McPherson's Limited (MCP) Earnings Call Transcript & Summary

Best of time is 11 a.m., we will now commence a live webcast for our online attendees. Good morning, everybody, and welcome to the meeting. My name is Ari Mervis, and I'm the Chairman of McPherson's. I've been advised that we do have a quorum present, so I'll now officially open the 2022 Annual General Meeting. As we gather for this meeting, I would first like to take a moment to acknowledge and pay my respects to the traditional owners of all the land upon which we conduct our business and to pay my respects to elders past, present and emerging. After the disruption of the past 2 years, we're really pleased this year to be able to be hosting what I'd call a more normal Annual General Meeting for McPherson's, here in Sydney, filled with our entire Board and with members of our executive leadership team in attendance. This AGM is also being held online so that attendees can watch a live webcast of the meeting and can participate remotely. We have made every effort to make today's meeting as interactive for our online participants as possible with the opportunity for shareholders to ask questions in a number of different ways as well as to be able to vote online. We also look forward to taking their questions later in the meeting. Joining me today in Sydney are my fellow nonexecutive directors, Geoff Pearce, and Geoff, we wish you a speedy recovery from the surgery. Alison Cook and Helen Thornton as well as Jane McKellar. And we're also joined by our CEO and Managing Director, Grant Peck, our CFO, Paul Witheridge; and our Company Secretary, Phil Bennett, who will also assist with facilitating the question-and-answer session. I'd also like to welcome Paddy Carney from our auditors, PwC, as well as [indiscernible] who is here, representing our share registry, Computershare. Notice of today's meeting was dispatched to shareholders on the 21st of October 2022. I will take the Notice of Meeting and explanatory notes for me part of the notice of meeting as read. The outline for today's agenda and today's meeting is now being shown. Once I provided an overview of how the meeting will proceed, I'll address the meeting and then Grant will speak in more detail regarding the company's performance and operational matters. The formal items of business to be covered at today's meeting are set out in the Notice of Meeting. We intend to introduce all of the formal agenda items, and we'll then take shareholders' questions on all agenda items together from shareholders both in the room here as well as attending online. I would now like to outline how the meet will proceed and how to ask questions and vote on the formal matters being considered at today's meeting. Once the question-and-answer session commences, if shareholders present at the meeting wish to ask a question, please simply raise your hand and we'll have a roving microphone that will come around and give you the opportunity to ask questions. For those online to ask a written question, select the messaging tab at the top of the Lumi platform. Type your question into the box at the top of the page. Press the arrow symbol to send it. To ask a verbal question online, click the request to speak button at the bottom of the broadcast window and then follow the on-screen prongs. Online participants can submit questions from now on, but that will only be addressed once the Q&A session commences. All questions will be responded to following consideration of all formal resolutions. Additional questions may also be asked at that time. Shortly after we conclude the question-and-answer session, I will declare the poll for all resolutions closed. When each resolution is considered, the related proxy voting results will be displayed on the screen. Directed proxies will be voted in accordance with the direction given. I will vote any undirected proxies left to my discretion as the Chair for each resolution in favor of that resolution. Shareholders entitled to vote at today's meeting have been validated the registration. Voting on all resolutions today will be via poll. Once I declare the poll open, those eligible to vote at this meeting may submit your vote at any time during the meeting until I declare the poll closed. I will now quickly outline the online and interim voting process. If you are voting online and eligible to vote at the meeting, a new voting tab will appear. Select the tab to bring up a list of resolutions and voting options. To cast your vote, simply select one of the options. Your vote is automatically recorded, and there is no need to submit -- to press a submit button. Shareholders and proxy voters who are here in person have been provided with a handset on registration. Once voting opens, eligible in-room attendees will see a list of today's resolutions on screen. Select the item you wish to vote on using the scroll wheel, and then press the green square to select it. I declare now that the polls for all resolutions are open. This means you can now vote or change your vote at any time during the meeting until I declare the polls closed. The results of all -- voting for all resolutions will be published on the ASX market platform after we conclude today's AGM. Before we move to the formal business of the meeting, I would like to make a few comments about the financial year that's just completed. At last year's AGM, I speak to the need for rapid and significant change in order to set up the company to deliver more predictable and profitable results. During financial year 2022, we not only refined our strategy and improved our capability but also streamlined