Slide 1: Scales Corporation Limited Annual Results Presentation
SCALES CORPORATION LIMITED Growing Your Diversified Agribusiness Annual Results Presentation For the Year Ended 31 December 2021 24 February 2022
Slide 2: Agenda
Agenda 1. Operating Summary 2. Sustainability and COVID-19 Update 3. Financial Overview 4. Divisional Performance 5. Capital Management 6. Governance 7. Trading Outlook 8. Appendices Scales Corporation Limited – 2021 Full Year Results 2
Slide 3: Operating Summary
1 Operating Summary
Slide 4: Operating Summary
Operating Summary Diversified strategy underpinned the Group’s outstanding result during a challenging year Statutory Profit for the Year $36.9m, up 39% (2020: $26.6m) Underlying* NPAT attributable to shareholders of $29.7m, up 8% (2020: $27.5m) Record Underlying NPAT of $39.8m, up 20% (2020:
Slide 5: Our Year in Numbers
Our Year in Numbers 4,983,000 $514.6m 30,313 13.8% TEU2 equivalents TCEs of apples exported1 Record revenue ROCE3 (2020: 5,739,000) (2020: $470.7m) managed (2020: 12.3%) (2020: 35,502) 19.0 cents 149,207 MT $82.1m 3,651,000 Dividends declared TCEs of own-grown apples Petfood ingredients sold4 Net ca
Slide 6: 2021 Highlights
2021 Highlights Teamwork and personal commitment succeeded over uncertainty and disruption Top priority given to health and wellbeing of staff during uncertain times Extraordinary effort made by the Mr Apple team to pick, pack and export the harvest – in full and on time to global markets Food
Slide 7: Sustainability and COVID-19 Update
Sustainability and COVID-19 Update 2
Slide 8: COVID-19 and Health & Safety
COVID-19 and Health & Safety Health and safety remains our primary priority COVID-19 • Business operations continued during the lockdowns, in line with our pandemic preparedness policies • Reducing risk, whilst supporting all our staff, is of ultimate importance • COVID-19 continues to present chall
Slide 9: Sustainability
Sustainability Responding to new challenges Environment • Reduced freight movements as a result of the commissioning of the Whakatu coolstore • Creation of sustainability champions at packhouses to increase communication and feedback between sites and head office • LED replacement at an orchard acco
Slide 10: Financial Overview
Financial Overview 3
Slide 11: Group Financial Performance
Group Financial Performance Outstanding results aided by diversification strategy and exceptional team performance • Record revenue of $514.6m, up 9% (2020: $470.7m) • Underlying EBITDA of $73.8m, up 15% (2020: $64.1m) • Record Underlying NPAT of $39.8m, up 20% (2020: $33.0m) • Underlying NPAT attri
Slide 12: Trends in Group Financial Performance
Trends in Group Financial Performance Historic results are unadjusted for businesses that have been sold or acquired 2017 and 2018 results have not been restated for the effects of NZ IFRS 16 Underlying NPAT Revenue Underlying EBITDA Attributable to Shareholders $514.6m $73.8m $484.6m $470.7m $6
Slide 13: Divisional Financial Performance Overview
Divisional Financial Performance Overview Strong results from all divisions • Horticulture – lower export volumes offset by strong in-market prices, and aided by diversified markets and varieties • Food Ingredients – benefitted from continued global petfood demand together with changes in product or
Slide 14: Trends in Divisional Performance
Trends in Divisional Performance Trends in Underlying EBITDA by division are shown in the graphs below 2017 and 2018 results have not been restated for the effects of NZ IFRS 16 Horticulture Food Ingredients Logistics* $48.3m $42.6m $35.1m $40.8m $38.9m $39.1m $23.1m $4.9m $4.9m $13.6m $4.1m $4.
Slide 15: Balance Sheet
Balance Sheet Strong financial position Balance Sheet $m 2021 2020 Current Assets (Excluding Cash) • Movement in capital employed reflects: Trade and other receivables 28.7 19.5 Inventories 29.6 25.8 ◦ Revaluation of land and buildings Unharvested agricultural produce 24.6 24.0 Other 10.0 16.6 ◦ Cap
Slide 16: Balance Sheet (continued)
Balance Sheet (continued) Security to invest in growth opportunities Balance Sheet (continued) • Net cash as at 31 December 2021 of $82.1m (2020: $97.6m), comprised: $m 2021 2020 ◦ Cash and term deposits of $118.2m (2020: $150.6m) Non-Current or Other Liabilities Deferred tax liabilities (22.9) (25.
