AGM 2021

Oct 19, 2021

Slides

Tena koutou, tena koutou, tena koutou, tena koutou katoa. Morina and welcome to Convita's Annual Shareholders Meeting. My name is Brett Hewlett. I am the Chair of Convita Board. Today, we are very pleased to welcome you as online participants through our virtual meeting platform provided by our share register Link Market Services. During this virtual meeting, you can vote and ask questions online. I'll provide you with further instructions as we progress through the meeting. If you encounter any issues, please refer to the virtual Annual Meeting online portal guide or you can find the helpline on 800-200 220. I'd encourage you to send through your questions as soon as you can. This will allow us to answer these questions at the appropriate time of the meeting. To ask a question, you will need to click Ask a question within the online meeting platform. Select the item of business, type in your question and click Submit. To some formalities. The company secretary has confirmed the notice of meeting has been sent on time. We have a quorum present, so I declare the Convita Limited 2021 shareholder meeting open. The financial statements for the year ending 30 June 2021 and the auditor's report for the period are available under the Investor Centre of our website. The annual report was made available on our website on 15th September and hard copies are available either through Link Market Services or by contacting our customer experience team. They can be contacted on 800 504-nine 59. We're very proud of our Annual Report. It's a comprehensive report with something for all stakeholders. For you, our shareholders, when reading this report, you'll gain an appreciation for everything that Convita is engaged in across the broader environment, social and governance spectrum. Apologies today have been received from Yawen Wu, Alex Xin and Guanping Shu. I'd like to acknowledge the presence today of our auditors, KPMG, our bank, Westpac and of course most importantly our co founders, our co founder Alan Bowden and family members. To the agenda, so I'll take you through what we do. I want to thank you all for joining us today. This is the first time that we've run a virtual ASM. While perhaps not exactly ideal, I am hoping that we can still provide the sort of engaging and informative session that many of us have come to expect from a Convenience Annual Meeting. Hopefully by this time next year we'll be able to meet again in person, while still retaining some of the access that makes this virtual meeting a little more inclusive for the growing number of long distance shareholders. After my address covering the performance highlights of our last fiscal year, I will hand you over to our CEO, David Banfield, who will take you for a deeper look inside Convita's operations, our strategies, how we are engaging with our multi stakeholder communities and lastly, providing some insights into our future ambitions. As we go through these two presentations, make a note of any questions you may have. As mentioned earlier, you can submit these questions via the online meeting platform And these are communicated to us by our online moderator, who is Tracey Brown today. After presentations, we will cover formal resolutions and finish the general business where we will respond to any questions raised during the day. Let me start by introducing my fellow directors. Luke Bunt is an Independent Director and also chairs our Audit and Risk Committee. Luke has been on the Board for 7 years. Sarah Kennedy is an Independent Director and shares our Safety and Performance Committee. Sarah joined the Board 6 years ago. Bob Major is an Independent Director and joined us at the end of 2019. Guangping Shu was also appointed to the Board at the end of 2019. Mr. Zhu is the founder of Convita's establishments in Mainland China more than 15 years ago and hence has played a key role in ensuring Convita's brand success in this most exciting focused growth market for Convita. Mr. Zhu also represents the interest of our largest shareholder Liwan. Recently, we had 2 directors step down from the Board Independent Director, Paul Reid and China Resources Nominated Director, David Cheng. I want to take the opportunity to thank both Paul and David for their commitment and service of the company over the past years. At the beginning of this month, we appointed 3 new directors to the Board all who will be standing for election at this annual meeting. Bridget Coats is an independent Director, Yawen Wu nominated from China Resources and our very own David Banfield as Managing Director. On the assumption that all of the nominated directors are elected to the Board today then we will have a Board of 8 with a majority independent, 2 strategic shareholder representatives and a Managing Director. Your Board has determined that we will pursue a policy of continuous review and evolution of Board composition to best suit the current and future needs of the business. Changes will be timed to ensure continuity and institutional knowledge and at the same time ensuring that we remain agile and adept at making balanced decisions in an ever increasingly complex multi stakeholder world. While the Board's primary accountability is to the company and to our shareholders, we know that consumers increasingly are making their purchase decisions based on a brand, social and environmental stance that governments, both local and international, can intervene if they feel the business community is not aligned with their agenda. And of course, we can see firsthand in this highly competitive employment environment that highly skilled and talented people are increasingly taking into consideration an organization's social, cultural and environmental stance when making their employment decisions. We recently carried out a refresh of our Board charter to more accurately reflect our collective commitment to delivering a high standard of governance in the areas of environmental, social and core governance functions. This is not just some form of woke comment, but a restatement and clarification of what Convita does at its core and why. We are grounded in the founding principles and values of the organization. Convita were pioneers in the honey and bee products industry since being founded in 1974. Our story began with an unlikely partnership, Alan Balger and Claude Stratford, generations apart, worldly and progressive in their thinking. They were united by a belief that food is the best medicine and that nature has the answers with deep principles that were ahead of their time, a belief in community and caring for one another, a deep respect for nature and the environment, always seeking and sharing knowledge. Our vision is to deliver world leading standards for our team, for our consumers, our shareholders and our planet, contributing to a world where bees and people can thrive in harmony. At Convita, directors take responsibility to act as guardians of these founding principles and our vision in a sustainable way for the benefit of all stakeholders. We take seriously our environmental, social and governance responsibilities and we act accordingly. In so doing, we will make balanced choices for investment, balanced choices in how we spend our time and resources and balanced choices in terms of how we think about success. We will know we are succeeding in our endeavors when we are achieving all 6 of our long term goals in a sustainable way. We will be a positive contributor to reducing the impact of global warming. We will be making fair and sustainable operating profits, delivering long term shareholder value and providing competitive rates of return for invested capital. We will have adoring and loyal consumers of our brand. We will be the best employer attracting and retaining the best talent. On that note, let me start with our review for the year gone with a mention of our team. Perhaps it's a cliche to