our resources to focus on sustainable growth opportunities that have produced a robust base for future growth. Notwithstanding a challenging macro environment, which has been well documented and which I do not intend to rehash, the company achieved 7% growth in total sales revenue, which translated into 11% growth in underlying profit before tax. This strong performance was largely due to double-digit growth in our essential beauty brands which is a key strategic focus area of the business. Grant will provide an expanded summary of the company's performance during his presentation. Over the past 12 months, we've also continued to integrate the Health division, comprising of the acquired brands, Fusion Health and Oriental Botanicals into our existing operational structure. And this not only provides operational efficiencies but also an improved customer experience. As I mentioned last year, we needed to become more focused and concentrate on winning with the winners. In this regard, we have not only increased our efforts and investments behind our leading brands, including Manicare, Swisspers and Lady Jayne, but have also exited underperforming subscale joint ventures and more notably, entered into a strategic alliance with Chemist Warehouse, which we announced on the 24th of March this year. This provides two significant new growth opportunities for the company. Firstly, McPherson's has been appointed as Chemist Warehouse's exclusive long-term distributor of Chemist Warehouse owned brands outside of the Chemist Warehouse network. And secondly, Chemist Warehouse will increase the ranging and presence of McPherson's brands in Australia and New Zealand. This particularly helps with distribution and specifically our Fusion Health, which has previously had a narrow distribution in the domestic pharmacy channel. As part of the agreements, we also welcomed Chemist Warehouse on to our shareholder register. Early in the year, McPherson's launched an enhanced sustainability strategy with the objective of operating our business in a more sustainable manner, and also to proactively assist our customers to drive more positive change through their purchasing decisions. Again, Grant will go into further detail on these commitments. Furthermore, McPherson's has proudly remained a key supporter of our community and partners. In 2022, McPherson's partnered with Good360 and Mondiale VGL to help flood-affected victims across the country as well as CanTeen NZ to support young people across New Zealand affected by cancer. The company has also provided donations to the Great Barrier Reef Foundation and worked with Trees That Count to point over 1,000 native trees assisting to ensure a more sustainable future. On the back of the improved financial performance, the company achieved strong underlying cash conversion of 129% with net debt at year-end, excluding lease liabilities remaining low at $1.7 million, and the company's gearing ratio at 1%. The company has, for some time now, maintained a relatively low level of bank debt. Our existing debt facilities are due to expire in June 2023 and the process of arranging new facilities is currently being undertaken. Mindful of present uncertain market conditions, your Board proposes to adopt a prudent but disciplined capital management profile for the company going forward. With that intention, as part of the refinancing of the company's expiring facilities, we will be seeking lender support to implement an on-market share buyback or other form of capital return to shareholders once the new facilities have been agreed. Details in this regard will be announced to the market subject to and once the company's refinancing arrangements have been settled. The Board has also continued its rejuvenation in 2022. And I'm delighted that Helen Thornton agreed to join the Board as an Independent Non-Executive Director in December last year, and was appointed as the Chair of the Audit Committee and a member of the Risk and Compliance Committee in February this year. Helen will introduce her shortly that she'll also be standing for election at today's meeting. Geoff Pearce recently announced his retirement from the Board effective at the close of today's AGM. And I would like to thank Geoff for his significant contribution to McPherson's. His extensive experience in pharmaceutical, cosmetic and personal care industries has been invaluable. And Geoff leaves the company with our gratitude and best wishes for the future -- fortunately, also left the door open for us to continue to contact him. The Board will take this newly created vacancy as an opportunity to enhance the existing skill set of directors taking into account the current and future needs of the business. I would also, at this time, like to acknowledge Phil Bennett, our Company Secretary, after 31 years at McPherson's, will soon be retiring. Phil, thanks for all you have done for the company over the many years and certainly deserve to enjoy a well-earned retirement and good health. While I realize that we are closer to the beginning than the end of the journey, I'm confident that we are strategically well placed and are focusing resources more appropriately. We will continue to ensure that we invest behind our leading brands and that we make every effort to exceed our customers' expectations. I would like to take this opportunity to thank our management team as well as our employees for all their effort and input over the past year. And also particularly, I'd like to thank all of you, our loyal shareholders, for your enduring support. I will now call upon Grant to make his CEO's address.

