Comvita Limited (CVT) Earnings Call Transcript & Summary

[Foreign Language] Greetings to you all. Welcome to the Comvita Annual Shareholders' Meeting 2024. So that we can set the foundation for a smooth and successful meeting today, can I please ask you all, if you can, to stand so we can open our day with [Foreign Language] Thank you. You can all be seated. I'll now hand over to Bridget to begin our day.

[Foreign Language] Good morning and welcome to the Comvita Annual Shareholders' Meeting. Very pleased to see so many of you here as we celebrate our 50th year in business. I'm Bridget Coates. I've recently been appointed as Chair of Comvita, and I'm very pleased to chair my first ASM today. I do hope there's enough seats for everybody. Thank you. Our theme today is agility in turbulent times, certainly a pertinent description of our global business environment and also a very apt description of our response to that environment. Our presentation today will focus on these 2 themes, the status of our global market and our response to those circumstances. You know that it's now been 4 months since the end of our last previous financial year. Markets remain difficult, but there are signs of a return to a more stable trading environment. Sales are tracking to us at a similar level to last year. Margins remain under very significant pressure as we face continued competitive pressure. In the 4 months, our company has begun an aggressive process of transformation, and we are now well into that change process. But this is not likely to have an impact until the second half of our current financial year. You will hear more from Brett on the various mitigation programs that we are taking -- that we have put in place. Some clear changes in consumer preferences are emerging in our categories globally, and we must respond with creativity, agility and flexibility to meet those developments. As a consequence, our experienced market-facing teams are reshaping all our product ranges, our value propositions, our pricing and marketing positioning and completely rethinking our channels to market globally. We've already found many opportunities to improve our customer value propositions while tightening up our cost to serve and hence, increasing our profitability. Every part of our company, globally and locally, is being examined as we seek to tighten up our product offerings, optimize our operations and our supply chain, and reduce costs across the board, which is exactly what you would expect us to do. Brett Hewlett, our CEO, will provide much more color on the progress we are making in his presentation shortly. With that introduction, I will move into my presentation and -- with an introduction to the Board. As you know, you will see some new faces on the Board and the management team that's here today. On the Board, David Banfield has now left the company and Brett Hewlett has stepped into the CEO role in David's place. Luke Bunt has rejoined the Board. He was formerly our Chair of Audit. And we now have, as of today, a small but extremely experienced and very effective Board, which is well capable of meeting the turbulent times that I just referred to. So, moving across the top of the slide, Bridget Coates; then Bob Major, Bob is here, Chair of our Safety and Performance Committee; Mr. Zhu who represents our major shareholder in the corner; Yawen Wu, representing China Resources; and across the bottom, Mike Sang, who's here, Chair of Audit -- Audit and Risk Committee; and Luke Bunt. I welcome Mike and Bob who are here with us today. Luke has unfortunately injured his back and so unable to attend and Yawen and Mr. Zhu will be attending online with us from China. Today's meeting is being conducted both online and in person. We're very pleased to welcome those of you who are participating online through the virtual meeting platform provided by our share registrar, MUFG Corporate Markets. I'll provide you with further instructions as we progress through the meeting. But if you encounter any issues, please refer to the virtual meeting online portal guide or you can phone the helpline on 0800-200-220. For those of you here in attendance, I firstly have a couple of items of housekeeping for you, please. Can I ask that you put your mobile phone on silent so that there's no interruptions. Toilet facilities are located near the entrance as you came through to the left. And if a fire alarm should go off, please -- main fire exits are marked by the running green man to the left and right, please exit and convene on the grass area outside in front of the venue. Please follow other directions from the team. I'd like also to welcome Glenn Keaney from KPMG, our company's auditors, and Andrew Matthews from Simpson Grierson, our company's legal advisers, who both join us here today and to the team from our share registrar, MUFG Corporate Markets. They will help conduct the voting on the formal business later in the meeting and also act as a scrutineer. During the annual -- this annual meeting, anyone in the room or online will be able to answer -- ask any questions and vote, and I encourage you to do so. For those of you online, you can send through your questions at any time through the online portal by clicking the Ask a Question button within the virtual meeting platform. Select the item of business, type in your question and click submit. I would encourage you to do so as early as possible as this will allow us to answer as many questions as possible during the appropriate time in the meeting. The Company Secretary has confirmed to me that the Notice of Meeting has been sent to shareholders and to all persons entitled to receive it. I've been advised that there is a quorum present and so I declare this meeting open. Proxies have been appointed for the purposes of this meeting in respect of approximately 25.3 million shares, representing over 36% of the total number of shares. My fellow directors and I intend to vote all discretionary proxies that we have received in favor of the resolutions as set out in the Notice of Meeting. The financial statements for the year ending 30th of June 2024 and the auditor's report for the period are available under the investment center on our website. The financial statements were made available on our website on 29th of August on the same date that we sent out -- we announced our annual results and while our annual report was made available on the 27th of September. Hard copies are available either through MUFG Corporate Markets or by contacting our customer experience team on 0800-504-959. We are very proud of our annual report. It is a comprehensive document, very honest, very reflective and it offers something for all shareholders. I'd like to thank shareholders here today for their level of participation, both online and in the room today. It's such a pleasure to be able to return to holding these meetings in person while still maintaining the inclusiveness and convenience of virtual meetings as we also live stream today's ASM. After my short address covering the performance highlights of our last fiscal year, I will hand you over to our Acting CEO, Brett Hewlett, who will take you on a deeper look into Comvita's operations, our strategies, how we're engaging with multi-stakeholders communities and lastly, provide some insight into our future ambitions. We will then complete the formal business of the meeting, including the resolutions, and we will then take questions before finishing with general business. Financial summary. You will have received our annual report, which describes very clearly the very difficult conditions we faced last year. We will pass relatively quickly over this historical information at this meeting since it is already well known to you and we are 4 months into the new year. Our revenue last year suffered from the macroeconomic downturn in China, which affected consumer demand, especially for high-margin products like ours, as well as from some changes in consumer preferences. Meanwhile, due to an oversupply of available inventory, our industry competitors were willing to dump product at low margins in both the U.S. and China. As you will be aware, China frequently experiences rapid changes in market conditions without warning and this was the case here. That said, we were too slow to respond to these market changes, which intensified throughout the year and which are still prevalent today. Our profitability was significantly impacted, as you can see, with EBITDA falling $26.1 million versus PCP and NPAT significantly down also. Turning to the balance sheet items. We examined our balance sheet in detail as part of our end of year processes this year and took impairment charges covering a wide range of assets, which no longer hold the value that we had previously ascribed to them. The carrying value of a number of our growth investments were no longer appropriate given changed market conditions and such exposures are being further reduced this year as we continue to further optimize our balance sheet. Our inventory remains stubbornly