Comvita Limited (CVT) Earnings Call Transcript & Summary

[Foreign Language] and welcome to Comvita's Annual Shareholders Meeting. My name is Brett Hewlett, I'm the Chair of the Comvita Board. Today, we're very pleased to welcome you as online participants through our virtual meeting platform provided kindly today by our share register, Link Market Services. During this virtual meeting, you can vote and ask questions online. I'll provide you with further instructions as we progress through the meeting. If you do encounter any issues, please refer to the virtual meeting online portal guide or you can phone the helpline on 0800-200-220. I would encourage you to send through your questions as soon as you can. This will allow the moderators to ask these questions or to arrange these questions, so they could be answered at the appropriate time of the meeting. [Operator Instructions]. The company's secretary has confirmed that the notice of meeting has been sent on time. We have a quorum present. Slides are clear to Comvita Limited 2022 Shareholder Meeting open. The financial statements of the year ending 30th of June 2022 and the auditors report for the period are available under the Investor Center on our website. The annual report was made available on our website on the 25th of August on the same date as we announced our annual results. Hard copies are available either through Link Market Services or by contacting our customer experience team that you can reach out to them on 0800-504-959. We're very proud of our annual report. It's a comprehensive document with something for all stakeholders. For you, our shareholders, when reading this report, you'll gain an appreciation of everything that Comvita is engaged in across the broader environment, social and governance spectrum. Apologies have been received -- no, sorry, we have no apologies to hand at the moment. I would like to acknowledge the presence today of our auditors, KPMG, our bank, Westpac, and of course, always welcome Comvita's Co-Founder, Alan Bougen, and his family members. I want to thank you all for joining us today. This is the second time we've run a virtual ASM. Learnings from last year was that the attendance was up and that shareholders are still able to engage during question time, et cetera. We'll continue to review the format of annual meetings, probably preferring a virtual format just because of its ability to reach a large number of people. But we will give consideration other ways that we can make more direct engage with all stakeholders. After my short address covering the performance highlights of our last fiscal year, I will hand over to our CEO, David Banfield, who will take you for a deeper dive inside the Comvita's operations, our strategies, how we are engaging with our multi-stakeholder communities; and lastly, provide some insights into our future ambitions. As we go through these 2 presentations, making to questions as we're going along and have them ready to go and load it. As mentioned earlier, you can submit your questions by the online platform. After the presentations, we'll cover formal resolutions and finish the general business where we will respond to any questions raised during the day. Let me start by introducing my fellow directors. With great pride, I introduce Lucas Bunt, as an independent director and also chairs our Audit and Risk Committee. Lucas has been on the Board for 8 years now. Sarah Kennedy is an independent director, and she is our safety and performance committee. Sarah joined the board 7 years ago. Sarah's standing for reelection this year, but intends to step down from the Board in March next year when a new independent director is to be appointed. Bob Major is an independent director and joined us at the end of 2019, Bob is also standing for reelection this year. Bridget Coates completes our lineup of independent directors and was elected to the Board at last year's ASM. [indiscernible] Zhu was appointed to the Board at the end of 2019 as a Non-Executive Director. Mr. Zhu was the founder of Comvita establishment in Mainland China more than 16 years ago, and hence, has played a key role in ensuring Comvita's brand success in this most exciting focused growth market for Comvita. Mr. Zhu also represents the interest of our largest shareholder, [indiscernible]. Mr. Zhu was standing for a reelection this year. Yawen Wu was elected to the Board at last year's ASM as non-Executive Director and Representative of China Resources. Yawen is currently on Maternity leave and the interim, Mr. Alfred Luke is acting as her alternative. Probably should just take the opportunity to extend our heartfelt congratulations to Yawen because she gave birth to a beautiful baby girl about a week ago. So congratulations Yawen. Finally, and certainly not lastly, as David Banfield, who joined the Board last year as our Managing Director. Your board of 8 with the majority independent, 2 strategic shareholder representatives and a Managing Director, a 38% female ethnically diverse and covering a range of tenures has determined that it will pursue a policy of continuous review and evolution of Board composition to best suit the current and future needs of the business. Changes will be timed to ensure continuity and institutional knowledge and at the same time, ensuring that we remain agile and adept at making balanced decisions in an ever increasingly complex multi-stakeholder world. As mentioned before, we will appoint a new independent director in March next year. This director has already been selected, and we are simply awaiting completion of independent confirmatory to process. We'll be announcing something later this year. Now let me introduce you to our team management team. David Banfield, of course CEO, who you'll hear from next. Nigel Greenwood, our Chief Financial Officer and also a moderator for today's meeting. Andy Chen, Regional -- Chief Executive Officer for Asia Pacific; Holly Brown, our Chief Purpose and Transformation Officer; Tracey Brown, no relation, Chief Operations Officer; Nicola O'Rourke, our Chief Digital Officer, is currently on a sabbatical break for a year, although we have been able to retain her as a consultant on key projects. Dr. Jackie Evans, our Chief Science Officer; Adrian Bar, Chief Business Development Officer; and Cory Blick, our General Manager for North America. And new to us this year -- or to the shareholders this year is Nigel King, our Chief Marketing Officer, who recently joined us from Ziwi Petfood company. Chris France, Chief Technology Officer, a self-proclaimed change agent and joined us from thank you very much mental block there forte. It's an impressive lineup. They're world-class. We've been very, very impressed by the lineup that David has been able to pull together, and we're very pleased to have them with us and a very dedicated and competent bunch of executives. Our vision as an organization, is to deliver world-leading standards for our team, our consumers, our shareholders and our planet, contributing to the world where Bs and people can thrive in harmony. At Comvita, directors take responsibility to act as Guardians of the founding principles and our vision in a sustainable way for the benefit of all our stakeholders. We take seriously our environmental, social and governance responsibilities and we act accordingly. In so doing, we will make balanced choices for investment balanced choices in how we spend our time and resources and balanced choices in terms of how we think about success. We will know we are succeeding in our endeavors when we are achieving of our long-term goals in a sustainable way. We will be a positive contributor to reducing impact of global warming, making fair and sustainable operating profits, building long-term shareholder value and providing competitive rates of return for invested capital. We will have a daring and loyal consumers of our brand. We will be the best employer attracting and retaining the best talent. We are making good progress on all fronts. You'll see there that I've marked them all under Ember only because we've still got work to do. We're not there yet, but we're well on the path to achieving most of those objectives like 2025. And certainly, all of them by 2030 sustainably. Let me start our review of the year gone with a mention of our team. The past year has been tough on our people. The culture and values are strong and run deep at Comvita. However, our people are not immune to the pressures of the current living and working environment. Lockdowns, supply chain disruptions, staff shortages, the need to adopt change in new ways of working, pressure to continue to perform all while managing the social and economic upheaval that we are all experiencing in our home lives. Today, you, our shareholders, as we take you through a review of the past year, I would ask that you put into context a significant achievements set against this challenging backdrop. So the 552 members of the Comvita [indiscernible] spread across 8 countries and representing 26 nationalities. On behalf of the Board and all shareholders, I say to you today. Thank you. This level of commitment by our staff demands an appropriate level of response from our leadership and a duty of care by the Board. Based on the achievement of financial goals for the year, the Board approved an offer to all staff to join us as shareholders. The Board also have supported a review of staff benefits, both financial and nonfinancial with a specific focus on safety and well-being. We introduced a health and life insurance program for all staff and continued with the delivery of care packages towards staff in their fare. We are very pleased to report positive gains in all areas of health and safety reporting. In particular, we saw total injuries fall by 40% in motor vehicle accidents, which is a critical risk area for our beekeepers in particular, fall by 64%. We are forging ahead in terms of climate action. We have completed our first global greenhouse gas inventory, capturing end-to-end business activities across our global value chain. This extensive process has been audited by Deloitte against ISO 14064 greenhouse gas protocols. We passed this first order with flying colors. Details of this can be viewed in our annual report. Working in partnership with [indiscernible] in the last 12 months, we have set site-based reduction targets and invested more than $150,000 in greenhouse gas management and other sustainability initiatives. We planted another 1.1 million [indiscernible] trees. And as our native forest grow enrich maturity, the volume of carbon are able to sequest also grows. We are well on our way to succeed in our objective of becoming net carbon positive by 2030. The overall highlight of FY '22 has been consistency in our financial performance. Asking you again to put these results into context of the significant challenges faced by the organization. I'm especially proud of what has been achieved here. Many organizations in our sector have struggled. Some have indeed failed altogether. We reached a milestone record revenue of $209 million, 9% up on prior year, extending our global leadership and gaining market share in all key markets. Most pleasingly, we achieved a gross margin of over 60%, a hallmark for premium FMCG food brands. Net earnings grew by 35%, and this was after a significant increase of 16% in marketing. Your Board were very pleased to have a fully -- pleased to approve a fully imputed final dividend of $0.03 per share, bringing the total annual dividend for FY '22 to $0.055 per share, a distribution representing 30% of net earnings. Perhaps the only disappointing aspect of our results last year was the increase in net debt largely due to a net increase in inventory throughout the year. This build in inventory was a precautionary move, a conscious proportion remove to offset against ongoing supply chain disruptions, mostly felt in China, and David will explain a bit more about that shortly. This elevated into position is likely to remain into FY '23. We are making steady progress in building a better business. We are well poised to benefit from an improving global trading environment. The analogy I like the most is the analogy of leaning forward struggling, but making slow and steady progress into a strong headwind. That's what comes to mind for me. As this head worth eases, you can rapidly accelerate to a full stride. I'll now hand you over to our CEO, David Banfield, who can explain in more detail how we are focused on building a better business and picking up pace. David, over to you.

