Comvita Limited (CVT) Earnings Call Transcript & Summary

Welcome, everyone, to the Comvita FY '23 Full Year Results Presentation. My name is Nigel Greenwood, CFO. Online attendees can submit a written question at any time by clicking the Ask a Question button on your screen during the presentation. Your questions will be answered at the end of the presentation. I will now hand over to David Banfield, CEO.

Tena koutou, Tena koutou, Tena koutou. Nau mai, haere mai. Good morning, ladies and gentlemen, fellow shareholders, and welcome to the Comvita FY '23 results presentation. The theme for this presentation is Poised For Takeoff, and we're looking forward to sharing with you the progress that we're making across the business. I'll start today's presentation on Page 3. I'm delighted to report that Comvita delivered record sales of $234 million in FY '23, a $25 million or 12.1% increase versus the PCP. Even more encouraging was that H2 revenue increased by 17.4% versus PCP. Our earnings, which is EBITDA after ERP was in line with our plan at 11.4% increase year-on-year. Our normalized EBITDA, which subtracts both ERP investment and transformation investment, which finishes in FY '24 was 15.4% in line with our plan. Our operating profit increased to $24 million, plus 18.7% versus PCP. And the Directors were delighted to declare a final fully imputed dividend of $0.03 per share, taking the full year dividend to $0.055 per share, in line with PCP. We see real momentum across our business. Here, you can see our revenue growing from $171 million in 2019 to the $234 million that we report today. Ecommerce share of total has grown from 23% in 2019 to the 42% we report today. China sales from $77 million to $109 million that we report today. We've delivered significant improvements in our gross profit from 37% to 60% and we've invested more in our brand to tell our incredible story to consumers around the world. And ultimately, that has fed through into an EBITDA after ERP. We've grown our EBITDA after ERP to $34 million in FY '23. As I've already shared, in FY '23, we delivered record sales, up $25.3 million versus the PCP. All of our segments showed double-digit revenue growth. Greater China with a standout performance, breaking $100 million in revenue for the first time. We're growing share in our key markets and Ecommerce has increased to 41.7% of total sales, plus 19% versus PCP. Our gross margin remains in line with our plan with a reported gross margin of 58% and a normalized gross margin of 59.5%. We delivered record investment in our brand, again, supporting that strong revenue growth. We were so proud last week to share that we've been awarded B Corp certification. In September of 2022, we became the first NZX listed organization to change our constitution to reflect the importance of all stakeholders when making investments and strategic decisions. B Corp is a designation that a business is meeting high standards of verified performance, accountability and transparency. We believe that this certification will open up global distribution opportunities for Comvita. We're proud to have achieved the recognition and see this as supporting business as a force for good. Back in 2020, we shared a number of elements of our strategic plan to 2025. On this page, you can see, first off, arotahi or our focus on the consumer at the heart of our thinking. On the right-hand side, you can see our unique business model with people in market supporting Comvita's ability to get close to customer and faster to act. We shared our plan at that time of stabilizing performance, transforming the organization and building long-term resilience and growth, which again, we're delighted to be reporting today. And finally, we shared the stages of organizational development, as we call them, crawl, walk and run. We're still in the walk phase, but we're kicking off a number of the things on that walk phase so we can hit the ground running as we come into the run phase in FY '25. Again, back in 2020, we shared our 2025 plan to deliver $50 million EBITDA or 20% of our total revenue by 2025. On this page, you can see our purpose, you can see our mission. And on the right-hand side, you can see our business model where we again shared our aim to deliver a gross profit of at least 60%, marketing to sales of 15% and a 20% EBITDA target. We're really pleased with the progress that we're making and we're on track to deliver in 2025. We're determined to be a world leader in ESG and we've made a number of far-reaching commitments to deliver on that promise. Across ESG, here we share our progress on environmental, social and governance. All our activity starts from our Harmony plan that I've shared with you many times before, and enters or ends with our intent to strengthen our global hive and share the progress and the impact that we make on the planet. Our team totals 559 people. Of that 91% of the team are now shareholders. We focused on really trying to create an environment for the team to thrive and we're delighted to see that reflected in Net Promoter Score of 21 in the period of FY '23. We believe that everyone should have the right to return safe and well at the end of every day. We put significant emphasis on the health and safety of all of our team through a combination of proactive reporting through understanding the elements of health and safety that make it more memorable by putting in place new initiatives such as well-being checks, by highlighting high-risk areas such as motor vehicles where we've seen importance. In this result, we saw our lost time injury frequency rate increase from 1.5 to 2.7. We've looked carefully at the causes of that. And whilst 95% of the increase were low-risk activity, this is a key area of focus going forward. We've shared on many occasions our intention to be carbon neutral in FY '25 and net positive in 2030. Here, we're able to share the progress that we've made from FY '22 to FY '23. If I draw your eye to the bottom of the page, you can see that our net GHG position in FY '22 was 25,500 tonnes of CO2. In FY '23, that reduced to 22,600 tonnes, a reduction of 12% versus PCP. I'll now hand over to Nigel, who will share more details of our results. Over to you, Nigel.