high as sales levels slowed faster than we had anticipated during the year and this impacted our net debt levels, which while lower than the PCP, was still higher than we had planned. As we advised the market on 30th of September, we have been in discussions with our bank syndicate to agree an appropriate covenant structure for financial year '25 and those discussions continue at this time as our present covenant structure is not appropriate in these current circumstances. If that discussion should not be successful, our present covenants would be breached as of December 2024. The discussions with our banks are ongoing. Our banks have been very supportive to date and we are very grateful to them for their continued support. We will update the market in due course when we have agreed a revised covenant structure with our banking syndicate for the remainder of the fiscal year. Meanwhile, as you will hear today, we continue to deleverage through our many debt and cost reduction initiatives, including, in particular, inventory management and through generating positive operating cash flow across all our global markets. Looking at the honey market, the underlying drivers of our financial situation last year are outlined on this slide. Macro factors, China slowdown in consumer good consumption and industry-specific factors, local oversupply and competitive intensity combined to create a downward pressure on our revenue lines and pressure on our margins. The next few slides explain these changes in more detail and in each case, point to the remedial actions that we are taking. As you can see on this bar graph, our sales and gross margins both fell but maintained reasonable levels, while our EBITDA fell very sharply as our cost structure proved to be insufficiently variable and was unable to respond quickly to the intensifying competition and the changes in trading conditions. It will take some time for the industry to right size demand and supply, and it's crucial that we lead the way on these changes, which is exactly what we are doing. The sales trend in strategic areas. Sales impact was spread relatively evenly across our major markets. But in all cases, the drivers were slightly different and our responses now need to be more nuanced depending on the relative market situation, as you can see on this slide. Sales impact. As you know, shopping festivals are a very important part of Comvita's year in China with a chance to offer gift packages and other innovative products to catch shopper attention. And you can see the comment there about partial cancellation of 12:12 and 6:18 shopping festivals, which had an impact on our period last year. In North America, the loss of a significant customer did hit our top line, but other parts of our U.S. market went very well for us. Our direct online revenue grew well, up 49% versus the PCP. And including the 1 -- excluding the 1 significant customer, our channel sales were up 19%. A week or so ago, I was up in the U.S. with Brett reviewing our market with our local team. What was particularly notable for me was the substantial potential for growth in our business there. It's very clear to us that our premium health and well-being Manuka offering product line has a strong resonance with prevailing consumer trends in the U.S. That said, we also found numerous opportunities for improvement. Firstly, we need a greater focus on productivity in market; secondly, improvements in our channel strategies, a full revision of our price and value propositions; and finally, the development of innovative product formats, which catch the attention of -- the fickle attention of U.S. consumers. As we've indicated, different market situations require different responses and we are conscious that one strategy does not fit all our global customers and consumers around the world. In China, while we focus on our premium products, we have also been concentrating on developing a wider range of choices using a good, better, best approach with more emphasis on entry-level products and on educating the consumer since household penetration in China is still very low in our product category. Throughout Asia, we operate our own retail outlets. This gives us a substantial advantage over our competitors. It means that we have immediate access to the consumer so that we can trial different innovative product formats and different price offerings and learn from consumer responses in real time. Our fast-growing online presence in the U.S. also gives us the same immediate market intelligence as we trial product and packaging innovations. I want to be clear that the headwinds do continue and will do so for some time. However, your team at Comvita are working with real determination to make sure we are match fit for every market challenge and ready to take every opportunity going forward. Before I pass over to Brett, a few words on our climate report, which you will also have seen, our first one this year. Comvita published its first climate-related disclosures in our F '24 climate statement, outlining our key climate market risks and opportunities. Gross GHG emissions decreased 25%, primarily due to less sales-related activity, optimizing external honey purchases and supply chain efficiencies and improvements. Emission intensity reduced also. Gross GHG emissions reduced by 14%. Removals decreased due to the registration of forests under the ETS, including removals in the GHG inventory, but increasing the NZ, the New Zealand ETS NZUs generated. This is all good progress. Our focus this year is very much on maintaining -- on developing our climate transition plan, working on a nature-based and ecological impact and biodiversity monitoring and moving to an SBTi measurement base. We will maintain our B Corp accreditation, which we are very proud of and which is increasingly important in our global markets and continue to refine and improve our measurement and reporting from our situation in 2024 as we go forward. Our customers are increasingly asking us for validation of our sustainable and ethical procurement practices in managing our human rights policies, our climate footprint, our environmental stewardship and circularity and our nature and biodiversity impacts. And Brett has some more to say on this matter as well. We're very proud of our first climate statement report. But as always, we will continue to improve the information in this report and to improve our efforts in this area, and we welcome shareholder feedback on this report. Looking at the health and safety situation. In '24 -- fiscal year '24, Comvita made significant strides in health and safety, including a 28% reduction in the total recordable injury frequency rate, TRIFR, and a 59% drop in the lost time injury frequency rate. A major highlight was having our internal safety maturity results externally verified by SafePlus, a WorkSafe endorsed assessment, placing Comvita at a performing level with some elements already trending towards leading. This is a hierarchy of definitions of how advanced a company is in terms of their health and safety practices. Our aim is to reach leading status through continuous improvements. We also maintained our commitment to fair wages with 100% of New Zealand-based employees earning a living wage, while gender diversity efforts are reflected in 65% of our global team being female. Finally, while the net -- employee Net Promoter Score remained stable at 21% -- plus 21%, signaling strong and sustained employee engagement, we will continue to emphasize initiatives that support this engagement as we navigate near term -- our near-term focus on increasing our agility. Collectively, these results affirm Comvita's dedication to fostering a safe, inclusive and progressively thriving work environment for our employees. Finally, a more positive future. So, in summary then, we are responding with honesty and determination to our market challenges. We're examining every aspect of our business with a laser focus to make sure that we optimize every part of our supply chain from the forest to the kitchen table. We know that we must both reduce costs and ensure our products meet or exceed consumer expectations in every one of our markets. Despite the short-term challenges, the long-term opportunity has not changed. We know that the Manuka Honey story remains very attractive to global consumers. This has been once again confirmed by our many conversations with our long-standing retail partners worldwide. They speak unequivocally of the unique value of our product for today's consumers, and they are backing up this confidence with their spend increasing significantly in the future growth of our category. We are gratified and encouraged by their very considerable support. Comvita is the market leader in our industry. Our strategic agility will ensure we are a major beneficiary of a return to growth as demand drivers improve and supply conditions normalize. But in the meantime, we are focused and ready for the near-term challenges ahead. I'll now pass over to our CEO, Brett Hewlett. Thank you.

