Comvita Limited — AGM Information 2017

Oct 18, 2017

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ANNUAL SHAREHOLDERS’ MEETING

18 OCTOBER 2017

Annual Shareholders’ Meeting 2017

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IMPORTANT NOTICE

This presentation is given on behalf of Comvita Limited. Information in this presentation:

• should be read in conjunction with, and is subject to, Comvita’s Annual Reports, Interim Reports and market releases on NZX;

• is from audited financial statements for the year ended 30 June 2017;

• may contain projections or forward-looking statements about Comvita. Such forward-looking statements are based on current expectations and involve risks and uncertainties. Comvita’s actual results or performance may differ materially from these statements;

• includes statements relating to past performance, which should not be regarded as a reliable indicator of future performance;

• is for general information purposes only, and does not constitute investment advice;

• is current at the date of this presentation, unless otherwise stated.

While all reasonable care has been taken in compiling this presentation, Comvita accepts no responsibility for any errors or omissions. All currency amounts are in NZ dollars unless otherwise stated.

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Annual Shareholders’ Meeting 2017

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CONTENTS

1. Welcome / Apologies – Neil Craig

2. Chairman’s Address – Neil Craig

3. CEO’s Address – Scott Coulter

4. Formalities and Resolutions

5. General Business

6. Director Farewell

7. Afternoon Tea

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WELCOME TO

NEIL CRAIG CHAIRMAN’S ADDRESS

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CHAIRMAN’S SUMMARY

TOUGH YEAR

• Two significant external events

• Changes to China’s regulatory environment took a long time to work through

• Extremely poor honey season

• We improved our balance sheet

• China Resources placement

• Medihoney® IP and share sale

• Enabled us to maintain our long term strategy

• Reviewed and ratified our strategy

• Strong finish to FY17, and good start to FY18

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SALES $155.9m

EARNINGS $9.8m

OPERATING EFFICIENCIES $7.0m

BALANCE SHEET

cash raised $51m

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BOARD OF DIRECTORS

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Alan Bougen (Founder) Non-Executive Director and DeputyChairman (Retiring 2017 ASM)

Neil Craig Non-Executive Chairman

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Sarah Kennedy Independent Director

MurrayDenyer Independent Director

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Luke Bunt Independent Director

Sarah Ottrey Independent Director

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Paul Reid Brett Hewlett Independent Independent Director Director

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KEY FINANCIAL RESULTS

• Reported NPAT of $9.8m

• One-off, non-operating profit of $15.3m primarily from the sale of Medihoney® IP to Derma Sciences Inc. (now Integra LifeSciences)

• Operating loss of $5.5m vs. market guidance of a loss of $7.0m

• Policy of paying dividends out of after-tax operating profits at a payout ratio of 40-45%

• We have a number of attractive M&A opportunities in front of us

• No final dividend in respect of FY17

• Expect dividends will resume in FY18

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Financial results for the period ended	12 months to 30 June 2017 Audited	12 months to 30 June 2016 Unaudited	15 months to 30 June 2016 Audited
Revenue	$156m	$192m	$231m
EBITDA*	$19.8m	$37.0m	$39.4m
EBITDA % of revenue	13%	19%	17%
Net profit after tax - NPAT	$9.8m	$18.1m	$18.5m
NPAT attributed to non operating items	$15.3m	-	$1.4m
NPAT excluding non operating items	($5.5m)	-	$17.1m
Earnings per share NPAT (NZ Cents)	23.74	-	46.91
Dividend per share (NZ Cents)	2.00	-	18.00
Return on Capital Employed - ROCE	5.8%	-	14.3%

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*EBITDA: earnings before interest, tax, depreciation andamortisation.

