Scales Corp. Ltd. · NZX:SCL
Scales — Shareholder Meeting (June 2022)
45 slides from Scales's shareholder meeting presentation, Jun 8, 2022
Slide 1: Growing Your Diversified Agribusiness
SCALES CORPORATION LIMITED Growing Your Diversified Agribusiness 2022 Annual Shareholders’ Meeting 8 June 2022 Scales – 2022 Annual Shareholders’ Meeting 1
Slide 2: Agenda
1. Welcome and Chair’s Review 2. Managing Director’s Review a) Year in Review b) Sustainability Update c) Business Update d) Outlook 3. Ordinary Resolutions 4. Voting and Questions Scales – 2022 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: • 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 • Your question will be immediately submitted • Help:
Slide 5: 1. Welcome and Chair's Review
1. Welcome and Chair’s Review
Slide 6: Welcome to all shareholders and stakeholders
• Welcome to all shareholders and stakeholders, both in person and online • Diversified strategy underpinned the Group’s outstanding result during another challenging year: • Business operations continued during the lockdowns • COVID-19 presented, and continues to present, challenges in areas such a
Slide 7: Teamwork and personal commitment succeeded over uncertainty and disruption
Teamwork and personal commitment succeeded over uncertainty and disruption ✓ Top priority given to health and wellbeing of staff during uncertain times ✓ Extraordinary effort made by the Mr Apple team to pick, pack and export the harvest ✓ Food Ingredients continued its remarkable growth trajectory
Slide 8: Our teams rose to the challenge of another turbulent year
• Our teams rose to the challenge of another turbulent year, operating throughout all lockdowns and traffic light settings • We observed the importance of our critical RSE workers and were impacted by availability of this skilled workforce during 2021: • Compared to 2020, the RSE workforce was appro
Slide 9: Strengthening our Director and Senior Management Team
Strengthening our Director and Senior Management Team • Commenced Board succession process, assisted by external advisors, Boardworks: ▪ Tim Goodacre and Mark Hutton will not seek re-election at the end of their current 3-year tenure, scheduled to end at the 2024 Annual Meeting • Qi Xin appointed as
Slide 10: 2. Managing Director's Review
2. Managing Director’s Review
Slide 11: Managing Director's Review agenda
a) Year in Review b) Sustainability Update c) Business Update d) Outlook Scales – 2022 Annual Shareholders’ Meeting 11
Slide 12: a) Year in Review
a) Year in Review
Slide 13: 2021 key figures
$514.6m $82.1m 13.8% 19.0 cents revenue net cash ROCE dividends declared (2020: $470.7m) (2020: $97.6m) (2020: 12.3%) per share Second Fourth climate change carbon footprint report prepared certification completed 4,983,000 3,651,000 TCEs of own-grown TCEs of apples exported* (2020: 5,739,000) apple
Slide 14: Revenue, Underlying EBITDA, Underlying NPAT
Underlying NPAT Revenue Underlying EBITDA Attributable to Shareholders $514.6m $73.8m $484.6m $470.7m $67.1m $35.4m $64.1m $62.0m $62.2m $402.5m $32.3m $31.8m $393.1m $29.7m $27.5m 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Historic results are unadjusted for business
Slide 15: Outstanding results aided by diversification strategy and exceptional team performance
Outstanding results aided by diversification strategy and exceptional team performance • Record revenue of $514.6m, up 9% (2020: $470.7m) • Underlying EBITDA of $73.8m, up 15% (2020: $64.1m) • Record Underlying NPAT of $39.8m, up 20% (2020: $33.0m) • Underlying NPAT attributable to shareholders of $
Slide 16: Divisional results summary
Horticulture • Very strong result given significant market uncertainty, supply chain challenges and lower volumes of fruit • All fruit picked, extraordinary effort by the entire Mr Apple team to pick, pack and export the harvest • Strong in-market pricing balanced reduced volumes and cost pressures
Slide 17: Horticulture, Food Ingredients, Logistics EBITDA
