Scales Annual Shareholders Meeting webcast

good good afternoon everybody um I'm Mike Peterson chair of scales and it's my pleasure to welcome you to this annual meeting and from a nice fresh Canterbury day but it's great to have you all here in attendance and online uh it's the 112th annual meeting of the company uh the 10th since it became a listed company and my second as chair once again we're holding a hybrid annual meeting and whether you're here in person or joining us online I'd like to thank you and welcome you all as you may recall from last year shareholders proxies and guests attending the meeting virtually will be able to hear and see a live webcast in addition shareholders and proxies have the ability to ask questions and vote on resolutions I'll provide further details on those matters shortly firstly some housekeeping matters for you who have joined in person uh first I'd like to remind you as a matter of courtesy to please put your mobile telephones on to silent uh and uh also if there is an emergency and we need to leave please do th do so through the marked exits uh and staff will be available to help us in the eventuality of that happening I am pleased to declare and confirm that we have a quorum and therefore declare the 2024 annual shareholders meeting of scales limited open the items of business for this meeting and the resol solutions to be considered by shareholders were contained in the notice of meeting which was sent to shareholders on the 3rd of May our order of proceedings is shown as shown on the current slide I'll briefly comment on the highlights of the last 12 months followed by a review by scales managing director Andy Borland we'll then attend to the resolutions where we'll cover each resolution in turn and invite questions specific to those items I'll shortly open the online voting and explain the voting process following that I'll explain the process for asking questions once the meeting's complete we hope that those of you present will join us for Refreshments it'll also be a good opportunity to meet the directors and Senior Management of the company and raise any other questions you may have on an informal basis with regard to the online voting process if you're eligible to vote you'll be able to cast your vote under the vote tab as shown on screen once the Voting is opened the resolutions will allow votes to be submitted and to vote simply select your voting direction from the options shown you can vote for all resolutions at once or each resolution separately your vote has been cast when the tick appears and to change your vote simply select change your vote and you have the ability to change your vote up until the time I declare voting closed you may submit questions on each resolution being put to shareholders using the questions process for those of you that have joined us in person those shareholders who are entitled to vote and proxies who have discretion as to how they vote should have received a voting or proxy form when they registered upon arrival at the meeting if you completed a postal vote you don't need to complete another voting or proxy form if you haven't received a voting or proxy form at the time of voting please go to the computer Shar desk in the foer where their representatives will be able to assist you after voting you should place your voting or proxy form in one of the ballot boxes boxes which will be passed around the room I'll invite you to vote after all the resolutions have been introduced to the meeting I now declare voting open on all items of business for those of you attending via the computer share online meeting platform the resolutions will now be open in the vote tab please submit your votes at any time and I'll give you a reminder before I move to close the meeting and sorry to close the voting I'd now like to S quickly summarize the process for asking questions to here today online questions can be submitted at any time if you have a question to submit during the meeting please select the Q&A a tab on the right half of your screen at any time as currently shown type your question into the field and press send your question will be immediately submitted should you require assistance of any sort you can type your query and one of the computer share team will assist using the chat function alternatively you can call Computer Share on 0800 65034 preferably from not in here please note the whil you can submit questions from now on I won't address them until the relevant time in the meeting please note also that your questions may be moderated or we receive multiple questions on the same topic they can be Amalgamated together finally due to time constraints and to ensure all shareholders have a chance to ask a question I ask that you limit yourself to asking two questions we may run out of time to answer all of your questions but if this happens we'll answer them in due course via email or after the meeting in person for those of you present we'll offer you an opportunity to ask questions on or speak to each resolution being put to shareholders at the the appropriate time as I indicated there will be an opportunity to ask questions of individual directors and formally also after the meeting before I go any further I'd just like to take a minute to introduce my fellow directors who are in attendance either in person or online uh we've got got Andy Borland our managing director Tony batterton the chair of scales nomination and remuneration committee uh also the finance and treasury committee and also an independent director Miranda Burton an independent director Nick Harris an independent director uh alen Isaac chair of the scales audit risk uh audit and risk management committee and also an independent director uh Nadine tunley chair of the health and safety and sustain ility committee and an independent director and online we have Shin shei who's a director of scals as well uh welcome to you all members of scales management and staff deot and Anthony Harper are also in attendance and I'm delighted to welcome everyone to the meeting as far as 2023 was concerned it was a testing year for the group however we are pleased to report a commendable result of underlying net profit after tax attributable to shareholders of $19 million this is at the top end of our 2023 guidance range this was only possible thanks to the work of our management teams and staff who worked extremely hard often in extremely difficult conditions