CWH-linked entity sees profits plummet

East Yarra Friendly Society saw a 25% drop in revenue between the 2015-16 financial year and the 2016-17 financial year, plus a significant drop in profits

The Financial Review’s Simon Evans reports that East Yarra Friendly Society Pty Ltd lodged its financial statements for the year ended June 30, 2017, with the Australian Securities and Investments Commission earlier this week.

Various mainstream media have examined the structure of Chemist Warehouse; Mr Evans writes that its network of 400 pharmacies has been developed through “a combination of direct ownership of pharmacies by Gance and Verrocchi family members, and partnerships through an entity known as East Yarra Friendly Society Pty Ltd”.

East Yarra’s documents show that it generated revenue of $300.9 million in the 2016-17 financial year, a 25% drop from the $400 million it reported the financial year before.

As for profits, they dropped from $101.2 million in the 2015-16 financial year, to $12.96 million in the year ending June 2017.

As yet East Yarra has not lodged documents for the 2017-18 financial year.

Directors Jack Gance and Mario Verrochi described the 2016-17 results as “satisfactory” given a number of changes to the business, including alterations to stock supply arrangements, and “entry into a franchise system”.

Meanwhile, the Financial Review’s Sarah Thompson and Anthony Macdonald write in Street Talk that the Chemist Warehouse group is set to meet Asian investors, “as part of Credit Suisse’s annual investment conference in Hong Kong next week”.

Describing Chemist Warehouse as an entity which “rarely sticks its head up,” the two say that the meeting will be perceived as a “good get for the Swiss”.

The meeting also raises questions about Chemist Warehouse’s plans, including whether it is considering an Initial Public Offer – a suggestion which has now been mooted in financial circles for some time.

“Maybe Chemist Warehouse just wants to tell investors more about its push into Asia next week? Whatever the case, there will be fundies and bankers back in Melbourne and Sydney waiting for an update.”

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