Thank you, Bridget. Now [indiscernible]. This has elements of deja vu in several layers, I have to say, standing up here again as the CEO of this company for the, let's say, third time. I want to thank Bridget Coates for stepping up to the role of Chair of our Board during this challenging time in the company's long history. I'd also like to acknowledge the tremendous collegial support that the whole Board had been providing to me and the management team through this period of transition, reset and refocus. Let me start by introducing the leadership team, and they're all here today. So I'll get them to stand, if you don't mind, as I introduce you. First up, we have Andy Chen, Head of our APAC regions here based in Hong Kong. Welcome, Andy. We have Holly Brown, Head of our North America, Europe, Middle East and Africa territories. Nigel Greenwood on the desk up here, our CFO. Dr. Jackie Evans, over here on the left. Jackie is our Head of Science and is also helping on the adjudication of questions today. Adrian Barr is the Head of our Business Development in the front here. We have Terry Chen. Terry, where is Terry? Down the back there. Head of our supply chain. Monica Yianakis, Monica is also down the back there on the left. Monica is Head of Digital and Marketing. Tania Van Paddenburg, Tania is also down there, the 3 of them are lined up, Head of Purpose and Transformation people. We have Chris France, our CTO. Chris is also there with us today. And Jessica Sanders, of course, always -- where is Jessica, down the back in the booth, the organizer of this very nice event. And once again, Jess has put on a fantastic show. Thank you, Jess. I want to thank all of the members of the leadership team and the rest of the team at Comvita and their tireless efforts through what has been an incredibly tough last 12 months. Never lose passion, no matter how big the challenge. So thank you very much to everybody. Upon my return to the role of CEO at the beginning of September, I immediately went quite deeply into the business to listen, learn and understand. Clearly, things have changed since I've been away. I've traveled to China, Hong Kong, Singapore and the U.S. as well as spent time out in the field with beekeepers and landowners. So much has changed and yet, perhaps refreshingly, there is still much that can be recognized and is still relevant from my earlier period as the CEO. Next week, I'll be back in China, and then go up to Korea and Japan. At a high level, these are the observations that I've made so far. Across all markets, without exception, we are witnessing a slowing of demand. Luxury of premium brands have been most materially impacted as consumers are trending to trade down, looking for bargains or more frugal offerings. In China, consumers are spending less on luxury and gravitating towards domestic brands or opting for more sustainable, personalized and culturally relevant products. Chinese consumers have an increasingly discerning appetite for quality and unique style. Local brands are doing this well and often better than imported brands by showing luxury premium in more culturally aligned ways. Chinese are also traveling again, as we all are, and now spend about 40% of their luxury budget outside of China. The U.S. is now the largest market for export of New Zealand Manuka Honey. It is also the cheapest. Pressure on margins is intense in the U.S. market. There is no clear category leader. Unfortunately, U.S. consumers have become confused by the mixed and often conflicting messages on the value proposition for Manuka Honey. The market is screaming out for a differentiated offering. Health and wellness brand -- health and wellness opportunities in North America are especially compelling. I'll talk a little bit more about that in a minute. Back home, the New Zealand honey industry is in a crisis. As we have seen too often in this country, the primary producers of New Zealand are pressed through deep feast or famine economic cycles. Current prices and volumes deployed by too many Manuka Honey producers, exporters and labels, we can't really refer to these as brands, just cannot be sustained. I fear it will take several years for the industry to reset and restabilize. The most important observation I've made in these early days has been recognition that we need to change. In recent times, we have been -- we have allowed ourselves to become unnecessarily complicated and have become complacent to the moves by our competitors. Whilst Comvita remains the industry leader and is best placed to be the primary beneficiary of the changes and the emerging situation, we must now act with speed and agility and I now want to take you through my work program. In the first quarter, sales through the first quarter are tracking in line with prior year, as Bridget mentioned. However, our margin has come under pressure and that is hurting our bottom line. For the past 20-plus years, Comvita has pursued a price leadership position for the category in all key markets. We do not want to lead or participate in a race to the bottom, so have been carefully testing price value elasticity of our core range and also learning from the recent launch of a number of price fighting and value opportunities. We have frozen capital expenditure plans where possible, example, in forest planting. And we've made good progress in our $10 million to $15 million annualized cost-out initiatives, which we have communicated at the time of our results announcement. We aim to significantly simplify our business in line with current market realities. We are on the process of making further changes to our structure to bring a sharper focus to strategic growth opportunities and at the same time, lower cost to serve operating and distribution models. As we move now already into the second quarter, purchase of raw material in the first half have been -- has also been significantly curtailed in line with current demand and focus has shifted instead to clearing existing inventory, converting this into cash. We are moving on clearing several non-strategic assets, although we would not expect or anticipate these to settle until early in the new year. Learnings from the first quarter have informed us on our tactical approach to the peak promotional season that runs from mid-October through February. Of course, these are 11:11, Black Friday, 12:12, Christmas, Chinese New Year. So this is the peak season that we're really building up velocity for. We can continue to adjust and we are doing so and amend our promotional program and pricing in real time as -- through our digital delivery channels. By the end of the third quarter, we will have line of sight on this season's honey harvest from Comvita-owned apiaries, which is targeted to provide circa 30% of our total annualized volumes. This will inform our purchasing strategy for third-party sourcing of honey for the balance of the calendar year. In the final quarter, we will be focused on -- sorry, on the final quarter we'll be focused on realizing the full benefit of our cost-out initiatives, cash receipts from peak season sales, reducing debt and setting ourselves up well for the rebound in FY '26. We would also hope to announce the appointment of a new CEO by the end of that quarter. As we work through the annual plan, we'll also like -- also need to deal with head on with those prevailing legacy issues, which we've been talking about. Let me start with the China market demand. This year not only marks 50 years since the inception of Comvita, but it also heralds 20 years in the China market. Actually you could probably say more like 30 years if you include our first presence in Hong Kong. I want to acknowledge the incredible job that our team in China and across all of the APAC countries have been doing over the past year, holding the line, defending our territory on price and building an incredible legacy of premiumization of the Comvita brand. We continue to lead the way with premium offers in the category. At the same time, we're innovating to make premium more culturally relevant to our locals, make sure that we have things that people can relate to. And at the same time, we're also exploring price fighting and value offers where appropriate. As mentioned earlier, Chinese middle class are traveling and we will go where they go by steadily increasing our retail presence in tourism and duty-free locations across APAC. And our recent acquisition of Singapore retail chain is a good example of that. In the U.S., it was well noted that we lost regional distribution last year, purely from pricing pressure. We are working hard to regain ground here and have gained traction in the offline and natural -- and online -- natural and grocery channels. In the U.S., we're also innovating to lift the category into more North American consumer appropriate offering and getting gate velocity in retail channels. We aim to lead the category in the U.S. into a more health and wellness positioning that is more appropriate and defendable for the future. The full potential in this broader health and wellness space dwarfs the current Manuka Honey category opportunity. So it's definitely worth pursuing. The honey supply glut, we've been hearing a lot about this, of course, over the last year or so. Just to give some context on this. From a peak of about 1 million hives in 2019, supply of Manuka Honey was pushed way beyond realistic underlying demand. Beekeepers have scaled back to only about 500,000 hives today and production has declined about 56% since 2020. In value terms, export of Manuka Honey remains relatively stable at around $420 million per annum and may be growing again. However, we still believe that the glut of Manuka Honey may take several years to work through. The poor quality sold by many brands is of concern. A recent survey by industry regulator UMFHA, UMF Honey Association, showed an alarming number of noncompliance to agreed honey standards for UMF Honey. Tests on Comvita's products, I'm pleased to say, came back 100% compliant. The surpluses will provide both a challenge and -- with market quality and pricing, but also some short- to near-term opportunities for this company, Comvita. We believe we can manage this by blending honeys from varied sources to match demand across differentiated market segments, the notion of a good, better and a best offering. We do see a move back into supply constraints towards the end of this economic cycle, which is -- which will create further volatility in raw material pricing. Comvita is focused on optimizing its own apiary operation around our own forestry operations with key strategic landowners on geographically diverse locations around New Zealand. We are here for the long term and continue to plan ahead to match supply with demand in more strategic and sustainable ways. Our high inventory and debt position. We have a number of non-strategic assets, including some land holdings that we are looking to exit from by the end of the third quarter. We have placed on pause any CapEx projects, including long-term planting programs and have slowed down others where we can, for example, our ERP system. We remain on target to reduce our inventory and converting this into cash, but in a responsible way that is not damaging our brand integrity or long-term position. We are also on target with our cost-out initiatives, although see most of the benefit falling in the second half of the fiscal year. As we look to further simplify and optimize our business to suit current realities, we will be able to identify other areas to optimize for bottom line growth and greater free cash flows. Overall, we remain on track to have reduced debt to targeted levels by the end of FY '25. In summary, the current trading environment remains tough with pricing pressures on core products likely to continue for several years. FY '25 will be a year of survival, reset and refocus for Comvita. We are currently trading in line with prior comparable period, but are experiencing pressure on margins. We remain the industry leader. And as a leader, we must act to protect and build on the consumer value proposition for Manuka Honey in the category. The size of the prize for success is compelling for all stakeholders. Comvita is well positioned as near- and long-term primary beneficiary. Over the next 20 years -- oh, -- sorry, I missed something there. When I first joined the company as the inaugural CEO late in 2005, we had a burgeoning export business based in Paengaroa, just up the road here from us, little to no in-market presence beyond distributors and no supply capacity. We basically relied on third-party suppliers for just about everything. Over the next 20 years, we moved to develop a highly sophisticated vertically integrated value-add success story built upon the shoulders of our aspiring founding fathers, Claude Stratford and Alan Bougen. We've never shied away from investing for the long term and have shown real courage and resilience through some incredibly tough times. We have survived and thrived through the global financial crisis in 2008, a failed hostile takeover in 2011, a decade-long supply-constrained period of honey wars, how ironic is that, followed by a collapse of the lucrative daigou grey channel in 2017, '18 and a merger of our China distribution business in 2018. Then most recently, of course, we survived and thrived through the COVID years. We have a platform that will see us survive and thrive for the next 20 years and perhaps even the next 50 years. Comvita's recent clinical trials on Comvita's patented Lepteridine honey -- I'm sorry, Jackie would -- tripping up on that one. Lepteridine honey delivered meaningful outcomes that provide us with a platform to reinvigorate the Manuka Honey category in the same way that Comvita's Medihoney wound care technology invigorated the category in the last decade. We are a health and wellness company. We have always taken an interest to understand the science of nature since our humble beginnings. We have evolved a competitive advantage through global IP, including clinical research and health benefits. We have fostered a pipeline of new product development supporting natural health and wellness positioning and we have go-to-market capability with boots on the ground in key markets. Investments in recent years to modernize our manufacturing facilities, laboratory and our IT systems is a sunk cost that sets us up to expand more than 3x our current throughput with enhanced efficiencies and agility. We are audit-ready for GMP quality, sustainability and ESG protocols demanded by our global retailers and trade partners. I was witnessed to one such audit just last week. A surprise audit for Costco shows at our door without warning. This is how they work. They spend 3 days on site asking lots of tricky questions and they walked away and left us with another AA+ rating. We have about 12 such audits conducted every year. Our native forests provide supply security, quality surety as well as long-term sustainable cost advantages. Our investment in plant breeding and native Manuka propagation started more than 10 years ago. Large-scale planting started just 5 years ago. Today, we have more than 6,000 hectares of Manuka forest under direct control by Comvita. On the long term, the honey sourced from our own forests will come to represent around 40% of our total volume requirements. That still leaves flexibility to acquire the balance of 60% from the spot market. Probably the greatest competitive advantage, certainly our greatest point of difference, is derived from our unique and authentic heritage and New Zealand provenance story spanning 50 years, a proud pioneering history and a proud pioneering future. In 2025, we celebrate 50 years. I want to acknowledge Alan Bougen and his family at the front of the room here that are here with us today. Alan will be joining me on my next trip to Asia, up into Korea, China and Japan, and we will be assisting the team in exploring the risks and opportunities as we reset and refocus to set us up for the next 50 years. Thank you very much. I'll now hand you back to Bridget.

