2023 Annual Results Announcement

Full Year Results21 February 2024SCLIndustrials

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 12 months to 31 December 2023
Previous Reporting Period 12 months to 31 December 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$565,356 -9%
Total Revenue $565,356 -9%
Net profit/(loss) from
continuing operations
$5,235 -73%
Total net profit/(loss) $5,235 -73%
Interim/Final Dividend
Amount per Quoted Equity
Security
Not Applicable. Any final dividend in respect of FY23 is
expected to be declared in May
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
$2.34 $2.37
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 audited
consolidated 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

22/02/2024

Audited financial statements accompany this announcement.

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SCALES CORPORATION LIMITED
Bringing Nutrition to the World
22 February 2024
Annual Results Presentation
For the Year Ended 31 December 2023

2
Scales Corporation Limited –2023 Full Year Results
1.FY23 Results
I.Summary
II.Group Performance
III.Divisional Performance
IV.Capital Management
V.Sustainability
2.FY24 Outlook
Appendices:
A.NZ IFRS Reconciliation
B.Disclaimer

1. FY23 Results

I. Summary

5
Scales Corporation Limited –2023 Full Year Results
✓Underlying result at the top end of FY23 Guidance range:
✓Underlying* NPAT Attributable to Shareholders of $19.0m (2022: $27.6m), down 31%
✓Reported NPAT Attributable to Shareholders of $5.2 m (2022: $19.4m), down 73%
✓Strong performance by Global Proteins, reflecting the ability of the division to execute its strategy and adjust to market conditions
✓Admirable Horticulture result following the effects of Cyclone Gabrielle:
✓Higher in-market prices helped to offset lower volumes
✓Effects of Cyclone Gabrielle expected to be largely limited to the 2023 season
✓Outstanding effort, skill and resilience from the Horticulture team to undertake the remediation work required
* 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 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 inclusive of NZ IFRS 16 effects. A reconciliation of Underlying to Reported Measures is provided in Appendix A
✓Solid result from Logistics despite the impact of lower volumes and geopolitical tensions in key trade routes
✓Commendable Group performance in a disrupted year, underpinned by strong Global Proteins earnings
✓Performance benefited from diversified strategy

6
Scales Corporation Limited –2023 Full Year Results
137,477 MT
Petfood ingredients
sold
1
(2022: 158,595)
3,920,000
TCEs of apples
exported
4

(2022: 4,580,000)
$12.0m
Net cash
(2022: $27.0m)
26,010
TEU
2
equivalents
managed
(2022: 27,580)
19.0 cents
per share paid
(2022: 19.0 cps)
2,733,000
TCEs of own-grown
apples exported
(2022: 3,324,000)
$565.4m
Revenue
(2022: $619.2m)
10.8%
ROCE
3
(2022: 13.5%)
1.Includes 100% of petfood ingredient volumes from relevant businesses; i.e. total petfood ingredient volumes controlled directly and indirectly by Global Proteins, but excludes volumes sold by Meateor Australia and Esro Petfood.
2.TEU is a Twenty-foot Equivalent Unit is a unit of cargo capacity to describe container volumes.
3.Return on Capital Employed, calculated as EBIT divided by Capital Employed, where Capital Employed is calculated as non-current assets plus working capital (excluding cash, overdrafts and borrowings, NZ IFRS 16 right-of-use asset and lease liability, dividends
declared, derivative assets / liabilities and employee loans).
4.TCE is a Tray Carton Equivalent, a measure of apple and pear weight, defined as 18.6kg packed weight which equates to 18.0kg sale weight. Includes own grown and external grower volumes including those volumes exported by Fern Ridge Fresh.

II. Group Performance

8
Scales Corporation Limited –2023 Full Year Results
Positive results in a testing year
•Reported NPAT Attributable to Shareholders of $5.2m, down 73% (2022: $19.4m):
•The impact of Cyclone Gabrielle and market conditions have resulted in NZ IFRS goodwill impairment and asset write-downs at Mr Apple (post-tax earnings impact of $10.9m)
•Underlying NPAT Attributable to Shareholders of $19.0m, down 31% (2022: $27.6m)
•Underlying NPAT of $38.4m, down 17% (2022: $46.4m)
•Underlying EBITDA of $67.5m, down 13% (2022: $77.9m)
•Revenue of $565.4m, down 9% (2022: $619.2m)

9
Scales Corporation Limited –2023 Full Year Results
Underlying EBITDA
Underlying NPAT
Attributable to Shareholders
Revenue

10
Scales Corporation Limited –2023 Full Year Results
Continuing to benefit from diversified strategy
•Expansion of Global Proteins division providing strong foundation for future growth:
•Excellent progress made with Meateor Australia and Esro Petfood, with both businesses operational by 4Q23
•Resilient Horticulture result following adverse effects of Cyclone Gabrielle:
•In part due to strong 2H23 sales and higher in-market prices, which helped offset lower volumes
•Effects of Cyclone Gabrielle expected to be largely limited to the 2023 season
•Solid result from Logistics despite lower volumes and geopolitical tensions

11
Scales Corporation Limited –2023 Full Year Results
Global ProteinsLogisticsHorticulture

12
Scales Corporation Limited –2023 Full Year Results
Scales continues to operate with a strong financial position
•Movement in working capital primarily reflects realignment of trade and other receivables,
trade and other payables and inventories in line with historical levels
•Movement in Net Cash primarily relates to:
◦Capital expenditure (including Cyclone-related capex)
◦Dividend payments (including payments to minority shareholders)
◦Investment in Fayman, Meateor Australia and Esro Petfood
Net Cash Reconciliation ($m)

III. Divisional Performance

14
Scales Corporation Limited –2023 Full Year Results
Global Proteins - Volumes Sold (MT 000s)
•FY23 profit margins in line with FY22:
◦2023 includes a full year of contribution from Fayman
•Movement in revenue, Underlying EBITDA and volumes reflects:
◦Petfood ingredient customers returning to lower, pre-COVID inventory levels, resulting in
lower volumes sold
◦Transition of Australian business and start-up phase of Esro Petfood
◦Pleasing performance from Fayman, complementing our petfood ingredients operations
Solid results during post-COVID inventory rebalancing
* 2022 edible protein volumes are for a 2 month period
** 2023 petfood ingredient volumes exclude those sold at Meateor Australia and Esro Petfood, both operational by 4Q23
Global Proteins - Underlying EBITDA ($m)

15
Scales Corporation Limited –2023 Full Year Results
Creating growth in unit revenue and EBITDA
•Key performance drivers:
◦Increased % processed vs traded product, which drives greater margin
◦Change in species mix to higher margin products (e.g. beef)
◦Introduction of blending and new product development at key US facilities,
leading to improved product mix, increased yields and higher margins
◦Leveraging our supply chain excellence and reliability during COVID to drive
overall division performance
◦Ability to manage supply / demand dynamics maintaining margin despite
lower volumes in 2023
Petfood Ingredients Revenue and Underlying EBITDA / KG

16
Scales Corporation Limited –2023 Full Year Results
Delivering on our strategy
•Commissioned the Meateor Australia plant, with first sales
made in Q423
•Established Esro Petfood joint venture and commissioned the
first processing line in Belgium in Q423:
◦The plant has already commenced salmon and beef processing,
sourced from the Netherlands
◦Other locations and site optimisation will be investigated
throughout FY24
•It is believed these investments will be extremely important
strategic investments for the long-term
•Introduced new blending capability:
◦Blending project in Hastings completed
◦New blending line in the Dodge City toll processing plant
commissioned
Meateor Australia
Esro Petfood
Salmon processing at Esro Petfood

17
Scales Corporation Limited –2023 Full Year Results
Commendable results given significant physical, financial and volumetric impacts of Cyclone Gabrielle
•Decline in revenue and Underlying EBITDA primarily due to lower volumes:
◦Margins remain in line with 2022
•18% decrease in Mr Apple total own-grown export volumes:
◦Continued increased focus on Premium varieties
◦Strong performance from Dazzle
TM
and Posy
TM
within the Asia and Middle East markets
Horticulture - Underlying EBITDA ($m)
Mr Apple Own Export Volumes (TCE 000s)Movement in Premium Volumes (TCE 000s)

18
Scales Corporation Limited –2023 Full Year Results
Evidence of the “fruits” of our team’s hard work
•Impact of damage from Cyclone Gabrielle expected to be largely limited to the 2023 season:
◦2024 volumes and performance expected to revert to more normal levels, with volumes expected to increase to around 3.4 million TCEs
◦Total planted orchard area currently around 1,100 hectares, approximately only 5% below the total area at the same time last year.
Before
Before
After
After

19
Scales Corporation Limited –2023 Full Year Results
Higher in-market apple prices helped compensate for lower volumes
•Strong finish to the season due, in part, to limited supply in key markets, which contributed to
higher in-market pricing
•Supported by marketing activities undertaken across the Asia & Middle East region included:
◦Customers supported with instore sampling activity and branded displays
◦Growth of digital and social media presence in key markets, using data to drive efficiency
◦Season launch events undertaken to complement brand advertising
•Mr Apple continues to focus on supply of Premium varieties such as Dazzle
TM
and Posy
TM
to the
Asia and Middle East markets, supported by increasing in-market prices:
◦Development of these varieties was accelerated during 2023 and we anticipate higher sales volumes as
plantings mature
•Steady volume of juice concentrate sold at Profruit
* External grower volumes comprise external grower volumes handled by Mr Apple and
Fern Ridge Fresh

