Honey products company Comvita posted a $27.7 million annual net loss after writing off $20.1m of goodwill.
The result for the 12 months ended June compares with an $8.2 million profit the previous year.
The $7.6m loss before write-downs was as Comvita flagged earlier this month but inventory came in at $132.2m, up from $116.5m the previous year. Earlier this month the company estimated the value of inventory at $110m, excluding China.
Comvita says raw material stocks, mainly manuka honey, fell to $84m at June 30 from $89m a year earlier while finished goods including China – the company has just bought out its joint-venture partner in China – was $48m. Excluding China, they were flat at $26m.
Auditor KPMG gives the financial statements a clean bill of health but also notes that Comvita's net assets of $173.4m exceed the company's market capitalisation.
Comvita shares rose as much as 18 cents, or 6.9 per cent, to $2.80 before easing to $2.75, giving it a market cap of $136.6m. The shares have fallen more than 50 per cent in the past 12 months.
The net assets are after deducting net debt of $88.9m.
KPMG says because net assets were higher than market cap, "impairment of non-current assets is considered to be a key audit matter" and that it involved valuation specialists "to challenge key judgements."
Comvita chair Neil Craig said the result was "an extremely disappointing conclusion to a year of significant change," including the third poor honey season in a row, the Chinese government's crackdown on the daigou trade and tighter specifications on the export of branded Manuka honey.
The daigou, which literally means someone buying on behalf of others, buy products in Australasia for resale in China.
Despite a number of "bold strategic initiatives," including buying out the Chinese joint-venture partner Li Wang, who is now Comvita's largest shareholder with 16.8 per cent, the firm's efforts were "clearly too late to remedy the shortfall and engineer a turnaround in full-year 2019," Craig says.
"With control over our supply chain for our core ingredients and our distribution business in most markets still showing solid signs of growth, the board is confident of restoring positive sales momentum and positive earnings in the next fiscal year," he said.
Craig told analysts that "we basically decided to draw out any skeletons in the balance sheet" with the goodwill write-downs, more than $15m of which was on the firm's Australian interests. The firm also wrote $2.3m off its interest in its venture with Blenheim-based apiarist Putake Group.
Comvita had been due to report on Tuesday but delayed the release while the board and KPMG discussed the write-downs required.
Of the pre-write-downs loss, $6.9m came from the supply side of the business and $700,000 came from the brand business.
Comvita's sales in China on a like-for-like basis rose to $52.1m from $45.7m while sales in Australia and New Zealand fell to $65.6m from $82.6m, reflecting the decline in the daigou trade.
Sales in Asia rose to $41.3m from $36.8m but fell in North America to $13.4m from $26.8m, reflecting over-ordering by Costco.
Craig says Costco started ordering again late in the financial year just gone and he expects a better trading this year.
While Costco's renowned as a discounter, Craig said it also stocks "lots of premium and super-premium brands."
"It's a really good way of market entry. You get your brand seen and recognised."
Comvita's sales also fell in Europe from $8.7m to $6.2m and the company says it's still battling with the adoption of Ministry for Primary Industries quality standards in Britain.
It says it now has distribution through Amazon in Germany and has made management changes and cut costs.