roche1
Anne Templeman-Jones
Christine Holman3
Wendy Stops4
Nominations
Anne Templeman-Jones, Chair
Wendy Stops
Sharon Warburton
Stephen Roche1
Christine Holman3
David Ansell4
People and Remuneration
Stephen Roche, Chair1
David Ansell
Anne Templeman-Jones
Wendy Stops
Christine Holman3
Sharon Warburton4
Risk and Technology
Wendy Stops, Chair
Erica Mann1
Anne Templeman-Jones
Sharon Warburton
David Ansell2
Christine Holman3
1. From 12 April 2022.
2. To 27 May 2022.
3. Christine Holman resigned as a Non-Executive Director effective 28 July 2021.
4. To 12 April 2022.
Details of current Board Committee memberships are set out on pages 36 and 37.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
69
Directors’ Report
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
COMPANY SECRETARIES
Helen Mediati, B.Ed. (Primary) (Hons), LLB, FGIA
Ms Mediati joined Blackmores as Group General Counsel
effective 11 April 2022 and was appointed as the Company
Secretary effective 11 August 2022.
William Hundy, LLB, B. Comm, B.Sc., FAICD, FGIA, Diploma of
Corporate Management
Mr. Hundy joined Blackmores as Company Secretary on
4 April 2022. Mr. Hundy resigned as Company Secretary effective
11 August 2022.
Richard Conway, LLB (Hons) and BA, Certificate in Governance
Practice.
Mr Conway joined Blackmores in July 2021 as its Group General
Counsel and Company Secretary. Mr Conway resigned as
Company Secretary on 7 April 2022.
Cecile Cooper, BBus, Dip Inv Rel (AIRA), CPA, GAICD. Ms Cooper
joined Blackmores in 1991. Ms Cooper resigned as Company
Secretary 26 July 2021.
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
South East Asia, China and India.
RESULTS
The Financial Report for the years ended 30 June 2022 and
30 June 2021 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 $38,555 (2021:
$33,514).
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 40 to 45 inclusive.
DIVIDENDS
The amounts paid or declared by way of dividend since the start
of the financial year are:
• A final dividend of 32 cents per share in respect of the year
ended 30 June 2022.
• An interim dividend of 63 cents per share fully franked in
respect of the year ended 30 June 2022 was paid on
12 April 2022.
• On 18 August 2022, Directors declared a final dividend for
the ended 30 June 2022 of 32 cents per share fully franked,
payable on 19 September 2022 to shareholders registered on
1 September 2022. This will bring total ordinary dividends to
95 cents per share fully franked (2021: 71 cents per share) for
the full year.
GROUP STRATEGY
An updated strategy was approved during the 2022 financial
year. The three-year FY24 growth strategy is to deliver
sustainable, profitable growth. The strategy is set out in the
Annual Report on pages 20 to 25.
Further information on likely developments in the operations
of the Group and the expected results of operations have been
referred to in the Annual Report on pages 20 to 25.
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 2022.
EVENTS SUBSEQUENT TO THE BALANCE
SHEET DATE
Final dividend
A final dividend was declared as described in note 4.5.2.
There have 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 endorses
the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations. Blackmores’ Corporate
Governance Statement is available on its website at
blackmores.com.au (go to ‘Investor Centre’, then click
‘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 40 to 45.
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.
70
BLACKMORES LIMITED ANNUAL REPORT 2022
Directors’ Report
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
DIRECTORS’ MEETINGS
The number of Directors’ meetings held (including meetings of Committees of Directors) during the financial year is as follows:
Board meetings
Committee meetings
People and
Audit
Nominations
Remuneration
Risk and Technology
DIRECTORS
H
A
H
A
H
A
H
A
H
A
David Ansell
18
18
-
-
1
1
9
9
5
5
Christine Holman
1
1
-
-
-
-
1
1
-
-
Erica Mann
10
10
-
-
-
-
-
-
1
1
Stephen Roche
10
10
1
1
-
-
1
1
-
-
Wendy Stops
18
18
4
4
1
1
8
8
6
6
Alastair Symington
18
17
-
-
-
-
-
-
-
-
Anne Templeman-Jones
18
18
5
5
1
1
9
9
6
6
Sharon Warburton
18
18
5
5
1
1
7
7
6
6
H: Number of scheduled meetings held during the time that the Director held office or was a member of the committee during the year.
A: Number of meetings attended.
All Non-Executive Directors who are not members of the standing Board Committees are invited to, and generally attend, the
standing Board Committee meetings. The independent Non-Executive Directors met separately during the financial year.
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 92 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.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
71
2022 Audited
Remuneration
Report
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
07
1. Introduction
2. Senior Executive Remuneration Framework
3. Performance and Remuneration Outcomes
4. Senior Executive Remuneration Tables
5. Remuneration Governance
6. Non-Executive Director Remuneration
7. Additional Statutory Disclosures
72
BLACKMORES LIMITED ANNUAL REPORT 2022
1
INTRODUCTION
KEY POINTS
Blackmores’ remuneration framework aligns Senior Executive remuneration to both Group performance
and individual performance and behaviour.
Under Blackmores’ FY22 Short-term Incentive (STI) plan, the gateway threshold of 95% of Group Budgeted
EBIT was met and the Board approved an STI pool of $5.5m based on the outcomes of the Group financial
measures under the plan. STI payments awarded to the Executive Director and Senior Executives are
provided on pages 81 and 84-85 and are delivered as 50% cash and 50% deferred equity.
Long-term Incentives (LTI) were not awarded in the year as the achievement of the three-year EPS and
ROIC targets for the FY20 plan, granted in December 2019, were not met.
No LTI vested in relation to FY21 or FY22 LTI plans as any vesting under these plans is not applicable
until after the end of the three-year performance period (FY23 and FY24 respectively) .
Blackmores’ long-standing profit share scheme which recognises and rewards the collective
contribution employees make to the Blackmores Group paid out at $2.8 million, equivalent to 7.5 days.
The Executive Director and Senior Executives received no increase to their Total Fixed Remuneration
(TFR) during the year.
Non-Executive Director fees were not increased in FY22.
For the Executive Team and Non-Executive Directors, increases to the Superannuation Guarantee rate
from 9.5% to 10% as of 1 July 2021 and from 10% to 10.5% as of 1 July 2022 are absorbed within
their TFR and Director fees, respectively, with base salary and cash fee, respectively, reducing and
superannuation contributions increasing by the commensurate 0.5%.
The Board regularly reviews Blackmores’ remuneration framework and the appropriateness of executive
fixed and variable elements of the framework and applicable financial and non-financial performance
metrics. The current executive remuneration framework will remain unchanged for FY23.
The Blackmores Working Together Agreement was successfully negotiated with 89% of employees
voting in favour of the renewed agreement.
Continued support to employees through our COVID-19 safe practices continued as outlined on page 54.
Commencing in November 2021, Blackmores introduced a new Employee and Director Share Rights
Plan. Details of the plan are provided on page 80.
Dear Shareholder,
On behalf of the Board, I am pleased to present to you our 2022 Remuneration
Report. The report outlines performance and remuneration outcomes for Blackmores’
Key Management Personnel (KMP), encompassing the Chief Executive Officer (CEO) ,
the Chief Financial Officer (CFO), and Executive and Non-Executive Directors.
2022 Audited Remuneration Report
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
73
2022 Audited Remuneration Report
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 that are references for FY22 and the comparative year where applicable, as
indicated below:
Role definitions
Directors
Executive Directors and Non-Executive Directors
Executive Directors
Former Executive Director Marcus Blackmore and the Chief Executive Officer
Senior Executives
Executive Directors and the other executives defined as Key Management Personnel (KMP) who have authority and
responsibility for planning, directing and controlling the activities of the Blackmores Group, directly or indirectly
Key Management
Personnel (KMP)
Chief Executive Officer, Chief Financial Officer, Executive Directors and Non-Executive Directors
Executive Team
Chief Executive Officer and the direct reports to the Chief Executive Officer
Other definitions
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 the KMP during FY22.
Non-Executive Directors
Anne Templeman-Jones Non-Executive Director, Chair of the Board, Chair of the Nominations Committee, member of the Audit Committee,
Risk and Technology Committee and People and Remuneration Committee.
David Ansell
Non-Executive Director and member of the People and Remuneration Committee and Risk & Technology
Committee (ceased as Chair of the People and Remuneration Committee, and member of the Nominations
Committee on 12 April 2022 and member of the Risk & Technology Committee on 27 May 2022).
Erica Mann
Non-Executive Director (appointed on 20 September 2021), member of the Risk and Technology Committee.
Stephen Roche
Non-Executive Director (appointed on 20 September 2021), Chair of the People and Remuneration Committee
(appointed on 12 April 2022) and member of the Audit Committee and Nominations Committee.
Wendy Stops
Non-Executive Director, Chair of the Risk and Technology Committee, and member of the People and
Remuneration Committee, Nominations Committee and Audit Committee (ceased as member of the Audit
Committee on 12 April 2022).
Sharon Warburton
Non-Executive Director, Chair of the Audit Committee, member of the Risk and Technology Committee,
Nominations Committee, and People and Remuneration Committee (ceased as member of the People and
Remuneration Committee on 12 April 2022).
Former Non-Executive Director
Christine Holman
Non-Executive Director, Chair of the People and Remuneration Committee, member of the Audit Committee,
and Nominations Committee, and Risk and Technology Committee (resigned as Non-Executive Director
effective 28 July 2021).
Executive Director
Alastair Symington
Chief Executive Officer and Managing Director.
Senior Executive
Patrick Gibson
Chief Financial Officer (joined on 21 February 2022 and commenced as KMP on 1 March 2022).
Former Senior Executive
Gunther Burghardt
Chief Financial Officer (ceased as KMP on 28 February 2022).
74
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
2
SENIOR EXECUTIVE REMUNERATION FRAMEWORK
The remuneration framework links remuneration outcomes to both the Group’s performance and behaviour.
It also provides the opportunity to share in the success and profitability of Blackmores in alignment with
increased shareholder wealth. The key elements of the FY22 framework are illustrated below.
Rewards the achievement of strategic goals, financial
targets, operational performance and behaviour gateway
Attracts and retains talented Senior Executives
Aligns Senior Executives to the enhancement of Blackmores’
earnings and shareholder wealth
BLACKMORES’ REMUNERATION FRAMEWORK
BLACKMORES’ REMUNERATION STRUCTURE
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
Fixed
Remuneration
Short-term
Incentive (STI)
Profit Share
Long-term Incentive
(LTI)
Purpose
To attract and retain
key talent by providing
reasonable and fair
remuneration.
To reward high
performance aligned
to improving company
performance in the short
to mid-term.
Whole of organisation
plan for eligible
permanent employees,
which recognises
and rewards the
collective contribution
employees make to
the Blackmores Group.
To motivate and align
Executives with the
long-term interests of
Blackmores’ shareholders.
Link to
performance
Targeted to be
reasonable and fair,
taking into account
Senior Executives’
responsibilities,
experience and
individual and Company
performance.
Benchmarked every
two years through
independent review
against companies with
relative size and scale of
Blackmores’ operations.
Market data of three
comparator peer groups
is considered:
1. comparative market
capitalisation;
2. bespoke company
selection;
3. Australia and New
Zealand consumer
staples companies.
Linked to clearly-specified
annual Group targets and
individual objectives and
behaviours.
Award is dependent on
first half and full year
Group NPAT, paid in
December and June,
aligned to Blackmores’
business strategy and
objectives.
Aligned to long-term
earnings and returns targets.
Performance
measures
The STI scheme is designed
around appropriate
Group level performance
benchmarks based on
quantitative and qualitative
gateway measures. A Group
STI pool is determined
based on three key
performance measures:
Group EBIT, Group Net
Sales, and Group Net
Working Capital.
A pool of up to 10% of
Group NPAT is available
to be shared among
eligible employees,
including Executives.
Three-year Earnings Per
Share (EPS) Compound
Annual Growth Rate (CAGR)
(weighting: 50%) and three-
year Return on Average
Invested Capital average of
a three-year performance
period (ROIC) (weighting:
50%).
Delivery
Base salary,
superannuation, and
any non-monetary
benefits (including
fringe benefits tax).
Comprises cash payments
and as applicable to the
CEO, CFO and other
members of the Executive
Team, there is a deferral of
a portion of the award into
equity.
Cash paid twice a year.
Performance rights.
75
Fixed remuneration
Year 1
Remuneration delivery
Year 2
Year 3
Profit share
LTI
STI
50% paid in cash
50% paid in equity
50% equity: one
year deferral for
Executive Team
50% equity: two year deferral for the CEO
50% subject to three-year EPS CAGR
50% subject to three-year ROIC
100% delivered in
performance rights
Cash
Base salary,
superannuation
and other
non-monetary
benefits
50% cash STI
paid at the end
of the one-year
performance
period
Paid twice-yearly
Minimum shareholding requirement (MSR)
In order to assist in aligning the interests of KMP and the Executive Team with the interests of the Company’s shareholders, Directors
and the Executive Team are required to build a minimum shareholding in the Company and maintain it during their tenure.
Under Blackmores’ MSR Policy, the CEO and the Executive Team are required to build minimum shareholdings equal to 100% and
50% respectively of their total fixed remuneration within 5 years of their appointment.
Non-Executive Directors are required to build minimum shareholding equal to 100% of their 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. Shares are only permitted to be purchased during an approved open trading window.
Senior Executive Remuneration Mix
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 equity.
Blackmores’ target and maximum Senior Executives' remuneration mix, as a percentage of total remuneration3, is outlined below.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
On Target
Reward
CEO
CFO
38
24
38
48
27
33
34
33
32
41
24
28
At Maximum
Reward
CEO
CFO
Fixed Remuneration1
STI
LTI2
1. Fixed remuneration includes cash, superannuation and non-monetary benefits (including fringe benefits tax).
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 LTI). Note, profit share is excluded from the graph and is separately
disclosed on page 84.
76
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
What is the STI and
who is eligible to
participate?
The STI plan provides eligible employees with an STI Award for annual performance against measured
targets set at the beginning of the performance period. STI Awards are delivered to the Executive Team as
50% cash and 50% deferred equity. For all other eligible employees, STI Awards are delivered as 100% cash.
What is the
amount Senior
Executives can
earn?
Chief Executive Officer
60
120
Chief Financial Officer
50
100
What were the
performance
conditions for
FY22?
Target
STI Opportunity (% of TFR)
Maximum
Why were these
performance
measures
chosen?
EBIT performance is a well-recognised measure of financial performance and a key driver of shareholder returns.
Group EBIT measures align employees with the 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.
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.
Individual KPIs are set at the start of each financial year and the Board reviews performance assessments for
Senior Executives and the direct reports to the CEO.
Does the Board
have an Executive
Remuneration
Malus and
Clawback Policy?
The Board adopted an enhanced Executive Remuneration Malus and Clawback Policy (Clawback Policy) on
22 July 2022. The prior Clawback Policy provided for Board discretion on circumstances related to Malus
and Clawback and the application and scope of the enhanced policy has been broadened and increases the
Board’s discretion to cancel or withhold incentive awards. For the CEO, Managing Director and the Executive
Team members, the Clawback Policy applies to all forms of incentive awards granted, both cash and equity.
For non-Executive Team members, the Clawback Policy only applies to any grants of equity incentive awards.
Under the Clawback Policy, the Board is entitled to withhold payments, forfeit unvested rights or require the
repayment of proceeds of the sale of any shares granted, if the Board determines that the relevant team
member is in breach of the Blackmores Code of Conduct, has acted fraudulently, is in breach of their material
obligations or any other of the circumstances as set out in the Clawback Policy.
Short-term Incentive (STI) – Details
The following outlines the details of the STI plan. Specific information relating to the actual award outcomes are set out in the tables
on pages 81 and 84-85.
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 Budgeted EBIT; 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: The total Group STI pool is determined based on the STI target at a % of fixed remuneration,
and the business must also meet three key performance measures:
• Group Underlying EBIT (weighting: 50% of the overall pool)
• Group Net Sales (weighting: 25% of the overall pool)
• Group Net Working Capital as a percentage of Net Sales (weighting: 25% of the overall pool)
Each of the above three measures has its own corresponding threshold, target and stretch performance level
and corresponding payout level.
Region/Functional pool: Each region (ANZ, China, International) / function is then allocated a proportion of the
Group STI pool relative to other markets/functions.
Individual assessment: Individual performance is rated against personal KPIs to determine an individual’s STI
outcome.
Senior Executives are not awarded any STI in the instance of not meeting minimum individual performance
expectations.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
77
2022 Audited Remuneration Report
Profit Share – Details
The following outlines the details of the Profit Share plan. Specific information relating to the actual award outcome is set out in the
table on pages 84 and 85.
What is the Profit Share
plan and who is eligible to
participate?
All eligible permanent employees1 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 employees on a
pro-rata basis by reference to their Fixed Annual Remuneration. The profit share plan is in addition to
the STI award and is covered under the Company’s Collective Agreement.
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 based on
November and May forecasts, and the total number of employees and salaries in the calculation.
What were the performance
conditions for FY22?
Under the Company’s Collective Agreement, up to 10% of Group NPAT is allocated to eligible
employees.
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, in December and June, based on Blackmores’ NPAT calculation based
on management forecasts for November and May in the reporting year.
1. Minimum conditions in profit share period: permanent fulltime and parttime employees of the Blackmores Group who: 1) commenced employment prior to 1 December
or 1 June in the relevant profit share period; and 2) are employed at the time profit share payments are made. Payments are made on a pro-rata basis where employment
is under 12 months in the relevant profit share period.
Long-term Incentive (LTI) – Details
The following outlines the details of the LTI plan. Specific information relating to the actual award outcome is set out in the table on
pages 84 and 85.
What is the LTI and who is
eligible to participate?
