Terry White Chemists Group has released its Annual Report 2013-2014, with the pharmacy network recording an increase in total revenue of five per cent to $55 million. Terry White, chairman of TWC, said the 2014 financial year had delivered the group, solid underlying results in the face of increasing industry challenges and a dynamic business environment. “Our ability to innovate, our experience, and expertise has seen us grow the size of the Terry White Chemists network in a tough
h climate. We achieved strong growth in store numbers – that growth representing our highest ever run rate,” White said.
“The 2014 financial results also highlight a pleasing increase in total revenue of five per cent on the prior year, achieved with tight controls on our cost structure throughout the year and a growing contribution from our joint venture activities.”
2014 marked an important milestone for Terry White Chemists, with ownership of the brand transferred to the group on January 1.
This allowed for a clear focus on commercialisation of the Terry White Chemists brand with benefits to the group expected to be realised in the medium term, according to White.
“The timing of our brand ownership coincides with the final phase of a four year systems investment which is already driving significant gains in productivity in trial pharmacies; with head office management of product data and new capabilities delivering meaningful insight to stock management and supplier relations,” White said
“Our experience and commitment to innovation is paying dividends in the form of a superior retail offer that builds off script purchases to underpin profitability for pharmacy owners with the implementation of our Value Health Retail Strategy responsible for increases in ‘front of shop’ sales of up to 15 per cent.”
Key results for the group included a rise in underlying net profit after tax up from $0.7million to $1.6million, a 16 per cent increase product revenue to $20.8million, a 50 per cent stake purchase in the Tony Ferguson brand, and the rollout of 23 new pharmacies – increasing the network to 176.
The Report revealed the group’s long term strategic focus will be on further systems investment, improved marketing and merchandise strategies, and an increased private label offering.
The release of the group’s FY14 results follows its announcement that the group had sold its Pharmacy Direct brand assets for $2.8million, resulting in an impairment write-down of $4.4million.
White said the sale came after the board made a strategic decision to concentrate resources on the Terry White Chemists brand and to exit the discount Pharmacy Direct brand and services related to that brand.
“The Pharmacy Direct brand, website and infrastructure were purchased at a time when discount brands were under developed and its infrastructure was used to establish the TWC Online business which provides ongoing value,” he said.
“The creation of a discount brand is no longer part of the company’s strategic priorities with initiatives such as the introduction of multi-tiered formats and systems within Terry White Chemists proving to be a more successful approach for us.”
“The sale will deliver positive cash proceeds, freeing up resources to be used to focus on our core direction and focus on the Terry White Chemists brand.”
The Annual Report shows a statutory net loss after tax of $2.8 million for the year after the impact of the impairment charge, the underlying net profit after tax was $1.6 million, an improvement of $0.7 million over the $0.9 million for the prior year.
White said the 2013-2014 Financial year represented 12 months of refocusing and consolidation with a view to ensuring a clear pathway for the Terry White Chemists brand into the future.
In recognition of what is described as “a solid underlying performance”, the board has declared a fully franked, final dividend of 5c per ordinary share to shareholders on the record as at September 26 2014, payable on November 30 2014.