Scales Corp. Ltd. · NZX:SCL
Scales — Shareholder Meeting (June 2024)
43 slides from Scales's shareholder meeting presentation, Jun 5, 2024
Slide 1: Scales Corporation Limited 2024 Annual Shareholders' Meeting
SCALES CORPORATION LIMITED Bringing Nutrition to the World 2024 Annual Shareholders’ Meeting 5 June 2024
Slide 2: Agenda
1. Welcome and Chair’s Review 2. Managing Director’s Review a) Review of 2023 b) Climate-Related Disclosures c) Business Update • Transaction with Bostock Group • Analysis of Global Proteins d) Outlook 3. Ordinary Resolutions 4. Voting and Questions Scales – 2024 Annual Shareholders’ Meeting 2
Slide 3: Shareholder and proxyholder voting
Shareholder and proxyholder voting • Once the voting has been opened, the resolutions and voting options will allow voting • To vote, simply click on the ‘Vote’ tab, and select your voting direction from the options shown on the screen • You can vote for all resolutions at once or by each resolution
Slide 4: Shareholder and proxyholder Q&A participation
Shareholder and proxyholder Q&A participation • Written Questions: • Questions may be submitted ahead of the meeting • If you have a question to submit during the meeting, please select the ‘Q&A’ tab on the right half of your screen at anytime • Type your question into the field and press submit • Y
Slide 5: 1. Welcome and Chair's Review
1. Welcome and Chair’s Review
Slide 6: Chair's review: welcome and 2023 performance
• Delighted to welcome all shareholders and stakeholders to the meeting, both in person and online • Delivered a commendable performance in 2023 in a testing year: o Employees, and their health and safety, continue to be our main concern, with several people initiatives implemented in 2023 o Underly
Slide 7: Scales people at a glance
~600 39 47 years permanent staff members operational sites* longest serving employee 36% >1,200 43% permanent female staff RSE workers female senior leadership / Scales-wide management staff * Owned or leased Scales – 2024 Annual Shareholders’ Meeting 7
Slide 8: Focussed on the development of skilled teams in all of our Group businesses
Focussed on the development of skilled teams in all of our Group businesses • Our people are a significant asset: • Very pleased to welcome the Esro team to the Group in August 2023 • Seeking to expand our Global Proteins teams, including in our joint venture businesses, to support their growth • Lo
Slide 9: Completed our Board refreshment and succession programme
Completed our Board refreshment and succession programme • Tony Batterton appointed as Independent Non-Executive Director: ▪ Effective 22 August 2023 ▪ Tony brings extensive private equity, investment banking and governance experience • Pleased to announce the appointment of Nadine Tunley as Chief R
Slide 10: 2. Managing Director's Review
2. Managing Director’s Review
Slide 11: Managing Director's Review agenda
a) Review of 2023 b) Climate-Related Disclosures c) Business Update • Transaction with Bostock Group • Analysis of Global Proteins d) Outlook Scales – 2024 Annual Shareholders’ Meeting 11
Slide 12: a. Review of 2023
a. Review of 2023
Slide 13: 2023 key figures
$565.4m $12.0m 10.8% 8.5 cents dividends declared revenue net cash ROCE (2022: $619.2m) (2022: $27.0m) (2022: 13.5%) per share (2022: 19.0 cents) First First Climate-Related Sustainability Policy and Disclosures report Emissions Inventory prepared Policy developed 137,477 MT 26,010 TEUs petfood ingr
Slide 14: Our staff are the standout performers of Scales
Our staff are the standout performers of Scales • Indebted to our team for the hard work and dedication following the cyclone event: • A larger than predicted recovery effort following Cyclone Gabrielle required extensive orchard remediation • Accordingly, our primary focus was on supporting our peo
Slide 15: Underlying NPAT, Underlying EBITDA and Revenue
Underlying NPAT Underlying EBITDA Revenue Attributable to Shareholders Scales – 2024 Annual Shareholders’ Meeting 15
Slide 16: Positive results in a testing year
Positive results in a testing year • Reported NPAT Attributable to Shareholders of $5.2m, down 73% (2022: $19.4m): • The impact of Cyclone Gabrielle and market conditions resulted in goodwill impairment and asset write-downs at Mr Apple (post-tax earnings impact of $10.9m) • Underlying NPAT Attribut
Slide 17: Global Proteins, Horticulture, Logistics
Global Proteins Horticulture Logistics Scales – 2024 Annual Shareholders’ Meeting 17
Slide 18: Global Proteins: solid results during post-COVID inventory rebalancing
Solid results during post-COVID inventory rebalancing Global Proteins - Volumes Sold (MT 000s) • Decrease in petfood ingredients volumes, revenue and Underlying EBITDA reflects: ◦ Petfood ingredient customers returning to lower, pre-COVID, inventory levels resulting in lower volumes sold ◦ Transitio
Slide 19: Horticulture: commendable results given Cyclone Gabrielle impacts
Commendable results given significant physical, financial and volumetric impacts of Cyclone Gabrielle • Decrease in revenue and Underlying EBITDA primarily due to lower volumes • Pleasingly, margins remained in line with 2022 • Continued increased focus on Premium varieties • Strong performance from
Slide 20: Evidence of the fruits of our team's hard work
Evidence of the “fruits” of our team’s hard work • Total planted orchard area currently around 1,100 hectares, approximately only 5% below the total area at the same time last year After After Before Before Scales – 2024 Annual Shareholders’ Meeting 20
