2023 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



global nutrition

NZX & Media Release

23 August 2023

DIVERSIFIED STRATEGY DELIVERS RESILIENT RESULT FOR SCALES CORPORATION

Highlights – 6 months to 30 June 2023 (1H23)

• Underlying
1
NPAT
2
Attributable to Shareholders of $14.5 million (1H22: $25.6 million), down
43.5%
• Reported NPAT of $14.3 million (1H22: $35.1 million), down 59.3%
• Excellent performance by the Global Proteins division
• Commendable Horticulture operational result in light of the effects of Cyclone Gabrielle
• Solid result from Logistics despite volumes also being affected by the Cyclone

Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its 1H23 results.
An excellent performance by its Global Proteins division together with solid earnings from its Logistics
division offset lower results from its Horticulture division due to the effects of Cyclone Gabrielle.

Mike Petersen, Scales Corporation Chair, commented: “Scales delivered a resilient result in what was
an extremely difficult 6-month period for the Horticulture division. The Group benefited from
continued growth in the Global Proteins division together with solid results from Logistics.”

“Cyclone Gabrielle caused significant loss and disruption, and we are extremely proud of all our team
members who were able to resume operations in the week following the Cyclone. We have
endeavoured to support both our staff and the community in every way that we can following Cyclone
Gabrielle and will continue to do so as the clean-up continues throughout the region.”

“As ever, our results are not possible without the hard work and effort of each and every individual
within the Group, and we would like to extend our thanks to all our team members, especially to those
who were personally affected by the Cyclone.”


1
Underlying results exclude some New Zealand International Financial Report Standards (NZ IFRS) non-cash and other adjustments
2
Net Profit After Tax

Divisions

Global Proteins produced an extremely good result, with Underlying EBITDA
3
of $30.1 million (1H22:
$29.9 million). Managing Director Andy Borland noted: “Global Proteins continued to capitalise on
operational improvements made in prior periods. Results include our 50% share of NPAT for the
Fayman businesses, with earnings for these businesses currently trading ahead of 1H22.”

“We were also recently delighted to further expand the Global Proteins division by establishing a
presence in Europe through Esro Petfood JV. This joint venture aligns with our strategic objectives
for the division in a number of ways, and we are excited for the opportunities presented by this
partnership.”

The Horticulture division produced a commendable operating result given the effects of Cyclone
Gabrielle. Underlying EBITDA was $11.4 million (1H22: $24.5 million). Mr Apple’s total own-grown
export volumes are forecast to be 2.7 million TCEs
4
(2022: 3.3 million TCEs).

Mr Borland noted: “This has been a very extremely difficult growing and post-harvest period for
Horticulture, as well as the wider Hawke’s Bay produce industry, resulting in lower volumes.
However, higher in-market apple prices have helped to compensate for the lower volumes. In
addition, Mr Apple has experienced encouraging growth in its Premium varieties of Dazzle
TM
and
Posy
TM
, with demand outweighing supply in China.”

“Extensive orchard remediation has taken place with approximately 165 hectares of damaged
orchards recovered from silt, debris and slash. An outstanding effort by our Horticulture team has
resulted in around 50% of recovered blocks being re-seeded, with a target to complete the re-seeding
by the end of this month.”

“Mr Apple is continuing its business review and we expect performance to return to more normal
levels for FY24.”

Logistics continued to provide strategically important services and solutions despite its volumes also
being impacted by Cyclone Gabrielle. Underlying EBITDA was $2.7 million compared to $3.6 million
in 1H22. Mr Borland commented “We have seen strengthened demand for airfreight volumes due to
new customers and changes in product mix. In addition, the logistics sector has seen some
improvement in the reliability of the supply chain, with pricing easing and delivery times improving.
Further recovery is anticipated in forthcoming periods.”



3
Earnings Before Interest, Tax, Depreciation and Amortisation
4
Tray Carton Equivalents

Full Year 2023 Outlook

Directors re-confirm that Underlying Net Profit Attributable to Shareholders is expected to be within
the previously advised range of $14.0 million to $19.0 million.

In re-confirming this guidance Directors note:
• Broader economic trends may affect international markets
• Global Proteins continues to perform strongly, noting that 2H23 divisional results will be affected
by:
o Initial trading losses whilst the Australian and European petfood plants reach full production
(Australian plant commissioned August 2023, European plant expected to be operational
4Q23)
o The transition of business from the legacy Australian operations to the new joint venture
• Mr Apple has ~26% of crop to be sold (August 2022: ~40%)

Scales continues explore a number of opportunities to grow the Global Proteins division.

On behalf of his fellow Directors, Shareholders and leadership team, Mr Petersen extends his thanks
to all Scales’ team members for their resilience, hard work and expertise.

About Scales Corporation
Scales Corporation is a diversified agribusiness portfolio. It comprises three operating divisions:
Global Proteins, Horticulture and Logistics. The company’s diverse spread of activities gives Scales
broad exposure to the agribusiness sector. Scales Corporation was founded in 1897 as a shipping
business by George Herbert Scales. Today it has operations across New Zealand, Australia and the
USA. 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

---

SCALES CORPORATION LIMITED
Bringing Nutrition to the World
23 August 2023
Half Year Results
For the 6 Months Ended 30 June 2023

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Scales Corporation Limited –2023 Half Year Results
global nutrition
1.1H23 Overview
2.Cyclone Recovery and Sustainability
3.Group Results
4.Divisional Performance
5.Global Proteins
6.FY23 Outlook
Appendices:
I.NZ IFRS Reconciliation
II.Disclaimer
Cover photo: Newly commissioned Meateor Australia factory, Melbourne

