2017 Annual Results Announcement

Scales Corporation Limited
Head Office: 52 Cashel Street | Christchurch 8013 | New Zealand
Postal: PO Box 1590 | Christchurch 8140 | New Zealand
Phone: +64 3 379 7720
scalescorporation.co.nz



NZX & Media Release

28 February 2018

SCALES CORPORATION DELIVERS ANOTHER STRONG RESULT

Highlights – 12 months to 31 December 2017

 Group FY2017 financial results:
o Record Group revenues of $399.1 million, 7 per cent above FY2016.
o Underlying EBITDA
1
of $62.0 million, at the top end of previously provided guidance.
o Underlying Net Profit
2
of $32.7 million, statutory Net Profit for the Year of $31.8 million.
 Mr Apple export volumes consistent with 2016, with like-for-like production only 5% less than
2016 record volumes in a very challenging growing season.
 Excellent growth in the Storage & Logistics division, with advantage taken of both organic and
acquisition opportunities.

Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its FY2017 full
year results. Net Profit for the year (including non-cash IFRS adjustments) was $31.8 million
(FY2016: $38.2 million). Earnings per share for FY2017 were 22.6 cents per share (2016: 27.4 cents
per share).

Scales Corporation chairman Tim Goodacre says: “This is a very satisfying result in light of a
challenging growing season and some competitive trading conditions. It demonstrates the skill,
knowledge and personal application of all of the Scales team to continue to deliver excellent returns”

“As reported in our half year results, the Hawke’s Bay region experienced a difficult growing season.
However, the Horticulture team produced an overall export volume consistent with the record 2016
crop and an export packout percentage also in line with the prior year. This was supported by an
excellent performance within the Storage & Logistics division and a solid result from the Food
Ingredients division.”


1
Earnings before interest, tax, depreciation and amortisation and excludes non-cash International Financial Reporting
Standards (IFRS) adjustments.
2
Net Profit excluding non-cash IFRS adjustments. A reconciliation between Net Profit and Underlying Net Profit is provided in
the appendix of our annual results presentation pack.

2



Scales Corporation managing director Andy Borland notes: “The FY2017 result reflects the positive
impact of careful investment made in prior years in order to respond to climatic and market conditions,
ensuring the needs of our customers were met.”

“We invested $13.5 million in capital expenditure during FY2017 and our net debt at 31 December
2017 was $40.8 million. Our strong financial position and low gearing enables us to react quickly and
confidently to potential strategic acquisitions and other opportunities. During the year Scales declared
dividends of 19.0 cents per share.
3
As in previous years, the board expects to declare a final dividend
in respect of FY2017 in May, with payment in July.” Mr Borland says.

Divisions

Horticulture
The Horticulture division delivered strong performance with Underlying EBITDA of $38.9 million in
FY2017 (FY2016: $45.3 million).

Mr Borland noted “Profitability was impacted by (1) a slight overall reduction in the weighted average
sale price achieved following record 2016 prices (2) an increase in on-orchard costs, following
adverse weather conditions, to ensure the highest possible export quality packout, and (3) the impact
of slightly reduced Mr Apple volumes (excluding Longview). Investments made during the season
paid off with overall export volumes sold being maintained at 3.55 million TCEs
4
.”

“Ongoing investment is being made in new and exciting plant variety rights for our export markets.
New varieties will be launched during FY2018 and redevelopment of our orchards will continue
accordingly.” Mr Borland says.

Storage & Logistics
The Storage & Logistics division delivered an excellent result with EBITDA of $19.1 million in FY2017,
an increase of 18 per cent on FY2016 Underlying EBITDA of $16.2 million.

Mr Borland commented. “We saw a strong EBITDA uplift of 24 per cent from Coldstore activities,
reflecting a return to more ordinary levels of trading. Scales Logistics acquired OceanAir in August
2017 and this, together with organic growth opportunities, resulted in a 46 per cent increase in
EBITDA compared to 2016. Both TEUs
5
shipped and airfreight tonnes managed were up on prior
year.”

Food Ingredients
The Food Ingredients division generated Underlying EBITDA of $8.0 million (FY2016: $9.2 million).

3
Scales declared a final dividend of 10.0 cents per share for FY2016 on 2 May 2017, which was paid on 7 July 2017 and
declared an interim dividend of 9.0 cents per share for FY2017 on 5 December 2017, which was paid on 19 January 2018.
4 Tray carton equivalent, a measure of apple and pear weight, defined as 18.6kg packed weight which equates to 18.0kg sale
weight.
5 Twenty-foot equivalent unit, based on the volume of a 20-foot-long intermodal shipping container.

3




Mr Borland noted “Within the division, Meateor sold close to 28,000 tonnes of pet food ingredients, an
increase of 20 per cent on its record FY2016 volumes, although a competitive environment resulted in
increased margin pressures. Profruit continued to deliver a robust result.”

Outlook

Looking ahead, Mr Goodacre commented: “Apple picking for the FY2018 crop has recently begun,
slightly ahead of normal harvest times. In spite of the wet weather experienced by the region, early
indications are positive. We anticipate that the Storage & Logistics division will build upon its FY2017
result and that volumes will continue to grow within the Food Ingredients division.”

“Based on these, and other, factors known to us at the present time, the Directors support previously
provided guidance for FY2018 EBITDA of between $58 million and $65 million.”

Contact
Andy Borland, Managing Director, Scales Corporation Limited, Mob: 021 975 999,
email: andy.borland@scalescorporation.co.nz

About Scales Corporation
Scales Corporation is a diversified agribusiness group. It currently comprises three operating
divisions: Horticulture, Storage & Logistics and Food Ingredients. The company’s diverse spread of
activities gives Scales broad exposure to New Zealand’s agribusiness sector. Scales Corporation
was founded in 1897 as a shipping business by George Herbert Scales. Today it employs more than
700 staff New Zealand wide. Find out more at www.scalescorporation.co.nz.

---

SCALES CORPORATION LIMITED
GROWING YOUR DIVERSIFIED AGRIBUSINESS
Annual Results Presentation
For the twelve months ended
31 December 2017
28 February 2018

February 2018Scales – 2017 Full Year Results
AGENDA
1. 2017 Highlights
2. Financial Performance
3. Divisional Performance & Outlook
4. Capital Management
5. Outlook
6. Strategy
7. Appendices
2

2017 HIGHLIGHTS

SCALES BY THE NUMBERS
4
Underlying EBITDA
$62.0m
9% decrease
Dividends declared
19.0 cents
per share
(2016: 14.5 cents per share)
Underlying Net Profit
$32.7m
15% decrease
Revenue
$399.1m
7% increase
ROCE
16%
(2016: 21%)
EPS
22.6 cents
per share
(2016: 27.4 cents per share)

February 2018Scales – 2017 Full Year Results
STRATEGIC AND OPERATING HIGHLIGHTS
5
Mr Apple export volumes of 3.5m TCEs consistent with 2016
record volumes,
like-for-like production only 5% less than 2016.
1
OceanAir acquired
in August 2017, adding new locations and
expertise in the freight forwarding and logistics business.
2
Continued development in our markets, brands and new
varieties:
working alongside customers to identify and satisfy their
needs, particularly in the Asia markets.
3
TEUs shipped and airfreight tonnes handled by Storage &
Logistics up 19% and 88% respectively compared to 2016:
being 29,481 TEUs and 6.2M tonnes.
4
Petfood Ingredients sales volumes up 20% on 2016, being
27,663M tonnes
.
5
Further development in Sustainability and Health & Safety,
including the appointment of a dedicated Group role.
6

FINANCIALS

February 2018Scales – 2017 Full Year Results
GROUP FINANCIAL PERFORMANCE
•
Revenue $399.1m, up 7% on 2016:

Solid revenue growth from Storage &
Logistics and Food Ingredients divisions.

Horticulture revenue in line with 2016
following successful integration of Longview.
•
Underlying* EBITDA $62.0m, at the top end
of previously provided guidance:

Increased on-orchard costs (e.g. spraying,
storage) as a result of inclement weather
impacted Horticulture gross margins.
•
Underlying NPAT $32.7m.
•
Reported NPAT of $31.8m after deducting
non-cash IFRS adjustments.
7
* Underlying Results exclude all International Financial reporting Standards (IFRS) non-cash adjustments (most notably fair value or revaluation gains and mark-to-market gains or losses on FX contracts
not exercised during the period). Management and the Board believe that Underlying results more accurately demonstrate the change in operational performance of the Group.
** Underlying gross margin excludes fair value gains relating to Mr Apple’s unharvested crop.
*** Capital Employed and Return on Capital Employed in 2016 excludes capital employed and net losses from the Longview acquisition which, due to the timing of the acquisition, did not contribute to 2016
profits. Longview has been included in the 2017 calculation.
Income Statement
2017
$ MillionsActual
Growth %
Actual
Growth %
Revenue399.1
7%
373.9
24%
Cost of Sales(287.1)(262.5)
Underlying Gross Margin **112.0
1%
111.5
4%
Underlying Gross Margin %28%30%
Underlying EBITDA62.0
-9%
67.9
11%
Underlying EBIT47.8
-14%
55.8
11%
Underlying Net Profit32.7
-15%
38.6
11%
After tax impact of:
Non-cash IFRS adjustments(1.0)(0.5)
Net Profit31.8
-17%
38.2
6%
Capital employed***307.5271.1
Return on capital employed ***16%21%
2016

February 2018Scales – 2017 Full Year Results
HISTORIC AND DIVISIONAL TRENDS
•
Underlying EBITDA and NPAT have increased at CAGRs of 10% and 13% respectively.
•
Underlying divisional EBITDAs have also increased at CAGRs of between 8% and 14%.
8
Underlying EBITDAUnderlying NPAT
$42.8m
$39.8m
$61.4m
$67.9m
$62.0m
20132014201520162017
CAGR 10%
$20.0m
$19.8m
$34.8m
$38.6m
$32.7m
20132014201520162017
CAGR 13%
HorticultureStorage & LogisticsFood Ingredients
$25.5m
$23.9m
$40.0m
$45.3m
$38.9m
2013 2014 2015 2016 2017
CAGR 11%
$13.9m
$12.3m
$16.3m
$16.2m
$19.1m
2013 2014 2015 2016 2017
CAGR 8%
$4.7m
$5.7m
$7.6m
$9.2m
$8.0m
2013 2014 2015 2016 2017
CAGR 14%
EBITDA by Division

February 2018Scales – 2017 Full Year Results
BALANCE SHEET
•
Scales’ balance sheet continues to reflect its
investment in land, buildings, equipment and trees:

731 ha. orchards owned by the Group (further 417 ha.
leased).

322,000 m3 of owned coldstorage space (further
453,000 m3 leased).
•
During 2017, Capital Employed increased slightly by
$14m. The movements are principally due to:

An increase in trade debtors and inventory reflecting the
increased revenues in Storage & Logistics and Meateor.

The acquisition of OceanAir and increase in associated
goodwill.
9
Maintaining a strong balance sheet
Balance Sheet
20172016
$ MillionsActualActual
Current Assets
(excluding Cash)
Trade Debtors23.417.6
Inventory22.216.4
Unharvested Agricultural Produce20.218.4
Other9.812.1
75.764.5
Current Liabilities
(excluding Overdraft and Dividends Declared)
Trade Creditors & Other Payables(22.2) (22.0)
Other(7.1)(8.4)
(29.3) (30.4)
Net Working Capital46.434.1
Non-Current Assets
Apple Trees30.731.0
Land & Buildings142.6140.7
Other PP&E55.555.0
Investments & Intangibles 24.521.1
Other7.811.6
261.1259.3
Capital Employed307.5293.4

February 2018Scales – 2017 Full Year Results
BALANCE SHEET (CONTINUED)
•
At 31 December 2017, Net Debt was $40.8m.
The increase in Net Debt on 2016 was due to
movements in working capital.
•
Average net debt for the year was $54.8m, or 0.9x
EBITDA.
•
Our strong financial position enables us to react
quickly and confidently to potential strategic
acquisitions and other opportunities.
•
Significant headroom on covenants.
10
Maintaining a strong balance sheet
Balance Sheet (continued)
20172016
$ MillionsActualActual
Non-Current or Other Liabilities
Deferred tax liabilities(28.2) (28.2)
Other financial liabilities(4.0)(4.9)
Dividends declared(12.6) (11.0)
(44.8) (44.1)
Net Debt
Cash less Overdraft5.76.4
Borrowings(46.5) (41.0)
Net Debt(40.8) (34.6)
Total Equity221.9214.6
Covenants
Interest Cover
Ratio18.3x24.1x
Covenant3.0x3.0x
Headroom511% 703%
Senior Debt Coverage
Ratio0.7x0.5x
Covenant2.5x2.5x
Headroom257% 432%