[Foreign Language]. Good morning, ladies and gentlemen, fellow shareholders. I'm delighted to welcome you to this year's ASM and to also welcome the majority of the Comvita team joining us shareholders for the first time. I'll come back to this later. The image behind me on our -- of our wellness lab in Auckland and calculates the extent of change that we've seen around the world over the last 30 months. We believe that with the changes we've seen in both retail and e-commerce ahead to stay with consumers expecting both experience and service in a seamless experience. Our wellness destination space tells our unique story and is designed to stimulate all the sensors. It's safe, we take visitors on a personal multisensory experience and aim to connect them with our amazing friends, the bees, and also share the story of rewinding beautiful remote areas of our New Zealand. It also represents the future of retail, which will increasingly move from a transactional 1 dimensional space to experience. If you haven't been there yourself, I invite you to join us there and let us know what you think. I'd like to start by thanking and acknowledging the incredible hard work and commitment of the global Comvita team. The last 3 months have been pretty relentless even without the impact of COVID with our absolute focus to set Comvita up for long-term success. We continue to make decisions to ensure by the time we get to the end of this particular chapter in Comvita's rich history at the end of FY '25 that we've put in place the belief, the foundations and the processes to set Comvita up for the next 50 years. We have made really strong progress over the last 3 months and we have achieved this in the most extraordinary of times that I've ever seen in over 25 years of leading business around the world. I want to say a huge thank you to the global compete team for their effort, belief performance and impact they've helped deliver. We see real momentum in our business and are on track to deliver our FY '25 plan, thanks to this talented team. I know it's not been easy at times, and I want to acknowledge the resilience and determination of the team to deliver a special chapter of compete together. I also want to thank the Board for their continued support and counsel over the last few years. We have made and continue to make material changes to Comvita, changes that we believe will set us up for a really exciting future, and this could not happen without a progressive Board focused on long-term results and align to our ambition to share the healing power of bees and nature with consumers around the world. Finally, I want to thank the millions of consumers around the world who continue to choose Comvita as their personal source for wellness and building immunity. In tough economic times, we are privileged that our consumers see their daily dose of Comvita is indispensable and through their stories, help us attract discerning consumers who only want the best and as such, turns to the Comvita brand. I'm delighted with the results we delivered in FY '22 that I will come on to. These have been delivered against the backdrop of disruption due to COVID, both in market and in global supply chains. The changing face of retail sales, along with the permanent shift to consumers to e-commerce and the demand for personalized solutions. The level of disruption we've experienced was summed up for me when I visited our team in the U.S. recently, exactly 861 days since my last visit in person. Finally, today marks a landmark day in Comvita's history, a day where we ask you, our shareholders to vote to change our constitution to reflect the long-term importance of all stakeholder and brighter future for Comvita. It's also a day that makes me extra proud where we are able to celebrate the offer for the global Comvita team to join us as fellow shareholders. And to date, over 90% of the team have accepted this offer. Over the course of the next 25 minutes, I'll share our progress on our 3-point plan to stabilize performance, transform the organization and build long-term resilience and growth. I will also share the trends we've delivered over the last 30 months and why we believe momentum is building in the business. Finally, I'll share our excitement about opportunities that exist to 2030 and beyond and share some of the work we are doing today to ensure that Comvita continues to win at this time. Our focus remains exactly the same today, as I shared with you back in 2020. Firstly, an absolute focus, arotahi, on putting the consumer at the heart of our decision making, focused on right markets, channels and products underpinned by best science and investment in our brands and in quality supply. This virtuous model is delivering, and we're encouraged by the process -- progress we are making. Secondly, we have a unique business model, unlike any of our competitors that makes us a better partner to consumers and customers, enabling us to deliver an agile response to changing needs. We recognize that we still have a fair way to go to get to the stage where we're truly delivering on all aspects of our plan. In the slide, entitled, Stages of Organizational Development, Call, Stride, Run, we're halfway through the stride stage and are working on all aspects in the run stage. To deliver our ultimate plan, we continue to invest in transformation that will enable the organization to thrive beyond 2025. In FY '23, we'll invest $5.5 million in these work programs. and a similar number in FY '24, but aim for these to be complete at the end of FY '24, so we get a full year in FY '25 to deliver the benefits for all stakeholders. Our Harmony plan guides our actions and intent to leave the world in a better place. It starts with our purpose to work in harmony with Bs in nature in New Zealand to hear and protect the world. It then moves to our 3 overriding principles, embracing the science of nature treading lightly and strengthening our global hive for all stakeholders. Finally, it focuses on the area that we believe makes us a better business. Firstly, climate action delivering carbon neutrality in 2025 and becoming net positive by 2030. Secondly, advocating and supporting action to protect bees around the world. This has never been more important with the bumblebee being added to the endangered list in the United States, huge colony loss has been reported around the world and the reemergence of varroa in Australia. Thirdly, community impact. We donate 1% of our earnings to causes globally and locally that supports social or environmental impact. We're proud to be able to make a difference to the organizations we support. And finally, native forests and biodiversity. In FY '22 alone, we planted over 1.1 million trees and now have over 8,000 hectares under predator management to protect native species, including Kiwi [indiscernible], which is blue dark amongst others. In this year's annual report, we produced our first integrated report that looks at and reports on our broader impacts. We've included these in our value creation model that you can see above. This shares the resources that we employ, how we create value, our output and ultimately, the value we create. In FY '22, we delivered an EBITDA of $30.1 million an increase of $4.6 million or 18% over FY '21 and the second highest earnings of all time at Comvita. Net profit after tax was $12.8 million, a 35% improvement on PCP. Our earnings per share increased by 34% to $0.182 per share. In addition, we delivered record revenue of $209 million, plus 9% on the previous year, including double-digit growth in North America, 9% in Mainland China, double-digit in the Manuka honey category and digital channels. We grew market share in both North America and China, and we delivered record gross margin. We also invested a record amount of $28 million in our brand to tell the amazing Comvita story to consumers around the world. This brand investment is designed to underpin our long-term growth aspirations, enabling consumers to hear and understand