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

Welcome to the McPherson's Limited First Half Year 2025 Investor Briefing Call. [Operator Instructions] If you have any issues asking a question via web, a backup phone line is available. Dial-in details can be found on the Request to Speak page or on the homepage under asking audio questions. To view documents relevant to today's meeting, including more detailed instructions on how to use the platform, select the documents icon. A list of all available documents will appear. When selected, the document will open within the Lumi platform. You will still be able to listen to the meeting while viewing the documents. Text questions can be submitted at any time during the meeting, and the audio queue is now open. I will now hand over to Brett Charlton, CEO and Managing Director of McPherson's Limited.

Good afternoon, everyone, and thank you for joining us today for McPherson's first half '25 results. I'm Brett Charlton, and I'm the CEO of McPherson's. And with me is Mark Sherwin, our CFO. Please note the disclaimer on the screen at the start of this presentation. I'll take us through Section 1 of the presentation and then hand over to Mark to present the financials. On to Slide 5, please. Our first half 25 result is a solid one during a demanding 6 months for the business in the midst of a transformation that had to happen. We achieved revenue from continuing operations of $70.7 million, $62.5 million from core brands and underlying EBITDA of $2 million. Sales from our continuing operations include the impact of exiting nonstrategic lower-margin brands, the brands we'd identified for exit back in November 2023 when we reset the group's strategy. That accounts for just over half of our revenue decline this year. The remaining shortfall is attributable to the company's portfolio brands, which were down $1.3 million; and core brands, which were also down $1.3 million. However, there were some encouraging signs in the performance of our core brands. We've achieved growth in 4 of our 5 core brands and some gains in market share while at the same time, it was offset by a disappointing performance of Dr LeWinn's. I'll talk more about our core brand shortly. As we announced at the AGM, we took the decision to upweight A&P spend into the first half of '25, and this is reflected in our underlying EBITDA and profit result as we invested in foundational research and digital asset development. Finally, we continue to have a healthy net cash position and a strong balance sheet. This continues to provide flexibility to fund their expansive transformation. Slide 6, please. On to our core brands now, and you can see that this half, we've started to provide revenue by brand for each of our core brands. The other comment I want to make up-front is that these are the brands where we have upweighted our A&P spend through the first half of '25. And pleasingly, we're starting to see some good traction from this spend. Manicare achieved $23.9 million in the first half of '25. It was good to see this brand return to growth and performing ahead of its category, which means it's starting to take market share, and we need that in our biggest brand. Manicare A&P spend was deployed across a range of social media platforms with timing to align with the promotional activities of our major customers. Dr LeWinn's had a challenging first half in '25 and was impacted by increased promotional intensity in the second quarter of '25, some year-end phasing across the Australian and New Zealand markets and a tough comparable period in the International business. A comprehensive brand reset is planned for Dr LeWinn's in the early stages of the financial year '26 and forms a critical part of the brand's performance turnaround. Swisspers performance with $10.5 million of revenue was supported by improved ranging in a major pharmacy customer and a solid performance in the grocery category, resulting in both revenue and share growth. Lady Jayne is another of our core brands that is growing ahead of its category. It achieved $9.6 million in revenue. This brand has been supported by an upweighted A&P during the half, a new electrical hair tools launch and a strong performance in brushes all delivering a relatively positive performance. Finally, we've had a strong first half in '25 for Fusion Health with a significant improvement in our stock availability following the appointment of a new manufacturer. In summary, aside from Dr LeWinn's, we're pleased with the steady and methodical improvements of the sales and marketing model around our core brands and their continuing performance improvements. They remain a critical factor in our ongoing transformation combined with expanded distribution. Next, Slide 7, please. Back in August of last year, I shared with you the road map for our transformation, so you could see the clear plan we are executing on, and so we could report on our progress against that plan. The FY '24 year was the foundational year of our transformation, a new strategy