Eligible employees are invited annually by the Board to participate in the LTI Executive Share Plan.
Under this plan, eligible employees are granted rights to acquire shares in Blackmores.
Eligible employees include Executive Directors, Senior Executives and other nominated employees.
What were the
performance conditions
for FY22?
• Three-year Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR). Weighting: 50%
• Three-year Return on Average Invested Capital three-year average over the performance period
(ROIC). Weighting: 50%
The three-year performance period for the EPS and ROIC measures is FY22 – FY24.
ROIC %
Vesting (% of Total Fixed Remuneration)
CEO
CFO
Less than 12%
0%
0%
12%
25%
25%
More than 12% but less than 13%
Pro rata between 25% - 50%
Pro rata between 25% - 30%
13%
50%
30%
More than 13% but less than 16%
Pro rata between 50% - 75%
Pro between 30% - 50%
16% or more
75%
50%
Annual EPS Compound Annual
Growth Rate
Vesting (% of Total Fixed Remuneration)
CEO
CFO
Less than 10%
0%
0%
10%
25%
25%
More than 10% but less than 20%
Pro rata between 25% - 50%
Pro rata between 25% - 30%
20%
50%
30%
More than 20% but less than 30%
Pro rata between 50% - 75%
Pro between 30% - 50%
30% or more
75%
50%
78
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
Long-term Incentive (LTI) – Details (Cont.)
Why were these
performance measures
chosen?
EPS performance measure:
• In determining the EPS performance measure for Blackmores’ LTI plan, the Board has recognised
EPS growth to be a key driver of shareholder value, influencing both share price and the capacity to
pay increased dividends.
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 LTI plan their interests become more directly aligned with those of
Blackmores’ other shareholders.
ROIC performance measure:
• The ROIC performance measure allows 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 consider 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.
What is the allocation
methodology?
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 14 trading days prior to and
14 trading 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 2024 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.
When are performance
conditions tested?
Compounded annual growth in EPS and and the average three-year 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.
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 either at the end of
the three-year performance period or on the termination of employment for a ‘good leaver’.
Does the Board have an
Executive Remuneration
Malus and Clawback
Policy?
The Board adopted an enhanced Executive Remuneration Malus and Clawback Policy (Clawback
Policy) on 22 July 2022. The prior Clawback Policy provided for Board discretion on circumstances
related to Malus and Clawback and the application and scope of the enhanced policy has been
broadened and increases the Board’s discretion to cancel or withhold incentive awards. For the CEO,
Managing Director and the Executive Team members, the Clawback Policy applies to all forms of
incentive awards granted, both cash and equity. For non-Executive Team members, the Clawback
Policy only applies to any grants of equity incentive awards. Under the Clawback Policy, the Board is
entitled to withhold payments, forfeit unvested rights or require the repayment of proceeds of the
sale of any shares granted, if the Board determines that the relevant team member is in breach of the
Blackmores Code of Conduct, has acted fraudulently, is in breach of their material obligations or any
other of the circumstances as set out in the Clawback Policy.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
79
2022 Audited Remuneration Report
SHARE PRICE ($) AS AT 30 JUNE 2022
FY18
FY19
FY20
FY21
0
30
60
90
120
150
FY22
70.40
FY18
FY19
FY20
FY21
0
50
100
150
200
250
300
350
FY22
95
DIVIDEND PER SHARE (CENTS)
3
PERFORMANCE AND
REMUNERATION
OUTCOMES
Performance Incentives –
Actual Performance 2022
Financial Year
Actual performance over the
past five years is shown in the
following graphs:
Employee and Director Share Rights Plan – Details
Previous Staff Share Plans (the Staff Share Plan and the Staff Share Acquisition Plan) have been decommissioned and no further
offerings were made under those plans post FY21.
Commencing in November 2021, Blackmores introduced a new Employee and Director Share Rights Plan designed to provide the
opportunity for eligible employees, including Senior Executives and Directors, to acquire rights to receive shares through sacrificing a
portion of their remuneration.
The following outlines the details of the Employee and Director Share Rights Plan.
What is the Employee
and Director Share Rights
Plan and who is eligible to
participate?
All eligible permanent employees in Australia, including Senior Executives and Directors can join the
plan to acquire rights to receive shares through sacrificing a nominated portion of their remuneration
during the relevant participation period.
The number of rights granted to a participant is equivalent to the remuneration sacrificed, divided
by the five-day volume weighted average closing price of Blackmores shares on the ASX over the
period immediately prior to the grant date, which is on or around the sixth business day immediately
following release of Blackmores’ annual financial report for the relevant financial year.
When are shares allocated
to participants?
Rights will automatically vest in two equal tranches:
• Tranche 1 will vest on the business day immediately following the release of Blackmores’ half-yearly
financial report for the relevant financial year, provided that a participant remains in employment
with Blackmores up until the vesting date.
• Tranche 2 will vest on the business day immediately following the release of Blackmores’ annual
financial report, provided that a participant remains in employment with Blackmores up until the
vesting date.
If a participant leaves employment with Blackmores prior to the vesting date, their unvested rights will
automatically lapse and instead of receiving shares they will be paid in cash an amount equal to the
remuneration that has already been sacrificed.
Subject to any applicable laws and to any applicable share trading blackout periods under
Blackmores’ Share Trading Policy, if rights vest the corresponding shares will be allocated to
participants on the third business day (or as soon as practicable) after the vesting date.
Restrictions on dealing apply to the shares and at the end of a participant’s nominated restriction period,
of three to fifteen years, the dealing restriction is lifted and the participant is able to access their shares.
As the plan is a salary sacrifice plan, no performance conditions apply to the rights. The shares are
purchased on-market.
What is the purpose of the
plan?
The plan:
• provides an opportunity for participants to build their shareholding in Blackmores;
• allows participants to share in the long-term growth of Blackmores, further aligning their interests
with the interests of shareholders;
• provides participants with a simple and authorised way of acquiring rights to receive shares in
Blackmores in a tax-effective manner; and
• assists participants with the acquisition of shares in compliance with Australian insider trading laws
and the Blackmores’ Share Trading Policy.
Does Blackmores offer
matching shares to
participants?
There is no matching share component attached to the plan.
80
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
Short-term Incentive (STI)
Under the current remuneration framework, EBIT is the key Group performance measure, with a gateway threshold of 95% of Group
Budgeted EBIT to be met before any STI award becomes payable. The STI plan also includes three Group financial measures by which
the Executive Team and key leaders’ KPIs are measured, once the gateway has been achieved:
• Group Underlying EBIT (weighting: 50% of the overall pool)
• Group Net Sales (weighting: 25% of the overall pool)
• Group Net Working Capital as a percentage of Net Sales (weighting: 25% of the overall pool)
Performance measures for both financial and non-financial for the Senior Executives and Executive Team are weighted as follows:
FY22 STI outcomes
The business delivered an EBIT outcome that met the EBIT gateway threshold for STI awards to become payable.
In contemplating variable reward decisions, the Board took a number of factors into consideration with respect to:
• the outcome of the three Group financial measures by which the Executive Team and key leaders’ KPIs are measured;
• the outcome of individual performance against non-financial measures;
• the current reward framework;
• broader information on corporate performance and impact on stakeholders (customers, investors and employees) and applying an
independent assessment by the independent Directors;
• a set of principles that were designed to provide fairness and clarity aligned in allocating any performance recognition;
• proportionality for leadership accountability for overall business results, strategic execution and personal performance; and
• timely signals to executives and employees on performance and conduct that is in the long-term interests of the company.
The Board considers the manner in which the STI pool and individual award allocations as being fair and equitable, and in line with
STI plan rules for assessing performance and differentiation based on financial and non-financial performance.
Performance against the following three strategic objectives was assessed by the Board in respect to non-financial measures for the
CEO and CFO:
• Growth in targeted segments and markets
• Simplify operations and reduce costs
• People and Planet
Details of FY22 STI opportunity and the actual payments awarded to the CEO and CFO are shown in the following table.
Measure
CEO and CFO
Executive Team
Financial
70%
60%
Non-financial
30%
40%
Total
100%
100%
STI Opportunity (% of Total Fixed
Remuneration)
STI Awarded
Senior Executive
Target
Maximum
% of Total
Fixed
Remuneration
% of Target STI
Opportunity
$
Alastair Symington (CEO)
60%
120%
39%
65%
507,0002
Patrick Gibson (CFO)1
50%
100%
45%
90%
120,2052
Gunther Burghardt (Former CFO)3
50%
100%
0%
0%
0
1. Joined on 21 February 2022 and commenced as KMP on 1 March 2022.
2. Delivered as 50% cash and 50% deferred equity (2-year deferral for the CEO and 1-year deferral for the CFO). Award amount of $120,205 for the CFO is pro-rata
amount from 21 February 2022.
3. Ceased employment on 28 February 2022.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
81
2022 Audited Remuneration Report
FY18
FY19
FY20
FY21
0
20
40
60
80
100
120
FY22
56.6
UNDERLYING EBIT ($M)1
FY18
FY19
FY20
FY21
0
520
540
560
580
600
620
640
660
FY22
649.5
NET SALES ($M)
The three Group performance financial measures, Blackmores’
EBIT, Net Sales and Net Working Capital as a percentage of
Net Sales for FY22 and over the past five years are shown in
the following graphs.
1. Underlying EBIT is non-Statutory measure of financial performance derived
from Statutory EBIT, after adjustment for material one-off items that are
non-recurring in nature, which the Board has determined do not reflect the
on-going operations of the Group. A reconciliation between Underlying EBIT
to Statutory EBIT is presented in note 2.2 to the Financial Statements .
2018 statutory and underlying financial results were consistent.
1. Underlying EPS is non-Statutory measure of financial performance derived
from Statutory EPS from Continuing operations, after adjusting Earnings
for material one-off items that are non-recurring in nature, which the Board
has determined do not reflect the on-going operations of the Group.
2018 statutory and underlying EPS were consistent.
1. Underlying ROIC is non-Statutory measure of financial performance
derived from Statutory ROIC from Continuing Operations, after adjusting
Net operating profit after tax (NOPAT) for material one-off items that are
non-recurring in nature, which the Board has determined do not reflect the
on-going operations of the Group. 2018 statutory and underlying ROIC
were consistent.
NET WORKING CAPITAL AS A % OF NET SALES
FY18
FY19
FY20
FY21
0
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
FY22
20.5%
Long-term Incentive (LTI)
The two LTI measures (EPS and ROIC) are equally weighted
(50% EPS weighting and 50% ROIC weighting) and the LTI plan
has a three-year performance period.
Due to not meeting the minimum performance hurdle
requirements under the FY20 LTI plan (i.e. performance period
beginning 1 July 2019 and ending 30 June 2022), there were
no FY20 LTI awards eligible to vest in FY22. The FY21 and FY22
plans were not eligible to vest in the current year as any vesting
under these plans is not applicable until after the end of the
three-year performance period (FY23 and FY24 respectively).
The total remuneration for the financial year, the details of
which are shown on page 84 includes an accounting expense
of $1.5 million (2021: $582,121) for these performance rights.
This amount has been calculated based on an assessment of
the likelihood of achievement of the performance hurdles over
the three-year performance period and represents a pro rata
amount of the total value of the unvested rights, from grant date
to expected exercise date.
UNDERLYING ROIC (%)1
UNDERLYING EPS (CENTS)1
FY18
FY19
FY20
FY21
0
50
100
150
200
250
300
350
400
450
FY22
160.2
2018
2019
2020
2021
0
5
10
15
20
25
30
35
2022
11.2
82
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
CEO Remuneration Outcomes – Five-Year History
The Group’s remuneration framework is designed to reward participants 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.
CEO performance-related remuneration over the past five years illustrates this linkage to business performance. Alastair
Symington was appointed CEO during FY20. The performance-related remuneration in the prior years relate to prior CEO's,
Prior to FY21, the STI plan was based on NPAT gateway performance measure and from FY21 it is based on EBIT gateway
performance measure.
STI EARNED AS A % OF MAXIMUM
LTI AWARDED AS A % OF MAXIMUM
ROIC (first introduced as a measure for LTI in 2020)
LTI
FY18
FY19
FY20
FY21
FY22
0
5
10
15
20
25
0
20
40
60
80
100
ROIC %
LTI awarded as a
% of maximum
30
Earnings per share (EPS)
LTI
FY18
FY19
FY20
FY21
FY22
0
100
200
300
400
500
600
0
20
40
60
80
100
Cents
LTI awarded as a
% of maximum
FY18
FY19
FY20
FY21
FY22
0
15
30
45
60
75
90
0
20
40
60
80
100
$M
STI earned as a
% of maximum
105
Underlying net profit after tax (NPAT)
STI
Underlying earnings before interest and tax (EBIT)
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
83
2022 Audited Remuneration Report
4
SENIOR EXECUTIVE REMUNERATION TABLES
Statutory Remuneration Table
The following table discloses the remuneration outcomes of the Senior Executives for the financial year ended 30 June 2022. The table
has been prepared in accordance with Section 300A of the Corporations Act 2001.
The statutory remuneration table includes the accounting value for LTI and STI grants for the FY21 and FY22 years, including sign-on
grants in FY22, which have not yet vested.
OTHER
SHORT-TERM
POST-
LONG-TERM
SHARE-
EMPLOYMENT
TERMINATION
EMPLOYMENT
EMPLOYMENT
BASED
BENEFITS
BENEFITS
BENEFITS
BENEFITS5
PAYMENT
SALARY
STI AND
NON-
TERMINATION
PERFORMANCE
AND FEES
PROFIT SHARE1 MONETARY2
OTHER3
PAYMENTS4 SUPERANNUATION
OTHER
RIGHTS6
TOTAL
$
$
$
$
$
$
$
$
$
Executive Director
Alastair Symington
2022
1,276,434
290,429
5,036
55,347
-
23,568
410,336
1,762,035 3,823,185
2021
1,278,316
78,000
1,854
12,958
-
21,694
410,336
628,588 2,431,746
Senior Executive
Patrick Gibson7
2022
248,664
63,116
2,358
113,651
-
11,784
-
191,614
631,187
Former Executive Director
Marcus Blackmore8
2022
-
-
-
-
-
-
-
-
-
2021
121,080
-
10,601
-
90,810
10,697
-
-
233,188
Former Senior Executive
Gunther Burghardt9
2022
409,499
13,476
-
15,369
-
17,676
-
(40,304)
415,716
2021
603,315
38,188
1,536
24,629
-
21,694
-
75,170
764,532
Total
2022
1,934,597
367,021
7,394
184,367
-
53,028
410,336
1,913,345 4,870,088
2021
2,002,711
116,188
13,991
37,587
90,810
54,085
410,336
703,758
3,429,466
1. ‘STI and profit share’ includes amounts paid by way of cash STI and profit share. $290,429 for Alastair Symington comprises $36,929 for FY22 Profit Share payment
and $253,500 for the cash portion of FY22 STI which is 50% of his total FY22 STI award outcome. The remaining 50% is deferred for two years into equity in the form of
performance rights and is shown in the performance rights column. $63,116 for Patrick Gibson comprises $3,013 for FY22 Profit Share payment and $60,103 for the
cash portion of FY22 STI which is 50% of his total FY22 STI award outcome. The remaining 50% is deferred for one year into equity in the form of performance rights and
is shown in the performance rights column. $13,476 for Gunther Burghardt is for 1H22 Profit Share payment.
2. ‘Non-monetary’ includes benefits and any applicable fringe benefits tax.
3. ‘Other’ shown in short-term employment benefits relates to provisions for annual leave. For Patrick Gibson, ‘Other’ comprises $19,901 of employment benefits related to
provisions for annual leave and $93,750 which relates to a contractual sign-on cash payment made to Patrick Gibson following commencement of employment.
4. Termination payments for Marcus Blackmore in FY21 is payment in lieu-of notice paid as an employment termination payment (ETP).
5. ‘Other’ shown in long-term employment benefits relates to provisions for long service leave (if applicable), with the exception of the $410,336 (2021: $410,336)
forAlastair Symington which relates to Sign-On Shares under the Executive Share Plan as part of Mr Symington’s employment contract. These Shares are subject to a
service condition being continuous employment with Blackmores Limited from 16 September 2019 to 16 September 2022.
6. The FY22 share-based payments include the LTI plan and represent the FY22 portion of the fair value of rights granted in FY20, FY21 and FY22, being $1,508,535 for
Alastair Symington, $131,511 for Patrick Gibson, which comprises $53,232 related to LTI and $78,279 related to contractual sign-on share rights, and ($40,304) for
Gunther Burghardt. The negative amount for Gunther Burghardt represents unwinding of cumulative LTI expenses from prior years. The FY20 rights have not vested
and there is nil value included in FY21 and FY22 as the performance conditions were not met. Vesting of the FY21 and FY22 rights remains subject to performance and
service conditions as outlined on pages 78 and 79. The FY22 share based payments includes FY22 deferred STI in the form of performance rights for Alastair Symington
and Patrick Gibson is $253,500 and $60,103 respectively. The deferral period is 2 years and 1 year, respectively, and represents 50% of their total FY22 STI award
outcome. The remaining 50% is paid as cash and is shown in the STI and profit share column.
7. Patrick Gibson joined on 21 February 2022 and commenced as KMP on 1 March 2022.
8. Marcus Blackmore ceased as an Executive Director on 23 October 2020.
9. Gunther Burghardt ceased employment as Chief Financial Officer on 28 February 2022.
84
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
Performance-related remuneration
Statutory performance-related remuneration table
The following table shows an analysis of the fixed remuneration and performance-related (STI, Profit Share and LTI) components of the
FY22 remuneration mix detailed in the Statutory Remuneration table.