Thanks, Ari. So welcome all, both those who have made it in person, and those joining virtually in what is McPherson's first hybrid AGM. And surely, a positive sign following the challenges associated with the pandemic. This is my second AGM as CEO, following what we acknowledged was a difficult reset year in 2021. We have seen McPherson's business and teams stabilize in FY '22, creating a strong platform for future growth. Whilst we are all enjoying greater personal freedoms and what we hope is our post pandemic recovery, the economy remains challenging for reasons that are well understood. However, in spite of this external turbulence, the company's FY '22 result indicates we have a sustainable and resilient business, well placed in the face of these uncertainties. This is due to our strong choice of health, wellness and beauty as our driving category definition, our strong and broad brand participation in this space and our robust balance sheet. I will recap on these results shortly. But first, some important updates in respect of our purpose and values, areas we have given a real focus to in FY '22. As many would understand, the McPherson's business has a long and resilient history dating back to 1860. We are one of the oldest listed companies on the ASX with our listing dating back to 1944. The McPherson's business has evolved through many iterations in these 162 years. Just as our predecessors have done in the past, we recognize the need to continue to evolve, to survive and grow. In FY '22, we devoted considerable time to developing our leadership team and structure. Through FY '21 and '22, we reduced the leadership team by three roles. We replaced four other team and introduced new and industry-relevant talent, which we continue to do today. We've clarified and restructured how we focus the business in health and beauty and introduced clear performance regimes and accountability. Through this process, we inevitably recognize the need to clarify and refresh our purpose and our views. In the last quarter, as we reported our full year results, we announced our revised purpose, being to provide care solutions to nurture confident, healthy and sustainable lifestyles. In addition, our team has updated and codified our values presented here for you today and as illustrated in our annual report. These key building blocks support our employee value proposition and in this ever competitive world, place us in a stronger position to hire, retain and retain big part of the key talent that drives the business. It's no surprise, we landed on caring as the overall capture of our values. Our products support consumers in their efforts to care for themselves, their health and their family. Our major customers exist to care for their communities, and we support them in that endeavor. I'm confident the outcome of this work is a meaningful framework to attract, develop and retain key talent. So to a brief recap of our FY '22 results. As announced in August, our FY '22 sales growth of 7% to $214 million was primarily due to 11% growth in sales of the company's core owned brands. This performance was driven by the pharmacy channel where our essential beauty brands, Manicare, Lady Jayne and Swisspers recorded exceptionally strong growth. This growth was supported by the company's impressive pipeline of new product innovation, some of which you'll be able to experience today in our complementary sample packs from factory here in person. Innovation and new product development is a consistent theme driving our brand's performance. Highlights in the last year included -- behind me here -- and these include step-up essential beauty tools for Manicare and Lady Jayne. The introduction of Dr. LeWinn's -- by Dr. LeWinn's of ingestible collagen products. Swisspers sustainable cotton products such as environmentally superior paper cotton tips. And most recently, the Dr. LeWinn's serums range. These have been just some of the innovation successes in the last 12 months. We continue to see new products bringing interest to our brands and a key strategic imperative for the future. Whilst imported product and material cost increases presented a challenge in FY '22, the company has progressed selling price increases to support profitability with our underlying EBIT increasing 9% to $11.8 million in FY '22. Strong cash flow performance and a robust underlying balance sheet with gearing at just 1% enabled the company to maintain a high dividend payout ratio for the full year FY '22 dividend being $0.05 per share, fully franked. Just as important as the financial metrics, however, we took actions to build a better platform for the future, and I would like to outline those actions here. As noted in the annual report, following on from our revised purpose and values, we spent considerable time on redefining our strategy. The strategy refinement highlighted the enhanced potential for many of our choices taken around core brands, customers and channels and synergistic opportunities in health and beauty. At the same time, we recognize there is substantial progress we need to make in the areas of sustainability, and our employee value proposition and our international market models. I would point out this strategy work did not hamper real progress in addressing the fundamentals. Indeed, our FY '22 achievements were considerable. As referenced earlier, we have a revised streamlined leadership team aligned through relevant processes and simplified focus. We have removed unnecessary and redundant complexity and duplication. Our strong pipeline of new product innovation continues to be the driver of consumer interest in our brands and our categories. This focus will deliver category growth and improved company and retailer returns. We are partnering for growth, and our brands and innovation programs remain key in winning and fostering positive relationships with our retail partners. Our key alliance with the Chemist Warehouse Group is now into its first half year performance, in fact, 4 months. We are encouraged by our initial combined performance. And at the same time, we recognize the long-term nature of this important partnership with the Chemist Warehouse Group. We look forward to continuing to build on our combined opportunities. We now improve reliability in the supply chain for our Fusion brand, which was in relatively poor shape on acquisition and struggled through COVID, means we can now secure channels and markets previously not considered and this will be a feature of the FY '23 year. And finally, we're in the process of cautiously broadening our international footprint, investing in select international channels and markets. And as mentioned previously, we will only expand where there is a solid business case and a clear pathway for return on investment. To sustainability, and I'd like to spend a little time on the subject of sustainability. From a product perspective, we are proud of the fact that Multix and Swisspers brands have led their respective categories in providing consumers with environmentally sensitive offerings to support them in their everyday choices around sustainability. From a business perspective, we're now expanding our ambitions beyond these two brands to the company as a whole. Our commitments are laid out in the annual report. We'll put programs in place with the ambition to achieve net zero in 2035 across scope 1, 2 and 3 emissions. We will achieve APCO, Australian Packaging Covenant Organization, sustainable packaging goals by 2025 across our core brands, and we'll implement a sustainable supply chain policy and assurance mechanisms by the end of this year. In addition, we'll implement guidelines by the end of calendar year 2022 in respect to diversity and inclusion for all of our key brands. We're partnering with the New South Wales Government Sustainability Advantage program as we take on this sustainability journey. To FY '23. First 4 months of FY '23 demonstrate continued strength associated with pharmacy channels, supported by our strong brand relevance and strategic alliances. Additional investment support behind growth brands, Manicare and Lady Jayne and expansion brands, Fusion, are establishing increased consumer awareness for these growth opportunities. The grocery channel, most recently is characterized by real caution in consumer buying patents, which is impacting the Multix brand as a higher share of spend directed towards private label and mainstream products. In grocery, notwithstanding price actions taken, margins impacted by commodity costs, sea freight and the AU U.S. dollar exchange rate remained challenged. Whilst we have recently observed moderating costs in the commodity and sea freight space, both will take some months to work through the supply chain and our inventory holdings. Of course, our hedging policy is providing a level of protection against the current AUD weakness. Whilst grocery sentiment is presently a watch out for us, we remain confident in the resilience of the pharmacy channel consumer and our ability to drive continued growth through our brand, customer and category expansion. So before handing back to Ari to conduct a formal part of the meeting, I'd just like to reiterate some of the key points. So following our reset in FY '21, we have stabilized the business in FY '22 and returns to profitable underlying growth. We're encouraged by our early performance in respective of Chemist Warehouse strategic alliance and related growth opportunities. We have revised our purpose and our values, provided a platform for our employees to grow capability and business. We've taken deliberate measures to simplify and improve processes, refine our strategy with further opportunities being implemented in this space. We have brands and innovation that are driving our growth in the pharmacy sector across a broad set of subcategories in health, wellness and beauty. And finally, our focus on sustainability is being introduced through the business consistent with our purpose, which I talked to earlier. Thanks very much for your attendance today. I'd like to hand now back to Ari for the formal component of the meeting.