1. 1H23 Overview

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Scales Corporation Limited – 2023 Half Year Results
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✓Global Proteins continues to capitalise on operational improvements made in prior periods
✓As indicated, delighted to further expand the Global Proteins division by establishing a presence in Europe through Esro Petfood JV
✓Pleased to note that Meateor Australia’s Melbourne petfood ingredients facility was commissioned this month
✓Higher in-market apple prices helped to compensate for lower volumes in Horticulture
* Underlying Results exclude some New Zealand International Financial Report Standards (NZ IFRS) non-cash and other adjustments.Management and the Board believe that Underlying Results more accurately demonstrate the change in operational performance of
the Group. Underlying NPAT and Underlying EBITDA are shown before the deduction of share of Non-Controlling Interests. Note that our definition of “Underlying” includes the effects of NZ IFRS 16 Leases in line with current market practice. All Underlying result
numbers, including comparatives, are now inclusive of NZ IFRS 16 effects. A reconciliation of Underlying to Reported Measures is provided in Appendix I.
✓Logistics continuing to provide strategically important services and solutions despite volumes being affected by Cyclone Gabrielle
✓Further strengthening of Board of Directors, continuing the Board refresh programme:
✓Formal appointment of Mike Petersen as Chair in April 2023
✓Appointment of Tony Batterton in August 2023
✓Resilient performance by the Group:
✓Excellent Global Proteins performance together with solid Logistics earnings
✓Commendable Horticulture operational result in light of the effects of Cyclone Gabrielle
✓Financial results for 1H23 are in line with expectations:
✓Underlying* NPAT Attributable to Shareholders of $14.5m (1H22: $25.6m), down 43.5%
✓Reported NPAT of $14.3m (1H22: $35.1m), down 59.3%
✓The impact of Cyclone Gabrielle and market conditions have resulted in NZ IFRS goodwill impairment and asset write-downs at Mr Apple
✓Directors re-confirm that Underlying Net Profit Attributable to Shareholders for FY23 is expected to be within the previously advised range of $14.0m to $19.0m

2. Cyclone Recovery
and Sustainability

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Scales Corporation Limited –2023 Half Year Results
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As previously noted, many people experienced significant loss or disruption as a result of
this event. The Hawke’s Bay community, people and culture are an integral part of Scales
and, as a result, Scales’ response included:
•Commitment of $250,000 in donations to the recovery, with donations to date being
distributed to the Evergreen Foundation and the Rural Support Trust
•Tailored assistance provided to staff members who were particularly affected
A significant amount of work has been invested in the clean-up and remediation of our
affected orchards and we thank our teams sincerely for this effort. We also appreciate
the cyclone recovery funding provided by the government to assist in this work. A
summary of the Cyclone’s effect on our orchards and our 2023 crop is as follows:
•3 orchards extensively damaged (Brookfields, Kinross and Pakowhai)
•1 orchard moderately affected (Pilos)
•No significant damage to the remaining orchards
•Indications are that the 2023 export crop will be down ~18% on last year
•Estimated total tree losses of ~5% (~50ha) of our total planted orchard area
•Due to expiring leases, less than 50% of this will need to be replaced
•Opportunity to further increase our focus on supply of Premium apples to the Asia and
Middle East markets and thus realign varieties and volumes to this strategy
Extensively damaged
Moderately damaged
No significant damage

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Scales Corporation Limited –2023 Half Year Results
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Primary focus on our People and Community
•Initiatives have included:
•Offering wellbeing workshops to all staff, facilitated by a third party providing specialist trauma advice and tools
•Providing financial contributions towards replacing lost belongings and offering the services of an insurance lawyer at no cost
•Supporting our RSE teams by providing counselling from Vitae (Employee Assistance Programme provider) immediately following the cyclone
•Immediately housing displaced RSE workers at our Hasting accommodation centres and providing them with new personal possessions
•Partnering with the District Health Board to undertake medical health checks for our RSE workers, particularly those involved in evacuations
•Providing laundry services to the community - our facility operates 6 days a week with the help of a pool of volunteers who deliver ~500 loads a month to affected families
•Assisting other growers with their harvest, lending machinery and helping with the start of their remediation works where possible
•Donations have been allocated to the Evergreen Foundation and the
Rural Support Trust, which provide a wide range of support services
for Cyclone-affected families and communities
Photo: Samoan and Tongan staff from Mr Apple and other employers. Mr Apple hosted a Tongan group from
Auckland that brought food and supplies, with this food being distributed to Tongan workers across Hastings

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Scales Corporation Limited –2023 Half Year Results
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Extensive orchard remediation undertaken by our teams
•An enormous effort by all teams at Mr Apple, managing both the recovery and the daily operations of
the season:
•The recovery effort has been bigger than initially envisaged
•Net earnings impact (taking into consideration government support and insurance receipts) consistent with initial expectations
•Harvest and post-harvest operations resumed in the week following the Cyclone
•Recovered ~165ha of damaged orchards from silt, debris and slash:
•Where possible, the disposal of wood, irrigation, wire and water tanks has been with a view to minimise waste to landfill
•Removed ~140,000m
3
(an estimated 17,500 truck loads) of silt from orchards
•Working with Council and contractors to dispose of this silt
•Re-seeded ~50% of recovered blocks, with a target to complete 100% by the end of August

3. Group Results

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Scales Corporation Limited –2023 Half Year Results
global nutrition
Income Statement
$m1H231H22% chg.1H231H22% chg.1H231H22% chg.
Underlying (excluding NZ IFRS 16)14.525.8-43.8%24.934.8-28.5%35.549.7-28.5%
NZ IFRS 16 Leases0.1(0.2)0.1(0.2)6.15.7
NZ IFRS 16 - renewal reassessment and terminated leases(0.1) - (0.1) - (0.2) -
Underlying (including NZ IFRS 16)14.525.6-43.5%24.834.7-28.3%41.555.4-25.1%
NZ IFRS & other adjustments:
Transaction costs(0.3)(0.0)(0.3)(0.0)(0.3)(0.0)
Impairment of non-current assets and goodwill(10.5) - (10.5) - (11.2) -
Cyclone costs and proceeds(0.7) - (0.7) - (1.0) -
Other adjustments0.90.50.90.51.51.1
Reported3.926.1-85.1%14.335.1-59.3%30.556.4-46.0%
Notes:
1. Prepared on an Underlying basis (including the effects of NZ IFRS 16 Leases). A reconciliation to NZ IFRS is provided in Appendix I
2. %'s are calculated based on non-rounded figures, figures may not sum due to rounding
3. Earnings are shown before the deduction of share of NPAT for Non-Controlling Interests of $10.4m (1H23) vs $9.m (1H22)
NPAT Attributable to
Shareholders
NPATEBITDA
Diversified strategy delivers resilient result notwithstanding the effects of Cyclone Gabrielle
•Reported NPAT Attributable to Shareholders of $3.9m (down 85.1% on 1H22)
•Underlying NPAT Attributable to Shareholders of $14.5m (down 43.5% on 1H22)
•Underlying NPAT of $24.8m (down 28.3% on 1H22)
•Underlying EBITDA of $41.5m (down 25.1% on 1H22)
•The impact of Cyclone Gabrielle and market conditions have resulted in NZ IFRS goodwill impairment and asset write-downs at Mr Apple (pre-tax
earnings impact of $11.2m)