NON-PERFORMANCE-
STI AND
PERFORMANCE
TOTAL PERFORMANCE-
RELATED REMUNERATION1
PROFIT SHARE
RIGHTS2,3 RELATED REMUNERATION
Executive Director
Alastair Symington
2022
46.3%
7.6%
46.1%
53.7%
2021
70.9%
3.2%
25.9%
29.1%
Senior Executive
Patrick Gibson4
2022
59.6%
10.0%
30.4%
40.4%
2021
-
-
-
-
Former Executive Director
Marcus Blackmore5
2022
-
-
-
-
2021
100%
0.0%
0.0%
0.00%
Former Senior Executive
Gunther Burghardt6
2022
106.5%
3.2%
(9.7%)
(6.5%)
2021
85.2%
5.0%
9.8%
14.8%
Total
2022
53.2%
7.5%
39.3%
46.8%
2021
76.1%
3.4%
20.5%
23.9%
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 ‘Performance Rights’ column..
2. Performance Rights includes the LTI plan and deferred STI and represents the FY22 accounting expense of the FY22 portion of the rights granted in FY21 and FY22.
3. Performance Rights represents the FY21 accounting expense of the FY21 portion of the rights granted in FY21.
4. Patrick Gibson joined on 21 February 2022 and commenced as KMP on 1 March 2022.
5. Marcus Blackmore ceased as an Executive Director on 23 October 2020.
6. Gunther Burghardt ceased employment as Chief Financial Officer on 28 February 2022.
Short-term Incentive
The following table shows the details of the STI awarded as remuneration to Executive Directors and Senior Executives for the financial
year ended 30 June 2022.
STI
% OF STI AWARD
% OF MAXIMUM
INCLUDED IN
AS A MAXIMUM
STI AWARD
REMUNERATION1,3
STI AWARD
FORFEITED2
Executive Director
Alastair Symington
507,000
33
67
Senior Executive
Patrick Gibson4
120,205
45
55
Former Senior Executive
Gunther Burghardt5
-
-
100
1. Amounts included in remuneration for the financial year represent the amounts related to the financial year based on achievement of personal goals and satisfaction of
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 77.
4. Patrick Gibson joined on 21 February 2022 and commenced as KMP on 1 March 2022.
5. Gunther Burghardt ceased employment as Chief Financial Officer on 28 February 2022.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
85
2022 Audited Remuneration Report
5
REMUNERATION
GOVERNANCE
Remuneration Governance
Overview
The diagram below outlines
the role of the Board, People
and Remuneration Committee
(PRC) and other parties in
overseeing remuneration
governance at Blackmores.
Makes recommendations to
the Board on remuneration
strategy and policy for KMP
and other executives that
are in the best interests
of Blackmores and its
shareholders.
Advises the Board on
remuneration policies and
practices for the Company.
Detailed responsibilities are
set out in the Committee's
charter which can be found
on 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.
People and Remuneration Committee
Provides oversight of Blackmores' remuneration strategy and policies for KMP and other
executives. Approves recommendations made by the People and Remuneration Committee
on Non-Executive Director (NED) fees and Executive remuneration.
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 FY22
were Anne Templeman-Jones (Chair of the Board), Stephen
Roche (appointed Chair of the Committee on 12 April
2022), David Ansell (appointed Chair of the Committee on
28 July; ceased as Chair of the Committee and appointed
a member of the Committee on 12 April 2022), Wendy
Stops and Sharon Warburton (appointed members of the
Committee on 5 August 2021; Sharon Warburton ceased as
member on 12 April 2022), Christine Holman (Committee
Chair until resignation on 28 July 2021).
Reviews and proposes
changes to remuneration
policies and structures
and provides information
and recommendations
on NED and Executive
remuneration to the PRC
for review and approval.
Management
Provides oversight on
the integrity of financial
information provided to
the PRC for the purposes
of decision making on
remuneration outcomes.
Audit Committee
Risk and Technology
Committee
Advisors to the
Committee
Provides oversight
of business risks and
behavioural issues provided
to the PRC for the purposes
of decision making on
remuneration outcomes.
The PRC 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 the CEO,
Executive Team members and NEDs
are being rewarded appropriately.
During FY22, the Committee
engaged an independent external
remuneration consultant, Ernst
& Young, to provide advice on
remuneration framework and
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 was
provided to the Committee. The
fee paid for the service in FY22 was
$121,325 (excluding GST).
No remuneration recommendations
as defined by the Corporations Act
were provided.
86
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
SENIOR EXECUTIVE EMPLOYMENT CONTRACTS
The remuneration and other terms of employment are covered in employment contracts. No contract is for a fixed term.
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 payments
Alastair Symington
(CEO)
Patrick Gibson
(CFO)
Gunther Burghardt
(Former CFO)
Six months’ notice (or payment in lieu).
May be terminated immediately for serious misconduct.
Redundancy Payments
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.
6
NON-EXECUTIVE DIRECTOR 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.
Compensation arrangements for Non-Executive Directors are determined by Blackmores after reviewing published remuneration
surveys and market information. There were no changes to the Non-Executive Director fees in FY22.
Non-Executive Director fees (inclusive of superannuation) for FY22 were:
2022
2021
CHAIR
MEMBER
CHAIR
MEMBER
FEES
$
$
$
$
Board
305,000
142,350
305,000
142,350
Audit
21,900
10,950
21,900
10,950
People and Remuneration
21,900
10,950
21,900
10,950
Risk and Technology
21,900
10,950
21,900
10,950
Nominations
-
-
-
-
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
87
2022 Audited Remuneration Report
The total annual Non-Executive Director remuneration for the Board of six (five in 2021) for FY22 was $1,086,774 (2021: $736,120).
The following table discloses the remuneration of the Non-Executive Directors for the financial year ended 30 June 2022.
SHORT-TERM
POST
EMPLOYMENT
EMPLOYMENT
BENEFITS
BENEFITS
FEES AND ALLOWANCES
NON-MONETARY1
SUPERANNUATION
TOTAL
$
$
$
$
Non-Executive Directors
Anne Templeman-Jones
2022
305,000
3,955
-11
308,955
20212
187,418
-
16,230
203,648
David Ansell3
2022
154,334
- 15,433 169,767
2021
156,385
-
14,857
171,242
Erica Mann4
2022
101,077
- 10,108 111,185
Stephen Roche5
2022
105,135
- 10,514 115,649
Wendy Stops
2022
181,981
-
-11 181,981
20216
25,846
-
2,455
28,301
Sharon Warburton
2022
166,088
-
16,609
182,697
20217
25,846
-
2,455
28,301
Former Non-Executive Directors
John Armstrong8
2022
-
-
-
-
2021
30,577
2
2,905
33,484
Christine Holman9
2022
15,036
-
1,504
16,540
2021
160,000
-
15,200
175,200
Brent Wallace10
2022
-
-
-
-
2021
88,000
620
7,324
95,944
Total
2022
1,028,651
3,955
54,168
1,086,774
2021
674,072
622
61,426
736,120
1.
'Non-monetary' includes benefits and any applicable fringe benefits tax.
2.
Anne Templeman-Jones was appointed Chair of Blackmores on 28 October 2020.
3. David Ansell resigned as a Non-Executive Director effective 30 June 2022.
4.
Erica Mann was appointed as a Non-Executive Director on 20 September 2021.
5.
Stephen Roche was appointed as a Non-Executive Director on 20 September 2021.
6.
Wendy Stops was appointed as a Non-Executive Director on 28 April 2021.
7.
Sharon Warburton was appointed as a Non-Executive Director on 28 April 2021.
8.
John Armstrong ceased as KMP on 8 September 2020.
9.
Christine Holman resigned as a Non-Executive Director effective 28 July 2021.
10. Brent Wallace ceased as KMP on 27 October 2020.
11. SG exemption certificate applies, no SG contributions made, total fees are delivered in cash.
88
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
7
ADDITIONAL STATUTORY DISCLOSURES
Share-based Payments
The following table outlines the shares and rights over ordinary shares in the Company that were granted as compensation to
Executive Directors and Senior Executives. The fair value of awards is calculated in accordance with AASB 2 Share-based Payments.
(a) LTI and STI plans
END OF
HOLDING
NAME
GRANT
VESTED
EXERCISED
LAPSED
LOCK
NUMBER OF FAIR VALUE
TOTAL FAIR
SHARE
MAXIMUM
NUMBER
NUMBER
NUMBER
RIGHTS NOT
DATE
RIGHTS PER RIGHT
VALUE1
PRICE
VALUE2
OF RIGHTS
OF RIGHTS
OF RIGHTS
VALUE
DATE
VESTED
$
$
$
$
$
$
Executive Director
Alastair Symington3 31/10/19
13,650
86.56
1,181,544
73.26
1,000,000
-
-
-
-
09/22
1,181,544
19/12/19
35,622
81.47
2,902,124
84.74
3,018,608
-
-
35,6226 2,902,124
N/A
N/A
18/12/20
38,364
71.78
2,753,768
74.19
2,846,225
-
-
-
-
08/23
2,753,768
9/11/21
22,056
98.45
2,171,413
99.54
2,195,454
-
-
-
-
08/24
2,171,413
18/10/21
882
98.38
86,771
99.16
87,459
-
-
-
-
10/23
86,771
Senior Executive
Patrick Gibson4
22/3/22
6,664
73.02
486,605
74.00
493,136
-
-
-
-
08/24
486,605
22/3/22
985
73.82
72,713
74.00
72,890
-
-
-
-
08/22
72,713
22/3/22
1,232
73.59
90,663
74.00
91,168
-
-
-
-
03/23
90,663
22/3/22
657
73.42
48,237
74.00
48,618
-
-
-
-
08/23
48,237
Former Senior Executive
Gunther Burghardt5
26/6/20
6,098
75.29
459,118
77.23
470,949
-
-
6,0987
459,118
N/A
N/A
18/12/20
7,386
71.78
530,167
74.19
547,967
-
-
7,3867
530,167
N/A
N/A
9/11/21
7,068
98.45
695,845
99.54
703,549
-
-
7,0687
695,845
N/A
N/A
18/10/21
353
98.77
34,866
99.16
35,003
-
-
-
-
10/22
34,866
1. The total fair 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. FY22 grant over 1 July 2021 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 13,650 number of rights granted on 31/10/19 relates to grant of contractual sign-on shares. The 882 number of rights granted on 18 October 2021 relates to grant
of deferred equity portion of Mr. Symington’s FY21 STI award.
4. Patrick Gibson joined on 21 February 2022 and commenced as KMP on 1 March 2022. The 985, 1,232 and 657 number of rights granted on 22 March 2022 relates to
grants of contractual sign-on share rights which are subject to vesting conditions being continuous employment with Blackmores Limited from 21 February 2022 to 31
August 2022, 31 March 2023, and 31 August 2023, respectively.
5. Gunther Burghardt ceased employment as Chief Financial Officer on 28 February 2022. The 353 number of rights granted on 18 October 2021 relates to grant of
deferred equity portion of Mr Burghardt FY21 STI award.
6. Rights that will lapse.
7. Rights that have lapsed.
(b) Staff Share Plan
Under the Staff Share Plan, vesting of 44 rights granted to Senior Executives for the year ended 30 June 2021, occurred on 31 July
2021 and shares were issued in September 2021. The Staff Share Plan was decommissioned with no further participation offerings
made under the plan post FY21.
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
89
2022 Audited Remuneration Report
Options
During FY22 and FY21 there were no share options in existence. There have been no share options issued since the end of the
financial year.
Shares
The following table outlines the fully paid ordinary shares of Blackmores Limited held by KMP.
Fully paid ordinary shares of Blackmores Limited
RECEIVED ON
BALANCE AT
SETTLEMENT
NET CHANGE
BALANCE AT
1/7/21
OF RIGHTS
OTHER1
30/6/22
NUMBER
NUMBER
NUMBER
NUMBER
Non-Executive Directors
Anne Templeman-Jones
652
-
250
902
David Ansell2
1,413
-
587
2,000
Erica Mann3
-
-
1,488
1,488
Stephen Roche4
-
-
-
-
Wendy Stops
2,500
-
-
2,500
Sharon Warburton
-
-
897
897
Executive Director
Alastair Symington
18,536
-
-
18,536
Senior Executive
Patrick Gibson5
-
-
-
-
Former Non-Executive Director
Christine Holman6
2,913
-
-
2,913
Former Senior Executive
Gunther Burghardt7
634
-
44
678
Total
26,648
-
3,266
29,914
1. Includes shares issued to Gunther Burghardt under the Company’s Staff Share Plan.
2. David Ansell resigned as a Non-Executive Director effective 30 June 2022 and his closing balance is as at this date.
3. Erica Mann was appointed as a Non-Executive Director on 20 September 2021.
4. Stephen Roche was appointed as a Non-Executive Director on 20 September 2021.
5. Patrick Gibson joined on 21 February 2022 and commenced as KMP on 1 March 2022.
6. Christine Holman resigned as a Non-Executive Director effective 28 July 2021 and her closing balance is as at this date.
7. Gunther Burghardt ceased employment as Chief Financial Officer on 28 February 2022 and his closing balance is as at this date.
Rights to shares
The following table outlines the rights to fully paid ordinary shares of Blackmores Limited held by KMP.
BALANCE GRANTED AS
BALANCE
BALANCE
VESTED
VESTED
RIGHTS
AS AT
COMPEN-
NET OTHER
AS AT
VESTED AT
BUT NOT
AND
VESTED
1/7/21
SATION
EXERCISED
CHANGE
30/6/22
30/6/22 EXERCISABLE
EXERCISABLE DURING YEAR
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
Executive Director
Alastair Symington
73,986 22,938
- (35,622)1 61,302
-
-
-
-
Senior Executive
Patrick Gibson2
-
9,538
-
-
9,538
-
-
-
-
Former Senior Executive
Gunther Burghardt3
13,484
7,421
- (20,552)
353
-
-
-
-
Total
87,470 39,897
- (56,174) 71,193
-
-
-
-
1. Rights that will lapse.
2. Patrick Gibson joined on 21 February 2022 and commenced as KMP on 1 March 2022.
3. Gunther Burghardt ceased employment as Chief Financial Officer on 28 February 2022. 20,552 rights relate to LTI rights that have lapsed. 353 rights relate to deferred
equity rights not lapsed as at 30 June 2022.
90
BLACKMORES LIMITED ANNUAL REPORT 2022
2022 Audited Remuneration Report
Loan disclosures
There were no loans due from KMP or any employee during or at the end of the financial year (2021: $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
Stephen Roche
Chair, People and Remuneration Committee
Dated in Sydney, 18 August 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
91
Auditor’s Independence Declaration
92
BLACKMORES LIMITED ANNUAL REPORT 2022
Independent Auditor’s Report
93
Independent Auditor’s Report
94
BLACKMORES LIMITED ANNUAL REPORT 2022
Independent Auditor’s Report
95
Independent Auditor’s Report
96
BLACKMORES LIMITED ANNUAL REPORT 2022
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 financial 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
Anne Templeman-Jones
Chair
Dated in Sydney, 18 August 2022
97
98
BLACKMORES LIMITED ANNUAL REPORT 2022
Financial
Report
G O O D H E A L T H C H A N G E S E V E R Y T H I N G
Financial Statements
99
Consolidated Statement of Profit or Loss and Other Comprehensive Income
100
Consolidated Statement of Financial Position
101
Consolidated Statement of Cash Flows
102
Consolidated Statement of Changes in Equity
103
General Information
104
1.1 Reporting entity
1.2 Statement of compliance
1.3 Basis of preparation
1.4 Critical accounting judgements and key sources of
estimation uncertainty
1.5 Basis of consolidation
1.6 Application of new and revised Australian Accounting
Standards
1
Our Financial Risk Management
132
5.1 Categories of financial 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
5
Our Group Structure
138
6.1 Parent entity information
6.2 Subsidiaries
6.3 Consolidated entities with minority interest
6
Other
142
7.1 Related party and Key Management
Personnel disclosures
7.2 Remuneration of auditor
7.3 Contingent liabilities
7.4 Events after the reporting period
7.5 Approval of financial statements
7
Our Operations
110
2.1 Revenue and other income
2.2 Segment information
2.3 Profit for the year
2.4 Other financial information
2.5 Working capital
2.6 Income taxes
2.7 Provisions
2.8 Remuneration structure
2
Our Investments
120
3.1 Property, plant and equipment
3.2 Goodwill and intangible assets
3.3 Commitments for expenditure
3.4 Discontinued operations and assets held for sale
3.5 Leases
3
Our Financing
128
4.1 Capital management
4.2 Financing facilities
4.3 Financing liabilities
4.4 Issued capital
4.5 Shareholder returns
4
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
1 YEAR IN REVIEW
2 GROWTH STRATEGY
3 COMPANY LEADERSHIP
4 OPERATING &
FINANCIAL REVIEW
5 CITIZENSHIP &
SUSTAINABILITY
6 FINANCIAL REPORT
7 REMUNERATION REPORT
8 FINANCIAL STATEMENTS
100
BLACKMORES LIMITED ANNUAL REPORT 2022
2022
2021
NOTES
$’000
$’000
Revenue
2.1
649,521
575,916
Other income
2.1
1,680
9,969
Gain on sale of assets
2.1
-
4,102
Revenue and other income
651,201
589,987
Raw materials and consumables used
239,854
214,734
Employee benefits expenses
2.3
180,617
166,461
Selling and marketing expenses
66,358
63,466
Depreciation and amortisation expenses
26,341
25,853
Facility and maintenance expenses
15,956
17,319
Professional and consulting expenses
15,874
10,050
Freight expenses
18,504
13,090
Licences and registrations
7,853
7,519
Cloud IT expenses
9,277
808
Impairment of financial assets
(38)
(268)
Impairment of non-financial assets
3.1, 3.2
-
9,767
Other expenses
14,647
15,398
Total expenses
595,243
544,197
Earnings before interest and tax
55,958
45,790
Interest revenue
183
144
Interest expense
(2,836)
(3,672)
Net interest expense
(2,653)
(3,528)
Profit before tax
53,305
42,262
Income tax expense
2.6.1
(14,750)
(13,398)
Profit after tax from continuing operations
38,555
28,864
Profit after tax from discontinued operation
3.4
-
4,650
Profit for the year
38,555
33,514
Profit attributable to:
Owners of the parent
30,622
28,619
Non-controlling interests
7,933
4,895
38,555
33,514
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign controlled entities
4,523
(3,282)
Net (loss)/gain on hedging instruments entered into for cash flow hedges (net of tax)
1,450
1,429
Asset revaluation reserve movement
(20)
-
Other comprehensive expense
-
(11)
Other comprehensive expense for the period (net of tax)
5,953
(1,864)
Total comprehensive income for the period
44,508
31,650
Total comprehensive income / (expense) attributable to:
Owners of the parent
35,813
27,196
Non-controlling interests
8,695
4,454
44,508
31,650
EARNINGS PER SHARE
From continuing operations
– Basic earnings per share (cents)
4.5.1
157.9
124.0
– Diluted earnings per share (cents)
4.5.1
156.7
123.6
From continuing and discontinued operations
– Basic earnings per share (cents)
4.5.1
157.9
148.1
– Diluted earnings per share (cents)
4.5.1
156.7
147.5
Notes to the Consolidated Financial Statements are included on pages 104-143.