firsthand why Comvita is the clear market leader and why consumers around the world are choosing us. In 2020, we shared our 2025 business model, namely 60, 15, 20. This model shares the aim to deliver a gross margin of at least 60% and invest 15% in marketing sales and deliver a 20% EBITDA margin by 2025. In FY '22, we improved our margin by 640 basis points to over 60%. We increased our marketing investment sales to 13.4% from 12.6% in FY '21 and delivered a reported EBITDA of 14.4%. Note that when you remove one-off costs, including transformation spend, this would actually be 16%. The directors declared a final dividend of $0.03 per share, taking the full year to $0.055 per share, an improvement of 37% versus the peak CP. We believe that everyone should expect to go home safe and well at the end of each day, and as such, put extra investment and focus on health and safety, including mental health in FY '22. We're pleased to report a 40% reduction in the total recordable injury frequency rate. Finally, we shared our aim to be carbon neutral in 2025 and net positive in 2030. We're thrilled to share our audited greenhouse gas inventory report, which covers Scope 1, 2 and 3 emissions and shows our total carbon output at 26,600 tonnes. I'd like to commend the team for pulling together this report. It's an incredible labor of love to get all that detail and again highlights the type of business we aim to be for all stakeholders. Having reviewed this, we again reaffirm our commitment to our long-term net positive goals. Turning to the balance sheet. Our net debt increased by $21 million to $25.5 million due to investment in inventory to offset global supply disruption and ensure we have product in market sell. We retain our view that while inventory will stay at this elevated level through FY '23, we see an optimum inventory level as being circa $85 million by the end of FY '25. We also invested in long-term value-creating activities, namely an investment with our joint venture partner, Caravan, creative artists in North America to products for topical use and also capital investment in both Manuka forest for long-term supply and various production efficiency programs. Despite these investments, we delivered positive operating cash flow of $2.8 million for the full year with the second half at $7.7 million positive. We're delighted to report all our segments are in growth. We're particularly pleased with the performance in Mainland China, plus 9% and given the lockdown between March and June severely affected retail sales, which were down by 46% during this period. And also our performance in the world's biggest monofloral market, North America, where our revenue grew by 29%. Rest of Asia grew by 8%, underpinned by excellent performance in Korea and Southeast Asia. Equally encouraging was Hong Kong's return to growth, again, giving us confidence about long-term consumer demand. Comvita's business model is truly unique and means that when executed effectively, we're close to customers, close to consumer, faster to act and able to empower quality teams in market in order to grow both market share and total addressable market. In the course of this year, we are pleased to have added more capability to our end market teams funded by efficiencies we've generated elsewhere in the group. We're delighted that all segments delivered positive net contribution growth despite increased investment in our brand in most markets. This shows the opportunity we get with operating leverage when we deliver growth. We're delighted that both Mainland China and North America delivered growth of $4 million and 26% in China and $3.7 million and 78% in North America. It's also very encouraging to see ANZ deliver double-digit growth. We see real momentum in our markets, ongoing improvements in our key ratios and our underlying performance. In the next few charts, and I will share with you how these have moved over the last 3 years and why this gives us confidence to FY '25. I will reference the 3-year compound annual growth rate or CAGR over the 3 years in each case. In the Greater China segment, we have delivered a 5.3% 3-year revenue CAGR despite significant disruption to sales in both Hong Kong and cross-border due to COVID. We have also delivered a 32.6% 3-year CAGR in net contribution in the segment showing that we're able to turn revenue growth into net contribution growth despite increased investment in our brand. China and North America are crucial markets for our long-term growth aspirations and are our focused growth markets. In Mainland China, we have now delivered a 15.2% 3-year revenue CAGR and a 47.8% net contribution CAGR. We hope that you agree that this result is extremely encouraging. We still see significant growth opportunities in China, where we actually have a low household penetration and are delighted that more and more high-profile brands are turning to us to partner with them. We see a similar trend and opportunity in North America where we have delivered a 33% 3-year revenue CAGR and a 78% net contribution CAGR. We also retain the view that there's no structural reason why North America can't be as big as China market for Comvita in the midterm. In the period from FY '19 to FY '22, we've doubled our gross margin from $63.8 million in 2019 to $126 million as a result of being clear on the products, markets and channels we want to compete in and also through a systematic investment in modernizing and increasing production capability. On a percentage basis, we've improved gross margin to 60.3% from 37.3%. You can clearly see how this focus has enabled us to invest in our brand to deliver long-term growth. Sharing our amazing founding story. Our purpose and our operating principles and beliefs captured in our Harmony plan is a key pillar for long-term success at Comvita. Since 2019, we have systematically increased brand investment from 7.7% of sales to 13.4% in FY '22. By making careful choices about the focused channel, in this case, digital, we've been able to achieve 2 things: one, accretive margins for every 10% growth in digital share of total, we gained 100 basis points of gross margin at group level. But also, as importantly, we generate data on consumer needs, both products and services that enable us to stay ahead. Finally, our investment in transformation activity included in the results that we've shared are designed to ensure we have scalable, integrated processes and thinking that, again, will help us to thrive in the future. In the final chart, you can see that we've grown our reported EBITDA from $19 million in FY '20 to just over $30 million in FY '22. When looking at our normalized EBITDA percentage removing one-off and transformation investment, you can see we have now consistently improved since 2020 and are now at 16%. The ratios I've just shared and our FY '22 results gives us confidence that we're on track to deliver a $50 million EBITDA in 2025 with 50% of our sales from e-commerce. We've endeavored to be consistent when sharing this plan with you, including KPIs that show we are making good progress in line with our plan. We know that we must stay focused on performance to deliver our plan and are absolutely focused on following up a successful FY '22 with a strong FY '23. I now want to take a few pages to share with you why we're excited about the opportunity for long-term profitable growth at Comvita. The global honey market has an estimated value today of USD 9 billion. It's forecast to grow by 67% to $15 billion by 2031. Manuka Honey household penetration, household penetration being the number of households using Manuka Honey is between 1% and 1.5%. And yet we know that we have some smaller markets where we have current penetration over 3%. This gives us confidence that we can drive global penetration to this level with the right products, route to market and data to inform us of consumer needs. Finally, when we look at average consumer lifetime value, we've shown that when we're able to have a direct relationship