20
Scales Corporation Limited –2023 Full Year Results
Steady results delivered by the Logistics division
•Decrease in revenue to $92.6m (2022: $123.3m)
•Decrease in Underlying EBITDA to $4.3m (2022: $6.6m)
•Ocean freight volumes impacted by Cyclone Gabrielle and geopolitical tensions
in key trade routes
•Airfreight volumes in part affected by a slow start to the stone fruit season
Logistics - Underlying EBITDA ($m)

IV. Capital Management

22
Scales Corporation Limited –2023 Full Year Results
Continuing to invest in line with divisional strategies
•ROCE affected by lower FY23 earnings
•A significant proportion of capital expenditure for FY23 was Cyclone-related,
principally in respect of the re-planting and grafting of trees
•Other material capital expenditure related to capital work-in-progress at Shelby, more
details of which will be provided once complete

V. Sustainability

24
Scales Corporation Limited –2023 Full Year Results
Governance
•Prepared our Climate Related Disclosure report, which will be released in April 2024
People
•Positive progress at Mr Apple on its people strategy, including annual leadership programmes and new digital systems
•Cyclone recovery support included donations of $250,000, tailored assistance to staff particularly affected and wellbeing workshops for all staff
•Mr Apple also supported RSE workers through counselling and replacing lost personal possessions, whilst partnering with the Hastings DHB to
undertake medical health checks
Environment
•Progress on our water and decarbonisation initiatives, including:
•Refrigeration upgrades at Meateor NZ
•New electric forklifts, boiler heat exchanger and CO
2
refrigeration at Meateor Australia
•Other water efficiency initiatives included:
•Upgrade of the plant boiler at Shelby’s Amarillo plant
•Installation of a water filtration / reticulation system at Mr Apple, which is reducing water usage at the Whakatu packhouse
•The regenerative farming trial at Kinross will recommence, following damage incurred by Cyclone Gabrielle

2. FY24 Outlook

26
Scales Corporation Limited –2023 Full Year Results
Group update
•Pleased to re-confirm Guidance as previously advised of Underlying Net Profit after Tax Attributable to Shareholders of between $30.0 million to
$35.0 million, implying:
◦An Underlying Net Profit after Tax range of between $47.0 million and $55.0 million
◦An Underlying EBITDA range of between $81.0 million and $91.0 million
•This takes into account the following:
◦A continued strong performance by Global Proteins, despite post-COVID rebalancing of inventories amongst petfood manufacturers
◦The start-up nature of Meateor Australia and Esro Petfood. We are working with our partners to realise the exciting opportunities from our investments in these
key markets
◦An anticipated return to more normal trading by Horticulture
•FY23 dividend payments likely to be made in 2 instalments:
◦The first instalment, of 4.25 cps, was paid on 18 January 2024
◦A second instalment will be reviewed and advised on in early May 2024
◦Total dividends expected to be between 50% and 75% of Underlying Net Profit After Tax Attributable to Shareholders

Appendices

28
Scales Corporation Limited –2023 Full Year Results

29
Scales Corporation Limited –2023 Full Year Results

30
Scales Corporation Limited –2023 Full Year Results
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
A full reconciliation of Underlying to reported measures is provided in our Annual Report.
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.

---

Scales Corporation Limited
consolidated financial statements
for the year ended 31 December 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 consolidated financial statements11
Independent auditor's report57
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 8013Level 34
New ZealandPwC Tower
15 Customs Street West
Postal AddressAuckland 1010
PO Box 1590
Christchurch 8140Corporate Advisor
New ZealandMaher & Associates
17 Albert Street
TelephoneAuckland 1010
+64 3 379 7720
Share Registry
WebsiteComputershare Investor Services Limited
www.scalescorporation.co.nzLevel 2
159 Hurstmere Road
Takapuna
Auckland 0622
3

Scales Corporation Limited
Consolidated statement of comprehensive income for the year ended 31 December 2023
20232022
Note$000's$000's
RevenueB1565,356619,173
Cost of salesB2(444,662)(492,547)
120,694126,626
Administration and operating expensesB2(64,123)(53,003)
Impairment of property, plant and equipmentC1(4,729)(3,729)
Impairment of goodwillC4(8,531)-
Share of profit of entities accounted for using the equity methodC38,1314,624
Other incomeB38,56967
Other lossesB3(6,336)(6,069)
EBITDA53,67568,516
AmortisationC7(497)(379)
DepreciationC1(10,245)(10,220)
Depreciation of right-of-use assetG2(8,711)(9,087)
EBIT34,22248,830
Finance revenue2,0561,045
Finance costB4(3,331)(1,284)
Finance cost of lease liabilityG2(3,144)(2,953)
PROFIT BEFORE INCOME TAX EXPENSE29,80345,638
Income tax expenseB5
(5,129) (7,407)
PROFIT FOR THE YEAR24,67438,231
Profit for the year is attributable to:
Equity holders of the Company5,23519,412
Non-controlling interests19,43918,819
24,67438,231
EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:
Basic earnings per share (cents)D53.713.7
Diluted earnings per share (cents)D53.713.7
The notes to the financial statements on pages 11 to 56 form part of and should be read in conjunction with this statement.
4

Scales Corporation Limited
Consolidated statement of comprehensive income for the year ended 31 December 2023 (continued)
20232022
Note$000's$000's
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Gain (loss) on cash flow hedges11,231
(10,704)
Income tax relating to cash flow hedges(3,145)
2,997
Share of other comprehensive income of joint venturesC31,554
817
Income tax relating to share of other comprehensive income of joint ventures22
(229)
Foreign exchange gain on translating foreign operations307
330
9,969(6,789)
Items that will not be reclassified to profit or loss:
Revaluation of land and buildings(3,122)
10,355
Income tax relating to buildings(740)
(331)
Revaluation of apple trees936
(3,873)
Income tax relating to apple trees(262)
1,084
Remeasurement of net defined benefit liability238
372
Income tax relating to remeasurement of net defined benefit liability(36)
(44)
(2,986)7,563
OTHER COMPREHENSIVE INCOME FOR THE YEAR6,983774
TOTAL COMPREHENSIVE INCOME FOR THE YEAR31,65739,005
Total comprehensive income for the year attributable to:
Equity holders of the Company12,12320,037
Non-controlling interests19,53418,968
31,65739,005
The notes to the financial statements on pages 11 to 56 form part of and should be read in conjunction with this statement.
5

Scales Corporation Limited
Consolidated statement of changes in equity for the year ended 31 December 2023
Share
capital
ReservesRetained
earnings
Attributable
to owners
of the
Company
Non-
controlling
interests
Total
Note$000's$000's$000's$000's$000's$000's
Balance at 1 January 2022
99,588 92,160192,644 384,3925,922
390,314
Profit for the year--19,41219,41218,81938,231
Other comprehensive income for the year-625-625149774
Total comprehensive income for the year-62519,41220,03718,96839,005
Recognition of share-based paymentsD2-
609
-
609-
609
Shares soldD1
116--116-
116
Shares fully vestedD1, D2
2,271(804)(234)1,233-
1,233
DividendsD3
--(21,947) (21,947) (17,516)
(39,463)
Balance at 31 December 2022101,97592,590189,875384,4407,374391,814
Profit for the year--5,2355,23519,43924,674
Other comprehensive income for the year-6,888-6,888956,983
Total comprehensive income for the year-6,8885,23512,12319,53431,657
Recognition of share-based paymentsD2
-456-456-
456
Shares soldD1
96--96-
96
Shares fully vestedD1, D2
1,374(499)(145)730-
730
DividendsD3
--(24,493) (24,493) (15,312)
(39,805)
Balance at 31 December 2023103,44599,435170,472373,35211,596384,948
The notes to the financial statements on pages 11 to 56 form part of and should be read in conjunction with this statement.
6

Scales Corporation Limited
Consolidated statement of financial position as at 31 December 2023
20232022
Note$000's$000's
EQUITY
Share capitalD1
103,445101,975
ReservesD2
99,43592,590
Retained earnings
170,472189,875
Equity attributable to Scales Corporation Limited shareholders373,352384,440
Equity attributable to non-controlling interests11,5967,374
TOTAL EQUITY384,948391,814
CURRENT ASSETS
Cash and bank balances
77,63868,144
Trade and other receivablesE1
34,02942,102
Current tax assets
3,9385,334
Other financial assetsE2
5,9894,938
Unharvested agricultural produceC2
24,22225,149
InventoriesC5
29,54342,647
Prepayments
4,3374,783
TOTAL CURRENT ASSETS179,696193,097
NON-CURRENT ASSETS
Property, plant and equipmentC1
221,219221,204
Investments accounted for using the equity methodC3
63,90254,743
GoodwillC4
36,97245,527
Defined benefit plan net asset
60-
Other financial assetsE229,07715,511
SoftwareC7
1,1601,332
Right-of-use assetG2
49,57249,044
TOTAL NON-CURRENT ASSETS401,962387,361
TOTAL ASSETS581,658580,458
CURRENT LIABILITIES
Bank overdrafts
-2,368
Trade and other payablesE3
26,44637,226
Dividend declaredD3
6,0418,503
Current tax liabilities
616-
Other financial liabilitiesE518,52415,445
Lease liabilityG2
10,96310,925
TOTAL CURRENT LIABILITIES62,59074,467
NON-CURRENT LIABILITIES
BorrowingsE4
65,64738,732
Deferred tax liabilitiesB5
17,10417,821
Defined benefit plan net liability
-170
Other financial liabilitiesE56,69913,388
Lease liabilityG2
44,67044,066
TOTAL NON-CURRENT LIABILITIES134,120114,177
TOTAL LIABILITIES196,710188,644
NET ASSETS384,948391,814
The notes to the financial statements on pages 11 to 56 form part of and should be read in conjunction with this statement.
7