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
Consolidated Statement of Profit or
Loss and other Comprehensive Income
101
2022
2021
NOTES
$’000
$’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
2.5.1
82,193
70,054
Receivables
2.5.3
121,075
108,492
Inventories
2.5.4
155,357
115,690
Tax assets
404
12,255
Other assets
12,290
14,633
Derivative assets
3,130
505
Total current assets
374,449
321,629
NON-CURRENT ASSETS
Property, plant and equipment
3.1
110,234
112,462
Right-of-use assets
3.5
24,506
30,945
Goodwill and intangible assets
3.2
67,456
72,684
Deferred tax assets1
2.6.2
10,980
9,790
Other financial assets
1,606
1,542
Other non-current assets
1,594
129
Total non-current assets
216,376
227,552
Total assets
590,825
549,181
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
2.5.5
127,125
112,650
Tax liabilities
7,652
7,466
Lease liabilities
3.5
7,901
7,855
Provisions
2.7
15,966
15,152
Other liabilities
687
872
Derivative liabilities
581
177
Total current liabilities
159,912
144,172
NON-CURRENT LIABILITIES
Lease liabilities
3.5
17,343
21,893
Provisions
2.7
4,888
4,162
Total non-current liabilities
22,231
26,055
Total liabilities
182,143
170,227
Net assets
408,682
378,954
EQUITY
CAPITAL AND RESERVES
Issued capital
4.4
201,133
196,126
Reserves
12,824
4,002
Retained earnings
182,570
173,028
Equity attributable to shareholders of Blackmores Ltd
396,527
373,156
Equity attributable to non-controlling interests
12,155
5,798
Total equity
408,682
378,954
Notes to the Consolidated Financial Statements are included on pages 104-143.
1. 30 June 2021 deferred tax balances have been reclassified, refer to note 2.6.2 .
AS AT 30 JUNE 2022
Consolidated Statement of Financial Position
102
BLACKMORES LIMITED ANNUAL REPORT 2022
2022
20211
NOTES
$’000
$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (net of promotional and other rebates)
702,161
628,320
Payments to suppliers and employees
(647,121)
(547,930)
Cash generated from operations
55,040
80,390
Interest and other costs of finance paid
(1,880)
(3,674)
Income taxes paid
(4,917)
(18,262)
Net cash flows from operating activities
48,243
58,454
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
183
156
Proceeds from disposal of property, plant and equipment
-
65
Proceeds from disposal of assets
-
34,632
Payments for property, plant and equipment
3.1
(8,538)
(11,018)
Payments for intangible assets
3.2
(2,158)
(7,421)
Dividends received
90
89
Net cash flows from/(used in) investing activities
(10,423)
16,503
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank borrowings
-
70,000
Repayments of bank borrowings
-
(155,000)
Repayments from other borrowings
-
(1,335)
Repayments of lease liabilities
(9,039)
(9,424)
Dividends paid - external BKL shareholders
(15,390)
(4,171)
Dividends paid - Kalbe JV
(2,338)
-
Payments for vested share rights
(915)
-
Proceeds from the issue of share capital (net of transaction costs)
-
48,313
Net cash flows from/(used in) financing activities
(27,682)
(51,617)
Net increase / (decrease) in cash and cash equivalents
10,138
23,340
Cash and cash equivalents at the beginning of the year
70,054
47,659
Effects of exchange rate changes on the balance of cash held in foreign currencies
2,001
(945)
Cash and cash equivalents at the end of the year
2.5.1
82,193
70,054
2022
2021
NOTES
$’000
$’000
Cash held by continuing operations
82,193
70,054
Cash held by discontinued operations
3.4
-
-
82,193
70,054
Notes to the Consolidated Financial Statements are included on pages 104-143.
1. The Consolidated Statement of Cash Flows includes both continuing and discontinued operations. Amounts relating to discontinued operations are disclosed in note 3.4.
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
Consolidated Statement of Cash Flows
103
EQUITY-SETTLED
FOREIGN
ATTRIBUTABLE
EMPLOYEE
CASH FLOW
CURRENCY
ASSET
TO OWNERS OF
NON-
ISSUED
BENEFITS
HEDGING TRANSLATION
CAPITAL REVALUATION
RETAINED
BLACKMORES
CONTROLLING
TOTAL
CAPITAL
RESERVE
RESERVE
RESERVE
RESERVE
RESERVE
EARNINGS
LTD
INTEREST
EQUITY
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance as at 1 July 2020
(restated)1
146,388
234
(1,226)
4,104
-
- 149,999
299,499
1,344
300,843
Profit for the year
-
-
-
-
-
-
28,619
28,619
4,895
33,514
Other comprehensive income/
(expense) for the year (net of tax)
-
-
1,429
(2,841)
-
-
(11)
(1,423)
(441)
(1,864)
Total comprehensive income/
(expense) for the period
-
-
1,429
(2,841)
-
-
28,608
27,196
4,454
31,650
Dividends declared
-
-
-
-
-
-
(5,579)
(5,579)
-
(5,579)
Share-based payments expense
-
2,319
-
-
-
-
-
2,319
-
2,319
Issue of shares under Dividend
Reinvestment Plan (DRP)
1,408
-
-
-
-
-
-
1,408
-
1,408
Issue of shares under employee
incentive plans (net of tax)
17
(17)
-
-
-
-
-
-
-
-
Issue of shares under Capital Raise
(net of transaction costs)
48,313
-
-
-
-
-
-
48,313
-
48,313
Balance as at 30 June 2021
196,126
2,536
203
1,263
-
- 173,028
373,156
5,798
378,954
Balance at 1 July 2021
196,126
2,536
203
1,263
-
- 173,028
373,156
5,798 378,954
Profit for the year
-
-
-
-
30,622
30,622
7,933
38,555
Other comprehensive income/
(expense) for the year (net of tax)
-
-
1,450
3,761
429
(20)
(429)
5,191
762
5,953
Total comprehensive income/
(expense) for the year
-
-
1,450
3,761
429
(20)
30,193
35,813
8,695
44,508
Dividends declared
-
-
-
-
-
- (20,383)
(20,383)
(2,338) (22,721)
Share-based payments expense
-
3,863
-
-
-
-
-
3,863
-
3,863
Vested share rights, settled on market
-
(915)
-
-
-
-
-
(915)
-
(915)
Transfer to retained earnings
-
268
-
-
-
-
(268)
-
-
-
Issue of shares under Dividend
Reinvestment Plan (DRP)
4,993
-
-
-
-
-
-
4,993
-
4,993
Issue of shares under employee
incentive plans (net of tax)
14
(14)
-
-
-
-
-
-
-
-
Balance as at 30 June 2022
201,133
5,738
1,653
5,024
429
(20) 182,570
396,527
12,155 408,682
Notes to the Consolidated Financial Statements are included on pages 104-143.
1. The year ended 30 June 2020 has been restated as a result of change in accounting policy in June 2021 due to the impact of International Financial Reporting
Interpretation Committee (“IFRIC”) guidance on upfront configuration and customisation costs incurred in implementing SaaS arrangements.
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
Consolidated Statement of Changes in Equity
104
BLACKMORES LIMITED ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
1.1 REPORTING ENTITY
1.2 STATEMENT OF COMPLIANCE
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 office 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.
1.3 BASIS OF PREPARATION
Accounting policies
Goods and services tax
Revenues, expenses, and assets are recognised excluding goods and services tax (GST), or jurisdictional equivalents.
The net amount of GST recoverable from, or payable to, the taxation authorities is included within receivables or payables.
Operating cash flows are included in the Consolidated Statement of Cash Flows inclusive of GST. GST in relation to
investing or financing activities which is recoverable from, or payable to, the taxation authorities is classified within
operating cash flows.
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 financial results and financial 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.
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 2022 comprises Blackmores and its subsidiaries (the Group).
The Consolidated Annual Financial Report of the Group as at and for the year ended 30 June 2022 is available upon request from the
registered office of Blackmores at 20 Jubilee Avenue, Warriewood, NSW 2102 or online at blackmores.com.au.
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-profit 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 18 August 2022.
The Consolidated Financial Statements have been prepared on the basis of historical cost, except for certain non-current assets and
financial 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 2021, 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.
General
Information
1
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
1.3 BASIS OF PREPARATION (CONT.)
1.4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY
In applying the Group’s accounting policies, which are described in notes 1 to 7, the Directors are required to make judgements
(other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current and future periods.
1.4.1 Ongoing impact of COVID-19
The full impact of COVID-19 continues to evolve globally. In the current financial year the China region was particularly impacted by
on-going restrictions and lockdowns. Management is actively monitoring the global situation and its impact on the Group’s financial
position, liquidity, operations, suppliers and industry. Given the 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 financial performance and liquidity for
future financial periods.
Although the Group cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic returns to
the extent previously experienced, it may have a material adverse effect on the Group’s future financial performance and liquidity.
1.4.2 Climate related risks
The Group is closely monitoring the impacts of climate and climate related risks and has outlined sustainability targets to mitigate
the potential impacts of these risks. The Group is monitoring the activities of the Australian Accounting Standards Board (AASB) and
International Sustainability Standards Board (ISSB) and other relevant bodies with regards to reporting requirements, which will be
addressed as part of the sustainability goals and reporting of the Group.
1.4.3 Geopolitical risks
The Group continues to monitor the impact to our business of global geopolitical risks. The Group does not have any direct customers or
suppliers impacted by the Ukraine/Russia conflict. Further, the Group is not directly impacted by sanctions relating to this conflict. Despite
this, global supply chain disruptions have impacted the Group's performance in the current year.
1.5 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 flows relating to transactions between members of the Group are eliminated in full on consolidation.
Accounting policies (cont.)
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 fluctuate significantly, 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).
106
BLACKMORES LIMITED ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
1.6 APPLICATION OF NEW AND REVISED AUSTRALIAN ACCOUNTING STANDARDS
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board
(AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 July 2021.
For the current financial period the adoption of the new and amended Standards and Interpretations had no material impact on the
financial statements of the Group.
1.6.1 Standards and Interpretations adopted
Impact of the initial application of COVID-19-Related Rent Concessions beyond 30 June 2021
– Amendment to AASB 16 Leases (AASB16)
In the prior year, the Group early-adopted COVID-19-Related Rent Concessions (Amendment to AASB 16) that provided practical relief
to lessees in accounting for rent concessions occurring as a direct consequence of COVID-19, by introducing a practical expedient
to AASB 16. This practical expedient was available to rent concessions for which any reduction in lease payments affected payments
originally due on or before 30 June 2021. In March 2021, the International Accounting Standard Board issued COVID-19-Related
Rent Concessions beyond 30 June 2021 (Amendment to AASB 16) that extends the practical expedient to apply to reduction in lease
payments originally due on or before 30 June 2022.
In the current financial year, the Group has applied the amendment to AASB 16 (as issued by AASB Board in April 2021). The practical
expedient permits a lessee to elect not to assess whether a COVID-19 Related Rent Concession is a lease modification. A lessee that
makes this election shall account for any change in lease payments resulting from the COVID-19-Related Rent Concession applying
AASB 16 as if the change were not a lease modification. The practical expedient applies only to rent concessions occurring as a direct
consequence of COVID-19 and only if all of the following conditions are met:
• The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change;
• Any reduction in lease payments affects only payments originally due on or before 30 June 2022 (a rent concession meets this
condition if it results in reduced lease payments on or before 30 June 2022 and increased lease payments that extend beyond
30 June 2022);
• There is no substantive change to other terms and conditions of the lease.
1.6.2 Standards and Interpretations in issue, not yet adopted
Certain Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective and have
not been adopted by the Group for the year ended 30 June 2022. These amendments are not expected to have a significant impact
on the Financial Statements of the Group on application.
EFFECTIVE FOR ANNUAL REPORTING
PERIOD BEGINNING ON OR AFTER
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
- Onerous Contracts – Cost of Fulfilling a Contract
1 January 2023
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Materiality Judgements
- Disclosure of Accounting Policies
1 January 2023
AASB 2021-20 Amendments to Australian Accounting Standards
- Disclosure of Accounting Policies and Definition of Accounting Estimates
1 January 2023
AASB 2020-1 Amendments to Australian Accounting Standards
- Classificaiton of Liabilities as Current or Non-current
1 January 2023
General
Information
1
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
THIS PAGE LEFT INTENTIONALLY BLANK
108
BLACKMORES LIMITED ANNUAL REPORT 2022
2.1 REVENUE AND OTHER INCOME
Blackmores is a leading natural healthcare company across the Asia-Pacific
region. Blackmores operations include product innovation and formulation,
sourcing of the highest quality ingredients, programs to ensure compliance
with standards of goods manufacturing and the marketing, sales and
distribution of products to customers and consumers.
2022
2021
$’000
$’000
Sales (net of discounts)
774,513
701,852
Promotional and other rebates
(124,992)
(125,936)
Revenue
649,521
575,916
Gain arising from disposal of assets
-
4,102
COVID-19 relief payments including JobKeeper and JSS (Singapore)
140
8,151
Other
1,540
1,818
Other income
1,680
14,071
Revenue and other income
651,201
589,987
Key estimates and judgements
Promotional and other rebates
Recognition of rebate accruals at balance date requires
management to exercise significant judgement with respect
to the amount of required accruals based on a combination
of actual and forecast customer sales volumes for the period
as well as growth and/or contributions by customers towards
promotional activities.
For the year ended 30 June 2022, the continuing operations
within the Group recognised promotional and other rebates of
$125.0m (2021: $125.9m) which have been charged against
sales revenue as disclosed in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income.
Accruals for promotional and other rebates as at 30 June 2022
are included within Other creditors and accruals in note 2.5.5.
Other income
Other income included COVID-19 government relief payments
and income assistance for Singapore and Thailand of $0.1m.
(2021: $8.2m for Australia and Singapore).
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 fulfilled and
control of the goods has been transferred to the customer.
Specifically, revenue from the sale of goods is recognised when
goods are delivered and legal title is passed. In certain markets,
where contractually obliged to, Blackmores accepts returned
goods from customers and provides a refund. A claims
provision has been recognised as a reduction against revenue
to reflect expected returns incurred, but not adjusted at year
end.
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.
Government grants and assistance income
Government grants and assistance income, including
JobKeeper, are recognised when there is reasonable assurance
that the grant will be received and all attaching conditions will
be complied with. If conditions are attached to the grant which
must be satisfied before the Group is eligible to receive the
contribution, the recognition of the grant as other income will
be deferred until those conditions are satisfied.
Our
Operations
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
109
2.2 SEGMENT INFORMATION
Information reported to the Group's Chief Operating Decision Maker for the purpose of resource allocation and assessment of segment
reporting is based on three key regions, Australia and New Zealand (ANZ), International and China and a fourth Corporate Segment. The
ANZ segment includes the operations of the BioCeuticals business and excludes the discontinued operations of Global Therapeutics.
This is presented on an Underlying basis below. Underlying is a non-Statutory measure of financial performance derived from
Statutory financial information, after adjustment for material one-off items that are non-recurring in nature, which the Group's
Chief Operating Decision Maker has determined do not reflect the on-going operations of the Group. A reconciliation between
Underlying and Statutory results is presented below.
ANZ
Comprising the Blackmores, PAW by
Blackmores, Impromy and BioCeuticals
practioner brands sold across Australia
and New Zealand, including the benefit
of sales made to customers which are
ultimately intended for Asian markets, and
manufacturing on behalf of third parties
within our Braeside facility.
CHINA
Comprising Blackmores brand in China (in
country) and China Export Division.
INTERNATIONAL
Comprising the Blackmores and PAW by
Blackmores brands in Thailand, Malaysia,
Singapore, Hong Kong (China), Taiwan
(China), South Korea, Indonesia, India,
Philippines, Vietnam and Pakistan.
CORPORATE COSTS
Those costs which cannot be reliably
allocated to a specific segment, or which
have been incurred for long-term growth
opportunities.
2.2.1 Revenue by segment1
The Group had one customer who contributed more than 10% of the Group's revenue in the year (2021: one). Revenue earned from
this customer amounts to $100.0m (2021: $96.7m). This customer is reported in the ANZ segment.
2022
2021
$’000
$’000
ANZ2
288,245
280,643
International
215,684
163,691
China
145,592
131,582
649,521
575,916
1. Statutory revenue is aligned to Underlying revenue in 2022 and 2021.
2. The ANZ segment includes the operations of the BioCeuticals business and excludes the discontinued operations of Global Therapeutics.