with consumers digitally underpinned by data, we're able to increase lifetime value by at least 335%. All of these factors combined underpin our confidence in future market opportunity and consumer demand. Given the size of the growth opportunity in our total addressable market, it's crucial that we secure long-term high-quality supply. On the screen, you can see our supply model, were this aiming for the highest quality at the lowest relative cost underpinned by us being the most sustainable operator, including planting 1 tree per [indiscernible] sold by '25 the best partner for land owners, the best partner for health and safety; and finally, the best partner for bees and bee Welfare. We firmly believe that well care bees and keepers create the best honeying. I'm also delighted that we now have a national head of Agriculture development in New Zealand to facilitate learning and sharing of best practice with all our partners. We are the quality leader in the industry. We have the only INS and MPI accredited in-house laboratory. In FY '22, we reported nearly [indiscernible] sales in results. In addition, we undertook over 34 individual tests on every batch of honey we produced and have 23 independent audits and certifications more than any other brand. Furthermore, we continue to invest to better understand the healing powers of honey to live up to our assertion that only nature knows more. Our long-term investment in Manuka forests is underpinned by our belief and results that show that forest deliver us a 40% increase in yields per hive, a 60% increase in quality of yield and a 20% decrease in costs. When we planted forest, we plan with the long term in mind. Forest develop over 6 years with a 25% yield in year 4, a 50% yield in year 5 and 100% yield in year 6 and thereafter. We're delighted that more landowners are approaching us to partner with them, particularly because we are planting a native species. We're measuring biodiversity, and we know that Manuka forests continue to deliver high-quality yields for at least 40 years and probably longer. In this year's annual report, we shared the story of our partnership with Blue Sky Honey. We're delighted that we're able to commit to a long-term partnership with Jason and his family and also have a wider positive impact on the local community to our sponsorship of the community bus. Only Comvita invest in scientific understanding to prove the efficacy of our products, and we have done this since Allen & Cloud founded Comvita in 1974 or '75. Some of our investment will help the industry as a whole, but we're also investing to give competitive advantage to Comvita. In order to ensure we have the best understanding and up-to-date knowledge we formed a global scientific advisory Board of world-leading gastroenterologists to ensure there is substance to our aims and claims. We're proud to have such knowledge and advice supporting us. One of the most important aspects of our science program is proving the effect of Manuka honey through clinical trials. This year, we have 2 trials underway with the first on digestive health trial now being approved by the ethics committee, we expect to get results in Q2 through Q3 FY '24. We are also a founding partner of [indiscernible] looking to improve metabolic health in New Zealand. Finally, we have started or are supporting further research on atopic dermatitis and propolis for immunity. We have more patents than anyone else in our industry and see this as a long-term way to deliver competitive advantage. In FY '22 alone, we had 5 patents granted in 3 patent families and also filed a further 12 patents. As I've already shown, we are the clear industry leader in terms of quality and have 23 independent audits and certifications, including the industry's only in-house ions accredited laboratory. In FY '22, we recorded 400,000 lab results, an increase of over 59% over the PCP, again improving our leadership. I've shared the total addressable market that's forecast for the honey category globally. I've shared our long-term supply plan and our science plan to prove efficacy. I now want to share how we're developing e-commerce capability in line with our plan for 50% of our revenue to be delivered through e-commerce. In the last 12 months, we've gone from a partially outsourced market-by-market view to initiating, launching and executing a global single source platform that is owned by Comvita in less than a year. This gives us instant reach, it's multi currency, multi regulatory, multiproduct, multi-brand. All data is owned by Comvita and gives us real-time sales data, including marketplaces such as Amazon and access, therefore, to changing consumer needs. It also allows us to test and learn at pace. Finally, and most importantly, all data and associated insights are owned by Comvita. These insights help us drive retention and brand loyalty. E-commerce data lets us be clear on the actions that help us drive household penetration, help us understand the value of returning customers where we see materially higher conversion rates, session duration times, average order values, open rates and page views. All of this information helps us drive brand loyalty and ultimately, brand advocacy and recommendation. Our single-source platform also enables us to launch globally with new or existing product categories such as Olive Leaf. The total addressable market for olive is similar to Manuka of $15 billion, and yet, it's a relatively small part of our portfolio, that circa 4%. One of the major constraints is that the largest revenue shares in Australia, where our positioning is more targeted at immunity rather than the global market opportunity in our science, which is on heart health. This brand was also founded on understanding and embracing the science of nature, which aligns with Allen and Cord's founding vision. Using the single-source platform, we've now repositioned Olive Leaf towards heart health and look forward to sharing our progress over the coming years. clinical research into fresh Olive Leaf extract proves that Olive life supports the healthy function of the cardiovascular system supports the maintenance of normal blood pressure supports the maintenance of healthy blood sugar levels and supports healthy cholesterol levels and support blood vessel function. In summary, for FY '22, we delivered record revenue, record margin, the second best earnings of all time. NPAT growth of 34.5% positive operating cash flow and strong performance across all focus areas. For FY '23, we're forecasting double-digit growth for the year with a strong weight into half 2. We are forecasting top and bottom line growth in our focused growth markets, channels and categories with e-commerce forecasting to be over 40% of total sales revenue. FY '23 has started well, with high single-digit revenue growth to the end of August, along with double-digit earnings growth. We believe that we have an incredibly exciting future ahead of us. We're on track to deliver our 2025 earnings EBITDA of $50 million. We're on track to deliver our 60, 15, 20 business model. We're on track for e-commerce to represent 50% of total revenue. In addition, the global honey market is forecast to grow by USD 6 billion or 67% by 2031. [indiscernible] we've put in place a world-leading science program, including patents that we believe will give Comvita real long-term and meaningful strategic advantage. Before I hand back to Brett, I want to thank him and the Board for the opportunity to lead Comvita at such a pivotal time in its history. Brett's support to me personally is highly appreciated and enabled me to hit the ground running from day one. His objective approach also meant that changes that were needed to future-proof Comvita were undertaken in a constructive and progressive environment. We take our responsibility very seriously, and the leadership team and the extended global team and I are absolutely focused on delivering a business that all our stakeholders can be even more proud of [Foreign Language].