Horticulture Food Ingredients Logistics $48.3m $35.1m $42.6m $40.8m $38.9m $39.1m $23.1m $4.9m $4.9m $13.6m $4.1m $4.2m $3.3m $10.2m $8.0m 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 The Logistics division was previously ‘Storage and Logistics’ up to and including 2018
Slide 18: Strong financial position
Strong financial position • Movement in capital employed* reflects: ◦ Revaluation of land and buildings ◦ Capital expenditure, including orchard redevelopment, the Whakatu coolstore and the Mr Apple automation project ◦ Increase in working capital ◦ Revaluation of FX derivatives • Movement in Net Ca
Slide 19: b. Sustainability Update
Pas. Pe an . . ss a ie ala , ee &. il re. ee fee ae se ok ideo oe t elas CR Ah a ok ea PRE ote sees ae Pies ise $riit + pak AP WE 287 hw “b. >. Sustainability Update ne ‘ PoE Be Oe ee Oe Oe Oe ee ee
Slide 20: Responding to new challenges
Responding to new challenges Environment • Reduced freight movements as a result of the commissioning of the Whakatu coolstore • Creation of sustainability champions at packhouses to increase communication and feedback between sites and head office • LED replacement at an orchard accommodation site
Slide 21: Workforce statistics
>500 45 years ~1,150 Permanent staff members Longest serving employee RSE workers 5th 38% 30% Permanent female staff Female senior leadership / Future Director appointed Scales wide management staff Scales – 2022 Annual Shareholders’ Meeting 21
Slide 22: Health and safety remains our primary priority
Health and safety remains our primary priority COVID-19 • Business operations continued during the lockdowns, in line with our pandemic preparedness policies • Reducing risk, whilst supporting all our staff, is of ultimate importance • Adaptable COVID-19 response planning put in place, embracing new
Slide 23: c. Business Update
a oi c. Business Update
Slide 24: Continued strong growth in Premium varieties
Continued strong growth in Premium varieties, benefitted from both geographical and channel diversification • Increase in Premium varieties of 6% compared to 2020: Mr Apple Own Export Volumes (TCE 000s) 3,867 3,915 ◦ Compound Annual Growth Rate (CAGR) of 14% since 2012 3,546 3,545 3,822 3,651 3,155
Slide 25: Commencement of automation plan helping to stabilise Mr Apple margins
Commencement of automation plan helping to stabilise Mr Apple margins • Multi-year investment and automation plan implemented to increase productivity and Mr Apple EBIT Margins Through Time* sustain margins 16% 14% • First phase was Whakatu coolstore – reducing: power consumption, double-handling Ta
Slide 26: Investment made in brand positioning, design and digital infrastructure
Investment made in brand positioning, design and digital infrastructure • Continued growth in Asia and Middle East markets despite disruptions: ◦ China and Hong Kong represented ~20% of Mr Apple total export sales (2020: ~17%) ◦ Near Markets (Asia, India and Middle East) accounted for ~72% of Mr App
Slide 27: Outstanding performance, reflecting ongoing demand for global petfood
Outstanding performance, reflecting ongoing demand for global petfood • Excellent full year result: ◦ 29% increase in volumes sold ◦ 26% increase in revenue ◦ 52% increase in Underlying EBITDA, exceeding the division’s long-run EBITDA target ◦ Increased profitability reflects movements in product or
Slide 28: Growth in global petfood production
• Growth of 8.2% in global petfood production, with a 17.1% increase in Asia-Pacific* • Reported increases in USA** and worldwide petfood sales*** • Strength of the industry largely attributed to: ◦ Rise in pet ownership due to the COVID-19 pandemic ◦ Focus on pets’ health and well-being • Supply ch
Slide 29: Strategy to be a key global provider of petfood ingredients
• Strategy is to be a key global provider of petfood ingredients to a wide range of international brands • Whilst previous travel restrictions limited our ability to pursue opportunities, internal and external growth opportunities continue to be actively investigated: ◦ We are pursuing opportunities
