On Target For A Sound Financial Result

Unlisted Securities Market Issuer On Target For A Sound Financial Result

Complementary health products market leader and Unlisted Securities Market issuer Comvita New Zealand is trading well ahead of last year’s performance and expects to finish the year with a sound financial result.

In his half-yearly report Comvita’s chairman, Bill Bracks, says an after-tax profit of $604,000 (for the six months ending June 30) is pleasing in view of the uncertain trading conditions that have prevailed.

“The first six months of 2003 have been characterised by a series of extreme events that included the Sars virus, the Iraq war and the Pan Pharmaceuticals product recall,” says Bracks.

“The impact of these events has seen a worldwide decline in tourism and a resulting negative impact on sales in our own tourism-related business. This is especially true of manuka honey sales.

“Comvita has weathered these extreme events very well. Sars created a big demand for our propolis range of products resulting in significant offshore sales, especially in Hong Kong and Taiwan. Undoubtedly, the longer term effect of this will be positive Comvita brand recognition in those markets and wider recognition of the beneficial properties of our propolis range.

“Flow-on effects of the increased demand for propolis have improved the performance of (part-owned subsidiary) Nelson-based Extracts New Zealand Limited.”

Bracks says Comvita’s consolidated net profit before tax and equity earnings adjustment (at June 30) was eight per cent above budget and 36 per cent ahead of last year’s standing at $1.08 million. Fixed costs to sales ratios were maintained at budget.

“Favourable exchange gains from long term forex purchases helped to produce an above budget profit. However, equity accounting losses from Extracts New Zealand totalling $30,000 and provisions for a New Zealand Colostrum Gold write-down of $80,000 have affected the final figure of $604,000 after tax profit which was $53,000 below budget.

“The Colostrum Gold write-down was our way of prudently dealing with the 17.5 per cent stake we took in that company. Such is the potential for colostrum that Comvita’s management may negotiate for a controlling stake in Colostrum Gold.”

Bracks says there have been some major positive developments for Comvita this year. He refers to the 2003 manuka honey season, which he describes as nothing short of overwhelming, and Comvita’s winning the ‘Consumer Products Exporter of the Year’ in the Trade New Zealand National Export Awards.

“Offshore, Comvita Japan and UK performed extremely well. A regional manager has been appointed in Hong Kong and our distribution system in Australia has been restructured to prepare for the appointment of further sales personnel in that market.”

Bracks adds that Comvita is progressing its plans to list on the NZX’s new AX market.

“The procedures and disciplines for such a listing are being adopted now,” he says.

Comvita will pay a dividend of 2.2 cents per share based on the half-yearly result, with a record date of August 29. The company has also adopted a dividend reinvestment scheme to benefit shareholders.

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