Slide 1: Scales Corporation Limited Annual Results Presentation
SCALES CORPORATION LIMITED ANNUAL RESULTS PRESENTATION For the twelve months ended 31 December 2014 26 February 2015
Slide 2: Agenda
AGENDA 1. Highlights 2. Divisional Overview 3. Capital Management 4. Strategy & Outlook 5. Appendices 2014 Full Year Results February 2015 2
Slide 3: Highlights
1 HIGHLIGHTS 1
Slide 4: Highlights: IPO forecasts exceeded
HIGHLIGHTS IPO forecasts exceeded. • Scales exceeded its IPO forecast Revenue, EBITDA, and Profit: FY2014 NZ$Ms Actual IPO Forecast Variance Revenue 263.3 253.9 3.7% Underlying EBITDA 39.8 38.8 2.7% Underlying EBIT 30.3 29.5 2.8% Underlying Net Profit 19.8 18.5 6.7% Net Profit from Continuin
Slide 5: Highlights: Diversified agribusiness portfolio results
HIGHLIGHTS Results demonstrate value of our diversified agribusiness portfolio. • Horticulture and Food Ingredients divisions materially exceeded prospectus forecasts. Both volumes and prices were higher than expected. • Storage & Logistics impacted by a late start to the cropping and meat process
Slide 6: Highlights: Bigger than you think
HIGHLIGHTS Bigger than you think. UNDERLYING EBITDA 420M+ >4.6M $39.8m apples picked from Mr Apple’s orchards litres of juice concentrate sold by Profruit 2.7% above PFI >1.1M 17,000 cubic 16,400MT twenty foot container of meat sold by petfood metres meat, fish, vegetables, dairy and FMCG ingredient
Slide 7: Highlights: Debt position and interim dividend
HIGHLIGHTS Better than expected debt position facilitated early declaration and payment of interim dividend. • Average Net Debt for 2014 was $40.8m1: $3.3m below IPO forecast of $44.1m. Due to enhanced management of working capital. Enabled us to declare and pay interim dividend of 3 cents in
Slide 8: Divisional Overview
2 DIVISIONAL OVERVIEW 2
Slide 9: Horticulture: Volumes and prices exceed forecast
HORTICULTURE Volumes and Prices exceed forecast. • Premium volumes and prices above forecast Key Performance Measures FY2014 (discussed further in next slide). Actual IPO Forecast Variance • Traditional volumes above forecast, prices Volumes by Variety (TCE 000s) in line. Premium Varieties TCE 000s
Slide 10: Horticulture: Premium varieties outperform
HORTICULTURE Premium varieties outperform. Premium Apple Volumes by Variety (TCE 000s) • Premium volumes 5.3% above forecast. 1,059 We are now producing and selling 3 times the volume Other 1,036 984 High Colour Royal Gala and Fuji sold in 2010. Pink Lady Following 2013 volume records, very plea
Slide 11: Horticulture: Divisional EBITDA higher than IPO forecast
HORTICULTURE Divisional EBITDA was 6.2% higher than IPO forecast. • Underlying EBITDA for the Horticulture division was 6.2% higher than our IPO forecast. Mr Apple’s Underlying EBITDA was 5.7% above forecast. Our share of profits from Fern Ridge Produce were almost 50% greater than forecast. A
Slide 12: Storage & Logistics: Spotlight on growth
STORAGE & LOGISTICS Spotlight on growth. • Our Storage & Logistics division is growing rapidly across all 3 business units to meet customer’s volume requirements and to drive cost efficiencies: Coldstores: — Construction has commenced on the Auckland coldstore which will increase our existing stor
Slide 13: Storage & Logistics: Coldstores volumes and throughput
STORAGE & LOGISTICS Coldstores – volumes higher than forecast, record product throughput. • Coldstores account for 83% divisional EBITDA. Storage & Logistics – EBITDA by Business Unit • We operate the largest independent coldstore network in the country. During 2014 we loaded Liqueo 1,168,000 m3 of
Slide 14: Storage & Logistics: Results demonstrate resilience
STORAGE & LOGISTICS Results demonstrate resilience of division. • Sector dynamics created challenges for our cold storage business, but were positive for Food Ingredients and Horticulture divisions, highlighting the value in our diversified agribusiness portfolio. Nevertheless, against challenging c