during and after the extreme weather events of 2023 health and safety has always been a top priority for us and the importance of this was confirmed during the Cyclone with our people first culture shining through we were also delighted to implement several people initiatives throughout the year and we'll continue to progress these and other initiatives over the coming year the 2023 year demonstrated that our Diversified strategy contributed positively to our result with global proteins delivering a strong performance during a period when horiculture was impacted by Cyclone Gabriel now dividends of 8.5 cents per share have been declared for the 2023 Financial year with this representing 63% of 2023 underlying net profit after tax attributable to shareholders you will have hopefully seen our recent press release announcing the transaction with Bostock group this presents a very exciting opportunity for the Horticulture division with the acquisition of Premium variety Orchards as well as the remaining 50% of Pro Fruit uh that we didn't own Andy will provide additional information on the transaction later in the in the presentation in addition we're pleased to have increased our shareholding in meteor Australia from 33% to 50% as announced yesterday we believe that this is a strategically important investment for the global proteins division with excellent prospects for the future the next slide provides a summary of some of our Workforce statistics having been with scales for just over a year I've come to appreciate the unique culture that exists within the group this is especially important within Mr Apple where staff numbers increased to over 2,000 people at peak season making it crucial for Mr Apple to ATT train attract and retain Personnel promote a positive work culture and drive high performance one of the numbers we found particularly encouraging was a percentage of female leaders and management personnel which increased by 15% compared to 2022 we're committed to further developing a diverse and inclusive work environment and we look forward to monitoring progress on this in future years as the group develops so does the shape of our team our people are one of scale's most significant asss and we recognize the importance of developing skilled teams in all of our group businesses irrespective of their size or the nature of their operations we believe that investment in our people will not only benefit our employees but will also be advantageous to overall business growth we'd like to extend a warm welcome to the new team members across our European joint venture ISRO and through the recent Bost transaction as well we're seeking to expand our Global proteins teams including in our joint venture businesses to support their growth additionally we're really excited about the Talent Development Across the group with some exceptional emerging leaders who leveraging the Deep experience we have across our divisions on behalf of the board I'd like to again say a very big thank you to all of the scales staff for their continued effort hard work and dedication to the success of scales Corporation we completed this phase of our board refreshment and succession program in 2023 with the appointment of Tony bton in August Tony brings extensive private Equity Investment Banking and governance experience and nzx listed companies as Tony was appointed by the board during the year he is required to offer himself election by shareholders at this meeting and you'll have the opportunity to hear directly from him later prior to voting I'd also like to take the opportunity to announce the appointment of Nadine tanley as Chief risk officer of scales this is a newly created position to focus on health and safety sustainability and compliance and we're thrilled to have Nadine as part of the senior management team unfortunately by taking this role it means that Nadim will be retiring from the board at the end end of August but we believe her experience will be invaluable in this newly created position we are thrilled with nadin's contribution at board and governance level uh but we know she'll create incredible value for us as a company in this new role at this stage we don't intend to seek a replacement for n Nadine on the board I'd also note that there will be no increase to director's fees paid to other directors as a result of nadin's resignation we also welcome Emma wheeler as our sixth participant in the future director program where's Emma just uh Emma Emma just there we go just putting a hand up there um emmer is currently Chief commercial officer for trust codes a company that provides brand protection anti-counterfeit and consumer engagement Solutions and we look forward to having Emer as part of our team welcome aboard I'd not now like to hand over to Andy who will update you further on last year's results and activities provide a business update and also summarize the outlook for the group following Andy's presentation we'll move to the formal business of the meeting as always we welcome feedback on any of the matters raised during today's presentation or other General matters in relation to the group uh welcome Andy thank you thanks Mike and welcome all I'd also like to acknowledge uh that our Bankers from West Becker here Richard Swan and um Eugene from Lockton our insurance brokers so um all our professional supporting firms here with us and have been with us a long time which we appreciate uh yeah so good afternoon everybody uh the current slide summarizes the topics that I'll cover in my presentation today which includes a review of 2023 a summary of our progress on climate related disclosures details of the stock transaction and an analys of analysis of global proteins and a summary of current trading conditions and the outlook for the group I'll start with a brief overview of 2023 this current slide summarizes various financial and volumetric measurements for 2023 some which I'll provide more information on later not withstanding the impacts of cyclone Gabriel last year the group continues to perform well and has an excellent foundation for further growth as staff are the standout performers of scales and we're indebted to everyone for their hard work and dedication particularly following the Cyclone after the Cyclone our primary focus was on supporting our people and Community with tailored assistance well-being initiatives medical checks and particular and practical support and whilst the