OPERATING + FINANCIAL REVIEW Suki Petgo, Assistant Production Operator (left) and Elena Irlandez, Production Operator, Blackmores 24 HOUR OPERATION 04 OPERATING REVIEW 25K 486 POINTS OF DISTRIBUTION GROUP OPERATIONAL REVIEW In the prior year, Blackmores was constrained by an inability to maintain stock to meet the rapidly growing demand for our products from consumers in Asia. A number of initiatives, from investing in the company’s capacity programs through to putting in additional partnership arrangements with suppliers and customers, have been executed in the year. We are also holding inventory of scarce raw materials to give us access in a growing market to mitigate against the vulnerability of having core product lines out of stock. Total expenses for the year were $454 million representing a 43% increase over the prior year. Total sales growth of 52% was the primary contributor with sales-related expenses of raw materials and freight up 46% to $225 million. The remaining expenses increased by $66 million to $229 million included employee performance related incentives which were $16 million greater than the prior year. MILLION CAPSULES OPERATIONAL HIGHLIGHTS Unprecedented consumer demand for products has continued. To protect our unrivalled quality standards and build capacity, the Group has: • Increased staff and shifts at the Blackmores Campus packaging facility. • Audited and secured more qualityapproved suppliers. • Completed extensive quality audits of new suppliers. • Doubled warehouse footprint including new leased facilities at Eastern Creek in Western Sydney. • Invested in new plant equipment including quadruple head counters, increasing packing speed from 4,000 tablets per minute to 13,000 tablets per minute. • Installed four new robotic packing cell. RESULTING IN RECORD OUTPUTS In the past 12 months, the Group produced 486 million tablets and capsules and shipped 43 million units which we delivered to more than 25,000 retail partners. BLACKMORES ANNUAL REPORT 2016 21