Slide 17: Divisional Performance
Divisional 4 Performance
Slide 18: Horticulture – Financial Performance
Horticulture – Financial Performance Outstanding performance in difficult environment • Revenue of $243.4m, in line with 2020 ($246.0m) Financial Performance - Horticulture • Underlying EBITDA of $39.1m (2020: $40.8m) $m 2021 2020 % change Revenue 243.4 246.0 -1% ◦ A very strong result given signifi
Slide 19: Horticulture – Automation and Orchard Development
Horticulture – Automation and Orchard Development Commencement of automation plan helping to stabilise Mr Apple margins • Multi-year investment and automation plan implemented to increase productivity and Mr Apple EBIT Margins Through Time* sustain margins 16% • First phase was Whakatu coolstore – r
Slide 20: Horticulture – Own-Grown Volumes
Horticulture – Own-Grown Volumes Continued strong growth in Premium varieties • Increase in Premium varieties of 6% compared to 2020: ◦ Compound Annual Growth Rate (CAGR) of 14% since 2012 ◦ Significant growth in sales of DazzleTM and PosyTM • Weather and orchard redevelopment (reducing planted hect
Slide 21: Horticulture – Pricing and Other KPIs
Horticulture – Pricing and Other KPIs Benefitted from both geographical and channel diversification • Pricing above prior year levels for most varieties, reflecting: Horticulture KPIs Apple Prices by Variety (NZD / TCE, FOB) ◦ Reduced volumes 2021 2020 % change ◦ Larger fruit for certain varieties P
Slide 22: Horticulture – Meeting the Challenges of a Changing International Market
Horticulture – Meeting the Challenges of a Changing International Market Investment made in brand positioning, design and digital infrastructure • Continued growth in Asia and Middle East markets despite disruptions: ◦ China and Hong Kong represented ~20% of Mr Apple total export sales (2020: ~17%)
Slide 23: Horticulture – Digital Marketing and Social Media
Horticulture – Digital Marketing and Social Media Using digital tools to actively build our brand awareness and conversion with consumers throughout Asia • Mr Apple has a presence on Facebook across SE Asia, and in China on WeChat, Weibo, Douyin (TikTok) and Little Red Book • Facebook and Instagram
Slide 24: Food Ingredients – Performance
Food Ingredients – Performance Outstanding performance, reflecting ongoing demand for global petfood • Excellent full year result: Financial Performance - Food Ingredients $m 2021 2020 % change ◦ 29% increase in volumes sold Revenue 218.9 173.7 26% ◦ 26% increase in revenue Underlying EBITDA 35.1 23
Slide 25: Food Ingredients – Industry and Strategy Update
Food Ingredients – Industry and Strategy Update Growth in petfood market reinforces Food Ingredients’ strategy • Growth of 8.2% in global petfood production, with a 17.1% increase in Asia-Pacific* • Reported increase in USA and worldwide petfood sales: ◦ Petfood and treat sales in the USA increased
Slide 26: Logistics – Performance
Logistics – Performance 2021 performance underlines strategic benefit of division • Strong full year performance: Financial Performance - Logistics $m 2021 2020 % change ◦ 5% increase in revenue Revenue 81.9 77.9 5% ◦ 17% increase in Underlying EBITDA, with performance returning to previous levels U
Slide 27: Capital Management
5 Capital Management
Slide 28: Capital Management
Capital Management Return on Capital Employed (ROCE) levels vary according to business structure and operations • Divisional and target ROCE calculations updated for effect of NZ IFRS 16 Capital Management Return on Capital Employed • Horticulture impacted by capital expenditure and to a significant
Slide 29: Capital Expenditure
Capital Expenditure Investing in growth and margin sustainability projects • 2021 capital expenditure included: Capital Expenditure ◦ Mr Apple orchard redevelopment Maintenance $m 2021 2020 ◦ Completion of Mr Apple Whakatu coolstore Horticulture 3.7 4.3 ◦ Commencement of the Mr Apple automation prog
Slide 30: Governance
Governance 6
Slide 31: Governance and Management
Governance and Management Strengthening our Director and Senior Management Team • Commenced Board succession process, assisted by external advisors, Boardworks • Qi Xin appointed as Non-Executive Director in December 2021: ◦ Senior Director of a department within China Resources Enterprise, Limited
Slide 32: Trading Outlook
Trading Outlook 7
Slide 33: 2022 Outlook
2022 Outlook Group update Note: Scales’ Horticulture division is particularly reliant on the ability to harvest and process fresh produce at the optimum timing. This impacts on volumes and quality and our ability to market our fresh produce globally. The harvest window does not allow for delays. The
Slide 34: 2022 Outlook (continued) – Horticulture and Logistics
2022 Outlook (continued) Divisional update – Horticulture and Logistics Horticulture • Picking and packing has commenced for the 2022 season, and current indications are positive with volumes in line with earlier projections. As always, our ability to pick and pack the entire crop is dependent on th
Slide 35: 2022 Outlook (continued) – Food Ingredients
2022 Outlook (continued) Divisional update – Food Ingredients Food Ingredients • The petfood businesses within this division have performed strongly and we continue to investigate opportunities for further growth • Our New Zealand joint venture with Alliance has performed well and is focused on both
Slide 36: Appendices
8 Appendices
Slide 37: Appendix I - Reconciliation of Underlying to Reported Measures
Appendix I - Reconciliation of Underlying to Reported Measures Reconciliation of Divisional Underlying Profitability to Reported Profitability Group Horticulture Food ingredients Logistics Corporate and eliminations 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 EBITDA Reconciliation Underlying E
Slide 38: Appendix II - Disclaimer
Appendix II - Disclaimer The information in this presentation has been prepared by Scales Corporation Limited with due care and attention. However, neither Scales Corporation Limited nor any of its directors, employees, shareholders nor any other person shall have any liability whatsoever to any per