Thank you, Grant. We'll now proceed to the formal business of the meeting. Agenda item 1 is consideration of financial statements and other reports. The first item of the meeting is consideration of the financial statements and reports for the year ended June 30, 2022. Neither the Corporations Act nor McPherson's Constitution requires shareholders to vote on or to formally approve or adopt the financial statements. However, shareholders can, of course, submit or ask questions later regarding the financial reports and regarding the company. As I mentioned earlier, Paddy Carney is here with us today representing our auditors, PwC. Should there be any questions from shareholders in regard -- in respect to the audit report, the conduct of the audit, the accounting policies adopted by the company or the independence of the auditor, then Paddy will be available to answer those questions. I will now move to the second item of business. This is the adoption of the remuneration report. The second item of business is to consider the adoption of the remuneration report for 2022 as set out on Pages 40 to 60 of the company's annual report. Although this resolution is not binding on the direction of the team, it does provide opportunity for shareholders to express an opinion regarding the company's remuneration policies. The outcome of the vote will be taken into consideration when reviewing remuneration practices and policies in the future. I now move that the company's remuneration report for the financial year ended 2022 -- June 30, 2022, is adopted. On the screen is a summary of the proxy voting received on this resolution. It should be noted that should this resolution received more than 25% of votes against it, this will constitute a first strike of the remuneration report. Agenda item 3 is the election of a Director, Ms. Helen Thornton. The next item of business is -- relates to the election of Helen Thornton as a Director. In accordance with the requirements of the ASX Listing Rule 14.4, having been appointed as a Director of MCP on the 20th of December 2021, Helen retires as a Director at this meeting and offs herself for election. The Board, excluding Helen, are unanimous in their support of Helen being elected as a Director. I will now ask Helen just to make a few comments regarding her background and her experience.

