With Comvita shares remaining well above the share offer level, the company delivering better results than earlier guidance and booking sales growth, Cerebos may have to rethink its offer.
Shareholders have fewer than 40 days to consider the present $71.6 million bid, which at $2.50 per share remains unchanged since it was launched in the middle of October.
Comvita's board has recommended shareholders do not sell and that they wait for the release of an independent appraisal of the offer, due out no later than November 22.
For the six months to September, revenue grew from $36.5 million to $41.7 million, while unadjusted after-tax profit was turned around from a $2.2 million loss for the same period last year to a $2.2 million profit this year.
One-off costs in the first half of the 2011 financial year included a $1.5 million tax charge, due to changes in building depreciation rules and costs associated with defending a key patent.
Comvita chairman Neil Craig said, "Positive trading activity in all key markets combined with ongoing operational improvements has delivered sales and earnings significantly better than the previous two years."
Mr Craig would not comment directly on what effect the after-tax profit may have on Cerebos' offer, other than to reiterate he believed it was still "undervalued", and believed this would be "borne out" in the independent appraisal report.
The result prompted announcement of a fully imputed interim payment of 4c per share for the first half, payable in December. After release of the result yesterday, Comvita shares were unmoved at $2.80.
When asked about guidance for the full-year dividend, Mr Craig said it would normally be another 6c-7c per share, but the final figure would be determined on cash flows towards the end of the year.
He said sales during the six-month period rose 14%, to $41.8 million from $36.6 million, and were up 18% in local market currency terms.
"This result is confirmation that the considerable investment Comvita has made over the last few years is starting to deliver for shareholders," Mr Craig said in a statement.
The second half-year results for Comvita have historically been significantly stronger than the first half.
The company expected this to be the case again this financial year.
Comvita reaffirmed guidance it was on track to meet the forecast for the full year ending March 2012 of sales in the range of $91 million to $95 million, compared with $82 million last year.
Normalised after-tax profit is expected of between $7.3 million to $8.2 million, compared with $3.6 million last year.
Comvita chief executive Brett Hewlett said that during the last five years the company invested to build the infrastructure required to support a high-growth international company, and initiatives were all starting to deliver "the desired improvement in net earnings".
"We have strengthened our distribution networks in international markets, particularly Australia and Asia. We have also invested heavily in research and development, new product development and the Comvita supply chain, particularly in the sourcing of manuka honey," he said.
The Cerebos offer is conditional on it receiving 90% acceptance from holders in Comvita and approval of the Overseas Investment Office, but it could change the level of acceptance to anything above 50% in the near future.
Comvita
• Is a natural health and beauty products company, using manuka (Leptospermum) honey as the core of its product range.
• Sells into more than 14 countries through a network of wholesale and third-party outlets.
• Has more than 470 branded retail outlets throughout Asia, including 400 stores in 40 cities in mainland China and online. Has offices in New Zealand, • Australia, Hong Kong, Japan, Taiwan, South Korea and the United Kingdom.
• Singapore-based food giant Cerebos has a hostile $71.6 million bid on table, at an offer price of $2.50 per share.
