Scales Corp. Ltd. · NZX:SCL
Scales — Shareholder Meeting (June 2019)
41 slides from Scales's shareholder meeting presentation, Jun 12, 2019
Slide 1: Scales Corporation Limited 2019 Annual Shareholders' Meeting
Scales Corporation Limited Growing your Diversified Agribusiness 2019 Annual Shareholders’ Meeting 12 June 2019
Slide 2: Agenda
Agenda I. Welcome II. Chair’s Review III. Managing Director’s Review 1. Year in Review 2. Sustainability and Governance Update 3. Strategy Update 4. Outlook and Investor Matters IV. Ordinary Business and Resolutions V. Voting and Questions Scales – 2019 Annual Shareholders’ Meeting 2
Slide 3: Chair's Review
Chair’s Review Delivering on our strategy • A record breaking year. • Re-focused group investment and growth strategy. • Continued progress on sustainability. • Expanded Board and new China Resources Ng Fung appointee – ensuring the continuation of a strong business relationship. Scales – 2019 Annua
Slide 4: Culture & Shareholder Alignment
Culture & Shareholder Alignment • Scales has cultivated a strong culture of teamwork, recognition and support. • Senior team members compensated via an appropriate mix of short and long-term incentives: ▪ STI scheme – performance based. ▪ LTI scheme – linked to long-term share price performance as a
Slide 5: Managing Director's Review
Managing Director’s Review 1. Year in Review 2. Sustainability and Governance Update 3. Strategy Update 4. Outlook and Investor Returns Scales – 2019 Annual Shareholders’ Meeting 5
Slide 6: Year in Review
Year in Review 1 6
Slide 7: Scales by the Numbers
Scales by the Numbers $464.7m 3 17% 18.5 cents acquisition or divestment Return on Capital dividends declared Underlying Revenue (new Revenue record) contracts signed Employed (ROCE) per share (Polarcold, Liqueo, Shelby) (2017: 17%) 5,831,000 3,867,000 35,210 TCEs* of apples exported 29,028 MT TCEs
Slide 8: Trends in Financial Performance
Trends in Financial Performance Continued growth • Underlying* EBITDA and Underlying NPAT have increased at CAGRs of 14% and 16% respectively. • Underlying EBITDA has increased by 68% and Underlying NPAT has increased by 81% since 2014. Underlying EBITDA Underlying NPAT $67.9m $67.1m $38.6m $61.4m $
Slide 9: Group Financial Performance
Group Financial Performance A record breaking year Income Statement 2018 2017 Growth % • Underlying Revenue $464.7m, up 18% on 2017: $Millions (Restated) ▪ Solid revenue growth from all divisions. Underlying Revenue 464.7 393.1 18% ▪ Reported* revenue (excluding discontinued operations) $402.5m up 2
Slide 10: 2018 Divisional Highlights
2018 Divisional Highlights Horticulture – setting a new benchmark • Revenue of $255m, up 15% on 2017. 1 • Continuation of our orchard redevelopment strategy. • Full launch of DazzleTM and PosyTM this year. Storage & Logistics – significant divestment activity 2 • Polarcold sold in May 2018, settled
Slide 11: Divestment Achievements
Divestment Achievements Positive returns on investment – highlighting our returns focused approach • Approximately $200m realised from the sale of Divestment summary Polarcold, Liqueo and 50% of Meateor NZ, comprising: Liqueo Polarcold ▪ Headline values; and Consideration $20.0m $151.4m ▪ Positive a
Slide 12: Trends in Divisional Performance
Trends in Divisional Performance CAGRs of 14% to 16% for divisional Underlying EBITDAs over the last 5 years Horticulture EBITDA Storage & Logistics EBITDA Food Ingredients EBITDA $45.3m $42.6m $21.1m $10.2m $40.0m $38.9m $19.1m $9.2m CAGR 16% CAGR 14% CAGR 16% $8.0m $16.3m $16.2m $7.6m $23.9m $12.3
Slide 13: Balance Sheet
Balance Sheet Maintaining a strong financial position • 2018 reported balance sheet showed: Financial Position ▪ Increase in capital employed due to Shelby transaction, capital 2018 2018 2017 expenditure and increases in inventories. $Millions (Pro Forma) (Restated) ▪ An increase in Net Debt due to
Slide 14: Sustainability and Governance Update
Sustainability and Governance Update 2 14
Slide 15: Sustainability
Sustainability Our Sustainability journey • In 2018 we started measuring, and setting targets for reducing our impact in, the areas of focus identified in 2017. • These areas were: ▪ People – in particular, staff engagement and health and safety. ▪ Energy – participation in CEMARS® (carbon footprint
Slide 16: Sustainability - Initiatives
Sustainability - Initiatives A snapshot of current and future initiatives • People: ▪ Inaugural Group-wide staff engagement survey undertaken, will be used as a baseline for measuring progress. ▪ Launching independent ethical business reporting line (Report It Now) in August 2019. • Health and Safet
Slide 17: Sustainability - Measurements
Sustainability - Measurements Measuring and setting targets in key focus areas 42% female 63 active 85% participation 100% of Scales 58% male apprenticeship in the inaugural companies have an updated programmes staff engagement survey Business Continuity Plan current staff ratio* 2.4 times 100% atte
Slide 18: Governance
Governance Two new additions to our Board • Tomakin Lai ▪ Non-Executive Director. ▪ Appointment effective from 28 January 2019. ▪ Replaces Weiyong Wang as China Resources Ng Fung’s representative on the Board. ▪ Director of China Resources Ng Fung and Executive Director of China Resources Beer (Hold
Slide 19: Strategy Update
Strategy Update 3 19
Slide 20: A Focus on Agribusiness