DIVISIONAL
PERFORMANCE &
OUTLOOK

February 2018Scales – 2017 Full Year Results
HORTICULTURE – FINANCIAL PERFORMANCE
•
Revenue of $228m (1% below 2016 revenue).
•
Gross profit down 8% on 2016, impacted by additional on-orchard expenses and additional labour.
•
Underlying divisional EBITDA of $38.9m (14% below 2016 results), representing a resilient
performance in a challenging growing season.
12
A strong performance despite a challenging growing season
•
Packout of 80% (in line with 2016
packout of 81%). Mr Apple is
constantly achieving incremental
gains in orcharding that lead to
superior export packout.
•
Longview fully integrated with
existing Mr Apple infrastructure,
improving capacity and unlocking
potential for future efficiencies.
•
Continued robust performance from
Fern Ridge (EBITDA of $2.3m).
Financial Performance - Horticulture
20172016
$ MillionsActual
Growth %
Actual
Growth %
Revenue228.0
-1%
230.1
29%
Underlying Gross Profit58.0
-8%
63.0
-3%
Underlying Gross Profit Margin25%27%
Other income, admin and operating expenses
(19.1)
8%
(17.7)
-31%
Mr Apple Underlying EBITDA 36.6
-16%
43.6
11%
Fern Ridge Underlying EBITDA 2.3
N/A
2.1
N/A
Longview Underlying EBITDA -
N/A
(0.4)
N/A
Underlying Horticulture EBITDA38.9
-14%
45.3
13%
Depreciation and amortisation(7.8)(6.2)
Underlying Horticulture EBIT31.1
-21%
39.1
14%

February 2018Scales – 2017 Full Year Results
HORTICULTURE – OWN-GROWN VOLUMES
•
Total own grown export volumes of 3.5m TCEs in line with 2016 (supported by approximately
200,000 TCEs from Longview orchards).
•
Growth in premium volumes affected by the inclement weather conditions:

Strong growth in volumes of the Asia-targeted NZ Queen variety (an increase of 18% to over 400,000 TCEs).
13
Premium and traditional volumes at a similar level to 2016
Mr Apple Grown Export Volumes (TCE 000s)Growth in Premium Volumes (TCE 000s)
Volumes may have changed slightly from previous announcements as final sales data on unsold fruit is received.
536
741
1,059
1,036
1,454
1,656
1,616
1,465
1,404
1,773
1,716
1,701
1,890
1,929
2,001
2,144
2,833
2,752
3,155
3,546 3,545
2011201220132014201520162017
Traditional Varieties
Premium Varieties
214
343
406
119
185
245
245
282
301
253
273
393
585
574
831
866
809
536
741
1,059
1,036
1,454
1,656
1,616
2011201220132014201520162017
Other
High Colour Fuji and Royal Gala
Pink Lady
NZ Queen
CAGR20%

February 2018Scales – 2017 Full Year Results
HORTICULTURE – PRICES
•
Compared to the record 2016 prices achieved, our 2017 apple prices were affected by an overall
softening of prices in the market
.
14
Recognition by customers and consumers of the superior quality of the Mr Apple brand
Apple Prices by Variety
20172016
NZD / TCE, FOBActual
Growth %
Actual
Growth %
Premium Varieties36.3
-3%
37.4
-1%
Traditional Varieties28.6
-2%
29.3
5%
Total Mr Apple Orchards32.1
-3%
33.1
2%
Price uplift - Premium vs Traditional27%28%

February 2018Scales – 2017 Full Year Results
HORTICULTURE – OTHER KPIs
•
Both internal and external grower volumes maintained notwithstanding higher than average rainfall and
the impact from ex-Cyclone Cook.

On a like-for-like basis, Mr Apple export volumes were down by ~5%, favourably comparable to the broader
industry.
•
Exchange rates broadly comparable to 2016.
•
Foreign exchange exposure – the impact of current spot rates, if maintained, will present a headwind
for the business post 2018
15
Key Performance Measures
20172016
Actual
Growth %
Actual
Growth %
Volumes (TCE 000s)
Mr Apple own-grown volumes3,545
0%
3,546
12%
External grower volumes1,250
5%
1,187
17%
Total volume sold4,794
1%
4,733
13%
FX Rates
NZD:USD0.69
0%
0.70
-4%
NZD:EUR0.60
0%
0.60
1%
NZD:GBP0.46
-1%
0.47
-3%
NZD:CAD0.88
2%
0.86
0%

February 2018Scales – 2017 Full Year Results
Europe
29%
UK
13%
North
America
5%
Asia &
Middle East
53%
Europe
30%
UK
10%
North
America
7%
Asia &
Middle East
53%
Europe
31%
UK
10%
North
America
5%
Asia &
Middle East
54%
HORTICULTURE – STRATEGY
•
During 2017 Mr Apple picked over half a billion apples. The Horticulture division sold apples to more than 160
customers in over 40 countries.
•
Asia & Middle East are the key focus for the Horticulture division, accounting for more than half of our sales, and
are expected to become increasingly relevant for the division:

We scrutinise per hectare orchard returns and will continue to redevelop lower-performing orchards and varieties into higher
value apples. As historical redevelopment matures, volumes of premium varieties will continue to increase.

We continue to invest in our marketing, packaging, products and brands that are targeted to these markets.

Affiliation with our key strategic shareholder, China Resources Ng Fung, provides improved access to the large China market.
•
Ongoing focus on brand development and acquiring Plant Variety Rights to meet emerging needs:

Dazzle® successfully launched in December 2016 and gaining market recognition as a promising new variety.
16
Asia & the Middle East remain the key focus for Mr Apple
FY16AFY17AFY15A
Mr Apple – Sales by Region (TCEs)

February 2018Scales – 2017 Full Year Results
S&L – FINANCIAL PERFORMANCE
17
Strong uplift from Storage & Logistics with EBITDA up 18% on 2016
•
Revenues of $126.0m, 16% ahead of 2016 reflecting strong growth from the Coldstorage and Logistics
businesses.
•
EBITDA of $19.1m, 18% ahead of 2016.
•
Strong growth from the Coldstore division:

Industry conditions and storage times returning to normal trends – reaping the rewards from previous extensions to the
network.

Coldstore merger completed effective 1 January 2018. The Whakatu Coldstores and Polarcold Stores businesses have
been combined under the “Polarcold” brand.

As a part of this process, the Polarcold logo
was modernised. New signage will be gradually
be rolled out across the network.
Financial Performance - Storage & Logistics
20172016
$ MillionsActual
Growth %
Actual
Growth %
Revenue126.0
16%
108.4
13%
Cost of Sales(81.4)
16%
(70.2)
14%
Gross Profit44.6
17%
38.2
12%
Gross Profit Margin35%35%
Other income, admin and operating expenses
(25.5)
16%
(22.0)
23%
EBITDA
All Coldstores14.5
24%
11.7
-7%
Liqueo1.3
-42%
2.3
30%
Scales Logistics3.3
46%
2.3
17%
Total Storage & Logistics EBITDA19.1
18%
16.2
0%
EBITDA Margin15%15%
Total Storage & Logistics EBIT13.3
22%
10.9
-4%

February 2018Scales – 2017 Full Year Results
S&L – FINANCIAL PERFORMANCE (CONT’D)
18
Ongoing improvements from Scales Logistics
•
Excellent performance from Scales Logistics, EBITDA up 46% on 2016 results, reflecting:

Strong increases in underlying activity: TEUs shipped and airfreight tonnes handled both significantly ahead of 2016 with growth
of 19% and 88% respectively.

We continue to evolve our expertise in perishable logistics. The OceanAir acquisition furthered this objective.
•
Bulk liquid storage business, Liqueo, impacted by the loss of a large customer, lower volumes and closure costs.

Liqueo has progressively moved its liquid handling activities at the Whakatu Industrial Park to a better suited facility closer to the
Napier Port (this facility was acquired in 2015). The 2017 result was impacted by one-off costs in finally exiting this facility.

Near term future outlook is positive with large anticipated volume increases from one key client in particular.

February 2018Scales – 2017 Full Year Results
S&L – KPIS
19
•
A 5% increase in the total available refrigerated coldstore space with additional leased area in Christchurch secured for
current and expected future demand.
•
Scales Logistics (including airfreight division Balance Cargo) achieved excellent growth :

Increased revenue from:
—
Scales Logistics internal customers (Fern Ridge, Meateor).
—
Balance Cargo key external customers.

Acquisition of new customers.

Addition of OceanAir.
Key Performance Measures
20172016
Actual
Growth %
Actual
Growth %
Coldstores
Total available refrigerated coldstore space (m3 000s) 775.1
5%
737.6
2%
Liqueo
Installed capacity of all tanks (MT)20,308
0%
20,308
-10%
Logistics
TEUs shipped (TEUs)29,481
19%
24,713
17%
Airfreight tonnes managed (MT)6,217
88%
3,306
17%

February 2018Scales – 2017 Full Year Results
S&L – STRATEGY AND OUTLOOK
20
Storage & Logistics benefits from a long-term view and appropriate levels of
investment
•
The outlook for 2018 is positive:

The Coldstore business expects to consolidate returns from new and existing customers requiring additional
storage. The year commenced with higher levels of goods in store relative to this time last year.

New racking to be installed in existing stores will improve the utilisable space and earnings potential of those
sites whilst also improving safety and handling efficiency.

Scales Logistics anticipates further increases in activity (TEUs shipped and airfreight tonnes managed).

Liqueo expected to benefit from additional forecast storage volumes.

February 2018Scales – 2017 Full Year Results
FOOD INGREDIENTS – FINANCIAL PERFORMANCE
•
Meateor continues its steady growth in securing and selling petfood ingredient volumes. During 2017, 27,663 MT
of petfood ingredients were sold by Meateor up 20% on 2016, delivering a corresponding increase in divisional
revenues.
•
Profruit sales volumes remained relatively steady at 5.6mL of juice concentrate:

A robust result given the difficult growing conditions and continued improvements in industry orcharding practices (thus provision
of a reduced amount of fruit suitable for processing).
•
Divisional EBITDA reduced by 13% from 2016 level reflecting increasing margin pressures within the division.
•
The Group is focused on strategic initiatives to enhance our relationships with suppliers and customers as well as to
build further scale within the division.
21
Record sales volumes from Meateor
Financial Performance - Food Ingredients
20172016
$ MillionsActual
Growth %
Actual
Growth %
Divisional Revenue68.9
19%
58.0
19%
Underlying Food Ingredients EBITDA8.0
-12%
9.2
22%
Depreciation & Amortisation(0.5)
6%
(0.5)
1%
Underlying Food Ingredients EBIT7.5
-13%
8.7
23%
KPIs
Meateor Volume Sold (MT)27,663
20%
22,971
14%
Juice Concentrate Sold (million Litres)5.65.7

CAPITAL
MANAGEMENT

February 2018Scales – 2017 Full Year Results
PERFORMANCE AGAINST BENCHMARKS
•
We monitor Return on Capital Employed (ROCE) and EBITDA Margins for each division and the group, targeting a
long-run combined ROCE of 15% and EBITDA Margin of 13%.
•
Group capital employed increased by $14m (5%) between 2016 and 2017, mainly due to an increase in working
capital.
23
Return on Capital Employed and EBITDA Margins targets exceeded
•
ROCE from all divisions were in excess of their
individual divisional targets.
•
Overall EBITDA margin remain positive and above
target levels.
Capital Management
20172016
ActualActual
Return on Capital Employed
Horticulture
1
19%28%
Storage & Logistics13%11%
Food Ingredients30%53%
Group16%21%
Target15%15%
EBITDA Margins
2
Horticulture17%20%
Storage & Logistics15%15%
Food Ingredients10%13%
Group16%18%
Target13%13%
2. Excluding share of profit from joint venture
1. Due to the timing of the acquisition (November 2016), Longview was excluded from the
calculation of Horticulture and Group 2016 ROCE. It has been included in 2017.

February 2018Scales – 2017 Full Year Results
CAPITAL EXPENDITURE
•
Operational capital expenditure of $7.4m was slightly higher than 2016 whilst $6.0m was invested in growth
projects, positioning us strategically for future earnings growth.
•
Investments during 2017 included:
24
Strategic investment

Horticulture:
—
Redevelopment of orchards to premium
varieties such as Dazzle®.
—
Installation of an apple washer at
Longview.
—
Upgraded vehicles and accommodation
for RSE workers.
—
Various IT upgrades.

Storage & Logistics:
—
Racking upgrades at Whakatu for
improved FMCG storage.
—
Finalisation of the warehouse
management system upgrade at
Polarcold.
—
Racking at Scales Logistics.
Capital Expenditure
20172016
ActualActual
Operational capital expenditure
Horticulture3.83.3
Storage & Logistics3.33.4
Food Ingredients0.20.4
Other0.10.0
Total operational capital expenditure7.47.0
Growth capital expenditure
Horticulture5.25.0
Storage & Logistics0.83.7
Food Ingredients - -
Total growth capital expenditure6.08.7
Total capital expenditure13.515.7

OUTLOOK

February 2018Scales – 2017 Full Year Results
WHAT WE KNOW ABOUT 2018
•
Market dynamics remain supportive:

Horticulture:
—
Apple harvesting is underway, having commenced 7-10 days ahead of last year, notwithstanding the wet weather
experienced by the region. Early crop indications are positive.
—
Gross production is expected to be consistent with 5-year average volumes.
—
Export volumes will be influenced by packout, it is hoped this will be slightly ahead of 2017.
—
Costs are expected to be more in line with a less challenging growing season
—
Focused marketing and branding efforts will continue throughout Asia.

Storage & Logistics:
—
We anticipate that the 2018 result will build upon 2017.
—
Additional volume and revenue is expected from new and existing FMCG customers within the storage division.
—
Increased fruit volumes are projected for the logistics businesses.