recovery effort was larger than initial initially predicted the 2024 Harvest is a test to the effort that was expended health and safety and well-being is one of our top priorities and continues to be a focus every day a shift to a health and safety and well-being partnership model at Mr Apple has resulted in a reduction and its LTI rate of 43% since 2022 this has been supported by an in-house physiotherapist working on our or our on Orchard and post Harvest teams and an injury prevention and Recovery we also continue to partner with Pacific island governments to develop recruitment plans for our RC workers that meet the goals of both their respective communities and those of Mr Apple the graphs on the slide illustrate our earnings and revenue over the last 5 years this includes the admirable performance of 2023 despite the challenges that were presented to us moving on to some more detail and respect of our 2023 results the reported impa tributable to shareholders was 5.2 million down from 19.4 million in 2022 this decrease was in due part to a Goodwill impairment and asset WR Downs at Mr Apple and had a combined post tax earnings impact of 10.9 million underlying impat attribut to shareholders was 19 million which is at the top end of our guidance range for last year you can see the trends in underlying eidar for each of the divisions on the current slide I've particular not is the growth in the global proteins division since 2019 I'll provide further information on our plans for the division later in my presentation I'll now touch on each of the divisions in more detail starting with global proteins following the record results in 2022 there was a decrease in pet food ingredients volumes revenue and underlying evitar in 2023 this was primarily due to pet food ingredients customers returning to lower preco inventory levels which resulted in lower volumes sold we also continu to incur startup losses during the transition of our Australian business and the establishment of ezro pet food however we benefit from four years contribution from faman with this edible proteins business completing our pet food ingredients operation complimenting our pit food ingredients operations pleasingly our 2023 profit margins were in line with the prior year and as you can see from the graph at the bottom right of the slide both the revenue and underlying e Dar per kilogram of pet food ingredients sold have been improving over time in line with the execution of our strategic initiatives the resilience of the Horticulture division was apparent in 2023 with the division generating an admal admirable result in the wake of cyclone Gabrielle it experienced a decrease in both revenue and underlying eidar primarily due to lower volumes following the Cyclone with export volumes of 2.7 million TC compared to 3.3 million TCS in 2022 however pleasingly margins remained in line with the prior year there was continued focus on premium volumes and a strong performance by desel and posy within Asia and Middle East regions this slide shows a couple of the images that were captured that captured the condition over Orchards immediately following the Cyclone as you can see from the before photos the land and trees were devastated but looking at the after photos it's almost hard to believe that the Cyclone had such a devastating effect fortunately the impact of cyclone Gabriel is largely expected to be limited to last year's apple season Logistics provided produced a steady result despite the impact to reduce volumes of produce and the need to navigate difficulties in the trade routes however it performs strongly producing earnings that were in line with the results of 2019 to 2021 both financially and operationally Logistics continues to be extremely strategically important to scales our balance sheet continues to show a strong financial position the net decrease in the decrease in net cash was primly due to a few factors including capital expenditure including cycl loan related capex dividend payments including those to minority shareholders and our investments into faman medeor Australia and ezro Pet Food and the drop in grou Group return on Capital employed was a result of our lower earnings I'd now like to touch on the work that we've undertaken in the preparation of our first climate change climate related disclosures or CID report we were very pleased to publish our first C report earlier this year for this we undertook a climate assessment process across the three divisions for three different climate scenarios the intention is that these scenarios will be considered whilst we undertake our strategic ref refresh as we continue to embed the consideration of climate risks and the opportunities into our business processes this process will result in US setting group targets as one of our outcomes whilst we haven't yet completed a standalone transition we are already undertaking several transition initiatives these will include the climate challenges and opportunities that we have identified in our CID report I would like here to thank uh Jeff Smith as Chief Operating Officer who did a great job working with the teams across scales to produce this report and uh I think uh it was quite a read if uh you did have trouble sleeping sometimes it was helpful because there was a lot of information on it but it it was certainly a big step forward for us in this area and we will be using the information to uh guide the business but also with a with the target setting ahead of us now moving on to the recently announced transaction with bosck group in this transition we've agreed to P in this transaction we've agreed to purchase selected Bostock Orchards together with the remaining 50% of Pro Fruit this agreement provides us with around 240 hectares of planted Orchard which is geographically close to existing operations at Mr Apple approximately 48% of owned Orchards with with the remainder are least a high concentration of Premium desel plantings providing meaningful future growth in this variety the anti ipation that premium varieties will represent around 80% of fruit sales in 2025 and last but definitely not least the benefit of having profood is a 100% owned subsidiary uh profood is a very very well-run um business and complements obviously the uh The Wider Horticulture division of scales we're currently marketing two of our existing Orchards for sale meaning that Mr Apple's Orchard total Orchard area is expect to remain largely