Scales Corporation Limited
Consolidated statement of cash flows for the year ended 31 December 2023
20232022
Note$000's$000's
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers571,987606,293
Insurance proceeds4,809-
Government grants received1,986-
Dividends and distributions received7511,876
Interest received1,8141,393
581,347609,562
Cash was disbursed to:
Payments to suppliers and employees(502,201)(545,477)
Interest paid(6,475)(4,237)
Income tax paid(7,971)(14,983)
(516,647)(564,697)
NET CASH PROVIDED BY OPERATING ACTIVITIES64,70044,865
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from:
Proceeds from maturing term deposits-85,000
Advances repaid255112
Sale of property, plant and equipment and software(424)161
(169)85,273
Cash was applied to:
Purchase of property, plant and equipmentC1(16,808)(14,592)
Purchase of softwareC7(325)(994)
Purchase of non-controlling shareholding-(2,180)
Acquisition of interest in joint ventures-(25,968)
Advances to joint ventures(11,869)(2,818)
(29,002)(46,552)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES(29,171)38,721
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided from:
Treasury stock sold96116
Drawdowns of term facility borrowingsE427,306-
27,402116
Cash was applied to:
Dividends paid
D3
(26,955)(26,863)
Dividends paid to non-controlling interests
F2
(15,312)(17,516)
Repayments of lease liabilities
G2
(8,420)(8,281)
(50,687)(52,660)
NET CASH USED IN FINANCING ACTIVITIES(23,285)(52,544)
The notes to the financial statements on pages 11 to 56 form part of and should be read in conjunction with this statement.
8

Scales Corporation Limited
Consolidated statement of cash flows for the year ended 31 December 2023 (continued)
20232022
Note$000's$000's
NET INCREASE IN NET CASH12,24431,042
Net foreign exchange difference(382)1,532
Cash and cash equivalents at the beginning of the year65,77633,202
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR77,63865,776
Represented by:
Cash and bank balances
77,638
68,144
Bank overdrafts
-
(2,368)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR77,63865,776
NET CASH GENERATED BY OPERATING ACTIVITIES
Reconciliation of profit for the year to net cash generated by operating activities:
Profit for the year24,67438,231
Non-cash items:
Depreciation (including on right-of-use asset)18,95619,307
(Gain) loss on lease modification(177)1,854
Impairment on revaluation4,7293,729
Amortisation497379
Share of equity accounted results(8,131)(4,624)
Hedging instruments(416)192
Gain on disposal of property, plant and equipment(118)(66)
Share-based payments456609
Change in value of call and put options4,1214,215
Deferred tax(4,867)(1,774)
Interest capitalised into loans(111)(24)
Fair value loss on interest-free related party loans, net of interest income1,913-
Impairment of goodwill8,531-
Foreign exchange on related party loans232-
Joint ventures purchase price receivable(1,307)-
Operating cash receipts not included in profit for the year:
Dividends received from equity accounted entities7501,875
Changes in net assets and liabilities:
Trade and other receivables9,662(12,812)
Unharvested agricultural produce927(588)
Inventories13,040(12,553)
Prepayments445(712)
Trade and other payables(11,131)13,429
Current tax assets and liabilities2,025(5,802)
NET CASH PROVIDED BY OPERATING ACTIVITIES64,70044,865
The notes to the financial statements on pages 11 to 56 form part of and should be read in conjunction with this statement.
9

Scales Corporation Limited
Consolidated statement of cash flows for the year ended 31 December 2023 (continued)
Statement of cash flows
For the purpose of the statement of cash flows, cash and cash equivalents include cash and bank balances and
bank overdrafts.
The following terms are used in the statement of cash flows:
Operating activitiesare the principal revenue producing activities of the Group and other activities that are not
investing or financing activities.
Investing activitiesare the acquisition and disposal of long-term assets and other investments not included in cash
equivalents.
Financing activitiesare activities that result in changes in the size and composition of the contributed equity and
borrowings of the Group.
For and on behalf of the Board of Directors who authorised the issue of the financial statements on 21 February 2024.
Mike Petersen, ChairAndy Borland, Managing Director
The notes to the financial statements on pages 11 to 56 form part of and should be read in conjunction with this statement.
10

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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" or the "Group"). 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 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.
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.
11

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
ABOUT THIS REPORT (CONTINUED)
Key judgements and estimates (continued)
Judgements and estimates which are considered material to understanding the performance of Scales are
explained in the following notes:
• Apple trees in note C1;
• Unharvested agricultural produce in note C2;
• Assessment of Group goodwill for impairment in note C4.
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 ventures.
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.
Adoption of new and revised standards and interpretations; standards and Interpretations issued but not yet effective
All mandatory amendments and interpretations have been adopted in the current year. None had a material impact
on these financial statements.
The Group has reviewed the standards, interpretations and amendments to existing standards
issued but not yet effective and does not expect these standards to have a material effect on the
financial statements of the Group when adopted.
12

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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.
Change in segments:
In 2022 the presentation of operating segments was amended. The Food Ingredients segment was renamed to Global Proteins
and now includes the new entities acquired during the previous year. Profruit (2006) Limited was moved to the Horticulture
segment. This impacted 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 Group comprises the following operating segments:
Global Proteins: processing and marketing of proteins such as pet food 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), ANZ Exports Pty Limited and Esro Petfood B.V.
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.
Global Proteins HorticultureLogisticsOtherEliminationsTotal
$000's$000's$000's$000's$000's$000's
2023
Total segment revenue298,547209,93992,5683,007(38,705)565,356
Inter-segment revenue--(35,684)(3,021)38,705-
Revenue from external customers298,547209,93956,884(14)-565,356
Gain on sale of non-current assets(5)123---118
Insurance proceeds-4,809---4,809
Share of profit of entities accounted for6,3691,762---8,131
using the equity method
Impairment of property, plant and equipment-(4,729)---(4,729)
Goodwill impairment-(8,531)---(8,531)
Gain on lease modification-177---177
13

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
SEGMENT REPORTING (CONTINUED)
Global Proteins HorticultureLogisticsOtherEliminationsTotal
$000's$000's$000's$000's$000's$000's
EBITDA52,2454,4934,281(7,344)-53,675
Amortisation expense-(473)(17)(7)-(497)
Depreciation expense(791)(9,213)(217)(24)-(10,245)
Depreciation of right-of-use asset(66)(8,071)(493)(81)-(8,711)
Finance revenue33686571,577-2,056
Finance costs(57)(7)(36)(3,231)-(3,331)
Finance cost of lease liability(12)(2,753)(339)(40)-(3,144)
Income tax expense(8,978)2,558(928)2,219-(5,129)
Segment profit (loss) after income tax42,677(13,380)2,308(6,931)-24,674
Global Proteins HorticultureLogisticsOtherEliminationsTotal
$000's$000's$000's$000's$000's$000's
Segment assets177,176324,68920,79758,996-581,658
Segment liabilities30,30188,69612,65765,056-196,710
Segment carrying value of investment56,0337,870---63,903
accounted for using the equity method
Segment acquisition of property, plant and6,15710,608234137-17,136
equipment and software
Segment acquisition of right-of-use assets(0)10,051356760-11,167
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
Gain on sale of non-current assets-66---66
Share of profit of entities accounted for3,5561,068---4,624
using the equity method
Reversal of (impairment) impairment on revaluation-(3,729)---(3,729)
Loss on lease modification-(1,854)---(1,854)
-
EBITDA58,91310,3326,595(7,324)-68,516
Amortisation expense-(361)(18)--(379)
Depreciation expense(747)(9,285)(176)(12)-(10,220)
Depreciation of right-of-use asset(64)(8,393)(572)(58)-(9,087)
Finance revenue362018971-1,045
Finance costs(25)(62)(39)(1,158)-(1,284)
Finance cost of lease liability(14)(2,664)(264)(11)-(2,953)
Income tax expense(11,012)2,871(1,615)2,32326(7,407)
Segment profit (loss) after income tax47,087(7,542)3,929(5,269)2638,231
14

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
SEGMENT REPORTING (CONTINUED)
Global Proteins HorticultureLogisticsOtherEliminationsTotal
$000's$000's$000's$000's$000's$000's
Segment assets169,018345,09629,03237,312-580,458
Segment liabilities46,398107,85015,96718,429-188,644
Segment carrying value of investment47,8856,858---54,743
accounted for using the equity method
Segment acquisition of property, plant and3,49111,89816826-15,583
equipment and software
Segment acquisition of right of use assets426,61433--6,689
Non-current assets other than financial instruments by geographical location
New ZealandAustraliaUSATotal
20232022202320222023202220232022
$000's$000's$000's$000's$000's$000's$000's$000's
Property, plant and equipment208,421213,614253112,7737,559221,219221,204
Investments accounted for29,50327,67434,39927,069--63,90254,743
using the equity method
Goodwill7,65716,189--29,31529,33836,97245,527
Software1,1601,332----1,1601,332
Right-of-use asset49,19748,57812314925231749,57249,044
15

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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
20232022
$000's$000's
By nature:
Revenue from the sale of goods
492,874 525,298
Revenue from the rendering of services
77,271 88,990
Fees and commission
1613
Net foreign exchange loss/(gain)
(9,450)(544)
Rental revenue
4,6455,416
565,356 619,173
By market:
New Zealand
68,354 95,627
Asia
159,907 162,097
Europe
30,540 32,262
North America
304,001 325,855
Other
2,5543,332
565,356 619,173
By segment and type:
Horticulture - sale of agricultural produce193,759214,084
Horticulture - agricultural produce related services11,5439,363
Horticulture - other4,6375,407
Global Proteins - sale of pet food ingredients290,216310,517
Global Proteins - other8,3319,406
Logistics services56,88470,444
Other(14)(48)
565,356 619,173
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service
to a customer.
16