Food Ingredients:
—
An anticipated increase in volumes with potential changes in product mix.
—
Continued consideration of opportunities to grow and develop this division.
•
Based on factors known to us at the time of writing, the Directors support previously provided guidance for 2018
(EBITDA of $58 million to $65 million).
26
A positive outlook

STRATEGY

February 2018Scales – 2017 Full Year Results
REFRESHING OUR STRATEGY
•
We have refreshed our group investment / growth strategy, adopting a greater focus on pure agri-businesses.
•
We will focus on opportunities that play well to our strengths:

Fully-vertically integrated.

Export-led.

Add value from our Chinese relationships.
•
This is an extremely exciting time to be a diversified investor in, and grower of, New Zealand agribusinesses.

New Zealand stakeholders expect the agriculture sector to embrace environmentally friendly, sustainable and high value
production - making best use of current natural resources and creating long lasting environmental benefits.

This is reflected in recent government announcements covering areas such as climate change and expectations of foreign
investment.
•
Successful implementation of the strategy will ultimately result in a meaningful rebalance of our current portfolio of
businesses:

We will look to acquire businesses that play well to our strengths.

We will seek to divest operations that are not well-aligned with our strengths.
28
A greater focus on pure Agri-Business

February 2018Scales – 2017 Full Year Results
REFRESHING OUR STRATEGY (CONT’D)
29
Agri-Business encompasses the following primary industries
Agriculture
Fisheries /
Aquaculture
Forestry
Viticulture
Horticulture
Apiculture
Innovative
Processed
Food
Dairy, Meat & Wool, Animal
products, Arable products,
Poultry and eggs
79.2%
of New Zealand’s
merchandise exports
The Primary Sector accounts for:
15%
of employment
10.5%
of GDP

APPENDICES

February 2018Scales – 2017 Full Year Results
RECONCILIATION TO STATUTORY ACCOUNTS
•
This table reconciles Underlying
EBITDA and Underlying Net Profit
to Net Profit as Reported in our
Financial Statements.
31
Reconciliation of Underlying EBITDA to Net Profit
20172016
$'000Actual Actual
Underlying EBITDA62,00767,856
RECONCILIATION TO GAAP INFORMATION
- Depreciation(13,661) (11,438)
- Amortisation(588)(661)
- Finance revenue175167
- Finance charges(3,039) (2,533)
- Taxation(12,164) (14,753)
Underlying Net Profit32,73038,638
- Foreign exchange contract revaluations / hedge ineffectiveness214 (1,258)
- Change in fair value gain on apple inventory(40)993
- Cash settled share-based payments(92) -
- Change in gross liability for Non Controlling Interests(629) -
- Equity settled employee benefits(389)(270)
- Taxation(23)75
(959)(460)
Net Profit as reported in Financial Statements 31,77138,178

February 2018Scales – 2017 Full Year Results
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 (including, without limitation,
arising from any fault or negligence) arising from this presentation or any information supplied in connection with it.
This presentation may contain projections or forward-looking statements regarding a variety of items. Such projections or forward-looking statements are based
on current expectations, estimates and assumptions and are subject to a number of risks, uncertainties and assumptions. There is no assurance that results
contemplated in any projections and forward-looking statements in this presentation will be realised. Actual results may differ materially from those projected in
this presentation. No person is under any obligation to update this presentation at any time after its release to you or to provide you with further information
about Scales Corporation Limited.
Our results are reported under NZ IFRS. This presentation includes non-GAAP financial measures which are not prepared in accordance with NZ IFRS. The
non-GAAP financial measures used in this presentation include:
•
EBITDA. We calculate EBITDA by adding back (or deducting) depreciation, amortisation, finance charges / (revenue), and taxation expense to net
earnings / (loss) from continuing operations.
•
EBIT. We calculate EBIT by adding back (or deducting) finance charges / (revenue), and taxation expense to net earnings / (loss) from continuing
operations.
•
Underlying EBITDA and EBIT are calculated by adding back (or deducting) any non-cash IFRS adjustments.
•
Underlying Net Profit is calculated by adding back or (or deducting) the after-tax effect of any non-cash IFRS adjustments.
We believe that these non-GAAP financial measures provide useful information to readers to assist in the understanding of our financial performance, financial
position or returns, but that they should not be viewed in isolation, nor considered as a substitute for measures reported in accordance with NZ IFRS. Non-
GAAP financial measures may not be comparable to similarly titled amounts reported by other companies.
Forward-looking statements are subject to any material adverse events, significant one-off expenses or other unforeseeable circumstances.
The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation. Nothing in
this presentation constitutes legal, financial, tax or other advice.
32

---

Reporting Period
Previous Reporting Period
12 months ended 31
December 2017
12 months ended 31
December 2016
$'000$'000
Revenue from ordinary activities$399,100$373,9276.7%
Profit (loss) from ordinary activities after
tax attributable to shareholders
$31,330$37,772-17.1%
Net profit (loss) attributable to
shareholders
$31,330$37,772-17.1%
Amount per share Imputed amount per
share
N/AN/A
Record Date
Dividend Payment Date
31 December 2017 31 December 2016
140,510,292139,779,006
$1.43$1.41
Audit
Comments
* Note that it is the company's intention to pay a final dividend in July
2018. A decision on the final dividend is subject to the directors'
approval, taking into account all aspects of the group's performance
and financial position.
Please refer to the attached report for detailed commentary on the
results.
12 months to 31 December 2017
12 months to 31 December 2016
The financial statements attached to this report have been audited.
Percentage change
Dividend to shareholders
Final (for 2017 financial year) *
Net Tangible Assets
Number of shares
Net Tangible Assets per share
Scales Corporation Limited
NZX Appendix 1 - Prescribed Disclosure
Results for announcement to the market
N/A
N/A

---

SCALES CORPORATION LIMITED
ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017

Contents
Comprehensive income 03
The income earned and operating expenditure incurred
by the Scales Group during the financial year (profit or
loss) followed by the other comprehensive income that is
taken to reserves in equity.
Changes in equity 04
The opening balance, details of movements during
the year and the balance of each component of
shareholders’ equity at the end of the financial year.
Financial position 05
The Scales Group assets, liabilities and equity at the end
of the financial year.
Cash flows 06
Cash generated and used in the operating, investing and
financing activities of the Scales Group.
About this report 08
A. Segment information 10
B. Financial performance 12
B1. Revenue
B2. Cost of sales, administration and
operating expenses
B3. Other income and losses
B4. Finance cost
B5. Taxation
B6. Foreign currency transactions
C. Key assets 16
C1. Property, plant and equipment
C2. Unharvested agricultural produce
C3. Investments accounted for using the
equity method
C4. Goodwill
C5. Inventories
C6. Impairment of assets
D. Capital funding 21
D1. Share capital
D2. Reserves
D3. Dividends
D4. Imputation credit account
D5. Earnings per share
E. Financial assets and liabilities 24
E1. Trade and other receivables
E2. Other financial assets
E3. Trade and other payables
E4. Borrowings
E5. Other financial liabilities
E6. Interest rate risk
E7. Foreign currency risk
E8. Categories of financial instruments
E9. Maturity profile of financial liabilities
F. Group structure 29
F1. Subsidiary companies
F2. Acquisition of OceanAir
G. Other 31
G1. Capital commitments
G2. Operating lease commitments
G3. Related party disclosures
G4. Events occurring after balance date
Independent auditor’s report 33
Directory 37
02
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017

03
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
20172016
NOTE$’000$’000
RevenueB1 399,100 373,927
Cost of salesB2(287,102)(257,038)
111,998 116,889
Share of profit of entity accounted for using the equity methodC31,376 1,612
Other incomeB3233 275
Administration and operating expensesB2(51,871)(50,197)
Other lossesB3(665)(1,258)
EBITDA61,071 67,321
Amortisation (588)(661)
DepreciationC1(13,661)(11,438)
EBIT46,822 55,222
Finance revenue175 167
Finance costB4(3,039)(2,533)
PROFIT BEFORE INCOME TAX EXPENSE43,95852,856
Income tax expense B5(12,187)(14,678)
PROFIT FOR THE YEAR31,771 38,178
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
(Loss) gain on cash flow hedges (6,377)9,382
Income tax relating to cash flow hedges 1,786 (2,627)
(4,591)6,755
Items that will not be reclassified to profit or loss:
Revaluation of land and buildings 4,200 26,945
Income tax relating to buildings(588)(3,041)
Revaluation of apple trees- 11,839
Income tax relating to apple trees- (3,315)
3,612 32,428
OTHER COMPREHENSIVE (LOSS) INCOME FOR THE YEAR(979)39,183
TOTAL COMPREHENSIVE INCOME FOR THE YEAR30,792 77,361
Profit for the year attributable to:
Equity holders of the Company31,330 37,772
Non-controlling Interests441 406
31,771 38,178
Total comprehensive income for the year attributable to:
Equity holders of the Company30,351 76,955
Non-controlling interests441 406
30,792 77,361
EARNINGS PER SHARE:
Basic earnings per share (cents) D522.6 27.4
Diluted earnings per share (cents) D522.5 27.2
The notes to the financial statements on pages 8 to 32 form part of and should be read in conjunction with this statement.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2017

04
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017

Share
Capital
Revaluation
Reserve
Hedging
Reserve
Equity-settled
Employee
Benefits
Reserve
Retained
Earnings
Attributable
to Owners
of the
Company
Non-
controlling
InterestsTotal
NOTE$’000$’000$’000$’000$’000$’000$’000$’000
Balance at 1
January 201690,755 25,289 2,210 233 39,498 157,985 - 157,985
Profit for the year- - - - 37,772 37,772 406 38,178
Other comprehensive
income for the year- 32,428 6,755 - - 39,183 - 39,183
Total comprehensive
income for the year- 32,428 6,755 - 37,772 76,955 406 77,361
Recognition of
share-based paymentsD2- - - 270 - 270 - 270
Shares purchasedD2(1,007)- - - - (1,007)- (1,007)
Dividends paidD3- - - - (8,974)(8,974)- (8,974)
Dividends declaredD3- - - - (11,045)(11,045)- (11,045)
Balance at 31
December 201689,748 57,717 8,965 503 57,251 214,184 406 214,590
Profit for the year- - - - 31,330 31,330 441 31,771
Other comprehensive
income (loss) for
the year- 3,612 (4,591)- - (979)- (979)
Total comprehensive
income (loss) for
the year- 3,612 (4,591)- 31,330 30,351 441 30,792
Recognition of
share-based paymentsD2- - - 389 - 389 - 389
Shares sold179 - - - - 179 - 179
Shares issuedF2970 - - - - 970 - 970
Shares fully vestedD22,853 - - (462)(591)1,800 - 1,800
Dividends paidD3- - - - (13,811)(13,811)(406)(14,217)
Dividends declaredD3- - - - (12,586)(12,586)- (12,586)
Balance at 31
December 201793,750 61,329 4,374 430 61,593 221,476 441 221,917
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2017
The notes to the financial statements on pages 8 to 32 form part of and should be read in conjunction with this statement.

05
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
20172016
NOTE$’000$’000
EQUITY
Share capitalD193,750 89,748
Revaluation reserveD261,329 57,717
Hedging reserveD24,374 8,965
Equity-settled employee benefits reserveD2430 503
Retained earningsD261,593 57,251
Equity attributable to Scales Corporation Limited Shareholders221,476 214,184
Equity attributable to Non-controlling Interests441 406
TOTAL EQUITY221,917 214,590
Represented By:
CURRENT ASSETS
Cash and bank balances5,690 6,355
Trade and other receivablesE123,437 17,529
Other financial assetsE26,415 8,464
Unharvested agricultural produceC220,189 18,433
InventoriesC522,212 16,365
Prepayments3,423 3,655
TOTAL CURRENT ASSETS81,366 70,801
NON-CURRENT ASSETS
Property, plant and equipmentC1228,881 226,652
Investments accounted for using the equity methodC34,507 4,131
GoodwillC418,177 16,222
Other financial assetsE27,764 11,561
Computer software 1,811 745
TOTAL NON-CURRENT ASSETS261,140 259,311
TOTAL ASSETS342,506 330,112
CURRENT LIABILITIES
Trade and other payablesE322,215 22,047
Dividend declaredD312,586 11,045
BorrowingsE46,500 11,000
Current tax liabilitiesB52,739 5,009
Other financial liabilitiesE54,331 3,357
TOTAL CURRENT LIABILITIES48,371 52,458
NON-CURRENT LIABILITIES
BorrowingsE440,000 30,000
Deferred tax liabilitiesB528,175 28,187
Other financial liabilitiesE54,043 4,877
TOTAL NON-CURRENT LIABILITIES72,218 63,064
TOTAL LIABILITIES120,589 115,522
NET ASSETS221,917 214,590

The notes to the financial statements on pages 8 to 32 form part of and should be read in conjunction with this statement.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2017

