Annual Report 2018 PAGE 02 Highlights
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Annual Report 2018 PAGE 02 Highlights PAGE 05 About PAGE 07 Chairman’s Introduction PAGE 08 CEO’s Year In Review PAGE 35 Sustainability, Community + People PAGE 46 Executive Team Financial Report 48 Five Year History 49 Annual Directors’ Profiles 50 Directors’ Report 52 Remuneration Report 56 Consolidated Financial Statements 80 Report PAGE 127 THE2018 2018 ANNUAL REPORT OF BLACKMORES LIMITED PROVIDES INFORMATION ON THE Company Information ORGANISATION AND COMPANY PERFORMANCE FOR THE YEAR 1 JULY 2017 TO 30 JUNE 2018. Annual General Meeting The 56th Annual General Meeting of the Company will be held at 11am on 25 October 2018 at the Blackmores Campus, 20 Jubilee Avenue, Warriewood NSW 2102. Cover image: Wes Ipsen, Strategic Sourcing Quality Manager, and Anna Bearpark, Senior Product Development Manager, overseeing the harvest of anchovies in Peru for Blackmores Fish Oil. Inside: Michael Evans, Head of Innovation & Development, Blackmores Australia. Blackmores’ values are at Our the heart of our business. These values, known as PIRLS, are both behavioural Values and aspirational. They underpin our work practices and decisions and are supported by legal policies and procedures. Passion for Natural Health Integrity Respect Leadership Social Responsibility Blackmores improves people’s lives by delivering Our the world’s best natural health solutions. We achieve this Purpose by translating our unrivalled naturopathic heritage and knowledge into innovative, quality branded healthcare solutions that work. Blackmores is committed to Four superior business performance. Our strategic direction is focused on delivering growth Strategic and continuous improvement to maintain Blackmores’ Priorities leadership position in the industry and to achieve ongoing success for our company, our people and our shareholders. 1 Consumer Connectedness 2 Innovation & Expertise OUR 3 Global Advantage UNRIVALLED 4 Operational Fitness HERITAGE TRANSPARENCY & BEST IN CLASS SUSTAINABILITY QUALITY THE BLACKMORES DIFFERENCE GLOBAL A PROUDLY EXPERTISE AUSTRALIAN COMPANY LEADING COMMITMENT WITH RESEARCH, TO THE EDUCATION & COMMUNITY ADVICE BLACKMORES ANNUAL REPORT 2018 1 02 19% 9% 10 4.7m 1.5m net profit after revenue growth. consecutive years social media fans, education tax growth. as Australia’s Most followers and touchpoints across Trusted Brand members of online the Group. in vitamins and communities. supplements.1 > > > NPAT Revenue of FY17 $70 million $601 million 1.2m Attributable to Blackmores’ shareholders 2 BLACKMORES ANNUAL REPORT 2018 FY18 Highlights Blackmores is the No. 1 vitamin and supplement brand in Australia2, Thailand, Singapore and Malaysia A1 71% 158 82% 4.5 Achieved A1 rating of waste diverted new products employee billion tablets and in Therapeutic Goods from landfill. launched across the engagement, capsules servicing Administration of Group. 14 percentage points more than 40,000 Australia audit for above the industry points of distribution. compliance to Good benchmark.3 Manufacturing Practice. > > FY17 FY17 69% 110 1. Reader’s Digest Most Trusted Brand Surveys 2018. 2. IRI Aztec total VDS market data MAT to 1/7/2018. 3. Independently assured by The Voice Project at Macquarie University. BLACKMORES ANNUAL REPORT 2018 3 Global Footprint MONGOLIA KAZAKHSTAN KOREA CANADA USA JAPAN CHINA TAIWAN HONG KONG MACAU VIETNAM CAMBODIA Operations and Markets THAILAND MALAYSIA COMPANY HEADQUARTERS, OPERATIONS AND SIGNIFICANT REVENUES JOINT VENTURE OPERATIONS OR OPERATIONS AND EMERGING MARKETS BRAND PRESENCE INDONESIA SINGAPORE (REGIONAL HEADQUARTERS) AUSTRALIA GROUP HEADQUARTERS, SYDNEY NEW ZEALAND 4 BLACKMORES ANNUAL REPORT 2018 About Us Blackmores is Australia’s leading natural health company. Founded by visionary naturopath Maurice Blackmore in 1932, Blackmores combines traditional naturopathic expertise with scientific research to help people achieve optimal health and wellbeing. Committed to developing innovative natural health products and services of the highest quality, Blackmores reaches consumers in 17 markets. Blackmores’ extensive range of vitamins, herbal and mineral supplements, and nutritional foods uses premium ingredients from around the world, with products made to strict Australian manufacturing standards and rigorous quality checks. Blackmores respects the innate link between healthy people and a healthy planet, implementing sustainable packaging and waste-reduction practices and supporting charitable community initiatives. Industry leaders for more than 80 years, Blackmores established the Blackmores Institute in 2012 to drive an evidence-based approach to natural health through education, research and professional advisory services. For health professionals and consumers