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
B1. REVENUE (CONTINUED)
Sale of agricultural produce
The Group sells apples to more than 160 customers in 40 countries. Sales-related quality claim provisions are
recorded in accordance with NZ IAS 37Provisions, Contingent Liabilities and Contingent Assets.Revenue is
recognised when control of the goods has transferred, being when the goods have been shipped to the customer
("outright sales") or when the goods have been sold by the customer ("consignment sales"). In addition, the apple
season finishes before the end of the calendar year, with performance obligations under both sales types satisfied
for all sales made during that season.
Outright sales
Following shipment, revenue is recognised when the customer obtains control as it has full discretion over the
manner of distribution and price to sell the goods, has the primary responsibility when onselling the goods and
bears the risks of loss in relation to the goods. A receivable is recognised by the Group when it loses control,
which is when the goods are delivered on the ship at the port of shipment as this represents the point in time at
which the right to consideration becomes unconditional, as only the passage of time is required before the
payment is due. Terms of payment are up to 45 days on arrival.
Consignment sales
Revenue is recognised by the Group when it loses control, which is when the goods are confirmed to be on-sold
to the ultimate customer as this represents the point in time at which the right to consideration becomes
unconditional, as only the passage of time is required before the payment is due. Terms of payment are
immediate upon on-sale.
Sale of petfood ingredients
The Group sells petfood ingredients to a number of international and domestic customers. Revenue is recognised
when control of the goods has transferred, being when the goods have been delivered to the customer ("delivered
to destination sales") or when shipped to the customer ("outright sales"). Terms of payment are up to 120 days.
Delivered to destination sales
Following delivery, revenue is recognised when the customer obtains control as it has full discretion over the
manner of distribution and price to sell the goods, has the primary responsibility when onselling the goods and
bears the risks of loss in relation to the goods. A receivable is recognised by the Group when it loses control, which is
when the goods are delivered to the destination named by the customer as this represents the point in time at
which the right to consideration becomes unconditional, as only the passage of time is required before the
payment is due.
Outright sales
Same as above under "Sale of agricultural produce - outright sales".
Agricultural produce related services
The Group provides a number of agricultural produce related services to external apple growers, including
packaging, cartage, export documentation and export services. Each of those services is considered to be a distinct
service as it is both regularly supplied by the Group to customers on a stand-alone basis and is available for
customers from other providers in the market.
A receivable is recognised by the Group when the service performance has been completed, and the performance
obligation is satisfied as this represents the point in time at which the right to consideration becomes unconditional,
as only the passage of time is required before the payment is due. Terms of payment are up to 45 days.
Logistics services
The Group provides marine and air logistics services to domestic customers. Revenue is recognised by the Group
at a point in time, which is when the shipment is organised and the goods are on the ship or the aeroplane. The
performance obligation is satisfied at the point in time at which the right to consideration becomes
unconditional, as only the passage of time is required before the payment is due. Terms of payment are up to 60 days.
17

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
B2. COST OF SALES, ADMINISTRATION AND OPERATING EXPENSES
20232022
$000's$000's
Auditor's remuneration:
Deloitte Limited (New Zealand):
Audit of the financial statements:
Audit of the annual financial statements
321285
Other assurance services:
Audit of solvency certificate for Selacs Insurance Limited
97
Sheehan & Company CPA, PC (United States):
Group reporting audit
134115
Review of subsidiary financial statements
3735
Lowe Lippmann (Australia):
Group reporting audit
22-
Bad debts incurred (recovered)
2,847(112)
Change in fair value adjustment to unharvested agricultural produce
(480)(131)
Change in inventories
11,559 (12,688)
Direct expenses
91,267 99,408
Directors' fees
716677
Donations
26110
Electricity
3,0363,583
Employee benefits expense:
Post employment benefits - defined contribution plans
1,2321,265
Post employment benefits - defined benefit plans
627689
Salaries, wages and related benefits
87,778 94,037
Other employee benefits
456609
Grower payments
35,318 31,568
Insurance
4,5374,190
Management fees
4844
Materials and consumables
153,817 182,046
Ocean and air freight
92,533 118,136
Operating lease expenses
1,9902,218
Packaging
13,673 14,029
Provision (reversal of) for write-down of inventories
1,825(107)
Repairs and maintenance
5,2225,637
508,785 545,550
Disclosed as:
Cost of sales444,662492,547
Administration and operating expenses64,12353,003
508,785 545,550
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.
18

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
B3. OTHER INCOME AND LOSSES
20232022
$000's$000's
Dividends
11
Gain on disposal of property, plant and equipment
11866
Insurance proceeds
4,809-
Gain on joint ventures earn-out provision settlement
1,307-
Gain on joint ventures call options
171-
Government grants - Cyclone Gabrielle
1,986-
Gain (loss) on lease modification
177(1,854)
Fair value loss on interest-free related party loans
(2,044)-
Remeasurement of gross liability on put options to non-controlling interest
(4,292) (4,215)
2,233(6,002)
Disclosed as:
Other income8,56967
Other losses(6,336)(6,069)
2,233(6,002)
B4. FINANCE COST
Interest on loans
3,2341,140
Other interest
773
Bank facility fees
9071
3,3311,284
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
8,0779,324
Adjustments recognised in the current year in relation to the current tax of prior years1,919
(143)
Deferred tax expense relating to the origination and reversal of temporary differences(4,867)(1,774)
Total income tax expense recognised in profit or loss
5,1297,407
The prima facie income tax expense on pre-tax accounting profit reconciles to the income tax expense in the
financial statements as follows:
Profit before tax29,80345,638
Income tax expense calculated at applicable corporate tax rates7,97311,830
Non-assessable income(7,650)(5,404)
Non-deductible expenses4,4541,124
Under (over) provision of income tax in previous year - current tax1,919(143)
(Over) under provision of income tax in previous year - deferred tax(1,567)-
5,1297,407
19

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
B5. TAXATION (CONTINUED)
The tax rates used in the above reconciliation are the corporate tax rate of 28% payable by New Zealand companies
under New Zealand tax law, 30% payable by Australian companies under Australian tax law and 26.82% (2022: 25.5%)
payable by US entities under US tax law, being federal tax 21% and weighted average state tax 5.82% (2022: 4.5%).
Shelby JV LLC and its subsidiaries are look-through entities for US income tax purposes. Therefore, although the Group includes
100% of its net profit before tax, separately disclosing non-controlling interest, the Group only includes 60% of its income tax.
Opening
balance
Charged to
profit or loss
Charged to
other
comprehen-
sive income
Foreign
exchange
movements
Closing
Balance
$000's$000's$000's$000's$000's
Deferred tax liability
Taxable and deductible temporary differences arise from the following:
31 December 2023
Deferred tax liabilities (assets):
Trade and other receivables82
(129)
--(47)
Unharvested agricultural produce7,042(260)--6,782
Property, plant and equipment and software13,960
(2,517)
1,002
(10)
12,435
Trade and other payables(708)
(389)
--(1,097)
Lease liability and right-of-use asset (NZ IFRS 16)(1,686)(32)-
-
(1,718)
Other financial assets and liabilities, joint ventures and pension plan(869)
(1,540)
3,159
(1)
749
Net deferred tax liability17,821(4,867)4,161(11)17,104
31 December 2022
Deferred tax liabilities (assets):
Trade and other receivables1171--82
Unharvested agricultural produce6,877165--7,042
Property, plant and equipment and software15,985(1,409)(753)13713,960
Trade and other payables(850)142--(708)
Lease liability and right-of-use asset (NZ IFRS 16)(939)(743)-(4)(1,686)
Other financial assets and liabilities, joint ventures and pension plan1,860-(2,724)(5)(869)
Net deferred tax liability22,944(1,774)(3,477)12817,821
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.
20

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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 from these transactions are recognised in profit or loss in the period in which they arise.
Income and expenses for each subsidiary whose functional currency is not New Zealand dollars are translated at
exchange rates that approximate the rates at the actual dates of the transactions. Assets and liabilities of each
subsidiary are translated at exchange rates at balance date.
All resulting exchange differences are recognised in the foreign exchange translation reserve, which is a separate
component of equity.
The effective portion of exchange differences on foreign currency borrowings designated as hedges of net
investments in foreign operations is also recognised in the foreign exchange translation reserve.
21

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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 and
motor vehicles
at cost
Capital work
in progress
at costTotal
$000's$000's$000's$000's$000's$000's
Gross carrying amount
Balance at 1 January 2022
143,45135,394 71,30812,4018,065
270,619
Additions
7212,437 11,0551,793 (1,414)
14,592
Disposals
--(100)(534)(21)
(655)
Revaluation
8,257(6,030)---
2,227
Effect of foreign currency translation
158-301229
490
Balance at 31 December 2022152,58731,80182,56413,6626,659287,273
Additions
2581,3736,1001,1957,882
16,808
Disposals
(402)-(1,274)(815)(30)
(2,521)
Revaluation
(5,101)(853)---
(5,954)
Effect of foreign currency translation
(3)-(82)-(114)
(199)
Balance at 31 December 2023147,33932,32187,30814,04214,397295,407
Accumulated depreciation, and impairment
Balance at 1 January 2022
1,264800 44,9869,700
-56,750
Depreciation expense
2,0982,1574,9091,056
-10,220
Disposals
--(39)(519)
-(558)
Revaluation
(2,098)(2,157)--
-(4,255)
Impairment on revaluation
673,661--
-3,728
Effect of foreign currency translation
--1831
-184
Balance at 31 December 20221,3314,46150,03910,238-66,069
Depreciation expense
2,1401,7905,0931,222
-10,245
Disposals
(375)-(1,973)(717)
-(3,065)
Revaluation
(1,979)(1,789)--
-(3,768)
Impairment on revaluation
9352,418--
-3,353
Impairment on disposals
214-1,162-
-1,376
Effect of foreign currency translation
--(22)-
-(22)
Balance at 31 December 20232,2666,88054,29910,743-74,188
Net book value
As at 31 December 2022151,25627,34032,5253,4246,659221,204
As at 31 December 2023145,07325,44133,0093,29914,397221,219
22