2.2.2 EBIT by segment
Year ended 30 June 2022
$’000
ANZ
International
China
Corporate
Total
Underlying EBIT1
43,136
29,754
15,951
(32,239)
56,602
COVID-19 support payments
-
140
-
-
140
Business transformation
-
(33)
-
(700)
(733)
Other non-recurring income (costs)
-
-
-
(51)
(51)
Statutory EBIT
43,136
29,861
15,951
(32,990)
55,958
Year ended 30 June 2021
$’000
ANZ
International
China
Corporate
Total
Underlying EBIT1
40,305
20,681
14,348
(27,720)
47,614
COVID-19 support payments
7,684
465
-
-
8,149
Business transformation
(6,361)
-
-
-
(6,361)
Impairment
(9,767)
-
-
-
(9,767)
Net gain on sale of non-core assets
-
-
-
3,994
3,994
Other non-recurring income
-
-
-
501
501
Cloud IT development adjustment
-
-
-
1,660
1,660
Statutory EBIT
31,861
21,146
14,348
(21,565)
45,790
1. Underlying EBIT is a non-Statutory measures of financial performance derived from Statutory EBIT, after adjustment for material one-off items that are non-recurring in nature,
which the Board have determined do not reflect the on-going operations of the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
110
BLACKMORES LIMITED ANNUAL REPORT 2022
2.3 PROFIT FOR THE YEAR
2022
2021
PROFIT FOR THE YEAR HAS BEEN ARRIVED AT AFTER CHARGING:
$’000
$’000
Employee benefits expense
Defined contribution plans
9,816
9,051
Redundancy payments
779
6,477
Other employee expenses
166,159
148,614
Share-based payments:
Equity-settled share-based payments
3,863
2,319
180,617
166,461
Other:
Provision for stock obsolescence
8,360
6,386
Hedge ineffectiveness
-
252
2022
2021
$’000
$’000
Cost of goods sold
302,912
274,886
The Group’s internal measurement for the cost of goods sold (COGS) in the period differs from 'Raw materials and consumables used',
in that it includes the allocation of direct labour, inbound freight and overheads relating to production at the Braeside facility and
packing at the Warriewood facility. In the statutory presentation in the Consolidated Statement of Profit or Loss, which is presented by
nature, these costs appear within employee benefits, 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.
2.4 OTHER FINANCIAL INFORMATION
Our
Operations
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
2022
2021
ANZ 1
50
100
0
150
200
250
300
350
International
China
288
146
216
281
132
164
$ MILLIONS
2.2.3 Revenue history by segment
1. In 2021 ANZ has been adjusted to exclude Global Therapeutics, which is a discontinued operation.
111
2.5.2 Reconciliation of profit after tax to net cash flows from operating activities
2022
2021
$’000
$’000
Profit after tax
38,555
33,514
Non-cash expenses
Depreciation and amortisation
26,341
25,935
Net loss/(profit) on disposal/write off of property plant and equipment
2,017
272
Impairment of non-financial assets
-
9,767
Gain on disposal
-
(8,898)
Non-cash income
Revaluation of investments through Other Comprehensive Income
-
(235)
Investing cash flow items
Interest income
(183)
(156)
Dividend income
(90)
(89)
Decrease/(increase) in assets
Receivables
(12,583)
(15,138)
Inventories
(39,667)
5,026
Other assets
815
(3,592)
Tax assets
10,661
(11,175)
(Decrease)/increase in liabilities
Trade and other payables
16,973
13,417
Tax liabilities
186
6,293
Provisions
1,540
3,068
Other liabilities
(185)
(1,857)
Increase/(decrease) in equity
Equity-settled share-based payments expense
3,863
2,319
Payment for on market share purchase
-
(17)
Net cash inflows from operations
48,243
58,454
2.5.1 Cash and cash equivalents
2022
2021
$’000
$’000
Cash and cash equivalents (as presented in the Consolidated Statement of Financial Position)1
82,193
70,054
1. Included in Cash and cash equivalents is cash held in offshore locations, which support working capital requirements in the markets we operate in.
2.5 WORKING CAPITAL
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
112
BLACKMORES LIMITED ANNUAL REPORT 2022
2.5 WORKING CAPITAL (CONT.)
2.5.3 Receivables
2022
2021
$’000
$’000
Trade receivables
125,430
113,641
Allowance for expected credit loss
(438)
(3,436)
Allowance for claims
(4,533)
(4,473)
Other debtors
628
1,315
Goods and services tax recoverable
(12)
1,445
121,075
108,492
Allowance for expected credit loss
Balance at the beginning of the financial year
3,436
4,127
Assets obtained through business combinations
-
-
Assets held for sale
-
-
(Decrease)/increase to allowance
(38)
(959)
Amounts recovered/(expensed as uncollectable)
(2,960)
268
Balance at the end of the financial year
438
3,436
The allowance for expected credit loss associated with the ageing of trade receivables at reporting date is detailed below.
2022
2021
Total
Allowance
Total
Allowance
$’000
$’000
$’000
$’000
Not past due
113,277
(47)
97,501
(49)
Past due 0 - 30 days
11,510
(9)
10,945
(20)
Past due 31 - 60 days
157
(9)
1,322
(19)
Past due 61 - 90 days
52
(8)
174
(28)
Past due > 90 days
434
(365)
3,699
(3,320)
Allowance for claims
(4,533)
-
(4,473)
-
Total
120,897
(438)
109,168
(3,436)
As at 30 June 2022 the Group has one customer (2021: two customers) each comprising amounts greater than 10% (2021: 10%) of the
total trade receivables balance. These customers owe the Group more than $25.2m (2021: $34.6m) and accounted for approximately
20.1% (2021: 30.4%) 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.
Refer to 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 verification procedures. Receivables balances are
monitored closely and management takes appropriate steps if a receivable becomes overdue and/or impaired.
Our
Operations
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
113
2.5 WORKING CAPITAL (CONT.)
2.5.4 Inventories
2022
2021
$’000
$’000
Ingredients
23,755
24,100
Raw materials
30,110
26,819
Finished goods
101,492
64,771
155,357
115,690
The provision at balance date to cover inventory write downs is $12.5m (2021: $14.9m) and is included in the balance above.
2.5.5 Trade and other payables
2022
2021
$’000
$’000
Trade payables1
71,496
63,609
Other creditors and accruals
55,629
49,041
127,125
112,650
1. The standard credit period on purchases ranges from 0 to 90 days from the end of the month the invoice is received. The Group has financial risk management policies in
place to ensure all payables are paid within the credit time frame. The majority of small suppliers are paid between 0 and 30 days.
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.
Significant 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 abrupt changes in market conditions including COVID-19 implications 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.
Accounting policy
Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate proportion of fixed 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 first-in-first-out basis. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs necessary to make the sale.
Accounting policy
Refer to note 5 Our Financial Risk Management.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
114
BLACKMORES LIMITED ANNUAL REPORT 2022
2.6 INCOME TAXES
2.6.1 Income tax recognised in profit or loss
2022
2021
$’000
$’000
Current tax
Current tax expense
16,782
12,195
Adjustments recognised in the current year in relation to the current tax of prior years
(47)
393
Deferred tax
Deferred tax expense relating to the origination and reversal of temporary differences
(1,122)
1,406
Adjustments recognised in the current year in relation to the deferred tax of prior years
(863)
(26)
Total income tax expense recognised in the current year relating to continuing operations
14,750
13,968
Income tax expense is attributable to:
Profit from continuing operations (as reported in the Consolidated Statement of Profit or Loss)
14,750
13,398
Profit from discontinued operations (refer note 3.4)
-
570
Total income tax expense
14,750
13,968
Reconciliation between tax expense and profit before income tax
Profit before income tax expense - continuing operations
53,305
42,262
Profit before income tax expense - discontinued operations (refer note 3.4)
-
5,220
Profit before income tax expense
53,305
47,482
Income tax expense using the Australian corporate tax rate of 30%
15,991
14,245
Tax effect of amounts which are not deductible / (taxable) in calculating taxable income
Non deductible expenses
682
4,507
Tax concessions
(173)
(136)
Impairment
-
1,652
Tax losses recognised
-
(974)
Capital losses recognised
-
(2,050)
Tax losses not recognised
246
97
Impact of differences in offshore tax rates
(2,656)
(3,267)
Other
1,319
(473)
15,409
13,601
Adjustments relating to prior years
(659)
367
Income tax expense
14,750
13,968
The tax rate used for the 2022 and 2021 reconciliations is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profits under Australian tax law.
Accounting policy
Income tax payable represents the amount expected to be paid to taxation authorities on taxable income for the year, using tax
rates enacted, or substantively enacted, at the reporting date and any adjustment to tax payable in respect of previous years.
Our
Operations
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
115
2.6.2 Deferred tax balances
Deferred tax balances arise from the following:
OPENING
FILING
CLOSING
BALANCE
MOVEMENT
DIFFERENCES
BALANCE
$’000
$’000
$’000
$’000
Temporary differences 2022
Property, plant and equipment
(307)
(462)
1,224
455
Prepayments and other
(57)
20
-
(37)
Provisions
11,063
(2,100)
62
9,025
Accruals
3,325
(335)
(568)
2,422
Cash flow hedges1
(125)
(771)
-
(896)
Foreign currency monetary items
428
546
-
974
Capitalised expenses
1,388
(277)
-
1,111
Indefinite life intangible assets
(8,214)
-
-
(8,214)
Carried forward tax losses2
379
127
(39)
467
Other
1,910
3,709
54
5,673
9,790
457
733
10,980
1. Cash flow hedges movement was recognised in Other Comprehensive Income.
2. The carry-forward tax losses have been recognised to the extent that it is probable that future taxable amounts will be available to utilise those losses in the foreseeable
future.
OPENING
FILING
CLOSING
BALANCE
MOVEMENT
DIFFERENCES
BALANCE
$’000
$’000
$’000
$’000
Temporary differences 2021
Property, plant and equipment
704
(1,271)
260
(307)
Prepayments and other
45
12
(114)
(57)
Provisions
10,904
248
(89)
11,063
Accruals
4,132
(820)
13
3,325
Cash flow hedges1
916
(1,041)
-
(125)
Foreign currency monetary items
(347)
868
(93)
428
Capitalised expenses
780
609
(1)
1,388
Indefinite life intangible assets
(8,177)
(37)
-
(8,214)
Carried forward tax losses2
3,184
(2,731)
(74)
379
Other
(589)
2,369
130
1,910
11,552
(1,794)
32
9,790
1. Cash flow hedges movement was recognised in Other Comprehensive Income.
2. The carry-forward tax losses have been recognised to the extent that it is probable that future taxable amounts will be available to utilise those losses in the foreseeable
future.
Presented in the Consolidated Statement of Financial Position as follows:
2022
2021
$’000
$’000
Deferred tax asset1
10,980
9,790
10,980
9,790
1. At 30 June 2022 in the Consolidated Statement of Financial Position deferred tax assets and liabilities related to income taxes levied by the same taxation authority have
been offset. The comparative period has been reclassified to present a net deferred tax asset of $9.8m, represented by deferred tax assets of $21.0m offset against
deferred tax liabilities of $11.2m which are levied by the same taxation authorities.
2.6 INCOME TAXES (CONT.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
116
BLACKMORES LIMITED ANNUAL REPORT 2022
2.6.3 Unrecognised deferred tax assets
2022
2021
$’000
$’000
The following tax losses have not been brought to account as deferred tax assets:
Capital (no expiry date)
282
110
Revenue (expiry FY22: 2023-2030)
702
480
984
590
2.6 INCOME TAXES (CONT.)
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 profit;
• the initial recognition of goodwill; and
• 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.
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 2022 deferred tax assets totalling $0.2m was recognised in relation to tax
losses. (2021: Nil deferred tax assets were recognised). 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 the 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.
Our
Operations
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
2.7 PROVISIONS
2022
2021
$’000
$’000
Current
Employee benefits
15,571
14,694
Other
395
458
15,966
15,152
Non-current
Employee benefits
2,441
1,935
Other
2,447
2,227
4,888
4,162
117
2.8.1 Key Management Personnel compensation
The aggregate compensation made to Key Management Personnel of the Group and Company is set out below:
2022
2021
$
$
Short-term employee benefits
3,525,985
2,845,171
Post employment benefits
107,196
115,511
Other long term benefits
410,336
410,336
Termination benefits
-
90,810
Share-based payment
1,913,345
703,758
5,956,862
4,165,586
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 REMUNERATION STRUCTURE
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 flows estimated to settle the present obligation, its carrying amount is the present value of those cashflows (where
the time value of money is material).
When some or all of the economic benefits 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 benefits 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 benefits 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 benefits are measured as the present value of the estimated future cash
outflows to be made by the Group.
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 profit or loss over the
remaining vesting period, with corresponding adjustment to the equity-settled employee benefits 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 profit or loss for the year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
118
BLACKMORES LIMITED ANNUAL REPORT 2022
2.8 REMUNERATION STRUCTURE (CONT.)
The following reconciles the share-based arrangements outstanding at the beginning and end of the year:
2022
2021
WEIGHTED
WEIGHTED
NUMBER
AVERAGE
NUMBER
AVERAGE
OF RIGHTS EXERCISE PRICE
OF RIGHTS EXERCISE PRICE
Balance at the beginning of the year
227,759
145,180
Granted during the year
105,271
121,469
Forfeited during the year
(34,472)
(38,890)
Exercised during the year
(9,445)
NA
-
N/A
Expired during the year
(92,640)
-
Balance at the end of the year
196,473
-
227,759
-
Exercisable at the end of the year
196,473
-
227,759
-
Share rights under the Long Term Incentive Plan will vest at the end of the three-year period ending 30 June 2024 and shares will be
subsequently issued in September of that year, following audit clearance of the Group's results and Board approval. Share rights under
the Short Term Incentive plan vest one or two years after the grant date and shares will be subsequently issued in October 2022 and
October 2023 respectively. Share rights under the Sign-on plan vest in three tranches and shares are subsequently issued in August
2022, March 2023 and August 2023, respectively.
Executive Share Plan
The Executive Share Plan was approved at the Blackmores Annual General Meeting in October 2018. Participation is open to
Executives as determined eligible by the Board. Under this plan, rights to acquire shares in the Company are granted annually to
eligible Executives at no cost and vest provided specific performance hurdles are met.
The fair value of rights granted is calculated in accordance with AASB 2 'Share-based Payments'. Under the Executive Share Plan,
during the year the Company granted Long Term Incentive entitlements to an allocation of ordinary shares, provided specific
performance objectives and hurdles are met over the three-year period commencing 1 July 2021 to the year ending 30 June 2024.
If the performance and employment vesting conditions are met, the minimum number of rights that could be vested under the
entitlement is 32,148 (2021: 32,646) and the maximum number of rights that could be vested is 82,472 (2021: 92,228). Several grant
dates apply to these rights; as a result, the following fair values applied to the number of rights listed below.
Under the Executive Share Plan, during the year the Company also granted Short Term Incentive and Sign-On entitlements to an
allocation of ordinary shares provided specific employment vesting conditions are met.
The following rights, outstanding at the end of the year, were issued in the periods specified:
NUMBER OF
GRANT
EXPIRY
EXERCISE
FAIR VALUE AT
RIGHTS
DATE
DATE
PRICE
GRANT DATE
Share rights series
Grants in the 2022 year
Granted - Short Term Incentives
882
18-Oct-21
18-Oct-23
N/A
$98.38
Granted - Short Term Incentives
4,367
18-Oct-21
18-Oct-22
N/A
$98.77
Granted - Long Term Incentives
74,594
9-Nov-21
31-Aug-24
N/A
$98.45
Granted - Long Term Incentives
7,878
22-Mar-22
31-Aug-24
N/A
$73.02
Granted - Long Term Incentives (Sign-on plan)
985
22-Mar-22
31-Aug-22
N/A
$73.82
Granted - Long Term Incentives (Sign-on plan)
1,232
22-Mar-22
31-Mar-23
N/A
$73.59
Granted - Long Term Incentives (Sign-on plan)
657
22-Mar-22
31-Aug-23
N/A
$73.42
Grants in the 2021 year
Granted - Short Term Incentives
9,445
14-Aug-20
14-Aug-21
N/A
$72.61
Granted - Long Term Incentives
112,024
18-Dec-20
31-Aug-23
N/A
$71.78
Our
Operations
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
119
2.8 REMUNERATION STRUCTURE (CONT.)
The allocation under the Long Term Incentive Plan is based on a percentage of the Executive’s 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
CHIEF
CHIEF
OTHER
OTHER
EXECUTIVE
FINANCIAL
EXECUTIVE
SENIOR
OFFICER2
OFFICER
TEAM
MANAGERS
Less than 10%
0%
0%
0%
0%
10%
25%
25%
5%
2.5%
10%-20%
Pro-rata between Threshold and Target
25% to 50%
25% to 30%
5% to 10%
2.5% to 5%
20%
50%
30%
10%
5%
20%-30%
Pro-rata between Target and Stretch
50% to 75%
30% to 50%
10% to 40%
5% to 20%
30%
75% (capped) 50% (capped) 40% (capped) 20% (capped)
CHIEF
CHIEF
OTHER
OTHER
EXECUTIVE
FINANCIAL
EXECUTIVE
SENIOR
OFFICER22
OFFICER
TEAM
MANAGERS
Less than 12%
0%
0%
0%
0%
12%
25%
25%
5%
2.5%
12%-13%
Pro-rata between Threshold and Target
25% to 50%
25% to 30%
5% to 10%
2.5% to 5%
13%
50%
30%
10%
5%
13%-16%
Pro-rata between Target and Stretch
50% to 75%
30% to 50%
10% to 40%
5% to 20%
16%
75% (capped) 50% (capped) 40% (capped) 20% (capped)
Percentage of participant’s base remuneration
CHIEF EXECUTIVE
SENIOR
OTHER SENIOR COMPANY
OFFICER2
EXECUTIVES
MANAGEMENT
Less than 10%
0%
0%
0%
10%
25%
5%
2.50%
10%-15% Pro rata between Threshold and Target
25% to 50%
5% to 10%
2.5% to 5%
15%
50% (capped)
10% (capped)
5% (capped)
25%
100% (capped)
40% (capped)
20% (capped)
CHIEF EXECUTIVE
SENIOR
OTHER SENIOR COMPANY
OFFICER2
EXECUTIVES
MANAGEMENT
Less than 7%
0%
0%
0%
7%
25%
5%
2.50%
7%-9%
Pro rata between Threshold and Target
25% to 50%
5% to 10%
2.5% to 5%
9%
50% (capped)
10% (capped)
5% (capped)
11%
100% (capped)
40% (capped)
20% (capped)
1. ROIC measure was introduced to the plan in FY20. Refer Remuneration Report for details regarding ROIC measures on pages 78 and 79.