Brett, thank you very much. Such an extremely interesting and comprehensive presentation. So a chance to talk more about that at question time if people are interested. We will now move on to the formal items of business on the agenda. And we're back to the resolutions voting. All resolutions will be voted on by way of a poll. Eligible shareholders or proxies have been given a voting card. For each resolution, you need to tick the box indicating whether you are voting for or against the resolution or abstaining. MUFG Corporate Markets representatives will collect the voting cards at the end of the resolutions prior to general business. For those attending the meeting online, you will be able to cast your vote by clicking Get Voting Card. You will be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking for, against or abstain on the voting card. Once you have made your selection, please click Submit Vote on the bottom of the card to lodge your vote. We will take questions for each resolution. For those of you in the room, please raise your hand and wait for a microphone. Please state your name and confirm whether you are a shareholder or a proxy holder. Voting will remain open until 5 minutes after the conclusion of the meeting and results of the vote will be announced on the NZX. Each resolution is set out -- which is set out in the Notice of Meeting is to be considered as an ordinary resolution and must be approved by a simple majority of the votes cast by shareholders entitled to vote and who do vote on the resolution. Resolution 1. Resolution 1 concerns the appointment and remuneration of the auditors, that the meeting record its reappointment of KPMG as the auditors of the company for the current financial year ending 30th of June 2025, pursuant to section 207T of the Companies Act 1993 and authorize the Board to fix KPMG's remuneration. Are there any questions on this motion from the floor? Thank you. Are there any questions from online?

