Comvita Annual Meeting Held Today
31 July 2008
Comvita Annual Meeting Held Today
Natural healthcare company Comvita Limited (Comvita) advised shareholders at its Annual Meeting in Te Puke today that the Company had faced a challenging 2007 financial year, but had also made significant advancements toward its longer term goals.
Comvita Chairman Neil Craig and CEO Brett Hewlett reflected on the Company's 2007 results and achievements, and outlined the Company's future strategic direction. As announced in its full year result on 11 June 2008, Comvita had experienced an extremely difficult 2007 financial year in many ways, Mr Craig said. However it was a period peppered with positive outcomes.
"Group revenue for the 15 month period was $65.18 million, representing a year-on-year growth of a 41 per cent. Strong offshore sales accounted for 75 per cent of our revenue, up from 66 per cent in 2006," said Mr Craig.
Comvita reported a net loss of $3.36 million, comprising an operating loss of $1.36 million and a $2.0 million non-cash provision related to the Company's dispute with WaikatoLink.
"The loss was very disappointing, attributed largely to foreign exchange and raw material cost increases however we remain optimistic, despite this result, that our long-term growth and profit targets are on track," he said.
CEO Brett Hewlett mirrored these sentiments and moved to assure shareholders that the Company is working hard to mitigate the external factors that impacted the business in 2007.
"While 2007 presented some sizeable market challenges, it was also a watershed year for Comvita on many fronts. A range of strategic acquisitions, securing FDA (US Food and Drug Administration) approvals and an acceptance on the UK Drug Tariff for MedihoneyTM products, launching our huniTM natural skincare range, Comvita's ongoing expansion into China and a continuing focus on R&D and innovation were all highlights last year," he said.
Mr Hewlett referred to the Company's operating strategy, based on four key imperatives: building scale, diversification of supply base, building a global premium brand and capturing and creating value with high efficacy products in the natural healthcare space.
"These four strategic imperatives underpin our goal of revenues of $100 million with significantly increased earnings by the end of 2010. We have not swayed from this longer term ambition and our business worldwide is stronger, more competitive and sustainable as a result," he added.
Hewlett told shareholders the series of acquisitions undertaken during 2007 were strategically pivotal and that the benefits were already evident. "For the first three months of this new financial year, our sales are tracking in line with budget. We are currently 31 per cent ahead in sales compared to the same period last year. As we start to see a softening New Zealand dollar, we should achieve continuing growth in margins and profitability from our offshore markets."
"Acquiring Greenlife Limited, our long standing Hong Kong Distributors, has allowed us to capture additional value in Hong Kong and sure up resources to support our growth in the wider Asian region. Retail sales year to date in Hong Kong are up 24 per cent on the same period last year despite a general market slow down," he added.
Recent milestones in the Company's medical business division included FDA approval for a number of MedihoneyTM wound care products and the listing of MedihoneyTM products on the UK Drug Tariff. "These regulatory advances should provide a significant boost to Comvita's sales potential in both the UK and US".
Hewlett also informed shareholders that Comvita had entered into detailed discussions with its US licensing partner, Derma Sciences. The parties are working towards a more comprehensive and enhanced relationship that would take better advantage of the specialist skills of both companies for exploiting the opportunities in the global wound care market. It is anticipated Derma Sciences would concentrate on the professional medical sector throughout the world and Comvita on the over-the-counter (pharmacy) sector of the market although flexibility will exist for collaboration across the sectors where appropriate. These discussions are expected to be concluded by the end of the second quarter 2008.
He went on to say that the purchase of Olive Products Australia Pty Limited had allowed Comvita to reduce its dependence on a single ingredient platform. "The launch of our fresh Olive Leaf ComplexTM has been well received in all markets with first quarter sales tracking ahead of budget," he said.
Post balance date, Comvita also acquired its main medical grade Manuka honey supplier, Kiwi Bee Distributors Limited, to further secure supply of this valuable raw material.
The Company will continue to innovate with the introduction of two new product ranges within the next 12 months. Both will be consistent with Comvita's brand as highly effective products in the natural healthcare space.
Comvita's head of Skincare, Leigh Kite, talked about the successful launch of the huniTM natural skincare range in a number of markets. She also pointed to landmark research into the anti-aging efficacy of Comvita huniTM in skincare. Recent clinical trials conducted in Germany have proven huniTM''s ability to increase skin moisture levels by 26 per cent, decrease the appearance of wrinkles by 31 per cent and improve skin elasticity by 31 per cent.
Ms Kite reinforced the huge opportunity for Comvita to operate in the growing global natural beauty industry, an arena that is a perfect fit for Comvita's recognised natural sustainability ethos.
With currently more than approximately 80 per cent of revenue and over half of Comvita's staff now based offshore, the 2007 financial year also marked Comvita's move from being a New Zealand-based export company to a truly competitive global company. The transition has involved an investment in infrastructure and human resources globally, resulting in a more sustainable business model able to offset competitive threats and capitalise on growth opportunities.
Mr Hewlett closed by assuring shareholders of the Company's commitment to reducing costs in the business and to increasing profits.
"The forecast we released to market on 11 June 2008 remains, with revenue of $65-70 million and NPAT of $2.0-2.5 million. Guidance will again be updated in the Company's six month results announcement. As pointed out in our 2008 Annual Report, our profit performance will be skewed toward the second six months with a peak in sales generated over the period November 2008 through to February 2009".
Comvita will not be paying a dividend relating to the 15 month period ending 31 March 2008. Mr Craig informed shareholders that there would be a reinstatement of dividend once the Company returned to a sustained level of profitability.
Shareholders approved the appointment of non-executive director Maurice Prendergast to the Comvita board. Mr Prendergast is an experienced CEO, leading Pumpkin Patch since 1993. Comvita will run as an expanded board until 2009 when long-serving board member Bill Bracks intends to retire. Re-elected to the Board after retiring by rotation were Chairman Neil Craig and Director David Cullwick.
Comvita also officially welcomed newly appointed Chief Financial Officer Peter Moran, who brings a wealth of experience to Comvita from his time with Caltex New Zealand, Gen-i and Telecom New Zealand.