2. Chief Executive Officer refers to Alastair Symington.
2022 rate of EPS growth
2022 ROIC1
2021 rate of EPS growth
2021 ROIC1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
Staff share plans
During 2021, the People and Remuneration Committee (PRC)
on behalf of the Board undertook a review of Blackmores’
two staff share acquisition plans . As a result, both plans were
decommissioned with no further participation offerings made
under these plans post FY21. Under the first plan, 193 shares were
issued to employees in July 2021 for profit share entitlement that
would otherwise have been paid in cash during the year ended
30 June 2021. Under the second plan, 3,816 shares were issued
to employees, including Senior Executives, in September 2021 for
the company matching shares component of the plan for the year
ended 30 June 2021. Under this plan, for every three purchased
shares acquired using employees’ after-tax contributions, subject
to employment vesting conditions and capping applied under the
plan, the Company provided one extra share to eligible participants.
Commencing in November 2021, Blackmores introduced a new
Employee and Director Share Rights Plan designed to provide the
opportunity for eligible employees in Australia, including Senior
Executives and Directors, to acquire rights to receive shares through
sacrificing a portion of their remuneration. There is no company
matching share component under this plan. More detail on the plan
is provided in the Remuneration Report on page 80. No Directors or
Senior Executives participated in the plan during the year ended
30 June 2022.
Options plan
At 1 July 2022 there were no share options outstanding. Nil were
issued during the years ended 30 June 2022 (2021: NIL) and as at 30
June 2022 (2021: 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 72-91.
Share-based conditions
The number of shares to be issued to an Executive under the Long Term Incentive Plan is determined by dividing the percentage
amount of base remuneration calculated in accordance with the above by:
• the volume weighted average price of Blackmores’ shares for the fourteen trading days prior to and fourteen trading days after
Blackmores’ results in respect of the prior financial year results announcement on the Australian Stock Exchange (ASX), less
• the amount of any final dividend per share declared as payable for the prior financial year.
120
BLACKMORES LIMITED ANNUAL REPORT 2022
The Blackmores Group carries investments in property, plant and equipment,
goodwill, and intangible assets.
3.1 PROPERTY, PLANT AND EQUIPMENT
FREEHOLD LAND
PLANT AND
LEASEHOLD
AND BUILDINGS1
EQUIPMENT IMPROVEMENTS
TOTAL
$’000
$’000
$’000
$’000
Year ended 30 June 2021
Cost
78,070
93,760
8,442
180,272
Accumulated depreciation and impairment
(12,536)
(48,907)
(6,367)
(67,810)
Net carrying amount
65,534
44,853
2,075
112,462
Movement
Net carrying amount at the beginning of the financial year
66,879
44,749
5,153
116,781
Additions
195
9,975
848
11,018
Disposals and write-offs
-
(1,931)
(2,856)
(4,787)
Depreciation
(1,540)
(7,902)
(1,044)
(10,486)
Other (including foreign exchange movements)
-
(38)
(26)
(64)
Net carrying amount at the end of the financial year
65,534
44,853
2,075
112,462
Assets under construction included above
-
2,666
-
2,666
FREEHOLD LAND
PLANT AND
LEASEHOLD
AND BUILDINGS1
EQUIPMENT IMPROVEMENTS
TOTAL
$’000
$’000
$’000
$’000
Year ended 30 June 2022
Cost
79,227
99,556
6,394
185,177
Accumulated depreciation and impairment
(14,076)
(55,856)
(5,011)
(74,943)
Net carrying amount
65,151
43,700
1,383
110,234
Movement
Net carrying amount at the beginning of the financial year
65,534
44,853
2,075
112,462
Additions
1,157
7,251
130
8,538
Disposals and write-offs
-
(351)
(3)
(354)
Depreciation
(1,540)
(8,104)
(843)
(10,487)
Other (including foreign exchange movements)
-
51
24
75
Net carrying amount at the end of the financial year
65,151
43,700
1,383
110,234
Assets under construction included above
-
1,017
-
1,017
1. Freehold land and buildings includes $25,686 of non-depreciable land (2021: $25,686).
Our
Investments
3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
121
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
25-40 years
Plant and equipment
4-10 years
Leasehold improvements
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/(loss) is
recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Impairment
Property, plant and equipment are tested for impairment in accordance with the policy for impairment of non-financial assets
disclosed in note 3.2.
Critical judgements and estimates
Impairment
There was no impairment recognised in the FY22 financial year. In the first half of the FY21 financial year, an impairment
of $2.8m (pre-tax) was recognised with respect to leasehold improvement assets at the Kippax Street office in Sydney. This
impairment was booked as some of the space was deemed surplus, in part due to changing work practices during the
COVID-19 pandemic, and also due to the fact that the transformation program and its impact on headcount by site resulted in
some under-utilised space in this office. Management will continue to monitor utilisation of the site, and at the date of this report
does not expect any further impairment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
122
BLACKMORES LIMITED ANNUAL REPORT 2022
3.2 GOODWILL AND INTANGIBLE ASSETS
OTHER
INDEFINITE LIFE
OTHER
INTANGIBLE
INTANGIBLE
GOODWILL
BRANDS
ASSETS1
ASSETS2
TOTAL
$’000
$’000
$’000
$’000
$’000
Year ended 30 June 2021
Cost
26,903
16,041
7,698
48,500
99,142
Accumulated amortisation and impairment
(5,039)
(503)
(876)
(20,040)
(26,458)
Net carrying amount
21,864
15,538
6,822
28,460
72,684
Movement
Net carrying amount at the beginning of the financial year
26,903
16,041
6,925
28,069
77,938
Additions
-
-
773
6,648
7,421
Amortisation
-
(503)
(3)
(4,574)
(5,080)
Impairment and disposals
(5,039)
-
(873)
(1,671)
(7,583)
Other (including foreign exchange movements)
-
-
-
(12)
(12)
Net carrying amount at the end of the financial year
21,864
15,538
6,822
28,460
72,684
Allocated to cash generating unit
ANZ
-
-
2,089
17,393
19,482
BioCeuticals
20,849
14,410
544
636
36,439
Braeside
-
-
-
7,202
7,202
Impromy
-
1,128
-
2,441
3,569
PAW
1,015
-
1,189
-
2,204
China
-
-
3,000
-
3,000
International
-
-
-
788
788
21,864
15,538
6,822
28,460
72,684
Year ended 30 June 2022
Cost
26,903
16,041
6,822
48,490
98,256
Accumulated amortisation and impairment
(5,039)
(786)
-
(24,975)
(30,800)
Net carrying amount
21,864
15,255
6,822
23,515
67,456
Movement
Net carrying amount at the beginning of the financial year
21,864
15,538
6,822
28,460
72,684
Transfers from property plant and equipment
Additions
-
-
-
2,158
2,158
Amortisation
-
(283)
-
(5,497)
(5,780)
Impairment, disposals and other write-offs
-
-
-
(1,681)
(1,681)
Other (including foreign exchange movements)
-
-
-
75
75
Net carrying amount at the end of the financial year
21,864
15,255
6,822
23,515
67,456
Allocated to cash generating unit
ANZ
-
-
2,089
12,339
14,428
BioCeuticals
20,849
14,410
544
636
36,439
Braeside
-
-
-
7,278
7,278
Impromy
-
845
-
2,146
2,991
PAW
1,015
-
1,189
-
2,204
China
-
-
3,000
-
3,000
International
-
-
-
1,116
1,116
21,864
15,255
6,822
23,515
67,456
1. Other indefinite life intangible assets relate to registrations, trademarks, and formulations.
2. Other intangible assets relate to software, patents, capitalised website costs, customer relationships, royalty streams and licenses.
Our
Investments
3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
123
3.2 GOODWILL AND INTANGIBLE ASSETS (CONT.)
Critical judgements and estimates
The ranges of rates used in determining recoverable amounts are set out below:
2022
2021
%
%
Long-term growth rate
2.0
2.0
Post-tax discount rate (BioCeuticals, Impromy)
9.0
9.0
Post-tax discount rate (PAW)
8.5
8.5
The Group believes that any reasonably possible change in the key assumptions applied would neither cause the carrying value
of assets to exceed their recoverable amount nor result in a material impairment based on current economic conditions and Cash
Generating Unit (CGU) performance. The Group uses a range of post-tax discount rates for impairment assessments between
8.0% and 9.0%.
The recoverable amount of the CGU is determined on a value-in-use calculation. This calculation uses cash flow projections
based on the plans approved by Management, and anticipated growth rates over a five year period, and also uses a terminal
value calculation. Budgeted sales growth is expected to be in line with sales growth in the category. Budgeted margins reflect
near term anticipated price changes, and beyond this remain consistent.
Evidence from both internal and external sources was considered to ensure no indicators of impairment existed.
The Braeside Manufacturing plant represents a separate CGU in accordance with AASB 136 Impairment of Assets. An
impairment indicator assessment was completed noting there is no goodwill or indefinite life intangible assets held in the
Braeside CGU, and there were no indicators of impairment at 30 June 2022. No impairment test was required to be performed
at 30 June 2022 for the Braeside CGU.
Accounting policies
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the share of the net identifiable 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 finite
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
20 years
Research partnerships
14 years
Customer relationships
10 years
Customer database and royalty streams
5 years
Software and capitalised website development
2-3 years
Accounting for cloud-based software-as-a-service (SaaS)
Software-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s application software
over the contract period. Costs incurred to configure or customise, and the ongoing fees to obtain access to the cloud provider's
application software, are recognised as operating expenses when the services are received.
In applying the entity’s accounting policy, the Directors made the following key judgements that may have the most significant
effect on the amounts recognised in financial statements.
Capitalisation of configuration and customisation costs in SaaS arrangements
Part of the customisation and configuration activities undertaken in implementing SaaS arrangements may entail the development
of software code that enhances or modifies, or creates additional capability to the existing on-premise software to enable it to
connect with the cloud-based software applications (referred to as bridging modules or Application Programming Interface).
Judgement was applied in determining whether the additional code meets the definition of and recognition criteria for
an intangible asset in AASB 138 Intangible Assets. During the year, the Group recognised intangible assets in respect of
customisation and configuration costs incurred in implementing SaaS arrangements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
124
BLACKMORES LIMITED ANNUAL REPORT 2022
3.2 GOODWILL AND INTANGIBLE ASSETS (CONT.)
Accounting policies (cont.)
Accounting for cloud-based software-as-a-service (SaaS) (cont.)
Determination whether configuration and customisation services are distinct from the SaaS access
Costs incurred to configure or customise the cloud provider's application software are recognised as operating expenses,
disclosed in the Consolidated Statement of Profit or Loss and Other Comprehensive Income under Cloud IT expenses, when
the services are received. In a contract where the cloud provider provides both the SaaS configuration and customisation, and
the SaaS access over the contract term, Management applies judgement to determine whether these services are distinct from
each other or not, and therefore, whether the configuration and customisation costs incurred are expensed as the software is
configured or customised (i.e. upfront), or over the SaaS contract term.
Specifically, where the configuration and customisation activities significantly modify or customise the cloud software, these
activities will not be distinct from the access to the cloud software over the contract term. Judgement has been applied in
determining whether the degree of customisation and modification of the cloud-based software that would be deemed
significant.
Impairment
Intangible assets are tested for impairment in accordance with the policy for impairment of non-financial assets disclosed in this note.
Impairment of non-financial assets
The carrying amounts of the Group’s property, plant and equipment (refer to note 3.1), goodwill and intangible assets (refer to
note 3.2) are reviewed for impairment as follows:
• Property, plant and equipment and finite 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 indefinite life intangibles – at least annually and when there is an indication that the asset may be impaired.
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 inflows, the recoverable amount is assessed at the cash generating unit
(CGU) level, which is the smallest group of assets generating cash inflows independent of other CGUs that benefit from the use
of the respective asset. Goodwill is allocated to those CGUs or groups of CGUs that are expected to benefit from the business
combination in which the goodwill arose, identified 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 Profit or Loss and Other Comprehensive Income.
Impairment losses recognised in respect of a CGU will be allocated first 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.
Our
Investments
3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
125
3.3 COMMITMENTS FOR EXPENDITURE
3.4 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
The profit for the Global Therapeutics business for the reporting period is $NIL and for 2021 is set out below.
2022
2021
$’000
$’000
IT infrastructure and software
Not longer than 1 year
4,418
6,397
Longer than 1 year and not longer than 5 years
3,095
7,028
7,513
13,425
Capital projects
Not longer than 1 year
12,293
5,800
Longer than 1 year and not longer than 5 years
400
-
12,693
5,800
Promotional services
Not longer than 1 year
540
560
540
560
Sponsorship
Not longer than 1 year
92
-
Longer than 1 year and not longer than 5 years
-
27
92
27
Research and development contracts
Not longer than 1 year
1,406
1,447
Longer than 1 year and not longer than 5 years
2,877
1,554
Longer than 5 years
300
-
4,583
3,001
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
30 JUNE 2021
$’000
Revenue
7,160
Other income
(13)
Revenue and other income
7,147
Total expenses
5,724
Earnings before interest and tax
1,423
Net interest income
10
Profit before tax
1,433
Income tax expense
(570)
Profit after tax before gain on sale of discontinued operations
863
Gain on sale of discontinued operations
3,787
Profit after tax from discontinued operations
4,650
Statement of Cash Flows
Cashflow from operating activities
2,499
Cashflows from investing activities
(2,457)
Cashflows from financing activities
(46)
Net decrease in cash and cash equivalents
(4)
Cash and cash equivalents at the beginning of the year
4
Cash and cash equivalents at the end of the year
0
3.4.2 Asset sales
IsoWhey and Wheyless brands
On 14 August 2020, Blackmores Group entered into an asset sale agreement to sell the IsoWhey and Wheyless brands. The sale price of
$1.1m covered the IsoWhey / Wheyless brands, product formulas, customer agreements and digital assets. Additional payments of $1.3m
were received for the stock that transferred with the sale at cost. No people transferred with the sale which completed in September 2020.
Sale of investment property
On 25 November 2020, Blackmores entered into a contract for sale of land for the investment property at 15 Jubilee Avenue
Warriewood NSW 2102. The land had a book value of $2.2m and the sale of $6.2m plus GST completed in May 2021.
126
BLACKMORES LIMITED ANNUAL REPORT 2022
3.5 LEASES
PLANT AND
PROPERTY
EQUIPMENT
FLEET
TOTAL
$’000
$’000
$’000
$’000
Right-of-use assets
Year-ended 30 June 2022
Cost
39,948
4,581
1,648
46,177
Accumulated depreciation
(18,273)
(2,275)
(1,123)
(21,671)
Net carrying amount
21,675
2,306
525
24,506
Movement
Net carrying amount at the beginning of the financial year
26,887
3,124
934
30,945
Additions
3,260
283
209
3,752
Depreciation
(8,347)
(1,102)
(558)
(10,007)
Disposals
(410)
-
(63)
(473)
Other (including foreign exchange movements)
285
1
3
289
Net carrying amount at the end of the financial year
21,675
2,306
525
24,506
Year-ended 30 June 2021
Cost
39,331
4,715
1,645
45,691
Accumulated depreciation
(12,444)
(1,591)
(711)
(14,746)
Net carrying amount
26,887
3,124
934
30,945
Movement
Net carrying amount at the beginning of the financial year
25,882
2,170
842
28,894
Additions
10,454
2,071
1,111
13,636
Depreciation
(8,125)
(1,119)
(642)
(9,886)
Disposals
(1,044)
(23)
(353)
(1,420)
Other (including foreign exchange movements)
(280)
26
(25)
(279)
Net carrying amount at the end of the financial year
26,887
3,125
933
30,945
Lease liabilities
Year-ended 30 June 2022
Current
6,551
951
399
7,901
Non-current
15,826
1,396
121
17,343
Total Lease liabilities
22,377
2,347
520
25,244
Year-ended 30 June 2021
Current
6,337
1,009
509
7,855
Non-current
19,323
2,148
422
21,893
Total Lease liabilities
25,660
3,157
931
29,748
2021
2021
$’000
$’000
2022
CONTINUED DISCONTINUED
$’000
OPERATIONS
OPERATIONS
Amounts recognised in profit or loss
Depreciation expense on right-of-use assets
10,007
9,886
35
Interest expense on lease liabilities
1,165
1,130
1
Expense relating to short-term or low value assets
59
105
67
Cash flow
The cash outflow during the year for leases relating to continuing operations was $9.0m (2021: $9.4m). The cash outflow relating to
discontinued operations was $NIL (2021: $32,000).