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C1. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Accounting policy
Land, buildings and apple trees are included in the statement of financial position at their fair value at the date of
revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Valuations 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 valuation 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 valuation 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 the straight-line 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 trees30 years
Buildings10 to 50 years
Office Equipment and Motor Vehicles2 to 20 years
Plant and Equipment2 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.
Land and buildings carried at fair value
Land and buildings shown at valuation were valued at fair value as at 31 December 2023 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.
The impact of Cyclone Gabrielle has been considered as part of the valuation process, refer to note G5.
23

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C1. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Land and buildings carried at fair value (continued)
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 the valuation.
Group finance team led by the Chief Financial Officer works closely with the qualified external valuers to establish the
appropriate valuation techniques and inputs to the model. The Chief Financial Officer reports the Group finance team’s
findings to the Audit & Risk Management Committee to explain the methods used and causes of fluctuations in the fair
value of assets and liabilities.
The fair value of land and buildings is calculated on the basis of market value. Market value is determined by 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 coolstores and
packhouses) are potential market comparative rentals $6 - $250 per square metre (2022: $5 - $250) and the capitalisation
rates of 6.4% - 10% (2022: 5.6% - 10%).
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.
Orchard land is valued within the range of $27,400 - $170,000 per hectare (2022: $39,500 to $180,000).
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 $59,556,000
(2022: $62,365,000).
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 2023.
The market valuations completed by Boyd Gross were based on a discounted cash flows analysis of forecast
income streams and costs. They were 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. The fair value of
orchard land and buildings are deducted from the overall orchard valuation to give rise to the apple trees valuation.
The impact of Cyclone Gabrielle has been considered as part of the valuation process, refer to note G5.
The significant unobservable inputs, based on district averages, for the apple trees are:
20232022
Production levels (gross tray carton equivalent (tce)) per hectare2,894 - 5,4592,485 - 5,249
Orchard gate returns per tce$22.00 - $55.00$20.00 - $62.00
Orchard costs per tce$19.00 to $31.44$20.21 to $37.16
Discount rate15.5% - 17.5%15.6% - 17.1%
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 carrying amount of apple trees had it been recognised under the cost model is $11,039,000
(2022: $13,873,323).
24

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C1. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
The apple trees, on owned and leased orchards, have the following planting profile:
Total hectares planted
20232022
Premium varieties:
NZ Queen
206205
Pink Lady
101117
Red sports (Fuji and Royal Gala)
275268
Other premium
236174
Traditional varieties:
Braeburn
3486
Royal Gala
122152
Other traditional
112147
1,0861,149
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 geographical spread of orchards, installing hail and frost
protection on orchards which have shown to be more susceptible to these risks, utilising foreign currency derivative
instruments and building close working relationships with key customers.
C2. UNHARVESTED AGRICULTURAL PRODUCE
20232022
$000's$000's
Balance at beginning of the year
25,149 24,561
Decrease due to harvest
(25,149) (24,561)
Development expenditure
24,981 26,388
Fair value adjustment
(759)(1,239)
Balance at end of the year
24,222 25,149
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 (including
costs to sell) 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.
The Group’s unharvested agricultural produce is classified as Level 3 in the fair value hierarchy.
The significant unobservable inputs included in the model are the:
20232022
Production levels (tonnes per hectare per annum)42 - 16460 - 111
Orchard gate returns per tce$24 to $67$23 to $65
Risk adjusting discount rates46% to 64%46% to 64%
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.
25

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C3. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Details of each of the Group’s material joint ventures at the end of the reporting period are as follows:
Joint venturesPrincipal activityCountry of
Holding
Balance date
incorporation
20232022
ANZ Exports Pty LtdTrading companyAustralia42.50%42.50% 30 June
Esro Petfood B.VTrading companyThe Netherlands50%N/A 31 December
FI Group Holding Pty LtdTrading companyAustralia50%50% 30 June
Meateor Australia Pty LtdTrading companyAustralia33.33%33.33% 30 June
Meateor Pet Foods Limited Partnership Trading companyNew Zealand50%50% 31 December
Profruit (2006) LimitedTrading companyNew Zealand50%50% 31 December
Summarised financial information in respect of the Group’s joint ventures is set out below. The aggregate summarised
financial information below represents amounts in joint ventures' financial statements prepared in accordance
with NZ IFRS Standards.
The Australian incorporated entities have a balance date of 30 June which aligns with the income tax year in Australia.
On 31 October 2022, Scales acquired the shareholdings of FI Group Holding Pty Limited, ANZ Exports Pty Limited
and Meateor Australia Pty Limited. On the same date, Scales provided a put option to the other shareholders of
each entity for the remaining shares and the shareholders provided Scales with a call option for the remaining
shares. The exercise price is set at a value based on a multiple of the respective entities EBITDA.
The options are recorded in the statement of financial position, refer to note E2.
On 10 August 2023, Scales subscribed to a 50% shareholding in a Europe based newly established petfood ingredient
processing operation, Esro Petfood B.V.
Summarised financial information for Profruit (2006) Limited for the year ended 31 December
20232022
$000's$000's
Current assets
17,096 14,558
Non-current assets
6,0326,015
Current liabilities
(7,390) (4,717)
Non-current liabilities
-(2,142)
Net assets
15,738 13,714
Group's share in the net assets
7,8696,857
Carrying amount of investment in equity accounted entities
7,8696,857
The above amounts of assets and liabilities include the following:
Cash and cash equivalents
491164
Current financial liabilities (excluding trade and other payables and provisions)
(2,143)(326)
Non-current financial liabilities (excluding trade and other payables and provisions)
-(2,142)
Capital commitments
357278
Revenue
26,225 26,504
Profit for the year after tax
3,5252,128
Other comprehensive income attributable to the owners of the company
--
Total comprehensive income
3,5252,128
26

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C3. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
20232022
$000's$000's
The above profit for the year includes the following:
Depreciation and amortisation
668646
Interest expense
734469
Income tax expense
1,383838
Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint
venture recognised in the consolidated financial statements:
Share of profit before taxation
2,4541,484
Share of income tax
(692)(415)
Share of other comprehensive income (net of tax)
--
Share of net profit for the year and total comprehensive income1,7621,069
Carrying value at beginning of the year
6,8576,663
Dividends and distributions paid
(750)(875)
Investment in equity accounted entities7,8696,857
Summarised financial information for Meateor Pet Foods Limited Partnership for the year ended 31 December
Current assets
28,162 25,679
Non-current assets
33,389 29,328
Current liabilities
(14,421) (10,526)
Non-current liabilities
(3,862) (2,847)
Net assets
43,268 41,634
Group's share in the net assets of equity accounted entities
21,634 20,817
Carrying amount of investment in equity accounted entities
21,634 20,817
The above amounts of assets and liabilities include the following:
Cash and cash equivalents
422320
Current financial liabilities (excluding trade and other payables and provisions)
(8,400) (3,600)
Non-current financial liabilities (excluding trade and other payables and provisions)
--
Capital commitments
7502,000
Revenue
53,007 52,665
Profit for the year after tax
1,7883,224
Other comprehensive income attributable to the owners of the company
(154)1,634
Total comprehensive income
1,6344,858
The above profit for the year includes the following:
Depreciation and amortisation
1,3221,253
Interest expense
649245
Income tax expense
--
27

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C3. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint
venture recognised in the consolidated financial statements:
20232022
$000's$000's
Share of profit before taxation
8941,612
Share of income tax
--
Share of other comprehensive income (net of tax)
(77)817
Share of net profit for the year and total comprehensive income8172,429
Carrying value at beginning of the year
20,817 19,388
Dividends and distributions paid by equity accounted entities
-(1,000)
Investment in equity accounted entities21,63420,817
Summarised financial information for the Fayman equity accounted entities for the year ended 31 December
The accounting for the acquisitions of FI Group Holdings Pty Limited, ANZ Exports Pty Limited and Meateor
Australia Pty Limited have been finalised during 2023.
The 2022 comparatives have been restated to record the goodwill on acquisition.
The finalisation of the acquisition accounting resulted in the restatement of the 2022 comparatives to record
goodwill on acquisition.
20232022
(Restated)
$000's$000's
Current assets
62,020 35,931
Non-current assets
67,693 33,756
Current liabilities
(43,255) (21,613)
Non-current liabilities
(37,668) (13,678)
Net assets
48,790 34,396
Group's share in the net assets of equity accounted entities
24,059 17,199
Goodwill
10,117 10,713
Effect of foreign exchange translation
224(841)
Carrying amount of investment in equity accounted entities
34,400 27,071
The above amounts of assets and liabilities include the following:
Cash and cash equivalents
4921,533
Current financial liabilities (excluding trade and other payables and provisions)
(27,035) (14,742)
Non-current financial liabilities (excluding trade and other payables and provisions)
(39,036) (13,607)
Revenue
384,033 48,546
Profit for the year after tax
10,5114,112
Other comprehensive income attributable to the owners of the company
1,031-
Total comprehensive income
11,5424,112
The above profit for the year includes the following:
Depreciation and amortisation
8767
Interest expense
1,820268
Income tax expense
5,1771,706
28