focused on 5 core brands: branded SKU rationalization, pharmacy channel focus, technology stack reset and a route-to-market review. FY '25 is now the year of heavy-lifting on various components of the business. It's a key year in our transformation. During the first half of '25, our priority has been completing our route-to-market review. And as you know, this has been a priority since the divestment of Multix in June 2024. As a part of this, we've identified a preferred new route to market. This has been a critical work stream, and you will have seen that we've reached a milestone earlier this week with our announcement that we are commencing implementation of our new route to market through a third-party warehousing and pharmacy wholesaler model. In addition to this, another highlight of the first half '25 was that we upweighted A&P spend for the year to this half. We did this in part to create some momentum in our brands but also to invest in some foundational consumer research to inform our expanding marketing and sales activities. This research and our new sales force retail execution and trade promotions management modules are already producing results, as we now have better data to make better decisions about our brand customers in real time. We've also reset our International business during the half year, so we have a plan that is rightsized for our new portfolio, rationalizing our cost base in China and Hong Kong specifically. The International Sales division with a new Head of Sales for China appointed is now focused on developing new consumers through the evolving social e-commerce channels in China, particularly for Dr LeWinn's and Fusion. Slide 8, please. Earlier this week, we reached a milestone in our route to market when we announced we had signed an agreement with Excel Logistics to sublease our Kingsgrove warehouse and provide our third-party warehousing services. By way of update, we also announced we are in advanced negotiations with major pharmacy wholesalers for the distribution of all McPherson's products to the pharmacy channels within Australia. Reaching this agreement has been the first step in the implementation of our new route to market as we shift our business from a direct-to-store model to a third-party warehousing and pharmacy wholesaler route-to-market model. This follows a comprehensive review of our route to market that we undertook following the divestment of Multix and we found several issues with our current model. Firstly, following the divestment of Multix, we retained a large portion of the previously shared fixed cost base, essentially a large underutilized warehouse for the remainder of the lease until mid-2020. Secondly, the cost of our group infrastructure are significant. The warehouse and office size are built through a business model from long ago. And we have a legacy warehouse management system that has reached end-of-life status that will likely require a replacement in the next 1 to 2 years at significant cost in the range of $6 million. And finally, the current direct to store model is simply not competitive with extended lead times and minimum order quantities, creating patchy distribution and extended out of stocks on shelf. Our core capabilities are in sales and marketing of our brands, not in warehousing and logistics. So our conclusion was clear. Our brands and uptimes deserve better. We needed a new route to market, one that would be more fit for purpose for our strategy and competitive with the current standings in the pharmacy and grocery channels. Our new route to market, based on third-party warehousing and pharmacy wholesalers, offers a range of strategic benefits that our current model cannot provide. Firstly, it's a variable cost model, making it more flexible and scalable as we grow. Second, wholesalers have far greater reach into all parts of the pharmacy channel at next-day delivery timings, meaning better distribution and less out of stocks on retail shelves. And finally, third-party warehousing significantly lowers working capital needs as most stock is held in the pharmacy wholesalers, plus grocery customers require simpler box and pallets-only configuration for their deliveries. This is a significant simple quicker -- this is a significant simplification of our distribution model. We'll go from handling about 14,000 orders a month to less than 200 orders a month as the pharmacy wholesalers in Excel take on the servicing of individual retailers. It is expected that the proposed changes will impact approximately 65 roles within McPherson's warehouse team and over the coming months as this transition takes effect. A consultation process with affected employees and representatives is underway. This shift in operating model is also expected to unlock underlying EBIT in the order of $4 million to $5 million in FY '26, which substantially addresses the residual fixed cost base post the marketing divestment. Mark will now take you through these figures in more detail and through the financial results for the half.

