2018 Interim 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





Media Release

28 August 2018

STRONG FIRST HALF RESULTS WHILST DELIVERING ON REFRESHED STRATEGY

Scales Corporation Limited (NZX:SCL) today reported its results for the six months ended 30 June
2018 (1H18). Net profit after tax for the Group was $34.8 million, an increase of 22 per cent on the
previous half year, ended 30 June 2017 (1H17) (restated). Profit for the period from Continuing
Operations was $29.3 million compared to $24.4 million 1H17 (restated), an increase of 20 per cent.

Key highlights include:
 Positive first half trading across the Group. In particular:
o A nine per cent increase in total own grown export volumes at Mr Apple.
o Improved utilisation and volumes within Storage & Logistics.
o An increase in volumes sold within Food Ingredients.
 The sale and settlement of the Liqueo business in August 2018.
 The conditional sale of Polarcold in June 2018.

EBITDA
1
for the Group for the six month period was $57.1 million, with EBITDA for Continuing
Operations of $46.7 million and $10.4m for Discontinued Operations (Polarcold and Liqueo).

Managing Director Andy Borland commented “Our results reflect strong performances across all
divisions and is a testament to the hard work of every member of the Scales team. In the Horticulture
division, Mr Apple capitalised on a return to expected growing conditions, after the challenging season
in 2017, to deliver another record crop and export volume. It also continued to benefit from ongoing
investment in the Middle East and China markets and strong demand from Europe, delivering an
overall increase in apple prices. We have anticipated some softening of demand for the conclusion of
the season.”

“The Storage & Logistics division delivered a satisfying result with increased volumes and improved
utilisation building on prior year operations. The sale of Polarcold, effective 1 June 2018, is only
subject to Overseas Investment Office (OIO) approval and we announced the sale of Liqueo earlier in
August. We expect full year trading for Scales Logistics to be in line with budget.”

1
Earnings Before Interest, Tax, Depreciation and Amortisation

“There was a significant increase in sales volumes at Meateor Foods in our Food Ingredients division,
due to favourable market conditions. However, we expect volumes to be lower in the second half of
the year.”

Tim Goodacre, Chairman of Scales Corporation noted “We are pleased to reaffirm our previously
announced EBITDA guidance of between $58 million and $65 million on a like-for-like basis
(Continuing and Discontinued Operations) and we expect to be at the top end of that range.”

Scales dividend policy is for interim and final dividends to be split approximately evenly and paid in
January and July. Directors will consider payment of an interim dividend later in the calendar year.

About Scales Corporation
Scales Corporation is a diversified agribusiness portfolio. It 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
permanent staff New Zealand wide. Find out more at www.scalescorporation.co.nz.

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

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SCALES CORPORATION LIMITED
GROWING YOUR DIVERSIFIED AGRIBUSINESS
Half Year Results
For the six months ended 30 June 2018
28 August 2018

August 2018Scales – 2018 Half Year Results
HIGHLIGHTS
•Positive first half trading across the Group:
An increase in Horticulture volumes and prices.
Improved utilisation and volumes within Storage &
Logistics.
Food Ingredients exposed to favourable trading dynamics.
•Sale and settlement of Liqueobusiness in August
2018:
Consideration of $20.0m, multiple of 13.3x FY17
normalised EBITDA.
•Conditional sale of Coldstorebusiness in June 2018:
Consideration of $151.4m, multiple of 15.6xFY17EBIT.
Conditional only on Overseas Investment Office (OIO)
approval.
•Proceeds from the sale of these businesses is intended
to be applied to growth initiatives and acquisition
opportunities that are being actively pursued.
2
Strong first half result whilst delivering on refreshed strategy
•FY18full year EBITDA guidance:
Previously announced EBITDA guidance between $58m
and $65m reaffirmed on a like-for-like basis.
Expect to be at the top end of that range.