Thank you very much, David. A great presentation. I can honestly say in -- after 17 years being involved with this company, I can still never fails to impress me when I hear the story of Comvita and what we're achieving on a daily basis. And congratulations, David, on a good year's result, and thank you very much for your resilience and fortitude shown through the year. I know it has been demanding on you and the team. And there have been a number of sacrifices, both personally and professionally [indiscernible]. We're now going to conduct the formal business of the meeting, we will read the resolutions to be voted upon. You may ask questions on each matter being put to the shareholders through the virtual meeting website. I propose to call a poll on each of these resolutions. Resolutions 1 through 4 are to be considered as ordinary resolutions and, as such, must be improved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolutions today. Resolution 5 is a special resolution, which requires a 75% majority of votes to be approved. As I mentioned, shareholders will be able to cast their vote using the electronic voting card received when online registration is validated. I'll share the outcome of proxy votes submitted before this meeting. that was submitted before this meeting after voting on all resolutions has taken place. To vote, hopefully, you've understood the instructions now, you'll need to click on the get voting card within the online meeting platform. You'll be asked to enter a shareholder or proxy number to validate this. Then you can discuss your vote and click on submit vote on the bottom of the card to log you vote. Please refer to the virtual meeting online portal guide or use the help line specified if you require assistance. Voting will remain open until 5 minutes after the conclusion of this meeting. Results of the vote will be announced by the NZX later before close of business today. We move to ordinary resolution number one, appointment and remuneration of auditors. To consider and if thought fit to pass the following ordinary resolution that the meeting record the, reappointment of KPMG as the auditors of the company for the current financial year ending 30 June 2023 pursuant to Section 207T of the Companies Act 1993, and authorize the Board to fix KPMG's remuneration. Are there any questions for the Board concerning the motion for shareholders?