Thank you, David. I now present to you our key financial results for the year. We demonstrated strong revenue growth of 12% up on last year and our GP percentage after adjusting for the inventory write-offs associated with Cyclone Gabrielle was 59.5%. We continued to invest in our marketing brand at $30.5 million and we invested another $5.4 million in our transformation and ERP spend. Our operating profit at $24 million was 18.7%, up on last year. And we also incurred some one-off movements, which I'll talk to later in the presentation. The material year-on-year movements we incurred in FY '23 are set out below in the table. Our FY '23 EBITDA result included a number of material year-on-year movements with a net EBITDA impact of $5.3 million. If adjusted, we would have delivered an EBITDA of $35.9 million, being $5.8 million or 19% higher than PCP and an NPAT of $14.1 million or 10% higher than PCP. In FY '23, we initiated our ERP project upgrade. During the year, we incurred $2.9 million of investment in that upgrade project. It is a project to implement the existing system that we currently have to its latest version. We are on track to complete that by the end of June FY '24. Reviews and updates include master data, end-to-end processes and ways of working. The benefits of implementing this system are overall organizational efficiency, data as a competitive advantage. It will release organizational energy and capability. We expect to be able to save 20,000 hours annually from FY '25 and it will be scalable and future-proof solution. Cash flow. Our operating cash flow for the year was $8 million, $2.7 million above last year's operating cash flow. We delivered operating cash flow in H2 of $28.8 million. We are planning to increase our stake in premium Propolis supplier Apiter to 32% imminently. And we're also forecasting positive operating cash flows in each half and forward right through to FY '25. And we expect our capital expenditure to be circa $13 million to $15 million per annum going forward. From a balance sheet perspective, we finished with a net debt of $53 million, which was in line with forecast. That said, our net debt is above our long-term target. And as a result, we are accelerating net debt reduction plans. Inventory finished at $136 million, which is 3% up on last year. However, did reduce by $9.8 million from H1. Our EPS reduced in line with our ERP investment. And as David said earlier, our final fully imputed dividend for the year is $0.03 per share, which brings our full dividend for the year to $0.055 per share in line with last year. Foreign exchange. As noted earlier, we incurred significant foreign exchange losses in FY '23 with a total loss of $4.6 million compared with $0.5 million in FY '22. This was caused predominantly by the weaker New Zealand Dollar against our 2 main currencies being the CNY and USD. We have set out on this page what our future hedging cover is and that we believe has been placed at favorable rates to effectively manage the risk of our strengthening New Zealand Dollar. I'll now hand over to David to talk about our Honey Harvest and forest projects.