unchanged following the transactions including in the contribution from Pro including the contribution from profr we believe this transaction will contribute around 10 to 12 million to horiculture eidar perom over the medium term prior to the impact of Orchard sales the purchase will initially be funded through a combination of dead and existing cash reserves although the proceeds from the sale of the B to parer Orchards will be used to retire debt in due course the bosto transaction is expected to complete in mid June with the sale of the Mr apple or is expected to conclude in the second half of this year moving on to the deeper dive into the global proteins division this is a uh project we've been working on for a number of years now and we've talked about it a lot to yourselves and to uh our The Wider investment community and we have been asked by the uh institutions and analysts the broker analysts to you know expand on what the division is all about so tell your story a bit better and this is uh a snapshot into that work we've done and later in the uh the month we'll be we'll be launching a a wider um package on on on this uh area because we we want to be able to tell our story and explain you know where it is we're going with it so we have confidence in the Global Pet Food Market due to a number of under lying market trends these underpin this large and growing market and include social and demographic changes particularly across Millennials and genz they now represent the largest proportion of pet owners and continue to grow due to the changes across their family and work environments this demographic is also more educated and has higher incomes which is leading to increased spending supported by human humanization of pets and the explosion of science-based nutrition products older age groups are also more likely to have pets due to Associated Champion companionship and health benefits and finally the increasing middle classes leading to growth across Emerging Markets we've seen phenomenal increase in pet ownership rates in spend across Asia which will also which have also coincided with social and un reggulator changes projected market growth for Asia and USA and the EU is shown on the graph to the right this is a market worth over 100 billion US doll supported by macro trends that is expected to grow at a 5 to 6% Kar between 2023 and 2029 um the recent sector growth and its future potential has fueled expansion by the key retail brands that is our customers both in the US and globally they've expanded their existing facilities and built new sites to increase capacity they want they also want to mitigate key risks including supply chain resilience and scarcity of ingredients this has resulted in many of our customers looking to develop longer term strategic relationships with key protein suppliers so they can focus on their Core Business of building retail pet food brands and product development we believe that we can capitalize on this opportunity as we offer a number of beneficial factors we we're integrated into the supply chains of the largest Global Pet Food manufacturers we're able to Aggregate and offer multiple ingredient products to simplify our customer supply chain and Logistics we have a proven track record of providing a reliable in spe inp specification and ontime service this is a important for customers just in time operations and our recent strategic Investments provide capacity for growth and a diverse production platform to solve our customers challenges and leverage industry Trends we've identified the market opportunity to partner with our customer globally and have been strategically investing around the globe since 2018 we're now operating in four different countries sell across SE key six key protein species have a diverse Global customer base and are developing a world-class team to execute on our plans you can see from this current slide the global proteins division has had almost 30 years of operating in the sector this experience provides an excellent platform for our fut recent and future growth in particular we've exhibited significant growth since 2018 when we acquired 60% of Shelby followed by expansion in Australia and the development of European operations we're excited for the next chapter in this division's development we believe these embedded projects many of which are either complete or in development will contribute sign significantly to Global proteins earnings over the next four years our initial Target for Global proteins was to achieve 25 million of underlying ebit by 2023 we achieved this in 2021 which was not only demonstrate our ability to capture opportunities but also to deliver on strategic initiatives we expect this growth to continue in the plans I've just discussed and we've now reset our Target for Global proteins to achieve underlying eidar of 70 million by 20127 we're excited to announce this Target and also our ambition for Global proteins which is to be recognized by global pet food brands as the world's leading natural proteins ingredient supplier moving on to the outlook for the current year I'm pleased to reconfirm our previously advised guidance of underlying net profit after tax attributable to shareholders of 30 to 35 million Global proteins has started this the year well desp ongoing rebalancing of pet food inventories by our customers medeor Australia has met one of its significant Milestones which in with customer Audits and approvals having been completed faman has also performed well in the year to date with its volumes increasing over all of its major markets within horiculture the Harvest is complete with a total pick of around 3.9 million TC this is slightly below our initial estimates due to us slower than expected recovery from the cyclone and Cold Spring conditions that impacted crop volume and fruit size however our export packout rate is expected to be in line with pre-cyclone levels early pricing indications are in line with expectations and we're benefiting from Global shipping rates that have reduced faster than was previously anticipated last but not least Channel mix has resulted in a solid performance performance a date by Logistics overall our earnings expectations for 2024 remain unchanged although the mix of divisional earnings May differ from initially for from that initially forecast so I've just got a little bit of an add in here that um Steve canelli doesn't know about but um I would like