say that our most valuable asset is our people, but that does not change the truth of the statement. Itangara, itangara, itangara. Much has been achieved this past year and none of this would have been possible were it not for the Herculean effort, tenacity, commitment and incredible resilience in the face of adversity that has been shown by our very own team of 552. On behalf of all shareholders, I would like to thank the staff at Convita for their efforts. Today Convita employs 552 people spread across 8 countries representing 26 nationalities. Proportion of staff in customer facing roles is currently 60%, up from 38% before our transformation started. This is testament to our refocus strategy and in market consumer facing business model. In our financial year 2020 annual report, we set team goals, which we are pleased to report have mostly been achieved. Our target was to have 40% of female executives reporting to COO globally and we reached 50%. We maintained 100% living wages for New Zealand based employers. We reached our target of 100% equal pay for equal work globally. We were down by 20% on a target of 75% of New Zealand vocational development supporting women, Maori and Pasifika and are hopeful our apprentice scheme will assist us with reaching that goal this year. We've made good progress in restoring gender balance and diversity at both Board and Executive levels. Health, Safety and Well-being is a priority. We are very pleased to report positive gains in all areas of health and safety reporting. In particular, we saw total injuries fall by 24% and motor vehicle incidents fall by 54%. Very importantly, we saw the reporting of near miss incidents more than double. High reporting of near miss indicates a good health and safety culture that is ingrained in the business. Despite the significant pressures the organization has been under this year, it's encouraging to see that we've held a high level of staff engagement. However, the lasting impact of COVID remains of ongoing concern. David will talk more about this in this presentation. Our value of kaitiakitanga, meaning guardianship, has been integral to our thinking since Alan and Claude founded Convita 47 years ago. We continue to invest in R and D to develop more sustainable practices for reforestation programs and beekeeping. We share this knowledge through our partnerships with organizations such as For the Love of Bees, Saving the Wild, The Himalayan Trust and others. Trials over the past few years have enabled us to achieve organic status for our Hawke's Bay, apiary operation, a first for New Zealand beekeepers on this scale. Recently, we were delighted to discover a growing population of 22 kiwi within our Makena Manuka Forest. This has sparked an accelerated predator control program and a protection project for kiwi and phio, an endangered species of small blue duck in the area. Last year, we shared with you our Prime and Sena wound care products applied to helping saving the wildlife caught in the Australian bushfires. We've been able to continue that good work with helping harmed elephant and rhino in Kenya and orangutan in Borneo. In our annual report, we announced the launch of our Harmony plan, which provides a framework for our partnerships and social impact initiatives. Key outcomes. We are targeting 1% of EBITDA to global community partnerships, a tree planted for every pot of honey, manuka honey salt, 1,000,000 bees saved every year globally, carbon neutral and circular economy. David will explain more during his presentation. This last year another 3,500,000 trees were planted bringing our total to 10,000,000 and counting. To support our strategy to become a net positive sequester of carbon by 2,030, we have been working with Thinkstep ANZ to develop a comprehensive greenhouse gases inventory for all of our New Zealand based operations. And at first cut, we are already net positive, but this excludes the majority of our upstream Scope 3 emissions. This is still to be validated and aligned with our forward planning on planting and ongoing efforts to reduce our global operating footprint, but so far so good. In FY 2021, we delivered reported NPAT of $9,500,000 up from a loss of $9,700,000 in the prior year. Notably, we had no non operating adjustments to report. We reported EBITDA of $25,500,000 up from $4,200,000 last year. This turnaround was made especially significant because at the same time we increased our marketing spend by more than $8,500,000 dollars We further reduced debt by $10,900,000 based on strong net operating cash flows of $24,800,000 Overall, we made very good progress last year. I feel very comfortable that the company is on a stable footing. We have a solid balance sheet with minimal debt. We have strongly trending sales in our target gross markets of China and the U. S. And the decline in Australia and New Zealand from within the Daigo channel appears to have bottomed out. Earnings were at the top end of our guidance and continue to trend positively in spite of a significant rate of investment in building our global brand. Perhaps most pleasingly for our shareholders, there was a 35% gain in total shareholder returns and dividends have been restored. Another important milestone was the building of a new leadership team. I'd like to thank David Banfield and his team for the many personal sacrifices they've had to make in order to help steer the company through and out of troubled waters. We have set a course towards a more prosperous and sustainable future. Let me introduce you to the team. David Banfield, our CEO, who you will hear from next Nigel Greenwood, our Chief Financial Officer Andy Chen, Regional Chief Executive Officer for Asia Holly Brown, our Chief Purpose and Transformation Manager Sarta McNamee is our Interim Chief Customers Officer Tracey Brown, Chief Operations Officer and also our moderator for today's meeting Nicola O'Rourke, our newly appointed Chief Digital Officer Doctor. Jackie Evans, our Chief Science Officer Adrian Barr, Chief Business Development Officer and Corey Blick, our General Manager for North America. As discussed at our annual meeting last year, this was the year when the rubber needed to hit the road. We have returned to profitability, reduced our debt and extended our leadership position in key markets around the world. We have proven our unique business model is adding value, focused on being closer to customer and consumers around the world. None more so than in China where our market presence has allowed us to accelerate where others with an over reliance on the informal Daigou channel have been severely hindered in their progress. There are still significant opportunities to further extend the business to realize the full potential of Convita and all stakeholders. I hope you will join us again next year to hear more. I'll now hand you over to David. Perfect. Many thanks, Brett. Good morning, ladies and gentlemen, and welcome to the Convita team and fellow shareholders gathering online. As Brett said, in a chapter of innovation and digitization at Convita, it's perhaps apt that today we hold our first virtual ASM. I'd like to start today by thanking and acknowledging the incredible amount of hard work and commitment from the global Convita team. The last 20 months have been pretty relentless even without the impact of COVID with our absolute focus to set Convita up for long term success. We have made and continue to make some pretty tough calls to ensure that by the time we get to the end of this particular chapter in Convita's rich history, the end of 2025, that we've put in place the belief, the foundations and the process to set Convita up for the next 50 years. Later today, I'll share our Carbon and Harmony plan. These leading and progressive policies serve to future proof Convita and enable us to evidence our differentiated and unique business model to our consumers around the world and also highlight