Many thanks, Nigel. In 2020, we reworked our harvest model in order to future-proof our business operation. That new model was designed to deliver a breakeven performance in bad weather years and a profit of approximately $3 million in good weather years. As everyone appreciates, FY '23 was a terrible year, but we're delighted to report that actually, despite those weather impacts, our Apiary division delivered in line with our plan. We continue to invest in forests. We're targeting 20,000 hectares by 2030. In FY '23, we added another 608 hectares, taking our total forest to 7,500 hectares. The aim of our forest plan is simply to give us the highest quality honey for the lowest relative cost. Again, we've shared the hypothesis from that forest that we deliver a 40% improvement in yield, a 60% improvement in quality of yield and a 20% reduction in cost per hive. We're delighted that, again, this has proven successful despite the weather in FY '23. We are in discussions with external partners to fund an acceleration of our forest aims. I now move on to our market segment reporting. As I shared at the start of today's meeting, all our segments showed double-digit revenue growth. In Greater China, we broke through $100 million of revenue for the first time and Regional NPD accounted for 4% of our total revenue at accretive margins. We're growing market share in key markets around the world and our Ecommerce share is now at 42% of group sales and improved by 19% year-on-year. Looking at all of our segments performance. Here, you can see the revenue performance. In Greater China, revenue increased to $109 million, plus 12% versus PCP. In North America, revenue increased to $35.6 million, again, plus 12% versus PCP. Rest of Asia had a standout performance with revenue up to $31.8 million, a plus 16% versus PCP and Australia delivered $40.8 million, plus 17.5% with PCP. Finally, EMEA delivered $5.9 million, which is 14% improvement on PCP. Our second half growth outstripped first half with total growth in H2 of 17.4%. In our Greater China segment, we reported total revenue of $109 million in FY '23, an improvement of 12.5% on PCP. Our half 2 revenue growth increased to 15%. And our net contribution increased by 16.8% to $26.8 million. We're delighted with the progress that we're making in Greater China. We've delivered continuous healthy double-digit growth. In Tmall, we're #1 in the Honey category. Tmall supermarkets we're #1 imported brand with a 69% share of wallet. Tmall Global, we're #1 in the health supplement candy, showing significant growth in our lozenges business. We're #1 in JD. We're #1 on TikTok. And in Hema, we showed an 82% increase in performance year-on-year. We were also delighted for our Regional NPD, a collagen drink to be awarded Silver in the 2022 New Product Awards. I recently visited China as part of the Prime Minister's trade mission. We were delighted to sign a Memorandum of Understanding with Ole supermarkets. That Memorandum of Understanding is designed to take the principles of our Harmony plan and implement them in our category in store for both social and economic benefit. The picture you can see here is with that signing ceremony. In North America, we delivered revenue of just under $36 million, 12% improvement on PCP. We delivered a net contribution of $8.9 million, a 5.5% improvement on PCP. In our ANZ segment, we delivered revenue of just under $41 million, improved 17.5% versus PCP and a net contribution of $11.5 million, improved 3.2% versus PCP. Our half 2 growth was particularly strong with revenue improved by 36.4%. Our Rest of Asia performance was equally strong with revenue increase by 16.2% to $31.8 million. That also flowed through to increased contribution with contribution of $8.3 million, up 25.9% versus PCP. Our half 2 sales were particularly strong with revenue increase by 31% versus PCP. In EMEA, Europe, Middle East and Africa, we were delighted to report double-digit growth again, with sales of $5.9 million, 14.4% up on PCP, and that flowing through to a net contribution of $604,000 or 10% of sales. Our Ecommerce has grown significantly. As I shared earlier in 2019 or FY '19, our total Ecommerce is about 23% of our total revenue. In FY '23, we delivered record Ecommerce sales of $98 million. Ecommerce accounted for nearly 42% of our total revenue. We invested $15.6 million to deliver that performance. Our registered users grew by 28%. Our D2C e-mail sign-up increased by 37% and our average order value increased by 1,200 basis points versus PCP. We were delighted to welcome HoneyWorld into the Comvita Group in early July 2023. We believe this is a strategic deployment of capital in a significant growth segment. It accelerates our growth and reach in a key regional market that connects the world with Asia and Asia with the world. Our market share in the Singapore market will now be approximately 50%. It utilizes our know-how from stores that we have in Hong Kong and Korea. It gets us closer to consumer and we're able to further accelerate that growth [indiscernible]. The purchase price was SGD 8.5 million plus inventory and was debt funded. The forecasting revenue of SGD 13 million in FY '24 and it's immediately accretive to the group with a return on capital of 25%. Looking ahead to FY '24, I'll now share our guidance. In FY '24, we are forecasting double-digit EBITDA growth with a strong weighting to H2 or FY '24. We'll update guidance at our Annual Shareholder Meeting in October. Our U.S. performance is expected to be strongly weighted to half 2 due to the strong half 1 FY '23. We're forecasting to deliver a gross profit of around 59%, double-digit inventory decline, positive operating cash flow in both half 1 and half 2, and we'll invest a total of about $10.5 million in transformation with about $7 million of that on our ERP program that Nigel talked to earlier. We're on track to deliver $50 million EBITDA 2025, 20% of revenue. So in summary, FY '23 saw us deliver record revenue of $234 million, plus 12% versus PCP. We feel momentum building half 2 revenue was improved by 17% versus PCP. Our F '23 earnings were in line with our plan and our guidance. We're growing share in key markets. And for FY '24, we're forecasting double-digit EBITDA growth. We look forward to sharing the results of our Lepteridine clinical trial. We're looking forward to launching our Caravan Honey joint venture and clearly, a full year of HoneyWorld revenue. As I've said, we're forecasting positive operating cash flow through both H1 and H2 of FY '24. We're on track to deliver FY '25 plan of $50 million EBITDA or 20% of revenue and we believe we're poised for takeoff. Thanks very much.