Our
Investments
3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
127
3.5 LEASES (CONT.)
MATURITY ANALYSIS $’000
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
ONWARDS
TOTAL
2022
8,556
7,498
4,724
3,992
1,000
989
26,759
2021
8,567
7,670
6,623
4,237
3,766
796
31,659
The Group has applied the practical expendient retrospectively to all rent concessions that meet the conditions in AASB 16: Leases
(AASB 16). As noted in Note 1.6, the Group has chosen to apply AASB 2021-3 Amendments to Australian Accounting Standards
– COVID-19 Related Rent Concessions beyond 30 June 2021 before its mandatory application date and accordingly, the practical
expedient has been applied to additional rent concessions negotiated during the financial year which meet the conditions in
AASB 16.48B.
The Group has benefitted from a concessional reduction of lease payments on some of the property leases across the Group. The
waiver of lease payments of $NIL (2021: $25,000) has been accounted for as a negative variable lease payment in profit or loss. The
Group has derecognised the part of the lease liability that has been extinguished by the forgiveness of lease payments, consistent with
the requirements of paragraph 3.3.1 of AASB 9 Financial Instruments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
Accounting policies
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of
low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right
to use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of
the assets including plant, equipment and motor vehicles. If ownership of the leased asset transfers to the Group at the end of
the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of
the asset.
The estimated useful life used in the calculation of depreciation on ROU assets is aligned to the term of the leases which is as
follows:
Property
1-10 years
Plant and Equipment
1-5 years
Fleet
3-5 years
ii) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be
paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group
exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount
of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease
payments (changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a
change in the assessment of an option to purchase the underlying asset.
iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term
of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases that are considered to be low value, valued at or below $10,000. Lease payments on
short-term leases and leases of low-value assets are recognised as expenses on a straight-line basis over the lease term.
128
BLACKMORES LIMITED ANNUAL REPORT 2022
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 shareholders
through optimisation of the debt and equity balance over the long term.
The capital structure of the Group consists of equity as well as available loan facilities, with the latter remaining unutilised at 30 June 2022.
The Group operates globally, primarily through Blackmores Limited (the Company) and subsidiary companies established in the
markets in which the Group trades. None of the entities within the Group are subject to externally imposed capital requirements with the
exception of any regulatory requirements which are applicable in the countries where the Group operates.
Operating cash flows are used to maintain and expand the Group's production, distribution, and IT systems as well as make the routine
outflows of tax, dividends, and repayment of maturing debt if drawn down. 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 Board reviews the capital structure of the Group on a semi-annual basis. Based upon this, the Group will balance its overall
capital structure through the payment of dividends. The Board considers new share issues and share buy-backs, in conjunction with 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 financial year was as follows:
2022
2021
$’000
$’000
Debt
-
-
Cash and cash equivalents
(82,193)
(70,054)
Net cash
(82,193)
(70,054)
Equity
396,527
373,156
Total capital
314,334
303,102
Gearing ratio
(26.1%)
(23.1%)
(Net cash as a % of total capital)
4.1 CAPITAL MANAGEMENT
4.2 FINANCING FACILITIES
2022
2021
$’000
$’000
Unsecured revolving Letter of credit facility under Common Terms Deed
9,488
9,579
9,488
9,579
Unrestricted access was available to the Group at the reporting date to the following unused lines of credit:
Bank loan facilities
140,512
290,421
Bank overdrafts
5,000
5,000
145,512
295,421
Our
Financing
4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
129
4.2 FINANCING FACILITIES (CONT.)
Maturity profile
The maturity profile
of existing bank loan
facilities by financial
year is as follows:
Bank loan facilities may be drawn at any time, subject to the terms of the lending agreements. The above facilities are subject
to certain financial covenants and undertakings. No covenants have been breached during the financial year (2021: Nil).
AUS$ MILLIONS
Debt facilities
Total debt facilities as
at 30 June 2022 are
as follows:
Drawn facilities
$9.5 million
Undrawn facilities
$140.5 million
94%
6%
Facility expires by Expiry Financial Year
0
25
50
75
100
2022
2023
2024
2025
2026
2027
75
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
4.3 FINANCING LIABILITIES
2022
2021
$’000
$’000
Current
Lease liabilities
7,901
7,855
Non-current
Lease liabilities
17,343
21,893
Interest-bearing liabilities
-
-
2022
2021
2022
2021
$’000
$’000
$’000
$’000
Reconciliation
Balance at the start of the year
-
85,000
29,748
27,818
Non-cash movements
-
-
4,535
11,354
Principal and interest repayments
-
(85,000)
(9,039)
(9,424)
Balance at the end of the year
-
-
25,244
29,748
Interest-bearing liabilities
Lease liabilities
130
BLACKMORES LIMITED ANNUAL REPORT 2022
2022
2021
$’000
$’000
From continuing operations
Profit attributable to shareholders of Blackmores Limited
30,622
23,969
Number
Number
WANOS1 used in the calculation of basic EPS²
19,390,045
19,327,760
WANOS1 used in the calculation of diluted EPS2
19,539,156 19,397,822
Cents
Cents
Basic EPS
157.9
124.0
Diluted EPS
156.7
123.6
From continuing and discontinued operations
Profit attributable to shareholders of Blackmores Limited
30,622
28,619
Number
Number
WANOS1 used in the calculation of basic EPS2
19,390,045
19,327,760
WANOS1 used in the calculation of diluted EPS2
19,539,156 19,397,822
Basic EPS
157.9
148.1
Diluted EPS
156.7
147.5
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 SHAREHOLDER RETURNS
4.3 FINANCING LIABILITIES (CONT.)
4.4 ISSUED CAPITAL
2022
2021
ISSUED
ISSUED
2022
CAPITAL
2021
CAPITAL
NUMBER
$’000
NUMBER
$’000
Fully paid ordinary shares
Balance at beginning of financial year
19,365,519
196,126
18,677,903
146,388
Issue of shares under Executive and Employee Share Plans (note 2.8)
193
14
231
17
Issue of shares under Dividend Reinvestment Plan (DRP)
64,730
4,993
17,573
1,408
Issue of shares under Capital Raise
-
-
669,812
48,563
Transaction costs
-
-
-
(250)
Balance at end of financial year
19,430,442
201,133
19,365,519
196,126
Fully paid ordinary shares carry one vote per share and carry a right to dividends.
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.
Accounting policies
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.
4.5.1 Earnings per share
Our
Financing
4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
131
4.5 SHAREHOLDER RETURNS (CONT.)
2022
2021
CENTS PER
TOTAL
CENTS PER
TOTAL
SHARE
$’000
SHARE
$’000
Recognised amounts
Fully paid ordinary shares
Final dividend for year ended 30 June 2021 (2021: 30 June 2020)
– fully franked at 30% corporate tax rate
42
8,162
Interim dividend for year ended 30 June 2022 (2021: 30 June 2021)
– fully franked at 30% corporate tax rate
63
12,221
29
5,579
105
20,383
29
5,579
Unrecognised amounts
Fully paid ordinary shares
Final dividend for year ended 30 June 2022 (2021: 30 June 2021)
– fully franked at 30% corporate tax rate
32
6,218
2022
2021
$’000
$’000
Adjusted franking account balance
31,628
32,500
4.5.2 Dividends
4.5.3 Franking account balance
4.5.4 Shareholder returns history
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
Earnings per share
Dividends per share
Dividend payout ratio (DPR)
1
0
100
0
10
20
30
40
50
60
70
80
90
100
%
200
300
400
500
600
2018
2019
2020
2021
2022
CENTS
1. Includes final dividend for the year ended and interim dividend paid.
132
BLACKMORES LIMITED ANNUAL REPORT 2022
5.1 CATEGORIES OF FINANCIAL INSTRUMENTS
2022
2021
CLASSIFICATION
NOTE
$’000
$’000
Financial assets
Cash and cash equivalents
Amortised cost
2.5.1
82,193
70,054
Receivables
Amortised cost
2.5.3
121,075
108,492
Unquoted equity investments
Fair value through OCI
5.7
1,606
1,542
Derivative financial assets
Fair value through OCI – cash flow hedge accounting
5.7
3,130
505
Financial liabilities
Derivative financial liabilities Fair value through OCI – cash flow hedge accounting
5.7
581
177
Borrowings
Amortised cost
4.3
-
-
Trade payables
Amortised cost
2.5.5
127,125
112,650
Lease liabilities
Amortised cost
3.5
25,244
29,748
Accounting policies
Financial instruments
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual provisions of the
instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately in profit or loss.
5.1.1 Financial assets
The Group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through Other Comprehensive Income, or profit or loss); and
• those to be measured at amortised cost.
The classification depends on the Group’s business model for managing financial assets and the contractual terms of the cash
flows. For assets measured at fair value, gains and losses will either be recorded in Profit 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 flows where those cash flows 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 financial assets
In relation to the impairment of financial assets, AASB 9 requires the use of 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 simplified 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.
Our Financial Risk
Management
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
133
5.1 CATEGORIES OF FINANCIAL INSTRUMENTS (CONT.)
Derecognition of financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
5.1.2 Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments are classified 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 financial 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 financial 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 financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled, or have
expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and
payable is recognised in profit or loss.
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange
rate risks, including forward foreign exchange contracts and interest rate swaps. Further details of derivative financial 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 profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in
which event, the timing of the recognition in profit 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 flow hedges or hedges of net investments in foreign operations. Hedges of foreign exchange
risk on firm commitments are accounted for as cash flow 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 flows 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 flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised
in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to
the ineffective portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income
and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss,
in the same line of the Consolidated Statement of Profit or Loss and Other Comprehensive Income as the recognised hedged
item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial 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-financial asset or non-financial 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 qualifies 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 profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised
immediately in profit or loss.
The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial
markets, and monitors and manages the financial risks relating to the operations of the Group. The Group seeks to minimise the
effects of currency risk and interest rate risks by using derivative financial instruments to partially or fully hedge these risk exposures.
The use of financial derivatives is governed by the Group’s Treasury policy. The Group does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
5.2 FINANCIAL RISK MANAGEMENT OBJECTIVES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
134
BLACKMORES LIMITED ANNUAL REPORT 2022
5.3 FOREIGN CURRENCY RISK MANAGEMENT
Sources of risk
The Group undertakes transactions denominated in foreign currencies; consequently, exposures to exchange
rate fluctuations arise.
Risk management
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), Malaysian Ringgit (MYR), Thai Baht (THB), Indonesian
Rupiah (IDR), Chinese Remimbi (RMB) and Canadian Dollar (CAD). It also undertakes transactions in Swiss Franc (CHF), Korean Won (KRW),
New Zealand Dollar (NZD), Euro (EUR), and Taiwan Dollars (TWD), amongst others. Blackmores enters into derivative financial instruments
to manage this risk, including forward foreign exchange contracts in the majority of these markets.
LIABILITIES
LIABILITIES
ASSETS
ASSETS
2022
2021
2022
2021
CURRENCY
$’000
$’000
$’000
$’000
USD
15,664
2,669
6,744
778
EUR
507
135
1
65
NZD
3,290
3,469
357
54
CAD
347
167
-
-
Other
316
483
13
(11)
Fluctuations in the Australian dollar relative to the foreign currencies may impact on Blackmores' cash flows, financial performance and
profitability. The following table details the Group’s sensitivity to a 10% increase and decrease against a number of relevant foreign
currencies. The sensitivity analysis includes 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 in the table below indicates an increase in profit or equity where
the Australian dollar strengthens 10% against the relevant currency, and a negative number indicates the opposite. The Group also has
exposure in terms of Net Sales in International Asia markets. In countries like Malaysia, Thailand and Indonesia the Group sells in the local
currency of each country, whereas in China invoicing to key customers is undertaken in Australian dollars. The tables below exclude the
impact of derivatives.
PROFIT / (LOSS)
10% INCREASE
10% DECREASE
2022
2021
2022
2021
CURRENCY
$’000
$’000
$’000
$’000
USD impact
811
172
(991)
(210)
EUR impact
46
18
(56)
6
NZD impact
267
310
(326)
(379)
CAD impact
32
15
(39)
(19)
Other impact
28
61
(34)
(35)
In markets like Thailand and Malaysia, while the sales to third parties are in local currency these markets have an indirect transaction foreign
exchange rate exposure to Cost of Goods sold which are sold into Blackmores International (in Singapore) in Australian dollars. MYR
Impact and THB impact in the table below represent the transaction foreign exchange impact which would occur if the Australian dollar
strengthens 10% or weakens 10% to those two markets. For Indonesia and China, Blackmores International invoices these markets in AUD
and therefore it does not have an indirect foreign exchange exposure to Cost of Goods sold.
PROFIT / (LOSS)
10% INCREASE
10% DECREASE
2022
2021
2022
2021
CURRENCY
$’000
$’000
$’000
$’000
MYR impact
(2,299)
(1,330)
2,810
1,330
THB impact
(3,968)
(1,360)
4,850
1,360
Our Financial Risk
Management
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2021
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
135
5.4 INTEREST RATE RISK MANAGEMENT
5.3 FOREIGN CURRENCY RISK MANAGEMENT (CONT.)
Sources of risk
The Group is exposed to interest rate risk as it borrows funds on a floating interest rate basis.
Risk management
The risk is managed by the Group by the use of interest rate swap contracts.
The following forward foreign exchange contracts were still open at the reporting date, in local currency:
NOTIONAL PRINCIPAL AMOUNT
FAIR VALUE
2022
2021
2022
2021
CURRENCY
$’000
$’000
$’000
$’000
USD
31,950
10,700
2,989
415
MYR
60,500
32,500
(338)
(120)
THB
410,000
248,000
(33)
72
NZD
9,600
1,100
(31)
3
CHF
250
-
24
-
KRW
2,650,000
1,295,000
(9)
(24)
HKD
11,700
5,225
(50)
(23)
TWD
55,100
25,300
(18)
5
EUR
985
-
16
-
There were no material ineffectiveness of hedging relationships at June 2022. (2021: NIL).
The table below details the movements in the cash flow hedge reserve during the period:
2022
2021
$’000
$’000
Balance at start of period
203
(1,226)
Gain/(loss) arising on changes in fair value of hedging instruments during the period:
Forward exchange contracts
(2,550)
328
Income tax related to gains/(losses) recognised in other comprehensive income
897
(125)
(1,653)
203
(Gain)/loss reclassified to profit or loss – hedged item has affected profit or loss:
Forward exchange contracts
(328)
1,360
Interest rate swaps
-
392
Income tax related to amounts reclassified to profit or loss
125
(526)
(203)
1,226
Balance at end of period
(1,653)
203
The Group did not have corporate debt in current and prior year. All other financial assets and liabilities (in the current and prior
financial 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 financial year and held constant
throughout the year. A 100 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 2022, if interest rates had been 100 basis points higher or lower and all other variables were held constant,
the Group’s net profit would decrease by $NIL (2021: $0.2m) or increase by $NIL (2021: $0.2m) respectively as a result of changes in
the interest rates applicable to commercial bank bills.
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 fixed and floating 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 flows 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 financial year.
The Group entered into $NIL of new interest rate swaps during the 2022 financial year (2021: $NIL), $NIL matured during the year
(2021: $NIL) and $NIL were terminated during the 2022 financial year (2021: $30m).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2021
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
136
BLACKMORES LIMITED ANNUAL REPORT 2022
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 financial information, trade references
and their own trading record to rate their major customers. Ongoing credit evaluation is performed on
the financial condition of accounts receivable. The credit risk on liquid funds and derivative financial
instruments is limited because the counterparties are banks with sound credit ratings assigned by
international credit-rating agencies. The carrying amount of financial assets recorded in the Consolidated
Statement of Financial Position, 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.
The Group continues to manage and measure risk with respect to the collectability of all receivables.
Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment
periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the Group can be required to pay. The tables include both interest and principal cash flows.
WEIGHTED AVERAGE
<1 YEAR
1-5 YEARS
>5 YEARS
TOTAL
EFFECTIVE INTEREST RATE %
$’000
$’000
$’000
$’000
2022
Trade and other payables
-
127,125
-
-
127,125
Lease liabilities
3.74
8,556
17,215
989
26,760
135,681
17,215
989
153,885
2021
Trade and other payables
-
112,650
-
-
112,650
Lease liabilities
2.63
8,567
22,297
796
31,659
121,217
22,297
796
144,309
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
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 flows.
Our Financial Risk
Management
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
137
5.7 FAIR VALUE MEASUREMENTS
The Directors consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the
Consolidated Statement of Financial Position approximate their fair values.
Valuation techniques and assumptions applied for the purpose of measuring fair value
The fair values of financial assets and financial liabilities are determined as follows:
• the fair value of financial assets and financial 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
flow 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 financial assets and financial liabilities (excluding derivative instruments) are determined in accordance
with generally accepted pricing models based on discounted cash flow 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 financial 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).
