Scales Corp. Ltd. · NZX:SCL
Scales — Shareholder Meeting (June 2021)
44 slides from Scales's shareholder meeting presentation, Jun 9, 2021
Slide 1: Scales Corporation Limited 2021 Annual Shareholders' Meeting
Scales Corporation Limited Growing your Diversified Agribusiness 2021 Annual Shareholders’ Meeting 9 June 2021
Slide 2: Agenda
Agenda I. Welcome and Chair’s Review II. Managing Director’s Review 1. COVID-19 2. Year in Review 3. Sustainability Update 4. Business Update 5. Outlook III. Ordinary Resolutions IV. Voting and Questions Scales – 2021 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 aut
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 • Your question will be sent immediately for review Received Scales – 2021 Ann
Slide 5: I. Welcome and Chair's Review
I. Welcome and Chair’s Review
Slide 6: Welcome
Welcome • Welcome to all shareholders and stakeholders, both in person and online • A challenging year that included lockdowns, travel restrictions and supply chain disruptions • Safety continued to be a priority for our team of 2,500 Scales – 2021 Annual Shareholders’ Meeting 6
Slide 7: Chair's Review
Chair’s Review A solid result in a turbulent year • Benefited from sound foundations and diversified agribusiness strategy • Pleasing Underlying earnings results • Management and staff exemplified unity and teamwork • Considerable progress in sustainability, including an inaugural climate change rep
Slide 8: Staff and Shareholders
Staff and Shareholders • As an essential business our staff continued to work during difficult and uncertain times • Results reflect hard work, skill and positive manner of all team members • Importance of RSE workers to assist with both harvest and post-harvest activities validated: Remarkable sk
Slide 9: Governance and Ethics
Governance and Ethics Governing through a pandemic • Board meetings undertaken via Zoom, when required • Commitment by the Board to a planned and orderly succession programme • Continued participation in the Institute of Director’s Future Director programme: Appointment of Kelly Brown, a brand and
Slide 10: II. Managing Director's Review
II. Managing Director's Review
Slide 11: Managing Director's Review
Managing Director’s Review 1. COVID-19 2. Year in Review 3. Sustainability Update 4. Business Update 5. Outlook Scales – 2021 Annual Shareholders’ Meeting 11
Slide 12: COVID-19
COVID-19
Slide 13: The Long Tail of COVID-19
The Long Tail of COVID-19 A ‘new normal’ • Agility of all group businesses allowed them to implement protocols quickly and operate safely during the initial lockdown and subsequent alert level changes • A number of COVID-19 protocols remain in place, gloves and masks required for China export requir
Slide 14: Year in Review
Year in Review Chantelle Ramage, General Manager Profruit, outside Profruit’s newly acquired and painted building
Slide 15: Our Numbers
Our Numbers $470.7m 19.0 cents revenue dividends declared (2019: $484.6m) per share First First Third climate change pay equality carbon footprint report prepared review completed certification completed 5,739,000 3,915,000 TCEs of own-grown TCEs of apples exported* (2019: 5,953,000) apples exported
Slide 16: Trends in Group Financial Performance
Trends in Group Financial Performance • Movement in Underlying EBITDA from 2019 onwards reflects changes in Group structure • Historic results are unadjusted for businesses that have been sold or acquired Underlying EBITDA Underlying NPAT $67.9m $67.1m $38.6m $35.8m $36.4m $62.0m $33.8m $32.7m $52.7
Slide 17: Group Financial Performance
Group Financial Performance Solid result in a disruptive year • Revenue of $470.7m, decrease of 3% on 2019 Change in revenue and earnings mix between the divisions • Underlying EBITDA of $53.9m, increase of 2% on 2019 • Underlying Net Profit of $33.8m, decrease of 7% on 2019 Reflects lower inter
Slide 18: 2020 Divisional Highlights
2020 Divisional Highlights Horticulture • Record export volumes of 3.92 million TCEs, strong sales into Europe and UK H • Higher than expected Mr Apple export crop during ongoing orchard development • Construction of a new coolstore at Whakatu Food Ingredients FI • 4% increase in volumes sold to 110
Slide 19: Trends in Divisional Performance
Trends in Divisional Performance • The graphs below demonstrate the change in earnings amongst the divisions in 2020 Horticulture Food Ingredients Logistics* Underlying EBITDA Underlying EBITDA Underlying EBITDA $45.3m $42.6m $23.1m $38.9m $39.7m $31.4m $13.5m $4.9m $10.2m $9.2m $3.3m $3.3m $3.4m $8
Slide 20: Balance Sheet
Balance Sheet Steady financial position Financial Position $Millions 2020 2019 2018 • Change in Capital Employed* reflects: Capital expenditure (Mr Apple coolstore, orchard Capital employed* 293.0 280.6 261.3 redevelopment and other projects) Return on Capital Employed 15% 16% 17% Revaluation of
Slide 21: Sustainability Update
Sustainability Update
Slide 22: Sustainability Overview
Sustainability Overview Considerable progress, despite disruptions of COVID-19 • Maintained business operations during lockdowns, including during peak harvest and production period • 9% reduction in carbon footprint emissions (that we can control) • 48% reduction in waste to landfill over a 3 year
Slide 23: People are at the Heart of What we do
People are at the Heart of What we do ~80% 35 30% of training incorporates female senior operational sites health & safety management staff >500 34% ~1,300 permanent staff permanent female staff RSE workers members Scales – 2021 Annual Shareholders’ Meeting 23
Slide 24: People, Health & Safety and Marketplace
People, Health & Safety and Marketplace Health and safety – an integral part of our everyday practices People and Health & Safety • Initiatives included: A full cross-team critical risk review Further development of the company-wide forklift training framework (including the introduction of a fo
Slide 25: Environment
Environment Managing our environmental footprint UN Sustainable Development Goals • Third annual Toitū Envirocare carbonreduce certification undertaken, with an ongoing decrease in emissions intensity • Exceeded our goals in 3 out of our 4 chosen UN Sustainable Development Goals: Mr Apple Carbon Foo
Slide 26: Environment (cont.)