Thank you, Brett, and good afternoon, everyone. I'll begin by highlighting some key messages in relation to our summary financials from Slide 10 of the presentation. Firstly, with regard to revenue, which has declined $5.8 million on the prior half, this primarily reflects the decision taken back in the first half and as part of the company's strategy reset to exit nonstrategic and lower-margin brands, which included Sugar Baby and Eylure. This accounts for $3.2 million of the overall movement in the half. We also experienced reduced portfolio brand sales of $1.3 million, in part, impacted by supply changes -- on our supply challenges, I should say, on A'kin and Bondi Fragrances brands. A decline in core brand sales of $1.3 million, largely due to the year-on-year performance of Dr LeWinn's in the International business. Notwithstanding this overall decline in core brand sales, as Brett has already highlighted, 4 out of 5 core brands achieved growth during the half. Our gross margin percent of 58.7% is just marginally behind the prior comparative period, and this reflects, firstly, a higher weighting of core brand revenue to total group revenue, which is favorable to our margin mix, offset by the impact of negative brand mix linked to lower relative sales of the Dr LeWinn's brand and to a lesser extent, customer channel mix. The company has recorded savings and employee costs of $1.7 million, and this primarily reflects actions taken at the end of first half '24 to rationalize the employee base following our strategy reset as well as more recent restructuring activities in first half '25, including in relation to our International operations. The company has also benefited from an increased utilization of lead accruals and some level of vacancies in first half '25, which are expected to be filled in second half '25. As noted by Brett and as signaled at our AGM, a deliberate decision has been made to weight our investment in advertising and promotions, or A&P, to first half '25. This is to support core brand momentum and to lay foundations for the effectiveness of future spend via investment in consumer research. I'll now make some further comments on A&P shortly. Finally, our net interest costs have reduced as a consequence of the repayment of borrowings during the half. Turning to the business unit overview on Slide 11. The performance of the ANZ business, being the majority proportion of continuing operations, largely reflects the drivers I've just mentioned for the group. Of note, however, is the performance of core brands, which are marginally ahead of the prior period for the ANZ business. This reflects pleasing growth in Manicare, Swisspers, Lady Jayne and Fusion, offset by Dr LeWinn's, which is down 5.6%, reflecting the shift of category growth to lower-priced, non-premium brands, promotional intensity in second quarter '25 and the timing of some customer orders in December '24. Sales in the International business are down $1.5 million, primarily attributable to the Dr LeWinn's brand. This result reflects the cycling of a major pipe fill order in July 2023, which was aligned to the launch of serums in China, combined with challenging market conditions. Also during the half, our new Head of China was appointed to oversee the execution of the company's strategy in China. Turning now to Slide 12. The underlying EBITDA from our continuing operations has declined $5 million in the half. This reflects several key drivers, which I'll briefly step through now. Firstly, the contribution from our core brands is down $1.5 million, reflecting the overall decline in core brand sales, which as mentioned is chiefly at attributable to Dr LeWinn's and International business. And this is combined with the impact of both brown and channel mix also as I mentioned earlier. However, the most significant contributor to the decline in EBITDA relates to the front-weighting of A&P spend in first half '25, which for our core brands equated to a $4.1 million uplift in brand investment. The timing of this spend better aligned with major customer promotional activity in first half '25 to support brand momentum into second half '25. Additionally, this A&P includes investment in working media, out-of-home and in-store promotions and importantly, foundational research for our core brands to support more informed spending in second half '25 and beyond. As noted earlier, the actions taken in first half '24 as well as more recent actions in first half '25 to rationalize our employee base has resulted in significant savings in employee costs during the half. Finally, in relation to other expenses, licensing costs associated with the company's new Salesforce software have been offset by various other cost-saving initiatives during the half. To Slide 13, the group finished the half with a strong net cash position of $11.6 million. This represents a decline of $2.5 million since June and is largely reflective of the company's investment in technology transformation, namely Salesforce, reflected in the payments for PP&E and intangibles. However, other important aspects of the cash position include a strong operating cash result of $1.8 million, representing a cash conversion rate of 137%. A portion of this operating cash flow does reflect the unwind of working capital following the divestment of Multix, and this totaled $1.1 million. And the remaining working capital movement is reflective of, firstly, the continued positive benefit from improved management of our inventory position. However, this is being offset in the current period by the timing of trade debt receipts and the payment of restructuring costs that were accrued in FY '24. Following the sale of Multix, the company also repaid its borrowing position, and this is reflected in the movement in financing outflows during the period. Additionally, and as a component of its capital allocation framework review, the company has reviewed its working capital requirements and subsequent to first half '25 has rightsized its working capital facility down from $45 million to $25 million. This action will further reduce the company's financing costs into second half '25. Slide 14 contains further information on our transformation update. As noted by Brett earlier, McPherson's has moved forward to the next stage of the implementation of its new operating model. The business is transitioning from a majority fixed to a variable cost route-to-market model. We disclosed the implementation of the new model -- sorry, we disclosed that the implementation of the new model is expected to unlock annual incremental underlying EBIT in the order of $4 million to $5 million from FY '26 onwards. To provide further understanding the key elements of this incremental EBIT include: Firstly, the partial recovery of costs associated with the lease of our Kingsgrove warehouse via sublease of that facility, employee cost savings from the exit of warehouse and in-house distribution capabilities, a significant reduction in cartage freight costs associated with our previous direct to store model and other warehouse and distribution savings associated with the transition to an outsourced 3PL model. These savings are partially offset by costs associated with the transition to our new outsourced 3PL provider and the transition to a new pharmacy wholesaler model, noting expected offset from the benefit of increased distribution and service capability. The combined impact of these items yields the annual incremental EBIT benefits that we have identified. Importantly, due to the nature of the changes being implemented, the company does expect to incur a series of one-off cash and noncash material items in the order of $9 million to $11 million in FY '25. As disclosed, these include redundancy and implementation costs, along with noncash write-downs of right-of-use assets associated with the head lease and other warehousing assets. I will now hand back to Brett to continue with the presentation.