06
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
20172016
$’000$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers393,145 373,223
Dividends received1,018 525
Interest received175 167
394,338 373,915
Cash was disbursed to:
Payments to suppliers and employees(345,660)(315,413)
Interest paid(3,039)(2,533)
Income tax paid(13,271)(14,627)
(361,970)(332,573)
NET CASH GENERATED BY OPERATING ACTIVITIES 32,368 41,342
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from:
Advances repaid866 1,100
Sale of property, plant and equipment and computer software147 216
1,013 1,316
Cash was applied to:
Net cash outflow on acquisition of businesses (Note F2)(978)(16,414)
Purchase of computer software(1,654)(445)
Purchase of shares in unlisted companies(5)(53)
Purchase of property, plant and equipment(11,826)(19,715)
(14,463)(36,627)
NET CASH USED IN INVESTING ACTIVITIES(13,450)(35,311)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided from:
Proceeds from term facility borrowings10,000 -
Proceeds from seasonal facility borrowings52,500 65,000
Shares sold179 -
62,679 65,000
Cash was applied to:
Repayments of seasonal facility borrowings(57,000)(54,000)
Dividends paid(24,856)(23,501)
Dividends paid to non-controlling interests(406)-
Shares purchased- (1,007)
(82,262)(78,508)
NET CASH USED IN FINANCING ACTIVITIES(19,583)(13,508)
NET DECREASE IN NET CASH(665)(7,477)
Cash and cash equivalents at the beginning of the year6,355 13,832
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR5,690 6,355
Represented by:
Cash and bank balances5,690 6,355
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR5,690 6,355
The notes to the financial statements on pages 8 to 32 form part of and should be read in conjunction with this statement.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2017

07
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
FINANCIAL STATEMENTS
20172016
$’000$’000
NET CASH GENERATED BY OPERATING ACTIVITIES
Reconciliation of profit for the year to net cash generated by operating activities:
Profit for the year 31,771 38,178
Non-cash items:
Amortisation 588 661
Hedge ineffectiveness on cash flow hedges(214)1,258
Deferred tax 1,186 36
Depreciation 13,661 11,438
Share of equity accounted results (1,376)(1,612)
Share-based payments523 270
Change in gross liability on Fern Ridge Produce Limited put option628 -
Items classified as investing and financing activities:
Working capital amounts included in acquisition of businesses(54)(1,162)
Dividends received from equity accounted company1,000 500
Gain (loss) on disposal of property, plant and equipment36 (50)
Changes in net assets and liabilities:

Trade and other receivables (5,908)(2,848)
Unharvested agricultural produce (1,756)(2,940)
Inventories (5,847)(2,051)
Prepayments 232 (689)
Trade and other payables 168 (229)
Current tax (2,270)582
NET CASH GENERATED BY OPERATING ACTIVITIES32,368 41,342
Statement of Cash Flows
For the purpose of the statement of cash flows, cash and cash equivalents include cash and bank balances and investments in
money market instruments.
The following terms are used in the statement of cash flows:
Operating activities are the principal revenue producing activities of the Group and other activities that are not investing or
financing activities.
Investing activities are the acquisition and disposal of long-term assets and other investments not included in
cash equivalents.
Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of
the Group.

Tim Goodacre, ChairmanAndy Borland, Managing Director
For and on behalf of the Board of Directors who authorised the issue of the financial statements on 27 February 2018.
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
for the year ended 31 December 2017

08
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
ABOUT THIS REPORT
IN THIS SECTION
The notes to the financial statements include information which is considered relevant and material to assist the reader
in understanding the financial performance and financial position of the Scales Corporation Limited Group (Scales).
Information is considered relevant and material if:
• the amount is significant because of its size and nature;
• it is important for understanding the results of Scales;
• it helps to explain changes in Scales’ business; or
• it relates to an aspect of Scales’ operations that is important to future performance.
Scales Corporation Limited (the “Company”) is a for-profit
entity domiciled and registered under the Companies Act 1993
in New Zealand. It is an FMC reporting entity for the purposes
of the Financial Markets Conduct Act 2013. The Group
consists of Scales Corporation Limited, its subsidiaries and joint
venture. The principal activities of the Group are to provide
logistics services, grow apples, export products, provide
insurance services to companies within the Group and operate
storage and processing facilities.
The financial statements have been prepared:
• in accordance with Generally Accepted Accounting
Practice (GAAP), International Financial Reporting
Standards (IFRS), the New Zealand equivalents to
International Financial Reporting Standards (NZ IFRS)
and other applicable financial reporting standards, as
appropriate for a Tier 1 for-profit entity;
• in accordance with the requirements of the Financial
Markets Conduct Act 2013;
• in accordance with accounting policies that are consistent
with those applied in the previous year;
• on the basis of historical cost, except for certain assets and
financial instruments that are measured at fair values; and
• in New Zealand dollars with all values rounded to the
nearest thousand dollars.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value
of an asset or liability, the Group takes into account the
characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the
asset or liability at the measurement date.
For financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable. The
levels are described as:
• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices within
Level 1, that are observable for the asset or liability, either
directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset
or liability.
Key Judgements and Estimates
In the process of applying the Group’s accounting policies and
the application of financial reporting standards, Scales has
made a number of judgements and estimates. The estimates
and underlying assumptions are based on historical experience
and various other factors that are considered to be appropriate
under the circumstances. Actual results may differ from
these estimates.
Judgements and estimates which are considered material to
understanding the performance of Scales are explained in the
following notes:
• Apple trees in note C1;
• Land and buildings in note C1; and
• Unharvested agricultural produce in note C2.
Basis of Consolidation
The Group financial statements incorporate the financial
statements of the Company and its subsidiaries (being entities
controlled by Scales Corporation Limited), and the equity
accounted result, assets and liabilities of the joint venture.
The financial statements of members of the Group, are
prepared for the same reporting period as the parent company,
using consistent accounting policies.
In preparing the Group financial statements, all material intra-
group transactions, balances, income, expenses and cash flows
have been eliminated. Subsidiaries are consolidated from the
date on which control is obtained to the date on which control
is lost.
Other Accounting Policies
Other accounting policies that are relevant to an
understanding of the financial statements are provided
throughout the notes to the financial statements.

09
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
Adoption of New and Revised Standards and
Interpretations - Standards and Interpretations in Issue
not yet Effective
NZ IFRS 9 (2014) Financial Instruments
NZ IFRS 9 (2014) Financial Instruments establishes the
principles for hedge accounting and impairment of financial
assets. The directors do not anticipate that application of
NZ IFRS 9 (2014) will have a material impact on the financial
performance or financial position of the Group when it
becomes effective on 1 January 2018.
NZ IFRS 15 Revenue from Contracts with Customers
NZ IFRS 15 Revenue from Contracts with Customers establishes
a single comprehensive model for entities to use in accounting
for revenue arising from contracts with customers. NZ IFRS
15 will supersede the current revenue recognition guidance
including NZ IAS 18 Revenue and the related interpretations
when it becomes effective on 1 January 2018.
The core principle of NZ IFRS 15 is that an entity should
recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services. Specifically, the Standard
introduces a 5-step approach to revenue recognition:
• Identify the contract(s) with a customer;
• Identify the performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the performance
obligations in the contract; and
• Recognise revenue when (or as) the entity satisfies a
performance obligation.
Under NZ IFRS 15, an entity recognises revenue when (or as)
a performance obligation is satisfied, i.e. when “control” of
the goods or services underlying the particular performance
obligation is transferred to the customer. Far more prescriptive
guidance has been added in NZ IFRS 15 to deal with specific
scenarios. Furthermore, extensive disclosures are required by
NZ IFRS 15.
Based on preliminary analysis, the directors do not anticipate
that the implementation of NZ IFRS 15 will have a significant
impact on the financial performance of the Group for the full
year reporting period.
NZ IFRS 16 Leases
NZ IFRS 16 Leases introduces a comprehensive model for
the identification of lease arrangements and accounting
treatments for both lessors and lessees. NZ IFRS 16 will
supersede the current lease guidance including NZ IAS 17
Leases and the related interpretations when it becomes
effective on 1 January 2018.
NZ IFRS 16 distinguishes leases and service contracts on the
basis of whether an identified asset is controlled by a customer.
The distinction between operating leases (off balance sheet)
and finance leases (on balance sheet) is removed for lessee
accounting, and is replaced by a model where a right-of-use
asset and a corresponding liability have to be recognised for
all leases by lessees (i.e. all on balance sheet) except for short-
term leases and leases of low value assets.
The right-of-use asset is initially measured at cost and
subsequently measured at cost (subject to certain exceptions)
less accumulated depreciation and impairment losses,
adjusted for any remeasurement of the lease liability. The
lease liability is initially measured at the present value of the
lease payments that are not paid at that date. Subsequently,
the lease liability is adjusted for interest and lease payments,
as well as the impact of lease modifications, among others.
Furthermore, the classification of cash flows will also be
affected as operating lease payments under NZ IAS 17
are presented as operating cash flows; whereas under the
NZ IFRS 16 model, the lease payments will be split into a
principal and an interest portion which will be presented as
financing and operating cash flows respectively.
In contrast to lessee accounting, NZ IFRS 16 substantially
carries forward the lessor accounting requirements in NZ IAS
17, and continues to require a lessor to classify a lease either as
an operating lease or a finance lease.
Furthermore, extensive disclosures are required by NZ IFRS 16.
As at 31 December 2017, the Group has non-cancellable
operating lease commitments of $128 million. NZ IAS 17
does not require the recognition of any right-of-use asset or
liability for future payments for these leases; instead, certain
information is disclosed as operating lease commitments
in note G2. A preliminary assessment indicates that these
arrangements will meet the definition of a lease under NZ
IFRS 16, and hence the Group will recognise a right-of-use
asset and a corresponding liability in respect of all these leases
unless they qualify for low value or short-term leases upon the
application of NZ IFRS 16. The new requirement to recognise
a right-of use asset and a related lease liability is expected to
have a significant impact on the amounts recognised in the
Group’s consolidated financial statements and the directors are
currently assessing its potential impact. It is not practicable to
provide a reasonable estimate of the financial effect until the
directors complete their review.
Other
The Group has reviewed all other Standards, Interpretations
and Amendments to existing Standards in issue not yet
effective and, except as noted above, does not expect these
Standards to have a material effect on the financial statements
of the Group.

10
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
A. SEGMENT INFORMATION
IN THIS SECTION
This section explains the financial performance of the operating segments of Scales, providing additional information
about individual segments, including:
• total segment revenue and revenue from external customers;
• segment profit before income tax; and
• total segment assets and liabilities.
SEGMENT REPORTING
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision-maker, being the Managing Director. The Managing
Director monitors the operating performance of each segment
for the purpose of making decisions on resource allocation and
strategic direction.
Inter-segment pricing is determined on an arm’s length
basis. Segment results include items directly attributable to a
segment as well as those that can be allocated on a
reasonable basis.
No single external customer’s revenue accounts for 10% or
more of the Group’s revenue.
All non-current assets are located in New Zealand.
Food
IngredientsHorticulture
Storage &
LogisticsOtherEliminationsTotal
$'000$'000$'000$'000$'000$'000
2017
Total segment revenue68,855 227,970 126,851 3,779 (28,355)399,100
Inter-segment revenue- - (25,224)(3,131)28,355 -
Revenue from external customers68,855 227,970 101,627 648 - 399,100
Loss on sale of non-current assets- (5)(31)- - (36)
Share of profit of entity accounted for
using equity method1,376 - - - - 1,376
EBITDA8,166 38,352 19,125 (4,572)- 61,071
Amortisation expense(3)(247)(312)(26)- (588)
Depreciation expense(528)(7,593)(5,512)(28)- (13,661)
Finance revenue1 94 20 60 - 175
Finance costs- (22)- (3,017)- (3,039)
Segment profit (loss) before income tax7,636 30,584 13,321 (7,583)- 43,958
The Group comprises the following operating segments:
Food Ingredients: processing and marketing of food
ingredients such as pet food ingredients and juice concentrate.
Meateor Foods Limited, Meateor Foods Australia Pty Limited
and Profruit (2006) Limited.
Horticulture: orchards, fruit packing and marketing. Mr Apple
New Zealand Limited, New Zealand Apple Limited, Fern Ridge
Produce Limited, Longview Group Holdings Limited, Longview
New Zealand Limited and Longview Packhouse Limited.
Storage & Logistics: cool, cold and bulk liquid storage and
logistics services. Liqueo Bulk Storage Limited, Polarcold Stores
Limited, Scales Logistics Limited, OceanAir Freight Pty Limited
and Whakatu Coldstores Limited.
Other: Scales Corporation Limited, Geo. H. Scales Limited,
Scales Employees Limited, Scales Holdings Limited and Selacs
Insurance Limited.