some of the fundamental differences in our model and standards to our exporter competitors. You can see on the screen behind me the front page of our FY 2021 Annual Report. I hope you find this report as beneficial and clear as our FY 2020 Annual Report, which incidentally won best Traditional Annual Report in Asia Pacific at the recent ARC Awards and later this month goes to the World Awards in New York. Your feedback on last year's report has encouraged us to go further in this report and also give us even more disclosure on both strategic and operational focus, including a long term business model. As always, any feedback, good or bad, is appreciated. Before I talk about the FY 'twenty one result and our FY 'twenty two plans, I wanted to share an update on COVID-nineteen and its impact on our team and our operations. The last 20 months since COVID-nineteen appeared have been unprecedented, both in terms of how we needed to adapt to win, but also how we needed to connect with our global computer teams during periods when they were quite often isolated and in different stages in various countries around the world. Our primary focus throughout has been on the health and wellness of our team around the globe. We're pleased to say the team are all safe and well, though some family members have been affected by the pandemic. I am increasingly concerned about the impact of lockdowns on mental health of the team. In order to build connection and show that our team aren't alone, we've significantly increased communication, added confidential external support and continue to send out monthly care packs comprising various Convita products that help build immunity and equally to just show we care. I have to say that the team response in all markets has been and continues to be amazing. We're proud to be part of the solution for consumers around the world and see a strengthening of the longer term trend of consumers turning to nature and natural products for their health and wellness needs. As a company, we have strong beliefs that the best way for us to get back to some form of normality is if the team are vaccinated and we have introduced new policies and procedures to protect the whole organization, but have also sought to provide objective information to enable the team to make their own personal decisions. One of my personal core philosophies is better to act your way to a new way of thinking than to think your way to a new way of acting. This principle has been central to our turnaround performance at Convita and encourages the team to think and act like the global leader that we are. By creating an environment where we're encouraged and expected to try new things, we can iterate and reiterate at speed. Long gone are elongated discussions about theoretical options and outcome. We prefer to get to a considered hypothesis and then test and learn at speed in order to get to an action driven optimized position. There's a long way to go, but this philosophy will help us overcome the fear of failure and keep us focused on constant innovation and transformation to meet changing consumer needs around the world and keep Convita as the global leader. It will also help us differentiate between exploration, looking at global dynamics outside Convita and applying them within and exploitation optimization of existing and core competence. Over the course of the next 20 minutes, I'll share our progress on our 3 point plan to stabilize performance, transform the organization and build long term resilience and growth. I will also share details of our 2,030 Harmony Plan that explains the type of organization we aim to be in a multi stakeholder world. I will also share our FY 'twenty one financial performance and give a brief update on trading performance in Q1 as we shared on NZX last week. During last year's Annual Shareholder Meeting, you will have heard me use the word focus over 40 times in my presentation. This focus remains as crucial to our long term success as it did a year ago. At the center of our focus are our discerning consumers around the world. By understanding who they are, what products they consume and why, in which markets and through which channels, we're able to stay relevant to their changing needs. By investing in science to enhance our relevance, knowledge and understanding and by investing in our brand to share our amazing founding story and ongoing scientific development, we again truly differentiate ourselves from exporters and are in the process open up the amazing benefits of Manuka and products of the Hive to an even larger audience. Finally, we reinvest in our vertically integrated supply and supply chain to further improve the quality of our products and our services. This combination sets us up for long term profitable growth. At Convita, we have a truly unique business model. Not only have we developed our own manuka cultivars in our own manuka forests with our own apiary team and our own extraction capability. We have our own quality and science facilities. We also have a highly capable team on the ground in markets around the world. We believe that by being closer to customer and consumer and by empowering our end market teams to act, we become a better business and a better partner. With our digital transformation project in full swing, we are learning more every day about our consumer needs into products and services and see the mid term opportunity to be a truly digitally data led business. A year ago, we shared our 3 point plan to stabilize the business, transform the organization and build long term resilience and growth. We've attempted to put a simple traffic light system over our progress to date and I'll now share with you where we are on that journey. In terms of stabilization, we've achieved results at the top end of our guidance range. We've significantly de risked the business by proving that our new harvest model that aims to produce 0 contribution to group profits in poor weather years and $2,000,000 to $3,000,000 of profit in good weather years has proven successful in FY 2021. Whilst we would not have wanted a poor weather year, we were able to show our ability to breakeven despite harvest yields being circa 50% below FY 2020. We have also completed our joint venture review and now have a clear and openly shared view of operating environment and companies over the next few years. In addition, we've continued to generate cash and pay down debt. Key milestones in FY 'twenty one were our half year earnings reflecting true seasonality of the business, our full year earnings and EBITDA of £25,500,000 It should also be noted that whilst our ANZ performance was materially down on FY 2020, we improved sales year on year by 17% in Q4 and also Q4 sales were 33% higher than Q3. Finally, we were pleased to resume dividend payments to shareholders as a result of our good financial performance. Looking forward, we aim to deliver single digit growth in ANZ. We aim to deliver FY 2022 earnings in line with our guidance of €27,000,000 to €30,000,000 EBITDA. We aim to improve our Team Net Promoter Score as we look to deliver on our promise to become the best employer. And we aim to deliver strong double digit earnings per share growth. Our transformation plan has enabled us to deliver double digit growth in our focused growth markets of China and North America, double digit growth in Manuka Honey sales, double digit growth in our digital channel sales now around 34% of our total sales, a 7 30 basis point improvement in gross margin, nearly $12,000,000 reduction in inventory and to reduce our net debt to $4,600,000 Key milestones were double digit top and bottom line growth in China and North America digital revenues up 17% to 24% of group and finally, us proving our ability to breakeven in our Europe, Middle East and Africa segment. Looking forward, we aim to deliver double digit growth again in China and North America. We aim to