Scales Corp. Ltd. · NZX:SCL
Scales — Shareholder Meeting (June 2020)
44 slides from Scales's shareholder meeting presentation, Jun 9, 2020
Slide 1: Scales Corporation Limited 2020 Annual Shareholders' Meeting
Scales Corporation Limited Growing your Diversified Agribusiness 2020 Annual Shareholders’ Meeting 9 June 2020
Slide 2: Agenda
Agenda I. Welcome and Chair’s Review II. Managing Director’s Review 1. COVID-19 Update 2. Year in Review 3. Sustainability and Governance Update 4. Strategy Update 5. Outlook III. Ordinary Resolutions IV. Voting and Questions Scales – 2020 Annual Shareholders’ Meeting 2
Slide 3: Voting Process
Voting Process • When the poll is open, the vote will be accessible by selecting the voting icon at the top of the screen. • To vote simply select the direction in which you would like to cast your vote, the selected option will change colour. • There is no submit or send button, your selection is a
Slide 4: Question Process
Question Process • When the Question function is available, the Q&A icon will appear at the top of the app. • To send in a question, simply click in the ‘Ask a question’ box, type your question and the press the send arrow. Ask a question • Your question will be sent immediately for review. Ask a qu
Slide 5: I. Welcome and Chair's Review
I. Welcome and Chair’s Review 5
Slide 6: Welcome
Welcome • Welcome to all shareholders and stakeholders. • First virtual ASM in over 100 years of trading. • Extremely grateful to our hard-working team members, especially during lockdown: ▪ Scales’ entities occupied the privileged position of being able to trade throughout lockdown. ▪ Safety of sta
Slide 7: Chair's Review
Chair’s Review Positive strategic momentum • Record Net Profit for the Year of $121.6 million. • Completed divestment phase of Strategy Refresh. • Continued improvements in sustainability matters. • Actively progressing organic growth and acquisition opportunities. The Profruit management team. Scal
Slide 8: Staff and Shareholders
Staff and Shareholders • Results reflect hard work, skill and positive manner of all team members. • Focused on leadership, training in bullying & harassment prevention and mental health awareness in 2019. • Continued incentive based remuneration scheme aligned to positive group and personal perform
Slide 9: II. Managing Director's Review
II. Managing Director's Review 9
Slide 10: Managing Director's Review
Managing Director’s Review 1. COVID-19 Update 2. Year in Review 3. Sustainability and Governance Update 4. Strategy Update 5. Outlook Scales – 2020 Annual Shareholders’ Meeting 10
Slide 11: COVID-19 Update
CGOWID-19 update Scales”
Slide 12: COVID-19 – Trading through the alert levels
COVID-19 – Trading through the alert levels Scales’ businesses occupied the privileged position of being ‘essential’ • Advice and direction received from Ministry for Primary Industries (MPI). • Priority on minimising risk to team members; staff worked from home where possible. • Implemented protoco
Slide 13: COVID-19 – Team Effort
COVID-19 – Team Effort It takes a village • Business continuity made possible by outstanding leadership effort and teamwork of all staff: ▪ Lockdown occurred during crucial apple harvest period. • Active involvement at government level to assist vital Recognised Seasonal Employer (RSE) workers: ▪ As
Slide 14: COVID-19 – Safety Measures
COVID-19 – Safety Measures Safety measures put in place at Mr Apple and Meateor Scales – 2020 Annual Shareholders’ Meeting 14
Slide 15: Year in Review
Year in Review 2 15
Slide 16: Strength in Numbers
Strength in Numbers $484.6m 16% revenue ROCE (new revenue record) (2018: 17%) 5,953,000 3,822,000 TCEs of own-grown TCEs of apples exported* (up 2% on 2018) apples exported (in line with 2018) 39,438 111.0 MT TEU equivalents freighted petfood ingredients sold** (step change resulting from acquisitio
Slide 17: Trends in Financial Performance
Trends in Financial Performance • Historic results not adjusted for businesses divested or acquired. • Graphs reflect changes in Group structure, particularly over 2018 and 2019. Underlying EBITDA Underlying NPAT $67.9m $67.1m $38.6m $35.8m $36.4m $61.4m $62.0m $34.8m $32.7m $52.7m 2015 2016 2017 20
Slide 18: Group Financial Performance
Group Financial Performance Strategic changes contributing to record profit • Record revenue up 20% on 2018: Income Statement ▪ Includes full year trading from Shelby. $Millions 2019 2018 Growth % • 2019 Underlying EBITDA $52.7m. Prior year Revenue 484.6 402.5 20% includes: Underlying EBITDA 52.7 67
Slide 19: 2019 Divisional Highlights
2019 Divisional Highlights Horticulture • Record revenue of $264.8m, up 4% on 2018. H • Higher than expected Mr Apple export crop during ongoing orchard development. • Initial sales of PosyTM. Food Ingredients FI • Step change in revenue to $155.1m (2018: $83.1m) following acquisition of Shelby. • 5
Slide 20: Trends in Divisional Performance
Trends in Divisional Performance Horticulture Food Ingredients Underlying EBITDA Underlying EBITDA $45.3m $42.6m $13.5m $40.0m $39.7m $38.9m $10.2m $9.2m $7.6m $8.0m 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Logistics* Underlying EBITDA $4.9m $3.3m $3.3m $2.3m $1.9m 2015 2016 2017 2018 2019
Slide 21: Balance Sheet
Balance Sheet Reflecting strategic changes • Net cash position attributable to proceeds from the Financial Position divestment of: $Millions 2019 2018 2017 ▪ Polarcold. Capital Employed 280.6 261.3 307.5 ▪ 50% of the Meateor NZ business. Return on Capital Employed 16% 17% 17% ▪ Increase in Other Lia
Slide 22: Sustainability and Governance Update
Sustainability and Governance Update 3 22
Slide 23: Sustainability
Sustainability • Continued progress on our Sustainability journey. • Measured impact in, and set targets for, our key Sustainability focus areas: ▪ People – in particular, staff engagement, leadership and health and safety. ▪ Energy – carbon footprint calculation and emission reduction initiatives.