11
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
Food
IngredientsHorticulture
Storage &
LogisticsOtherEliminationsTotal
$'000$'000$'000$'000$'000$'000
Segment assets35,743 182,362 120,203 4,198 - 342,506
Segment liabilities7,906 38,229 23,155 51,299 - 120,589
Segment carrying value of investment
accounted for using the equity method4,507 - - - - 4,507
Segment acquisition of property, plant and
equipment and computer software211 9,063 4,129 73 - 13,476
Property, plant and equipment and
computer software included in business
acquisitions (note F2)- - 47 - - 47
2016
Total segment revenue58,038 230,077 108,383 3,525 (26,096)373,927
Inter-segment revenue- (212)(23,131)(2,753)26,096 -
Revenue from external customers58,038 229,865 85,252 772 - 373,927
Gain on sale of non-current assets1 70 (20)(1)- 50
Share of profit of entity accounted for
using the equity method1,612 - - - - 1,612
EBITDA9,016 45,258 16,182 (3,135)- 67,321
Amortisation expense(2)(278)(359)(22)- (661)
Depreciation expense(501)(5,950)(4,971)(16)- (11,438)
Finance revenue1 108 15 43 - 167
Finance costs- (13)- (2,520)- (2,533)
Segment profit (loss) before income tax8,514 39,125 10,867 (5,650)- 52,856
Segment assets27,327 185,423 109,971 7,391 - 330,112
Segment liabilities6,325 44,781 20,777 43,639 - 115,522
Segment carrying value of investment
accounted for using the equity method4,131 - - - - 4,131
Segment acquisition of property, plant
and equipment and computer software370 12,722 7,060 8 - 20,160
Property, plant and equipment and
computer software included in
business acquisitions- 11,722 - - - 11,722
20172016
$'000$'000
The total revenue from external customers in New Zealand and other countries are:
New Zealand 127,919 107,111
Asia106,925 112,712
Europe76,603 76,530
North America85,487 75,210
Other2,166 2,364
399,100 373,927
SEGMENT REPORTING (continued)

12
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
B. FINANCIAL PERFORMANCE
IN THIS SECTION
This section explains the financial performance of Scales, providing additional information about individual items in the
statement of comprehensive income, including:
• accounting policies, judgements and estimates that are relevant for understanding items recognised in the statement of
comprehensive income; and
• analysis of Scales’ performance for the year by reference to key areas including revenue, expenses and taxation.
B1. REVENUE
20172016
$'000$'000
Revenue from the sale of goods283,286 269,062
Revenue from the rendering of services110,196 92,507
Fees and commission476 681
Net foreign exchange gain1,002 7,925
Net hail insurance proceeds119 -
Rental revenue4,021 3,752
399,100 373,927
Sale of Goods
Revenue from the sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of
ownership of the goods, the amount of revenue and costs incurred can be measured reliably, management have effectively ceased
involvement or control over the goods sold and it is probable that the economic benefits associated with the transaction will flow to
the Group.
Rendering of Services
Revenue from services is recognised on the basis of the value of services performed.
Fees and Commission
Fees and commission are recognised as revenue when the Group’s right to receive payment becomes unconditional.
Net Hail Insurance Proceeds
Net hail insurance proceeds are recognised as revenue when the Group’s right to receive payment becomes unconditional.
Rental Income
Rental income is recognised on a straight-line basis over the term of the relevant lease.
B2. COST OF SALES, ADMINISTRATION AND OPERATING EXPENSES
Auditor's remuneration:
Audit of the financial statements
Audit of the annual financial statements139 141
Review of interim financial statements 42 40
Other services:
Audit of solvency certificate for Selacs Insurance Limited6 6
Acquisition due diligence services- 89
Risk management review- 17
Tax compliance services- 4
Tax services re employee share scheme- 6
Bad debts Incurred (recovered)48 (390)
Change in fair value adjustment to unharvested agricultural produce40 (993)

13
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
20172016
$'000$'000
Change in inventories(5,847)(2,051)
Direct expenses38,022 35,299
Directors' fees466 434
Donations28 14
Electricity8,581 8,427
Employee benefits expense:
Post employment benefits - defined contribution plans1,566 1,235
Salaries, wages and related benefits72,986 68,777
Other employee benefits748 314
Grower payments55,620 58,972
Insurance3,605 3,369
Management fees119 108
Materials and consumables60,133 44,238
Ocean and air freight61,721 50,911
Operating lease expenses18,415 14,998
Packaging15,628 15,913
Repairs and maintenance6,907 7,357
338,973 307,235
Disclosed as:
Cost of sales287,102 257,038
Administration and operating expenses51,871 50,197
338,973 307,235
Employee Benefits
An accrual is made for benefits due to employees in respect of wages and salaries, annual leave and long service leave when it is
probable that settlement will be required and they are capable of being measured reliably. Accruals are measured at their nominal
values using the remuneration rate expected to apply at the time of settlement.
Contributions to defined contribution plans are recognised as an expense when employees have rendered service entitling them to
the contributions.
The costs relating to shares issued in accordance with the Senior Executive Share Scheme are explained in note D2.
Leased Assets
Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased
items, are recognised as an expense on a straight-line basis over the lease term.
B3. OTHER INCOME AND LOSSES
Dividends18 25
(Loss) gain on disposal of property, plant and equipment(36)50
Hedge ineffectiveness on cash flow hedges214 (1,258)
Remeasurement of gross liability to non-controlling interest(629)-
Insurance proceeds1 200
(432)(983)
Disclosed as:
Other income233 275
Other expenses(665)(1,258)
(432)(983)
B2. COST OF SALES, ADMINISTRATION AND OPERATING EXPENSES (continued)

14
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
B4. FINANCE COST
20172016
$'000$'000
Interest on loans2,729 2,346
Other interest180 41
Bank facility fees 130 146
3,039 2,533
Finance costs consist of interest and other costs incurred in connection with the borrowing of funds.
Interest expense is accrued on a time basis using the effective interest method.
B5. TAXATION
Income Tax Recognised in Profit or Loss
Income tax expense comprises:
Current tax expense 11,504 14,648
Adjustments recognised in the current year in relation to the current tax of prior years (503)(6)
Deferred tax expense relating to the origination and reversal of temporary differences1,186 36
Total income tax expense recognised in profit or loss12,187 14,678
The prima facie income tax expense on pre tax accounting profit reconciles to the income tax expense
in the financial statements as follows:
Profit from continuing operations43,958 52,856
Income tax expense calculated at 28% 12,308 14,799
Non-assessable income(390)(448)
Non-deductible expenses443 321
Over provision of income tax in previous year - current tax(503)(6)
Under provision of income tax in previous year - deferred tax329 12
12,187 14,678
The tax rate used in the above reconciliation is the corporate tax rate of 28% payable by New Zealand
companies under New Zealand tax law.
Current Tax Liability
Balance at beginning of the year5,009 4,427
Arising on acquisition of businesses- 567
Current taxation expense - continuing operations11,001 14,642
Taxation paid(13,271)(14,627)
Balance at end of the year2,739 5,009

15
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017

Opening
balance
Charged to
profit or loss
Charged to other
comprehensive
income
Acquisition
of Businesses
Closing
balance
$'000$'000$'000$'000$'000
Deferred Tax Liability
Taxable and deductible temporary differences
arise from the following:
31 December 2017
Deferred tax liabilities (assets):
Trade and other receivables(5)- - - (5)
Unharvested agricultural produce4,883 769 - - 5,652
Property, plant and equipment and
computer software20,334 574 588 - 21,496
Trade and other payables(512)(157)- - (669)
Other financial assets and liabilities 3,487 - (1,786)- 1,701
Net deferred tax liability28,187 1,186 (1,198)- 28,175
31 December 2016
Deferred tax liabilities (assets):
Trade and other receivables(81)76 - - (5)
Unharvested agricultural produce4,338 440 - 105 4,883
Property, plant and equipment and
computer software13,345 (509)6,356 1,142 20,334
Trade and other payables(529)29 - (12)(512)
Other financial assets and liabilities 860 - 2,627 - 3,487
Net deferred tax liability17,933 36 8,983 1,235 28,187
Current tax is the taxation expected to be paid to Taxation Authorities in respect of the current year. Deferred taxation is recognised
in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Financial
Statements. Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date.
Income Tax
Current and deferred tax are recognised in profit or loss, except when the tax relates to items charged or credited to other
comprehensive income, in which case the tax is also recognised in other comprehensive income.
B6. FOREIGN CURRENCY TRANSACTIONS
In preparing the financial statements of the individual entities, the transactions in currencies other than New Zealand dollars are
recorded at the rates of exchange prevailing at the dates of the transaction. At the end of each reporting period financial assets
and liabilities denominated in foreign currencies are retranslated into New Zealand dollars at the rates prevailing at the end of the
reporting period.
Exchange differences are recognised in profit or loss in the period in which they arise.
B5. TAXATION (continued)

16
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
C. KEY ASSETS
IN THIS SECTION
This section shows the key assets Scales uses to generate operating revenues. There is information about:
• property, plant and equipment;
• unharvested agricultural produce;
• investments accounted for using the equity method;
• goodwill; and
• inventories.
C1. PROPERTY, PLANT AND EQUIPMENT
Land and
Buildings at
fair value
Apple Trees
at fair value
Plant and
Equipment
at cost
Office
Equipment &
Motor Vehicles
at cost
Capital
Work in
Progress
at costTotal
$’000$’000$’000$’000$’000$’000
Gross carrying amount
Balance 1 January 2016104,532 18,510 100,755 16,889 4,152 244,838
Additions6,904 2,909 6,086 3,056 761 19,716
Acquisition of businesses8,866 200 2,563 93 - 11,722
Disposals- - (543)(756)- (1,299)
Revaluation20,368 9,520 - - - 29,888
Balance at 31 December 2016140,670 31,139 108,861 19,282 4,913 304,865
Additions252 2,209 7,599 2,505 (739)11,826
Acquisition of businesses (Note F2)- - - 47 - 47
Disposals(9)- (685)(1,032)- (1,726)
Revaluation1,712 - - - - 1,712
Balance at 31 December 2017142,625 33,348 115,775 20,802 4,174 316,724
Accumulated depreciation and
impairment
Balance 1 January 20164,402 1,193 58,874 12,302 - 76,771
Depreciation expense2,175 1,311 6,128 1,824 - 11,438
Disposals- - (432)(668)- (1,100)
Revaluation(6,577)(2,319)- - - (8,896)
Balance 31 December 2016- 185 64,570 13,458 - 78,213
Depreciation expense2,488 2,432 6,628 2,113 - 13,661
Disposals- - (595)(948)- (1,543)
Revaluation(2,488)- - - - (2,488)
Balance 31 December 2017- 2,617 70,603 14,623 - 87,843
Net book value
As at 31 December 2016140,670 30,954 44,291 5,824 4,913 226,652
As at 31 December 2017142,625 30,731 45,172 6,179 4,174 228,881

17
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
Accounting Policy
Land, buildings and apple trees are included in the statement
of financial position at their revalued amounts, being the
fair value at the date of revaluation, less any subsequent
accumulated depreciation and subsequent accumulated
impairment losses. Revaluations are performed with sufficient
regularity such that the carrying amounts do not differ
materially from those that would be determined using fair
values at the end of the reporting period.
Any revaluation increase arising on the revaluation of
such land, buildings and apple trees is recognised in other
comprehensive income and accumulated as a separate
component of equity in the revaluation reserve, except to the
extent that it reverses a revaluation decrease for the same
asset previously recognised in profit or loss, in which case
the increase is credited to profit or loss to the extent of the
decrease previously charged. A decrease in carrying amount
arising on the revaluation of such land, buildings and apple
trees is charged to profit or loss to the extent that it exceeds
the balance, if any, held in the revaluation reserve relating to a
previous revaluation of that asset.
Depreciation on revalued buildings and apple trees is charged
to profit or loss. On the subsequent sale or retirement of
revalued property or apple trees, the attributable revaluation
surplus remaining in the revaluation reserve is transferred
directly to retained earnings. No transfer is made from the
revaluation reserve to retained earnings except when an asset
is derecognised.
Office equipment, motor vehicles, plant and equipment are
stated at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditure that is directly
attributable to the acquisition of the item.
Depreciation is provided on property, plant and equipment,
including buildings and apple trees but excluding land and
capital work in progress. Depreciation is charged so as to
write off the cost or valuation of assets, other than land and
capital work in progress, over their estimated useful lives,
using either the straight-line or the diminishing value method.
The estimated useful lives, residual values and depreciation
method are reviewed at each year end, with the effect of any
changes in estimate accounted for on a prospective basis. The
following estimated useful lives are used in the calculation of
depreciation:
Apple trees 30 years
Buildings 10 to 50 years
Office Equipment and Motor Vehicles 2 to 20 years
Plant and Equipment 2 to 25 years
The gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the
difference between the sale proceeds and the carrying amount
of the asset and is recognised in profit or loss.
C1. PROPERTY, PLANT AND EQUIPMENT (continued)
Land and Buildings carried at Fair Value
Land and buildings shown at valuation were valued at fair
value as at 31 December 2016 by independent registered
valuers Added Valuation Limited, Logan Stone Limited and
Telfer Young Limited. The valuations, which conform to the
New Zealand Property Institute Practice Standard 3 - Valuations
for Financial Reporting Purposes, were arrived at by reference
to market evidence of transaction prices for similar properties.
An assessment of the fair value of land and buildings as at
31 December 2017 was completed by Scales using market
information provided by independent valuers. Based on this
assessment there was deemed to be no material change in the
capitalisation rates from 31 December 2016 and only minor
movements in potential market comparative rental rates. As a
result a valuation increase of $4,200,000 has been recorded in
other comprehensive income.
The fair value of land and buildings is calculated on the
basis of market value. Market value is determined applying
income capitalisation and comparative sales calculations
which are benchmarked against depreciated replacement cost
calculations. The valuations include adjustments to observable
data for similar properties to take into account property-
specific attributes.
The significant unobservable inputs, based on regional
averages, for the land and buildings (mainly coldstores and
packhouses) are potential market comparative rentals $10
- $220 per square metre and the capitalisation rates of 8%
- 18%. The higher the rental rates the higher the fair value.
The higher the capitalisation rates the lower the fair value.
Significant changes in either of these inputs would result in
significant changes to the fair value measurement.
The Group’s land and buildings are classified as Level 3 in the
fair value hierarchy.
The carrying amount of land and buildings had it been
recognised under the cost model is $82,221,000 (31 December
2016: $83,869,000).
Apple Trees carried at Fair Value
The Group’s apple orchards, being the apple trees other than
the existing crop on the trees, were valued at fair value by
Boyd Gross B.Agr (Rural Val), Dip Bus Std, FNZIV, FPINZ of
Logan Stone Limited as at 31 December 2016. The market
valuations completed by Boyd Gross were based on a DCF
analysis of forecast income streams and costs. This was
benchmarked against a comparison of sales of other orchards
adjusted to reflect the location, plantings, age and varieties of
trees and productive capabilities of the orchards.
An assessment of the fair value of the apple trees as at
31 December 2017 was completed by Scales using market
information provided by the independent valuer. It was
determined that the carrying amount as at 31 December 2017
did not differ materially from fair value.

