CVT
23/05/2014 10:04
FLLYR
REL: 1004 HRS Comvita Limited
FLLYR: CVT: Comvita Annual Result in line with Guidance
Financial highlights for the year ended 31 March 2014
- Annual sales rose 11.4% to finish at $115.3m.
- Net Profit After Tax was $7.6m, up 3.3% and EBITDA of $16.4m was up 11.4%
on previous year.
- A final dividend of 8 cents per share has been declared by the Board,
bringing total dividends for the year to a fully imputed 12 cents per share.
This is ex-dividend on 20 June 2014 and payable on 27 June 2014.
- 62% of sales and all our profits were generated in the second half of
2013/2014. Sales growth in the second half was 24% up on the same six month
period in the previous year.
Financial summary for the year to 31 March 2014:
Revenue $115.3m (increase 11.4%)
EBITDA* $16.4m (increase 11.4%)
Net profit after tax $7.6m (increase 3.3%)
Earnings per share (cents) 24.95 cents
Dividend per share 12.0 cents
Financial summary for the year to 31 March 2013:
Revenue $103.5m
EBITDA* $14.7m
Net profit after tax $7.4m
Earnings per share (cents) 25.71 cents
Dividend per share 13.0 cents
* Earnings before interest, tax, depreciation and amortisation
A year of two halves
Sales in the first half year were negatively impacted by honey supply
shortages. Full year earnings were suppressed by a sharp increase in the cost
of honey as supply was restored during the second half year.
Sales in key markets of Asia and New Zealand which comprise 62% of sales,
were strong. However, margins were impacted by the very strong NZ dollar and
from further sharp rises in the cost of Manuka honey. Because of contractual
commitments on pricing in the fast growing China market these costs couldn't
be recovered within the annual time frame. Price rises are now in effect for
the coming year.
Sales in Australia (25% of Group revenue) were strong, up 17% on the prior
year. However, the weakening of the Australian dollar relative to the New
Zealand dollar contributed to suppressed margins. Sales and profit
contribution from our fresh Olive Leaf Extract range were also impacted in
Australia where price competition intensified. We expect the mounting
clinical evidence supporting the efficacy of our fresh Olive Leaf Extract
products will assist us to lead a recovery of lost market share in the coming
year.
We continue to see strong growth of circa 35% of our Medihoney(TM) woundcare
business. During the year it did not translate into growth of profits for our
Medical business unit because the sharp rise in the cost of medical grade
Manuka honey could not be passed on at such short notice due to commitments
of phased pricing adjustments with our US partners.
Security of future honey supply assured
In September 2013, we issued 2.3m ordinary shares to Derma Sciences Inc., our
USA Medihoney(TM) woundcare partner, at $3.90 per share, primarily for use in
expansion of our ownership of Manuka honey supply.
During the year we acquired two further apiary businesses (in Gisborne and
Hawkes Bay), giving us six apiary hubs spread throughout the North Island,
with a collective capacity of 30,000 hives for the coming 2014/2015 season,
targeting Manuka honey. Apiary profits are now contributing to overall
profitability of Comvita, thereby helping mitigate the current high cost of
contract honey supply.
The recently announced acquisition of South Island-based New Zealand Honey
Limited (post balance date), in addition to our own North Island operations,
means we have surpassed our strategic objective of having at least 50% of our
honey supply under direct ownership or control. This position helps alleviate
the pressure we have experienced in the past few years caused by honey
supply shortages.
Capital projects
During the year we invested a total of approximately $15m in a number of
capital projects:
- Point-of-Sale till system for retail outlets to better capture sales and
customer data that can be managed in harmony with our e-commerce platform.
- Demand Planner system to further optimise production planning, logistics
and inventory management.
- A proprietary Apiary Management System which will allow full digital
traceability of honey back to individual hives and facilitate optimal hive
management practices.
- To ensure full control over the quality and safety of our products, we
established a new, world class analytical laboratory in Paengaroa.
- We opened two concept retail stores in New Zealand (in Auckland and
Paengaroa) as well as a new kiosk at Auckland International Airport (post
balance date) to better profile the Comvita brand in our domestic market and
to target our growing Asian consumer base.
- In November 2013 we launched a joint venture, Comvita Tourism Experience,
at our home base of Paengaroa, in the Bay of Plenty.
- During the year we expanded the honey production facility at Paengaroa,
resulting in a 50% increase in overall honey throughput capacity.
- We completed further infrastructure and building development of our eight
hectare site at Paengaroa, effectively future proofing plans for the staged
investment in our site facilities, in line with growth of sales.
