CZZ 0.48% $20.90 capilano honey limited

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    Sydney -Tuesday - February 10: (RWE Aust Business News) CAPILANO HONEY (CZZ) has reported improving profit performance for the half year.

    Yesterday, the shares shot up 70c to $8.70 and then touched its all time high of $8.99.

    The company sent a letter to shareholders,detaling the results for the half year to December 31,2014.

    It reported the half-year result being a net profit before tax (NPBT) of $5.12 million, which compares to $2.45 million for the same period last year, before the impact of the Richlands fire and insurance reimbursements.

    Revenue has increased 34% to $57.9 million due to growth in domestic and export markets.

    Net interest bearing debt has been reduced to $4.29 million, down from $7.59 million at the end of June 2014 and $9.75 million for the same period to December 2013.

    Debt is associated with working capital requirements (inventory) and we continue to improve our gearing using incoming cash flows.

    The average cost of domestic supplier honey for the 6 months to 31 December has risen to $4.61/kg compared with $3.49/kg for the same period last year.

    This increase reflects heightened competition in the market as packers compete for supply in a period of reduced domestic production.

    Such increases in honey price have delivered our beekeepers a better reward for their effort and will help maintain the continuing viability of their businesses.

    Raw material cost increases have been effectively recovered from the market with wholesale price increases.

    Recent rains bring welcomed relief to many production regions and will help orchestrate a return to better seasons in the future as trees respond with increased flowering patterns.

    The Board has recently announced the acquisition of Victorian honey packer, Yellow Pty Ltd (trading as Chandlers Honey).

    The assets acquired and skilled staff within this honey business will be deployed to recommission Capilano s existing factory in Maryborough, Victoria.

    The reopening of this facility will expand Capilano s operational capability and will prepare the company to meet future sales targets, whilst absorbing an increase of packing demand of over 1,000 tonnes as a consequence of the acquisition.

    International interest in the quality premium range of retail products we market continues to grow, with expanding ranges in the Middle East and Asia, with overall export sales increasing 19% year to date.

    Capilano s Directors will continue the practice of considering only an annual dividend, declared Ben McKee , managing director.

    Meanwhile, directors announced that Capilano Honey Limited (ASX code: CZZ) has entered into a conditional contract to acquire the assets of Victorian honey packer, Yellow Pty Ltd (trading as Chandlers Honey).

    The contract is subject to certain conditions precedent, however it is expected that these will be satisfied and the contract will become unconditional on 30 January 2015 and that the transaction will complete simultaneously.

    Part of the consideration pursuant to the contract will be settled by issuing 76,923 shares in CZZ to the Vendor s nominee.

    The assets acquired will be deployed to recommission Capilano s Maryborough, Victoria facility, thereby expanding Capilano s operational capacity to meet a larger sales demand.

    Capilano anticipates that its packing volumes will increase in the magnitude of 1,000 tonnes as a consequence of the integration of this acquisition.

    It is envisaged that increased access to honey supply will be achieved through establishing renewed relationships with beekeepers in south-east Australia, whilst delivering a local regional base for honey delivery and packing.



    Shares of Capilano Honey yesterday climbed 70c to $8.70.

    Rolling high was $8.99 and low $3.926.

    Dividend is 15c to yield 1.74 per cent.Earnings per share is 54.20c while price earnings ratio is 15.92.

    The company has 899.3 million shares on issue with a market cap of $74.27 million.

    Chairman Trevor Morgan said it was a pleasure to declare open the forty-second Annual General Meeting of Capilano Honey Limited, and welcome everyone present.

    It is pleasing to once again report that Capilano has completed a very successful year with a significant increase in both sales and profit.

    The most notable issues during the year have been a shortage of supply due to low honey production nationally, and the successful and profitable integration into the business of the Western Australian honey packing and marketing operation, Wescobee, that was acquired towards the end of last financial year.

    A net profit after tax of $4.61m for this financial year is a very good result, being a 34% improvement over the previous year and continues to build on the increases seen over the last few years.

    This year s EBITDA of $9.05m is also an increase over last year s good result of $7.76m.

    A fully franked dividend of 20 cent per share, comprising the 15 cent normal dividend plus a 5 cent special dividend to reflect the improved performance, was declared in June based on this year s results and paid to shareholders on 25 July 2014.