18
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
C1. PROPERTY, PLANT AND EQUIPMENT (continued)
The significant unobservable inputs, based on district averages, for the apple trees are:
20172016
Production levels (gross tray carton equivalent (tce)) per hectare3,305 - 5,8963,624 - 5,709
Orchard gate returns per tce$24.36 - $39.90$25.31 - $38.90
Orchard costs per tce$18.77 - $31.39$17.00 - $28.60
Discount rate18.0% - 21.40%18.0% - 21.40%
The higher the production levels and orchard gate return the higher the fair value. The higher the orchard costs and discount rate
the lower the fair value. Significant changes in any of these inputs would result in significant changes to the fair value measurement.
The Group’s apple trees are classified as level 3 in the fair value hierarchy.
The apple trees, on owned and leased orchards, have the following planting profile:
Total Hectares Planted
20172016
Premium varieties:
NZ Queen211 213
Pink Lady119 121
Red sports (Fuji and Royal Gala)234 234
Other premium75 59
Traditional varieties:
Braeburn165 171
Royal Gala186 186
Other traditional158 160
1,148 1,144
The exported volume from Mr Apple’s planted apple orchard was 3,537,000 tce’s (2016: 3,546,000 tce’s).
Risk Management Strategy:
The Group is exposed to financial risks arising from changes in climatic conditions, market prices and the value of the New Zealand
dollar. The Group mitigates these risks by installing hail and frost protection on orchards which have shown to be more susceptible to
these risks, obtaining hail insurance cover, utilising foreign currency derivative instruments and building close working relationships
with key customers.
C2. UNHARVESTED AGRICULTURAL PRODUCE
20172016
$'000$'000
Balance at beginning of the year18,433 15,493
Decrease due to harvest(18,433)(15,493)
Acquisition of businesses- 375
Development expenditure19,236 17,065
Fair value adjustment953 993
Balance at end of the year20,189 18,433
The assessment of the value of unharvested agricultural produce was undertaken by management, using a discounted cash flow
model, and is calculated as the fair value less estimated harvest and post-harvest costs of the unharvested crop on the trees at the
reporting date. The risk adjusting discount rate represents an allowance for adverse events that may affect crop, harvest and/or
market conditions. This calculation is also benchmarked against orchard costs incurred during the current growing cycle.

19
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
The significant unobservable inputs included in the model are the:
20172016
$'000$'000
Production levels (tonnes per hectare per annum)60 - 10750 - 100
Orchard gate returns per tce$22 to $39$20 to $40
Risk adjusting discount rates 51% to 72%55% to 73%
The higher the yield per hectare and the higher the orchard gate returns per tce, the higher the fair value. The higher the risk
adjusting discount rate, the lower the fair value.
C3. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
20172016
$'000$'000
Share of profit before taxation1,915 2,241
Share of income tax(539)(629)
Share of Net Profit for the Year and Total Comprehensive Income1,376 1,612
Carrying value at beginning of the year4,131 3,019
Dividend paid(1,000)(500)
INVESTMENT IN EQUITY ACCOUNTED ENTITY4,507 4,131
Profruit (2006) Limited, which is domiciled in New Zealand and has a 31 December balance date, is the joint venture investment as at
31 December 2017 and 31 December 2016. The principal activity is juice production and sales. Scales held 50% of of Profruit (2006)
Limited as at 31 December 2017 and 31 December 2016.
The Scales Corporation Limited Group share of the guarantee of the Profruit (2006) Limited bank loan facilities is $1,494,197
(2016: $240,000).
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets
of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of joint ventures are incorporated in these consolidated financial statements using the equity
method of accounting. Under the equity method, an investment in joint venture is initially recognised in the consolidated statement
of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive
income of the joint venture. Dividends or distributions received from a joint venture reduce the carrying amount of the investment in
that joint venture in the Group financial statements. When the Group’s share of losses of a joint venture exceeds the Group’s interest
in that joint venture, the Group discontinues recognising its share of further losses. Additional losses are recognised only to the
extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.
An investment in a joint venture is accounted for using the equity method from the date on which the investee becomes a joint
venture until the date it ceases to be a joint venture. On acquisition of the investment in a joint venture, any excess of the cost of
the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as
goodwill, which is included within the carrying value of the investment. The requirements of NZ IAS 36 are applied to determine
whether it is necessary to recognise any impairment loss.
C4. GOODWILL
20172016
$'000$'000
Gross Carrying Amount
Balance at beginning of the year16,222 5,319
Arising on acquisition of:
Fern Ridge Produce Limited- 5,702
Longview Group Holdings Limited- 5,201
OceanAir business and assets and shares in OceanAir Freight Pty Limited (see Note F2)1,955 -
Balance at end of the year18,177 16,222
C2. UNHARVESTED AGRICULTURAL PRODUCE (continued)

20
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
C4. GOODWILL (continued)
Goodwill arising on the acquisition of a business is carried at cost as established at the date of acquisition of the business less
accumulated impairment losses, if any.
For the purpose of impairment testing, goodwill has been allocated to the cash-generating units listed below which represent the
lowest level at which the Directors monitor goodwill.
20172016
$'000$'000
Storage & Logistics3,944 1,989
Horticulture14,233 14,233
18,177 16,222
As at 31 December 2017, the Directors have determined, based on discounted cash flow and value in use calculations, that there
is no impairment of goodwill associated with Storage & Logistics and Horticulture. The Directors consider that any reasonably
possible changes in the key assumptions would not cause the carrying amount of any of the cash-generating units to exceed their
recoverable amount.
C5 . INVENTORIES
Finished goods17,798 12,489
Other4,414 3,876
22,212 16,365
Inventories are stated at the lower of cost and net realisable value. Cost means the actual cost of the inventory and in determining
cost the first in first out basis of stock movement is followed, with due allowance having been made for obsolescence. Net realisable
value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make
the sale.
C6. IMPAIRMENT OF ASSETS
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate
the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of
the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in
profit or loss and is not reversed in subsequent periods.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future pre-
tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or
loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

21
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
D. CAPITAL FUNDING
IN THIS SECTION
This section explains how Scales manages its capital structure and how dividends are returned to shareholders. In this
section there is information about:
• equity:
• dividends paid; and
• earnings per share.
Capital Management
The Group’s capital includes share capital, reserves and retained earnings. The Group’s policy is to maintain a strong capital base so
as to maintain investor, creditor and customer confidence and to sustain the future development of the business. The impact of the
level of capital on shareholders’ return is also recognised and the Group recognises the need to maintain a balance between the
higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.
D1. SHARE CAPITAL
Issued and paid up capital consists of 140,510,292 fully paid ordinary shares (2016: 139,779,006) less treasury stock of 721,056
shares (2016: 1,847,257 shares) (refer to note D2). All shares rank equally in all respects.
Shares issued or purchased on market under the Senior Executive Share Scheme (“Share Scheme”) (note D2) are treated as treasury
stock until vesting to the employee.
Number of shares
20172016
Fully paid ordinary shares
Opening balance139,779,006 139,779,006
Shares issued as consideration for business acquisition (Note F2)283,405 -
Share Scheme - shares issued335,211 -
Cash-settled share based payment shares issued112,670 -
Closing balance140,510,292 139,779,006
Treasury stock
Opening balance1,847,257 1,533,193
Share Scheme - shares issued335,211 -
Share Scheme - shares purchased on market- 314,064
Share Scheme - shares forfeited and sold on market(50,212)-
Share Scheme - shares fully vested(1,411,200)-
Closing balance721,056 1,847,257
The Available Subscribed Capital of $38,531,000 (2016: $36,036,000) represents the amount of the shareholders’ equity that is
available to be returned to shareholders on a tax-free basis.
In accordance with the Companies Act 1993 the Company does not have a limited amount of authorised capital and issued shares
do not have a par value.

22
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
D2. RESERVES
Revaluation Reserve
The revaluation reserve arises on the revaluation of land, buildings and apple trees, net of the related deferred tax.
Hedging Reserve
The hedging reserve represents the unrealised gains and losses on interest rate and foreign currency contracts taken out to manage
the Group interest rate and foreign currency risks, net of the related deferred tax.
Equity-settled Employee Benefits Reserve
The Senior Executive Share Scheme involves the Company making available interest-free loans to selected senior executives to
acquire shares in the Company. The senior executives will not gain any benefit with respect to the shares purchased under the
Scheme unless they remain in employment with the Group for a period of three years from the date of acquisition of those shares.
The shares are held by a custodian during the restrictive period and are then transferred to the senior executive. All net dividends or
distributions received in respect of the shares must be applied to repayment of the interest-free loan.
Grant dateVesting dateExercise price, $Number of shares
Opening
balanceGrantedForfeited
Vested and
exercised
Closing
balance
24 July 201424 July 20171.601,437,000 - 25,800 1,411,200 -
8 May 20158 May 20181.6696,193 - - - 96,193
22 April 2016*22 April 20191.67314,064 - 15,066 - 298,998
5 May 2017†5 May 20201.70- 299,377 9,346 - 290,031
5 May 2017‡5 May 20202.45- 35,834 - - 35,834
Total1,847,257 335,211 50,212 1,411,200 721,056
The weighted average share price for shares that vested on 24 July 2017 was $3.45.
The shares issued vest over three years. The estimated value of the share options was determined using the Black-Scholes pricing
calculator and is being amortised over the restrictive period. This cost is expensed with the corresponding credit included in the equity-
settled employee benefits reserve. Expected share price volatility was based on historical volatility of the Company ordinary shares.
The inputs into the “option pricing calculator” are:
201720172016
†FY16A‡FY16B*FY15
Acquisition date share price, $3.353.353.20
Expected share price volatility, %232324
Option life, years333
Risk-free interest rate, %2.312.312.12
Exercise price, $1.702.451.67
Fair value of each instrument issued in the year, at the grant date, $1.771.161.65
Retained Earnings
Retained earnings represents the profits retained in the business.
D3. DIVIDENDS
20172016
$'000$'000
Final dividend - 10.00 (2016: 6.50) cents per share13,811 8,974
Interim dividend - 9.00 (2016: 8.00) cents per share12,586 11,045
26,397 20,019
The 2017 interim dividend was declared on 5 December 2017 and paid on 19 January 2018.

23
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
D4. IMPUTATION CREDIT ACCOUNT
20172016
$'000$'000
Balance at end of the year18,583 17,408
The imputation credit account balance represents the net amount available at the reporting date that can be attached to future
dividends declared.
The Scales Corporation Limited consolidated tax group for income tax includes Scales Corporation Limited and all New Zealand
registered subsidiary companies other than Scales Employees Limited.
D5. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the company by the weighted average
number of ordinary shares on issue during the year, excluding shares held as treasury stock. Diluted earnings per share assumes
conversion of all dilutive potential ordinary shares in determining the denominator.
20172016
$'000$'000
Profit attributable to equity holders of the Company
- used in the calculation of earnings per share
31,330 37,772
Number of shares
20172016
Basic and diluted earnings per share
Weighted average number of ordinary shares138,738,233138,026,398
Effect of dilutive ordinary shares (non-vested Senior Executive Share Scheme) 751,619832,669
Weighted average number of Ordinary Shares for diluted earnings per share 139,489,852138,859,067
Basic earnings per share (cents)22.6 27.4
Diluted earnings per share (cents)22.5 27.2