We are now ready for any questions.

Online attendees, please click the Ask a Question box to send in your questions. Thank you. We have received already a number of questions, which I will read out and either David or I will respond to each one of them. First question from David Streeter. Have you considered asking the shareholder to pay for the HoneyWorld acquisition? I'm not actually sure to be fair, what the reference here is, David. Perhaps if you have time, you could re-ask the question because we're not clear exactly what you mean by that. So I'll move to the next question. From Graham Edwards. Marketing support amounts to 13% of sales. This is a significant [ contra ] to the 58% gross margin. What level of marketing support is envisaged going forward? David?

Thanks very much for the question. And look, in our 2025 plan, what we've shared is that our ultimate business model is to deliver a gross margin of at least 60%, 15% marketing to sales, and then that will enable us to deliver a 20% EBITDA margin. So we're currently just over 13% marketing to sales and we will peak at 15% by 2025.

Next question from Josh. Does your $50 million EBITDA target include HoneyWorld's expected earnings contribution?

With our -- Josh, thanks for the question. With our EBITDA target, we've shared our business model, which effectively says that 20% EBITDA margin. So what we haven't shared at the moment is a revenue forecast for 2025 that would enable you to come back to what that EBITDA target is. So we retain in the fact that it's circa $50 million and that our business model is designed to deliver a 20% EBITDA margin by 2025.

Another question from Graham. Results look promising until we get to NPAT and debt/inventory. It is acknowledged it has been a poor honey season. How do you expect these key parameters to track going forward?

Graham, again, thanks for the question. In terms of inventory, we shared at actually the interim results that we had a number of long-term supply contracts that came off at that time. And we've shared today that we expect double-digit decline in inventory over the next year. So we expect that to come down to a more manageable level. In terms of our net debt, we're generating positive operating cash flow over the next couple of years and that will support us paying down debt.

Question from Alan. Congratulations to David and the team on a very impressive result. Regarding Comvita's Manuka plantation development, could David give us an update on progress, including the mid and long-term implication in terms of carbon sequestration?