Thanks, Mark. On Slide 16. Looking ahead to the remainder of FY '25, which outlines some more of the transformations that are coming. We're clear that our priority is the implementation of our new route to market and the delivery of transformation right across the business. This is both a pathway to unlock residual costs following the divestment of Multix, but it's also a critical piece of making sure we have a leaner and more efficient operating model, one that's right for our portfolio and our customers and that will set our brands up for success. During the half, we've also completed our usage and attitude study, and we will maintain disciplined investments in advertising and promotional activity on our core brands, all informed by data. We're also turning our focus to accelerating innovation plans, continuing our technology transformation with Salesforce and resetting our model in China. And we'll be expanding the distribution of our core brands right across the business in all channels. Our aim remains to have our new simplified operating model fully functional for the start of FY '26. Next slide. We are maintaining a relentless focus on methodically working through the steps of this transformation while delivering growth on our core brands. While complex, it is imperative we get this right if we are set McPherson's on a fundamentally different strategic trajectory. Year-to-date, we continue to see early indicators that disciplined investment in our brands is paying off and that our brands are gaining traction with customers and consumers with gains in category market share. And as we stated at the AGM, we continue to anticipate that FY '25 underlying EBITDA will be majority weighted to the second half of this year. Thank you all, and we look forward to taking your questions.

[Operator Instructions] Our first question is a text question from Shuo Yang from Microequities. She asks, what do you expect the net working capital benefit under the 3PL mill on average over the course of a full year?

Yes. Thanks, Shuo, and I appreciate the question. So net working capital benefit, as we said, we expect to be significant. We haven't put exact numbers around it, but to give you a bit of an idea, we're holding anywhere between 120 to 150 days' worth of inventory on hand at the moment. We're obviously targeting should that be reduced a significant reduction we see that coming down by at least 25% to, let's say, 40% and you'll be able to work out the financials off the back of that. It's in the millions, and that's definitely a significant benefit to cash flow.

Our next question is a text question from Robert [ Alarie ]. What is the operating status of the CW EDA, including preferred brand? What proportion of cost of the 9.9% MCP shareholding has been recouped, i.e., was it beneficial to MCP shareholders or CW? If not already answered, will MCP remain a preferred supplier to CW? And will there be a greater competition for shelf space for the various lines, given the new distributions and warehousing model?

