Slide 1: Investor Presentation Full Year Result FY21
PRESENTED BY: INVESTOR PRESENTATION David Banfield, CEO FULL YEAR RESULT FY21 Nigel Greenwood, CFO 26 AUGUST 2021
Slide 2: Important
I M P O R TA N T This presentation is given on behalf of They should not be used in substitution for, regarded as a reliable indicator of future Comvita Limited. Information in this or isolation of, Comvita’s audited financial performance; presentation: statements. We monitor these non-GAAP • Is for
Slide 3: Today's Agenda
T O D AY ’ S 01. 02. 03. 04. Our Focus Full year Cashflow, Inventory, Honey Harvest Arotahi Results and Net Debt and Supply Our Unique Business Model Why Comvita 05. 06. 07. 08. Market Our GHG Inventory and Q&A Segment 3 Point Plan net position Performance Aiming to be carbon neutral 2025
Slide 4: Comvita at a glance
01. 02. 03. 04. Number one 552 Seven 34% Global brand leader Team members in Seven subsidiaries Digital share of in Mānuka Honey the Comvita in countries around total revenue and Propolis Whanau the world FY21 05. 06. 07. 08. $24.2M $25.5M $4.6M 35.3% +56% EBITDA result Net debt FY21 Comvita TSR Inv
Slide 5: Our purpose: working in harmony with bees and nature
OUR Working in harmony with bees and nature in New Zealand to heal and protect the world.
Slide 6: Section
SECTION 1
Slide 7: Our Focus
RIGHT PRODUCTS OUR FOCUS VERTICAL RIGHT INTEGRATIO N M ARKET IM PROVED SUB SIDIARIE S QUALITY CONSUM ER LONG TERM P R O F I TA B L E G R O W T H INVESTM E N T IN ROUTE TO B RAND, M ARKET IP & SCIENCE
Slide 8: Leveraging Our Business Model
LEVERAGING OUR BUSINESS MODEL
Slide 9: The global Comvita whānau
The global Comvita whānau • Our primary focus remains on the health and wellness of our team around the globe • The team are all safe and well, though some family members have been affected (especially India and S. America) • The team response has been amazing in all markets • Many markets still bei
Slide 10: Global regulatory and standards
• Comvita support goal of higher standards for all NZ honey − We have one of the most advanced in-house honey laboratories in the world est. 2012 − We are independently audited by a number of independent external authorities such as Medsafe and the Ministry for Primary Industries G L O B A L R E G U
Slide 11: FY21 result highlights
• Reported NPAT $9.5M vs. ($9.7m) in PCP • Reported EBITDA* $25.5m, + $21.3m vs. June 2020 or +511% − Double-digit top and bottom-line growth in focus growth markets, China, and USA − Double digit top and bottom-line growth in Mānuka product category − Double digit top and bottom-line growth in digi
Slide 12: Full Year Results
SECTION Full Year Results
Slide 13: Key Results: Income Statement
K E Y R E S U LT S I N C O M E S TAT E M E N T For the year ended 30 June 30 June Variance $ Variance $ • Constant currency revenue shows a $2.9m or NZD 000’s 2021 2020 1.5% improvement YOY Revenue (Reported Currency) 191,734 195,912 (4,178) (2.1%) • Underlying revenue** growth 5.4% Revenue (Constan
Slide 14: Key Results: Balance Sheet
K E Y R E S U LT S BALANCE SHEET • Net debt reduced by $10.9m to be $4.6m at As at 30 June 30 June year end NZD 000’s 2021 2020 Variance $ • Operating cash flow at $24.8m reflects Audited Audited EBITDA performance with net working capital Net Debt 4,583 15,520 (10,937) movements being flat YOY • Fu
Slide 15: Gross profit up $12.1M
Gross Profit improved $12.1m from Focus Growth markets, Rest of Asia, digital channel and productivity gains • Focus Growth markets – Strong performance in China and North America GROSS • Strong performance in Rest of Asia segment • Digital +17% vs PCP to 34% of total sales at accretive margins − Ev
Slide 16: Transformation on track
