CHAIRMAN’S ADDRESS
At last year’s ASM, I outlined our recent history from 2005. To recap, this involved transforming the business so that it became a profitable global marketer of high-end natural products from New Zealand through:
• Diversifying our product mix away from a high dependence on sales of ‘manuka honey in a pot’, and
• Piecing together a comprehensive global distribution infrastructure.
Several major acquisitions were made as we refined how we operate around the world.
For the year ended 31 March 2010, we produced a strong turnaround result of $5m after tax profit and a long awaited resumption of dividends totalling 8 cps fully imputed.
Notably, we also reduced net borrowings from $30.3m to $11.5m from retained earnings, inventory reductions and the sale to Derma Sciences of the global rights to the Medihoney range to the professional market.
The Board acknowledges the outstanding effort made by the Executive to produce such a result in what were very challenging economic times.
Since balance date, we have concluded the long standing dispute with WaikatoLink, the commercialisation arm of Waikato University. Although we won our case under the Fair Trading Act regarding misleading conduct in the negotiations leading up to the purchase of IP from WaikatoLink, we were still required to pay $1m of the $2m outstanding. This does not impact profits but does have a balance sheet impact as we were required to write a cheque to WaikatoLink – this trying issue is now behind us.
This year, we have been involved in another case defending one of our key medical patents in the United Kingdom. This case we expect to win but as you will know, there is a high cost of time and money which will fall in this current half year.
While we have had two such cases in the last year, our approach is always to sort disputes out by way of negotiating and if necessary, mediation. However, when it involves intellectual property or patents around key products, we will be required from time to time to go down the legal route.
It is too early to make a forecast of profits for 2011 except to say it is already clear that the market environment at this time is generally more sluggish than we had anticipated. As was the case in 2010, our result will be weighted heavily to the second half of the year and the Northern Hemisphere winter season.
The first 3 months of this year have been impacted by a slower start to the Southern Hemisphere winter, no repeat of last year’s ‘swine flu tailwind’ and the continued resurgence of the NZ dollar against all currencies and in particular, the UK pound where it is extremely difficult for Comvita to ‘turn a profit’.
I would now like to hand you over to Brett Hewlett, our CEO. Brett’s presentation will include an outline of the year just been and an outline of the direction of the company.
We are happy to take questions at the end of Brett’s presentation. Over to you Brett.