    Beekeepers throughout the country have had a difficult season for honey production that has resulted in lower than normal production nationally; the increased competition for the limited supply has seen an escalation in the cost to Capilano for the honey we have acquired.

    Fortunately Management have been successful in obtaining corresponding increases in wholesale prices for our products that has maintained a reasonable level of profitability for Capilano.

    It has been the first time for many years that we have seen a meaningful increase in the wholesale price and we hope to be able to maintain most of these as production comes back to normal next season, providing us with the opportunity to give beekeepers a much needed incentive to stay in production.

    Changes in sales mix to reduce the number of lower margin large retail packs has also allowed the company to maintain returns from the limited amount of honey available.

    It has been and continues to be our policy to only use 100% Australian honey in our Capilano branded Australian retail products.

    Wescobee, the major West Australian honey company that was acquired near the end of the previous financial year has now been successfully and seamlessly integrated into Capilano and continues to contribute to the whole business, meeting and in some cases exceeding our original expectation.

    Hopefully the next honey season beginning this spring will see more favourable conditions for honey production, that will result in more honey available to meet the demand for this great product and allow Capilano to take better advantage of the sales opportunities that exist worldwide.

    Capilano continues to strive for increased efficiencies within the core business to meet our aim of being the most efficient low cost participant in the category.

    While the fire that destroyed much of shed two in Richlands in late 2012 created some disruption, we have been able to use the rebuilding to modify the operation to make it more efficient and streamlined.

    The insurance pay back for the fire has now been completed and we currently retain some of that money to further improve the decanting of raw honey.

    The Sales and Marketing team have done a great job working with our major customers to improve the offering we have available for consumers and to maintain the returns achieved.

    Capilano has always had a large share of the category but we have seen that market share increase even further over the past year.

    New products like, premium seasonal honey and pot set honey, continue to be introduced to maintain consumers interest in the product and to attract new or lapsed users back to consuming honey.

    During the past year shareholders have been rewarded with a steady increase in the traded price for the shares they hold in the company, hopefully with further good results and with those for the full year included in this report, that momentum can be maintained.

    The outcomes and results accomplished during the past year can only be achieved if everybody in the Capilano team are working hard and Finally to all the beekeepers who supply Capilano, we hope for a better new season for them and a more profitable future.



    Capilano Honey Limited (CZZ) is an Australian based company operating in packing of honey for domestic and export sales.

    CZZ's key products are 100% Australian Honey, Natural Pot Set Honey, Active Manuka, Honey Shotz, Floral Honey and Honey Fusions.

    The company has two segments: domestic and exports.

    Domestic segment includes products sold to customers within Australia for Australian consumption or sale.

    The export segment includes products sold to customers outside Australia which are included Europe, North America, Middle East, Indian sub-Continent, Asia and the Pacific Islands for consumption.

    Incredibly Capilano Honey was found 10 thousand miles from home.

    It was along South Africa s picturesque southern coastline, half-way between Cape Town in the west and Port Elizabeth in the east, lays the small seaside vacation town of Vleesbaai (sometimes known as Vlees Bay).

    In the summer of 1969, the Jordaan family first became aware of the Australian company Capilano Honey.

    During an afternoon beach stroll near the family holiday home they discovered a Capilano Honey tin washed up on the sand.

    At the time, the company was still known as Smith s Capilano Honey, named after its founder s apiarist Tim Smith and his brother Bert.

    The tin was undamaged with the lid still firmly in place and the family were amazed to find it full of honey in perfect condition.

    Over the years the honey was consumed, the lid was lost and the tin grew rusty, but for 45 years the Jordaan family have often wondered about the mysterious honey tin they found themselves in possession of.

    Was it left on the beach by a visiting Aussie tourist Did it fall overboard during a treacherous sea voyage Did it travel over ten thousand kilometres across the Indian Ocean from the West Australian coastline The likely answer to how the tin came to be on this quiet beach will be never known, but for Leon Jordaan some of his curiosity about the Capilano Honey tin was satisfied after he made contact with the company recently.

    After searching for Capilano Honey online, Leon was astonished to find Capilano still going strong.

    It was with great pleasure that the company responded to Leon to let him know that Capilano had just celebrated its 60th birthday last year.

    Copyright 2011 RWEABN

    courtesy of Bell Direct

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