grow digital sales to 38% of total sales as accretive gross margins. We will continue underlying debt reduction and are aiming for strong double digit EPS growth. We shared we recently shared our long term 60%, 15%, 20% business model. This sets out our plan to deliver a gross margin of at least 60%, 15% brand investment and 20% EBITDA ratio by 2025. We recognize that this is a significant improvement versus the 13.3 percent EBITDA ratio that we delivered in 2021, but we have confidence in our ability to achieve this goal. In addition, we shared our 1st carbon footprint measurement and launched our 2,030 Harmony plan. It's also crucial that health and safety is at the center of our thinking. We are pleased that total recordable injury frequency rate reduced by 9% during this period that we see further opportunities to improve this. Looking forward, we aim to deliver an additional 150 basis point improvement in margin in FY 2022. We aim to become B Corp certified and will increase our investment in science with a new patent filed to showcase our industry leading capability and category understanding. We're really proud to share our 2,030 Harmony Plan with the Convita Fano and our multiple stakeholders. This plan is built on our belief that we can leave the world in a better place. It's a living document that will evolve as our business evolves. It is a way of providing clarity on how we believe we can become a positive force for good. It's an ecosystem approach, which means it's not linear, though initiatives can be interrelated. Our model is expected to iterate as we evolve and move forward, taking into account the needs of stakeholders in our ecosystem. It's meant to be aspirational, but some objectives can be realized sooner than 2,030 and we're able to we're aiming to achieve those as fast as possible. The Convita Harmony Plan is based on 3 core principles: treading lightly in forging a new leadership path in sustainability and circularity with this being net positive carbon by 2,030. Secondly, by embracing the science of nature. Our Thakapapa is sharing the power of nature and the Hive with the world. We seek to do business in a way which honors ancient wisdom and harnesses latest scientific learnings, while showing respect and care for our place as we restore balance in nature. Our third principle is strengthening our global hive. Convita has been caring for bees since 1974 and are supporting native forest regeneration in New Zealand. We aspire to be the best employer nationally and abroad with safety and well-being at the heart of our reinvestment in our team. We believe that the best interests of all stakeholders are served when the Convita team are shareholders and think and act in the best interest of all stakeholders. Our Harmony Plan sets out our commitment to achieve this. Finally, we're committed to investing 1% of EBITDA in support of better social and environmental outcomes. We invite you to join our mission to connect bees and nature to help heal and protect the world as part of our 1Hive movement. Finally, it wouldn't be an update from me without a Lao Tzu quote, who said, Do the difficult things while they're easy and do the great things while they are small. A journey of 1,000 miles must begin with a single step. We are pleased with the steps that we are making and are committed to deliver an incredible chapter in Convita's rich history by the time we turn 50 in 2025. In FY 2021, we delivered a reported net profit after tax of £9,500,000 versus a $9,700,000 loss in the prior corresponding period or PCP. We achieved a reported EBITDA of £25,500,000 which was improved by 21 point £3,000,000 versus June 2020 or over 500%. We delivered double digit top and bottom line growth in our focused growth markets of China and USA, double digit top and bottom line growth in Manuka product category, double digit top and bottom line growth in digital channels. Our gross profit increased by 7.30 basis points to 53.9%. We increased marketing investment by €8,700,000 or 56%. Business transformation plan is on track. We have a new leadership team in place. We're delivering strong GP growth. And in 18 months since initiating our transformation plan, we've delivered $12,100,000 of value add. Our SKU reduction program of 30% simplifies our business. And we've been able to reduce net debt by 10,900,000 to 4,600,000 with inventory reduction of 11,700,000 and operating cash inflow of 24,800,000 dollars As I shared earlier, we had a 9% reduction in total recordable injury frequency rate and we were pleased to record a fully imputed dividend of $0.04 per share. Overall, we are pleased with the progress, but it's definitely so far so good with us delivering 9,500,000 reported impact, the EBITDA result that I just shared, along with the results that you can see on the screen. As we previously shared, good management of business fundamentals and particularly management of working capital and cash is central to our long term plan. In FY 2021, we reduced inventory by £11,700,000 and net debt by £10,900,000 reflecting our ongoing focus in this area. UMF Manuka Honey share increased from 61% to 66% of our total business with Manuka revenue up 10% and as importantly, our more premium 10 plus Manuka improved by 14% year on year. Our ongoing focus on product level productivity continued with us reducing our SKU count by over 30% during the year. This helps us focus on SKUs that our consumers demand and on SKUs that give us the highest profitability. In addition, we get to reduce production and supply chain efficiencies in the process. Our focus remains on delivering growth in our focused growth markets of China and North America. China is the world's biggest honey market and North America the 2nd biggest. For Convita, Mainland China revenue increased by 31% in local currency as we extended our market leadership. In North America, revenue increased 23% in local currency and we're the fastest growing Manuka brand. Greater China represents nearly 50% of our total sales And whilst North America share of our total revenue increased to 13%, we recognize we need to grow faster in order to deliver portfolio balance and take advantage of strong broader category fundamentals. Complete a business model is truly unique and means that when executed effectively, we're closer to customer, closer to consumer, faster to act and able to empower quality teams in market in order to grow both market share and total addressable market. In the course of this year, we're pleased to have added more capability to our in market teams, funded by efficiencies we have generated elsewhere in the group. Through our collective efforts, we delivered strong top and bottom line growth in both China and North America. We increased our marketing investment by 56% to 12.6% of sales and continue to refine our unique Y Comfyta story and tell that story to consumers around the world. In order to give like for like performance, I'll skip this page on reported currency and focus on constant currency revenue performance. Our constant currency revenue increased by 11% to $96,500,000 in Greater China, by 23 percent to $27,200,000 in North America and by 30% to $26,700,000 in Rest of Asia. In Australia and New Zealand, sales declined by 27 percent to £32,100,000 due to disruption to the Asian health market and tourism and our strategy to leverage our in market team in China of around 200 people. In EMEA, our revenue was down by 25% to £5,200,000 dollars as a result of Brexit challenges in H2, meaning no product could be shipped to Europe. Looking at our net contribution by segment, our Greater China net contribution increased by 9% to $19,900,000 Our North American contribution increased by 7% to $4,700,000 Our Asia contribution increased by 52% to $6,400,000 with strong growth across all markets. Our ANZ net contribution decreased by 27 percent to £10,200,000 due to the revenue decline. Finally, we were