A Focus on Agribusiness Our strategies as an investor in New Zealand agribusiness • Continue to look for diversification from our operating units, ensuring a more sustainable and robust earnings profile. • Pursue fully integrated models where we can directly benefit from 'best practice' farming, oft
Slide 21: Macro Economic Trends
Macro Economic Trends Scales is well positioned to capitalise on environmental trends • The food & agribusiness sector has particular relevance in the fight against climate change*: ▪ As a carbon emitter (roughly a third of annual greenhouse gas emissions are from agriculture, food production and fo
Slide 22: Strategy Progress
Strategy Progress Delivering on our Strategy Refresh • Portfolio rebalancing: ▪ Storage businesses divested. • Focus on opportunities best aligned with our core strengths, with initial focus on our Food Ingredients division: ▪ Acquired a controlling interest in Shelby Foods. ▪ Announced a joint vent
Slide 23: Horticulture – Orchard Strategy
Horticulture – Orchard Strategy Mr Apple expects to drive future performance through three strategic initiatives • Maintaining our focus on premium varieties to Asia and Middle East. • Driving improved returns and branding presence through increased sales of proprietary varieties and brands (e.g. Da
Slide 24: Horticulture - Market Strategy
Horticulture - Market Strategy A shift in focus • Evolution of marketing focus at Mr Apple: ▪ Maximisation of appeal to consumers as well as wholesalers and retailers. • Led to a range of marketing and branding initiatives, particularly in China: ▪ Increased social media, in-store promotions and exh
Slide 25: Horticulture – New Varieties
Horticulture – New Varieties Images from our PosyTM launch in China Posy Repack (gift box, label) Posy online sale Posy on shelf Scales – 2019 Annual Shareholders’ Meeting 25
Slide 26: Logistics – Australasian Strategy
Logistics – Australasian Strategy Ongoing strength in the Australasian food and perishable market • Australasian agricultural products have, and are expected to continue to, experience strong growth. • Scales Logistics provides end-to-end logistics services, with specialised expertise in the food an
Slide 27: Food Ingredients – Global Strategy
Food Ingredients – Global Strategy Developing a $25m EBITDA division • Food Ingredients division offers attractive market opportunities and strong financial returns. • Petfood ingredients is an attractive industry for investment: ▪ Spending on pets demonstrating strong year-on-year growth, global in
Slide 28: Our Developing Overseas Presence
Our Developing Overseas Presence • Through organic growth and acquisition, Scales has developed an international network spanning four regions: ▪ New Zealand ▪ Australia (petfood ingredients and logistics) ▪ USA (petfood ingredients) ▪ China (Primary Collaboration New Zealand (PCNZ), and cornerstone
Slide 29: Outlook and Investor Matters
Outlook and Investor Matters 4 29
Slide 30: Trading Update
Trading Update Overall agribusiness environment remains positive • Group: ▪ Scales reconfirms previous Guidance - Underlying Net Profit Guidance for the full year of between $32.0m and $37.0m. ▪ Implies an Underlying EBITDA range of $49.0m and $55.0m from operations, compared to $48.5m in 2018 (like
Slide 31: Shareholder Returns
Shareholder Returns • Dividends – a total of $0.19 per share in cash dividends paid in respect of 2018: ▪ An increase from the $0.18 total dividend per share in 2017. ▪ Represents 75% of Underlying Net Profit. ▪ Scales remains committed to the current dividend cash level, whilst the company holds Ne
Slide 32: Ordinary Business and Resolutions
Ordinary Business and Resolutions 32
Slide 33: Resolution 1
Resolution 1 That the Board is authorised to fix the auditor’s remuneration for the coming year. Scales – 2019 Annual Shareholders’ Meeting 33
Slide 34: Resolution 2
Resolution 2 Having retired by rotation, that Alan Isaac be re-elected as a Non Executive Independent Director. Scales – 2019 Annual Shareholders’ Meeting 34
Slide 35: Resolution 3
Resolution 3 Having been reappointed during the year by the Board and holding office only until the Annual Meeting, that Andrew Borland be elected as an Executive Director. Scales – 2019 Annual Shareholders’ Meeting 35
Slide 36: Resolution 4
Resolution 4 Having been appointed during the year by the Board and holding office only until the Annual Meeting, that Tomakin Lai be elected as a Non Executive Director. Scales – 2019 Annual Shareholders’ Meeting 36
Slide 37: Resolution 5
Resolution 5 Having been appointed during the year by the Board and holding office only until the Annual Meeting, that Nadine Tunley be elected as a Non Executive Independent Director. Scales – 2019 Annual Shareholders’ Meeting 37
Slide 38: Resolution 6
Resolution 6 Subject to the approval of Resolution 5, that the maximum total pool of Directors’ remuneration payable by Scales to Directors (in their capacity as Directors) be increased by $100,000 per annum, from a total pool of $500,000 per annum to $600,000 per annum, effective from the close of
Slide 39: Special Resolution
Special Resolution As a result of Scales’ transition to the new NZX Listing Rules on 1 May 2019, to amend Scales’ Constitution in the form and manner described in the explanatory notes of the Notice of Annual Meeting, with effect from the close of the Annual Meeting. Scales – 2019 Annual Shareholder
Slide 40: Voting and Questions
Voting and Questions
Slide 41: 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