Slide 1: Scales Corporation Limited Annual Results Presentation
Scales Corporation Limited Growing Your Diversified Agribusiness Half Year Results Annual Results Presentation For the six months ended 30 June 2020 For the Year Ended 31 December 2020 26 August2021 26 February 2020
Slide 2: Agenda
Agenda 1. Operating Summary 2. Sustainability 3. Financial Overview 4. Divisional Performance 5. Capital Management 6. Governance 7. Trading Outlook 8. Appendices Scales Corporation Limited – 2020 Full Year Results 2
Slide 3: Operating Summary
Operating Summary 1
Slide 4: Operating Summary
Operating Summary • Scales’ sound foundations generated strong 2020 operating performance: ▪ Underlying* EBITDA $53.9m up 2% on 2019 ($52.7m). ▪ Underlying* NPAT $33.8m down 7% on 2019 ($36.4m). ▪ Statutory Profit for the Year $26.6m (2019: $121.6m**). • Volumes up but earnings down at Mr Apple: ▪ M
Slide 5: By the Numbers
By the Numbers 5,739,000 $470.7m 35,502 15% TCEs of apples TEU2 equivalents Revenue ROCE3 exported1 (2019: $484.6m) managed (2019: 16%) (2019: 5,953,000) (2019: 39,438) 19.0 cents 115,700 MT $97.6m 3,915,000 Dividends declared Petfood ingredients TCEs of own-grown Net cash per share sold4 (2019: $10
Slide 6: 2020 Achievements
2020 Achievements Unity and teamwork allowed Scales to deliver • All business operations continued during lockdowns, including during the critical apple harvest period. • Safety and wellbeing of staff prioritised at all times. • All staff paid in full, without use of New Zealand government subsidies
Slide 7: Sustainability
Sustainability 2
Slide 8: Sustainability – Overview and Environment
Sustainability – Overview and Environment Looking to the future TCFD themes Overview • Maintained business operations during lockdowns, including during peak harvest and production period. • Partnered with thinkstep-anz to undertake an indepth materiality assessment: ▪ Included a ‘Three Horizons’ wo
Slide 9: Sustainability – Health & Safety and Other
Sustainability – Health & Safety and Other Health & safety first Health & Safety • Expansion and development of a number of health & safety initiatives, including: ▪ The company-wide forklift training framework. ▪ Guarding and traffic management focus. ▪ Critical risk in-depth assessment. ▪ Cross-co
Slide 10: Financial Overview
Financial Overview 3
Slide 11: Group Financial Performance
Group Financial Performance Solid result in a disruptive year • Revenue of $470.7m, down 3% on 2019 ($484.6m). • Underlying EBITDA of $53.9m, up 2% on 2019 ($52.7m). • Underlying NPAT of $33.8m, down 7% on 2019 ($36.4m), reflecting lower interest income. Income Statement Revenue EBITDA NPAT $Million
Slide 12: 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
Slide 13: Divisional Financial Performance Overview
Divisional Financial Performance Overview • Horticulture – record export volumes, strong sales into Europe and UK. • Food Ingredients – strong petfood demand continued into 2H20. • Logistics – in line with prior periods. Divisional Performance % chg. $Million 1H20 2H20 2020 1H19 2H19 2019 2020 v 201
Slide 14: Trends in Divisional Performance
Trends in Divisional Performance • The graphs below demonstrate the change in earnings amongst the divisions. 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 $8.0m $2.