delighted to prove that despite significant revenue headwinds, we were able to deliver a breakeven performance in EMEA, giving us further confidence about the long term opportunity to have self funded profitable growth in this segment in the future. I now turn to focused growth markets, where our strategic focus is to have long term structured investment to grow the total addressable market and our market share. When looking at Greater China, you can see our total sales increased by 7% to £93,000,000 and our net contribution by 9% to £19,900,000 in the world's biggest honey market. Again, for transparency reasons, we will focus on constant currency performance. In Mainland China, our total revenue grew by 31% to RMB 337 million and our net contribution by 25 percent to over RMB70 1,000,000 We increased investment in our brand by 139% in order to build long term loyalty and advocacy. Our China market highlights are new leadership team in place and performing strongly, record results in key festivals, 11.11 and 6.18 number 6 and the only international brand in healthy food category on Alibaba digital channel grew 41% to 57% of total. Retail sector grew 28% versus the prior corresponding period. UMF Manuka grew 38%. Importantly, our new CBEC and Daigo model was implemented to ensure amplification of in market brand strength and supply efficiency. Our Asian Health model supports local ANZ daigou with targeted brand collateral and value chain initiatives. We also gain enhanced management and visibility of inventories. Mainland China efficiencies support Hong Kong profit focus. We've also launched multiple brand partnership events throughout FY 2021, driving affinity. We are proud to form long term partnerships with other high profile brands in the China market, further driving affinity and engagement. As you can see, our afternoon tea, a highlight of Shanghai society, drove a high volume of target market engagement with over 5,000,000 posts delivered post views delivered. Other high profile brand partnerships associations are underway. I now move on to North America. For the purpose of transparency, we'll focus on constant currency performance. Our revenue in North America grew by 23% to US17 $1,000,000 in FY 2021, with net contribution increasing by 18 percent to US3.2 million dollars representing 19% of sales. Structured brand investment is again central to our plan and was increased by 80% versus the PCP. In order to diversify earnings, we invested strongly in the digital channel and grew sales by 37% versus the PCP and now represent 36% of total North American sales. And North American highlights. Convita is the fastest growing Manuka Honey brand in the U. S. We have increasing rates of sale per point of distribution with key retail customers for Manuka. We have strong growth in key categories versus PCP, including UMF Manuka Honey and Propolis. Our retail distribution increased by an estimated 2,000 stores, doubling our retail presence. Convita.commetrics demonstrates success in growing our brand within the online channel, with us growing new users by 31%, transactions by 33%, email marketing by 29%, social by 117% and earned media impressions of nearly 1,300,000,000 up from 722,000,000 in PCP. We committed to save 5,000,000 bees working with beekeepers across the U. S, which led to a feature in Forbes during World Bee Month. We also partnered with major health media publications to expand thought leadership within the MANUCA category. In summary, our focus strategy is starting to deliver results with a strong FY 2021 results reported. We saw double digit top and bottom line growth in our focused growth markets, our digital channel and the Manuka category. We further simplified the business with our product range, our operating businesses and organizational roles and responsibilities. We've reduced inventory. We generated cash. We paid down debt. Our transformation at Convita is on track as we put in place foundations to deliver long term profitable growth. And finally, we've made good progress on delivering to our 60, 15, 20 20 plan. For FY 2022, our focus is to deliver in a guidance range of €27,000,000 to €30,000,000 at EBITDA, continued double digit top and bottom line growth in focused growth markets, digital to become at least 38% of total revenue, mid single digit revenue growth in ANZ, further focus in driving an increase in GP more towards H2, Our transformation program will continue with $2,500,000 investment, which is included within our guidance. We're targeting further inventory reductions from $100,000,000 to $90,000,000 and we'll invest around $18,000,000 in CapEx during this year. Before I hand back to Brett, I wanted to share our Q1 performance. And I'm pleased to say that despite COVID disruptions in offline retail, underlying revenue is in line with our expectations. We've invested 50% more in our brand and delivered an unaudited Q1 EBITDA result 10.6% above PCP. We continue to look for and explore material opportunities to enhance our global leadership and accelerate growth further. Our full year guidance is maintained. I'd now like to hand back to Brett, but would like to thank Brett and the Board for their challenge, for their support and their encouragement throughout FY 'twenty one. Thank you. Thank you, David. That's been great. Now moving to the resolutions. I propose to call a poll on each of these resolutions. As I mentioned, shareholders will be able to cast their vote using the electronic voting card received when online registration was validated. To vote, you'll need to click a Get Voting Card within the online meeting platform. You'll be asked to enter your shareholder a 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've made your selection, please click Submit Vote. On the bottom of the card to lodge your vote, please refer to the virtual meeting online portal guide or use the helpline specified if you require assistance. Voting will remain open until 5 minutes after the conclusion of the meeting. Results of the vote will be announced via the NZX. Each resolution set out in the notice of meeting is to be considered as an ordinary resolution and as such must be approved by a single majority of the votes cast by shareholders entitled to vote and voting on the resolution. The outcome of proxy votes will be displayed for your information after voting on all of the resolutions. So, ordinary Resolution 1, appointment and remuneration of auditors. To consider and if thought fit to pass the following ordinary resolution that the meeting record the reappointment of KPMG as the auditors of the company for the current financial year ending 30 June 2022, pursuant to Section 270 of the company's Act 1993, to authorize the Board to fix KPMG's remuneration. Are there any questions of the Board concerning the motion from shareholders? Good morning. No questions have been received from shareholders relating to Resolution 1. Thank you very much, Tracey. Please now select either for, against or abstain for Resolution 1 on the voting card. Ordinary Resolution number 2, Director's election of re election of Luke Bunt. To consider and if thought fit to pass the following ordinary resolution that Luke Bunt who retires by rotation and is eligible for reelection, be reelected as a director of the company. I now invite Luke to speak to his reelection. Lorena, good morning. My name is Luke Bunt, Independent Director, Deputy Chair and Chair of the Audit and Risk Committee. I'm delighted to have this opportunity to stand for reelection to your Board for a 3rd term. It is rewarding to be part of an organization whose purpose centers around health and well-being and which places importance on making a meaningful contribution to reducing carbon emissions, environmental protection and sustainability. It has also been rewarding to have played a part in our transformation process so far. We're at the early stages of that transformation, and