Thanks, Alan. And great to have you on the call. Look, forest is an important part of our go-forward strategy. We've currently got about 7,500 hectares. We're targeting to get to 20,000 hectares. There's probably a number of elements to that. Obviously, we gain benefit from sequestration from those forests. We get better quality honey at a lower average cost per hive due to some of the operational efficiencies that we get. We set [Technical difficulty] net positive by 2030. And the majority of that is through sequestration benefits that we get from our forest investment.

A question from Graham. What are the plans for Hawke's Bay storm damaged facilities? I can respond to that one. Look, those facilities were considered completely written off. And so that's why we've treated them as a write-off in our financial statements for FY '23 and also recognized the insurance proceeds. So those will be dismantled and removed from site.

I'll just add one piece to that, Nigel, if I may, which is the Hawke's Bay team have been relocated to a new facility. So they are chomping at the bit to get started for the new season. They're all safe and well, which is clearly the most important thing and looking forward to, hopefully, a good weather year ahead of us.

Thanks for that, David. Quick one from Christian Bell. Your FY '24 guidance is for double-digit growth on reported EBITDA, implying circa $34 million at the bottom end. So can we still continue to assume that you would also present EBITDA after ERP of circa $41 million. i.e., equivalent to $33.5 million number you presented for FY '23?

Christian, probably one for us to take separately. But if I just walk you through the sort of principle, so our $30.6 million reported number in FY '23, if we then apply double-digit EBITDA growth on top of that, we then have an incremental -- we have an incremental contribution from HoneyWorld, and then we have to subtract the incremental investment in our ERP system, which is about $4 million year-on-year, which gets us back to that underlying double-digit growth. What I would say is the investment in both transformation and ERP totals about $10.5 million and all that is due to finish at the end of FY '24. So therefore, the full benefit of our revenue and margin will flow through in FY '25.

A question from Josh. How would we interpret the change in EBITDA target to circa $50 million compared to $50 million last year?

Josh, it's a good question. Look, as I said earlier, we haven't shared revenue guidance. What we have shared is our business model, which remains unchanged. That business model is minimum 60% GP, 15% marketing to sales and a $0.20 EBITDA margin.

Another question from Josh. You've had HoneyWorld for over a month now. Now that it's in your hands, has your thinking changed at all around how to best optimize the results of that business?

Look, we're delighted with -- first off, we're delighted to welcome HoneyWorld into the group. First month's performance has been good. Integration is going well. And it's back to what we originally felt that Singapore is in a maiden country that connects the world with Asia and Asia with the world and to have such a strong market leader join the Comvita group is clearly a strong case for the future. It enables us to really leverage our experience with running stores in Hong Kong and Korea, and we're excited by what we're seeing in the market.

Another question from Josh. Presumably, the amount of honey taken from supply partners in '23 was quite low. How have they responded to this? And what are the risks around maintaining those relationships?

We do see partnership as a long-term commitment. What we have to do though is make sure we balance supply and demand. We continue to have positive conversations with our partners about that need for balance, but it must reflect what's actually happening in market. And we, as I say, we work together to ensure that we give more clarity going forward.

Another question from Josh. Could you please just explain why insurance proceeds appear to well exceed the lost value of PP&E and inventory? Is this to reflect the market value rather than the cost? Yes, Josh, that's 100% correct. Next question from Margaret. David and Nigel, congrats on a solid result. Can you talk to any signs of consumer demand challenges you're seeing across your key markets? And what actions you're taking to offset that? Are those actions different across each market? For example, in ANZ, you mentioned growing share and the segment's biggest customer. Can you share who that is or how you've managed to do this?