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BAL ANCE SHEET

• FY17 net debt year end: $61.9m

• FY16 prior year end $84.0m

• HY17 $82.4m

• Two liquidity events raised $51.2m

• China Resources placement $21.2m at $10.60 per share

• Derma Sciences Inc.; $30m

  • $11m from share sale

  • • $19m from sale of IP

• Debt to equity now 38% (FY16 64%)

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Key Balance Sheet Ratios as at	30 June 2017 $’000	30 June 2016 $’000	Change %
Total assets	256,692	243,268	6%
Raw material inventory	59,895	64,509	(7%)
Net debt	61,928	84,020	(26%)
Net debt to equity ratio	38%	64%	(41%)
Weighted average shares on issue	41,373	39,386	5%

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SALE OF MEDIHONEY® IP ASSESTS

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DERMA SHARES SOLD TO INTEGRA LIFE SCIENCES (NASDAQ:IART)

• USD $7 per share - $11m proceeds

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SALE OF MEDIHONEY® IP

• $19m proceeds for sale of Medihoney® brand and associated royalties

• Retained royalty free unrestricted use of the Medihoney® brand in perpetuity in over-the-counter (OTC) markets globally

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MILESTONES

• USD $2m when reach US $25m sales

• USD $3m when reach US $37.5m sales

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MANUK A HONEY DEFINITION

This is a big deal for the Manuka honey industry. It will mean certification of all Manuka honey leaving New Zealand

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• Industry is aligned

• Establishment of Apiculture NZ

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• UMFHA® (UMF Honey Association) has 120 members

• Major players agree on most of the key issues facing the industry

• The Ministry of Primary Industries (MPI) has committed to working with industry on the definition and we expect an announcement by the end of the year

• Comvita’s science team recently published a definitive scientific paper in internationally recognised publication, ”Food Chemistry”. This paper was also presented this month at Apimondia, the global apiculture conference

• Hopeful of agreement with MPI on the Certification standard shortly

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MANUKA HONEY – MYRTLE RUST

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MYRTLE RUST

• Very low risk to industry

• ₋ Nothing since our 27 June market update has caused us to change our view.

• In Australia for seven years

• ₋ No wild infections of Leptospermum species reported

• ₋ No impact on honey production

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WELCOME TO

SCOTT COULTER CEO’S ADDRESS

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YEAR IN REVIEW

MAINTAINED FOCUS ON STRATEGY

• Kept our focus in FY17 on re-shaping the business to deliver on our long term strategic objectives

• Sourcing our raw ingredients

• New product innovation

• Balancing our market growth between East and West

• Acquisitions (China strategy)

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LEADERSHIP TEAM

STRONG TEAM: RESHAPED AND BROADENED WITH A FOCUS ON COMMERCIAL EXECUTION, HIGH PERFORMANCE CULTURE AND E-COMMERCE

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TBC

Kate Selway

MarkSadd

Scott Coulter

Julianne Keast

NewChiefDigital Officerrole

Chief Financial Officer - Acting

Chief People & Culture

Chief CommercialOfficer

Chief Executive Officer

Officer - Acting 7 years in People & Culture

M&A, Partnerships, Governance with a focus on China JV, Apiaries and other investments

An increasing number of sales are made via digital channels

7 years managing finance for Comvita

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Simon Pothecary Chief Sales Officer

Colin Baskin

Ben Shaw ChiefMarketing Officer

Sharon Hollenstein Chief Innovation Officer

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Chief Supply Chain Officer

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GLOBAL TRENDS VISION AND STRATEGY

Annual Shareholders’ Meeting 2017

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GLOBAL TRENDS

THAT INFLUENCE THE NATURAL HEALTH MARKET

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Aging populations and Consumers taking a Rapid growth of Consumers need emergence of lifestyle pro-activeapproach e-commerce and to trust the source diseases, e.g., mobility towards managing cross boarder of their food supply cardiovascular, diabetes, theirhealth platforms antibioticresistance

Comvita’s vision and strategy positions us perfectly to take advantage of these global trends

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VISION SOURCE TO SHELF

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CLOSE, DIRECT LINKS WITH CONSUMERS IN KEY MARKETS CONNECTED TO THE SOURCE NATURAL PRODUCTS THAT WORK, BACKED BY SCIENCE

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TRUSTED

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COMVITA STRATEGY ON TRACK

$400M BY FY21

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CONSUMER-FOCUSSED BUSINESS

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DIRECTLY CONNECTED TO THE SOURCE

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INNOVATION

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ACQUISITIONS

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EARNINGS FOCUS

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CONNECTING TO THE SOURCE

Annual Shareholders’ Meeting 2017

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MANUKA HONEY

41,500 HIVES

• Regional spread of apiaries designed to mitigate weather events

• Building Joint Venture partnerships with strong management to increase growth

• Moving to land owner partnerships utilising Manuka plantation opportunities

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PANHANDLE STATION

KAKAHI VALLEY, OHURA

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2,900HA DRY STOCK STATION

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200HA OF EXISTING MANUKA

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PLANTED 250HA FY17

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1,250HA OF PLANTATION POTENTIAL WILL TAKE UP TO 1,500 HIVES

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MAKINO STATION Ltd.