I'm pleased to have this opportunity to continue the journey with David and his team and with my fellow directors. As an independent director, it is a prerequisite to be aligned to a company's vision, strategic direction, culture and values. I have great confidence in Convita's future, and I consider myself to be totally aligned to the organization's boss as this has developed under David's executive leadership. I believe my skills and experience gained from 40 years in business and over 20 years in a variety of governance roles remains relevant to the challenges and opportunities in front of us. Conveta is heading into an exciting period of expansion and growth. If elected, I will bring the high level of energy, diligence and commitment necessary to effectively execute my governance responsibilities and to playing my part in achieving the company's goals. Namihi? Thank you, Luke. Please now select either for, against or abstain for Resolution 2 on the voting card. Ordinary Resolution number 3, Director's election for Yawin Wu. To consider and have thought fit to pass the following ordinary resolution that Yawin Yu of China Resources be elected as a Director by shareholders. I now invite Yawin to speak to her election. Hi, everyone. This is Yawen Wu from China Resources. It's my great pleasure to join Kamida board as Kamida is one of the most beloved consumer brands in China and also around the world. We've known that the brand for such a long time is not just helping people to improve the health or well-being, but also becomes a lifestyle brand that features trendy health and sustainability. I've been working in China like in investment fields in the past 15 years and we have been developed a bunch of very popular international brands. And I think Convita is definitely one of them. And I believe my personal experience in investments and also in the corporate governance will help the company to move to the next stage of its development. Although like Comvita has been doing very well in the past decades, but we think they still have the best potential to explore. So it's very excited to join the Board at this moment. So we take this opportunity to give best wishes to the company and also to the people who love CAMVEDA. And I'm looking forward to my journey to work with David and also with the management team as well as the Board members in Convida. Thank you, Wah wen. Are there any questions for the Board concerning the motion for shareholders from shareholders? We have not received any shareholder questions relating to this resolution. Thank you, Tracy. Please now select either for, against or abstain for Resolution 3 on the voting card. Ordinary Resolution Number 4, Director's election of Bridget Coats to consider and have thought fit to pass the following ordinary resolution that Bridget Coats be elected as a Director by shareholders. I now invite Bridget to talk to her election. Kia ora koutou katoa. My name is Bridget Coats. I'm an independent Director and I'm proud to be invited to join the Board of Comvita subject to your approval at this meeting. I have a finance background as my primary career and I have more than 30 years experience as a director in a wide range of companies in New Zealand and in the USA. Comp Eater is one of New Zealand's most iconic brands. I'm very committed to the company's mission, taking the highest New Zealand natural food products to the world, while at the same time committing to sustainability in everything the company does. So with that in mind, there are 3 principal reasons, 3 principal areas where I believe I can contribute to the Convita Board, should I be appointed. Firstly, I have 10 years experience in marketing New Zealand Health Food Products to U. S. Consumers through a full variety of channels, retail, direct to consumer and via many online platforms. I understand that market very well and what relevance the New Zealand provenance has for various categories of US consumers. Secondly, I have a deep engagement in sustainability through 2 of my current roles. I have the chairmanship of Toitu Tahua, which is the Centre For Sustainable Finance and I'm also Chair of the Fonterra Sustainability Panel. Thirdly, I have a background in finance and economics, including equity analysis and board roles on the Reserve Bank and on the New Zealand Super Fund, as well as a wide variety of governance roles. I look forward to working with the Combita Board and to continuing to build this brand into the future. Thank you. Are there any questions for the Board concerning the motion for Bridget Coats? No questions received from shareholders relating to this motion. Thank you, Tracy. Please now select either for against or abstain for Resolution 4 on the voting card. Okay, we move to Resolution 5, Director's election of David Banfield. We consider and if thought fit to pass the following ordinary resolution that David Banfield be elected as a Director by shareholders and I now invite David to talk to his election. Thank you. On the 20th January 2020, when I joined the Convita team, I shared my belief with the team that we had the opportunity to write an amazing and exciting chapter in Convita's rich history. I shared my belief that this was a chapter that had to be based on talent, ambition and delivery of results. I invited the team to be part of that special chapter and asked how they were going to make themselves famous at Convita. Over the last 20 months, we've changed a lot and we have achieved a lot, but our ambition and our capability demands that we do more and we strive for more. The results that we shared today show that we're on the right track, but it really is a case of so far so good. I'm excited to be with you today virtually asking for your support to endorse my election as Managing Director at Convita. I have a firm belief that in today's multi stakeholder world, it's an important signal that we recognize and want to promote an agenda for all stakeholders and I believe that my appointment was set. I have significant experience in the role of Managing Director and have held this joint role since my late 20s in many countries around the world, but also here in New Zealand and I look forward to proving how my appointment will benefit all stakeholders. As I said earlier, we've made a good start, but there remains much to do and I hope for your support through this appointment to help accelerate that change further. Thanks very much. Thank you very much, David. Are there any questions for the Board concerning this motion? No questions received from shareholders relating to Resolution 5. Thank you very much, Tracy. Please now select either for, against or abstain for Resolution 5 on the voting card. That concludes the resolution section. Thank you very much for your support there. We now move into general business. I'd now like to give shareholders the opportunity to post their questions whether related to the presentations, the financial statements the management of the company. You can continue to provide questions online and we will also address questions already submitted online. If we can run short of time, as mentioned before, we will endeavor to respond to those after the meeting. So are there any questions received from shareholders? We have received a number of questions from shareholders this morning. First question we have received has been tabled by Kaushik Patel. The question is, is the company well geared with the Chinese market and Chinese government's latest crackdown on dairy industry as it could do the same with other products? With logistic and other cost issues, are Comida products able to pass on the increase in these costs or facing any headwinds? Is the ANZ market still struggling? And lastly, the spending on brand should ensure that the desired outcome of larger sale volume or niche pricing is targeted as we do not want to see a core outcome over time? Thank you. Thank you very