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C3. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
Summarised financial information for Esro Petfood B.V. for the year ended 31 December
2023
$000's
Current assets
1,838
Non-current assets
5,479
Current liabilities
(1,040)
Non-current liabilities
(7,984)
Net assets
(1,707)
Group's share in the net assets of equity accounted entities
(854)
Effect of foreign exchange translation
-
Carrying amount of investment in equity accounted entities
-
The above amounts of assets and liabilities include the following:
Cash and cash equivalents
566
Current financial liabilities (excluding trade and other payables and provisions)
(105)
Non-current financial liabilities (excluding trade and other payables and provisions)
(7,984)
Revenue
714
Profit for the year after tax
(1,340)
Other comprehensive income attributable to the owners of the company
-
Total comprehensive income
(1,340)
The above profit for the year includes the following:
Depreciation and amortisation
69
Interest expense
211
Income tax expense
447
Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint
venture recognised in the consolidated financial statements:
Share of profit before taxation
-
Share of income tax
-
Share of other comprehensive income (net of tax)
-
Share of net profit for the year and total comprehensive income-
Carrying value at beginning of the year
-
Dividends and distributions paid by equity accounted entities
-
Effect of foreign exchange translation
-
Investment in equity accounted entities-
Esro Petfood B.V. generated a loss of $1.3m, (Scales share of $0.6m) for the year end 31 December 2023.
Scales does not provide a guarantee which results in the loss being capped at zero. For financial reporting
purposes no profit has been recognised in Scales Group result for 2023.
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.
30

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C3. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
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 a 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 36Impairment of Assetsare applied to determine whether it is
necessary to recognise any impairment loss.
31

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C4. GOODWILL
20232022
$000's$000's
Gross carrying amount
Balance at beginning of the year45,52743,392
Impairment of goodwill(8,531)-
Effect of foreign currency exchange differences(24)2,135
Balance at end of the year
36,972 45,527
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. Goodwill is tested for impairment annually, or more
frequently if there are indications that goodwill might be impaired. For the purpose of impairment testing,
goodwill has been allocated to the cash-generating units (CGUs) listed below which represent the lowest level at
which the Directors monitor goodwill.
20232022
$000's$000's
Horticulture - Fern Ridge5,7025,702
Horticulture - Mr Apple-8,531
Global Proteins - Shelby29,31529,339
Logistics1,9551,955
36,972 45,527
As at 31 December 2023, the Directors have determined, based on discounted cash flow and value in use
calculations, that there is no impairment of goodwill associated with Fern Ridge, Shelby and Logistics.
The discounted cash flow and value in use calculation uses future cash flows covering a five year period based on
a Board approved budget. The model was based on the following key assumptions:
32

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C4. GOODWILL (CONTINUED)
20232022
Pre-tax discount rates12-16%12-16%
Annual growth rates3%3%
The Directors consider that any reasonably possible changes in the key assumptions would not cause the carrying
amount of any of the CGUs to exceed their recoverable amount.
The directors have determined that there is an impairment of the Mr Apple CGU as at 30 June 2023, as the carrying value
exceeded the recoverable amount. The impairment arose due to the orchard damage and reduced volumes due to
Cyclone Gabrielle, refer to note G5, and increasing interest rates.
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 amount of the Mr Apple CGU
211,978
Carrying value
220,509
Impairment
(8,531)
Key assumptions:
20232022
Post-tax discount rate9.02%8.67%
Terminal growth rate beyond year 52.10%2.00%
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 rate
12,214 (10,568)
+5%-5%
Forecast earnings
16,781 (16,781)
As a result of the impairment testing, the impairment was wholly allocated to the Mr Apple CGU goodwill.
C5. INVENTORIES
20232022
$000's$000's
Finished goods
24,854 37,810
Other
4,6894,837
29,543 42,647
33

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
C5. INVENTORIES (CONTINUED)
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.
A provision of $1.6m has been recorded relating to aged inventory within the Global Proteins division. The
provision relates to inventory that has reached or nearing its expiry date and cannot be sold or may not be
sold with certainity in the market. The provision includes the costs of the inventory plus disposal costs.
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 CGU to which the asset belongs.
A CGU 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 CGU 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 CGU) is estimated to be less than its carrying amount, the carrying amount of the
asset (or CGU) 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.
C7. SOFTWARE
Software is stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the item. Amortisation is calculated on a straight line basis.
The estimated useful live of 3 years is used in the calculation of amortisation.
20232022
$000's$000's
Gross carrying amount
Opening balance8,233
7,239
Additions325
994
Closing balance
8,5588,233
Accumulated amortisation
Opening balance(6,901)
(6,522)
Amortisation expense(497)
(379)
Closing balance
(7,398)(6,901)
Net book value1,1601,332
34

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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 143,095,981 fully paid ordinary shares (2022: 142,721,868) less treasury stock of
1,160,229 shares (2022: 1,088,295 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
Fully paid ordinary shares:
20232022
Opening balance142,721,868142,394,837
Share Scheme - shares issued374,113327,031
Closing balance143,095,981142,721,868
Treasury stock:
Opening balance1,088,2951,230,166
Share Scheme - shares issued374,113327,031
Share Scheme - shares forfeited and sold(28,898)(27,657)
Share Scheme - shares fully vested(273,281)(441,245)
Closing balance1,160,2291,088,295
The available subscribed capital of $50,313,936 (2022: $49,101,810) 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.
20232022
Movement in share capital related to share-based payments:$000's$000's
Equity-settled employee benefit share scheme vested
Interest-free loan became full recourse7301,233
Accumulated share option value reclassified from reserve into share capital499804
Accumulated dividends reclassified from retained earnings into share capital145234
1,3742,271
35

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
D2. RESERVES
Revaluation
Cash flow
hedge
Share of
joint
ventures
Equity-settled
employee
benefits
Foreign
exchange
translation
Pension plan
reserve
Total
reserves
$000's$000's$000's$000's$000's$000's$000's
Balance at 1 January 2022
86,3105,021(70)1,277(168)(210)
92,160
Other comprehensive income (loss)7,235(7,707)588-330
179
625
Transfer to retained earnings
------
-
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
Other comprehensive (loss) income(3,188)8,0861,576-307
107
6,888
Transfer to retained earnings
------
-
Recognition of share-based payments
---456--
456
Shares fully vested
---(499)--
(499)
Balance at 31 December 202390,3575,4002,0941,0394697699,435
Revaluation reserve
The revaluation reserve arises on the revaluation of land, buildings and apple trees, net of the related deferred tax.
Cash flow hedge reserve
The cash flow hedge 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 - LTI Scheme
The 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 Share 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 restricted 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
30 April 2020 - FY1930 April 20233.20282,125-(8,844) (273,281)-
28 June 2020 - FY19R 24 August 20244.19194,511---194,511
30 April 2021 - FY2030 April 20243.20284,628-(8,922)-275,706
30 April 2022 - FY2130 April 20253.20327,031-(11,132)-315,899
30 April 2023 - FY2230 April 20263.33-374,113--374,113
Total1,088,295374,113 (28,898)(273,281)1,160,229
36

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
D2. RESERVES (CONTINUED)
The weighted average share price for shares that vested during 2023 was $3.14.
The shares issued vest over three years. The estimated value of the share options is determined using the
Black-Scholes pricing calculator and is amortised over the restricted 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's ordinary shares.
20232022
FY22FY21
The inputs into the "option pricing calculator" are:
Issue date share price, $3.245.03
Expected share price volatility, %2525
Option life, years33
Risk-free interest rate, %4.143.27
Exercise price, $3.333.20
Fair value, at the grant date, $0.692.21
Equity-settled employee benefits reserve - PSR Scheme
On 15 December 2023 the Board approved the Scales’ Performance Share Rights Plan to grant performance rights to key
senior management personnel as a long-term incentive programme. The first round of performance rights were issued under this
programme during the period.
Performance rights granted are summarised below:
Grant dateVesting date
Number of rights
Opening
balanceGrantedForfeited
Vested and
exercised
Closing
balance
20 December 2023 - FY23 Tranche 19/03/2026-56,748--56,748
20 December 2023 - FY23 Tranche 223/03/2026-38,113--38,113
20 December 2023 - FY23 Tranche 39/03/2026-228,095--228,095
37

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
D2. RESERVES (CONTINUED)
TSR Hurdles - Tranches 1 and 3
The proportion of performance rights subject to the absolute TSR growth hurdle which may vest is dependent on Scales' TSR
compound annual growth rate (CAGR) across a 3-year measurement period.
TSR is the Company's total shareholder returns. TSR measures the total return received by Scales' investors from the increase
in the "market value" of an ordinary share in Scales and the receipt of gross dividends and other distributions, from the
Commencement Date to the Vesting date.
For each tranche that vests the rights are awarded on a straight-line basis dependent on the TSR CAGR achieved. The percentage
of TSR related performance rights vest according to the following performance criteria for each unvested tranche:
Tranche 1 - % vestingFY23 Round
0%< 8.5% CAGR
25%= 8.5% CAGR
26% - 99% (Straight-line prorata)> 8.5%, < 12.5% CAGR
100%= 12.5% CAGR
Tranche 3 - % vestingFY23 Round
0%= 12.5 % CAGR
1% - 99% (Straight-line prorata)> 12.5%, < 31.1% CAGR
100%= 31.1% CAGR
The TSR performance tranches are calculated across the following periods:
RoundVesting Period
FY23 - Tranche 1 and 320 December 2023 to 7 days after the announcement date of the FY25 Result
38