Thank you, Ari, and good morning, everyone, and thank you for the opportunity to introduce myself today as I seek election to the McPherson's Board as an Independent Non-executive Director. I'm a Chartered Accountant by background, and my executive career was spent in senior governance roles in businesses such as Deloitte, BHP and BlueScope Steel, where I was the Global Head of Risk Management. Subsequently as a Board Director, I have maintained a diverse portfolio across a number of industries. But a common thread is that they are all purpose-led organizations with a strong focus on achieving results for the customer, community and stakeholders. And with my background, I Chair a number of audit and risk committees, and I bring the breadth of experience of finance and governance to McPherson's. Consequently, and as noted by Ari earlier, I became Chair of the McPherson's Audit Committee earlier this year and joined the Risk and Compliance Committee following the restructure of our committees. I am very excited to be joining McPherson's Board. At this time, as we're facing the many opportunities in front of us. And I look forward to working with Ari as our Chair, my fellow Board members and our excellent management team as we strive to deliver the best results for all shareholders. Thank you again for the opportunity to introduce myself and I look forward to being able to make a valuable contribution to the business. Thank you.

Thanks very much, Helen. And thanks for all the contribution that you've already made to date to the company. Further information relating to Helen's qualifications and experience, I'll set out on pages 10 -- on Page 10 of the explanatory note to the notice of meeting and on Page 34 of the annual report. I have pleasure in moving that Helen Thornton is elected as a Director of the company. I'll now share with you a summary of the proxy version received on this resolution. Agenda item number 4 is the approval of the issue of performance rights to the Managing Director, Grant Peck under the company's performance rights plan. And it goes as follows: that for the purpose of Part 2E.1 of the Corporations Act and ASX Listing Rule 10.14 and for all other purposes, the grant of performance rights and shares on exercise of such performance rights to Mr. Grant Peck, the MD of the company under the McPherson's Limited Performance Rights Plan and his employment contract with the company, is approved on the terms set out in the attached Explanatory Notes to this Notice of Annual General Meeting. This is an ordinary resolution, and if passed, the issue of performance rights to the Managing Director will be approved on the basis set out in detail in the Explanatory Notes to the meeting. I will now share with you a proxy of voting received on this resolution. Please ensure that you have cast your vote on this resolution and all other resolutions. That concludes the formal business of the meeting. I will now consider and open the opportunity for everybody to ask any questions that they have and we'll commence by asking questions from those in the meeting on the floor. And thereafter, we will go to any online questions, which, as I said earlier, could either be submitted in writing or could be asked verbally.

You've done a lot to clean up the company last couple of years, but your EBIT margins are still a drag on the share price. I think I've seen somewhere where there's an expectation of getting growth in margins, but in an inflationary environment, that's always a challenge. So I'd like to get a bit more texture from yourselves about how you see operating margins in the next -- evolve over the next 2 or 3 years? And if I may ask a second question. When the Chemist Warehouse deal was done and there was some discussion around the opportunity from you marketing their brands. And I don't think that was mentioned here. So if you could just talk through that opportunity?