MAKINO ROAD, RAETIHI

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1,530 HA DRY STOCK STATION

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700HA OF EXISTING MANUKA

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800HA OF PLANTATION POTENTIAL

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PLANTED 130HA FY17

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AKIRA STATION

WAIRARAPA

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430HA DRY STOCK STATION

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400 HIVES ON EXISTING MANUKA PLANTED 110HA FY17

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WILL TAKE UP TO 500 HIVES

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INNOVATION

STRATEGIC GOAL: Transform how we do innovation at Comvita

• Faster growth of core bee product innovation

• Product diversification

• $2.2m of sales from new-to-the-business innovation

• Eye Health

• Drinking Vinegar

• Reduced-sugar lozenges

• Expect sales >$10m in FY18

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BUILDING A PRODUCT PORTFOLIO FOCUSSED ON OUR CUSTOMERS CORE HEALTH NEEDS

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BEE BASED PRODUCTS: Manuka honey, Propolis, Royal Jelly, Pollen

EXTEND BEE PRODUCTS

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DRIVE CATEGORY GROWTH

MEDIHONEY® MARINE & OMEGA OLIVE LEAF

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EXPAND

MILK BERRY KIWIFRUIT PROBIOTICS

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MEDIHONEY® ADHESIVE WOUND DRESSING

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LAUNCH OF MEDIHONEY® ADHESIVE DRESSINGS OCTOBER 2017

• Medical device approval (CE Mark) obtained in New Zealand, Australia, Hong Kong and the UK

• USA launch (FDA version) early next calendar year

• Current market size for OTC adhesive wound dressings in these markets alone is $1billion.

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EYE HEALTH

NEW ZEALAND - SOURCED BLACKCURRANTS

• Eye health is one of the largest health concerns in Asia

• New Zealand blackcurrant has excellent levels of anthocyanins

• Launched eye health product

• Targeted at young, working professionals, sales already circa $1m

• Good demonstration of Comvita’s brand strength, outside of bee products

• About to launch Macular Health product, targeted at 50+ age group

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MARINE BIOACTIVES (including Omega 3)

THE MARINE BIOACTIVES PORTFOLIO IS DESIGNED TO ADDRESS KEY CONSUMER HEALTH CONCERNS THROUGHOUT EACH LIFE STAGE

• Omega 3 Gummies launched

• New Omega 3 range to be launched next year using New Zealand manufactured Omega 3 fish oil sourced from SeaDragon

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• Omega 3 fish oil market is USD $9.94b and expected to grow at 13.8% from 2015 to 2020 driven predominantly by Asia.

Brain, Mood Brain, Mood Eye, Beauty,Sleep Eye, Beauty,Sleep Heart, Sleep, Mental Brain, Heart, Agility, Beauty, Mood Mobility/bone health, Mental agility

Brain development, wellbeing formother

Brain, Mood, Eye,Skin

Brain development (Eyehealth)

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FRESH PICKED ™ OLIVE LEAF EXTRACT (OLE)

EXPANDING INTO CARDIOVASCULAR HEALTH

• Targeting the three highs:

• Blood sugar

• Cholesterol

• Blood pressure

• Leveraging clinical trial results:

• Regular OLE intake may be associated with a 9-14% reduction in Coronary heart disease risk and a 20-22.5% reduction in risk of stroke and heart attack

“The evidence for OLE improving cardiovascular health is compelling” Professor of Medicine at UCLA in Los Angeles, USA, Professor Matthew Budoff, Cardiologist

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PREMIUM BRANDING

• Brand refresh for Bee product range in FY18

• Super premium positioning for high end (20+) Manuka honey range

• Broadening of range appeal at the lower end (5+, 10+) to support Western market growth

