Comvita Limited — AGM Information 2020

Oct 22, 2020

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ANNUAL SHAREHOLDER MEETING 2020

22 October 2020

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 2020;

• Includes non-GAAP financial measures such as Operating (Loss)/Profit and Operating EBITDA. These measures do not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information presented by other entities. They should not be used in substitution for, or isolation of, Comvita’s audited financial statements. We monitor these non-GAAP measures as key performance indicators and we believe it assists investors in assessing the performance of the core operations of our business. A reconciliation of NPAT to NPAT operating can be found in our Investor Presentation released on the NZX on 23 August 2020.

• 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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C H A I R A D D R E S S

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Agenda
Brett Hewlett
Chair
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• Mihi me Karakia Timatanga

• Welcome and Apologies | Brett Hewlett

• Chair Address | Brett Hewlett

• CEO Address | David Banfield

• Reports and Financial Statements

• Resolution 1: Appointment and Remuneration of Auditors

• Resolution 2: Director’s Elections

• General Business

• Acknowledgements

• Karakia and Close

• Afternoon Tea

INTRODUCTIONS: BOARD OF DIRECTORS

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Brett Hewlett Non-Executive Chair

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Luke Bunt Chair of Audit and Risk Committee

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Sarah Kennedy Paul Reid Chair of Safety Independent Director and Performance Committee

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Bob Major Independent Director

Zhu Guangping Director

Cheng Dayong Director

Neil Craig

*(retired as Chair January 2020, retired as Independent Director 30 June 2020)

INTRODUCTIONS: LEADERSHIP TEAM

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David Banfield Chief Executive Officer

Andy Chen Regional Chief Executive Officer Asia

Nigel Greenwood Chief Financial Officer

Adrian Barr Chief Business Development Officer

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Dr Jackie Evans Chief Science Officer

Tracy Brown Chief Supply Chain Officer

Holly Brown Colin Baskin Chief Purpose & Chief Operating Officer Transformation Officer

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FORMALITIES

• Notice of Meeting

• • Quorum

• • Proxies

• • Health and Safety

• • Annual Financial statements

COVID-19: A GLOBAL PANDEMIC

• This has been an unprecedented year on a global scale

• We had to re-think how to remain operational

• We had to act selflessly to protect the whole company

• We claimed the Government wage subsidy of $104K to retain employment of retail and duty-free staff

However

• We intend to repay the wage subsidies once we return to profitability

HEALTH AND SAFETY Improved visibility of safety performance

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Health and Safety

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People
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Our team at comvita

PEOPLE – Our team at Comvita

PEOPLE Governance & Diversity

YOUR BOARD

AVERAGE LENGTH OF SERVICE: 3 YEARS*

YOUR LEADERSHIP TEAM

AVERAGE LENGTH OF SERVICE: 3 YEARS, 10 MONTHS

*from date of formal election

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OUR TEAM GOALS Looking Forward

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PEOPLE

Launching our Beekeeping Apprentice Programme

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OUR PLANET Goal: Carbon positive by 2030

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Environment

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PARTNERSHIP Supporting Biodiversity and Wildlife

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FY 2020 IN SUMMARY

As forecast, this was a year to stabilise, reset and refocus. While there’s no question the results for the first half were disappointing, we saw real progress and momentum in the second half.

FY 2020 IN REVIEW

FY 2020 REVIEW

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FY 2020 REVIEW

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OUR STRATEGIC PILLARS

• Unrelenting focus on our consumers and execution

• World class digital engagement and experience

• Unrelenting focus on science and quality

• • Unrelenting focus on simplification, cost, and efficiency

• Unrelenting focus on sustainability and creating a world class organisation

LEVERAGING OUR UNIQUE BUSINESS MODEL

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CEO
Address
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David Banfield
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CEO ADDRESS

FY20 Financial Results

• Company

• Products

• Markets

• 3 Point plan

• Focus

• Strategy

Building Resilience and growth

• Winning in China

• Digital

• NPD – Premium reserve

Trading Update Q1

N e w b e g i n n i n g s a r e o f t e n d i s g u i s e d a s p a i n f u l e n d i n g s Lao Tzu 400bc