There will be no questions received, Chairman.

Okay. Thank you very much, Nigel. So can you please cast your vote and on resolution 1 on the voting card. [Voting]

Okay. I think we can move to ordinary resolution number 2. This one, to consider and if thought fit to pass the following ordinary resolution that Robert Major, who retires by rotation and is eligible for reelection, be reelected as a Director of the company. I'm not sure if we're showing the right slide. Can we just -- I don't know if we have the right slide up, but I wanted to invite Bob to now speak to his reelection, if you could, please.

[Foreign Laungae] I'm Bob Major, and I'm standing for a second term as a member of the Comvita Board of Directors. As I told you 3 years ago, I spent most of my executive career with Frontera and a wide variety of roles, including being Head of China and Head of Middle East. I'm also a few global functional roles I was head for a while of innovation with sales and marketing, and strategy [indiscernible] acquisitions. I left Fonterra about 12 years ago. And since I've been on the Board of a number of companies, primarily in the agribusiness and branded food sector, companies like Sealord and Mud House Wines, and [indiscernible]. During the last 3 years, we've come along well with Comvita. First, we stabilized the company, we needed to stabilize it. And we're now wanting to the transformation stage and heading for the broad stage of growth stage. As you all have heard, we've just come off the back of a record year in terms of revenue. We've built strong volume, strong values that have submitted ourselves in our communities. And most importantly, we build credibility. We do what we say we're going to do in the last 2 years have shown that. I've got enormous respect for my fellow directors on the Board for David and for the completed lead team, and I enjoy working with them, and I'll let continue to do that. We've come a long way in the last 3 years, but we've got quite a bit to do yet. We've got a strategic plan to execute against -- to continue executing against. We've got a [indiscernible] in front of us, a $50 million EBITDA target for 2025. It's an exciting time. These are exciting challenges and I'd certainly be there to help drive the achievement of those challenges. And I appreciate your support in doing so. Thank you. [Foreign Language].

Thank you very much, Bob. That was much appreciated. Are there any questions for the Board concerning the motion from shareholders?

There are no questions in respect of this resolution.

Okay. Thank you very much. If you could please cast your votes now for,, against or abstain resolution 2 on the voting card. [Voting]

Now move to resolution number 3. To consider and if thought fit to pass the following ordinary resolution that Mr. Zhu Wang Ping, who retires by rotation and is eligible for election, be reelected as a Director of the company. I'll now invite Mr. Zhu to speak to his reelection.

[Foreign Language]. Dear shareholders and my fellow directors, and good day, everyone. I am [indiscernible] Zhu. I'm the biggest shareholder and also the biggest super fan of Comvita. Thank you very much for your continued support of Competed myself. Since the pandemic, and we are not able to meet and speak in person but luckily, the technology has improved our life quality and also work efficiency. [Foreign Language]. I'm very happy that through the modern technologies like zoom calls and e-mails to stay in touch with my fellow directors and the leadership team like David and Andy, so I could help the team and enable the team to grow that can be faster and better. [Foreign Language]. And I believe with the border opening around the world, we will have more chances to speak and meet in person. I'm getting very excited to build Comvita into a business to us, together with my fellow directors and the leadership team. [Foreign Language]. After 20 years, laughters and tears with this unit business, my love the United business has grown stronger and further. And although Comvita's business has been up and down like many other businesses. But I'm so -- it's very comforting for me to say that the new leadership team has quickly turned around the business despite the ramp paging pattern since 2020 is really comforting. [Foreign Language]. This gives me and I believe gives you all more confidence and stronger confidence for Comvita's future, and it has motivated me to work more closely and to share and my personal resources connections with the leadership team to grow Comvita stronger. [Foreign Language]. So I've heard that many of you are very concerned about the China market situation these days, and I believe that the NZH result released back in late August, already perfectly answered our questions. And this a nice surprise. I call it a nice a surprise. During the challenging environment, was very comforting. And also it gives me stronger confidence for the visionary growth plans that was met out by David Bank earlier. [Foreign Language]. Hence, I'm sincerely asking for your support on my directorship I'm really connected to represent us all to enable the management team to grow compete further and stronger. [Foreign Language]. Along with the border area of [indiscernible], I very much look forward to meeting and speaking with you in New Zealand and discuss our vision growth plan and also I'm very excited for the premium FMCG brand transformation plans. [Foreign Language] Then we can all stand united with concerted efforts and enable the leadership team to create huge values and returns for shareholders. As Dave said, so let's build a business to last together. [Foreign Language]. Dear fellow shareholders and my fellow directors, thank you again. I stand hugely committed to Comvita. And as Celine Dion sings, "My heart will go on and on" for Comvita.

Thank you very much, Mr. Zhu. Very much appreciated. Are there any questions for the Board concerning the motion for shareholders?

There are no questions in respect of this resolution.

Thank you very much, Nigel. If you can please cast your vote now, so either for, against or abstain on resolution 3 on the voting card. [Voting]

We'll. Now move to ordinary resolution number 4, to consider and to fit to pass the following ordinary resolution. that Sarah Kennedy, who retires by rotation and is eligible for reelection, be reelected as a Director of the company. I now invite Sarah to speak to her reelection. She is here with us. I think we're coming through.

For the Comvita board. If reelected, I will sit on the Board through to March 1 next year, where as per the rotational calendar are stand down and maybe successor will be appointed. I want to wish convince all the best and say that I've thoroughly enjoyed the last 7 years with the Board.

Thank you very much, Sarah. I should mention, I think as I mentioned before, that Sarah will be stepping down intention to step down in March next year when we have a new independent director already appointed, just waiting for confirmatory work to be done on that appointment. I want to take the opportunity to thank Sarah for 7 years of incredible dedication to the business. She's been an outstanding director was recently asked to step up and become Head of our Safety and Performance Committee, when Murray Denyer step down and has done that -- taken that role on with great capability. So thank you very much, Sarah, and we look forward to celebrating your time with Comvita in other ways. So you can be sure. Are there any questions for the Board concerning the motion from shareholders?