Thanks very much. Thank you for those questions. I think the first question relates to the operating margins. And you're absolutely correct that we are operating in challenging inflation environments. We've noted how the reserve banks around the world are responding through increases in interest rate to find curb some of the inflationary pressures. And we've also noticed that clearly what was unpredicted and unfortunately is the events that have taken place in Europe, specifically in Ukraine, which, of course, have a lot of global pressure on both raw materials, but also on fuel. Two of the things that the company is doing to try and protect the margins. The one, Grant mentioned in his speech, was around pricing and trying to take price to augmented, which is well supported by our foreign exchange policies where we take ForEx cover to try and protect ourselves and protect the company against fluctuations within the currency. But two things that we also do is that we have taken advantage of innovation to try and introduce new products that of prices are higher and at a higher return, if you will, and equally trying to streamline our business and keep our cost base under control as possible. So Grant also mentioned around reduction of senior leadership team members, the integration of health and beauty and trying to streamline it, so increase the revenue and the top line growth while containing costs and then making sure that with a robust balance sheet, we can go through those challenging times. The second question, if I heard it correctly, was just around the opportunity for McPherson's to commercialize, if you will, the Chemist Warehouse owned brands. One of these strands of the Chemist Warehouse agreement is that we've become the long-term exclusive distributor and seller of their Chemist Warehouse owned brands in channels at on Chemist Warehouse. So any of the independent pharmacy and other channels that are at our disposal that we currently service we now have an opportunity to introduce Chemist Warehouse brands through those channels. And that is a journey that we've started. It's an enduring contract that last for 20 years, certain threshold gates along the way. But we are slowly starting to roll out, introduce those brands into the pharmacies and get those pharmacies to then be able to not only take advantage of leading brands, but also supplement their portfolio with those great brands. So very much is happening.

Chemist Warehouse deal, my equity has gone down 10% in the company because of this transaction, not a problem. We're talking about growth, that's great. But nobody is telling me actually how much money we're making out of this transaction. That's the key thing for me because you've taken 10% of my company away, give it to somebody else, but I don't see the dollars of sense yet. I just hear, we're selling all products, but I want to know the actual return. What's the return? Okay? And the second question is with Grant, I'm happy for performance shares. We always pay people to do a great job. But right now, I think when I look at -- you're being issued the shares and your performance is based on shares being issued at $0.70. Like the market's fallen 20%, it's recovered 10%. So bottom line, unless you sort of start saying that the share price has to increase more than $0.90 before we're moving ahead. So $0.70 is a little bit generous, if that's a word that I would like to use. So I'd like a little bit of a discussion on that, of course.

Thanks very much for those two questions. I think in terms of the first question with regards to the Chemist Warehouse profitability, and I think what you rightly state is that there has been an additional issue of equity to Chemist Warehouse, which by definition, says that there's a dilution of existing shareholders. That comes along with a lot of benefits for the company. So firstly, we have a very supportive shareholder on the register. We also have a 2-year standstill agreement, of which Chemist Warehouse will not acquire or dispose of any additional shares in that regard. So they're here for the long haul. And equally, what it does is it opens up a whole host of avenues for us to have the incremental sales and incremental opportunities of their products to the other question. We did announce at the time of the acquisition that the -- sorry, at the time of the transaction that it was -- the modeling was to be EPS accretive. So it would be EPS accretive for our shareholders. We don't delve into the specific margins that are generated out of it. But we can have to say that already the introduction of Fusion as a health brand across the majority of the Chemist Warehouse is seeing traction and it is giving us an opportunity to step change the growth of that brand. With regards to the performance thresholds, I think you're right in identifying the price at which the performance rights are issued, which is a trading and fixed time period. But the thresholds and targets are well documented within the annual report, within the Notice of Meeting, and there are stretch targets that will be challenging for management to achieve. I think that the objective of these type of targets is to be fair, measurable and to drive the business forward and to drive the performance of the company forward. And I'd like to believe that the way they have been set is in that regard. Previous thresholds that haven't been met to invest. So the targets have to best, although the rate at which the shares issued to rightly point out would be at the current price, which is all one can use. Paul, is there anything that could be added to that?

I think you've answered that well, Ari. The performance thresholds are set out on Page 41. It's the feedback we've had there is very fair.

