Comvita New Zealand Ltd

Kia ora koutou katoa, good morning, and thank you all for joining us today. I'm Bridget Coates, our chair of the Convita board. I'd like to warmly welcome you to this online meeting. We will provide you with an update on Convita's interim results for the six months ended 31st of December 2025. Today's presentation will be led by myself, our Chief Executive Officer, Carl Graydon, and our Chief Financial Officer, Mandy Tonkin-Stancy. I would also like to acknowledge my fellow directors who are in attendance, Mike Tsang, Chair of our Audit and Risk Committee, Bob Major, and Alfred Luke, representing Yawen Wu from China Resources. Yawen Wu and Greg Barclay send their apologies for today. Before we begin, I would like to wish those in our Asian markets a very happy Lunar New Year. Gong Ji Fa Kai. Computer is a global business with the majority of our staff based offshore and a significant proportion in Asia. Our team in this important region are working hard through Lunar New Year, a critical trading period for Convita, and we thank them for their efforts, innovation and passion that they are bringing at this time. It's been so great to see the innovative marketing activations and locally tailored products that have been developed for Lunar New Year launch in the market. Our connection to Asia remains an important part of Convita's story. The Year of the Horse symbolises energy, resilience and forward momentum, a fitting moment to reflect on the progress we have made in the last six months and on our priorities for the remainder of the year. I will start the session today with a high-level performance overview and recapitalisation update. Carl will then provide an operational and market update, and Mandy will follow Carl to talk to our financial performance for the half year and update on our full year forecasts. Then Carl will return at the end to give you an update on our strategy looking forward before we move to question and answer session. Before we step through the detailed results, I'd like to briefly frame the first half. The period reflects disciplined execution and clear progress in stabilising our business. We delivered against our first half objectives, which were returning to profitability, generating positive operating cash flow, and reducing both net debt and inventory. Important work has continued to strengthen the foundations of the business, building leadership capability, sharpening our strategic focus, and improving execution discipline. The company has also managed risk and strengthened resilience by shifting focus towards higher growth regions, while maintaining discipline in markets where conditions remain softer. The impact of these initiatives is clearly evident in the results the team will take you through today. Our full year FY26 forecasts remain consistent with the prior guidance that we have given you. Normalised EBIT of $14.3 million or $13.5 million pre-IFRS 16 as communicated at our annual shareholders meeting in December. This is, of course, subject to trading execution and market conditions, which we are monitoring closely. We're monitoring closely the key value drivers that underpin the full year result. Meaningful progress has been made over these past six months. Convita is moving in the right direction again. And in saying this, we may remain mindful of the work still ahead to fully restore our financial strength and to deliver a sustainable long-term performance. Today I'm very pleased to report improvements across all of Convita's key financial metrics. Revenue growth, profitability, cash flow, net debt and inventory reduction are all on or ahead of our targets. As you can see, they also show significant improvement relative to the first half of FY25. This result reflects decisive action, disciplined execution, and a clear focus on restoring financial strength. Driven by an experienced leadership team, which is committed to returning the business to sustainable growth and restoring shareholder value. Mandy will speak to our financial performance shortly. The recapitalisation of the company remains the top priority for the board. We continue to engage constructively with our lending syndicate regarding extension of banking facilities beyond April 2026, subject to completion of the recapitalisation. The board would like to take this opportunity to acknowledge the continued support of our banking partners. The recapitalisation process is progressing according to plan. With the board focused on its core objectives, which are creating certainty, ensuring participation for all eligible shareholders and minimising dilution. We have confirmed credible expressions of interest from both existing and prospective investors to support and potentially to underwrite the capital raise, including interest at pricing levels which are above the current market. This does include interest from an offshore strategic investor in the food and beverage sector to underwrite a capital raise at a share price of 80 cents per share and a quantum materially above the minimum 25 million, which is required to position the company appropriately. And that would provide the company with additional financial flexibility. The ultimate shareholding of the strategic investor would be determined by the participation of existing shareholders in the cap raise and may require shareholder approval and overseas investment office consent. The board is carefully assessing these various options alongside continued constructive engagement with the company's lenders regarding the potential extension of lending facilities. Given the state of the process, we are not in a position to provide you with further detail today. The board is progressing this work at pace, though, and will update shareholders as soon as is appropriate to do so, in line with our continuous disclosure requirements. Current timing for the recapitalisation is aligned with the April 2026 banking facility expiry. I would now like to hand over to Carl Graydon, Convita's CEO, to provide you with more detailed updates on the operational progress delivered and how our markets are performing. Carl, thank you.