Slide 15: Balance Sheet
Balance Sheet Steady financial position Balance Sheet $Millions 2020 2019 • Changes in assets reflect: Current Assets (Excluding Cash) Trade and other receivables 19.5 20.6 ▪ Capital expenditure (Mr Apple coolstore, orchard redevelopment Inventories 25.8 26.4 and other projects). Unharvested agricul
Slide 16: Balance Sheet (continued)
Balance Sheet (continued) Ongoing ability to invest in growth opportunities • Net cash as at 31 December 2020 of $97.6m Balance Sheet (continued) (2019: $104.9m), comprising: $Millions 2020 2019 ▪ Cash and term deposits of $150.6m (2019: $159.4m). Non-Current or Other Liabilities Deferred tax liabil
Slide 17: Divisional Performance
Divisional Performance 4
Slide 18: Horticulture – Financial Performance
Horticulture – Financial Performance Record export volumes • Revenue of $246.0m (2019: $264.8m). Financial Performance - Horticulture • Underlying EBITDA of $31.4m (2019: $39.7m): $Millions 2020 2019 % change Revenue 246.0 264.8 -7% ▪ Strong sales into Europe and UK. Underlying EBITDA 31.4 39.7 -21%
Slide 19: Horticulture – Own-Grown Volumes
Horticulture – Own-Grown Volumes Growth in premium volumes in changing markets • Increase of 4% in premium variety volumes compared to 2019: ▪ Similar or increased volumes across most premium varieties. ▪ Significant % increases in volumes of new premium varieties (DazzleTM and PosyTM). ▪ European m
Slide 20: Horticulture – Pricing & Other KPIs
Horticulture – Pricing & Other KPIs Prices impacted by lockdowns Horticulture KPIs Apple Prices by Variety (NZD / TCE, FOB) • Pricing within different geographies affected by: 2020 2019 % change ▪ Timing of lockdowns. Premium Varieties 36.9 39.8 -7% ▪ Impact on logistics and purchasing patterns. Tra
Slide 21: Horticulture – Margin Improvement
Horticulture – Margin Improvement Margin improvement is the key focus in the Horticulture division • The company acknowledges headwinds in margins and is focused on initiatives to maintain current margins: ▪ New Whakatu coolstore is now operational. Coolstore was finished on time and on budget and i
Slide 22: Horticulture – Market Strategies
Horticulture – Market Strategies Identifying innovative strategies for our key markets • Ongoing in-market branding initiatives and marketing activations, particularly in Asia and Middle East: ▪ Asia and Near Markets comprise ~62% of export sales. ▪ Retail category management being implemented in Vi
Slide 23: Food Ingredients - Performance
Food Ingredients - Performance Exceptional performance, taking advantage of growing global petfood demand • Significant increases in revenue and profitability reflect Financial Performance - Food Ingredients geographical and protein diversification strategies: $Millions 2020 2019 % change Revenue 17
Slide 24: Food Ingredients – Strategy Update
Food Ingredients – Strategy Update An attractive industry for investment • The global petfood industry shows no sign of slowing: ▪ Market value expected to be US$168.3b by 2029, compared to US$97b in 2019*. ▪ Market development being shaped by pet ownership and pet humanisation trends. ▪ As an examp
Slide 25: Logistics - Performance
Logistics - Performance Stable returns in a challenging year • Solid performance from the Logistics division in a Financial Performance - Logistics year where activity was impacted by global supply $Millions 2020 2019 % change chain disruptions: Revenue 77.9 87.1 -11% Underlying EBITDA 3.4 3.3 4% ▪
Slide 26: Capital Management
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Slide 27: Capital Management
Capital Management Overall group target maintained, mix differs • Return on Capital Employed (ROCE) parameters Capital Management determined by business operations: Return on Capital Employed ▪ Horticulture partly impacted by a $14m increase in capital 2020 2019 employed (primarily orchard redevelop
Slide 28: Capital Expenditure
Capital Expenditure Continuing to invest in growth initiatives • 2020 expenditure included: Capital Management Operational Capital Expenditure ▪ Mr Apple orchard redevelopment ($4.9m) - approximately 36 $Millions 2020 2019 hectares. Horticulture 4.3 3.1 ▪ Mr Apple Whakatu coolstore build ($11.5m) –
Slide 29: Governance
Governance 6
Slide 30: Governance and Management
Governance and Management Governing through a pandemic • Good governance practices maintained during the year: ▪ First virtual Annual Shareholders’ Meeting successfully held in over 100 years of trading. ▪ Board meetings undertaken via Zoom where necessary. • Excellent leadership and teamwork from a
Slide 31: Trading Outlook
Trading Outlook 7
Slide 32: 2021 Outlook
2021 Outlook Group update • As a result of a combination of national weather events over the key growing period and continuing disruptions in global supply chains (particularly port side delays and costs), Scales has updated its full year 2021 Guidance. • Directors have amended the full year Guidanc
Slide 33: 2021 Outlook (continued)
2021 Outlook (continued) Horticulture division • The outlook for Horticulture sales activity remains supportive at this time. Key observations include: ▪ A lower national crop will lower in-market supply particularly for Europe and UK. ▪ Early fruit shipments to Asia have been well received and sale
Slide 34: Appendices
Appendices 8
Slide 35: 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 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 EBITDA Underlying 53.9 52.7 31.4 3
Slide 36: 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