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Scales Corporation Limited –2023 Half Year Results
global nutrition
Divisional Performance
% chg.
$m1H231H222H22FY221H23 v 1H22
Global Proteins30.129.930.260.20.5%
Horticulture11.424.5(7.6)17.0-53.3%
Logistics2.73.63.06.6-25.7%
Corporate(2.7)(2.7)(3.2)(5.8)1.7%
Underlying EBITDA41.555.422.577.9-25.1%
Underlying NPAT24.834.711.746.4-28.3%
Underlying NPAT
Attributable to Shareholders
14.525.61.927.6-43.5%
Notes:
2. %'s are calculated based on non-rounded figures, figures may not sum due to rounding
4. FY22 results have been adjusted for the transfer of Profruit from Global Proteins to Horticulture
1. Prepared on an Underlying basis (including the effects of NZ IFRS 16 Leases). A reconciliation to NZ IFRS is provided
in Appendix I
3. NZ IAS 41 Agriculture requires unsold agricultural produce to be measured at fair value less costs to sell. This means
that the expected profit on unsold fruit is recognised in our interim result, giving rise to seasonality in profitability
Global Proteins provides strong base for overall Group result
•Global Proteins – consolidation of operational improvements in 2022 generate strong first half earnings
•Horticulture – commendable result given the effects of the Cyclone on the growing and harvesting period
•Logistics – solid result notwithstanding lower volumes

12
Scales Corporation Limited –2023 Half Year Results
global nutrition
Strong financial position
•Net Debt of $29.8m as at 30 June 2023 vs Net Cash of $16.8m as at 30 June 2022:
◦Net Cash as at 31 December 2023 is forecast to be ~$10m
•Agricultural produce represents unsold fruit at 30 June:
◦As at 30 June 2023, 46% of crop sold (30 June 2022: 36%)
•Movement in other non-current assets due to increase in carrying value of investments
Net Cash / Net Debt Reconciliation ($m)

4. Divisional Performance

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Scales Corporation Limited –2023 Half Year Results
global nutrition
Excellent result, capitalising on operational improvements made in prior periods
•Underlying EBITDA of $30.1m (1H22: $29.9m), an increase of 0.5%. Results include our 50% share of Fayman NPAT
•Transition in earnings and volumes of Australian operations underway with commissioning of the Melbourne petfood ingredients factory
Volumes Sold (MT 000s)
Underlying EBITDA
1
($m)
1.Prior year comparatives have been updated to reflect the transfer of Profruit from Global Proteins to Horticulture

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Scales Corporation Limited –2023 Half Year Results
global nutrition
Commendable operating result given extremely difficult growing and post-harvest period
•Underlying EBITDA $11.4m (1H22: $24.5m):
◦Earnings principally impacted by lower volume. Mr Apple’s forecast total own-grown export volumes are
down 18% on prior year at 2.7m TCEs (2022: 3.3m TCEs). This is consistent with estimates for the NZ crop
1
◦Higher in-market apple prices helping to compensate for lower volumes, although global inflationary
pressures continue to affect consumer spending
•Mr Apple is continuing its review of the business and its increased focus on Premium apples to the
Asia & Middle East markets. As previously advised, there will be a realignment of varieties and
volumes as a result of this work. We continue to be very positive about returns from this strategy
and note that in-market pricing for our branded varieties this year supports this strategy.
Performance for FY24 is expected to return to more normal levels:
◦Whilst too early to be definitive, volumes are expected to increase
◦Ongoing improvements in the product mix will increase overall weighted average sales price
◦Returns are also supported by increases in market pricing, reductions in FX rates, reduced shipping times
and lower freight costs
◦Improved labour availability following recent disruptions
◦Automation projects delivering operating efficiencies
Horticulture - Underlying EBITDA
2
($m)
1.NZ Apples & Pears estimate for the 2023 NZ crop is 21% lower than initially forecast due to the damage caused by Cyclone Gabrielle
2.Prior year comparatives have been updated to reflect the transfer of Profruit from Global Proteins to Horticulture
Mr Apple Own Export Volumes (TCE 000s)

16
Scales Corporation Limited –2023 Half Year Results
global nutrition
Encouraging growth in Dazzle
TM
and Posy
TM
•Premium volumes increasingly comprised of Mr Apple PVRs; Dazzle
TM
and Posy
TM

(15.4% for 2023F)
•Asia & Middle East sales expected to comprise 75% of total fruit sold:
◦High demand for Dazzle
TM
in Asia & Middle East, with demand outweighing supply in China
◦Increased demand anticipated for the impending China Mid-Autumn Festival
◦Middle East and India demand for Royal Gala very strong due to a shortage of domestic fruit
•Export packout to date approximately 70% (2022: 75%)
Premium Volumes (TCE 000s)
Sales by Region (TCEs) FY23F*
* Actual sales by region will not finally 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.

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Scales Corporation Limited –2023 Half Year Results
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Supply chain reliability improving
•Underlying 1H23 EBITDA of $2.7m (1H22: $3.6m), a decrease of 25.7%, consistent with Cyclone-impacted produce volumes
•Strengthening demand for airfreight volumes due to new customers and changes in product mix
•Prices easing and delivery times improving, with further recovery anticipated
•Exploring options for an improved Auckland facility, reflecting growth in this region
•Team continuing to display skill and expertise to assist both internal and external customers with their freight needs
Logistics - Underlying EBITDA ($m)

5. Global Proteins

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Scales Corporation Limited –2023 Half Year Results
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Structure•50/50 joint venture between Scales and Esro Food
Group (Esro)
Investment•Scales is providing lending facilities for a combined
€15m
•Interest rates and repayment schedules are on
commercial terms
Funding•Initially funded through cash reserves
Sites•The first site will be in Hoeselt, Belgium
•We are converting an existing Esro edible
processing operation to petfood
•The development is underway and is expected to be
operational in 4Q23
Growth
opportunities
•The lending facility contemplates a second
development, which is yet to be approved

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Scales Corporation Limited –2023 Half Year Results
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•The initial site in Hoeselt is:
•Ideally located to the largest retail markets (shown in dark green)
•Strategically located close to key customers’ facilities
•The largest petfood manufacturers in Europe are already our key customers
in the US, providing an opportunity to leverage our networks globally
•Esro has a complementary existing petfood customer base, and these
customers will be our initial focus as the plant scales up
•Our partners have collection facilities inside abattoirs across all key supply
regions
•The site was previously used for edible processing – key benefits include:
•Development is faster and less expensive than greenfield
•Able to transfer experienced operational staff to the new JV
US$25b
retail value
2
nd
largest
global market
11.2%
forecast
growth
(2022 -2027)
Retail volume sold 2022
1.2 million tonnes
Source: Euromonitor data