Thank you for both of the presentations, and I comment you on the key achievements so far. They look really good. I want to go into the direction international expansion a little bit. I heard a few things in between the lines. We have obviously very high-quality products, brands with high potential. But the international CBU stands at very low numbers and hasn't been growing since a while. So I would be just interested in getting your views on the potential of international expansion, especially short to midterm. And if you have anything else, you can elaborate on that one?

Thanks very much for that. I'll give Grant a chance to come in on that also. I think one of the things that you rightly say is that there's an enormous appetite in international markets for high-quality products. And generally, Australian products in health care, agriculture, services and education are perceived as very high quality and, in fact, very high quality. So it does give you the opportunity. One of the challenges of entering into international markets is that one need to ensure that you have a really solid route to market and you have a very solid platform upon which to build that you can't just go put product down there and expect it to sell. So we've seen historically where we've had a couple of waves that have been successful and then less successful. And what we want to do now is be far more deliberate. So rather do it in a slowly and more planned and methodical way we are going, it's going to be self-funding. We're not going to be putting significant funds at it and then be exposed and role it in a more orderly and systemic manner to get ourselves into those real growth platforms, which might take slightly longer, but I think would then be giving us a far more better position into the medium term. Grant, would you like to expand?

Thank you. Not much to add. I think Ari summarized it pretty well. We know that we need to broaden our base of channel participation. We know that we need to be -- we agree with you. We think we've got some compelling brand positions from an international perspective. The channel piece that Ari referred to is spot on. We don't want to rely on just one channel and one market perhaps lessons learned there. We also see that the whole environment from a daigou perspective in international tourism and international travel, we expect that, that will begin to return. It's not necessarily at the moment. But as the world gets healthier, there is that expectation. I'm not sure it's going to be what it was, but we're going to be ready for that when it begins to evolve and we think we've got some solid brand positions we can take advantage of. So the planning at the moment is to make sure that we've got that channel position and then the digital path to purchase really well laid out.

Any further questions from the floor?

Okay. All I wanted to do is ask you how the last 4 months trading has been going? Because usually, we get some sort of message that sort of says how we're going but we're pretty quiet at the moment because we know what market conditions are like. But it would be great to see July, August, September, October, you already looked to the books. You must know how things are going. And I'd like to know how our dividends are looking for the next 6 months.

So thanks, John. Look, I think I did address FY '23 in the words. And I guess the first thing I'd say is I agree with you, the volatility in the market is more than I've seen in 30 years. So where the sea freight costs, currency commodities are going, we are reluctant to put too much detail into forecast for exactly that reason. It's a little bit of a little of a guess. But in terms of what's happened so far, we're really feeling pretty good about the pharmacy channel. And we're seeing that, that's strong, continuing the strong profile that we saw in FY '22, particularly around the essential beauty brands and those strategic customers we have in that space. More challenging in the grocery channel and the grocery channel, of course, is exposed perhaps a little bit more so to the -- to the consumers and what they're seeing in terms of their mortgages and their inflation generally. So there's a little bit of both in there, but we're certainly really, really comfortable with where pharmacy is going and where our brand is going in that space. And I think it would be inappropriate at this junction to comment around forward-looking dividends, so to say that we have a very robust and healthy balance sheet and our net debt position is particularly low at this point in time. But as I mentioned earlier, we will be going through the refinancing exercise as our current debt comes up for renewal in June of next year. Are there any questions online? We will, once again, at the end of the meeting, give you an opportunity just prior to closing the polls to give those out of attendant in person, another opportunity to ask questions, but maybe we'll just go online and see if there's any questions by phone.

No online questions.

No online questions. Okay. So I'll just give a last round opportunity if you have any further questions from the meeting here. And also just to give you an early warning that we'll be closing the polls in about 20 seconds time. So if you have not registered your votes, if you can please register your votes on all the resolutions or if you should change your votes equally, that's an opportunity to do it at this juncture. [Voting]

Making sure that everyone has had the opportunity to cast their vote. If you can please assist with some assistance upfront for someone just to cast the vote. [Voting]

Okay. With that, I will now formally close the poll. As I indicated earlier, the results of the voting will be announced later today on the ASX and will also be uploaded on to the company's website. Ladies and gentlemen, as that is all for the business meeting, I'd like to thank you for your participation at the AGM and also declare the meeting closed.