2
FINANCIALS

August 2018Scales – 2018 Half Year Results
FINANCIAL OVERVIEW
•Growth in revenue:
$255.2mfrom All Operations, up 24% on 1H17.
$220.1mfrom Continuing Operations, up 25% on 1H17.
•All profit measures also running ahead of 1H17.
4
A strong first half year of trading
1H18
$000
Continuing
Operations
Discontinued
Operations *
All
Operations
Continuing
Operations
All
Operations
Continuing
Operations
All
Operations
Total Revenue220,12035,097255,217175,806205,61025%24%
Gross Profit66,13821,37087,50858,42075,47713%16%
% of Revenue30%61%34%33%37%
EBITDA46,74210,40057,14239,04847,57520%20%
% of Revenue21%30%22%22%23%
EBIT42,1437,54449,68735,57141,35318%20%
% of Revenue19%21%19%20%20%
NPAT29,3315,43634,76724,42628,43420%22%
% of Revenue13%15%14%14%14%
* Excludes intercompany
1H17% chg.

August 2018Scales – 2018 Half Year Results
DIVISIONAL PERFORMANCE
•Horticulture – return to more settled growing conditions, resulting in higher volumes, with market dynamics
remaining firm.
•Storage & Logistics – strong performance, building on prior year operations.
•Food Ingredients – reflects favourable trading conditions including global supply restrictions.
•Scales Corporation – impacted by costs associated with the sale of Coldstoresand Liqueo.
5
Growth within all divisions
EBITDA by Division ($m)
40.3
14.3
6.2
(3.7)
34.2
11.6
4.0
(2.3)
H ortic ultureStora ge & L ogisticsFood IngredientsOther
2018
2017
All OperationsHorticulture
Storage & Logistics
Food Ingredients
Corporate &
Eliminations
Group
$0001H181H171H181H171H181H171H181H171H181H17
Total Segment Revenue143,842120,33481,51167,55145,52133,978(15,657)(16,253)255,217205,610
EBITDA40,30134,22714,27911,6166,2134,013(3,651)(2,281)57,14247,577
% of Revenue28%28%18%17%14%12%23%14%22%23%
EBIT36,11631,09111,2888,8045,9433,754(3,660)(2,296)49,68741,354
% of Revenue25%26%14%13%13%11%23%14%19%20%
Note: Segment Revenue includes intercompany charges, most specifically within the Storage & Logistics division, where Scales Logistics charges Mr Apple and Meateor for shipping.
In addition, costs relating to the disposal of Polarcold and Liqueo, amounting to $687k for 1H18, have been included in the Corporate division in this analysis.

August 2018Scales – 2018 Half Year Results
BALANCE SHEET
•Average Net Debt (average of 30 June 2018 and 31
December 2017) $60.0m:
Increase of $8.2m on 1H17 ($51.8m), primarily due to
increases in working capital and the exclusion of
Polarcoldand Liqueocash balances.
Net Debt to equity 33% (29% at 30 June 2017).
•Net Cash at 31 December 2018 expected to be
~$130m:
Subject to completion of the sale of Polarcoldduring
the current financial year.
Includes $20m from the sale of Liqueo, which settled
on 13 August.
6
Robust financial position
Group - Unaudited
$000
1H18
1H17
(Restated)
31 Dec 17
(Restated)
Current Assets
Cash and Bank Balances1,841
15,124 5,690
Trade & Other Receivables73,361 66,232
23,437
Agricultural Produce
61,558 64,750 20,189
Inventories
27,750 22,398 22,212
Other Current Assets
5,726 10,833 9,838
170,236 179,337 81,366
Assets Held for Resale111,995 - -
Current Liabilities
Trade & Other Payables(57,401)
(63,178) (22,215)
Dividend Declared(12,538)
(14,006)
(12,586)
Short-Term Borrowings(41,000) (44,000) (6,500)
Current Tax Liabilities(14,822) (16,076) (2,739)
Other Financial Liabilities(7,088) (1,715) (4,331)
(132,849) (138,975)
(48,371)
Liabilities Associated With
Assets Held for Resale(18,303)
- -
Net Working Capital131,079 40,362 32,995
Non-Current Assets
Property, Plant and Equipment133,445
225,862 228,881
Other Non-Current Assets27,243 36,636
32,259
160,688
262,498
261,140
Non-Current Liabilities
Term Borrowings(40,000) (40,000) (40,000)
Deferred Tax(8,666) (24,821) (28,175)
Other Financial Liabilities(5,568) (3,379)