21
Scales Corporation Limited –2023 Half Year Results
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Scales Corporation Limited –2023 Half Year Results
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Global
Proteins’
Strategy
04
03
02
01
Add value
through
innovation
Global supply
and logistics
excellence
GOALS
Species
diversification
Deepening
customer
relationships
•Focus will initially be on beef and salmon ingredients, with strong interest
already signalled by customers in both Europe and the USA
•Trials have already begun on sustainably sourced salmon through the facility
•Collaboration on plant design has introduced new opportunities to reduce waste
and maximise yield:
•If successful, there may be opportunities to roll out across our network
•Deepen relationships with our global customers operating in multiple markets
•Seeking to position ourself as a preferred, global, partner of choice
•Provide customers (in any market) with certainty and resilience of supply
•Entering a new market extending supply diversification
•Leveraging Esro’s networks to create a competitive advantage, through immediate
and secure access to raw material and an established logistics capability

23
Scales Corporation Limited –2023 Half Year Results
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Global
supply
Secondary processing
Customer partnerships
Primary
processing
Expansion into EU
In-plant collection systems
already established
Developing in-plant collection
system for a key supplier,
due 4Q23
Supports existing co-location with
other suppliers
Commissioned new plant (Australia) 3Q23
New blending capability (NZ) 2024
Trialling new plant design to maximise
yield and reduce waste
Increasing efficiencies through additional plant at
existing sites
New product development starting commercial
production 3Q23
Exploring new capacity options 2024
Advanced discussions on a long-term
supply agreement with a key customer
– to be finalised in 2024
Developing in-plant
collection system for key
suppliers in Australia
Discussions underway on alternate
European supply options for existing
US customers
North America
Australia & NZ
Pursuing opportunities for further
processing to allow our customers to
concentrate on their core operations

6. FY23 Outlook

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Scales Corporation Limited –2023 Half Year Results
global nutrition
•Directors re-confirm that Underlying Net Profit Attributable to Shareholders is expected to be within the previously advised range of
$14.0m to $19.0m
•In re-confirming this guidance Directors note:
◦Broader economic trends are likely to affect international markets
◦Global Proteins continues to perform strongly, noting that 2H23 divisional results will be affected by:
◦Initial trading losses for the Australian and European petfood plants until they reach full production (Australian plant commissioned August 2023, European plant expected to
be operational 4Q23)
◦The transition of business from the legacy Australian operations to the new joint venture
◦Mr Apple has ~26% of crop to be sold (August 2022: ~40%)
•Scales continues to explore a number of opportunities to grow the Global Proteins division
•Horticulture expected to return to more normal performance for FY24
Scales re-confirms its FY23 guidance

Appendices

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Scales Corporation Limited –2023 Half Year Results
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Scales Corporation Limited –2023 Half Year Results
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29
Scales Corporation Limited –2023 Half Year Results
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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 supplements our full year results announcement. 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.
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) certain non-cash NZ IFRS and other adjustments
•Underlying Net Profit is calculated by adding back or (or deducting) the after-tax effect of certain non-cash NZ IFRS and other 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.

---

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)



Results for announcement to the market
Name of issuer Scales Corporation Limited
Reporting Period 6 months to 30 June 2023
Previous Reporting Period 6 months to 30 June 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$309,368 0%
Total Revenue $309,368 0%
Net profit/(loss) from
continuing operations
$3,896 -85%
Total net profit/(loss) $3,896 -85%
Interim/Final Dividend
Amount per Quoted Equity
Security
Not Applicable
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.26 $2.40
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the attached reports for commentary and
unaudited condensed interim financial statements.
Authority for this announcement
Name of person

authorised
to make this announcement
Steve Kennelly
Contact person for this
announcement
Steve Kennelly
Contact phone number +64 3 3712263
Contact email address steve.kennelly@scalescorporation.co.nz
Date of release through MAP

23/08/2023

Unaudited financial statements accompany this announcement.

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Scales Corporation Limited
Condensed Consolidated Interim Financial Statements
for the six months ended 30 June 2023

Scales Corporation Limited
Contents
Directory3
Consolidated statement of comprehensive income4
Consolidated statement of changes in equity6
Consolidated statement of financial position7
Consolidated statement of cash flows8
Notes to the condensed consolidated interim financial statements10
2

Scales Corporation Limited
Directory
Board of DirectorsAuditor
Mike Petersen (Chair) (Appointed 28 April 2023)Deloitte Limited
Andrew Borland (Managing Director)Level 4
Tony Batterton (Appointed 22 August 2023)151 Cambridge Terrace
Miranda BurdonChristchurch 8013
Nick Harris
Alan IsaacBankers
Nadine TunleyANZ Bank New Zealand Limited
Qi XinLevel 3
Mark Hutton (Resigned 7 June 2023)ANZ Centre
Tim Goodacre (Resigned 28 April 2023)267 High Street
Christchurch 8011
Audit and Risk Management Committee
Alan Isaac (Chair)Coöperatieve Rabobank U.A., New Zealand Branch
Nick HarrisLevel 4
Tony Batterton32 Hood street
Hamilton 3204
Nominations and Remuneration Committee
Tony Batterton (Chair)Westpac New Zealand Limited
Mike PetersenLevel 4
The Terrace
Finance and Treasury Committee83 Cashel Street
Tony Batterton (Chair)Christchurch 8011
Andrew Borland
Solicitors
Health & Safety and Sustainability CommitteeAnthony Harper
Nadine Tunley (Chair)Level 9
Andrew BorlandAnthony Harper Tower
Miranda Burdon62 Worcester Boulevard
Christchurch 8013
Registered Office
52 Cashel StreetChapman Tripp
Christchurch 801323 Albert Street
New ZealandAuckland 1010
Postal AddressCorporate Advisor
PO Box 1590Maher & Associates
Christchurch 814017 Albert Street
New ZealandAuckland 1010
TelephoneShare Registry
+64 3 379 7720Computershare Investor Services Limited
Level 2
Website159 Hurstmere Road
www.scalescorporation.co.nzTakapuna
North Shore City
Auckland 0622
3