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
D2. RESERVES (CONTINUED)
The fair value of the TSR performance rights have been valued under a variant of the dividend adjusted Monte Carlo simulation.
The fair value of TSR performance rights, along with the assumptions used to simulate the future share prices are shown below:
FY23 - Tranche 1FY23 - Tranche 3
Current price at grant date$3.17$3.17
Risk free interest rate4.53%4.53%
Expected life (years)2.2 years2.2 years
Expected share volatility
1
31.12%31.12%
1. Volatility represents the volatility of the Scales Corporation's NZD share price over a 3-year period to December 2023.
The estimated fair value for each tranche of performance rights issued is amortised over the vesting period from the grant date.
EPS Hurdles - Tranche 2
The proportion of performance rights subject to the EPS growth hurdle which may vest is dependent on Scales' EPS
compound annual growth rate (CAGR) across a 3-year measurement period. For each tranche that vests the rights are awarded
on a straight-line basis dependent on the EPS CAGR achieved. EPS growth hurdle is considered a non-market condition.
The percentage of EPS related performance rights vest according to the following performance criteria:
Tranche 2 - % vestingFY23 Round
0%< 5% CAGR
25%= 5% CAGR
26% - 99% (Straight-line prorata)> 5%, < 10% CAGR
100%= 10% CAGR
The EPS performance is calculated across the following periods:
RoundVesting Period
FY23 - Tranche 220 December 2023 the announcement date of the FY25 Result
The fair value of the EPS performance rights have been assessed as Scales' share price as at grant date less the
present value of the dividends forecast to be paid prior to each vesting date.
The estimated fair value for each tranche of performance rights issued is amortised over the vesting period from grant date.
Vesting of performance rights also requires the employee to remain in employment with the Company during the performance
period. The Company has expensed in the income statement nil (2022: nil) in relation to performance rights.
Foreign exchange translation reserve
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as
part of the net investment, are accounted for in two ways. Gains or losses relating to the effective portion of the
hedge are recognised in other comprehensive income. Any gains or losses relating to the ineffective portion of the
hedge are recognised in profit or loss.
Gains or losses arising on translation of foreign subsidiaries results (Note B6) are also recognised in this reserve.
39

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
D3. DIVIDENDS ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
20232022
$000's$000's
Final dividend paid - 13.00 (2022: 9.50) cents per share18,45213,444
Interim dividend declared - 4.25 (2022: 6.00) cents per share6,0418,503
24,49321,947
All above dividends were fully imputed.
The 2023 interim dividend was declared on 8 December 2023 and paid on 18 January 2024.
D4. IMPUTATION CREDIT ACCOUNT
20232022
$000's$000's
Balance at end of the year8,65118,057
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 and Fern Ridge Produce 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.
20232022
Profit attributable to equity holders of the Company ($000's):5,23519,412
Weighted average number of shares:
Ordinary shares141,831,545 141,413,787
Effect of dilutive ordinary shares (non-vested Senior Executive Share Scheme)116,268302,534
Weighted average number of Ordinary Shares for diluted earnings per share141,947,813 141,716,321
Earnings per share (cents):
Basic - continuing3.713.7
Diluted - continuing3.713.7
40

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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 as financial assets 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
The Group recognises a loss allowance for expected credit losses (ECL) on investments in debt instruments that
are measured at amortised cost, trade and other receivables. The amount of expected credit losses is updated at
each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Group always recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets
is estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors
that are specific to the debtors, general economic conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in
credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an
amount equal to twelve-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected
life of a financial instrument. In contrast, twelve-month ECL represents the portion of lifetime ECL that is expected to
result from default events on a financial instrument that are possible within twelve months after the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that
are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at the original effective interest rate.
41

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
E. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
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 net of 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 twelve months and it is
not expected to be realised or settled within twelve 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.
Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss
on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive
income and accumulated under the heading of foreign exchange translation reserve. The gain or loss relating to
the ineffective portion is recognised immediately in profit or loss. Gains and losses on the hedging instrument
relating to the effective portion of the hedge accumulated in the foreign exchange translation reserve are
reclassified to profit or loss on the disposal of the foreign operation.
42

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
E1. TRADE AND OTHER RECEIVABLES
20232022
$000's$000's
Trade receivables
25,589 36,170
Other receivables
3,6371,964
Owing by entities accounted for using the equity method
1,628924
Goods and services tax
3,1753,044
34,02942,102
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.
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 5 customers who represent 35.95% (2022: 5 customers
who represented 44.42%) 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 provision for expected credit losses was not material 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:
1 month5,1594,998
2 months2,0491,288
More than 2 months6,89513,981
14,10320,267
There was an ECL provision of $0.4m as at 31 December 2023 (2022: nil), which is included within the Trade Receivables
balance above.
E2. OTHER FINANCIAL ASSETS
Current:
At fair value:
Foreign currency derivative instruments
5,2174,435
Interest rate swap contracts and forward rate agreements
772503
5,9894,938
43

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
E2. OTHER FINANCIAL ASSETS (CONTINUED)
20232022
$000's$000's
Non-current:
At fair value:
Foreign currency derivative instruments
13,6789,853
Interest rate swap contracts and forward rate agreements
2621,004
Joint venture call option
171-
Shares in unlisted companies
184184
At amortised cost:
Employee loans
2,1031,628
Related party loans
12,6792,842
29,07715,511
E3. TRADE AND OTHER PAYABLES
Trade payables10,22416,127
Accruals11,81615,565
Employee entitlements4,4065,534
26,44637,226
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 replaced existing Multi-Option Facility Agreements with Coöperatieve Rabobank U.A., New Zealand
Branch (Rabobank) and Westpac New Zealand Limited (Westpac) with new agreements on 11 November 2021.
The existing facility agreement with ANZ bank New Zealand Limited (ANZ) was also replaced with a new agreement
on 11 November 2021. The AUD and USD denominated loans are designated as a hedge of net investments in
foreign operations.
Facility limit
Undrawn facility
2023202220232022
Facility
$000's$000's$000's$000's
Rabobank term facility, NZD1,0001,000--
Rabobank term facility, USD11,63511,635--
Rabobank term facility, AUD12,500---
Rabobank seasonal facility, NZD5,0001,0005,0001,000
Westpac term facility, NZD1,0001,000--
Westpac term facility, USD11,63511,635--
Westpac term facility, AUD12,500---
Westpac seasonal facility, NZD5,0001,0005,0001,000
ANZ overdraft, NZD1,0001,0001,0001,000
44

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
E4. BORROWINGS (CONTINUED)
The floating interest rate is 4.24% to 6.87% (2022: 1.91% to 5.85%) and the term borrowing facility expiry date is
1 July 2025. Seasonal facilities presented as current borrowings are 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 as at 31 December 2023
are Scales Corporation Limited, Scales Holdings Limited, Mr Apple New Zealand Limited, New Zealand Apple Limited,
Fern Ridge Produce Limited, Geo.H.Scales Limited, Meateor Foods Limited, Scales, Logistics Limited and Meateor Group Limited.
Term borrowings
20232022
$000's$000's
Seasonal (current) and term (non-current) borrowings:
Opening balance38,73236,060
Drawdowns27,306-
Effect of foreign currency translation(391)2,672
65,64738,732
E5. OTHER FINANCIAL LIABILITIES
20232022
$000's$000's
Current financial liabilities at fair value:
Foreign currency derivative instruments
4,5547,209
Put options
13,9708,236
18,52415,445
Non-current financial liabilities at fair value:
Foreign currency derivative instruments
6,699 11,802
Put options
-1,586
6,69913,388
In 2018 the Group acquired 60% of Shelby JV LLC and its subsidiaries Shelby Foods LLC, Shelby
Exports Inc, Shelby Cold Storage LLC, Shelby Trucking LLC and Shelby Properties LLC (collectively, Shelby Group).
As part of the transaction, the Company entered into an agreement with the vendor whereby the vendor has an
option to put a further 5% of total units in Shelby Group to Scales at a value based on a multiple of Shelby Group
EBITDA. The obligation to acquire the ownership interest under the put option is included in other financial liabilities.
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.
45

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
E6. INTEREST RATE RISK (CONTINUED)
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 can 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.
Details of interest rate swap contracts for the Group are:
Fixed Interest Rate
Notional principal
amountFair value
202320222023202220232022
%%$000's$000's$000's$000's
Maturity Date
Within 1 year------
2-5 years0.971.2017,35017,3641,0341,507
After 5 years------
17,35017,3641,0341,507
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.
As the critical terms of the interest rate swap contracts and their corresponding hedged items are the same, the
Group performs a qualitative assessment of effectiveness and it is expected that the value of the interest rate
swap contracts and the value of the corresponding hedged items will systematically change in opposite directions
in response to movements in the underlying interest rates. The main source of hedge ineffectiveness in these
hedge relationships (which is not material) is the effect of the counterparty and the Group's own credit risk on
the fair value of the interest rate swap contract, which is not reflected in the fair value of the hedged item
attributable to the change in interest rates. No other sources of ineffectiveness emerged from these hedging
relationships.
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives
and non-derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared
assuming the amount of liability outstanding at reporting date was outstanding for the whole year. A 1%
increase or decrease is used when reporting interest rate risk internally to key management personnel and
represents management’s assessment of the reasonably possible change in interest rates. Impact on net profit
after tax assumes that none of floating interest rate borrowings were hedged.
20232022
+1%-1%+1%-1%
$000's$000's$000's$000's
Impact on net profit after tax158(158)(131)131
Impact on cash flow hedge reserve net of tax246(254)337(352)
46