Slide 30: 2021 performance underlines strategic benefit of division
2021 performance underlines strategic benefit of division • Strong full year performance: ◦ 5% increase in revenue ◦ 17% increase in Underlying EBITDA, with performance returning to previous levels ◦ Decrease in volumes due to reduced volumes of agricultural exports and impact of COVID-19 • Exceptio
Slide 31: d. Outlook
d. Outlook
Slide 32: Scales' diversification continues to mitigate global complexity
Scales’ diversification continues to mitigate global complexity • Outlook summary: ◦ Food Ingredients earnings now forecast to at least match 2021 ◦ Apple prices strong compared to the same time last year due to variety mix and positive sales results from near markets ◦ Crop volume down 9% on 2021 •
Slide 33: Horticulture outlook
Horticulture • Volumes lower than originally forecast, early pricing indications positive: Mr Apple Pick and Packout ◦ Hawke’s Bay and other growing regions, impacted by adverse weather events during key growing period 80% 76% 76% 79% 77% 80% ◦ Pipfruit New Zealand has revised its crop estimate down
Slide 34: Food Ingredients, Logistics and Group outlook
Food Ingredients • Our petfood businesses have continued to grow and perform strongly • We are actively reviewing a number of growth opportunities: ◦ John Sainsbury is investigating opportunities both in the USA and elsewhere ◦ Value adding options are also being actively pursued Logistics • Pressur
Slide 35: 3. Ordinary Resolutions
3. Ordinary Resolutions
Slide 36: Auditor's remuneration resolution
That the Board is authorised to fix the auditor’s remuneration for the coming year Scales – 2022 Annual Shareholders’ Meeting 36
Slide 37: Re-election of Alan Isaac
Having retired by rotation, that Alan Isaac be re-elected as a Non Executive Independent Director • Alan’s current external roles include: ◦ Chair of the Basin Reserve Trust ◦ Director of Oceania Healthcare (NZ) Limited ◦ Director of Skellerup Holdings Limited ◦ Director of a number of other private
Slide 38: Re-election of Nadine Tunley
Having retired by rotation, that Nadine Tunley be re-elected as a Non Executive Independent Director • Nadine’s current external roles include: ◦ CEO of Horticulture New Zealand ◦ Director of Plant & Food Research ◦ Member of Nga-Pouwhiro Taimatua ◦ A range of other governance and advisory roles Sca
Slide 39: Re-election of Andrew Borland
Having retired by rotation, that Andrew Borland be re-elected as a Director • Andy’s current external roles include: ◦ Chair of Primary Collaboration New Zealand Limited ◦ Chair of Primary Collaboration New Zealand (Shanghai) Co. Limited ◦ Chair of Rabobank New Zealand Limited Scales – 2022 Annual S
Slide 40: Election of Qi Xin
Having been appointed during the year by the Board and holding office only until the Annual Meeting, that Qi Xin be elected as a Non-Executive Director • Xin is a Senior Director of a department within China Resources Enterprise, Limited Scales – 2022 Annual Shareholders’ Meeting 40
Slide 41: Increase in directors' remuneration pool
That the maximum total pool of directors’ remuneration payable by Scales to directors (in their capacity as directors) be increased by $50,000 per annum, from a total pool of $600,000 per annum to $650,000 per annum, effective from the close of the Annual Meeting, with such sum to be divided amongst
Slide 42: 4. Voting and Questions
4. Voting and Questions
Slide 43: Shareholder and proxyholder Q&A participation
Shareholder and proxyholder Q&A participation • Written Questions: • 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 • Your question will be immediately submitted • Help:
Slide 44: Scales Corporation Limited 2022 Annual Shareholders' Meeting
Scales Corporation Limited 2022 Annual Shareholders’ Meeting Scales – 2022 Annual Shareholders’ Meeting 44
Slide 45: 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