24
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
E. FINANCIAL ASSETS AND LIABILITIES
IN THIS SECTION
This section explains the financial assets and liabilities of Scales, the related risks and how Scales manages these risks. In
this section of the notes there is information on:
• the accounting policies, judgements and estimates relating to financial assets and liabilities; and
• the financial instruments used to manage risk.
ACCOUNTING POLICIES
Financial Assets
Financial assets are classified into the following specified
categories: financial assets ‘at fair value through profit or loss’
(FVTPL) and ‘measured at amortised cost’.
The classification depends on the business model for
managing the financial asset and the cash flow characteristics
of the financial asset and is determined at the time of initial
recognition or when a change in the business model occurs.
Financial assets at fair value through profit or loss
Financial assets are classified at fair value through profit or loss
if they are not measured at cost or amortised cost. Gains and
losses on a financial asset designated in this category and not
part of a hedging relationship are recognised in profit or loss.
Financial assets measured at amortised cost
The Group’s financial assets held in order to collect contractual
cash flows that are solely payments of principal and interest
on the principal outstanding are measured at amortised cost.
Cash and cash equivalents, trade receivables and employee
loans are classified in this category.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting period.
Financial assets are considered to be impaired when there is
objective evidence that, as a result of events that occurred
after the initial recognition of the financial asset, the estimated
future cash flows of the asset have been affected.
For financial assets carried at amortised cost, the amount of
the impairment loss recognised is the difference between the
asset’s carrying amount and the present value of estimated
future cash flows, discounted at the financial asset’s original
effective interest rate.
Financial Liabilities Measured at Amortised Cost
The Group’s financial liabilities include trade and other
payables and borrowings. These financial liabilities are initially
recognised at fair value plus any directly attributable costs.
Subsequent to initial recognition, they are measured at
amortised cost using the effective interest method.
Derivative Financial Instruments
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value with reference to observable
market data at the end of each reporting period. The resulting
gain or loss is recognised in profit or loss immediately unless
the derivative is designated as an effective hedging instrument,
in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship. The Group
designates certain derivatives as cash flow hedges. A derivative
is presented as a non-current asset or a non-current liability
where the cash flow will occur after 12 months and it is not
expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current liabilities.
Hedge Accounting
At the inception of a hedge relationship, the Group documents
the relationship between the hedging instrument and the
hedged item, along with its risk management objectives
and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instrument
that is used in a hedging relationship is highly effective
in offsetting changes in cash flows of the hedged item,
attributable to the hedged risk.
Cash Flow Hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is
recognised in other comprehensive income and accumulated
as a separate component of equity in the hedging reserve. The
gain or loss relating to the ineffective portion is recognised
immediately in profit or loss, and is included in ‘other income’
or ‘other losses’.
Amounts recognised in the hedging reserve are reclassified
from equity to profit or loss in the periods when the hedged
item is recognised in profit or loss, in the same line as the
recognised hedged item. Hedge accounting is discontinued
when the Group revokes the hedging relationship, the hedging
instrument expires or is sold, terminated, or exercised, or no
longer qualifies for hedge accounting. Any cumulative gain
or loss deferred in the hedging reserve at that time remains
in equity and is recognised when the forecast transaction
is ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the cumulative gain
or loss that was deferred in the hedging reserve is recognised
immediately in profit or loss.

25
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
E1. TRADE AND OTHER RECEIVABLES
20172016
$'000$'000
Trade receivables18,724 14,574
Other receivables1,356 593
Owing by entity accounted for using the equity method76 349
Goods and services tax3,281 2,013
23,437 17,529
Credit Risk Management
The Group activities expose it to credit risk which refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the Group. Financial instruments which potentially subject the Group to credit risk principally consist of
cash and cash equivalents, trade and other receivables and advances as disclosed in note E2. The Group performs credit evaluations
on trade customers, obtains trade credit insurance as appropriate but generally does not require collateral. The Group continuously
monitors the credit quality of its major receivables and does not anticipate non-performance of those customers. Cash and cash
equivalents are placed with high credit quality financial institutions.
There is a significant concentration of credit risk with five customers who represent 25.93% (2016: five customers who represent
35.63%) of trade and other receivables.
The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit risk.
Included in Trade Receivables are debtors which are past due at balance date, as payment was not received within one month,
and for which no provision has been made as there has not been a significant change in credit quality and the amounts are still
considered recoverable. No collateral is held over these balances although trade credit insurance cover is obtained in respect of some
specific receivables. Interest is not charged on overdue debtors. The ageing of these past due trade receivables is:
One month3,995 2,363
Two months 790 639
More than two months786 2,139
5,571 5,141
E2. OTHER FINANCIAL ASSETS
Current:
At fair value:
Foreign currency derivative instruments6,415 8,409
At amortised cost:
Advances to other entities- 55
6,415 8,464
Non-current:
At fair value:
Foreign currency derivative instruments6,544 11,231
Shares in unlisted companies 211 206
At amortised cost:
Employee loans 1,009 124
7,764 11,561

26
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
E3. TRADE AND OTHER PAYABLES
20172016
$'000$'000
Trade payables10,325 12,737
Accruals7,214 4,882
Employee entitlements4,676 4,428
22,215 22,047
E4. BORROWINGS
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured
at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit
or loss over the period of the borrowing using the effective interest method. The fair value of current and non-current borrowings is
approximately equal to their carrying amount.
The Group signed Multi-Option Facility Agreements with Rabobank and Westpac New Zealand Limited on 22 March 2013. The total
facility is $90,000,000 (2016: $100,000,000). At 31 December 2017 the undrawn amount under these facilities was $43,500,000
(2016: $59,000,000).
The floating interest rate is 2.94% to 3.34% (2016: 2.91% to 3.25%) and the term borrowing facility roll-over date is 30 June
2019. Seasonal facility presented as current borrowings is due for repayment within one year. The bank facilities are secured by a
first ranking security interest granted by each of the Charging Group* Companies over all its present and after-acquired property
(including proceeds) and a first ranking security interest over any of the Charging Group Companies present and future assets and
undertakings which are not personal property. The bank facilities are also secured by first and exclusive registered mortgages over
property comprising coolstores, orchards and industrial and commercial property owned by members of the Charging Group.
*Charging Group Companies are Scales Corporation Limited, Geo.H.Scales Limited, Liqueo Bulk Storage Limited, Meateor Foods
Limited, Mr Apple New Zealand Limited, New Zealand Apple Limited, Polarcold Stores Limited, Scales Holdings Limited, Scales
Logistics Limited and Whakatu Coldstores Limited.
The Multi-Option Facility Agreements with the Group’s banks include the requirement that at all times the Tangible Net Worth of the
Group, being Tangible Assets less Total Liabilities (excluding deferred tax liabilities), be not less than $100,000,000. The Group has
complied with this requirement since the facility was established. The Group policies in respect of capital management and allocation
are reviewed regularly by the Board of Directors. There have been no material changes to the Group’s management of capital during
the year.
E5. OTHER FINANCIAL LIABILITIES
Current financial liabilities at fair value:
Foreign currency derivative instruments1,312 2,047
Interest rate swap contracts and forward rate agreements481 371
Fern Ridge Produce Limited put option2,538 939
4,331 3,357
Non-current financial liabilities at fair value:
Foreign currency derivative instruments3,318 3,111
Interest rate swap contracts and forward rate agreements725 826
Fern Ridge Produce Limited put option- 940
4,043 4,877
On 11 January 2016 the Group increased its shareholding in Fern Ridge Produce Limited (“Fern Ridge”) to 75%. As part of the
transaction, 2.12% of the shares were then sold to an employee of Fern Ridge, and Scales entered into agreements with the
remaining shareholders of Fern Ridge whereby those shareholders have an option to “put” their shares to Scales at a value based on
a multiple of Fern Ridge profits, but with a minimum value equivalent to that paid to the selling shareholders.

27
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
E6. INTEREST RATE RISK
Interest Rate Risk Management
The Group is exposed to interest rate risk as it borrows funds at floating interest rates. Management monitors the level of interest
rates on an ongoing basis and may use interest rate swaps and forward rate agreements to manage interest rate risk.
Interest Rate Swap Contracts and Forward Rate Agreements
Under interest rate swap contracts and forward rate agreements, the Group agrees to exchange the difference between fixed and
floating rate interest amounts calculated on agreed notional principal amounts. Such contracts, some of which commence in future
reporting years, enable the Group to mitigate the risk of changing interest rates on the cash flow exposures on the issued floating
rate debt. The fair value of these contracts at the reporting date is determined by discounting the future cash flows using the
forward interest rate curves at reporting date and the credit risk inherent in the contracts. The average contracted fixed interest rate
is based on the notional principal amount at balance date.
Details of interest rate swap contracts and forward rate agreements for the Group are:
Maturity Date
Fixed Interest
Rate
Notional Principal
AmountFair Value
201720162017201620172016
%%$’000$’000$’000$’000
Maturity Date
Interest rate swap contracts:
Within one year- 4.97 - 10,000 - (280)
Two to five years4.02 4.02 30,000 30,000 (938)(826)
After five years3.25 - 10,000 - (268)-
Forward rate agreements:
Within one year- 3.55 - 25,000 - (91)
(1,206)(1,197)
These interest rate swap contracts and forward rate agreements, exchanging floating rate interest amounts for fixed rate interest
amounts, are designated as cash flow hedges in order to reduce the Group’s cash flow exposure resulting from floating interest
rates on borrowings. The interest rate swap and forward rate agreement payments, and the interest payments on the loans occur
simultaneously, and the amount deferred in equity is recognised in profit or loss over the period that the floating rate interest
payments on debt impact profit or loss.
The Group’s interest rate swap contracts and forward rate agreements are classified as Level 2 in the fair value hierarchy.
At 31 December 2017 it is estimated that a general increase of one percent in interest rates would decrease the Group’s profit after
income tax and equity by approximately $558,000 (2016: $451,000).
E7. FOREIGN CURRENCY RISK
Foreign Currency Risk Management
Foreign currency risk is the risk that the value of the Group’s assets and liabilities or revenues and expenses will fluctuate due to
changes in foreign exchange rates. The Group is exposed to currency risk as a result of normal trading transactions denominated in
foreign currencies. The currencies in which the Group primarily trades are the Australian dollar, Euro, Canadian dollar, Great Britain
pound and United States dollar, with the largest exposure being to the United States dollar.
Currency risk is managed by the natural hedge of foreign currency receivables and payables and the use of foreign currency
derivative financial instruments. The fair value of foreign currency derivative financial instruments at the reporting date is determined
on a discounted cash flow basis whereby future cash flows are estimated based on forward exchange rates and contract forward
rates, discounted at a rate that reflects the credit risk of various counterparties.
The Group’s forward foreign exchange contracts and foreign exchange options are classified as Level 2 in the fair value hierarchy.
Details of foreign currency instruments at balance date for the Group are:
20172016
Contract ValueFair ValueContract ValueFair Value
$’000$’000$’000$’000
Sale commitments forward foreign exchange contracts260,406 3,546 165,524 7,250
Sale commitments foreign exchange options96,787 4,783 128,150 7,232

28
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
E7. FOREIGN CURRENCY RISK (continued)
These foreign currency instruments are designated as cash flow hedges in order to reduce the Group’s cash flow exposure resulting
from movements in foreign currency exchange rates on anticipated future transactions. It is anticipated that the sales will take place
during the 2018 to 2021 financial years at which stage the amount deferred in equity will be released into profit or loss.
It is estimated that a general increase of five cents in the value of the New Zealand dollar against other foreign currencies would
have decreased the Group’s profit after income tax by $10,303,000 (2016: $9,939,000). A decrease in exchange rates would have
the opposite impact on profit.
E8. CATEGORIES OF FINANCIAL INSTRUMENTS
2017 2016
$'000$'000
Financial Assets:
Fair value through profit or loss211 206
Derivative instruments in designated hedge accounting relationships12,959 19,640
Amortised cost26,855 22,050
40,025 41,896
Financial Liabilities:
Amortised cost81,301 74,092
Fair value through profit or loss2,538 1,879
Derivative instruments in designated hedge accounting relationships5,836 6,355
89,675 82,326
E9. MATURITY PROFILE OF FINANCIAL LIABILITIES
Liquidity Risk Management
The Group manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and
actual cash flows and matching the maturity profiles of financial assets and liabilities.
The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been drawn up
based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
The table includes both interest and principal cash flows.
Within Three
Months
Four Months
to One Year
One to Five
YearsTotal
$'000$'000$'000$'000
2017
Trade and other payables22,215 - - 22,215
Dividend declared12,586 - - 12,586
Fern Ridge Produce Limited put options1,269 1,269 - 2,538
Borrowings363 7,601 40,633 48,597
Interest rate swaps and forward rate agreements120 364 1,247 1,731
36,553 9,234 41,880 87,667
2016
Trade and other payables22,047 - - 22,047
Dividend declared11,045 - - 11,045
Fern Ridge Produce Limited put options939 - 940 1,879
Borrowings324 11,812 31,462 43,598
Interest rate swaps and forward rate agreements113 315 684 1,112
34,468 12,127 33,086 79,681

29
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
F. GROUP STRUCTURE
IN THIS SECTION
This section provides information to help readers understand the Scales Group structure and how it affects the financial
position and performance of the Group. In this section there is information about:
• subsidiaries; and
• the acquisition of assets and business of OceanAir Limited and shares in OceanAir Freight Pty Limited.
F1. SUBSIDIARY COMPANIES
Subsidiary Companies:Principal Activity
Country of
Incorporation
Holding
2017 2016Balance Date
Fern Ridge Produce LimitedTrading companyNew Zealand 72.88%72.88%31 December
Geo. H. Scales Limited Non trading companyNew Zealand 100%100.00%31 December
Liqueo Bulk Storage LimitedTrading companyNew Zealand 100%100.00%31 December
Longview Group Holdings LimitedNon trading companyNew Zealand 100%100.00%31 December
Longview New Zealand LimitedNon trading companyNew Zealand 100%100.00%31 December
Longview Packhouse LimitedNon trading companyNew Zealand 100%100.00%31 December
Meateor Foods Australia Pty LimitedTrading companyAustralia100%100.00%31 December
Meateor Foods LimitedTrading companyNew Zealand 100%100.00%31 December
Mr Apple New Zealand LimitedTrading companyNew Zealand 100%100.00%31 December
New Zealand Apple LimitedTrading companyNew Zealand 100%100.00%31 December
OceanAir Freight Pty Limited (Note F2)Freight consolidatorAustralia100%0.00%31 December
Polarcold Stores LimitedColdstore operatorNew Zealand 100%100.00%31 December
Scales Employees LimitedCustodial companyNew Zealand 100%100.00%31 December
Scales Holdings LimitedHolding companyNew Zealand 100%100.00%31 December
Scales Logistics LimitedFreight consolidatorNew Zealand 100%100.00%31 December
Selacs Insurance LimitedInsurance companyNew Zealand 100%100.00%31 December
Whakatu Coldstores LimitedColdstore operatorNew Zealand 100%100.00%31 December
Subsidiary companies are controlled by the Company. Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the company loses
control of the subsidiary.