Margaret, I'll start by thinking about Greater China. Greater China COVID restrictions disappeared in -- just before Christmas last year. At that time, we saw dynamic demand put it that way, we saw a significant increase in the last few weeks of the half. Through the first quarter of the year -- of the calendar year, we saw muted demand, which we saw get stronger into 618 and the last couple of months of the year. So I think it is fair to say that we've delivered this strong performance, but it was -- demand was patchy at different times. Our ultimate aim is to make sure that we have products that actually play a bigger part in consumers' lives. So that Comvita isn't just something that's associated with a honey tea or an end of night drink. We actually have those broader needs, which include preventative in terms of propolis throat spray, right the way through to lozenges which help throughout the day. And as we increase the number of occasions by which consumers use our product, we also have become even more part of that daily life. And across the [Technical difficulty] we obviously don't talk about specific customers by name, but we do see good demand and we are mindful that we're in recessionary times and we're looking very carefully at any changes or for any changes in demand as we go forward.

A follow-up from Christian. Following the update earlier regarding performance in FY '24 versus FY '23, I'll paraphrase the question because it's quite a long one. Christian is asking, how do we get confidence that can generate underlying growth of circa $5 million of EBITDA in FY '25 to get to the $50 million?

I think, Christian, we've shown in the slides that we shared today, we show the momentum that we've got in terms of our underlying performance. We clearly see that we've got some investments that we're making through FY '24 as I say, that fall away for FY '25, but those investments are there in terms of in our FY '23 result where we're delivering revenue growth, as you can see, of $25 million. And at a certain point, we also then get operating leverage as we go forward.

Question from Margaret. Your original FY '25 target of $50 million of EBITDA was intended to be an organic target for the group?

Yes.

Is further M&A activity on the table in terms of trying to reach this target and are you actively looking for additional accretive opportunities?

Two separate parts to that, Margaret. So of course, we'll always look for additional accretive activity. We see, as I say, strong momentum within our business, and we see consumers demanding Comvita. So we will look at accretive opportunities throughout the next couple of years. In terms of needing activity or M&A activity to hit our target, we don't believe we do. So we retain our focus on our business model, which is still, as I say, 60% minimum GP, 15% marketing to sales and a 20% EBITDA target.

Next question from Christian. Does your $85 million target for inventory remain in place for FY '25? You've mentioned double-digit decline in inventory in FY '24. And what action plans do you have to achieve that target? Can we assume you basically will stop buying volume from third-party suppliers that used to historically be 70% of your supply over the next 2 years?

Sorry, I froze halfway through. So look, for our core business, we do see the $85 million revenue target as the revenue -- the inventory target as being still relevant. Obviously, then when we acquire HoneyWorld, that inventory goes on top as would any other acquisitions that we make over the next couple of years. But as Nigel shared earlier, we are forecasting strong positive operating cash flows through half 1 and half 2 of FY '24 and '25.

Another question from Christian. Historically, you mentioned transformation spend of circa $5 million to $6 million per annum. Why is this now $3 million? Has it been reallocated to ERP?

No, it's -- Christian, it's just an assessment of actually the level of investment we need in that area to deliver the outcomes that we're looking for. So we have the investment in ERP that you can see there. But again, as we've shared, the total investment in transformation in FY '24 will be about $3.5 million.

Follow-up question from Josh being, does your guidance for double-digit EBITDA growth in FY '24 include HoneyWorld's contribution? Or is it double-digit organic growth only?

No, it does include HoneyWorld's contribution. But obviously, the HoneyWorld contribution is offset by the increased investment in our ERP program.

Quite from Mark Topy. Can you elaborate on the debt reduction plans?

Probably partially, Mark. So we have a long-term leverage ratio of below 1.5x. So that's where we're aiming to get to. Obviously, we've just debt funded the purchase of HoneyWorld. But we have a number of elements that we're looking at to make sure that we come down to below the 1.5x leverage. And we'll share more as we go through. Actually in this deck, you can see one, which is we're talking to external providers to fund some of our forest expansion that would normally have been a Comvita investment, but we see an appetite for landowners to actually work with us and use native trees such as Manuka rather than imported exotic trees that have historically been used on this land.