Very good progress so far with $12m in value gain through improved GP and reduced fixed costs over last 18 months: • Strong improvement in $ and % GP − GP improved by a further 730 bps – not all transformation related • Underlying cost reduction $5.7m to date (in both COS and other opex) $15M + $10M
Slide 17: Cashflow, Inventory & Net Debt
SECTION Cashflow, Inventory & Net Debt COMVITAS
Slide 18: Cashflow
For the year ended 30 June 30 June • Operating cash inflow $24.8m NZD 000’s 2021 2020 Variance $ • Operating cashflow in line with full year Audited Audited EBITDA with net working capital movements being relatively neutral Operating cash inflow 24,825 39,297 (14,472) • Significant reduction in inve
Slide 19: Working capital and net debt
As at 30 June 30 June • Inventory reduced by $11.7m vs. 30 June 2020 NZD 000’s 2021 2020 Variance $ • Reduction in non-Mānuka honey inventory Audited Audited holding through bulk sales Total assets 286,609 286,423 186 • Trade receivables up primarily in our China market where we have seen strong gro
Slide 20: Inventory profile
PROFILE 30 June 30 June • Inventory reduced by $11.7m vs. 30 June 2020 As at 2021 2020 Variance $ NZD 000’s • Raw materials reduced by $16.6m vs PCP Audited Audited • Increase in FG Inventory in market to offset Port Raw materials 60,762 77,334 (16,572) / shipping delays outside our control Work in
Slide 21: PPE and leased assets additions
& LEASED ASSETS 30 June 30 June • Increased investment in Mānuka forests, will be As at 2021 2020 ready for harvesting honey in three years with NZD 000’s full potential in five years Audited Audited • Manufacturing process improvements having Mānuka forest development 3,849 2,402 significant positi
Slide 22: Investments
As at 30 June 30 June • Apiter investment is facing short-term Covid NZD 000’s 2021 2020 Variance $ impacts, but long-term strategy remains sound Audited Audited • Gan Supply relationship changing from Joint Venture to long term Supply Agreement Apiter 5,479 5,348 131 • Makino investment performing
Slide 23: Honey Harvest and Supply
SECTION Honey Hanvest and Supply COMVITAS
Slide 24: Harvest 2021
• Comvita’s new harvest model has proven successful in FY21 • Despite this year’s harvest being below average, caused by unsettled weather, the quality of the harvest and good control of costs has meant that the harvest has delivered a small contribution to Group profits in this financial year • Tot
Slide 25: Market Segments Performance
SECT|ON 5) Market Segments Performance
Slide 26: Market performance overview
• Our business model is unique with our global in market subsidiary team − Closer to customer − Closer to consumer − Faster to act MARKET − Primacy of market − Team capability enhanced • Strong growth in focused growth markets − China: Revenue in LC +31% Net Contribution (NC) +25% Ratio 20.9% (LCY)
Slide 27: Performance vs PCP, reported currency
PERFORMANCE vs. PCP GREATER CHINA NORTH AMERICA 93.1 24.7 REPORTED CURRENCY $ M $ M 2020 : $86.9m 2020 : $22.1m +7% +12% REST OF ASIA AUSTRALIA + NZ EMEA 25.3 32.4 5.1 (30 June 2021 vs 30 June 2020) $ M $ M $ M 2020 : $20.5m 2020 : $44.1m 2020 : $6.9m +23% -27% -26%
Slide 28: Performance vs PCP, constant currency
PERFORMANCE vs. PCP GREATER CHINA NORTH AMERICA 96.5 27.2 C O N S TA N T C U R R E N C Y $ M $ M 2020 : $86.9m 2020 : $22.1m +11% +23% REST OF ASIA AUSTRALIA + NZ EMEA 26.7 32.1 5.2 (30 June 2021 vs 30 June 2020) $ M $ M $ M 2020 : $20.5m 2020 : $44.1m 2020 : $6.9m +30% -27% -25%
Slide 29: Net contribution performance vs PCP
NET CONTRIBUTION GREATER CHINA NORTH AMERICA PERFORMANCE vs. PCP* $19.9 2020 : $18.2m M $4.7 M 2020 : $4.4m +9% +7% REST OF ASIA AUSTRALIA + NZ EMEA 6.4 10.2 0.0 (30 June 2021 vs 30 June 2020) $ M $ M $ M 2020 : $4.2m 2020 : $13.9m 2020 : LOSS $0.5m +52% -27% +100% .