to comment on scales teams and tenure in addition to what my has had to say earlier and my earlier comments scales has had a history of retaining and growing great people and teams you'll note in this presentation our current longest serving team member has worked at Scales logistics for 4 47 years I was talking to her this morning and uh she started in January 1977 I'm getting old and I started the third form that year so well done Julie Hammond she doesn't know when she's going to retire but she can stay on for a long long as long as she likes at our Centenary celebrations uh in 2012 we recognized an employer who complete employee who had completed 50 years at polar cold these sorts of tenures are are created by having strong leaders and a culture that at its heart at its heart looks after and develops its people these sorts of tenures at one employer will be hard to beat however in my team who I don't look to be retiring anytime soon but I have Andrew vanham here and he's well past 30 years at Mr Apple Kent Richie's here and he's done 25 years in shipping he's probably lucky he doesn't go as many lunches as he used to John sainsbury is not here he's we've shifted John off to Kansas City to lead the global proteins business which is if you've been to the Midwest of America that is where there's a lot of pet food going on so it's good to have John over there so you can't beat experience keeping on this same trajectory I'd like to today to acknowledge as CFO Steve canelli who is clocking up his 30th year at Scales this year he still looks 40 so he must have started young Steve has been my wingman for more than 10 years all of which we've added the extra tasks and responsibilities of being listed on the New Zealand Stock Exchange Steve is a loyal hardworking accurate and persistent man with a 10 out of 10 Integrity thank you Steve and I hope you have a great and well-deserved extended holiday with your family before you all start worrying about us all being pending up old age Penance as Mike mentioned we do have a strong group of young and diverse scales team members coming through all through all scales divisions seeing them grow and develop into our Future Leaders is exciting for scales so that concludes my presentation uh we'll answer questions following the resolutions but in the meantime I'll pass back to Mike to cover the formal part of today's meeting [Applause] thanks Andy and uh it's fascinating isn't it seeing the the length of tenure from some of our staff members and it's it's it's something that's really unique I think to many companies these days and I know the younger generation um they do things a bit differently but they don't seem to hang around much in jobs uh so it's really really good to see and I think you know this is one of the real strengths of scales Corporation um we've got experienced people that have seen this business and Company through many years of ups and downs uh you will have noted of course that aggr business is not having an easy time at the moment um and so we are delighted to be you know one of of a handful of companies that I I know of that is actually profitable uh and is actually delivering for its shareholders uh we um really firmly believe in this three-legged stool of course it started with Logistics with uh all those many years ago um and of course then with horiculture now with global proteins and we think that has stood Us in good stead um to withstand challenges that are thrown at us and we know that these are regular challenges across the sector so thanks Andy the the fact that we've got uh experienced people that have taken us to this position is really exciting um but um but I'm equally excited I was privileged enough to have a u a session with Jeff Smith who is one of our young leaders he CLA doesn't claim to be young these days but as one of our young leaders convened a group of people from Ro Ross the three divisions uh in Hawks Bay recently uh just to get them together and to talk about you know the group as a whole and it was truly exciting to see the next level of talent that's coming through in this business uh it was great to see and I'm really confident that um when this group of experienced leaders decide to hang up their boots that um that we've got another group of leaders that's going to come through and fill those um shoes with a plum so very exciting thanks Andy I'll um we'll now move to the business uh of the meeting and all items of business are ordinary resolutions and are required to be passed by simple majority of votes current best practice for shareholder voting is by way of poll accordingly a poll will be held for each of the resolutions I and my fellow directors hold the following undirected proxies with respect to resolution one the authorization for the directors to fix the Auditors remuneration for the coming year for 147,148 140 shares with respect to resolution two election of Tony Bon as non-executive independent director 143,000 shares your board supports these resolutions and we intend to vote all the shares in favor of both of those resolutions above I'll now move on to each of the resolutions resolution one relates to the remuneration of Auditors and nice to see the Auditors here in the room here thank you this proposed ordinary resolution is to authorize the directors to fix the Auditors remuneration for the coming year in accordance with the company's act deot has automatically been reappointed a scales auditor as is usual with audit fees due to the complexity and changing nature of the company's Affairs it is not possible to fix a remuneration at the beginning of the year I now move as an ordinary resolution that the board is authorized to fix the auditor's remuneration for the coming year are there any questions on this resolution thank you we'll now move to the next resolution resolution two relates to the election of a director appointed since the last annual meeting the nzx listing rules State directors appointed by the board must not hold office without reelection past the next annual meeting meeting following the director's appointment resolution two relates to the reelection of Tony pton Tony was appointed to the board in August 2003 and a brief biography for him was included in the notice of meeting Tony being eligible offers himself a re-election and the board unanimously supports his re-election and recommend that shareholders vote in favor of resolution two I'd now like to invite Tony to