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YEAR IN REVIEW - Covid-19

• Living in unprecedented times

• Our Primary goals

• Safety of our team

• Being part of the solution

• Thank our team for the way they responded in all departments, in all markets

• Commercially had a positive impact on results

• Consumers turned to Natural Health products

IMPACT OF CORONAVIRUS ON PERFORMANCE

Summary

Positive trading during the Covid-19 period as consumers look to purchase natural health products

POSITIVE IMPACTS $20M

NEGATIVE IMPACTS $12M

• China, Asia, CBEC, North America and EMEA revenue growth year on year +$20M

• Double digit growth in North America, China, CBEC, Japan, Korea, SEA and EMEA

• Temporary Covid-19 impact retail in China - $3.4M in h2 offset by strong online growth

  • Retail in China has now normalised

• North America

• -Strong digital performance improvement +45%

• Strong retail sales +88%

• AU/NZ and Hong Kong revenue decline = $12M

• Business materially impacted by loss of footfall in tourism, retail and Daigou channels

• Mānuka honey sales impacted by Daigou and tourism

• H2 revenue impact AU/NZ $11M

• HK predominantly retail business impacted by civil unrest and loss of tourism expected to continue -$3M ($1M Covid-19)

• -Propolis and Fresh Picked Olive Leaf[TM] performed well

• -Positive Covid-19 stock fill $2.6M

General Conditions

Good inventory levels in-market. Boosting local inventory to meet ongoing anticipated inflated demand

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OUR THREE POINT PLAN

1. Stabilise the organisation

• Winning in AU/ NZ

• Focus on fundamentals

• Relentless simplification

• Positive cashflow paying down debt

• Inventory management

• Underperforming assets

2. Transformed organisation

• Consumer focus

• New harvest model

• Agile focused team

• $15M transformation plan

• Reconnection with our cause

3. Build long term resilience and growth

• Aligned 5-year plan

• US and China the engine for sustainable top and bottom-line growth

• Simplified organisation – lowest headcount since 2011

• • Reducing break even point per month from $16.2m to $13.5m

• Reduced debt <1 EBITDA relative to inventory value

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FULL YEAR - Headlines

• Revenue growth 14.5%

• Strong top and bottom-line growth in focus growth markets o China +11% sales, +60% contribution o North America +66% sales, +196% contribution

• Full year EBITDA $4.2M

• Year-end underlying EBITDA* $19.1M o H2 $18.4M

• NPAT ($9.7M)

• Impact of one-off non-operating items ($9.3M)

• • Year-end Net Debt $15.5M versus $93M in December o $50M capital raise completed in June o $27.5m cash generated to pay down debt

• Significant simplification of total organisation o Organisation restructure complete (costs in FY20)

• o Headcount reduction from 630 to 540

• Reduction of risk

• Capital structure reset

• Low risk honey harvest model implemented

• o New bank facilities agreed to June 2022

*Underlying EBITDA is a non-GAAP measure. We monitor this as a key performance indicator and believe it assists investors in assessing the performance of the core operations of our business.

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FINANCIAL SUMMARY

The last six months have shown that our turnaround and transformation are on track.

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SIGNIFICANT REDUCTION IN DEBT AND INVENTORY

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• Inventory reduced by $20M

• Net debt decrease of $73M vs 30 June 2019 due to successful capital raise $50M and working capital improvements $23M

• $27.5M Cash generated to pay down debt

• Banking facility extended to July 2022

FULL YEAR

SHARE OF REVENUE BY PRODUCT CATEGORY

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OUR MARKET SEGMENTS

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GOOD PERFORMANCE IN FOCUS GROWTH MARKETS

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• Strong double digit top and bottom-line growth China and North America

• Fastest growing Mānuka Honey brand North America

• Strong growth in Rest of Asia

• EMEA – Top line growth but unprofitable

• • NZ AU impacted by Covid-19 disruption to Diagou channel

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FY 20 SUMMARY

We have completed substantial changes to the business structure, we emerge from FY20 more focused, more agile, more resilient. We are in the process of ‘Building a better Business’

A M A N W H O C H A S E S T W O R A B B I T S C A T C H E S N E I T H E R - C h i n e s e P r o v e r b -

AROTAHI OUR FOCUS

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= LONG-TERM
PROFITABLE GROWTH
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BUILDING CUSTOMER INTIMACY

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OUR THREE POINT PLAN Progress and Update