Question from Jackie Wayne. What are the biggest challenges that the company faces in the coming year? And what's the plan to address them?

Look, I think, obviously, we're in globally, we've got recessionary times around the world. And obviously, what happens in that period is that discretionary spend gets allocated towards areas of most need for -- based on your personal choice. For us, it's about continuing to share the benefits of Manuka and making sure that people are choosing Comvita as their choice for that discretionary spend for their own personal health and wellness.

A question from [ Yu Bing Li ]. How do you increase shareholders' return if you look at our share price?

So it's a really good question. Ultimately, we set out a plan to deliver circa $50 million or 20% EBITDA target in 2025. From the very first time that we talked to you all, our shareholders back in 2020, we shared that plan. Ultimately, the market decides where that value sits, but we're very clear that if we deliver our FY 2025 plan, then that value will be realized.

A question from Mark Topy. Do you have concerns around the China economy slowdown? And how do you continue to maintain momentum against that backdrop? Is it based on greater country penetration in second and third tier cities?

Mark, it is a good question. Obviously, it does occupy a significant part of our thinking. And part of it's through making sure we have products that meet individual needs across the whole country. Part of it is through an extrapolation of our distribution or extension of our distribution into new channels. But ultimately, we do have low household penetration in China. So household penetration is less than 1%. China is a market where consumers have used honey as a medicine for thousands of years. So they're predisposed to our category and what's crucial, again, is we keep giving evidence about why Manuka should be part of their personal health and wellness journey. We do continue to look at more daily usage products. So if I take our new products that we've launched, as I say, they've enhanced our proposition in the market itself.

A question from Jason Hamilton. Why is the guidance for '24 gross margin 59%, below the normalized 59.5% gross margin in '23? What's driving the forecast decline?

Look, broadly, it's going to be flat year-on-year. So it's sort of 59%, 59.5%. The primary parts are when we launch with a new customer, we get some short-term margin headwinds or when we extend distribution with a new customer, we get some of that. But materially, it's going to be in line before going back to above 60% in 2025.

A follow-up question from Margaret. Just seeking further insight around the EBITDA guidance for '24. Can we provide more clarity around that? I think, Margaret, my response to that would be, I think we've probably provided that clarity on this call. And hopefully, what we've said we'll now have responded to that question. A question from [ Oyvind Rimmer ]. Re-phrasing Josh's question with respect to the $50 million EBITDA target for '25. Is this organically generated earnings-only or can you acquire your way there and with the recent acquisition, is it fair to add any contributions from that transaction to the $50 million?

[ Oyvind ], hopefully, to answer that, we don't need to acquire our way there. If we see incremental opportunities to overachieve, we will. So our focus is on delivery of our business model. So back to minimum 60% GP, 15% marketing to sales, 20% EBITDA. We see on our underlying business, we're on track to deliver that performance. As I say, we haven't given revenue guidance for FY '24 and '25. But clearly, a number of analysts will extrapolate our current performance.

A question from [ Zhiji Jin ], related to how do we position for the Daigou channel within our '25 plan? And what's our biggest challenge in the future?

I'm not fully sure of the question. Look, we -- a couple of years ago, we had a project called Project 3, which was to make sure that the work that we undertook in both Australia and New Zealand through the Daigou channel amplified our brand work in market. That work continues and we still continue to work with partners who want to bring new users to us or new register to market to us through the Daigou channel. So we're pleased with some of those partnerships, and we're pleased with the progress we're making.

A follow-up question from Christian, basically asking whether we can rephrase our guidance for FY '24 to be the same as saying $41 million after EBITDA -- sorry, of EBITDA after ERP? And I think we're saying that that's right, Christian, that if you add the $7 million back on top of the number that you've come to, you'll get to $41 million. A question from [ Nick Kwan ]. When can we expect the Lepteridine clinical trials to be released?