Slide 24: It's All About Our People
It’s All About Our People >500 ~25% 43 years ~30% permanent staff staff with longest serving female senior members >10 years service employee management staff 18 >30 people >170 people involved in the Solo Parent ~25% different ethnicities undertaken NZQA and Seasonal Employer / permanent recorded i
Slide 25: People and Health & Safety
People and Health & Safety Health and safety of our people is our number 1 priority People • Second Group-wide staff engagement survey undertaken, engagement score of 61%. • Leadership, bullying & harassment prevention and mental health awareness 61% 56% training undertaken. • Significant investment
Slide 26: Marketplace and Environment
Marketplace and Environment Progress made in a wide range of areas Marketplace • All businesses continue to have an annually updated Business Continuity Plan. • Continuing investment in technology to provide traceability. Environment • EECA audit at 2 Mr Apple sites showed excellent energy managemen
Slide 27: Governance
Governance Investing in our strategic leadership • Two new additions to the Board in 2019: ▪ Tomakin Lai – appointed January 2019. ▪ Nadine Tunley – appointed February 2019. • Brought complementary skills and expertise to our Board table. • Continued participation in the Institute of Directors’ Futu
Slide 28: Strategy Update
Strategy Update 4 28
Slide 29: Horticulture – Orchard Strategy
Horticulture – Orchard Strategy Redevelopment – a decade long investment • When complete, approximately 475 ha of orchard will have been redeveloped to premium varieties. Orchard Redevelopment Programme 2008-2014 ~300ha ~143ha ~32ha 2017-2019 2020 • Sales to Asia and Middle East have increased from
Slide 30: Horticulture – Volumes and Pricing
Horticulture – Volumes and Pricing Benefits expected from the replanting profile • Absent further redevelopment, orchard production expected to increase in future as recent plantings mature. • New planting techniques involve considerably more trees / ha: Newer planting techniques involve many more t
Slide 31: Horticulture – Volumes and Pricing (cont.)
Horticulture – Volumes and Pricing (cont.) Benefits expected from the replanting profile • Volume increases, facilitated by RSE scheme workers, generate a meaningful growth in permanent roles (up 106% between 2012 and 2019). • Driving improved pricing through: ▪ Higher proportion of premium varietie
Slide 32: Horticulture – Marketing
Horticulture – Marketing Maximising appeal to consumers, wholesalers and retailers • Enhanced in-market branding and marketing initiatives, particularly in Asia and Middle East. • China represented 17% of Mr Apple export volumes in 2019 (2018: 10%): ▪ Supported by China Resources Ng Fung Ltd and Pri
Slide 33: Food Ingredients – Industry Focus
Food Ingredients – Industry Focus Solid foundation for continued growth • Initial investments provide base for expansion in an attractive industry: ▪ Global petfood ingredients market estimated at US$37.0b in 2019*. ▪ Projected to grow at a CAGR of 6.6% to US$54.3b in 2025*. ▪ 2019 USA petfood and t
Slide 34: Food Ingredients – Global Strategy
Food Ingredients – Global Strategy A key provider of petfood ingredients to a wide range of international brands • Actively reviewing opportunities to expand product range, with added-value and functional petfoods. • Aiming to be a key provider to a range of international petfood brand owners. • Con
Slide 35: Outlook
Outlook 5 35
Slide 36: Trading Update – Horticulture
Trading Update – Horticulture • Apple harvest completed with limited disruption. Total pick of 5.1m TCEs equal to the previous record in 2018. • Packing is underway with approximately 2/3rds completed. Whilst final export packout rates will not be known until the end of the season, performance to da
Slide 37: Trading Update – Food Ingredients and Logistics
Trading Update – Food Ingredients and Logistics Food Ingredients • Demand ‘front-loaded’ as customers have accelerated purchases to mitigate their own supply-chain risks. • Trading through the balance of the year will likely be lower as a result. Logistics • Has also benefitted from demand accelerat
Slide 38: Trading Update – Group
Trading Update – Group Group • Impact on group earnings due to COVID-19 difficult to assess: ▪ Precautions and distancing measures allowed us to continue trading during lockdown. ▪ Picking has been completed, but packing and marketing in progress. ▪ Situation and market dynamics, including supply ch
Slide 39: III. Ordinary Resolutions
III. Ordinary Resolutions 39
Slide 40: Resolution 1
Resolution 1 That the Board is authorised to fix the auditor’s remuneration for the coming year. Scales – 2020 Annual Shareholders’ Meeting 40
Slide 41: Resolution 2
Resolution 2 Having retired by rotation, that Nick Harris be re-elected as a Non Executive Independent Director. Scales – 2020 Annual Shareholders’ Meeting 41
Slide 42: IV. Voting and Questions
IV. Voting and Questions 42
Slide 43: Question Process – Reminder
Question Process – Reminder • The floor is now open to questions – the Q&A icon will appear at the top of your app. • To send a question, simply click in the ‘Ask a question’ box, type your question and the press the send arrow. Ask a question • Your question will be sent immediately for review. Ask
Slide 44: Disclaimer
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 person for any lo