much, Mr. Patel. So look, I'll pass that back to David. It's a perfect question for him to respond to. Many thanks, Brett. There's quite a few questions in there. So I'll attempt to answer them individually. Look, first off, I think the most important thing is recognize our unique business model. And that business model in the China market is reflected by the fact that we have around 200 people on the ground in the market, which means that we are closely connected to the changing market environment, the changing market demand, and I think puts us in a unique position to take advantage of the opportunities that are there. If you look at the performance in Mainland China in the year just finished with total revenue up 31% in local currency. I think it highlights the opportunity that we see there. In terms of cost pressure and margins, Again, through this result, you've seen total gross profit improve by 7.30 basis points to 53.9%. We are clear that we won't pass on price increases unless we unless we experience cost price pressure. And but we're confident in our ability to do that should we need to at any particular point. Moving to ANZ, and I'll apologize if I missed any parts. But moving to ANZ, look, we believe that ANZ market has bottomed out. If you look at Q4 performance, we saw Q4 plus 17% versus the prior corresponding period and also increased by 33% versus Q3. So we have a strong sense that the market has bottomed out in terms of demand and we lose that headwind and we're targeting single digit revenue growth in that market. The final question about brand investment model. When I first joined Convita, what I really saw was that we have such an incredible story, founding story from Alan and Claude that we have to have a business model that lets us tell that story and differentiate ourselves from other sort of exporter competitors. To enable that to happen, we must invest in the substance to that story. And I believe that going forward, it will become an even bigger differentiator versus any competitors that we compete against. So it's integral also in our 60, 15, 20 long term business plan, which as I shared earlier, is designed to make sure that this becomes our default position going forward. Thank you, David. Do we have any more questions, Ms. Tracey? We do. The next question has been tabled by Chris Brown from NZSA. The question is, given the potential for conflict of interest, does the company intend to take any action in relation to the significant portion of non audit work provided by the company's auditor? Okay. Some good questions coming in. Thank you. Look that is something that has been noted by the company. We have enjoyed a very good relationship with KPMG as our auditor. But during this last couple of years, we've had obviously a fair amount of consulting work as we look to restructure. We have noted that the work that KPMG is mostly being done around tax, tax consulting. We took a review this last year and I can confirm that going forward we've appointed PwC as our lead tax advisor in this regard. So that should shift the balance in the future. Are there any other questions, Tracey? Yes. Next question has been tabled by Coralie VanCamp. The question is what percentage of the company is owned by Chinese interests? Yes, thank you for that question. It's not normal that we would disclose details and just around that. But I can confirm that our Asian interest I don't think we have anything specific on China per se, but our Asian related shareholding was around 7.5%. And that does include China Resources, which is a Hong Kong listed company and it's at less than that. So that's probably what I can confirm. As of interest, I will note that Lee Wong, which is our largest shareholder is a New Zealand citizen. Thank you, Tracy. Any other questions? Next question is in 2 parts. It has been tabled by Neil Craig. First part of the question is, given the company is now paying dividends again, can the Chair clearly articulate the future dividend policy? 2nd part is, CBT has released encouraging results as well as positive prospects for the future. However, the share price has not reflected this. As a result, does the company feel vulnerable to a bid given the current level of M and A activity? Thank you, Neil. I wouldn't have said anything different from you. I really appreciate it. Look, dividend policy has remained unchanged that 30% of net profit are for tax and we will continue to review that as time goes on. We've obviously got a fairly, assertive program around investing in our brand in particular and building resource and capability in the market. Our CapEx requirements are not overly onerous, but it is focused around developing our plantations program and again around building our marketing capability in market. So look the dividend policy, we will do everything we can to retain it and maintain it. The question obviously will be around if there's an interim dividend we will be giving consideration to that close at close to the end of the year once we've got some certainty around our half year result. But we will endeavor to pay an interim dividend if at all possible. Share price, yes, look that's probably the one thing that does tend to keep me awake at night if I'm really honest with everybody here is that our share price does I think poorly reflect the true capability of this organization. If I compare that to other listed companies of similar breed if you like as Convita premium branded products around the world then I think we are significantly undervalued. So look we can't let that up. We're just going to focus on business fundamentals and get that right and make sure that we're communicating that effectively to the analysts, make sure they understand our business model, where the value is and how we're going to drive value around that. But we're just focused on getting our brand to the stronger possible position as we can and also improving earnings growth as steadily and as sharply as we can, while still investing in brand and investing in building capability. So look, I don't know if that answers your questions, Neil, but I really do appreciate the CVT right now. Other questions, Tracey? Yes. Next question has been tabled by Christian Bell. The question relates to, have you seen any of the other New Zealand Honey brands elevating their own marketing spend to match what Comvita is doing? That might be a convenient one to pass back to David. You can he's obviously closer to the ground than I am. Thanks, Brett. Look, we I mean, it is a dynamic marketplace. I think that in terms of percentage terms, obviously, others can look to match our spend or in percentage terms. But given our scale and our market leadership, what we're able to do is make sure in terms of share of voice that actually it's Convita's voice that is the predominant one. And that's what you see in terms of our performance in both the U. S. And China. If you look at you'd have heard me during my address correct myself when I talk about impressions, where I'm talking about 1300,000,000 impressions of our brand work. And those are our unique position there will continue to differentiate us. And as we grow more, our share of voice will increase more as well. So yes, it's not direct to competitors, but I do think that the combination of our scale and our model will mean that it's our voice that's heard. Heard. Thank you, David. Tracy, do we have any more questions? We do. Next question again tabled by Christian Bell. Platforms like TikTok are becoming important for reaching consumers in China. For example, TikTok is a channel that A2 Milk is investing into. Is Convita currently investing or planning to invest in TikTok in particular? One for you again, David. Thanks, Brett, and thanks, Christian. Look, you've got an incredibly dynamic online marketplace in China and that means that you have to be on all relevant channels. I'm not going to talk about individual channels