There are no questions in respect of this resolution.

Okay. Can you please cast your vote for, against or abstain for resolution 4 on the voting card. [Voting]

We'll now move to ordinary resolution number to consider, and this is a special resolution, as I should say. So it requires a 75% support by shareholders to be approved. To consider and thought fit to pass the following special resolution that the existing constitution Comvita Limited be revoked and the constitution tabled at the Annual Meeting and referred to an explanatory notes to the notice of meeting be adopted with effect from the close of the annual meeting. Are there any questions for the Board concerning the motion from shareholders?

There are no questions in respect of the special resolution.

Thank you very much. And please ask everybody to cast their vote for, against or abstain resolution 5 on the voting card. [Voting]

Okay. Now that voting has taken place on all resolutions, I can confirm that as Chairman, I hold proxy votes from 53 holders representing approximately 35% of shares on issue. For resolution 1, we have in favor, 97.25%, for resolution 2, 97.51%, for resolution 3, 96.75%, for resolution 4, 97.4%, for resolution 5, 96.79%. Those -- the full results will be posted including these proxy boots, but also devote to the cast today will be posted by close of business today on the NZX. We now move on to general business. I'd now like to give shareholders the opportunity to ask questions, whether related to the presentations, the financial statements or the management of the company. You can continue to provide questions online, and we will also address questions already submitted online. If we can run short of time and we are unable to answer your question online today, we will endeavor to respond to you after the meeting. So Nigel, do you have any questions for us?

Yes, I do. Mr. Chair. I'll start out perhaps by reading a more of a statement than a question from Alan Bougen, our co-founder. As co-founder of Comvita, I would like to take this opportunity to thank the Board and management team on a great 2022 result. The progress on strategy is super encouraging and fits perfectly with what Claude Stratford and I set out to bring about almost 50 years ago, well down.

Very much appreciate it. Thank you very much, Alan. Those words warm my heart, of course. Thank you.

Now the next question, Mr. Chair from Tom Walters, I refer to the Manuka Honey Appellation Society Inc. Financial Report to 31 March 2022. Word is disclosed that Comvita paid $250,000 to the society during the financial year. Could you please explain to shareholders, one, on what basis has the sum been paid? Two, is there any commitment or possibility that further payments are going to be made in the future and three, what benefits are Comvita going to get from this? And how will this benefit Comvita's shareholders?

Thank you, Tom, for that question. I'll hand that to David Banfield, if you could please refrain David, your across this all this detail.

Yes. Thank you, Brett. Yes, so the money that we invested the Appalachian Society is for the protection of the community trademark protecting Manuka as a tone from New Zealand. -- when we think about this, it's of the highest strategic importance for us that we make sure that when consumers buy Manuka, they see it comes from New Zealand, and they get the quality that they expect from that product. We do see this, as I say, is the highest importance for both the category and for Comvita clearly. And as we prove the case, that will further strengthen our long-term opportunity. .

Thank you, David. Nigel back to you any further questions.

Yes, there are more questions, Mr. Chair. Another one from Tom Walters, wanting to know whether the minutes of this meeting will be sent to shareholders at the completion of the meeting at a later date.

Okay. Thank you very much. Look, it hasn't been our practice, Tom, to post the minutes of this meeting. The full script of the presentation you've heard from David and me will be made available and as is the full presentation. Upon request, you can get the minutes of the meeting. They are kept as an official record by the company. But they don't typically include all of the responses to answers, for example. So there are things that are not included in those minutes. But by all means, it can be made available to you. The recording of this meeting has been recorded, and if you had a request that could also be made available to you.

Another question from Juan Pablo [indiscernible]. Logistics is a big issue concerned to several companies impacting profits what is the strategy or plan to diminish the logistics shipping prices?

I think that sounds like a very perfect question for you, David.

Thank you, Brett. Yes, look, it's a good question. It's been widely reported about the impact of global supply chain disruption. Our approach has been to make sure that we have product in market to be able to set demand that's there. As both I and Brett said earlier on, inventories that are an inflated level to enable us to offset those impacts until such time as the global supply chain comes back to normal?

Thank you, David. Further questions, Nigel.

Yes. Next question is actually from Allan [indiscernible]. Given the somewhat high permanent labor turnover currently at 20% and the challenging outlook, are we doing enough to retain our great Comvita talent including equity involvement?

Yes. Thank you, Allan. Another good question. Look, as I opened this presentation by saying, I think it has been with some degree of concern, I guess, for the pressure that our team comes under. That high labor turnover is something that we're not so familiar with, but we're not alone. All organizations worldwide, in fact, are suffering through this as people struggle with the changes, both professionally and privately. And of course, we're going through a lot of changes at Comvita. This is an organization that's been going through transformational moves even before Comvita hit us -- before COVID at us. So we've been doubly impacted. But I think the team on whole have come through that incredibly well. The culture and the values run deep within this organization. I'm proud to see that they're still being retained in spite of all of that. We have accepted several proposals from management around improving the benefits, both financial and nonfinancial including, most importantly, a share offering, which I can share with you is the equivalent of a $2,000 worth of shares for every single employee of this company, excluding senior management, of course, who have other incentive programs with the shareholder. So as of today, I believe that, that offer has been accepted by a little over 91% of the staff. And so that means that we have a shareholding across all of our employees or the majority of our employees, which is a great thing. So our interests are very much aligned shareholders and management. And we will continue to have to review that. I think there are some less tangible, I think, things that we can continue to do to encourage ensure retention of our key staff and key people. David, perhaps, if you would like, would you like to also make any comments?