(4,043)
(54,234)
(68,200) (72,218)
Net Assets 237,533 234,660 221,917
Net Debt(79,159) (68,876) (40,810)
Average Net Debt(59,985) (51,761) (54,843)

3
DIVISIONAL
PERFORMANCE &
OUTLOOK

August 2018Scales – 2018 Half Year Results
HORTICULTURE
•Mr Apple total own grown export volumes up 9% compared to last year:
More normal growing conditions experienced.
Export packoutof 76% in line with long-term averages.
•A 17%increase in Premium Variety volumes, including large increases in NZ Queen, Pink Lady, and High Colour
fruit.
•A slight increase in Traditional Variety volumes, 2% ahead of FY17.
•Pricing remained firm, with solid demand from key markets.
8
Increase in both volumes produced and prices achieved
Mr Apple GrownExport Volumes (TCE 000s)Growth in Premium Volumes (TCE 000s)
741
1,059
1,036
1,454
1,656
1,616
1,887
1,404
1,773
1,716
1,701
1,890
1,929
1,975
2,144
2,833
2,752
3,155
3,546
3,545
3,862
2012201320142015201620172018
Tra ditiona l Varieties
Premium Varieties
134
214
343
406
455
185
245
245
282
301
253
359
393
585
574
831
866
809
961
147
148
112
741
1,059
1,036
1,454
1,656
1,616
1,887
2012201320142015201620172018
Other
High Colour Fuji and Royal Gala
Pink Lady
NZ Queen
CAGR17%

August 2018Scales – 2018 Half Year Results
HORTICULTURE
•Ongoing strategy to become a leading apple brand in China:
Investment continuing to redevelop our planted land into the premium varieties sought after by Asia and Middle East markets.
—Historical redevelopment of premium varieties coming into production.
—Intention to continue to redevelop orchards in new premium varieties such as Dazzle
®
.
Sustained in-market targeted advertising and promotions together with continued further development in proprietary varieties.
Ongoing support from our key strategic shareholder, China Resources Ng Fung.
•Strong demand from key European customers this season.
9
Continued penetration of key overseas markets
Sales by Region (TCEs) FY16Sales by Region (TCEs) FY17
Sales by Region (TCEs) FY18F*
*Actual sales by region will not be known until all fruit is sold.
Sales to Asia and Middle East are predominantly in USD, North American sales are in CAD and USD, UK and Europe sales predominantly in their respective currencies.
Europe
30%
North America
7%
UK
10%
Asia & Middle
East
53%
Europe
34%
North America
4%
UK
9%
Asia & Middle East
53%
Europe
31%
North America
5%
UK
10%
Asia & Middle East
54%

August 2018Scales – 2018 Half Year Results
STORAGE & LOGISTICS
10
Pleasing performance from the Storage & Logistics division
•Divisional contribution growth reflects:
More ordinary cropping season, giving rise to higher volumes and improved utilisation for Polarcoldin particular.
Improved trading from the Auckland coldstore.
Increased trade in edible oil storage for Liqueo.
Increased freight volumes for Scales Logistics (due in part to higher apple volumes).
Full six months of trading from OceanAir.
•Divestment of Polarcoldand Liqueoin line with refreshed Group strategy:
Conditional Polarcoldsale effective 1 June 2018, subject to OIOapproval.
Liqueosale completed and settled 13 August 2018.
Storage & Logistics EBITDA ($m)
10.2
12.8
12.0
11.6
14.3
1H141H151H161H171H18

August 2018Scales – 2018 Half Year Results
FOODINGREDIENTS
•Meateor:
Continuing increases in volume sold.
Margins favourably impacted by market conditions
and overall product mix.
Business strategy continues to focus on adding value
to, and expanding supply of, protein sources.
11
Volume increases due to market shortage
Meateor – Volumes Sold (MT 000s)
•Profruit:
Increased volumes due to a larger apple crop and
lower export packout.
8.1
9.7
12.0
12.9
16.0
1H141H151H161H171H18

4
SUSTAINABILITY

August 2018Scales – 2018 Half Year Results
SUSTAINABILITY
•People:
Group-wide staff engagement survey conducted throughout August.
Three new Health and Safety positions created throughout the Group.
Safety culture workshops undertaken at Mr Apple.
•Environment:
Waste audits being undertaken across selected sites.
Discussions held with suppliers regarding packaging changes.
Increased recycling options being explored.
CEMARs* carbon footprint certification underway for Mr Apple.
•Governance and Risk Management:
Appointment of Teresa Steele-Rika as our next Future Director in August 2018.
Business continuity plans reviewed for all Group companies.
13
Continuing our sustainability journey
* Certified Emissions Management and Reduction Scheme, an internationally accredited greenhouse gas certification scheme.