1. Stabilise the organisation

• Reset AU/ NZ

• Positive cashflow paying down debt

• Reduced Inventory

• Underperforming assets

2. Transformed organisation

• Consumer focus

• New harvest model

• Leverage market leading position in China

• • Leadership talent

3. Build long term resilience and growt h

• US and China the engine for sustainable top and bottom-line growth

• Simplified organisation – lowest headcount since 2011

• • Reducing break even point per month from $16.2m to $13.5m

• Reduced debt <1 EBITDA relative to inventory value

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STABILISE PERFORMANCE

What’s Happened? Legislative changes Poor honey harvest Covid-19 impacts Loss of focus

The Way Forward

Focus markets Focus products Focus consumers Reset Capital structure Progress So Far

Reduced debt

Reduced underlying costs 6 consecutive profitable months Key achievements

New strategy and five-year plan Review of JVs and structure New leadership team in place

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TRANSFORMATION

What Must Change Unrelenting consumer focus Enhanced digital capability and engagement Enhanced focus on cash and efficiency What We Are Doing About It Consumer focused China and North America focused New capital structure Flat structure Progress So Far US growth 66% China growth 11% Digital growth 35% Headcount reduction Debt reduction

Key achievements

Simplified structure Reset capital structure Double digit growth focus markets

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LONG TERM RESILIENCE AND GROWTH

Longer term pressures on the business

More competition due to digital Driving household penetration Driving frequency of use Competition for talent Actions and Innovations, we are putting in place

Clear Brand Value Proposition Brand Investment model

Science at the heart of the business

Highly capable market teams closer to consumers Net positive 2030

Why they will help

Comvita as the brand of choice Comvita as the employer of choice Comvita as the partner of choice Key achievements

Market support centre not Head office Flat, action-oriented structure New Leadership team structure China as a fully integrated subsidiary, ESG reporting

TRANSFORMATION AT COMVITA

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It's vital that as we transform the business, we retain and celebrate what's made us the Global market leader we are today.

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BUILDING ON OUR PROUD HISTORY

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OUR STRATEGIC BELIEFS

• Success in China is key to delivering longterm stakeholder value

• Digital leadership is a critical success factor for Comvita

• Mānuka honey (and Mānuka honey products) will be our main source of revenue and margin for the next 10+ years

• • An aligned, sustainable, competitive advantage is key to extending our Global leadership

• Brand advocacy will be enhanced by connecting consumers to our founding story and belief in Kaitiakitanga

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OUR STRATEGIC PILLARS

• Unrelenting focus on our consumers

• • World class digital engagement and experience

• Unrelenting focus on science and quality

• • Unrelenting focus on simplification, cost, and efficiency

• Unrelenting focus on sustainability and creating a world class organisation

OUR STRATEGIC FOCUS

1. Build a China market business capable of delivering 10 years of 10% CAGR

2. Provide geographical balance by delivering breakthrough in North America

3. 50% of total sales to be delivered by digital channels

4. Leverage Comvita’s unique business model to deliver above average returns vs the category

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CHINA MARKET

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CHINA MARKET GROWTH

• Biggest Honey market in the world 8.3BN RMB ($1.8BN NZD)

• Imported honey makes up around 12% of total market

• Chinese consumers using honey as a medicine for thousands of years

• Comvita are strong market leader in Mānuka honey in China

• Wholly owned Subsidiary

• Over 200 team members on the ground

• New Leadership team complementing existing capability

• System integration completed

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CHINA – GROWING THE MARKET AND OUR SHARE
Total Market $1.8Bn
TODAY
Imported Honey
Imported Honey Imported Honey
Market Share
Market Share Market Share
20%
12% 15%
12% TAM 15% TAM 20% TAM
= NZD$216M = NZD$270M = NZD$360M
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WINNING IN CHINA

THE PATH TO SUSTAINABLE GROWTH Comprehensive Strategies

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NOW

FUTURE

WE KNOW OUR CONSUMERS

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ECOMMERCE
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OFFLINE
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REDEFINING OUR TARGET CONSUMER

• Consumer demographics

• Demographic size

• Media consumption Traffic, awareness, enlightenment, conversion

• Shopper habits

• Social influences

• Their needs (product and brand)

• Creating moments of escape

SIZE OF PRIZE AND LIFE STAGE

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COMVITA
TARGET
CONSUMERS
TODAY
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HOW TO CONNECT

• Three Elements to Generate Customer Engagement with Advocacy 1. Provide great products