There are no questions online regarding this resolution.

Thank you very much. If there are no questions from shareholders, are there any -- yes, no further questions. Please cast your vote on the voting card or online in relation to resolution 1. Resolution 2. As this resolution relates to my reappointment, I will pass over to -- as Chair of the meeting to Mike Sang, who is Chair of our Audit and Risk Committee. Thanks, Mike.

[Foreign Language] Resolution 2 concerns the reelection of Bridget Coates as a Director of the company, that Bridget Coates who retires by rotation and is eligible for reelection, be reelected as a Director of the company. I'll now invite Bridget to say a few words.

Thank you, Mike. I'm proud to put myself forward for reelection as a Director. Comvita is a totally iconic New Zealand company, which represents so much of what our company stands for authentic, high-quality, differentiated food ingredients, which offer a unique health and wellness value proposition for global consumers. My background is in finance and economics. I've been a director of a number of New Zealand companies, as you can see from the slide, if I were to move it forward and a Director of Comvita for the past 3 years. Of particular relevance to my role today, I also bring a deep experience of building a food and consumer products business in the U.S. -- in the U.S. global -- U.S. consumer products market. As you have heard, Brett and I -- have heard Brett and me both describe, the U.S. offers particularly valuable, attractive growth opportunities for us at the moment. And I look forward to helping realize our potential in that market. I'm pleased to say that your Board are very clear-eyed and very honest about the opportunities and challenges we have ahead. Every one of us is committed to returning our company to a positive trading performance and to return -- restoring shareholder value. Thank you.

I now propose that Bridget Coates, who retires by rotation and is eligible for reelection, be reelected as a Director of the company. Are there any questions concerning this motion from the floor? Thank you. Any questions from online?

There are no questions from shareholders online regarding this resolution.

If there are no questions from shareholders joining online, turn the page. I will now hand back to the Chair. Thank you.

Thank you. Please cast your vote as you, I'm sure know, is the step before we proceed. Resolution 3 concerns the reelection of Yawen Wu as a Director of the company, that Yawen Wu, who retires by rotation and is eligible for reelection, be reelected as a Director of the company. We will now hear a few words from Yawen online. Thank you.

[Foreign Language] Nice to meet you. I'm Yawen Wu and I'm a shareholder, Director at China Resources Enterprise, or CRE. So CRE is a wholly-owned subsidiary of China Resources Group, one of the largest conglomerate in China. China Resources has been a shareholder of Comvita since 2015. We recognize the long-term value of the company and believe in its potential. Over the past 9 years, China Resources has worked closely with Comvita with its products sold through our extensive retail network, including the Ole in mainland China and the city'super in Hong Kong. As Comvita face current challenges, we are committed to support the company as it navigates through this period. I'm dedicated to existing management in restoring and increasing shareholder value. Therefore, I'm standing up for reelection as a Director of Comvita. Thank you for your attention, and I look forward to continuing our collaboration with the company in future. Thank you.

Thank you very much. Are there any questions? I now propose that Yawen Wu, who retires by rotation and is eligible for reelection, be reelected as a Director of the company. Are there any questions? Actually, we should go back. Yes, there we are. Thank you. Are there any questions regarding Yawen Wu's reappointment from the floor? Thank you. Are there any questions online?

There are no questions from shareholders online.

Thank you. Please cast your vote on the paper or voting card in relation to Resolution 3. Resolution 4 concerns the election of Luke Bunt as a Director of the company, that Lucas Bunt, appointed by the Board as a Director with effect from 1st of September 2024, is elected as a Director by shareholders. Luke has unfortunately hurt his back and is attending specialist appointments today and he sends his apologies for not being here today with you -- with us all. As you can see, Luke has a stellar experience as a professional director. He has been previously a Director of Comvita and Chair of the Audit and Risk Committee of Comvita. And speaking for my fellow directors, we are delighted to have Luke back at this time rejoining the Board. I now propose that Luke Bunt be elected a Director of the company. Are there any questions on this motion from the floor? Thank you. Are there any questions online?

There are no questions from shareholders online.

Thank you, Jackie. I would now ask that you mark your vote on the voting card in relation to Resolution 4. That completes the voting on the resolutions. At this time, I'd like to advise the outcome of the proxy votes, which were lodged in respect to the resolutions. The results are shown up on the screen here. For those of you in the room, representatives of MUFG Global Markets -- Corporate Markets, will now collect your voting cards and that's just coming down now. Thank you. Thank you very much. General business. We're now moving on to general Q&A. I'd like to open up the floor and online for any questions that you may have. I'd invite Brett to join me on the stage as he will also participate in the question-answering process. For those in the room, would you please wait until a microphone is provided before you proceed with your questions? Can we open up the floor? Are there any questions from the floor, please? Thank you.

I'm [ John McDonald ], a shareholder. While I want to look to the future, I must ask a question on the past regarding the impairments, particularly the investments in Uruguay, U.S.A. and Australia, where over $20 million have been written off on those investments. My questions are, why were those investments made? They seemed well outside the core business of the company. And as an original shareholder of the company, I can't understand or don't even know why these investments were made. So the question is, why were they made? Is there any hope of a recovery on those investments? And thirdly, what lessons have you learned regarding those investments?

Thank you. To answer this question, which I'm sure is in many shareholders' minds, the company has faced a very strong history of growth, as you can see from the slide that Brett put up. We have invested ahead of that growth. In many instances, we have taken and put investments in place, which will lead to being able to take advantage of growth opportunities. It's certainly true that -- and as the market changed, that we were not well positioned to really address the changes, the slowdown that occurred. And in some cases, those investments related to a perception of growth, which did not materialize and is not likely to materialize for the foreseeable future. So that was definitely a big part of it. We are -- we have definitely taken, as you say, the key learnings from that. We are very -- Brett has said a number of times that we are simplifying, focusing and streamlining our business. And that is, I think, the major part of the response that we can offer to you. Brett?

Yes. Thank you very much, Bridget. And, John, look, the only other thing I'd just -- on the last part of the question is there some potential for net realizable value post this impairment? And the simple answer is yes. So they're not completely gone forever. There is still the potential to realize something relevant.

Thank you. Yes, please. Thank you.

[ Jonathan Spink ], and I'm representing the Shareholders' Association today. Is olive oil extract your only product really of any significance other than honey-related products? No. Do you want to speak to that?

Yes. Yes. Thank you very much, John. Look, it's still part of our portfolio. It still delivers a net return for our shareholders, for the business. So we're not ready to give up on it yet. But it's fair to say it's been unloved and it does tend to fall outside of our core product offering of bee-related products, Manuka Honey and Propolis. But we still have a firm belief in what olive leaf can do. But we need to make sure that we are positioning that business for success. And look, it could well be that perhaps Comvita is not the rightful or the highest value owner of that business. So we will be exploring all of those options.

In addition, about other products, which I think your question covered as well, we -- Brett and I, in particular, in the U.S., were impressed with the adjacent products and the ways that Comvita, the Manuka Honey story can be extended to products like lozenges and gummies and lollipops and other products and we are certainly conscious that some of our competitors have had quite a lot of success in those adjacent areas. We have a very active program of looking for all opportunities that might come forward in those areas. Was there any further questions?

I'm [ Derek Reid ]. I'm a long-term shareholder of Comvita. I've got a question. Does the Board consider due to the low -- current low share values of Comvita, that there could be a takeover bid eventuates at the present time?

Yes. Thank you for the question. One can never anticipate what might happen. As you know, last year, we were subject of a non-binding indicative offer, which has certainly focused our minds for a significant period of time. It was a highly credible offer from a highly credible purchaser, a potential purchaser, and it did not succeed. But there's no reason to assume that there -- in fact, we were confirmed by the acquirer that there was -- it was related to our trading performance at that time rather than anything intrinsic to do with Comvita that led them not to make an offer in the end.

And maybe if I could just add, the simple answer is yes. I guess there's that sense that we're always looking over our shoulder or looking over our back. And if it wasn't for that -- not that simple reason, but of course, it just highlights to us all the time why we've got to make sure we restore value in our share price.