5
STRATEGY

August 2018Scales – 2018 Half Year Results
STRATEGY
•As previously advised, we have revised our group investment and growth strategy:
A greater focus on pure agribusinesses.
Seeking opportunities that play to our strengths:
—Fully-vertically integrated.
—Export-led.
—Add value from our China relationships.
15
Greater focus on pure agribusiness
•Initial steps successfully executed through the divestment
of Liqueoand Polarcold.
•Currently reviewing a number of acquisition opportunities
in our previously disclosed investment universe.
•Reviewing strong opportunities within our existing
business units.

6
FINANCIAL OUTLOOK

August 2018Scales – 2018 Half Year Results
FY18 FULL YEAR OUTLOOK
•Horticulture:
Improved orchard outcomes, with Mr Apple exported volume up 9% on prior year to a record 3.86mTCEs.
Ongoing investment in the Mr Apple brand and premium apple varieties for the Asia and Middle East markets continues to
deliver sales growth. Solid demand from European markets.
However, softer demand has been anticipated for the conclusion of the season.
Although advantage has been taken of recent weakness in the NZD to increase hedging levels for future years, this has no
material impact on current year trading.
•Food Ingredients / Logistics:
Meateorvolumes expected to be lower in 2H18.
Full year results anticipated to be in line with expectations.
•Scales Corporation:
Increased costs associated with acquisition opportunities and divestment activity, including expected final costs associated with
the sale of Polarcoldand Liqueoof approximately $1m.
•FY18EBITDA guidance:
Previously announced EBITDA guidance between $58m and $65m reaffirmed on a like-for-like basis.
Expect to be at the top end of that range.
17
Like-for-like EBITDA guidance of $58mto $65mreaffirmed, likely to be at top end of range

August 2018Scales – 2018 Half Year Results
DISCLAIMER
Please do not read this presentation in isolation
This presentation supplements our half year results announcement dated 28 August 2018. It should be read subject to and in conjunction with the additional
information in that release, and other material which we have released to the NZX.
There is no offer or investment advice in this presentation
This presentation is for information purposes only. It is not an offer of securities, or a proposal or invitation to make any such offer. It is not investment advice or a
securities recommendation, and does not take into account any person’s individual circumstances or objectives. Every investor should make an independent
assessment of Scales Corporation on the basis of independent expert financial advice.
Non-GAAP financial measures
Our results are reported under NZ IFRS. This presentation may include 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 expense / (income), and taxation expense to net earnings / (loss).
•EBIT. We calculate EBIT by adding back (or deducting) finance expense / (income), and taxation expense to net earnings / (loss).
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.
Disclaimer
To the maximum extent permitted by law, we will not be liable (whether in tort (including negligence) or otherwise) to you orany other person in relation to this
presentation, including any error in it.
18

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Reporting Period
Previous Reporting Period
6 months ended 30
June 2018
6 months ended 30
June 2017 (restated)
$'000$'000
Revenue from ordinary activities$NZ220,120$NZ175,80625.2%
Profit (loss) from ordinary activities after
tax attributable to shareholders
$NZ29,094$NZ24,29219.8%
Net profit (loss) attributable to
shareholders
$NZ29,094$NZ24,29219.8%
Dividend to shareholders
Amount per shareImputed amount per
share
Interim - 2018 Financial YearN/AN/A
Record Date
Dividend Payment Date
Net Tangible Assets
30 June 201830 June 2017
141,103,597140,114,217
$1.56$1.55
Audit
6 months to 30 June 2018
6 months to 30 June 2017
Scales Corporation Limited
NZX Appendix 1
Results for announcement to the market
N/A
N/A
The interim financial statements attached to this report have not been
audited.
Comments
Number of shares
Net Tangible Assets per share
Please refer to the attached report for commentary on the results.
Percentage change