- We increased the capacity of our apiary business by adding an additional
7,000 hives to now have a 30,000 hive capacity for the 2014-2015 season.
- The planting of a further 80,000 seedlings in our recently purchased Olive
Leaf plantation.
Balance sheet remains in good shape
Our capital spend in 2013-2014 outlined above has been paid for out of
earnings from operations, and funds from the share placement to Derma
Sciences. At year end, our net debt position of $26.5m was similar to last
year ($25.3m), leaving our Balance Sheet in a relatively strong position.
Post balance date we spent $12.3m on acquiring New Zealand Honey Limited,
mostly funded by bank borrowings. A significant part of this acquisition was
honey inventory.
Our dividend policy of paying 50% of after tax profit is maintained, which we
believe is the right balance between rewarding shareholders with income and
retaining funds for growth.
In summary
Comvita is a brand marketing business of high end, efficacious natural
products that provide human health benefits. Approximately 80% of our sales
are to export markets.
Our focus in recent times has been on security of supply of high quality raw
material and control of our supply chain right through to our customers for
all our products. We are now where we want to be strategically and can place
more focus on extending our existing product range and increasing the
emphasis on marketing and contribution margins, thereby making full use of
our comprehensive infrastructure.
We are also working to address the challenges of managing a year of two
profit halves. This includes evolving our product and channel portfolio so
that we have a more even spread throughout the year. This plan is ongoing
and will take more than one year to implement.
We continue to actively seek strategic acquisitions that fit with our high
end Comvita natural product brand. Such an acquisition would need to be
earnings accretive for shareholders.
Our outlook for the next fiscal year remains optimistic. We anticipate
continued growth in revenue and net earnings.
# Ends #
For further information:
Brett Hewlett, Comvita CEO, 021 740 160
Neil Craig, Comvita Chairman, 021 731 509
Julie Chadwick, Comvita Communications Manager, 021 510 693
Name of listed issuer: Comvita Limited
For the full year ended: 31 March 2014
This report has been prepared in a manner which complies with New Zealand
International Financial Reporting Standards and gives a true and fair view of
the matters to which the report relates and is based on audited accounts.
CONSOLIDATED OPERATING STATEMENT
Current Full Year NZ$7,616; Previous Corresponding Full Year NZ$7,371.
Total operating revenue: NZ$115,283, Up 11%; Previous Corresponding Full Year
NZ$103,529.
OPERATING SURPLUS BEFORE UNUSUAL ITEMS AND TAX:
Current Full Year NZ$10,608; Previous Corresponding Full Year NZ$10,446.
Unusual items for separate disclosure: Current Full Year nil; Previous
Corresponding Full Year NZ $nil.
OPERATING SURPLUS BEFORE TAX:
Current Full Year NZ$10,608; Previous Corresponding Full Year NZ$10,446.
Less Tax on operating profit: Current Full Year NZ$2,992; Previous
Corresponding Full Year NZ$3,075.
OPERATING SURPLUS AFTER TAX BUT BEFORE NON-CONTROLLING INTERESTS:
Current Full Year NZ$7,795, Previous Corresponding Full Year NZ$7,384.
Less non-controlling interests: NZ($179), Previous Corresponding Full Year:
NZ($13).
Equity Earnings: NZ$12; Previous Corresponding Full Year NZ$5.
OPERATING SURPLUS AFTER TAX ATTRIBUTABLE TO MEMBERS OF LISTED ISSUER :
Current Full Year NZ$7,795; Previous Corresponding Full Year NZ$7,384.
Extraordinary items after tax attributable to Members of the Listed Issuer:
Nil
OPERATING SURPLUS AND EXTRAORDINARY ITEMS AFTER TAX ATTRIBUTABLE TO MEMBERS
OF THE LISTED ISSUER:
Current Full Year NZ$7,795; Previous Corresponding Full Year NZ$7,384.
Earnings per share: 24.95cps; Previous Corresponding Full Year 25.71cps.
Net tangible assets per share: $1.54p.s. Previous Corresponding Full Year
$1.34p.s.
Final Dividend Payable: 8 cents per share.
Date Payable: 27 June 2014.
Imputation tax credit on latest dividend: fully imputed.
Contacts:
Neil Craig, Chairman, Comvita Limited : 021 731 509
Brett Hewlett, Chief Executive, Comvita Limited : 021 740 160
End CA:00250806 For:CVT Type:FLLYR Time:2014-05-23 10:04:49