Yes. Absolutely. Jackie, yes, thank you. I'll just take a question or two online, and then we'll come back to the room. Thank you.

Yes. So we have 2 questions that were submitted before the meeting. And the first question is from [ Chow Lin ]. And the question is, the last 12 months have seen countless guidance downgrades. What plans do you have in place to get your forecast accurate? And how can investors rely on your projections going forward?

We are very, very conscious of the situation last year, which was most unsatisfactory for everybody, particularly shareholders, but certainly for the company as well. Downgrades seem to be the name of the game and it was extremely unsatisfactory. The market is very volatile. It's very difficult to forecast at the moment. And for that reason, we are not offering any guidance at all at the moment until we have a clearer sense of the future. As far as our forecasting is concerned, we are working constantly to upgrade and improve our forecasting capability and accuracy. And there's a lot of management time and energy going into exactly that task, which is, of course, a consequence of exactly what you say. Brett, have you got any?

Yes. Look, I appreciate everybody would love to have some sort of indication at least of how we're going to trend. It's so incredibly challenging to forecast. If you just break it down to our 3 biggest challenges, it comes down to sales, margin and costs. We've got good line of sight on costs, and we're getting a good ability to be able to predict very accurately what we can achieve on our fixed cost [ rate ]. Margin and sales is a balancing act. And we're constantly experimenting and learning. Every time we go through a sales program in different markets in different countries, like I said, we're trying to hold a line to defend against the large-scale deep discounting that's going on, dumping basically by certain key brands or labels that are pairing up in different markets. So our ability to respond to that is measured. We don't want to go too far to totally damage the business, but we're trying to keep this business alive and thriving. So trying to predict exactly how the sales and margin are going to land is challenging, to say the least. We'll know a lot more once we're through this peak sales season. We'll be a lot more informed. And in the meantime, we're just working like hell on costs, because that's the one thing we can control right now, and it's the one thing something we can do something about.

Thank you. Jackie?

Yes. So we have a second question that was received before the meeting. This is a question from a shareholder from ROYALE SCHOLARS LIMITED. And the question is, please provide an update on the ongoing insurance claim related to Cyclone Gabrielle.

Yes. Nigel, would you like to comment?

Might be a Nigel question. I think. Yes.

Yes. It's right there.

Is this on?

Yes. Yes.

Yes. I can confirm that the insurance claim process related to Cyclone Gabrielle has completed. We received the final assessment, if you like, on what was the last part of our insurance claim, which is what they refer to as the business interruption claim, the loss of profits associated with that insurance event. And that was agreed and settled literally within the last 2 weeks. So that claim process is now 100% completed.

Thank you, Nigel. Any further questions online?

Yes. Yes, we have a total of 4 so far. So the next question, this is from [ Paul Grant ]. And the question is, for the nearly 4 months of this financial year, is the company making any net profit?

We have -- we will be announcing our half year results in due course. And until then, we've indicated sales are broadly in line with last year. Margins are under pressure. So it's not exactly clear when it comes to the profit line.

Thank you. And then another question, this question from [ Farida ]. And the question is, we talk of cost efficiency. Why have expenses on selling and distribution increased on lower revenue, whereas all other expenses have reduced proportionately?

Yes. Do you want to?

I think that's a case of a variable cost versus a fixed cost. I guess that's -- I'm not exactly sure I completely understand the question. But if it's talking about a sales cost, those are largely variables. Basically sales move up, sales move down and you've got a cost associated with that, certainly in the digital arena. Nigel, would you like to...

So sales expenses are typically what they refer to as license fees that we pay on various customers and customers that we operate with in various markets. These are fees that we pay as a percentage of sales in those markets to sort of like supermarket chains would be one example where we pay a license fee. The reason that they've proportionately increased is that we pay license fees related to the new acquisition we made in Singapore, HoneyWorld. So with all the sales that we generate through the HoneyWorld application -- acquisition, we do pay license fees associated with that to the various stores that we're within. So as a consequence, the proportional increase of license fees to total sales has occurred as a result of that.

Thank you, Nigel. Just take a couple of questions in the room, and then we'll go back to you, Jackie. Is there any question? Yes, thank you.

[ Douglas Lashihawara ] Bridget, can you just talk about the skills that's required on the Board to sort of really sort of drive the long-term growth of the company? If you could elaborate on that, what sort of potential experience and skills you might be looking for to really assist the company going forward.

Yes. We -- as you know, this is a complex company that spans agriculture through to many, many global markets. There are skills required at every section of that supply chain. And we are grateful that our Board members have a proven track record in each of those areas. Our 2 China directors provide enormous insights into the business in China and really grateful for their support. Bob Major heads up our Safety and Performance Committee and brings considerable skills in terms of that area as well as being a very, very experienced China operative. Mike is a -- has a proven honey industry record as well as a very strong financial background and leadership -- CEO leadership role. I think I described my background before. And Luke Bunt is, as you have seen, ranges from CEO, CFO and a wide range of different companies and different markets. So that's the Board at the moment. And I feel that we are well served in terms of the tone of your question to answer that, that we do span a very good range of skills for the company we have at the moment.

There is a detailed skills matrix in the annual report.

Yes. There is a detailed skills matrix in the annual report, if you'd like to refer to that. I can point it out after the meeting.

No, no, I've seen them. Given the sort of underperformance of the company and also probably more for how you sort of see the sort of company strategy going forward is probably more the aim of my question.

Yes.

And given those skills, I guess I'm a bit surprised, the company was so slow to react to some of the downturn and...

Yes. We acknowledge the point, of course. I hope you have -- all of you have today got the sense that we take our responsibilities extremely seriously. We're very conscious and humbled by what has happened and we are very determined to make sure that we are vigilant about making sure that we change the company so that it doesn't happen again.

Okay. So we have 2 further questions online. So the first question from [ Coralie Van Camp ]. How has the decision to allow Australia to use the name Manuka in honey products effective Comvita?

Yes, let me take that challenge. It's been incredibly annoying. And I think a lot of energy and a lot of money from New Zealand industry has gone in to try and defend our position there. And as you will have seen from the court results, unsuccessfully defended the position or the rights to claim the use of the word manuka. I don't think the industry has given up hope yet. But at the same time, if I look on the other side of it, the Australian manuka industry hasn't really evolved and hasn't really amounted to very much anyway. So the threat, I don't know that is that material. And I think we just are focused very much on forging ahead under the Comvita brand and making sure that we continue to build value propositions for New Zealand and for Comvita.

And we have a final question online. This question is from [ Don Atkinson ] from Airflo Holdings Limited. And the question is, how is honey inventory valued?

How is it valued? I'm going to hand this to Nigel Greenwood.