briefly address the meeting uh on his proposed re-election thanks Tony thanks Mike and good afternoon everyone uh like I said I'm Tony Bon and uh seeking reelection as one of your scales directors today uh as the summary says I have a background in finance I've been partnering two uh uh prominent and highly successful private Equity firms in New Zealand uh before that I worked um uh in London in investment banking for five years and and going right back to the start originally qualified as a chartered accountant uh all of which is still uh all really useful and relevant to to what I do today uh in terms of board roles I've been sitting on boards for the past 20 or so years and a wide range of industries that includes other nzx experience uh for the last8 years I've sat on the board of brisos group uh which owns the retailing chains brisos and and reel sport a really um high high performed business uh I've also some previous experience sitting on the scales board I was a director from 2011 to 2014 a period uh which direct capital was a major shareholder having bought its shareholding from South Canterbury Finance so I was one of the direct capital Partners who led that investment sat on the board of scales for um Just sh four years and I came off uh at the IPO um uh and delighted to re have the opportunity to rejoin the board um in the middle of last year that's the business background which these things always tend to focus on uh but I think where um directors earn their stripes or or should earn their stripes really is around the the human elements that they bring to the role uh and uh you know I see the important ones which I I know all of us seek to bring to the to the role as your scales directors uh obviously firstly holding ourselves um to account to the very highest standards of Integrity um always bringing a genuinely independent thought and an inquiring mind uh Obviously good commercial Acumen and judgments honed um through our experience over the years and last but uh by no means least uh always bringing a positive mindset um scals is a really well-run really well performed organization with a really clear path of where um of what the business would like to achieve in the future and uh our role first and foremost is to help the company to achieve its objectives uh so I appreciate your support with my reelection thank you [Applause] thanks Tony I now move as an ordinary resolution that Tony bton be reelected as a non-executive independent director are there any questions on this resolution none from the floor you got away lightly Tony thank you very much we'll now move to finalize the voting and then we'll answer general questions um once all the votes have been cast They be countered by the company share regist Computer Share and scrutinized by the company's auditor the results of today's meeting will be released to the nzx on the completion of verification of voting if you have not already done so please cast your votes now and give your voting forms to Computer Share whilst we take questions so you'll see the couple of gentlemen walking down the AES uh with a box for voting in person and uh those on online uh will be able to do so if there are any questions on the financial results the business update or any other matters you'd like to raise for those online please do so through the online Computer Share meeting platform a reminder of the process is shown on the screen so that's how to participate in the virtual and hybrid meeting if you need a hand please either contact Computer Share or talk to the helpful people and attendance for those of you present I'll open the floor to any questions I want to remind everyone if we run out of time uh to answer all questions now we'll respond uh either after the meeting or in writing following the meeting um and so uh we will just uh we'll have Steve monitoring the questions online um and then uh we will have the opportunity for questions uh from the floor here um when you ask a question please we have Jane and Lisa with microphones uh and so please wait for them to bring the microphone to you um and just just state your name so we know who we're talking with uh and ask a question and if I can't answer it then I'm sure that any one of our team will be able to do so thank you very much ladies and gentlemen the floor is open for questions yes oh one at the top and then we'll come down to the front hallowen um could you elaborate um the advantage of having sold you bought you've bought land and you've sold land what is the advantage of the land that you've bought over the land that you've got for sale is it to do with the the the the flooding risk climate risk or obviously it's more than just the uh the the varieties of apples on the land that you're buying the other question is uh I noticed with the map of Europe uh you've included B Russia and Ukraine so they're dicey areas aren't they so here is but I don't think we've got Russia and Ukraine included on the map have we B Russia yes yeah so can I just let me just go to your first question um look there there's no doubt the bosck equ position has really given us a leg up in getting premium varieties of apples um that that's been really we think that's a really positive uh move for uh us at Mr Apple and obviously for scales Corporation um that will take us to nearly 80% of our apples and what we call Premium varieties and so that's been a big Advantage for us when it comes to the sale of the Orchards uh we are always conscious that uh we we want to be careful how we deploy capital and so really the sale of a couple of orchards is really to help us fund the acquisition of this The Orchards that have Superior varieties on them have you got a a jump up an area it'll be we'll end up be we'll end up having about the same area of apples as we had when we've completed both transactions um so look I don't know whether Andrew Andy do you want to all the other uh The Orchards we're selling do need quite a bit of Redevelopment so it's really about you know uh cycling Capital into you know pretty welldeveloped Orchards you know the the ones that that we're selling are going would have needed quite a lot of um Redevelopment if we' done that ourselves it would be over 5 years Cyclone Remedy or or just Redevelopment Redevelopment yeah okay and and and these better varieties so you know that takes time and money so we've sort of fast-tracked that by buying into the Bostock Orchards that are already already