Scales Corporation Limited
Consolidated statement of comprehensive income for the six months ended 30 June 2023
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
Note$000's$000's$000's
Revenue5309,368309,308619,173
Cost of sales(242,972)(228,710)(492,547)
66,39680,598126,626
Administration and operating expenses(31,415)(25,496)(53,003)
Impairment of property, plant and equipment12(4,015)-(3,729)
Impairment of goodwill12(8,531)--
Share of profit of entities accounted for using the equity method2,7941,2934,624
Other income125,7982767
Other losses(554)-(6,069)
EBITDA30,47356,42268,516
Amortisation(246)(162)(379)
Depreciation(5,283)(5,019)(10,220)
Depreciation of right-of-use asset(4,484)(4,471)(9,087)
EBIT20,46046,77048,830
Finance revenue8794721,045
Finance cost(1,532)(502)(1,284)
Finance cost of lease liability(1,515)(1,447)(2,953)
PROFIT BEFORE INCOME TAX EXPENSE18,29245,29345,638
Income tax expense(4,017)(10,211)(7,407)
PROFIT FOR THE PERIOD14,27535,08238,231
Profit for the period is attributable to:
Equity holders of the Company3,89626,05919,412
Non-controlling interests10,3799,02318,819
14,27535,08238,231
EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:
Basic earnings per share (cents)82.718.513.7
Diluted earnings per share (cents)82.718.413.7
The notes to the financial statements on pages 10 to 18 form part of and should be read in conjunction with this statement.
4

Scales Corporation Limited
Consolidated statement of comprehensive income for the six months ended 30 June 2023 (continued)
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
$000's$000's$000's
PROFIT FOR THE PERIOD14,27535,08238,231
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Loss on cash flow hedges(8,987)(24,203)(10,704)
Income tax relating to cash flow hedges2,5166,7772,997
Share of other comprehensive income of joint ventures(690)(506)817
Income tax relating to share of other comprehensive income of joint ventures160142(229)
Foreign exchange gain on translating foreign operations1,0691,289330
(5,932)(16,501)(6,789)
Items that will not be reclassified to profit or loss:
Revaluation of land and buildings(13,416)-10,355
Income tax relating to buildings671-(331)
Revaluation of apple trees(1,818)-(3,873)
Income tax relating to apple trees509-1,084
Remeasurement of net defined benefit liability--372
Income tax relating to remeasurement of net defined benefit liability--(44)
(14,054)-7,563
OTHER COMPREHENSIVE (LOSS) INCOME FOR THE PERIOD(19,986)(16,501)774
TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE PERIOD(5,711)18,58139,005
Total comprehensive income for the period attributable to:
Equity holders of the Company(16,090)9,55820,037
Non-controlling interests10,3799,02318,968
(5,711)18,58139,005
The notes to the financial statements on pages 10 to 18 form part of and should be read in conjunction with this statement.
5

Scales Corporation Limited
Consolidated statement of changes in equity for the six months ended 30 June 2023
Share
capitalReserves
Retained
earnings
Attributable to
owners of the
Company
Non-
controlling
interestsTotal
Note$000's$000's$000's$000's$000's$000's
Unaudited
Six months ended 30 June 2023
At 1 January 2023101,97592,590189,875384,4407,374391,814
Profit for the year--3,8963,89610,37914,275
Other comprehensive loss for the period-(19,986)-(19,986)-(19,986)
Total comprehensive loss for the period-(19,986)3,896(16,090)10,379(5,711)
Recognition of share-based payments-248-248-248
Shares sold96--96-96
Shares fully vested1,374(499)(145)730-730
Dividends6--(18,451)(18,451)(6,407)(24,858)
Balance at 30 June 2023103,44572,353175,175350,97311,346362,319
Unaudited
Six months ended 30 June 2022
At 1 January 202299,58892,160192,644384,3925,922390,314
Profit for the year--26,05926,0599,02335,082
Other comprehensive loss for the period-(16,501)-(16,501)-(16,501)
Total comprehensive income for the period-(16,501)26,0599,5589,02318,581
Recognition of share-based payments-289-289-289
Shares sold116--116-116
Shares fully vested1,236(584)(128)524-524
Dividends6--(13,445)(13,445)(7,741)(21,186)
Balance at 30 June 2022100,94075,364205,130381,4347,204388,638
Audited
Year ended 31 December 2022
At 1 January 202299,58892,160192,644384,3925,922390,314
Profit for the year--19,41219,41218,81938,231
Other comprehensive income for the period-625-625149774
Total comprehensive income for the period-62519,41220,03718,96839,005
Recognition of share-based payments-609-609-609
Shares sold116--116-116
Shares fully vested2,271(804)(234)1,233-1,233
Dividends6--(21,947)(21,947)(17,516)(39,463)
Balance at 31 December 2022101,97592,590189,875384,4407,374391,814
The notes to the financial statements on pages 10 to 18 form part of and should be read in conjunction with this statement.
6

Scales Corporation Limited
Consolidated statement of financial position as at 30 June 2023
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
Note$000's$000's$000's
EQUITY
Share capital103,445100,940101,975
Reserves772,35375,36492,590
Retained earnings175,175205,130189,875
Equity attributable to Scales Corporation Limited shareholders350,973381,434384,440
Equity attributable to non-controlling interests11,3467,2047,374
TOTAL EQUITY362,319388,638391,814
CURRENT ASSETS
Cash and bank balances37,73336,26468,144
Term deposits-20,000-
Trade and other receivables97,315101,56842,102
Current tax assets528-5,334
Other financial assets92,3834,0884,938
Agricultural produce62,70985,36325,149
Inventories46,70338,72742,647
Prepayments5,4923,5324,783
TOTAL CURRENT ASSETS252,863289,542193,097
NON-CURRENT ASSETS
Property, plant and equipment203,090214,497221,204
Investments accounted for using the equity method56,89326,33854,743
Goodwill38,25146,09845,527
Other financial assets915,52612,37415,511
Computer software1,1846701,332
Right-of-use asset51,89374,93549,044
TOTAL NON-CURRENT ASSETS366,837374,912387,361
TOTAL ASSETS619,700664,454580,458
CURRENT LIABILITIES
Bank overdrafts--2,368
Trade and other payables74,38385,26537,226
Dividend declared613,49113,4458,503
Current tax liabilities2,9228,728-
Other financial liabilities920,30915,95815,445
Lease liability10,78810,09710,925
TOTAL CURRENT LIABILITIES121,893133,49374,467
NON-CURRENT LIABILITIES
Borrowings67,53539,44838,732
Deferred tax liabilities5,9119,38617,821
Defined benefit plan net liability178470170
Other financial liabilities914,90924,62813,388
Lease liability46,95568,39144,066
TOTAL NON-CURRENT LIABILITIES135,488142,323114,177
TOTAL LIABILITIES257,381275,816188,644
NET ASSETS362,319388,638391,814
The notes to the financial statements on pages 10 to 18 form part of and should be read in conjunction with this statement.
7