Thank you very much, Bridget. Kia ora koutou, good morning, and gong shi whakai, happy Lunar New Year. It's a pleasure to be here today to present significant progress against our H1 priorities. Before I get into detail, though, I would like to firstly acknowledge the strength and passion of our leadership team and the dedication of our entire global team. The energy, focus, commitment and passion for this very special brand and business are the force behind the improvements we have delivered over the past six months. I'd like to reiterate what I said at the ASM in December. Consistent delivery of results is how we earn and maintain the trust and support of our shareholders and stakeholders. We have continued to build on the hard decisions and foundational work undertaken over the past 18 months. We've worked with ongoing focus and discipline and we are on track to deliver against our FY26 priorities and financial targets. Our debts and inventory levels continue to fall and are now further reduced from the time at the end of the financial year. While doing this, we've implemented new sales strategies in the Chinese, American, and Southeast Asian markets, and we are seeing these benefits flow through. We've continued to maintain our premium positioning, supported by a focused innovation pipeline and strengthening of our global brand framework. At the same time, we've continued to deliver locally relevant innovation and new products and offerings. We'll talk about a few of these examples shortly. We are delighted with the results from our club retail partnership in North America, and we are also continuing to work on how we diversify risk across our key markets, customers, and economic cycles. Having the right leadership capability and experience has been our key priority. We have our Chief Financial Officer, our Chief Operating Officer and Chief People and Culture Officer in place with further announcements for key positions shortly. The benefits of cost savings initiatives we started in 2025 are continuing to flow through into the 26 results. And we are continuing to work on optimizing our business model, our operations, and improving our risk management. And last, but definitely not least, we are working hard and continuing to see the benefits from lifting our global connection, alignment, and engagement. I'm very proud of our dedicated team and how they continue to lift their performance while still being very realistic and grounded that this is an ongoing journey. I'll now provide an update on the progress, challenges and what our key focus areas are in some of our key markets. Within the Greater China region, China continues to be a challenging market with mixed results and uneven economic performance. While GDP grew in 2025, mainly through strong exports, there is still relatively weak consumer confidence and sluggish domestic demand. Convita continues to maintain its number one brand position and lead in China online channels, despite ongoing weaker demand and commoditization and lower UMF grades. We continue to outperform at the higher UMF end of the market. While our sales are down, we are starting to stabilize our net contribution even with the challenging market environment. I need to be very clear that this has been no mean feat and is a testament to the strength of the team in market. We continue to work on differentiating our brand and leveraging innovation beyond honey in a jar to a position in the category and put ourselves on a new growth curve. We remain focused on reducing exposure to economic cycles and particular markets. We are also exploring volume opportunities in large-scale retail and online and continue to ensure our existing channels and store footprints are optimized to deliver maximum profit. In North America, as previously mentioned, it is absolutely clear that they are now the world's largest manuka honey market and Convita has been part of this growth through its club retail relationship. This relationship has delivered significant sales growth and also an increase in net contribution for the half year. While the net contribution percentage has declined, this excludes the positive benefit to manufacturing efficiency we've gained in New Zealand from the increased volumes. In FY26 H1, we have also seen strong market growth in the natural retail channels. Aggressive e-commerce competition and relatively low consumer awareness and household penetration are challenges, but we are seeing these as opportunities. Alongside our strategy to maximize these opportunities, we are actively exploring other large retail and product format opportunities to further strengthen Convita's market position. Winning in the large North American Manuka honey market and doing this profitably remains top priority for the team and we are excited by the progress seen to date. The performance in our other markets across Asia, Australia, New Zealand, UK and Europe has been mixed, but overall it has improved from H1 2025. Sales, net contribution and net contribution percentage are all up across all markets apart from ANZ. Our Singapore performance has significantly lifted through a focus on operational improvement and this key market continues to provide a gateway to further growth in Southeast Asia. Business model improvements and cost reductions have also improved performance in other markets. We definitely see intensifying competition in oil markets and our ANZ market remains challenging. The Asian health channel continues to underperform due to a heavy reliance on China's economic recovery, although we have seen some growth return due to increasing tourist traffic. Moving forward, we will continue to focus on our channel optimization and look for strategic and targeted geographical expansion opportunities. Before I finish, I would like to share with you some recent examples how we are using innovation informed by consumer intelligence and market trends for brand differentiation and growth. Lozenges are a key growing product group for Convita and serve an important role in recruiting new consumers to our brand, given the affordable price point. Market access for lozenges is also relatively straightforward, enabling launches to be scaled across multiple markets. We have recently added two new fresh and modern flavors to our Pure Manuka honey range, Manuka with Yuzu and Manuka with Ginger. Sales for the total range, including the new products, are forecast to grow over 60% this financial year. Locally relevant innovation is key. As you know, we are currently in the Lunar New Year period in Asia, a key gifting occasion driving sales across many of our markets. Every year we continue to lift the bar with contemporary and aspirational gift boxes and supporting marketing activation. This is an image of one of our beautiful gift sets and boxes for the celebration this year, which is the Year of the Horse. I'll now hand over to Mandy, our CFO, to provide a financial update.