Environment (cont.) Looking to the environmental future TCFD themes • Inaugural TCFD (climate change) report prepared to explore the impacts of climate change on our business • Based on the 4 themes contained within the TCFD’s recommended framework of: Governance Strategy Risk Management Met
Slide 27: Business Update
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Slide 28: Horticulture – Margin Improvement
Horticulture – Margin Improvement A focus on initiatives to maintain margins • New Mr Apple coolstore at Whakatu commissioned February 2021: Finished on time and on budget Providing operational and logistics efficiencies Allowed sale of the Havelock North packhouse, achieving greater centralis
Slide 29: Horticulture – Volumes and Pricing
Horticulture – Volumes and Pricing Own-grown volumes up but prices impacted by lockdowns in 2020 • Own-grown volumes of 3,915k TCEs (an increase of 2%): External grower volumes down 14%, due primarily to a portion of Fern Ridge’s apple volumes being replaced by sales of kiwifruit Increase of 4%
Slide 30: Horticulture – Market Strategies
Horticulture – Market Strategies Innovative strategies for our key markets • Committed to being the preferred NZ apple brand in the international marketplace: Exposure to a broad range of markets enables Mr Apple to transfer sales to respond to market factors • Investing in the important Asia and
Slide 31: Food Ingredients - Performance
Food Ingredients - Performance A considerable step towards our long-run divisional EBITDA target of $25m • Took advantage of growth in global petfood demand: Increased pet ownership and adoption rates during COVID-19 pandemic* Consumer demand and trends (e.g. humanisation of pets) for petfood co
Slide 32: Food Ingredients – Future Strategy
Food Ingredients – Future Strategy Continuing to capitalise on the growing global petfood demand • Global strategy is to be a key provider of petfood ingredients to a wide range of international brands • Continued growth of the global petfood industry anticipated: Market value expected to be US$16
Slide 33: Logistics - Update
Logistics - Update Solid position despite global supply chain disruptions • Impact of COVID-19 lessened by focus on the essential agribusiness sector: Underlying EBITDA up 4% to $3.4m Underlying EBIT up 9% to $3.2m • Decrease in volumes of both ocean and air freight due to supply chain disruptio
Slide 34: Outlook
Outlook
Slide 35: Trading Update – Horticulture
Trading Update – Horticulture • Season impacted by inclement weather during key growing period: Mr Apple Own-grown volumes lower than originally forecast Significantly lower level of pipfruit exports from the Tasman region, impacting on third party export volumes for Mr Apple and Fern Ridge • Ap
Slide 36: Trading Update – Food Ingredients and Logistics
Trading Update – Food Ingredients and Logistics Food Ingredients • The pet food market in the USA continues to perform well, with good demand across the division’s businesses and proteins • Supply chain disruptions, as well reported in the press, continue to pose challenges and we are working with S
Slide 37: Outlook – Group
Outlook – Group Group • Ripples from COVID-19 lockdowns impacting 2021 results: Improvement in supply chains is anticipated for the second half of the year • The group continues to benefit from its diversified agribusiness strategy • 2021 earnings guidance is reiterated: Underlying net profit fo
Slide 38: III. Ordinary Resolutions
III. Ordinary Resolutions
Slide 39: Resolution 1
Resolution 1 That the Board is authorised to fix the auditor’s remuneration for the coming year Scales – 2021 Annual Shareholders’ Meeting 39
Slide 40: Resolution 2
Resolution 2 Having retired by rotation, that Tim Goodacre be re-elected as a Non Executive Independent Director Scales – 2021 Annual Shareholders’ Meeting 40
Slide 41: Resolution 3
Resolution 3 Having retired by rotation, that Mark Hutton be re-elected as a Non Executive Independent Director Scales – 2021 Annual Shareholders’ Meeting 41
Slide 42: IV. Voting and Questions
IV. Voting and Questions
Slide 43: 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 • Your question will be sent immediately for review Received Scales – 2021 Ann
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