Slide 30: Focus: China & North America
FOCUS CHINA & NORTH AMERICA FOCUS STRUCTURED LONG-TERM INVESTMENT TO GROW T.A.M AND MARKET SHARE
Slide 31: Greater China
GREATER CHINA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 93,076 86,945 6,131 7% Net Contribution 19,908 18,203 1,705 9% Net Contribution % 21% 21% 0% • Revenue growth 7% • Strong performance in mainland China offset by challengi
Slide 32: Mainland China, local currency
MAINLAND CHINA ON A LOCAL CURRENCY BASIS CNY 000’S This Year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 337,150 258,330 78,820 31% Net Contribution 70,377 56,514 13,863 25% Net Contribution % 21% 22% -1% • China is the world’s biggest honey market at 8.3bn RMB • Revenue growth
Slide 33: Mainland China, reported currency
MAINLAND CHINA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 73,151 57,610 15,541 27% Net Contribution* 15,282 12,626 2,656 21% Net Contribution % 21% 22% -1% • China is the world’s biggest honey market at 8.3bn RMB • Revenue growt
Slide 34: Greater China market highlights
• New leadership team in place and performing strongly • Record results in key festivals 11:11 and 6:18 • Number 6 and only International brand in healthy food category in Alibaba • Digital channel +41% to 57% of total G R E AT E R • Retail sector has now recovered +28% vs PCP • UMF Mānuka +38% • Ne
Slide 35: Greater China brand partnerships
G R E AT E R B R A N D PA R T N E R S H I P S D R I V I N G AFFINITY AND ENGAGEMENT
Slide 36: North America, local currency
NORTH AMERICA ON A LOCAL CURRENCY BASIS USD 000’S This Year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 17,247 14,019 3,228 23% Net Contribution 3,237 2,744 493 18% Net Contribution % 19% 20% (1%) • Revenue +23% versus PCP with strong growth across all channels. • Revenue inclu
Slide 37: North America, reported currency
NORTH AMERICA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 24,735 22,137 2,598 12% Net Contribution 4,733 4,380 353 8% Net Contribution % 19% 20% (1%) • Revenue +12% versus PCP with strong growth across all channels. • Revenue rep
Slide 38: North America market highlights
• Comvita is the fastest growing Mānuka honey brand in the U.S. • Increasing rates of sale per point of distribution with key retail customers for Mānuka* • Strong growth in key product categories versus PCP, including UMF Honey +24% and Propolis +31%. • Retail Distribution increased by an estimated
Slide 39: Focus: Korea, Japan and South East Asia
FOCUS KO R E A , J A PA N A N D S O U T H EAST ASIA FOCUS SELF FUNDING PROFITABLE GROWTH
Slide 40: Rest of Asia
REST OF ASIA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 25,346 20,533 4,813 23% Net Contribution 6,367 4,196 2,171 52% Net Contribution % 25% 20% 5% • Total revenue growth +23% • Net contribution +52% to 25% evidencing operating
Slide 41: Focus: Australia and New Zealand
FOCUS AUSTRALIA AND NEW ZEALAND FOCUS BUILDING DOMESTIC STRENGTH AND DISTRIBUTION
Slide 42: Australia & New Zealand
AUSTRALIA & NEW ZEALAND ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 32,444 44,069 (11,625) -26% Net Contribution 10,218 13,943 (3,725) -27% Net Contribution % 31% 32% 0% • ANZ revenue declined -26% vs PCP • 84% of decline in Aust
Slide 43: Focus: UK, Europe, Middle East and Africa
FOCUS UK, EUROPE, MIDDLE EAST AND AFRICA FOCUS SELF FUNDING PROFITABLE GROWTH
Slide 44: Europe, Middle East & Africa (EMEA)
EUROPE, MIDDLE EAST & AFRICA (EMEA) ON A LOCAL CURRENCY BASIS GBP 000’S This year Last Year Vs. Vs. June 2021 June 2020 Last Year Last Year % Sales 2,613 3,464 (851) (25%) Net Contribution 15 (305) 320 105% Net Contribution % 1% (9%) 9% • Break even result reflects strong cost control and good GP im
Slide 45: Our Three Point Plan
SECTION Our
Slide 46: Our three point plan: progress and update
STABILISE THE Winning in Australia and New Zealand ORGANISATION Focus on fundamentals Relentless simplification Positive cashflow paying down debt Inventory management Underperforming assets OUR THREE POINT TRANSFORMED Customer focus ORGANISATION World class digital experience and tech New proven ha
Slide 47: Stages of Comvita
S TA G E S O F C O M V I TA JAN 2020 JAN 2021 – JUN 24 JUN 24 ONWARDS Key Achievements: Key Goals: Key Goals: ● Return to profitability ● Sustainable profitable growth ● Clear route to carbon neutral ● Reset capital structure (all market segments and positive profitable and growing) ● Clear route to
Slide 48: Our 2025 long term business model
OUR 2025 LONG TERM BUSINESS MODEL 60 : 15: 20 Underpinned by • Delivery of at least 60% GP • Recognition as premium FMCG / CPG brand • 15% marketing Investment for sustainable • Carbon neutral 2025 growth • B Corp certification • 20% EBITDA ratio to sales • Strong working capital control and cash ma
Slide 49: Proudly heading towards carbon neutral 2025
P R O U D LY H E A D I N G T O W A R D S NEUTRAL 2025 S1 = Scope 1 — S2 = Scope 2 — S3 = Scope 3 2 FY21 GHG Inventory and Net Position (S1, S2, S3 (limited)) • Scope 3 categories included within the GHG Inventory for categories that are material and where good quality data is available: − C3 – Fuel
Slide 50: FY22 market performance and guidance
• FY22 EBITDA guidance range of $27.0m to $30.0m FY22 MARKET • Continued double digit top & bottom-line growth in Focus Growth Markets • Digital to at least 38% of revenue • Mid single digit revenue growth in ANZ market • Focus on further increase in GP% (H2) PERFORMANCE • Transformation program con
Slide 51: Summary
• Focus strategy starting to deliver results – Strong FY21 result • Double-digit top and bottom-line growth: ‒ Focus growth markets ‒ Digital channels ‒ Mānuka • Simplified business — Product range — Operating businesses — Roles and responsibilities • Reducing inventory, generating cash, paying down
Slide 52: Section
SSEE C C TTIIOONN 8
Slide 53: Thank you
THANK YOU COMVITA .COM