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Comvita chair Neil Craig eyes the exit once he finds a new CEO

Friday 18th October 2019

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Comvita chair Neil Craig is planning to step down after the honey products company appoints a new chief executive and probably before the end of the company's financial year next June.

Craig confirmed that he told shareholders at Thursday's annual meeting both that he is planning to step down and that Brett Hewlett will succeed him.

Hewlett has been acting chief executive since Scott Coulter stood down from that role in September after four years in that position and 16 years with Comvita. Hewlett had been Coulter's predecessor, holding the reins for 10 years, and joined the board in 2017.

"What I said is, this time next year, I wouldn't be chairman," Craig told BusinessDesk.

"And when I retire, he (Brett Hewlett) will replace me when we've got new management ensconced in the job and everyone's comfortable and we've got a business in shape with the new CEO, it's my plan to slip away," he said.

"The board is comfortable with that."

The company expects to appoint a new chief executive before Christmas.

Craig described the meeting, which went on for about two hours 20 minutes, as "a very positive meeting, despite the poor performance of the company."

Comvita reported a $27.7 million net loss for the year ended June, which included a $20.1 million write-down of goodwill and compares with an $8.2 million net profit the previous year.

Craig said 18 months ago, he had intended to have resigned by now but, after the company's poor performance, "under the circumstances, the board wanted me to stay on for the transition to the new CEO."

He noted that all five of the directors up for election – two of whom were already directors and up for re-election – were approved by 99 percent or more of the shares voted.

The New Zealand Shareholders' Association had said ahead of the meeting that it intended to vote its proxies in favour of all resolutions.

"We've got a very loyal shareholder base. You go into these meetings with a little trepidation – it was one of those meetings where shareholders understand it quite well," Craig said.

That understanding applied to problems with the Ministry for Primary Industry's new regulations covering Manuka honey, which are only applicable to exports, not domestic sales.

Comvita also says that rules allowing "multifloral Manuka honey" to be sold have created "unfair competition" and consumer confusion.

"Comvita does not sell multifloral Manuka. Until rules are 'tidied up' – and we are working with industry bodies and MPI to do this – the only real protection to consumers wanting to buy genuine Manuka honey is to buy monofloral Manuka packed in NZ," the company told shareholders.

Comvita had also complained of a third poor honey season in a row and changing regulations impacting sales to China.

NZSA representative at the Comvita meeting, Jane Lyndon, has been attending Comvita AGMs since the 1980s, long before the company listed on NZX with the help of Craig's broking firm in 2003. She had an entirely different idea of how proceedings went.

Lyndon said the meeting was "quite heated" at times and the mood of the about 180 shareholders attending was unhappiness at Comvita's performance.

"For years now, they've over-promised and not delivered," Lyndon said.

She pointed out that when presenting its annual results in August 2017, Comvita had set itself a target of reaching $400 million in sales revenue by the 2021 financial year – revenue in the year ended June was $171 million, down from $178 million the previous year.

Lyndon said another shareholder had said Comvita looks "very Fonterra-ish" and that two of the directors, Sarah Kennedy and Bob Major, used to work for Fonterra.

The dairy giant reported a net loss attributable to shareholders of $557 million for the year ended July, up from a loss of $221 million the previous year, after $826 million of asset write-downs.

Comvita shares recently traded at $3.30 and have fallen 45 percent in the last 12 months.


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