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Comvita Reports Profit Lift Following strong Growth in Asian Markets, Offshore Acquisition
March 3, 2006

COMVITA LIMITED 2005 ANNUAL REPORT NEWS RELEASE


Natural healthcare products company, Comvita, has lifted its annual net profit after tax by 26% to $1.59 million.  This result was achieved on revenue of $31.3m, up 13% on 2004. A final fully imputed dividend of 3 cents per share has been declared, bringing total dividends to 5 cents (compared with 4.1 cents for 2004).

Comvita Chairman, Neil Craig, says the company achieved strong growth in all offshore markets with export revenue at 60% of total sales, now larger than domestic revenue for the first time.

“With EBITDA of  $4.09 million, margins were maintained at the operating level against a background of a continuing strong NZ dollar. This is testament to our strategy of ongoing strong marketing support for the Comvita brand and ownership of the distribution channels in all key markets.”

Comvita’s offshore growth has been spurred by a planned strategy to take greater control of its distribution channels. As part of this strategy, on
December 1, 2005, Comvita purchased its UK distributor (NZ Natural Foods) in order to increase its presence in the UK and launch in a very controlled manner into certain European markets.  In China and Taiwan, Comvita has made strong progress with the rollout of 20 Comvita-branded retail stores. These stores have been funded by local distributors, however all marketing is controlled by Comvita.

Subsequent to year-end, Comvita entered into a long-term exclusive licensing agreement for the Americas with Derma Sciences Inc, covering the manufacturing and marketing of certain patented wound care products.  This agreement, which involves taking a small equity stake in Derma Sciences in exchange for dedicated marketing spend, should result in wound care products being launched in the US in the second-half of 2006.

The Board of Directors appointed Neil Craig, the current executive chairman of ABN AMRO Craigs, as Comvita's new chairman in September 2005. Also appointed to the Board mid-2005 was business, marketing and innovation consultant, Dr David Cullwick. Former chairman, Bill Bracks, continues to make a significant contribution as a company director.

A new chief executive, Brett Hewlett, was also appointed in September 2005, along with the recent appointment of Dr Ralf Schlothauer as General Manager Technical.

Dr Schlothauer has global experience in new product development, including nutritional ingredients.  At Comvita, he is taking overall strategic and functional responsibility for research and development, including new product development.

According to Craig, CEO Brett Hewlett has already made his mark with the company with the development of a focused five-year growth strategy based on leveraging the brand and innovation in wellness products from natural source materials.

“The future looks very exciting for Comvita,” says Craig. “Brett has very quickly built an executive leadership group capable of delivering on the company’s 2010 strategy.”

Hewlett says the result is very good, given the currency issues and a flat domestic market.

“Sales for the first two months of this year have been significantly higher than the same period last year, and while it's still early days, provided the currency performs in line with predictions, we should beat both 2005 sales and profitability. This will be driven by sales increases in all export markets, margin improvement at the operating level and an increased contribution from our wound care division,” said Hewlett.   

“In order to achieve our growth targets, we need to continue to invest in our people. Plans are also underway for warehouse and factory expansions, and the completion of a new ‘Wellness Centre’. We have initiated a number of projects targeting strategic raw material supply, in anticipation of long-term growth in demand. We will also invest in retail merchandising assets and overall marketing spend. More details of these projects will be released later in the year as they progress.”


Appendix – Results

Year to 31 December 2005 (NZ$)

20042005
Group Revenue  27.6m  31.2m
Net Profit after Tax1.26m  1.59m
EBITDA 3.64m4.09m
Earnings per share   11.0c 12.3c
Dividend (fully imputed) 4.1c   5.0c

Final Dividend     

3.0c

Ex date14 April 2006
Payable date     28 April 2006
(Dividend Reinvestment Plan will apply.)


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New Look Comvita
February 23, 2006

Natural health products company Comvita, the UK brand leader for Manuka Honey and other bee products, is introducing a ‘new look’ of stylish, vividly-coloured packaging. The rationale behind the packaging redesign was to create a more contemporary identity for the premium health products brand, and to classify its products into ‘families’, easily identifiable by consumers.