Under accounting standards, our honey is -- honey inventory is valued at the lower of cost or net realizable value. That's, I know rather technical and may not mean a lot. So perhaps I'll just provide a bit more insight as to what that means. It means if you look at our inventory holdings, we have 2 core inventory elements in our balance sheet. One is what we refer to as raw honey and materials associated like also propolis, raw propolis, and we have finished goods. So if you think about the finished goods inventory, that's valued at the cost of manufacture of that finished goods. It's the raw honey, it's a processing and it's a distribution into market. And so that's the value that we held that on the balance sheet. With respect to the raw honey, it's valued at the cost of acquisition. So the cost of either acquisition from our third-party suppliers or if it's from our own apiary business, we value it at what is referred to as fair value, fair market value. So we bring that honey in at fair market value into our balance sheet. So that's the more fuller response and I hope that answers the question.

Thank you. Thank you very much, Nigel. Yes. Question here, please.

It's Brooke from Milford Asset Management. I just had a question around the product strategy and where you're at with that. So you're talking about the good, better, best product strategy, which I think is a good one to pursue. Where are you at with actually rolling that out? Like you've obviously developed those products, you've been talking with people in market, you're saying that your sales are flat. But is that -- have you got a wave of value products yet to come? Or is that flat sales already got quite a bit of the value product in there? It's a really subtle point, but your product offering, I think, is in transition. So it would be good to understand that.

Thanks, Brooke. Yes. Look, it is certainly in transition, but we've launched a number of products in this sort of better and best range, and we've also gone into a couple of price fighting propositions, which you'd say would probably sit in the good range. So we've got a -- had a number of test launches in play, certainly in Asian markets and increasingly in the U.S. market that were launched probably over the last 12 months successively. Varying degrees of success, I have to say. And some of the -- when you go into a new category with a new brand or a new value proposition, of course, you sometimes come head-to-head with some pretty aggressive discounting whereas up in the premium end of the market, we're able to rely on our brand positioning. So we're a lot more defensive and defendable in those premium categories. So I guess we are playing on all fronts. And we've got brand offers and product offers in all of those 3 sectors.

So they're already in market now...

Already in market and increasingly so. So we've got a number of product launches also planned for the third quarter in the new year that we'll keep building some of those positions.

Okay. And in recent weeks and months, we've seen some stimulatory activity happening within the Chinese market. Do you think that that's going to have a material impact on your segment within China?

Look, just appropriately, we just had a bit of an update from Andy Chen, who just arrived back in the country yesterday. And of course, we've been talking with Andy around -- as he's been traveling around Asia, trying to get a read on things. The economic stimulus that we heard about, of course, has gone predominantly into the public sector, I think, as Andy would have reported. Is it really going to have a material impact on consumer spending capability? I don't think we're really expecting anything huge there. It will, of course, build confidence. And that's what right now Chinese consumers need more than anything is the confidence to know that they're -- the state of the economy is all right. They're saving like crazy. They're actually putting money away. And that is an interesting trend because that's suggesting that they will -- when they do get comfortable, they'll go back to spending again. Right now, they're kind of just being cautious.

Thanks, Brooke. [ Julia ]?

It's great to be back and to see you guys revitalizing the company. I'm Julia from [ Carver New Zealand Investment Limited ], by the way. It's great to see that you have refocused your strategy on wellness and -- the wellness as a main strategy. I'm just wondering, you've also talked about growing your product range. What sort of the marketing approaches do you think that you would deploy to get that message out to the consumers, whether it's in the United States or it's in China?

Yes. If I can answer that one. Julia, thank you very much for the question and great to see you again here, thank you, back. Yes, look, I think it's through the market adjacencies. Comvita Honey -- Manuka Honey in itself is already recognized as a health and wellness product. Our consumers take it for that reason, predominantly for gut health-related issues, but also as a general immune support product. So we're already in that space. Unfortunately, with the commoditization of this category, which we're seeing through this multiple brands, multiple labels, super discounting, appearing in grocery channels and large volumes, that's not helping that value proposition. So as leaders, we have to lead and show the way for consumers so they really make that connection. So we do that through the quality marks that we offer. We make sure that we are predominantly selling higher UMF honeys so that they're efficacious and that they can actually deliver a benefit to a consumer. And then we're also doing things to understand the science and the research, like Lepteridine honey, for example, so that we can actually ensure that when we deliver up a product, that's actually going to have some benefits. It's also through the adjacencies, the innovation that we can do around positioning products, some of the things we're doing in Asia like probiotics, so probiotics with honey, ginseng with honey. These are the sort of positionings that really show consumers and direct them towards what the category actually offers up. And it's very clearly in that health and wellness space and not an FMCG grocery.

Just to add a small point on the U.S. We are working with Sprouts as one of the major U.S. retailers on a range of innovative product formats, new ideas, new positionings to bring some life and excitement to the Manuka Honey category and that has been very successful. We're grateful to them for leaning into this. They're very excited.

That's great. I just came back from the U.S., and I think there is definitely a growing trend in understanding and recognizing the wellness presented by Manuka Honey. But the knowledge of that amongst the consumers varies greatly. So is there a plan to team up perhaps with research institutions to really systematically approach the topic of the wellness of Manuka Honey and able to advocate that to consumers?

There's -- in particular, are we a small company in the U.S., massive market. We're working very, very closely with our retailers. We regard them as being a very important conduit to the consumers and to explaining the value proposition to consumers through retailer positioning, retailer communication, our online communication, which, as we said, is going very, very well. So those are the tracks. It's harder to communicate direct to consumers as a very small company.

Jackie -- I think Dr. Jackie Evans is dying to answer this question if we give her a chance. Yes, please.

I'll just cover in here. So specifically to answer the question about working with researchers on the health and wellness benefits of Manuka, so, yes, we have a very extensive range of world-leading researchers that we work with, both here in New Zealand and overseas. And we've got research programs ongoing in the gut health space, as Brett has talked about, but also in antimicrobial resistance, atopic dermatitis. And we're always looking for the best researchers in the world to work with so that we can evidence the health benefits of Manuka Honey and our other ingredients as well.

Thank you, Jackie. Are there any further questions in the room? Yes.

With regard to honey stocks, it's a long-term thing, but are they currently increasing or decreasing? And also a comment on health products. Some of the recent pharmacies, they like entering into a supermarket with tens of thousands of products available. They're all after the health dollar. And that's all competitive people with your products. Any comments?

Thank you very much. Two interesting questions. When it comes to stock, if I took it the nation's stock of Manuka Honey, we believe that is in decline because production has come back so much that beekeepers unfortunately, they don't really have a sustainable economic model right now or very few of them do. So production has really been put on pause. So there will be a work through of that this mountain of honey or this glut of honey will find its way through the system. Unfortunately, it creates a lot of damage as it's been pushed out to the market and discounted and fire sold -- sold through fire sales. So look, that will come down. If it comes to our stock and inventory, that's also coming down. Really, we pushed a lot of product out to market. We had a lot of supply disruptions through the COVID period. We made sure that we kept high safety stocks and we were preparing for growth that we saw through '22 and '23 in particular. So we probably have too much inventory or more than we really need in market and available, which we're working through that as we speak. So we'll make good progress, and we are making good progress on reducing that. But we need to start thinking about the future and we need to start to be ready to be back into the market, which presents some opportunities. As far as you're talking about the health and wellness space, you're absolutely right. But we're firmly of the belief that consumers today are looking for more and more to get medicine through their food. So it's -- food is my medicine is kind of the belief that we believe that we want to pursue. So the notion of functional foods, to take it to a whole another level, Manuka Honey is already a fabulous functional food. We just got to tell that story in a better way. But there's lots of other examples, olive, propolis, of course, and a whole lot of other range of products that we can draw upon and use as ingredients in our products.