30
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
F2. ACQUISITION OF OCEANAIR
On 1 August 2017 Scales Corporation Limited through its wholly owned subsidiary Scales Logistics Limited completed the purchase
of the assets and the business of OceanAir Limited and all of the shares in OceanAir Freight Pty Limited (collectively OceanAir), a
freight forwarding business with offices in Auckland and Melbourne.
OceanAir specialises in sea and air freight for perishable produce, specifically kiwifruit and avocado exports, which account for about
50% of its activity.
Details of the acquisition are as follows:
Fair Value on
Acquisition
$'000
Current assets
Cash and cash equivalents14
Trade and other receivables247
Prepayments4
Non-current assets
Property, plant and equipment47
Current liabilities
Trade and other payables(319)
Net liabilities acquired(7)
Goodwill on acquisition1,955
Consideration1,948
Issue of shares in Scales Corporation Limited as part consideration970
Net cash outflow on acquisition978
Goodwill arising on acquisition
Goodwill arose on the acquisition of OceanAir because the cost of acquisition included immediate operational presences in the
Auckland and Melbourne markets, synergies and future market benefits as the operations are integrated with the Scales Logistics
operations. These benefits are not recognised separately from goodwill as the expected future economic benefits arising cannot be
reliably measured and they do not meet the definition of identifiable intangible assets.
Impact of the acquisition on the results of the Group
OceanAir contributed $198,000 to the Group profit for the year. Group revenue for the year includes $4,308,000 in respect of
OceanAir. Had the OceanAir acquisition been effective at 1 January 2017, the revenue of the Group would have been $403,854,000
and the profit for the year would have been $31,735,000.

31
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
G. OTHER
IN THIS SECTION
This section includes the remaining information relating to Scales’ financial statements which is required to comply
with NZ IFRS.
G1. CAPITAL COMMITMENTS
20172016
$'000$'000
Commitments entered into in respect of apple trees as at balance date2,161 1,577
Commitments entered into in respect of property, plant and equipment as at
balance date- 150
G2. OPERATING LEASE COMMITMENTS
The Group as Lessee
Operating leases relate to coldstores, orchards, offices, vehicles and office equipment with lease terms of between 3 to 9 years,
generally with options to extend for further periods. All operating lease contracts contain rental reviews that provide for reviews at
regular intervals and in the event that the Group exercises its options to renew.
Non-cancellable operating lease commitments:
Not later than one year16,271 13,966
Later than one year and not later than five years53,325 41,894
Later than five years58,854 53,762
The Group as Lessor
Operating leases relate to coldstores owned by the Group with lease terms of between 3 to 9 years, generally with options to extend
for further periods. All operating lease contracts contain review clauses that provide for reviews at regular intervals and in the event that
the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expiry of the lease period.
Non-cancellable operating lease receivables:
Not later than one year4,065 1,520
Later than one year and not later than five years3,696 3,668
Later than five years1,866 2,796
G3. RELATED PARTY DISCLOSURES
Transactions with Related Parties
Certain Directors or senior management have relevant interests in companies with which Scales has transactions in the normal
course of business. A number of Scales directors are also non-executive directors of other companies. Any transactions undertaken
with these entities have been entered in the ordinary course of business on a third party arm’s-length basis.
Key Management Personnel Remuneration
The compensation of the directors and executives, being the key management personnel of the Group, is as follows:
Short-term employee benefits2,820 2,858
Share-based payments433 262
Post-employment benefits102 85
3,355 3,205
During 2017 145,813 (2016: 146,028) shares were issued to key management personnel in accordance with the senior executive
share scheme described in note D2.

32
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
G3. RELATED PARTY DISCLOSURES (continued)
20172016
$'000$'000
Transactions with Equity Accounted Entities
Revenue from sale of goods890 1,128
Revenue from services968 1,222
Dividends received1,000 500
Trade receivables at balance date76 349
G4. EVENTS OCCURRING AFTER BALANCE DATE
There were no events occurring subsequent to balance date which require adjustment to or disclosure in the financial statements.

INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF SCALES CORPORATION LIMITED
OpinionWe have audited the consolidated financial statements of Scales Corporation Limited and its
subsidiaries (the ‘Group’), which comprise the consolidated statement of financial position as
at 31 December 2017, and the consolidated statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages 3 to 32, present
fairly, in all material respects, the consolidated financial position of the Group as at 31 December
2017, and its consolidated financial performance and cash flows for the year then ended in
accordance with New Zealand Equivalents to International Financial Reporting Standards (‘NZ
IFRS’) and International Financial Reporting Standards (‘IFRS’).
Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and
International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1
(Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and
Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code
of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Other than in our capacity as auditor and the provision of other assurance services, we have no
relationship with or interests in the Company or any of its subsidiaries. These services have not
impaired our independence as auditor of the Group.
Audit materialityWe consider materiality primarily in terms of the magnitude of misstatement in the financial
statements of the Group that in our judgement would make it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced (the
‘quantitative’ materiality). In addition, we also assess whether other matters that come to our
attention during the audit would in our judgement change or influence the decisions of such a
person (the ‘qualitative’ materiality). We use materiality both in planning the scope of our audit
work and in evaluating the results of our work.
We determined materiality for the Group financial statements as a whole to be $2.15 million.
Key audit mattersKey audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
33
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017

Key audit matterHow our audit addressed the key audit matter
Valuation of Unharvested Agricultural Produce
Unharvested agricultural produce growing on bearer plants (i.e.
fruit), is measured at fair value less costs to sell.
The Group’s unharvested agricultural produce was valued
at $20.2 million at balance date as described in note C2. A
revaluation gain of $1.0 million is recorded in profit or loss.
Fair value less costs to sell is calculated by the Group using a
discounted cash flow model. The model includes significant
unobservable inputs and assumptions including, for each
variety, the forecast production per hectare per annum by
weight, sales prices, and risk-adjusting discount rates, as well as
costs to harvest and sell.
The risk-adjusting discount rates take into account the risk of
unknown adverse events that may affect crop, harvest and/or
market conditions.
The valuation of unharvested agricultural produce is considered
to be a key audit matter due to the level of judgement required
to determine the fair value less costs to sell.
Our procedures focused on the appropriateness of the valuation
methodology and the key assumptions applied in the internal
valuation model.
Our procedures included, amongst others:
• Holding discussions with management and considering
market information to identify factors, including
environmental or market risks, that would impact the
current crop valuation.
• Engaging a Deloitte valuation specialist to consider whether
the valuation method applied was appropriate and whether
the risk-adjusting discount rates were reasonable based on
market information and risks relating to the unharvested
agricultural produce.
• Challenging the reasonableness of the key assumptions
by comparing the forecast production, prices, and costs
to harvest and sell for the current growing season to the
approved budgets for each orchard.
• Assessing the historical accuracy of the Group’s
budget forecasts.
• Checking the mechanical accuracy of the discounted cash
flow model.
Valuation of Land and Buildings
As disclosed in note C1, the Group has land and buildings
of $142.6 million. The Group has a policy of recording land
and buildings at fair value with revaluations performed with
sufficient regularity that the carrying amount at the end of a
reporting period does not differ materially from their fair value
(usually every 3 years). The last independent valuation of land
and buildings was carried out as at 31 December 2016.
The significant assumptions adopted in the valuation of land
and buildings include; sales prices for similar properties, market
rental rates, and capitalisation rates. The valuations include
adjustments to observable data for similar properties to take
into account property-specific attributes.
Management have considered and sought input from
independent valuers as to any changes to the significant
assumptions used in the 2016 valuation and whether these
changes indicate that the land and buildings are not held at fair
value as at 31 December 2017.
Management have used the information provided by the
independent valuers to determine that the fair value of the
land and buildings has increased by $4.2 million. This increase
is recorded through other comprehensive income in the
consolidated statement of comprehensive income.
Valuation of land and buildings is considered to be a key audit
matter due to the significance of the assets to the Group’s
consolidated statement of financial position, and due to the
judgment involved in the assessment of the fair value of these
assets by the Group’s Directors.
In conjunction with our internal valuation specialists we
reviewed and evaluated the documentation prepared by the
Group in support of their assessment of whether the carrying
value of land and buildings classified as property, plant and
equipment as at 31 December 2017 differed materially from
their fair value.
Our procedures included, amongst others:
• Agreeing material additions to supporting documentation.
• Assessing changes in the significant assumptions from
the 31 December 2016 independent valuation against
external information.
• Assessing correspondence from the independent valuer.
• Checking the mathematical accuracy used in the
Group’s assessment.
34
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017

Valuation of Apple Trees
As disclosed in note C1 the Group has apple trees of $30.7
million. The Group has a policy of recording apple trees at fair
value with valuations performed with sufficient regularity that
the carrying amount at the end of a reporting period does not
differ materially from their fair value (usually every 3 years). The
last independent valuation of apple trees was carried out as at
31 December 2016.
The significant assumptions adopted in the valuation of these
assets are production levels per hectare, orchard gate returns
(market prices), orchard costs, and discount rates.
Management have considered and sought input from
independent valuers as to any changes to the significant
assumptions used in the 2016 valuation and whether these
changes indicate that the apple trees are not held at fair value
as at 31 December 2017.
Management have applied judgement in determining there
have been no substantial changes to the significant assumptions
used in the 2016 valuations, that these assumptions remain
appropriate, and that fair value does not differ materially from
carrying amount as at 31 December 2017.
Valuation of apple trees is considered to be a key audit matter
due to the significance of the assets to the Group’s consolidated
statement of financial position, and due to the judgment
involved in the assessment of the fair value of these assets by
the Group’s Directors.
In conjunction with our internal valuation specialists we
reviewed and evaluated the documentation prepared by the
Group in support of their assessment of whether the carrying
value of the apple trees as at 31 December 2017 differed
materially from their fair value.
Our procedures included, amongst others:
• Agreeing material additions to supporting documentation.
• Assessing management’s assertion that there have been no
substantial changes to the significant assumptions from the
31 December 2016 independent valuation against internal
data and market information.
• Assessing correspondence from the independent valuer.
35
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017

Other informationThe directors are responsible on behalf of the Group for the other information. The other
information comprises the information in the Annual Report that accompanies the consolidated
financial statements and the audit report. The Annual Report is expected to be made available
to us after the date of this auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and
we will not express any form of assurance conclusion thereon.
Our responsibility is to read the other information identified above when it becomes available
and consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
When we read the other information in the Annual Report, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to the directors and
consider further appropriate actions.
Directors’ responsibilities for
the consolidated financial
statements
The directors are responsible on behalf of the Group for the preparation and fair presentation
of the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such
internal control as the directors determine is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the
Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
for the audit of the
consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISAs (NZ)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements
is located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1
This description forms part of our auditor’s report.
Restriction on useThis report is made solely to the Company’s shareholders, as a body. Our audit has been
undertaken so that we might state to the Company’s shareholders those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company’s shareholders as a body, for our audit work, for this report, or for the opinions we
have formed.
Michael Wilkes, Partner
for Deloitte Limited
Christchurch, New Zealand
27 February, 2018
36
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017

37
ANNUAL FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2017
DIRECTORY
Board of Directors
Tim Goodacre (Chairman)
Andy Borland (Managing Director)
Nick Harris
Mark Hutton
Alan Isaac
Weiyong Wang
Carol Chen (Alternate Director for Weiyong Wang, appointed
2 November 2017)
Audit and Risk Management Committee
Alan Isaac (Chairman)
Nick Harris
Mark Hutton
Nominations and Remuneration Committee
Mark Hutton (Chairman)
Tim Goodacre
Finance and Treasury Committee
Mark Hutton (Chairman)
Andy Borland
Health and Safety Committee
Nick Harris (Chairman)
Andy Borland
Registered Office
52 Cashel Street
Christchurch 8013
New Zealand
Postal Address
PO Box 1590
Christchurch 8140
New Zealand
Telephone
64-3-379-7720
Website
www.scalescorporation.co.nz
Auditor
Deloitte Limited
Level 4
151 Cambridge Terrace
Christchurch 8013
Bankers
ANZ Bank New Zealand Limited
665 Colombo Street
Christchurch 8011
Rabobank New Zealand Limited
Level 23
157 Lambton Quay
Wellington 6011
Westpac New Zealand Limited
Level 2
2 Show Place
Christchurch 8024
Solicitors
Anthony Harper
Level 9
HSBC Tower
62 Worcester Boulevard
Christchurch 8011
Chapman Tripp
23 Albert Street
Auckland 1140
Corporate Adviser
Maher & Associates
17 Albert Street
Auckland 1010
Share Registry
Computershare Investor
Services Limited
Level 2, 159 Hurstmere Road
Takapuna
North Shore City
Auckland 0622