Okay. Thank you, Robert. I've got that in front of me. So there's a lot in that. Let me break that down into a couple of different pieces. Sorry, could that come back up? Just get that up. Let me just talk about that. From the EDA portion of the business, there's 2 parts to the deal that was done with Chemist Warehouse for 9.9% of the business. One was the preferred brands agreement part, where our brands receive preferential treatment with the best intentions inside Chemist Warehouse; and then there was our distribution of the EDA brands. It's fair to say the [ PPA ] part of the business has been quite successful, and we've maintained significant distribution for all of our brands. We have an excellent working relationship with Chemist Warehouse, but I will say we have an excellent working relationship with all of our customers. The EDA's part of it has been a challenge. We've not seen the traction on those brands that we probably would have liked. And with this change, we are in constant dialogue with Chemist Warehouse about how we can change that dynamic. I think a couple of other things in there, I think, it was beneficial. I think both of -- in terms of a beneficial to McPherson's on or Chemist Warehouse, I think it was both. I think both Chemist Warehouse have enjoyed the use of #1 brands in our stables of Manicare, Lady Jayne, Swisspers, and we've worked with them to start to expand our categories. And then we've also enjoyed some great promotions with them. To be fair, I think we haven't invested as much A&P around the outside of those promotions, and we're just starting to see that happen now as we've reset the business. So I think over the next couple of years, we will really start to see a lot more coming out of that [ PPA ] part of it. I think we remain a preferred supplier to Chemist Warehouse for the next couple of years because of the preferred brands agreement that we have with them. So I think that that's going to remain in place. Nothing is going to change there. And will there little bit greater competition for shelf space for various lines given the new distribution and warehousing model? I'm not sure that there'll be any more competition. I think that's fairly standard in terms of there's always competition for shelf space. I think it has -- our change in the route-to-market model is less around competing for the space. It's actually making sure that we've got the stock to be arriving in the store so that we're taking up the space that we do have. So I hope that answers the question.

Our next question is from Shuo Yang from Microequities. Under the 3PL and pharmacy wholesale model, will you gain some distribution and improve stock availability? The additional sales and margin from this benefit? How much does this represent on the EBIT benefit?

Great question, Shuo. Absolutely, we'll get more distribution from the model. Our model, and there's 2 factors that impact our sales. The first one is that under agreements, the pharmacy agreements with the government, the wholesale distributors into pharmacy have to be able to reach any pharmacy in Australia within 24 hours. So effectively, if any one of our customers ordered our products from a pharmacy wholesaler, it will be there the next day pretty much at the latest. In some metro areas, if you order by 10, you get it by 4. So there's a huge impact on delivered really fast. The difference between that model and ours is that if someone was with us, depending on where they are, if they're in a regional area, it could be 10 days for us to get the stock to them. And the way that pharmacists tend to order is they see something, it runs out of stock, they go, I need to reorder that. So we might have a 10-day period where we're not on shelf. So we see that as a huge benefit for us. In terms of EBIT impact on that one, we know that there's an upside in terms of sales. We don't understand because we don't go to -- we don't deliver to up to about 1,500 of the 5,800 pharmacies. So we don't actually know how much they're going to add to our bottom line. So it's hard for us to put a number on that. And I'm not trying to be evasive around it, Shuo, but the reality is we do know that there's somewhere near a 5%, just maybe 6% upside in sales, somewhere around that mark. Lots of square brackets around that one in terms of we don't yet understand, and we're really pushing into it. But what we do know is from our pharmacy wholesalers, they tell us that there's definitely a benefit for having greater distribution but also being out of stock a lot less than your current direct to store model. I hope that helps.

Our next question is an audio question from Sarah Mann from Moelis Australia.

Can you hear me?

Yes, Sarah.

Good. Look, just, I suppose, following up from the question before around, I guess, the volume uplift from, I guess, having expanded reach by the wholesale model. When we look at that chart that you've given us on Slide 14, I guess, how much of an EBIT offset compared to the cost associated with going to a wholesale model have you included in the $3.5 million to $4.5 million increase in variable costs?

Yes. Sarah, it's Mark here. Yes, yes. No. So there certainly is something, as Brett noted, there is some variability in that. But I can give you a little bit of an idea that the order of magnitude is you'd say it's between about $3 million to $5 million of EBIT benefit, which is coming through in that section of the chart. By nature though, it is variable, so the costs associated with that are also so it does move around, which is why we've ranged it. So I think -- hopefully that gives you a bit of an idea.