redeveloped and I I think we're finding about 5 to 6 years of age those trees mostly Andrew I think is that right in the in the high in the newer varieties bit varieties we're getting a getting a kickart of five to six years the the other point that the board are are also very conscious about is just our balance sheet we we are a conservative company we want to make sure we have a strong balance sheet and so we didn't think that we should be buying the bck assets um without actually freeing up some capital from elsewhere Prudence y y thank you thank you there's a question down the front here thank you um my name is Frank Stewart and I represent the New Zealand shareholders Association and I've got a comment and a question the comment is that every year we produce a report card for companies under various criteria and uh our report card for scales I didn't do it but I've never seen so many green ticks for scale so in terms of the various categories we rate companies on so congratulations for that and my question is um recently um I ate an apple that came from Northland yes and it was it was called Breeze and it was designed to be red and sweet I didn't particularly like it myself and I wouldn't buy it even if it was available I'm liking this better and better it's not going to be available in New Zealand anyway but I I wondered if you'd heard of it and whether how you rated it as competition for Fantastic look I'm Mr work answer that question but give Andrew mic we'll just take the mic to Andrew but think can I just say thank you thank you for your comments about the um the report card and look we have read the report card and we appreciate that um and look we do a lot of work to make sure that we're doing uh the the most possible to uh get best practice and and governance and how we actually report on a performance scale so so thanks for that um it's appreciated it's work in progress there's a couple of little areas we need to keep working on and we've got that in plan for the coming year um Andrew did you want to comment on Breeze because it's not one of ours you want to be careful yes uh yeah look no Breeze is not one of ours it's um there are there are probably 40 35 to 40 different apples exported out of New Zealand some of them are completely unique apples and some of them are sport or a version of another Apple like you if you if you imagine you had six children they're all the same parent but they're slightly different Breeze is one of those options and it's a it's a branded product it's not one of ours um we haven't chosen to plant it um probably can't comment more than that but there are a lot of options and we've got quite a a basket of options ourselves yes that we're branding in effect after the meeting you'll be able to try some dazel um we we also have some raw Gala there and I think we have some pink lady is that right yes there all pink lady and raw Gala yes so there we go you'll be able to test it great any other questions uh from people in on in person yes there's one in the middle here my question is about the volume of apples from this year's crop and how does it compare to the uh um volume that uh we we got prior to the um recent weather event yes I wonder if we could Seth has any chance of putting that slide up I think it has the volume of apples on it Andy do you want to comment because one of the one of the challenges for this season was that you know some of the smaller fruit size particularly in the early part of the season and that has affected the volume of the crop across New Zealand not just for Mr Apple um but I think you'll see uh yeah well three three 2022 was uh 3324 3.3 million and um obviously with the Cyclone was sort of like 2.8 or 273 um and we'll be sort of in between that um you know this year because of uh sort of bounce back to more like 2022 but you know not quite there so so the expectation is the volume will stay relatively stable but um we're hoping of course with those extra premium paying varieties uh that will give us a better margin uh for you know our future Harvest yes sir Paul hson um my question is how salable do you think these are and these two that you're wanting to sell um just I mean locally and area South canbury there seems to be quite a few um more Acres going into apples uh even though um other don't appear to be doing so well but overall I mean what is the is the acreage in New Zealand sort of um balanced out or is it going up or down or sideways well well we would certainly argue that HW spay is the best place in New Zealand to grow apples and that's where all our orchards are located in spite of the challenges we had with the Cyclone last year um the weather conditions make it very well suited um we're we're optimistic that we can secure a sale for those Orchards at a value that's acceptable to us um and in fact um you know we think there is is interest in particularly um land owning Assets in New Zealand um from people that take a long-term view about investing uh so um we're we're we're pretty confident that they'll sell and they'll actually do the job that we need to do Andy did you want to add to that oh well just to the second question I think the the Apple uh volumes are pro and traditional apples anyway are probably slightly falling because these you know the old varieties are either getting pulled out but you know if you took apples overall it's it's about flat cuz there's a lot of new area gone into rocket for example so I think overall you know the Apple industry is probably just holding its own um but but traditional farmer you know orchardist with with no new varieties will be struggling to make money because of just the variety is becoming uh less favored hence our sort of drive to get into these premium varieties to uh you know really mitigate um the margin erosion that we've been having with the increase in labor costs great yes sir hello uh the name's Ray spring um two questions the first question is if we chop down all our apple trees and planted them in Pine we would get uh carbon credits why can't we get carbon credits for trees that are growing at the moment why do we have to chop them down before we can get them now you realize once you open this up to Andy ball and this is going to be this will be a long conversation um he's argued for years that we should be claiming carbon credits in fact he's even talked about just putting a single lader up to 5 m is so it would qualify but there is some science