We're really excited by the trial itself. As you'll have seen, we've got a global panel of gastroenterologists, immunologists, and we're in the trial program right now. So recruitment is going well. So we're expecting results either late this half or early calendar year 2024. So we'll look forward to sharing those results with you at that time.

A question from Margaret. With your CapEx expectations of $13 million to $15 million per annum, can you please split this up into broad categories like forest investment, maintenance CapEx, intangibles and others?

Margaret, we'll do that separately. Obviously, we don't guide at that level. But what I would say is that back in 2020, one of the biggest decisions that we made was that through our R&D investment, our focus would be on consumer-facing activity and activation. So the same thing applies for our CapEx going forward that our focus will be on utilizing our CapEx to help us win or help us transform how we present ourselves in market. So that's a key part of the focus going forward.

Another question for Mark Topy. Can you expand on the Southeast Asian growth opportunity and the traction you are gaining there with the addition of HoneyWorld?

Yes, look, we're excited by what we see there, Mark. As you saw in the results, we had a really strong half 2. Again, consumers through the whole region are predisposed to using honey as a medicine. And with the addition of HoneyWorld, we take a segment that's previously been weaker. And this was also over $30 million of revenue. And we're opening up a huge region in terms of people who are predisposed as I say, to honey and particularly, we believe, to Manuka Honey when we have the story and we give the evidence.

A follow-up question for David Streeter regarding the -- asking shareholders to pay for HoneyWorld. I think what I'm interpreting from the question is, shouldn't we -- Dave is asking should we, in fact undertake a capital raise in order to pay for the HoneyWorld acquisition. And our view has been that we're comfortable debt funding that. We have the capacity within our debt facilities. We're also comfortable that we will have and do have a plan in place to accelerate the reduction of our debt plan back to the leverage ratios that I talked about earlier in the Q&A set. So we do not think that this was an acquisition that warranted any capital raise from our shareholders. Next question from [ Oyvind Rimmer ]. [Technical difficulty] the ERP spend would presumably be happened irrespective of the recent acquisition and it's not really a valid offset to the acquired income?

No, you're entirely right. Even it's not -- all I'm pointing out is that the increase year-on-year of investment in the ERP in FY '23 was $3 million. In FY '24, it's going to be $7 million, so a $4 million increase year-on-year, and that will offset the benefit that we get from HoneyWorld. So it's a one-time negative offset. And going forward from FY '25, obviously, we'll see the benefit of HoneyWorld coming through, but it's 2 separate things.

A question from Mark Topy. Can you expand on market share gains? And is your position online and digital and in-store in Greater China driving this?

Probably can't expand too much, too much Mark. Obviously, we're seeing strength across the board and we're seeing opportunities coming from strategic partnership across the board. We are being recognized as a partner of choice by various online and offline retailers and we're looking to advance that or enhance that by investing at point of purchase or at point of delivery, which we'll continue to do.

Not so much a question from [ Zhijie Zhang]. She's basically stated very proud of Andy's team achieving Greater China, well done.

Look, that's fantastic to hear. And look, Andy and the entire team through APAC have done a brilliant job and you bring a smile to our faces when you say that. And I'm sure even Hong Kong at the moment listening. So I'm sure there's a smile on his face as well.

A question just popped back into the question queue from Christian, which is exactly the same question he's asked earlier and that I also addressed earlier directly with him on the phone. So I think, Christian, the best way we can deal with that one is to catch up we have later today and will address that question again there. Otherwise, it seems a little repeated on this call. That said, however, there are no other questions currently in the queue. We have only a few minutes left, however, David.

Look, just in the last 2 minutes, I just want to thank everyone for their support. Thank the team who I hope a lot of the team are on the call as shareholders and just thank the team for the huge efforts that they've put in to deliver this result. And we look forward to sharing more of our performance as we go forward, but really appreciate the ongoing support. Thanks very much.