Scales Corporation Limited
Consolidated statement of cash flows for the six months ended 30 June 2023
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
Note$000's$000's$000's
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers260,660240,217606,293
Government grants received1,388--
Dividends and distributions received5005001,876
Interest received7687051,393
263,316241,422609,562
Cash was disbursed to:
Payments to suppliers and employees(279,741)(261,543)(545,477)
Interest paid(3,047)(1,949)(4,237)
Income tax paid(4,424)(8,496)(14,983)
(287,212)(271,988)(564,697)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES(23,896)(30,566)44,865
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from:
Proceeds from matured term deposits-65,00085,000
Advances repaid15641112
Sale of property, plant and equipment-3161
15665,04485,273
Cash was applied to:
Purchase of property, plant and equipment(4,795)(5,256)(14,592)
Purchase of computer software(98)(115)(994)
Purchase of non-controlling shareholding-(2,180)(2,180)
Acquisition of interest in joint ventures--(25,968)
Advances to joint ventures(2,745)-(2,818)
(7,638)(7,551)(46,552)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES(7,482)57,49338,721
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided from:
Proceeds from seasonal facility borrowings27,306--
Treasury stock sold96116116
27,402116116
Cash was applied to:
Dividends paid(13,463)(13,419)(26,863)
Dividends paid to non-controlling interests(6,407)(7,741)(17,516)
Repayments of lease liabilities(4,419)(4,205)(8,281)
(24,289)(25,365)(52,660)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES3,113(25,249)(52,544)
NET (DECREASE) INCREASE IN NET CASH(28,265)1,67831,042
Net foreign exchange difference2221,3841,532
Cash and cash equivalents at the beginning of the period65,77633,20233,202
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD37,73336,26465,776
Represented by:
Cash and bank balances37,73336,26468,144
Bank overdrafts--(2,368)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD37,73336,26465,776
The notes to the financial statements on pages 10 to 18 form part of and should be read in conjunction with this statement.
8

Scales Corporation Limited
Consolidated statement of cash flows for the six months ended 30 June 2023 (continued)
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
Note$000's$000's$000's
NET CASH GENERATED BY OPERATING ACTIVITIES
Reconciliation of profit for the year to net cash generated by operating activities:
Profit for the year14,27535,08238,231
Non-cash items:
Hedging instruments2,361157192
Loss on hedge instruments recycled to profit or loss-2,856-
Share-based payments248289609
Change in gross liability on put options554(24)4,215
(Gain) loss on lease modification(162)-1,854
Impairment (reversal of impairment) on revaluation4,015-3,729
Impairment of goodwill8,531--
Share of equity accounted results(2,794)(1,293)(4,624)
Amortisation246162379
Depreciation (including on right-of-use asset)9,7679,49019,307
Gain on disposal of property, plant and equipment(3,159)(3)(66)
Deferred tax(8,159)(6,801)(1,774)
Interest capitalised into loans(111)-(24)
JV purchase price receivable(1,089)--
Operating cash receipts not included in profit for the period:
Dividends received from equity accounted entities5005001,875
Changes in net assets and liabilities:
Trade and other receivables(50,994)(71,886)(12,812)
Agricultural produce(37,560)(60,802)(588)
Inventories(3,739)(8,579)(12,553)
Prepayments(700)539(712)
Trade and other payables36,32261,23113,429
Current tax assets and liabilities7,7528,516(5,802)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES(23,896)(30,566)44,865
For and on behalf of the Board of Directors who authorised the issue of these interim financial statements on 22 August 2023.
Mike Petersen, ChairAndy Borland, Managing Director
9

Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
1. GENERAL INFORMATION
Scales Corporation Limited (the "Company" or "Scales") 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 and the Financial Reporting Act 2013. The Group consists of Scales, its subsidiaries and joint ventures. The principal
activities of the Group are to grow apples, provide logistics services, export products, manufacture and trade food ingredients,
provide insurance services to companies within the Group and operate processing facilities.
2. BASIS OF PREPARATION
These unaudited condensed consolidated interim financial statements have been prepared in accordance with Generally
Accepted Accounting Practice (“GAAP”). They comply with the New Zealand Equivalent to International Accounting
Standard 34 (NZ IAS 34) Interim Financial Reporting and International Accounting Standard 34 (IAS 34) Interim
Financial Reporting, as applicable for-profit orientated entities. The significant accounting policies applied by the Group
during the period have been applied consistently to all periods presented in these condensed consolidated interim
financial statements. These financial statements should be read in conjunction with the financial statements and related
notes included in the Company’s Annual Report for the year ended 31 December 2022.
The information is presented in thousands of New Zealand dollars unless otherwise stated.
3. SEGMENT INFORMATION
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 and the United States of America.
Change in segments:
The Food Ingredients segment name has been changed to Global Proteins, which includes the new entities acquired during
the year ended 31 December 2022 and shifting Profruit (2006) Limited to the Horticulture segment. This impacts the share
of profit in entities accounted for using the equity method and the carrying value of investments accounted for using
the equity method. The prior year figures have been restated to reflect this change in segments.
The Group's operations comprise the following operating segments:
Global Proteins: processing and marketing of proteins such as petfood ingredients, edible meat and offal products.
Meateor Foods Limited, Meateor Foods Australia Pty Limited, Meateor Group Limited, Meateor US LLC,
Shelby JV LLC Group (Shelby Cold Storage LLC, Shelby Exports Inc, Shelby Foods LLC, Shelby JV LLC, Shelby Properties LLC,
Shelby Trucking LLC), Meateor GP Limited, Meateor Pet Foods Limited Partnership, Scales FI Group Holdings Pty Limited,
Meateor Australia Pty Limited, FI Group Holdings Pty Limited Group (FI Group Holdings Pty Limited,
Fayman International Group Pty Limited and Fayman New Zealand Limited) and ANZ Exports Pty Limited.
Horticulture: orchards, fruit packing, juice concentrate processing and marketing. Mr Apple New Zealand Limited,
New Zealand Apple Limited, Fern Ridge Produce Limited, Longview Group Holdings Limited and Profruit (2006) Limited.
Logistics: logistics services. Scales Logistics Limited and Scales Logistics Australia Pty Ltd.
Other: Scales Corporation Limited, Geo. H. Scales Limited, Scales Employees Limited, Scales Holdings Limited
and Selacs Insurance Limited.
10

Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
3. SEGMENT INFORMATION (CONTINUED)
Global
Proteins
HorticultureLogisticsOtherEliminationsTotal
$000's$000's$000's$000's$000's$000's
Unaudited
Six months ended 30 June 2023
Total segment revenue151,128122,55154,3631,802(20,476)309,368
Inter-segment revenue--(19,157)(1,319)20,476-
Revenue from external customers151,128122,55135,206483-309,368
Segment profit (loss) before income tax30,277(2,093)2,273(12,165)-18,292
Segment assets179,903405,80922,02611,962-619,700
Segment liabilities30,081139,72111,94575,634-257,381
Unaudited
Six months ended 30 June 2022
Total segment revenue151,692117,33967,8851,332(28,940)309,308
Inter-segment revenue--(27,409)(1,531)28,940-
Revenue from external customers151,692117,33940,476(199)-309,308
Segment profit (loss) before income tax29,52515,7093,490(3,431)-45,293
Segment assets124,391467,82428,70843,531-664,454
Segment liabilities34,653197,58317,48626,094-275,816
Audited
Year ended 31 December 2022
Total segment revenue319,923228,854123,3382,893(55,835)619,173
Inter-segment revenue--(52,894)(2,941)55,835-
Revenue from external customers319,923228,85470,444(48)-619,173
Segment profit (loss) before income tax58,099(10,413)5,544(7,592)-45,638
Segment assets169,018345,09629,03237,312-580,458
Segment liabilities46,398107,85015,96718,429-188,644
4. SEASONALITY OF BUSINESS
The Horticulture business segment is subject to seasonal fluctuation. The apple crop has been picked, with packing and the export
programme well under way as at 30 June. At 30 June the harvested crop held in inventory is valued at fair value less estimated
costs to sell. At 31 December the unharvested crop is valued at fair value less estimated costs to sell. Both the harvested crop at
30 June and the unharvested crop at 31 December are included in agricultural produce.
Higher volumes are processed through the petfood ingredients plants in the first half of the year due to the seasonal nature of the
meat industry. There is greater utilisation of logistics services over the first half of the year as seasonal products are shipped to
export markets.
11

Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
5. REVENUE
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
$000's$000's$000's
By nature:
Revenue from the sale of goods264,884256,586525,298
Revenue from the rendering of services46,17250,87488,990
Fees and commission(5)(5)13
Net foreign exchange (loss) gain(4,708)(1,565)(544)
Rental revenue3,0253,4185,416
309,368309,308619,173
By segment and type:
Horticulture - sale of agricultural produce112,726107,652214,084
Horticulture - agricultural produce related services6,8056,2749,363
Horticulture - other3,0203,4135,407
Global Proteins - sale of petfood ingredients146,923147,343310,517
Global Proteins - other4,2054,3499,406
Logistics services35,20640,47670,444
Other483(199)(48)
309,368309,308619,173
6. DIVIDENDS
During the six months ended 30 June 2023 the Company paid interim dividends totalling 9.5 cents per share and declared a
final dividend of 9.5 cents per share in respect of the year ended 31 December 2022. This final dividend was paid on 7 July 2023.
During the six months ended 30 June 2022 the Company paid an interim dividend of 9.5 cents per share and declared a
final dividend of 9.5 cents per share in respect of the year ended 31 December 2021. This final dividend was paid on 8 July 2022.
12

Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
7. RESERVES
Revaluation
Cash flow
hedge
Share of joint
ventures
Equity-
settled
employee
benefits
Foreign
exchange
translation
Pension plan
reserveTotal reserves
$000's$000's$000's$000's$000's$000's$000's
Unaudited
Six months ended 30 June 2023
At 1 January 202393,545(2,686)5181,082162(31)92,590
Other comprehensive (loss) income(14,054)(6,471)(530)-1,069-(19,986)
Recognition of share-based payments---248--248
Shares fully vested---(499)--(499)
Balance at 30 June 202379,491(9,157)(12)8311,231(31)72,353
Unaudited
Six months ended 30 June 2022
At 1 January 202286,3105,021(70)1,277(168)(210)92,160
Other comprehensive income (loss)-(17,426)(364)-1,289-(16,501)
Recognition of share-based payments---289--289
Shares fully vested---(584)--(584)
Balance at 30 June 202286,310(12,405)(434)9821,121(210)75,364
Audited
Year ended 31 December 2022
At 1 January 202286,3105,021(70)1,277(168)(210)92,160
Other comprehensive income (loss)7,235(7,707)588-330179625
Recognition of share-based payments---609--609
Shares fully vested---(804)--(804)
Balance at 31 December 202293,545(2,686)5181,082162(31)92,590
8. EARNINGS PER SHARE
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
Profit attributable to equity holders of the Company ($000's):3,89626,05919,412
Weighted average number of shares:
Ordinary shares141,729,183140,900,047141,413,787
Effect of dilutive ordinary shares (non-vested Senior Executive Share Scheme)-351,554302,534
Weighted average number of ordinary shares for diluted earnings per share141,729,183141,251,601141,716,321
Earnings per share (cents):
Basic2.718.513.7
Diluted2.718.413.7
13

Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
9. FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
$000's$000's$000's
Current financial assets at fair value:
Foreign currency derivative instruments1,6443,9124,435
Interest rate swap contracts and forward rate agreements739176503
2,3834,0884,938
Non-current financial assets:
At fair value:
Foreign currency derivative instruments6,58310,2599,853
Interest rate swap contracts and forward rate agreements7939411,004
Shares in unlisted companies184184184
At amortised cost:
Employee loans2,2029901,628
Related party loans5,764-2,842
15,52612,37415,511
Current financial liabilities at fair value:
Foreign currency derivative instruments9,49711,0697,209
Put option10,8124,8898,236
20,30915,95815,445
Non-current financial liabilities at fair value:
Foreign currency derivative instruments14,90923,84011,802
Put option-7881,586
14,90924,62813,388
Foreign currency derivative instruments
The Group is exposed to currency risk as a result of normal trading transactions denominated in foreign currencies. The Group
uses foreign currency derivative financial instruments to manage its currency risk. 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.
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 2023 to 2028 financial years at which stage the amount deferred in equity will be released into
profit or loss.
14

Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
9. FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES (CONTINUED)
Interest rate swap contracts and forward rate agreements
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 uses interest rate swaps and forward rate agreements to manage interest rate risk.
Under interest rate swap contracts and forward rate agreements, the Group agrees to exchange the difference between fixed
and floating interest rate amounts calculated on agreed notional principal amounts. Such contracts, some of which may
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. The Group’s
interest rate swap contracts and forward rate agreements are classified as Level 2 in the fair value hierarchy.
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.
10. RELATED PARTY DISCLOSURES
(a) 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 into in the ordinary course of business
on a third party arm’s-length basis.
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
$000's$000's$000's
(b) 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 benefits and directors' fees2,4031,7643,445
Share-based payments133386574
Post-employment benefits7557113
2,6112,2074,132
(c) Transactions with equity accounted entities
Revenue from sale of goods2,0521,2352,428
Revenue from services3,9732,8976,179
Dividends and distributions received5005001,875
Interest received111-24
Materials and services received(479)(311)(998)
Trade receivables at balance date267584924
Purchase of property, plant and equipment--15
Related party loans5,764-2,842
15

Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
11. CAPITAL COMMITMENTS
UnauditedAudited
Six months endedYear ended
30 June
2023
30 June
2022
31 December
2022
$000's$000's$000's
Commitments entered into in respect of apple trees1,8303,1802,530
Commitments entered into in respect of property, plant and equipment363441371
2,1933,6212,901
12. CYCLONE GABRIELLE IMPACT
In February 2023, Cyclone Gabrielle struck the Hawke's Bay region. This impacted the Group's operations, in particular our
orchards. The specific impact of the cyclone on the Group is disclosed below.
(a) Land, buildings and apple trees carried at fair value
Land and buildings shown at valuation were valued at fair value as at 31 December 2022 by independent registered
valuers Added Valuation Limited and Logan Stone Limited. The valuations were arrived at by reference to market evidence
of transaction prices for similar properties.
In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available.
Where Level 1 inputs are not available, the Group engages third party qualified valuers to perform valuations.
Due largely to the impacts of Cyclone Gabrielle on Hawke’s Bay, no additional market-observable sales data was available
subsequent to the valuations carried out as at 31 December 2022. The Group obtained advice from independent
valuers which included market sentiment, changes in rental rates and income capitalisation rates.
As at 30 June 2023, an estimated range of reduced orchard values of 10% to 15% was determined based on market
sentiment, changes in orchard land rental rates and increased interest rates. The decrease in valuation of 12.5%, reflecting
the midpoint of the indicated range, was adopted and applied to each orchard’s 31 December 2022 valuation, after
considering any specific impairment of assets.
An estimated range of changes in coolstore and packhouse values of +1% to -10% was determined based on market
sentiment, current rental rates and increased interest rates. The weighted average decrease in valuation of 4.4%, reflecting
the midpoint of the indicated range, was adopted and applied to each coolstore and packhouse’s 31 December 2022 valuation.
(b) Leases
Some leases of orchards damaged by Cyclone Gabrielle were not renewed, at their renewal dates, prior to 30 June 2023.
The impact of not renewing these leases was the derecognition of the lease liability and right-of-use asset relating to these
leases. The difference has been recorded as a gain on lease modification in the statement of comprehensive income.
(c) Plant and equipment impairment
Orchard plant, equipment and motor vehicles damaged or lost due to the flooding caused by Cyclone Gabrielle were fully
impaired. The impairment has been recorded as an impairment of property plant and equipment in the statement of
comprehensive income.
Any insurance proceeds relating to these assets are recognised when it is virtually certain that the related insurance claim
is accepted and the value of the claim can be reliably measured. Accordingly, the Group recognised a $3.2m insurance
receivable as at 30 June 2023. Insurance proceeds are included in other income in the statement of financial performance.
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Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
12. CYCLONE GABRIELLE IMPACT (CONTINUED)
(d) Goodwill
The directors have determined that there is an impairment of the Mr Apple CGU ("cash generating unit") as at 30 June 2023,
as the carrying value exceeded the recoverable amount.
The directors estimated the recoverable amount of the Mr Apple CGU based on a value in use calculation which uses future
cash flows covering a 5-year period.
Mr Apple CGU$000's
Recoverable amount211,978
Carrying value220,509
Impairment(8,531)
Key assumptions:
Post-tax discount rate – 9.02%
Terminal growth rate beyond year 5 – 2.10%
The post-tax discount rate was determined based on the weighted average cost of capital which utilises past experience and
external sources.
The sensitivity of the recoverable amount of the Mr Apple CGU to reasonably possible changes is set out below:
$000's$000's
+0.5%-0.5%
Post-tax discount rate(14,784)17,007
Terminal growth rate12,214(10,568)
+5%-5%
Forecast earnings16,781(16,781)
As a result of the impairment testing, the impairment was wholly allocated to the Mr Apple CGU goodwill.
(e) Government grants
The Group recognised a total of $1.4m government grant revenue related to cyclone Gabrielle relief programs, included in
other income.
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Scales Corporation Limited
Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2023
13. EVENTS OCCURRING AFTER BALANCE DATE
Receivable in respect of Fayman JV acquisition
The Group has accrued a net $1.1m receivable in respect of the purchase price for the shareholdings in FI Group Holding
Pty Limited and ANZ Exports Pty Limited that the Group acquired in October 2022. This represents a purchase
price adjustment as defined in the sale and purchase agreement that was conditional on actual financial performance
of the acquired companies, including collection of overdue trade debtors outstanding as of the acquisition date.
Investment in European petfood ingredients
The Group subscribed for a 50% shareholding in a newly established petfood ingredient processing operation, Esro
Petfood BV on 10 August 2023. This joint venture will be based in Europe alongside Esro Food Group ("Esro"), who will hold
the other 50% shareholding. Esro is a key player in Europe’s animal by-product processing, with factories in The Netherlands,
Belgium and Spain.
The Group is providing lending facilities to the joint venture company for a combined€15 million to fund capital
expenditure for two petfood ingredient processing plants in Europe.
Other
There were no other events occurring subsequent to balance date which require adjustment to, or disclosure, in the
financial statements.
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