Look, I'd just endorse what you say, Brett, that probably the share offer is 1 part of it. We've also put in place a long-term retention plan that recognizes the contribution as people go through, starting with the company 2 years, 5 years, 10 years, 15 years and right out to 20 years. We've got some amazing talent within the organization that we want to keep. We do recognize it's a competitive marketplace. And we're clear on our aspiration to be best employer in New Zealand as voted for by our team, and we'll continue to have progressive policy to try and deliver that. .

Thank you, David. Back to you, Nigel.

What is the dependence of the Chinese market on the growth plan is another question from Juan Pablo?

David, you are perfectly well placed to be that there.

The China market, clearly, it's our biggest single market. It represents a significant long-term opportunity for us, as I've already shared, actually, household penetration in the China market is still relatively low. So we see a lot of opportunity to actually deliver more growth in that market, probably equally, we see a significant opportunity in North America as well. The performance that we delivered through FY '22 was extremely encouraging, up around 30%. but actually, we see more and more people turning to nature and in that process, turning to Comvita. So that gives us a view that actually, there's a global opportunity that we're just starting to untap, but it does. It is there in the China market as well.

And I think if I could just add also some context also that the Chinese consumers are global consumers and success and premiumization of our brand in China has led to an increased consumption with consumers around the world. So yes. So I think success in China is going to lead to a broader global success. Nigel, other questions?

Mr. Butcher from Timothy Bevan. Any comment from the Board on the occurrence and/or risk from counterfeit products.

David?

Look, we obviously -- we work with reputable brands, customers reach to market around the world. We don't see a significant amount of counterfeit product. Obviously, it's something our in-market teams give us gives us access to, but it is something that we watch for carefully. But there is no evidence of that in our case so far. .

Nigel, any further questions?

Yes. There are still 5 questions to go at this stage, Mr. Chair. Next question is, I note that the company hedges its exposure to foreign exchange. Is this policy subject to regular review. While hedging reduces fluctuations of foreign exchange receipts should also eliminates any benefits received from the weakness in New Zealand dollar.

Yes. Thank you. Probably, in general terms, I'll answer it, but if there's any more specific actually you yourself, Nigel, would probably be well placed to answer here. But look, obviously, it's a bit of a roller coaster ride right now and events of the last week have really shown us how volatile FX positions can become. We obviously have quite a comprehensive FX policy, which we review regularly. And in fact, we reviewed just a week ago. And we seek advice on that as well on how to best position ourselves there. we see the FX policy not as an opportunity to try and gain currency, definitely avoid any temptation to go there, but more as a method of smoothing the impact of currency changes from year-to-year reporting periods. So that's probably an initial response. Nigel, did you want -- as a CFO, did you want to add anything to that?

I think that your comments are 100% right, Mr. Chair. We also have had our policy and our performance against our policy independently reviewed by an independent expert, which has given the Board confidence that the company is administering and applying the policy appropriately. So certainly, exactly the New Zealand dollar is quite a volatile currency. And so as a result, it is appropriate that we should have in policy in place to avoid both risks and smoothing of the currency over time. So that is the correct answer.

And look, it goes without saying that right now, having a weak New Zealand dollar and more importantly, a strong U.S. dollar is going to be relatively favorable to Comvita's position. Next question?

A question by [indiscernible] Blue. Hello, I'm living in Dunedin. I used to buy Comvita from local supermarkets, but none of them stopped the brand now. I would like to know why. Thank you.

David, I'll let you take that one.

Thank you. Look, we are in the process of building out distribution throughout both Australia and New Zealand for local consumption. There's probably or aspects. One, you can always get it through Compete.com, or co. So that's a route that is always available. But secondly, it's probably a bigger question, which is when we think about quality of product, the actual standards that we have in New Zealand for our category are lower than the standards that we need to sell our product in international markets. So we have a view at Comvita that New Zealand does deserve better. So we will only sell product that meets the international standard in New Zealand rather than product that is at a lower standard. And that remains our position. As I say, we think that Needs deserve the same quality standard as everywhere else. .

Next question...

Do have question, Nigel?

Yes a question from Carl [indiscernible]. [indiscernible] an on-off health supplement. What makes Comvita confident this is a complementary product to honey?

Yes. Very good question. I think, look, it's a strategic position that the company took quite a few years ago. I can say that with confidence because I was at the helm at the time when we did it. with the belief that the supply chain, the vertical integrated supply chain and the value proposition of Olive Leaf resembled very much so that of Alfa Manuka honey and Propolis. And so the capability within the organization to execute a strategy for rollout of product offerings from this unique position in our operations in Australia was sort of our bid and butter money, if you like. I think our ability to execute on that has been challenged. And I know David in his presentation today gave a sense that we're going to relaunch Olive Leaf and there's a renewed commitment to try and create some value around our proposition. We recognize all the time that the Comvita a brand is most strongly associated with our core offering of Manuka honey, and we have to build a brand and value proposition that is unique to Olive Leaf extract based on the positioning that David mentioned of heart health and heart conditions. So look, I think we've still got an enormous amount of confidence and belief in Olive Leaf, but that doesn't -- we don't let it distract from our core, which is around Manuka Honey and propolis.

Look, the next question, Mr. Chair from Alex [indiscernible] also related to currency movements and being able to take advantage of against the U.S. and Chinese yuan, which I think we've pretty much addressed in the previous answer on the previous currency question.

Yes. Thank you. Nigel. Look, Alex, if you do need more explanation or would like some more clarity around your question. Please feel free to follow up with us afterwards.

Yes. And one more question, which I think we have also answered David, when he took another question from Ligand [indiscernible] asking I would like to know what the strategies are for the growth -- sales growth within New Zealand. And I think we have answered that question as well.

Yes. Thank you. And again, [indiscernible], if you feel that you need more answers or more clarification, feel free to reach out to us after the meeting.

And that is the end of the questions, Mr. Chair.

Okay. Thank you very much. Look, this concludes our 2022 Annual Shareholders Meeting. Thank you very much again for joining us today, and thank you very much for your ongoing support as shareholders. To close proceedings today, Dave Walters will lead us and a closing [indiscernible] [Foreign Language].