alike, Blackmores is a trusted source of natural health advice. Proud of its strong naturopathic heritage, Blackmores is an ASX 200 publicly-listed company. The Group employs 1,400 people across Asia-Pacific and includes BioCeuticals, Australia’s leading practitioner range; Pure Animal Wellbeing, natural health products for pets; and Global Therapeutics, Australia’s leading provider of Chinese herbal medicine. The Blackmores Campus head office and production facility is located on Sydney’s Northern Beaches. Our Brands 01 BLACKMORES 01 02 BIOCEUTICALS 03 ISOWHEY 04 FUSION HEALTH 05 ORIENTAL BOTANICALS 06 PURE ANIMAL WELLBEING 07 BLACKMORES INSTITUTE 02 03 04 05 06 07 BLACKMORES ANNUAL REPORT 2018 5 Marcus Blackmore The richness of our past will nourish our future… My father’s early theories Today’s consumers two new research education and sharing the on optimising health were have a strong and growing fellowships within the benefits of natural healthcare always firmly grounded interest in better nutrition. Australian Research Centre – are all richly referenced in in better nutrition and he The movement towards in Complementary and our 86-year heritage. spent decades researching fresh grown ingredients, the Integrative Medicine at the Stephen Chapman will and observing the impacts rejection of sugar and the University of Technology retire from the Blackmores of minerals on improved understanding of the role Sydney (UTS:ARCCIM). Board after 25 years of health outcomes. of vitamins, minerals and Australia is regarded as a service. Steve has made Maurice Blackmore supplementary nutrients is world leader in this research, a significant contribution was a strong opponent increasing. It’s a philosophy largely due to the work of over this time with his strong of chemical fertilisers and that has been part of centres like ARCCIM. I look financial acumen, strategic sprays and he advocated for the DNA of Blackmores forward to seeing the results counsel and measured a clean, wholefoods diet for throughout our 86-year of this ongoing research. leadership. clients at his naturopathic history and we’re excited We’ve long held the He has been a mentor rest home where patients by the consumer-driven belief that knowledge is to many of our Board were treated holistically. momentum towards the key to better health and members and to our He researched natural health. over the past year the work Executive Team. Importantly, extensively the role and The garden is a of the Blackmores Institute he has shared my passion best dosage of minerals daily reminder of our has made a significant for our Company purpose for plants, animals and, naturopathic heritage. impact. The expansion of and he is a personal ultimately, his patients It’s a space for staff to our education program and advocate for healthy living and we have extensive work outdoors or for collaborations with research – he has run the Blackmores documentation of his quiet reflection. The fruits, centres and universities all Sydney Marathon and theories and observations. vegetables and herbs we over the world is building camped out with our staff These stories were grow are used in our staff a strong foundation that to raise money to support close to our hearts when café and are taken home will underpin the future Sydney’s homeless. He has we created a wholefoods by our team who share my success of Blackmores, been a wonderful colleague garden at the Blackmores passion for good nutrition. building on the knowledge and friend and I thank him Campus this year. The This strong naturopathic base in our industry and for his contribution and wish garden replaces the heritage was the driving ultimately leading to better him well. therapeutic herbal force behind the Blackmore health outcomes for the The best of health plantings that were part Foundation (the private community. of the original landscaping philanthropic trust run It’s humbling for me and is called the Maurice by my wife Caroline and to see that so many of Blackmore Memorial me), in partnership with Blackmores’ opportunities Marcus C Blackmore AM Garden. BioCeuticals, supporting for the future – research, Executive Director Blackmores Campus Gardener, Raphael Maufay and Marcus Blackmore “ Executive Director Marcus Blackmore was recognised with two international awards, the first Australian to ever receive these accolades. Admission into the New Hope Hall of Legends and recipients of the Nutrition Business Journal Lifetime Achievement Award are honours reserved for those who have devoted a significant proportion of their lives to developing the natural products industry. We are enormously proud that he continues to serve on our Board and for the role he plays in driving the Blackmores culture and championing the development of the Blackmores Institute. Stephen Chapman,