And we are -- when I think of your comment about Chemist Warehouse, for instance, we are privileged to have Jackie and her team and to have a very solid science background to our product, which we can stand behind. Jackie, is there any further questions online?

There are no further questions online.

Thank you. Are there any further questions in the room?

Two more.

[ Ronnie Butt, shareholders ] and thank you for today. Brett, you mentioned that you joined the company in 2005.

Yes.

So thank you for giving your close to 20 years to the company. Yes. Remember, in 2008 you joined not for long, our share price dropped down to $0.80 and then 8 years later, you and your team bring it to $12. So without you around, how are we going to do it again? That's the question.

Wow, no pressure, right? Thank you, Ronnie. And if anybody wasn't aware, Ronnie Butt was the family member of the Butt family, which became part of the Comvita family through an acquisition of Green Life, which was the distributor of Comvita in Hong Kong. So thank you very much, Ronnie. Yes. Look, that's humbling. Thank you very much for saying that. Look, of course I've 20 years of passionate energy and my DNA is written into this organization from top to bottom. I'm definitely up for the challenge. I don't know if I've got all the answers. I'm not claiming to be the messiah that's going to bring the solution to everything. And I've got a very, very capable team of people that work with me and we're going to make sure we do everything within our power to get back to those glory days.

Alan, thank you.

Look, I just wanted to make a couple of comments as well before I ask a question, which is fairly basic. Can you hear me okay? I'm just -- I'm Alan Bougen for my sons, one of the co-founders with Claude Stratford back in the day. And we'll tell those stories one day in a better way. But look, I just wanted -- I'm just reflecting now on a couple of things. One of them is that Comvita is just such a classic kind of story in the sense that we're here in a population of 5 million people. We've been very ambitious with addressing global markets one by one, not just a scattergun approach, but we've taken the approach that we want to go much deeper in the markets that we have considered that we have the potential to grow in. And with that comes all the issues around gearing up capital, human resources, et cetera, et cetera. And then you find yourself in a situation, as we have recently, where we have a very large player in the U.S. who's very attracted to our product. And we were able to successfully negotiate some very -- a very large piece of business with them. So with that, of course, it comes another level of gearing up everything, laboratories, quality, audits, people, capital, the whole thing, and it all costs a lot of money. And then within a very short time -- well, not a short time, but we actually lose a part of that business purely on price. And that's the world we live in. So unfortunately, I often think of Comvita had grown up in the U.S., for instance, most of you probably know the Burt's Bees story. Young girl meets Burt on the road. Burt tells her about his great honey products. Burt's Bees sells 10 years later for $500 million. It's another story. But because the fact is they've got a huge domestic market right on their doorstep. Here we are down the bottom of the world, trying to address these markets and grappling with the ups and downs of what it takes to actually be there, to grow and to stay there. And so look, I've got a -- it's a sad meeting today. There's a lot of sadness in the room. We've had some -- we've had a very tough run. And I'm as disappointed as anybody. But I'm optimistic that we're going to get back. I can remember the days walking down the streets in Te Puke when the kiwi fruit industry was on its knees. There were at least 12 exporters all set up down the road and they're all undercutting each other out in the international market. And of course zest -- the approach that was taken with a single desk, of course, was a fantastic strategy, and it's been wonderful. We're actually out there fighting sadly with a bunch of New Zealanders, and we're just -- those people are absolute price takers. So they're desperate to take anything. That's what we're faced with right now. It will wash out. I'm sure that we won't go to a single desk. We don't really want that. Well we think we can establish our leadership and we can get back there. I just had a question. So that was just really my couple of thoughts and I suppose some encouragement for you. I just had a question around the forests, Brett, and the opportunity to actually extract some value out of that via carbon credits. And I went through the climate report. It was an unbelievable read. I don't -- I think I understood about 20% of it. And I know that's a lot, -- there's a lot of compliance stuff in there, but we've made massive strides in that regard. So are we going to get to the point where actually -- rather than just, I guess, we're doing mitigation at the moment, but are we going to get to the point where actually we're going to deliver some value back in terms of revenue from carbon credits? I'm going to allow Bridget to answer that. She's our in-house Board climate change and GHG expert.

Yes. And we have Aaron here, who is the author of the climate statement, if you would like to speak in more detail. But yes, of course, as we are the owners of the forests, we benefit from the carbon credits that are generated. And as you might know, there's been some changes in the ownership and in the way that these carbon credits are recorded. And so you'll notice some changes in the climate statement in that regard.

[indiscernible]

No, the ones that we do. Yes.

And even the ones that we don't own, we have an arrangement around sharing of carbon credits. NZUs if they're traded through ETS, we can benefit from those as well.

Excellent. Thank you. Thank you for the question and for the comments. Jackie, anything further?

Nothing further, no.

Is there anything further online -- in the room, sorry? Yes.

I'd like to congratulate you on your annual report. It's one of the most comprehensive and easily understood ones I receive each year.

That is very kind. Thank you. And I entirely -- I'm sure we all agree, it's extremely pretty as well as being very, very honest and very direct. So hopefully, you enjoy reading it. I think it's time to bring the questions to a close. And thank you, Brett. I'll just -- do you want to say anything?

No, just to say thank you, everybody in the room, and it's so good to see both some mostly familiar and old friends back here in the room. It's so good to meet in person. I really appreciate it. And to all of those people online, thank you also for dialing in and spending some time with us today.

Great. So thank you for attending today and for your continued interest in Comvita. As we close, I really do want to acknowledge the very substantial contribution of my Board and in addition, in particular, our CEO, Brett Hewlett. As we have said, Brett has stepped forward at this time after a long history with the company to take up the CEO role again, which is driven by his absolute dedication to Comvita and to the Manuka Honey industry. The Board, on your behalf, offers Brett, its very sincere thanks for being available to bring his considerable knowledge and background to bear at this time, to roll up his sleeves and to lean in to build a better future for us all. I also want to acknowledge my Board colleagues who are without doubt as capable and dedicated a Board as I have ever worked with and I am extremely grateful for their dedication to the task at the moment. And finally, I really do want to acknowledge also the continued support from you, our many long-standing shareholders, who remain very steadfastly supportive of the company. I acknowledge the frustration of the share price volatility that we have experienced in the last year. But you can be assured that not one day goes by without your Board and management team working with single-minded determination to build a more robust future for our company, Comvita and for you, our shareholders. There being no more business, I would like to thank you all for attending and now declare the meeting closed and invite all of you attending to a light tea at the back. Thank you very much.

We'll just have a closeout [Foreign Language] from our colleague [ Nicky ].

[Foreign Language] So before we invite you to go and have something to eat, [indiscernible] been prepared today. So just giving thanks for that as well. [Foreign Language]