Thank you, Mandy. Good morning, everyone. We are pleased to have delivered on our H1 objectives with a solid first half year performance. Strong US Club retail wholesale channel performance drove improved volume, sales, profitability and supported overhead recovery. This strong performance offset sales challenges in the US Club retail digital channel and ANZ markets. Performance across other markets largely balanced out overall. Ongoing disciplined cost management and the flow through of cost out initiatives in the financial year 25 have reduced our operating costs compared to prior periods. Specific examples include delivering procurement formulation and freight efficiencies, streamlining leadership, simplifying our organisational structure and reducing staff numbers to align with operational realities and strategic priorities. Cost savings have been achieved in the first half of the financial year, notwithstanding the inclusion of transaction costs of $1.4 million in our half-year 26 results. While trading conditions remain mixed across regions and channels, EBIT performance has stabilised overall, reflecting the diversification benefits of the US club retail channel. During half year 26, we have further reduced our inventory and net debt levels. Excess inventory has been an issue for Convita, and we have now completed our inventory normalisation programme, reducing inventory from prior levels of $145.8 million at December 23, down to $68.3 million at 31 December 25. In addition to delivering our half-year operating profit, improved cash conversion cycles from 484 days to 239 days, primarily from excess inventory sell-through, enabled us to reduce our debt further and faster than we had planned. Further working capital improvements are not expected to the same level in the second half of the financial year. At the first half of the financial year, our net debt was sitting at $48.7 million, a further significant reduction from the net debt of $62.4 million at the end of financial year 2025 and $81.6 million at the same time last year. As Bridget mentioned earlier, our normalised EBIT forecast for the full financial year remains at $14.3 million, or normalised EBIT pre-IFRS 16 of $13.5 million, as shared at our ASM in December. While we've had a solid H1, important seasonal and commercial drivers, which we signalled previously to you, sit ahead of us in our third quarter. As such, we are maintaining our full year guidance and we continue to monitor, manage and reassess these factors as they are delivered. Headwinds from ANZ and FX are challenges which are currently being offset by solid performance in other markets and areas, We expect this to continue. A key driver of our H1 performance was the demand and sell-through of our club retail partner in the USA. As already mentioned, this is currently in line with forecasts. The Manukau Heights honey season, like our summer, has been mixed, not as settled, calm and warm as we would like. We'd forecast for an OK season, and this is now playing out with yields likely to be in line with our baseline assumptions. The Lunar New Year sales period is well underway, but results are not yet known. Our China and wider Asian team are supporting this with comprehensive promotional plans and are focused on managing this key sales period for maximum profitability. Finally, given that China and the US experience golden flu season and several key trading and gifting moments in H1, our H2 outlook reflects the seasonal cadence of our business. While there are still some uncertainties, I'd like to reiterate the comments I made at the ASM. What gives me confidence in our future is the tangible progress that has already been made, as demonstrated by our financial metrics and the clarity on our key drivers. We are clear on our priorities and the further work required this year and moving forward to enable sustainable profits and deliver increased value. I will now hand back to Carl to talk to our strategy and growth opportunities.