around this and I'm going to let Mr band explain how's that well it's it's anyway that they that apples don't see Quest carbon and it's just a a politically um driven thing out of the Paris Accord that that we they nominated what was a carbon sequestering tree and what wasn't and you know like your natural carbing story on a New Zealand Farm is a as a carbon sequestering business but they they don't count cuz you know they're not pine trees you're right it's it's it's really a nonsense it's frustrating yeah we don't like it either sorry now the next question is this uh annual report page uh 24 um you're claiming rce and I have no idea what rce it might be something about rate of return or something uh is 42% or uh and 67% the figures are incredible how how is it [Music] done don't tell anyone exactly why are we printing it return on Capital employed uh look I mean one of the things look and and and we have we have lots of discussions about what should be in the annual report um and um but you know we we want to be transparent and we want shareholders to make sure that they've got all the information that they need to hopefully make a very good investment in scals so yes right any other questions Steve do we have questions from online we have one from uh Granton clear yes question is do you view the current challenges The Alliance Group are experiencing in New Zealand plus the continuing decline in sheep numbers as a threat to meteor or an opportunity or both I I'll let Andy answer this question because I'm a director of anco foods which is a competing Meat Company to a Alliance Group look I think it's clearly going through a difficult patch um but they're a resilient Bunch that uh the farmer it's a farmer Co-op so uh we would think that um they'll find a way through their current um um you know downturn I guess you'd call it and you know we'd have a lot of confidence that they're a pretty good team and they'll pull pull things through and I think from aista Media or know it's uh we we collect off um all of the meat companies that are sort of close to our two processing plants one in Hastings one in denan so we get a wide SE of the meat industry's products through our plants um so Alliance is important to us but you know and and they'll continue to supply us over the years as well no more online questions Mike okay thank you Steve any others from the floor yes sir sorry can I just pass that to you Mr nous thank you uh chair thank you Mr War um just wondering a couple of questions I think that's what I'm Mike um first one was the capex that's needed to get your 70 million EIT for your Global proteins um and then subsequent that be would be the governance oversite you've got on joint uh joint ventures CU in my view joint ventures are pretty tricky so how do we keep our shareholders Association green tick right across the um right across the governance thank you thanks uh Stuart um the the capex is um a lot of it's already embedded we've started these projects uh for some some haven't um but there isn't um there isn't significant CAPIC some of it's uh planting equipment that we just you know purchasing to put into plants so it's uh certainly um you know not what you'd think you I wouldn't definitely call it significant um not going to give you a number right now off the top of my head but yeah you you should think of it as being not significant relative to our balance sheet and everything um we're doing a couple of projects for example in in in um Shelby that they'll be able to fund out of their resources uh rather than you know us scales putting more money into it or or the shareholders putting more money into it so I think overall you're pretty confident that that those nine projects we refer to are uh you know certainly manageable and but not wouldn't wouldn't say that's significant and the governance side yeah it's a challenge with joint ventures um we put you know our um um myself and John sainsbury uh and Nick Harris actually helps us as well um so certainly where we've got you know pulling in Nick's uh experience from Harris Farms um and obviously John and I so we're representing scales shareholders in those joint ventures across the meat uh you know the global protein's part of it and and their partners are obviously joining us on those boards um finding them you know good contributors and you know and and you know everything's um going you know reasonably well at the moment on on all those companies um the in the horiculture business with Pro Fruit obviously we've been in a longstanding joint venture partnership where we had fact gr sley has uh been a longterm director for Pro Fruit for us um I'm on that board with um and obviously John Bostock and Neil chiter will be coming off it and we'll just put a you know an inhouse um directorship on you know we report regularly through that board to back to the scales main board so uh we don't um keep any anything from the main board you know everything that we're seeing in those in those subsidiary um or joint venture boards are very very well reported back to the full scales board thanks Jude nothing else afterwards maybe yeah good any any fur any any further questions from anyone else before we close the voting okay thanks ladies and gentlemen that um concludes our discussion on the items of business and shortly I'll close the voting system so please ensure that you have cast your vote on all resolutions uh and I'll now pause to lay you time to finalize those votes particularly if you're voting online and everyone on here has obviously voted so that's been great all right voting has now closed the results of all votes will be released to the nzx later today ladies and gentlemen there doesn't appear to be any further business for discussion so that brings us to the end of formal business for scales Corporation 2024 annual shareholders meeting I'd like to thank you all for taking the time to connect with us today whether it's in line or on person in person or online and I will now declare the meeting closed thank you very much and I invite all those presents present to stay on for light refreshments and the opportunity to have some informal discussions with directors uh taste a few apples out the back uh and and have a general catch up on any other issues might want to raise and take oh take apples with you the managing director said so um thanks very much ladies and gentlemen and we look forward to seeing you out the back [Applause] [Music]