Slide 21: Steady results delivered by the Logistics division
Steady results delivered by the Logistics division • Decrease in revenue and Underlying EBITDA: ◦ Ocean freight volumes impacted by Cyclone Gabrielle and geopolitical tensions in key trade routes ◦ Airfreight volumes in part affected by a slow start to the stone fruit season • The division continues
Slide 22: Scales continues to operate with a strong financial position
Scales continues to operate with a strong financial position • Movement in Net Cash primarily relates to: ◦ Capital expenditure (a significant proportion being Cyclone-related, principally in respect of the re-planting and grafting of trees) ◦ Dividend payments (including payments to minority shareh
Slide 23: b. Climate-Related Disclosures
b. Climate-Related Disclosures
Slide 24: Inaugural Climate-Related Disclosures Report published
Inaugural Climate-Related Disclosures (CRD) Report published • Using 3 climate scenarios we undertook a climate assessment process across the 3 divisions • The intention is that these will inform our strategic refresh as we continue to embed climate risk and opportunity into business processes, whic
Slide 25: c. Business Update
c. Business Update
Slide 26: Transaction with Bostock Group
Transaction with Bostock Group
Slide 27: Acquisition of selected orchard assets and remaining 50% of Profruit
Acquisition of selected orchard assets and remaining 50% of Profruit from Bostock Group • Acquisition of ~240ha of planted orchard: ◦ ~114ha of owned orchard ◦ Assignment of ~126ha of leased orchard • Strong geographical alignment to existing Mr Apple orchards and increased utilisation of post- harv
Slide 28: Transaction expected to contribute ~$10m-$12m p.a. to EBITDA
The transaction is expected to contribute ~$10m-$12m p.a. to EBITDA over the medium-term, prior to orchard sales • Profit contribution includes an increased share of Profruit earnings together with anticipated margins achieved by bringing the responsibility for shipping and marketing in-house • Expe
Slide 29: Analysis of Global Proteins
Analysis of Global Proteins
Slide 30: Large and growing market underpinned by powerful global trends
Large and growing market underpinned by powerful global trends Market growth 2023-2029 CAGR: Trends 2023-2029 1.50 6.1% • Social and demographic changes, particularly across millennials and 1.45 Gen Z – they now represent the largest proportion of pet owners and continue to grow due to the changes a
Slide 31: Global Proteins positioned to benefit from growing demand for diverse proteins
Global Proteins is strongly positioned to benefit from growing global demand for the reliable supply of diverse proteins Scales – 2024 Annual Shareholders’ Meeting 31
Slide 32: Almost 30 years of experience providing the platform for growth
Almost 30 years of experience providing the platform for recent and future growth 2005 2023 2024 Meateor NZ moves New production Shelby has commissioned a new in-plant from toll processing facility in Melbourne collection system, with a long-term supply to exporting venison agreement with a key pork
Slide 33: Global Proteins' new target is $70m Underlying EBITDA by FY27
Global Proteins’ strategic target of $25m Underlying EBITDA by FY23 was achieved in FY21 – the new target is $70m Underlying EBITDA by FY27 Global Proteins revenue (lhs), Underlying EBITDA (lhs) and Underlying EBITDA margin (rhs) $350m 25.0% $330.0m $319.9m $298.5m $300m 20.0% $250m $218.9m 15.0% $2
Slide 34: World's leading natural proteins ingredient supplier
To be recognised by global petfood brands as the world’s leading natural proteins ingredient supplier Scales – 2024 Annual Shareholders’ Meeting 34
Slide 35: d. Outlook
d. Outlook
Slide 36: Re-confirm FY24 Guidance
Pleased to re-confirm FY24 Guidance as previously advised of Underlying Net Profit after Tax Attributable to Shareholders of between $30.0 million to $35.0 million Global Proteins • Positive start to the year despite ongoing rebalancing of customers’ petfood inventories • Customer audits and approva
Slide 37: 3. Ordinary Resolutions
3. Ordinary Resolutions
Slide 38: Resolution: fix the auditor's remuneration
That the Board is authorised to fix the auditor’s remuneration for the coming year Scales – 2024 Annual Shareholders’ Meeting 38
Slide 39: Resolution: elect Tony Batterton as Independent Director
Having been appointed during the year by the Board and holding office only until the Annual Meeting, that Tony Batterton be elected as a Non-Executive Independent Director • Tony’s current external roles include: ◦ Independent Non-Executive Director of Briscoe Group Limited ◦ Partner and Director of
Slide 40: 4. Voting and Questions
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Slide 41: Shareholder and proxyholder Q&A participation
Shareholder and proxyholder Q&A participation • Written Questions: • Questions may be submitted ahead of the meeting • If you have a question to submit during the meeting, please select the ‘Q&A’ tab on the right half of your screen at anytime • Type your question into the field and press submit • Y
Slide 42: Scales Corporation Limited 2024 Annual Shareholders' Meeting
Scales ScalesCorporation CorporationLimited Limited 2024 2024Annual AnnualShareholders’ Shareholders’Meeting Meeting
Slide 43: 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 loss (includi