Very helpful. And the other question I just wanted to ask was around advertising and promotion. Particularly, to be very clear that a lot of it is front-end weighted. You spent it. I presume across all 5 of the core brands, we've seen market share gains. Just curious how, I guess, the performance of those brands that are tied up to your expectations? Like do they kind of hit the return hurdles that you were expecting? And then also, sorry if you have recovered this, but how we should think about, I guess, kind of the second half split? And just on an ongoing basis, how we should think about advertising promotion as well going forward?

Yes, sure. Thanks, Sarah. I mean in terms of the return hurdles from the working A&P that we've put in, which is the majority part of most of the money that we put in, we have seen excellent returns. But again, it's not -- we're not investing at the level that we would really like to at this point in time. So broadly, the cash return on those is not as great. I will say that we're in -- we know what to do, and part of this entire transformation is being able to give our marketing team more money to be able to do the things that they know that is working. The other part of what we were doing in terms of are we getting return hurdles about things, which is what we call the nonworking A&P, which is the research that we've done, the digital asset management development that we've got, it's been spectacular for us in terms of what it's taught us to our U&A study. We've learned a lot about our brands, our competition in the categories. We've learned a lot about white space territories for innovation. And so in terms of -- we've done -- this is the first genuine study in the business around our brands for the last, I think, 7 years. And so we've got a lot of things that we can now take away and work on. They take a while to work through, particularly in innovation. You may need 6 to 12 months returns on that for stuff, but we feel very good about the return from research. But in terms of the work that Mel and the team have been doing in terms of are we getting a return from our digital media that is facing a different tune, it is at this stage looking very positive. The other part to it is not so much all about A&P. It is also the returns that we're getting from Salesforce. We're now live with both TPM and ReX. ReX is now absolutely telling us what stores do not have our best sellers of 85 SKUs. And our ReX are now actively targeting those outlets to kind of get the right mix for that outlet that is segmented into the right sort of out to make sure that we've got the right SKUs. And we're now actively pushing into that quite hard, and we have seen some good steady gains in terms of distribution of the [ BSL ], the sales list. And only over the last month or so, we've started to see and track our key account teams start to really talk about the returns they're seeing and the information that Salesforce is knitting together for us, which says we did a promotion inside a particular retailer. We could see that glam worked really well. We've got a great rate return, but we can necessarily get the return on Manicare as an example. And we can now start to break down what didn't work and change it for the next promotion, speak to our retailers about modifying the depth of the discount or the length of time that we're on promotion and things like that. So we're starting to get genuine real things that our people are working with, which is certainly exciting on those 2 areas of investment because they're material investments, right? We want to increase our A&P. We've got to get a return, and we're increasing our investment in tech and Salesforce and we need a return. So short answer, yes, we are starting to see it, but it is very early stages.

Got it. And then how should we think about A&P spend in the second half relative to the first half, given you said it was front-end weighted? And then you commented as well that it's not quite the level you'd like it to be. But in general, should we think as a rule of thumb that it might be, I don't know, 10% of sales? Or can you give us the framework as to how we should think about where your ideal A&P spend should kind of get to?

Yes. Sarah, it's Mark. I'll definitely start and Brett might want to provide an view on this, too. So we -- look, we obviously haven't guided to second half on A&P. We've guided overall around EBITDA being weighted to the second half. What we have said is that A&P will certainly be a feature of that. So the first thing I can say is that the spend in the second half, A&P will certainly be lower than what it is now. I think that shape of first half being a little stronger than second half, maybe a little more of our go-forward position, whereas last year, we're actually a little bit the other way around where our second half was ahead -- was high than our first for different reasons. In terms of the quantum and what that looks like, obviously, a bit careful because I haven't given guidance on that. But I think what I could say is to give a bit more color is that there is definitely nonworking spend in the first half. Some of the items that Brett was touched on, one-offs that we wouldn't expect to repeat in the second half, and at least, they could be around $1 million. That's not to say that that's the differential, but that is -- I'd say, it's at least that and probably can't go too much further than that.

No, it's fine.

Anything you want to add, Brett?