• Anti-counterfeit initiatives

• Link to premium branding video:

https://youtu.be/gQOILFClaik

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KEY MARKETS

STRATEGIC GOAL: EAST-WEST BALANCE

• Australia and New Zealand

• Efficient, low cost business model will provide favourable sales leverage as the grey channel recovers

• Building on pharmacy distribution

• Hong Kong

• Focus on productivity is starting to pay off, with a 37% increase in net contribution. We expect strong sales growth in FY18

• Japan and Korea

• Grew 13% and 21% respectively

• Success in TV home shopping and duty free

• UK and Europe

• Grew 13% in GBP terms

• New listings in Boots, the Chemist and Holland & Barrett, the UK’s largest health food chain

• Expect good growth in FY18

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MARKETS (Continued)

• North America

• Will be a significant step up in sales and profitability across US and Canada

• Continue with online success in Amazon

• New distribution agreement in USA and Canada natural health markets; expect to ship pre-Christmas

• Listing in 200 COSTCO stores in the US and 100 COSTCO stores in Canada

• COSTCO

• 85 million members

• 700 stores worldwide

• Top US retailer of organic food and wine

• Initial indications are sell through has been positive

• Our North American revenues excluding medical honey sales to Integra LifeSciences will exceed $30m (prior year $3.7m)

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– ACQUISITIONS CHINA J OINT VENTURE (JV) CHINA IS A KEY PART IN OUR FUTURE GROWTH THE CHINA JV IS AN IMPORTANT STEPPING STONE TO GET CLOSER TO OUR CUSTOMERS

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• The JV is a circa $50m revenue business

• New leadership team appointed and governance structure established

• Equity accounted not consolidated

• Clear strategic plan for growth

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WELCOME TO

MR ZHU GUANGPING

Joint Venture Partner

CHINA

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CHINA JOINT VENTURE

STRATEGY – PRODUCT

FY18 FY19 FY20 FY21 FF FOCUS ON BUILDING LEADERSHIP LEVERAGE CAPABILITY IN BEE PRODCTS IN BEE PRODUCTS + + TEST AND LEARN – NEW INNOVATION LANCH OF NEW INNOVATION

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CHINA JOINT VENTURE

STRATEGY – CHANNEL

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E-COMMERCE

• Strategic Partnership with JD.com and Tmall

• Expand X-border coverage

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TVHS

• Expand number of channels

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RETAIL STORES

• Expand stand alone stores in Shanghai, Beijing, Chengdu

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WHOLESALERS

• Actively manage 45 wholesalers who cover parts of China we can’t reach

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PREMIUM RETAIL

• Expand distribution in Health and beauty, Pharmacy and Hypermarkets with targeted product lines

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CHINA ROAD TO SUCCESS

  - Transform from honey relevance to holistic health products

• Launch new products

• • Open new customers • Geography expansion • Increase brand

• Focus on core Bee products

• Transition and integration

• Team build-up

• Introduction of new products

• investment

• Grow e-commerce coverage

FY17-18

FY19-20

FY21-22

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OUTLOOK

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– OUTLOOK October 2017

• Previous guidance (22 August):

• After-tax operating earnings for FY18 to be at least equal to aftertax operating earnings of $17.1m achieved in FY16*

• Update to guidance:

• With first quarter sales ahead of internal budget at 35% up on the same period last year, a solid recovery in the grey channel into China and significant North American sales now a reality, Comvita has confidence in a profit greater than $17.1m

• Assumptions and risks

• Grey channel continues to recover

• Return to ‘normal’ honey season

• North America and South East Asia growth

• China Joint Venture contribution to future profitability

• Savings from FY17 partially reinvested in marketing and product development to drive further sales

• A further update to this seasons honey harvest will be made early in the new calendar year

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*comparable 12 month period unaudited

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Neil Craig - Chair

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FORMALITIES AND RESOLUTIONS

FORMALITIES

• Reports and Financial Statements

RESOLUTIONS

1. Appointment and Remuneration of Auditors

2. Re-elect Neil Craig

3. Re-elect Sarah Kennedy

4. Elect Brett Hewlett

5. Elect Paul Reid

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GENERAL BUSINESS

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FAREWELL TO

ALAN BOUGEN CO-FOUNDER

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THANK YOU

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