themselves, but you can assume that we know who our online target market is. We know how they consume media through those different channels. And therefore, we put ourselves on those channels to make sure that we're relevant to how they consume media. And we continue to do that. Thank you very much, David. Tracy, further questions? Yes. This question relates to the upcoming honey harvest has been tabled by Chris Bell. Could you please give an update on the flowering period to date and whether any areas have been impacted by the recent cool weather? Might be a bit too soon for that yet. David, probably also you can best place to ask that. Yes. Look, I think you're entirely right, Brett. It is too soon. Look, the one thing I would say is that with our revised harvest model, that actually the impact of a poor weather year on our earnings is mitigated. So we've set ourselves up that in a poor weather year, we deliver 0 contribution to group profits. And in a good weather year, we deliver £2,000,000 to £3,000,000 contribution to group profits. That's obviously a key part of making sure that we focus on where our cash is generated and where we really win, which is in market in front of consumers. So we will give an update, but it will probably be in April next year when we give an update, but we'll do it at the same time when we talk about consumers in markets and our performance there. Thank you, David. Tracy, further questions? Yes, there's a couple of questions more to go. Underlying revenue was 4.5%. What is the country breakdown for this? Could you please explain if this reflects DD growth in focused markets, MSD growth in ANZ markets, I. E, whether it was in line with your market growth targets? All good questions to you again, David. Yes. Thanks, Fred. And look, thanks for the question. Look, as you know, look, we don't release results on a quarterly basis in terms of more granular results on a quarterly basis. We it's obviously pretty onerous releasing the half year detailed results, and we won't break down the detail of individual territory performance in intervening periods. What we would say is that our performance is in line with our expectation, and we're pleased with the progress that we're making. Thank you. Tracy? Next question is in relation to the ANZ market performance and it has been tabled by Zen Wang. Why did the ANZ market drop down last financial year? David, you're getting all the good ones there. I'm going to get anything of interest. Nobody got any questions for the Chairman? Yes. Again, look, thank you for that. I think, look, the challenges in ANZ market, primarily through the Asian Health DiGo channels have been pretty well documented. The end of tourism effectively over that period and us also reconfiguring how we think about success in across our total business really is at the heart of that. I think that we've taken time to really say, when we think about our overall performance, let's think about we actually ran a product called Project 3, which was looking at 1 plus 1 equaling 3, which was looking at when we think about the brand proposition we're developing in the China market and when we think about how the ANZ Daigou market needs to amplify our in market positioning, how do we make sure that we think about what's best for the group and best for consumers in the market. So you've got external factors that have impacted us, but as I say, are pretty widely reported. But also, internally, we want to make sure that we are focused on who our target consumers are, how we communicate with them and that we produce the best combination of what's from here and what's actually in China. Thank you. Tracy, any further questions? Just a couple to go. Currently, this question again relates to ANZ revenue growth. What was quarter 1 FY 'twenty two revenue growth versus quarter 4 FY 'twenty one? I'll repeat that, quarter 1 FY 'twenty two versus quarter 4 FY 'twenty one? Andrew? Yes. Thank you. Look, as I just said a minute ago, we won't talk about a breakdown of our performance at a quarter level. At the half year, we'll give you an update of our segment performance versus PCP. And we've also said that in the ANZ segment, we believe that the segment itself has bottomed out, and we're expecting to show single digit revenue growth during FY 'twenty 2. Thank you. Okay. Next question. Why was the list of major shareholders and percentages held not listed in the annual report? Can you confirm them now and this has been tabled by Karolie VanCamp? Major shareholders significant shareholders can be disclosed. It's not normal that we would break that down and greater granularity. Look, I'm happy to take advice on that. And if it's deemed appropriate, we could consider in the future how we report on that. Normally unless they're material shareholders over 5%, it's not a requirement to disclose their holding. Is that okay? Tracy, back to you. Thank you. Final question received so far, tabled by Guy Manning. Question is, what is happening with U. K. Market growth as far as sales? Are you also looking at growth by buying similar companies? U. K, Stephen, your area, David? Yes. It's be nice to be able to get back there to see it personally. But look, the U. K. Market is an interesting market. It was obviously one of the first international markets for Manuka Honey. It's a market that is fairly strong, and it's a market that we recognize we under index in that particular market. I think that as I shared, the important part of this last result was that we were able to breakeven in Europe, Middle East and Africa. So that's the whole segment. That was despite not being able to ship any product into Europe during the whole of the second half. So again, I think that gives us reasons for positivity. In terms of M and A in that particular area, that wouldn't be a primary area of focus for us. But we've been clear that we see our focused growth markets as being China and North America. And equally, we've been clear about the categories that we are focused on in those markets. There we go. Tracy, any more questions? No further questions received from shareholders. Okay. Well, look, I can I'm happy to bring forward a question that I've received via text message because apparently the underlying person had a challenge with the question. And it's from John Charrington. So he just wanted to explain the 60, 15, 20 model. And I'll probably answer this one David on your behalf even though it's your part of your strategy. The 60, 15, 20 is basically represents 60% gross margin, 15% of sales return to marketing and 20% EBITDA margin. And this is really just being developed as a sustainable way to ensure that our position around a premium brand positioning at 60% margin is being supported by a sustainable spend of 15% on marketing activities and brand activities. And we believe that that will deliver a sustainable 20% EBITDA margin. We currently, as David mentioned, is running around 13%, but that did include in this last fiscal year an increase of $8,500,000 in additional marketing spend, so bringing our total marketing spend to around $25,000,000 So that's a significant investment into our brand building for the future and ensuring that we've got a growing business, profitable business and a premium brand positioning. So that's what I was explaining. That's all the questions. And please you can of course ask more questions online, but I think that we probably need to let everybody go. So thank you very much to everybody. Thank you to David and my fellow directors who spoke today and also for everybody joining us online. I believe we had a little over 100 people join. So it's obviously a clear demonstration of the success of a virtual meeting so that we can pull a lot of people together from a lot of different places. I wish you all the very best. And before we go, we will have a karaokea from David Walters. So thank you very much that I hereby close this meeting.