Key to Comvita’s brand imprint is the strong use of black (and gold). Each product family is colour-coded and introduces graphic reference to product origin and ingredients. For example, the Comvita Winter Wellness range, which includes products like Propolis Herbal Elixir and Lozenges, is now presented in orange and bright blue denotes Comvita’s Propolis Liquids range, including Extract, Tincture and Throat Spray. Comvita’s ‘new look’ packaging is just one step in the company’s strategy towards achieving greater brand presence on-shelf, and increasing brand awareness and market share in the UK and Europe. The refreshed identity will be rolled out across advertisements, posters, and a brand new exhibition display, created specifically for the Natural Trade Show, Brighton and Natural Products Europe this year.


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Comvita Announces US Medical Licensing and Equity Deal
News Release
Date: February 15, 2006

Comvita announces it has signed a long-term exclusive licensing deal with US-based manufacturer and supplier of wound care products, Derma Sciences Inc.

The licensing deal, which includes patents and other intellectual property, covers the use of Comvita’s medical grade manuka honey-based products for chronic wounds, skin tears, post-operative wounds and burns.

Under the agreement, Derma Sciences will receive exclusive manufacturing and marketing rights to Comvita’s woundcare products throughout the Americas (North, Central and South).

In addition, and subject only to due diligence and final documentation Comvita will purchase US$500,000 (666,666 shares at US$0.75) of Derma Sciences stock when Derma receives FDA 510K approval for the manuka honey-based products. Funds from the purchase of Derma shares will be used exclusively to launch the manuka honey products in the Americas.

Comvita will also have the option to purchase an additional US$500,000 shares at the same price for one year from the signing of the license and an additional option to purchase two million shares three years from the signing of the agreement at US$3 per share.

Comvita CEO Brett Hewlett says his company is working to a precise step-by-step plan for entry into global markets and the evaluation and selection of Derma Sciences has been carefully planned.

“The US has always been part of our plan for growing our medical category and with its manufacturing capabilities and established distribution network, Derma Sciences is the perfect partner for Comvita’s entry into this large and growing advanced wound care market.

“Derma is ideally positioned to capture the commercialisation potential of Comvita’s range of patented products,’” he says.

Comvita now has the UK, US and Australasia covered for its wound care category, and rapidly growing sales in other new markets.

Hewlett says the value of the Derma Sciences agreement is significant for Comvita shareholders.

“The share options provide a pathway for more direct involvement in the US market through Derma. Operationally there will be excellent opportunities for knowledge sharing and learning between the organisations, benefiting both Comvita’s global wound care position and Derma’s sales and marketing efforts in the Americas.”

Barry Wolfenson, Director of Marketing for Derma Sciences says exclusive access to Comvita’s products greatly enhances Derma’s product portfolio as it fills an unmet need for combination wound healing/antimicrobial products for use in all phases of wound healing.

“Fifty percent of all non-traumatic leg amputations in the United States are due to infected diabetic ulcers, with a five-year mortality rate ranging from 39% - 68%. With other wounds and burns there is a growing concern over antibiotic resistant super-bugs such as MRSA. A significant percentage of these infections prove fatal.

“Medical grade manuka honey products will provide clinicians with additional resources to help reduce the risk of infection while providing optimal environments for wound healing from the onset of the wound through to closure.”

President and CEO of Derma Sciences, Edward J. Quilty says Comvita has a strong reputation for utilising raw materials from natural sources and is highly regarded in the natural health products industry.

“The unique qualities found in manuka honey have been shown in clinical studies to be effective in the management of leg ulcers, pressure sores and post-operative conditions. It’s capable of treating some of the more antibiotic resistant strains of bacteria, a significant and growing problem for hospitals.”

Background
FDA 510K
Manufacturers, distributors, or importers are required to get FDA clearance before marketing certain types of new medical devices in the United States. In most cases, this clearance is obtained by submitting a file, called a 510(k), for FDA review. The 510(k) must demonstrate that the new device is “Substantially Equivalent” to a named device (the “predicate”) that has already been legally marketed in the United States for the same purpose.

Web site
www.dermasciences.com

Derma Sciences Inc
Derma Sciences, Inc. is a fully integrated manufacturer, marketer and supplier of a complete line of products for wound and skin care. Its products can be broken down into five categories: Advanced Wound Care, Traditional Wound Care, Burn Care, Skin Care and Bathing, and Specialty Securement and Closure Devices. With three wholly owned and operated manufacturing facilities in St. Louis, Toronto, and China, Derma Sciences also offers contract manufacturing services for OEM or private label products.


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