Slide 15: Food Ingredients: EBITDA above IPO forecast
FOOD INGREDIENTS EBITDA 43% above IPO forecast. • Meateor (pet food ingredients): Successful geographical diversification of supply. Contracts in place securing finished product from Australia. Higher than expected volumes from New Zealand. Sales to US market remaining strong across a broad ra
Slide 16: Capital Management
3 CAPITAL MANAGEMENT 6
Slide 17: Operational Performance
OPERATIONAL PERFORMANCE • We monitor Return on Capital Employed (ROCE)1 and EBITDA Margins2 for each division and the Group. As a group we target: A long-run average ROCE of 15% or greater. EBITDA Margin of 13% or greater. • ROCE: Consistent with IPO forecast at 14.8%. Expect to exceed ROCE
Slide 18: Capital Expenditure
CAPITAL EXPENDITURE • Operational capital expenditure slightly higher than Capital Expenditure FY2014 forecast: NZ$Ms Actual IPO Forecast Operational capital expenditure Additional investment in Extenday® reflective cloth Horticulture 2.5 2.0 should improve overall fruit quality. Storage & Logisti
Slide 19: Strategy & Outlook
4 STRATEGY & OUTLOOK 9
Slide 20: Strategy: New Zealand as a global agribusiness super-power
STRATEGY We think New Zealand can be a global agribusiness super-power amongst the world’s temperate climates. • New Zealand is a highly successful agricultural based economy with considerable scope for further improvement. Relative to climatic peers, New Zealand has an opportunity to drive agricu
Slide 21: Strategy: Growing and sourcing agribusiness opportunities
STRATEGY We’re dedicated to growing and sourcing agribusiness opportunities. We’re already doing so with our existing portfolio… • We manage a portfolio of businesses that will directly benefit from improvements in New Zealand’s agricultural output. • Furthermore, we believe we have the people, expe
Slide 22: Strategy: Looking to do more
STRATEGY …and we’re looking to do more, subject to our investment requirements. • Through our IPO, $30m was raised to help pursue growth initiatives. • We’ll develop our existing divisions, or extend our agribusiness reach through disciplined and patient investment. • We believe that the best and mo
Slide 23: Outlook
OUTLOOK • We again re-affirm FY2015 IPO forecasts. • Beyond this, Scales is positioned for considerable growth: Historical orchard investment is expected to deliver meaningful uplift in premium volumes over next 5 years+. A number of initiatives currently underway and scheduled for FY2015 are de
Slide 24: Appendices
5 APPENDICES 9
Slide 25: Comparison of FY2014, FY2013 and IPO Forecasts
COMPARISON OF FY2014, FY2013, AND IPO FORECASTS FOR FY2014 AND FY2015 • Scales outperformed all IPO forecast profit measures. • FY2014 and FY2013 Gross Margin and Underlying Net Profit were broadly equivalent. • FY2013 Underlying EBITDA, Underlying EBIT, Net Profit from Continuing Operations, and Pr
Slide 26: Balance Sheet
BALANCE SHEET • FY2014 Net assets are consistent with IPO forecast. • FY2013 includes demerged George H Investments Ltd assets and reflects pre-IPO senior debt levels. Balance Sheet FY2014 FY2013 FY2014 Actual FY2014 Actual NZ$Ms Actual IPO Forecast variance% Actual variance% Assets Current assets 3
Slide 27: Reconciliation of Underlying EBITDA to Net Profit
RECONCILIATION OF UNDERLYING EBITDA TO NET PROFIT IN OUR FINANCIAL STATEMENTS Reconciliation of Underlying EBITDA to Net Profit FY2014 FY2013 NZ$000s Actual IPO Forecast Actual Underlying EBITDA 39,849 38,811 42,823 RECONCILIATION TO GAAP INFORMATION - Depreciation (8,609) (8,875) (8,147) - Amortisa
Slide 28: Disclaimer
DISCLAIMER Please do not read this presentation in isolation This presentation supplements our full year results announcement dated 26 February 2015. It should be read subject to and in conjunction with the additional information in that release, other material which we have released to the NZX and