2022
2021
$’000
$’000
Financial assets
Unquoted equities
Level 3
1,606
1,542
Foreign exchange derivatives
Level 2
3,130
505
4,736
2,047
Financial liabilities
Foreign exchange derivatives
Level 2
581
177
581
177
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
138
BLACKMORES LIMITED ANNUAL REPORT 2022
6.1 PARENT ENTITY INFORMATION
2022
2021
$’000
$’000
Financial position
Assets
Current assets
253,312
214,994
Non-current assets
225,141
249,366
Total assets
478,453
464,360
Liabilities
Current liabilities
246,094
213,903
Non-current liabilities
17,849
22,244
Total liabilities
263,943
236,147
Equity
Issued capital
201,133
196,126
Retained earnings
6,930
29,462
Reserves
6,447
2,625
Total equity
214,510
228,213
Financial performance
Profit / (Loss) for the year
(2,620)
1,522
Other comprehensive income / (loss)
1,450
1,429
Total comprehensive income / (loss)
(1,170)
2,951
6.1.1 Commitments for expenditure – parent entity
IT infrastructure and software
Not longer than 1 year
4,418
6,397
Longer than 1 year and not longer than 5 years
3,095
7,028
7,513
13,425
Capital projects
Not longer than 1 year
3,197
3,775
3,197
3,775
Promotional services
Not longer than 1 year
540
560
540
560
Sponsorship
Not longer than 1 year
53
7
Research and development contracts
Not longer than 1 year
1,344
1,384
Longer than 1 year and not longer than 5 years
2,752
1,335
Longer than 5 years
300
-
4,396
2,719
Our Group
Structure
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
139
6.2 SUBSIDIARIES
OWNERSHIP INTEREST
COUNTRY OF
2022
2021
NAME OF ENTITY
INCORPORATION
%
%
PRINCIPAL ACTIVITY
Blackmores Nominees Pty Limited
Australia
100
100
Management of employee share plans
Pat Health Limited
Hong Kong (China) 100
100
Marketing of natural health products
Blackmores Beijing Co. Limited
China
100
100
Marketing of natural health products
Blackmores China Co. Limited
China
100
100
Marketing of natural health products
Blackmores (Taiwan) Limited
Taiwan (China)
100
100
Marketing of natural health products
Pure Animal Wellbeing Pty Limited2
Australia
100
100
Holder of intellectual property for PAW
Blackmores (New Zealand) Limited
New Zealand
100
100
Marketing of natural health products
Blackmores (Singapore) Pte Limited
Singapore
100
100
Marketing of natural health products
Blackmores (Malaysia) Sdn Bhd
Malaysia
100
100
Marketing of natural health products
Blackmores Holdings Limited
Thailand
100
100
Holding company
Blackmores Limited
Thailand
100
100
Marketing of natural health products
Blackmores Korea Limited
Korea
100
100
Marketing of natural health products
Blackmores International Pte. Limited
Singapore
100
100
Regional head office
PT Kalbe Blackmores Nutrition1
Indonesia
50
50
Marketing of natural health products
Blackmores Vietnam Co. Limited
Vietnam
100
100
Marketing of natural health products
FIT-BioCeuticals Limited2
Australia
100
100
Marketing of natural health products
FIT BioCeuticals (NZ) Limited
New Zealand
100
100
Marketing of natural health products
PharmaFoods Pty Limited2
Australia
100
100
Marketing of natural health products
FIT-BioCeuticals Limited
United Kingdom
100
100
Marketing of natural health products
FIT-BioCeuticals (HK) Limited
Hong Kong (China) 100
100
Marketing of natural health products
Hall Drug Technologies Pty Limited2
Australia
100
100
Holding company
Blackmores SPV Co Pty Limited2
Australia
100
100
Holding company
New Century Herbals Pty Limited2
Australia
100
100
Marketing of natural health products
Global Therapeutics Pty Limited2
Australia
100
100
Marketing of natural health products
Blackmores Japan Limited
Japan
100
100
Marketing of natural health products
Catalent Australia Holdings Pty Ltd2
Australia
100
100
Holding company
Catalent Australia Pty Ltd 2
Australia
100
100
Manufacturing of natural health products
Blackmores Philippines Inc.
Philippines
100
100
Marketing of natural health products
Blackmores India Private Limited
India
100
100
Marketing of natural health products
1. PT Kalbe Blackmores Nutrition is consolidated into the Group at 100%, and the 50% of profit 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 financial report.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
140
BLACKMORES LIMITED ANNUAL REPORT 2022
6.2 SUBSIDIARIES (CONT.)
6.2.1 Controlled entities
The Consolidated Statement of Profit or Loss and Other Comprehensive Income and the Consolidated Statement of Financial Position
of the entities party to the deed of cross guarantee are as follows:
2022
2021
$’000
$’000
Revenue
538,813
481,120
Other income
9,847
5,004
Gain on sale of assets
-
10,615
Revenue and other income
548,660
496,739
Raw materials and consumables used
251,482
248,952
Employee benefits expenses
140,375
130,681
Selling and marketing expenses
31,737
26,803
Depreciation and amortisation expenses
22,279
21,675
Facility and maintenance expenses
13,401
14,119
Professional and consulting expenses
12,590
6,978
Freight expenses
5,947
5,445
Licences and registrations
8,322
6,857
Cloud IT related expenses
9,277
808
Impairment of financial assets
(86)
(650)
Impairment of non-financial assets
-
9,767
Other expenses
12,241
17,777
Total expenses
507,565
489,212
Earnings before interest and tax
41,095
7,527
Interest revenue
74
57
Interest expense
(2,441)
(3,312)
Net interest expense
(2,367)
(3,255)
Profit before tax
38,728
4,272
Income tax expense
(9,031)
(1,476)
Profit after tax from continuing operations
29,697
2,796
Profit from discontinued operations
-
4,650
Profit for the year
29,697
7,446
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Net gain/(loss) on hedging instruments entered into for cash flow hedges (net of tax)
1,450
1,429
Other comprehensive expense for the period (net of tax)
1,450
1,429
Total comprehensive income for the period
31,147
8,875
Our Group
Structure
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
141
6.2 SUBSIDIARIES (CONT.)
6.3 CONSOLIDATED ENTITIES WITH MINORITY INTEREST
The Group, through its 100% owned subsidiary entity, Blackmores International PTE Limited, holds 50.01% share of Kalbe Blackmores
Nutrition, a company which acquires goods from Blackmores and distributes these through the network pharmacies in the Kalbe Group
in Indonesia. The other 49.99% is held by Kalbe Nutritional’s PTE, 100% owned subsidiary entity of Kalbe Group PTE, a publicly listed
pharmaceutical company operating in South East Asia. By virtue of the majority shareholding and risks and rewards of the arrangement,
the Group consolidates the assets, liabilities, income and expenses of Kalbe Blackmores Nutrition, and recognises a minority interest for
Kalbe’s 49.99% share.
6.2.1 Controlled entities (cont.)
2022
2021
$’000
$’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
28,985
11,218
Receivables
106,721
88,869
Inventories
118,538
95,785
Tax assets
-
11,719
Other assets
10,713
12,241
Derivative assets
3,023
423
Total current assets
267,980
220,255
NON-CURRENT ASSETS
Property, plant and equipment
108,758
110,365
Right-of-use assets
18,118
23,743
Goodwill and intangible assets
58,360
62,411
Deferred tax assets
2,646
3,667
Other financial assets
5,571
5,571
Other non-current assets
1,456
546
Total non-current assets
194,909
206,303
Total assets
462,889
426,558
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
104,043
87,677
Tax liabilities
2,859
-
Lease liabilities
5,727
5,632
Provisions
14,572
13,945
Other liabilities
242
274
Derivative liabilities
33
5
Total current liabilities
127,476
107,533
NON-CURRENT LIABILITIES
Lease liabilities
12,768
16,674
Provisions
4,013
3,512
Total non-current liabilities
16,781
20,186
Total liabilities
144,257
127,719
Net assets
318,632
298,839
EQUITY
CAPITAL AND RESERVES
Issued capital
201,133
196,126
Reserves
7,759
7,089
Retained earnings
109,740
95,624
Total equity
318,632
298,839
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
142
BLACKMORES LIMITED ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
7.1 RELATED PARTY AND KEY MANAGEMENT PERSONNEL DISCLOSURES
7.1.1 Equity interests in subsidiaries
Details of the percentage of ordinary shares held in controlled entities are disclosed in note 6.2 to the Consolidated Financial
Statements.
7.1.2 Loan disclosures
There were no loan balances due from Key Management Personnel during or at the end of the financial year (2021:$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
(2021: $NIL).
Other related party transactions
No transactions occurred between the Group and its related parties during the financial year end 30 June 2022.
Balances with related parties
No balances were outstanding at the end of the financial year with related parties that are not members of the Group (2021: $NIL).
Other
7
7.2 REMUNERATION OF AUDITOR
2022
2021
$
$
Deloitte and related network firms
Audit or review of financial reports:
Group
575,000
546,969
Subsidiaries
411,744
338,713
Total audit or review of the financial reports
986,744
885,682
Other assurance and agreed-upon procedures under other legislation or contractual agreements1
72,000
62,539
Tax compliance services
-
70,000
1,058,744
1,018,221
The auditor of Blackmores Limited is Deloitte Touche Tohmatsu.
1. Other assurance and agreed upon procedures 2022 : $72,000 (2021 : $62,539) relates to the review of the sustainability report.
143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – FINANCIAL YEAR ENDED 30 JUNE 2022
1
GENERAL
INFORMATION
2
OUR
OPERATIONS
3
OUR
INVESTMENTS
4
OUR
FINANCING
5
OUR FINANCIAL
RISK MANAGEMENT
6
OUR GROUP
STRUCTURE
7
OTHER
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 to export classification codes and related exemptions claimed under free trade agreements between the periods of
2009 to 2014. These discussions have been ongoing for over 6 years. The relevant authority has issued assessments for approximately
A$9.5m (adjusted for FX). The Group has issued corresponding bank guarantees of A$9.5m (adjusted for FX). Blackmores has initiated
an appeals 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, no legal liability exists in relation to the assessments under applicable
laws of that jurisdiction. A reliable estimate of potential risks or probable outflows, 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 2022.
7.3 CONTINGENT LIABILITY
7.4 EVENTS AFTER THE REPORTING PERIOD
Final dividend
The Directors declared a fully franked final dividend of 32 cents per share on 18 August 2022 as described in note 4.5.
Other than the foregoing, no other matter or circumstance has arisen since 30 June 2022 that has significantly affected or may significantly
affect the Group's operations, the result of those operations, or the Group's state of affairs in future years.
7.5 APPROVAL OF FINANCIAL STATEMENTS
The Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 18 August 2022.
144
BLACKMORES LIMITED ANNUAL REPORT 2022
Distribution of holders of equity securities
Range
Total holders
% Holders
Units
% Units
1 - 1,000
12,054
89.85
2,224,014
11.45
1,001 - 5,000
1,201
8.95
2,383,432
12.27
5,001 - 10,000
84
0.63
582,725
3.00
10,001 - 100,000
63
0.47
1,256,966
6.47
100,001 and over
14
0.10
12,983,305
66.82
Total
13,416
100.00
19,430,442
100.00
Unmarketable Parcels
Minimum Parcel Size
Holders
Units
Minimum $500.00 parcel at $77.49 per unit
7
594
2,190
Substantial Shareholders
Shareholder
Date of Notice
Units
Percentage
MARCUS CHARLES BLACKMORE
20 July 2020
3,659,102
18.91
FIL LIMITED
10 March 2021
1,759,618
9.09
AUSTRALIAN SUPER PTY LTD
29 June 2022
1,423,836
7.33
Twenty largest shareholders as at 3 August 2022
Rank
Name
Units
% Units
1
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3,579,223
18.42
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3,351,013
17.25
3
MARCUS BLACKMORE
2,132,245
10.98
4
CITICORP NOMINEES PTY LIMITED
1,605,606
8.26
5
NATIONAL NOMINEES LIMITED
781,058
4.02
6
BLACKMORE FOUNDATION PTY LTD
696,535
3.59
7
BNP PARIBAS NOMS PTY LTD
450,280
2.32
8
ESTATE LATE ESTHER WHELLAN
150,347
0.77
9
MRS PATRICIA GLADYS WRIGHT
123,912
0.64
10
RATHVALE PTY LIMITED
113,088
0.58
11
ROY SHEPHERD
100,000
0.51
12
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
66,763
0.34
13
NETWEALTH INVESTMENTS LIMITED
48,105
0.25
14
BNP PARIBAS NOMINEES PTY LTD
38,809
0.20
15
CITICORP NOMINEES PTY LIMITED
37,588
0.19
16
MR JOHN TAYLOR
35,465
0.18
17
POWERWRAP LIMITED
34,204
0.18
18
MS MARGARET DITTMAN
32,191
0.17
19
MRS CHERYL ELISABETH HENSTRIDGE
31,660
0.16
20
MR TREVOR NOEL PRAEGER
31,660
0.16
Total
13,439,752
69.17
Additional
Information
Number of holders of equity securities as at 3 August 2022
Ordinary share capital
19,430,442 fully paid ordinary shares are held by 13,416 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.
Unquoted Securities
314,224 Conditional Rights issued under the Executive Share Plan.
145
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
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Shareholder Services
GPO Box 2975 Melbourne
Victoria 3001 Australia
Telephone:
(within Australia) 1300 855 080
(international)
+61 3 9415 4000
Online:
www.computershare.com.au/investor
Securities Exchange Listing
Blackmores Limited’s ordinary shares are quoted by the Australian
Securities Exchange Limited, listing code BKL.
Dividends
Dividends are paid in Australian dollars for shareholders with an
Australian registered address on our register.
Dividend payments for shareholders with a New Zealand
registered address on our share register will be made by direct
credit to their nominated New Zealand domiciled bank or
financial institution account.
International shareholders can use Computershare’s Global
Payments System to receive dividend payments in the currency of
their choice at a nominal cost to the shareholder.
Direct credit instructions can be provided contacting the share
registry.
Dividend Reinvestment Plan
Blackmores Limited’s Dividend Reinvestment Plan (DRP) is a
mechanism to allow shareholders to increase their shareholding
in the Company without the usual costs associated with share
acquisitions, such as brokerage.
Details of the DRP are available from the Company's website or
the share registry.
Change of Address
Shareholders who have changed address should advise:
• For broker sponsored holdings, the broker; or
• Other holdings, our share registry
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 Investor Relations or the
Company Secretary if you would like more information.
To Consolidate Shareholdings
Shareholders who want to consolidate their separate
shareholdings into one account should contact the share registry.
Annual Report Mailing
The Annual Report is available on our website at
blackmores.com.au (go to ‘Investors’, then click on
‘Annual Reports’).
Shareholders who wish to receive a hardcopy Annual Report
should contact the share registry.
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.
Investor Information
Securities analysts and institutional investors seeking
information about the Company should contact Martin Cole
employed by Capital Markets Communications,
on +61 403 332 977.
COMPANY INFORMATION
Board of Directors
Directors who are Executives of the Group:
Alastair Symington
Directors who are not Executives of the Group:
Anne Templeman-Jones
David Ansell (resigned effective 30 June 2022)
Wendy Stops
Sharon Warburton
Erica Mann
Stephen Roche
Company Secretary
The Company Secretary is Helen Mediati
Email: bklcosec@blackmores.com.au
Auditor
Deloitte Touche Tohmatsu
Blackmores Online
Blackmores website contains information on its products
and services and the Company in general. The address is
blackmores.com.au.
Company
Information
146
BLACKMORES LIMITED ANNUAL REPORT 2022
AASB
Australian Accounting Standards Board
ANZ
Australia and New Zealand business units of Blackmores, BioCeuticals and PAW
Brands
Blackmores, BioCeuticals, PAW by Blackmores, Impromy
B2B
Business 2 Business
BCMT
Business Continuity Management Team
BIP
Business Improvement Program
B(More)
Personalised online direct-to-consumer offer launched in March 2021
CAPEX
Capital Expenditures
CEBC
Cross Border E-Commerce
CCR
Cash Conversion Ratio
C&F
Cold and Flu
CMEd
Complementary Medicine Education (CMEd) program for pharmacists across Australia, Malaysia and
Thailand by the Blackmores Institute
Consumer Growth
Platforms
Core, Modern Parenting, Everyday Mental Wellbeing, Move, Pet Health
COGS
Cost of Goods Sold
CRM
Customer Relationship Management
CY
Calendar Year
DIFOT
Delivery In Full, On Time
Double 11
Singles Day Chinese shopping festival in November
DPS
Dividend Per Share
DTC
Direct To Consumer
EBIT
Earnings Before Interest and Taxes
EPS
Earnings per Share
ESG
Environmental, Social, Governance
FAR
Fixed Annual Remuneration
FX
Foreign Exchange
FY
Financial Year
GDP
Gross Domestic Product
GHG
Greenhouse Gas
GMV
Gross Merchandise Value
GT
Global Therapeutics
HY
Half Year
H1/H2
First half of the financial year/second half of the financial year
IBP
Integrated Business Planning
IFRIC
International Financial Reporting Interpretations Committee
Glossary
147
Ignite for 2024
Strategic plan for sustainable profitable growth
IP
Intellectual Property
KMP
Key Management Personnel
KPI
Key Performance Indicator
IRR
Internal Rate of Return
LTI
Long Term Incentive
LVP
Leading Value Position internal program to deliver savings and efficiencies across
7 workstreams – plan, source, make, pack, deliver, quality and facilities
MUI
Majelis Ulama Indonesia (MUI) is responsible for imported brand Halal certification
M&A
Mergers and Acquisitions
NMF
No Meaningful Figure
Net Zero Emissions
Net Zero by 2030 is Blackmores’ commitment to decarbonise our operations to mitigate the impact of
climate change. To achieve this commitment, we will take responsibility for our scope one emissions
(fuels we burn), scope two emissions (electricity we purchase) and measured scope three emissions
(supply chain services of waste, water and business travel).
The boundaries of Blackmores’ Net Zero by 2030 commitment are disclosed in Blackmores Group’s
Sustainability Report blackmoressustainability.com.au
NWC
Net Working Capital
NPAT
Net Profit After Tax
NIR
Near Infrared
NPV
Net Present Value
OPEX
Operating Expenditure
PAW
PAW by Blackmores brand
PCP
Prior Corresponding Period
PP&E
Property, Plant and Equipment
ROIC
Return On Invested Capital
RPA
Receivables Purchasing Arrangement
RTRT
Real Time Release Testing
SPP
Share Purchase Plan
SKU
Stock Keeping Unit
STI
Short Term Incentive
TCFD
Taskforce on Climate-related Financial Disclosures
TGA
Therapeutic Goods Administration Australia
VDS
Vitamins and Dietary Supplements
WACC
Weighted Average Cost of Capital
Glossary
148
BLACKMORES LIMITED ANNUAL REPORT 2022
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149
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The paper is manufactured from
100% post-consumer recycled
paper in a process chlorine free
environment under the ISO 14001
environmental management system.
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