No, no, no, that's fine. That's about right.

And then the question around longer term, like if you could provide us the framework as to how we should think about your ideal A&P spend going forward? Because you did mention that it's not what you'd like it to be.

Yes. No, it definitely needs to increase. And we would tend to look at it much more around a percentage of the overall net sales as opposed to a fixed number. And that just allows us to manage the picture going forward. In businesses -- in FMCG, brands are driven by A&P, really effective returns from your A&P, increasing your awareness, increasing your trial, your repeat purchase is the important part of building and maintaining brands. And to do that, you have to have a level of spend anywhere between 10% and 12% of your net sales as a minimum in my world. And then you can go north of that when you've really got a very effective model. We don't yet have a very effective model is what we -- I'd be very clear in saying, and I'm not keen on spending money to just try and figure that out. So it's quarter by quarter, we're stepping into it with a very disciplined approach about where do we put the money or what are we learning about it and then how do we invest more in the areas that we're getting the returns, but we're very early on that journey. But in the future, I'd love to be able to say that we're investing in a virtuous circle, somewhere between 12.5% and 15% depending on the investment.

The consumer.

The consumer. The consumer element. Co-op and customer slightly different, but they work in conjunction together. Yes.

Excellent. That's really good color. Last question for me. Can you provide us any more -- you've given us the key line items and some of the one-off costs. But do you have a rough feel for the percent that will be cash versus noncash at all?

Yes. Yes, I can, Sarah. So just to be clear, this is for the one-offs related to the transformation, the [indiscernible].

Yes, sorry. Yes. Yes.

So look, in terms of the cash, noncash splits, the cash component of that will be in the order of $6 million to $7 million. And that really attaches to the restructuring costs and implementation project costs. The noncash elements, the write-down of things like right-of-use assets, which another way of saying sort of onerous lease contracts, those things write-down of some warehouse assets there, the noncash component, but the cash is sort of $6 million to $7 million of that.

Our next question is a text question from [ Sally Lee ], investor. The great driver of skin care used to be Dr LeWinn's. What are the next steps going to be taken to revitalize Dr LeWinn's? There hasn't been much of a new product development from the Dr LeWinn's since the new serum line 2 years ago?

Thanks, Sally. Great question. I think what you've outlined there is exactly what we're doing with the brand reset. Dr LeWinn's has undergone a lot of research in terms of all the different parts of its mix. I would agree that its innovation hasn't reached the heights that we really wanted it to. And there's a huge amount of work from Melissa and her team in understanding exactly what the most appropriate directions are, but there will be more innovation and there is more innovation absolutely in the pipeline as we speak. We will be looking at rationalizing the range and really kind of focusing in on anti-aging as a core part of what Dr LeWinn's stands for. Packaging, I think, has become dated and requires updating, and there's -- we're looking at pretty much the new designs as we speak now. And they have -- skin care has changed a lot in terms of how well educated people are when they buy skin care these days. They know what ingredients are. They know what the indications are from those ingredients. And so having those a little bit more front and center is a very important part of the way that we bring what Dr LeWinn's can do for our consumers in the packaging. Super important. It does need to remain premium. We are a premium brand, and we intend to stay that way. We're not interested in kind of the lower price sub-$40, sub-$30 segments. And so for us, it's really around maintaining that premium positioning, upgrading our packaging, accelerating our innovation plan and then positioning ourselves in a way that's distinct and unique in the anti-aging part of skin care. So yes, that's effectively the way that we're looking at relaunching Dr LeWinn's. I hope that answers your question.

[Operator Instructions] As there are no further questions, I will pass back to Brett for some closing remarks.

Thank you, and thank you, everybody, for your time today. A reminder, that your management team and Board are working tirelessly to transform this company. 165 years of history is not lost on us, and we are incredibly excited but also humbled by the challenges in front of us. We want to remain focused on the transformation, ensuring that as we do, we're growing our core brands and ensuring that we're managing our cash, our customers and our brands as we head towards FY '26. Again, I thank you for your time, and I thank you for your support over this transformation period. Thank you.

That concludes today's call. Thank you for joining us. You may now log out.