• Understand consumer needs 3. Create a sense of belonging

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CONNECTED THROUGH HEARTS, ONE STEP FURTHER

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ACCELERATING DIGITAL LEADERSHIP

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ACCELERATING DIGITAL LEADERSHIP

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ACCELERATING DIGITAL LEADERSHIP

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ACCELERATING DIGITAL LEADERSHIP

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2 5 + S P E C I A L R E S E R V E MĀ NU K A H O NEY

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OUR WINNING MODEL

We aim to have an unrelenting focus on:

• Consumers and execution

• World class digital engagement and experience

• Science and quality

• Simplification, cost, and efficiency; and

• Sustainability and creating a world class organisation

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STRONG Q1 PERFORMANCE

• Strong start to the year

• Double digit revenue growth

• Strong GP margins

• Costs in line with expectations

• Brand investment increase to support differentiated model

• Trading profitably

• Nine consecutive profitable months

• Focused on delivering FY21 results

• Reducing Inventory and SKU count as we look to simplify the business and generate cash

FULL YEAR GUIDANCE MAINTAINED

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We pioneered the Mānuka Honey industry 50 years ago.

As we chart the course for the next 50 years, we looked to our beginnings to rediscover the timeless qualities that have got us to where we are today.

Our story began with an unlikely partnership; Alan and Claude – generations apart, worldly & progressive in their thinking.

United by a belief; That food is the best medicine. And that nature has the answers.

nearly 50 years on.

At the time they were regarded as rebels, mavericks even crazies.

They believed that Mānuka, considered near worthless at the time, had powerful health properties.

They sensed a magic lay within this honey from New Zealand and the hive itself.

And though it couldn’t be explained by science at the time – that was no reason to stop.

With the benefit of history, they are seen as pioneers.

The world has increasingly come round to Alan and Claude’s way of thinking. They see a healing wisdom in nature that makes sense in a world out of balance. People the world over, are looking for a natural answer to support their health. Many of us live in population dense, unrelenting cities – the environment and lifestyle combined causes stress, illness and general health damage.

And our science is now revealing nature’s secrets.

Every day we’re learning more and more about the extraordinary powers of the Mānuka tree, honey and the wondrous bee. We lead the industry in investment in science and will continue to do so.

We work in harmony with nature – seeking to understand. Never to alter.

This partnership of nature and science is the Comvita difference.

It’s what sets Comvita apart from the rest.

And makes Comvita the world’s leading bee products company.

There’s still more to learn, and more to share, but the giant steps we’ve already taken and the lives we’ve touched, fuel the passion to keep going.

We pioneered the industry nearly fifty years ago. We look forward with excitement to pioneering the next fifty years.

Comvita. This is our story.

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RESOLUTIONS

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Agenda
Brett Hewlett
Chair
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RESOLUTIONS

Formalities

• Reports and Financial Statements

Ordinary Resolutions

1. Appointment and Remuneration of Auditors

2. Director’s Elections:

3. Re-elect Mr. Brett Hewlett

RESOLUTION 1

Agenda Brett Hewlett Chair

Appointment and Remuneration of Auditors To consider, and if thought fit to pass, the following ordinary resolution:

“That the meeting record the re-appointment of KPMG as the auditors of the Company for the current financial year ending 30 June 2021 pursuant to section 207T of the Companies Act 1993, and authorise the Board to fix KPMG’s remuneration.”

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RESOLUTION 2

Director’s Election

To consider, and if thought fit to pass, the following ordinary resolution:

“That Brett Hewlett, who retires by rotation and is eligible for re-election, be re-elected as a Director of the Company.”

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RESOLUTION 2

Director’s Election

Brett is a professional director and consultant.

Other former Governance and Advisory Board roles include: Derma Sciences Inc. (DSCI:Nasdaq), SeaDragon (SEA:NZX), Enterprise Angels, NZTE’s Better by Design Advisory Board and Member of the Callaghan Innovation Stakeholder Advisory Group.

Brett has a Bachelor of Food Technology from Massey University, and a Masters of Business Administration from the International Institute for Management Development, Switzerland. He has also completed advanced management programmes at Stanford University and the Massachusetts Institute of Technology’s Sloan School of Management.

Brett is a Member of the Institute of Directors.

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General Business Questions Acknowledgements

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THANK YOU