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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:
20232022
Contract
ValueFair Value
Contract
ValueFair Value
$000's$000's$000's$000's
Sale commitments forward foreign exchange contracts371,3255,888422,810(3,795)
Sale commitments foreign exchange options185,2401,754158,067(928)
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 2024 to 2028 financial years at which stage the amount
deferred in equity will be released into profit or loss.
For hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life
and underlying) of the foreign currency instruments and their corresponding hedged items are the same,
the Group performs a qualitative assessment of effectiveness and it is expected that the value of the instruments
and the value of the corresponding hedged items will systematically change in opposite directions in
response to movements in the underlying exchange rates. The Group uses the hypothetical derivative method
for the hedge effectiveness assessment and measurement of hedge ineffectiveness. As for the hedge of the net
investment in Meateor US LLC sub-group, the Group assesses effectiveness by comparing the nominal amount
of the net assets designated in the hedge relationship with the nominal amount of the hedging instrument.
This is a simplified approach because the currency of the exposure and hedging instruments perfectly match
and the Group excludes from the designation the foreign currency basis spread.
The following table demonstrates the sensitivity to a reasonably possible change of 5% in the value of New
Zealand dollar against other foreign currencies, with all other variables held constant. The impact on the Group’s
profit before tax is due to changes in the fair value of monetary assets and liabilities. The impact on the Group’s
equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges.
47

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
E7. FOREIGN CURRENCY RISK (CONTINUED)
20232022
+5%-5%+5%-5%
$000's$000's$000's$000's
USD
Impact on net profit after tax(655)724(783)865
Impact on cash flow hedge reserve net of tax(15,408)13,943(15,976)14,479
AUD
Impact on net profit after tax(4)4644(1,082)
Impact on cash flow hedge reserve net of tax--176176
EUR
Impact on net profit after tax(10)11(2)2
Impact on cash flow hedge reserve net of tax(1,886)1,704(2,143)1,940
GBP
Impact on net profit after tax--(7)7
Impact on cash flow hedge reserve net of tax(801)720(991)898
CAD
Impact on net profit after tax----
Impact on cash flow hedge reserve net of tax(216)195(383)347
E8. CATEGORIES OF FINANCIAL INSTRUMENTS
20232022
$000's$000's
Financial assets:
Amortised cost123,274111,672
Derivative instruments in designated hedge accounting relationships19,92915,795
Fair value through profit or loss355184
143,558127,651
Financial liabilities:
Amortised cost98,13486,829
Derivative instruments in designated hedge accounting relationships11,25319,011
Fair value through profit or loss13,9709,822
123,357115,662
The carrying amount of financial instruments at amortised cost approximates their fair value.
48

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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 table 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.
Foreign currency derivative liabilities are presented below at fair value.
Within 3
months
4 months
to 1 year1-5 yearsTotal
$000's$000's$000's$000's
2023
Trade and other payables26,446--26,446
Dividend declared6,041--6,041
Put options13,970--13,970
Borrowings1,0793,23867,79372,110
Foreign currency derivatives7473,8076,69911,253
48,2837,04574,492129,820
2022
Trade and other payables37,226--37,226
Dividend declared8,503--8,503
Put options8,236-1,5869,822
Borrowings570239,88540,457
Foreign currency derivatives2,0835,07611,85219,011
56,6185,07853,323115,019
49

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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
non-controlling interests.
F1. SUBSIDIARY COMPANIES
Subsidiary companies:Principal activityCountry of
Holding
Balance date
incorporation
20232022
Fern Ridge Produce LimitedTrading companyNew Zealand100%100% 31 December
Geo. H. Scales LimitedNon trading companyNew Zealand100%100% 31 December
Longview Group Holdings LimitedNon trading companyNew Zealand100%100% 31 December
Meateor Foods Australia Pty LimitedTrading companyAustralia100%100% 31 December
Meateor Foods LimitedTrading companyNew Zealand100%100% 31 December
Meateor Group LimitedHolding companyNew Zealand100%100% 31 December
Meateor US LLCHolding companyUnited States100%100% 31 December
Mr Apple New Zealand LimitedTrading companyNew Zealand100%100% 31 December
New Zealand Apple LimitedTrading companyNew Zealand100%100% 31 December
Scales Employees LimitedCustodial companyNew Zealand100%100% 31 December
Scales FI Group Holding Pty LtdHolding companyAustralia100%100% 31 December
Scales Holdings LimitedHolding companyNew Zealand100%100% 31 December
Scales Logistics LimitedFreight consolidatorNew Zealand100%100% 31 December
Scales Logistics Australia Pty LtdFreight consolidatorAustralia100%100% 31 December
Selacs Insurance LimitedInsurance companyNew Zealand100%100% 31 December
Shelby Cold Storage, LLCColdstore operatorUnited States60%60% 31 December
Shelby Exports, IncNon trading companyUnited States60%60% 31 December
Shelby Foods, LLCTrading companyUnited States60%60% 31 December
Shelby JV LLCHolding companyUnited States60%60% 31 December
Shelby Properties LLCNon trading companyUnited States60%60% 31 December
Shelby Trucking LLCTrading companyUnited States60%60% 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.
50

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
F2. NON-CONTROLLING INTERESTS
The following non-wholly owned subsidiaries of the Group have material non-controlling interests.
Proportion of equity interest held by non-controlling interests:
Subsidiary companies:Country of incorporation
Non-controlling holding
and operation
20232022
Shelby JV LLC and its subsidiariesUnited States40%40%
The summarised financial information in respect of the Group’s subsidiary that have material non-controlling
interests as at 31 December 2023, reflecting 100% of the underlying subsidiary’s relevant figures, is set out below:
20232022
$000's$000's
Statement of financial position
Current assets31,01329,827
Non-current assets11,3626,163
Current liabilities(8,174)(11,697)
Non-current liabilities(140)(435)
Net assets34,06023,858
Attributable to:
Equity holders of the Company20,43614,315
Non-controlling interests13,6249,543
Note that a put option on 5% of the non-controlling interest shareholding is recognised as a financial liability,
separate from non-controlling interest. Refer to note E5 for disclosures regarding the put option.
Total dividends paid to non-controlling interests15,31217,313
Statement of comprehensive income
Total revenue214,624220,425
Net profit for the year48,64747,155
Attributable to:
Equity holders of the Company29,18828,293
Non-controlling interests19,45918,862
Statement of cash flows
Net cash provided by operating activities45,35048,064
Net cash used in investing activities(6,160)(4,238)
Net cash used in financing activities(38,346)(43,344)
Net increase in net cash844482
51

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
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
20232022
$000's$000's
Commitments entered into in respect of apple trees purchases as at balance date1,5402,530
Commitments entered into in respect of property, plant and equipment purchases as at balance date469371
G2. LEASES
The Group as a lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognised a
right-of-use asset and a corresponding liability with respect to all lease arrangements in which it is the lessee,
except for short-term leases (defined as leases with a lease term of twelve months or less) and leases of low value
assets. For these leases, the Group applies the practical expedient and recognises the lease payments as an
operating expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the lease assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined,
the Group uses its incremental borrowing rate (IBR).
Lease payments included in the measurement of the lease liability comprise:
- fixed lease payments (including in-substance fixed payments), less any lease incentives;
- variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
- the amount expected to be payable by the lessee under residual value guarantees;
- the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
- payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate
the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
- the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;
- the lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease
payments using the initial discount rate;
- a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case
the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
52

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
G2. LEASES (CONTINUED)
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement date and any initial direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on
which it is located or restore the underlying asset to the condition required by the terms and conditions of the
lease, a provision is recognised and measured under NZ IAS 37Provisions, Contingent Liabilities and Contingent Assets.
Right-of-use assets are depreciated over the shorter period of either the lease term or the useful life of the
underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects
that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful
life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial position.
The Group applies NZ IAS 36Impairment of Assetsto determine whether a right-of-use asset is impaired and
accounts for any identified impairment loss under this standard.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and
the right-of-use asset. The related payments are recognised as an expense in the period in which the event or
condition that triggers those payments occurs and are included in the line "Administration and operating expenses"
in the statement of comprehensive income.
As a practical expedient, NZ IFRS 16 permits a lessee to not separate non-lease components, and instead account for
any lease and associated non-lease components as a single arrangement.
The lease modification in the current year relates to leases that were not renewed due to damage from Cyclone Gabrielle.
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.
In the 31 December 2022 year the modification related to the reassessment of renewal terms for leases extending longer than
10 years. The impact reduced the lease liability and right-of-use asset proportionately based on the reduction in the overall
lease term assumed. The difference has been recorded as a loss on lease modification in the statement of comprehensive income.
Right-of-use assets
Land and
buildings
Plant and
equipment
Office
equipment
motor and
vehiclesTotal
$000's$000's$000's$000's
Carrying Amount
Balance at 1 January 202271,6673004,46476,431
Additions2,3277963,5676,690
Lease modification(24,989)--(24,989)
Depreciation expense(6,332)(390)(2,365)(9,087)
Balance at 31 December 202242,6737065,66649,045
Additions9,140-2,02711,167
Lease modification(1,230)-(699)(1,929)
Depreciation expense(6,331)(412)(1,968)(8,711)
Balance at 31 December 202344,2522945,02649,572
53

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
G2. LEASES (CONTINUED)
20232022
$000's$000's
Amounts recognised in profit and loss
Depreciation expense on right-of-use assets8,7119,087
(Gain) loss on lease modification(177)1,854
Interest expense on lease liabilities3,1442,953
Expense relating to short-term leases and low-value assets1,9902,218
Lease liabilities
Current10,96310,925
Non-current44,67044,066
Maturity analysis (undiscounted cash flows)
Year 110,96310,932
Year 210,0599,930
Year 39,4899,065
Year 48,6118,466
Year 56,6987,578
Onwards30,51726,483
76,33772,454
Cash outflows for leases
Interest on lease liabilities3,1442,953
Repayments of lease liabilities8,4208,281
Short-term leases and low-value asset leases1,9902,218
13,55413,452
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.
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 benefits8,6223,445
Share-based payments295574
Post-employment benefits263113
9,1804,132
During 2023, 1,120,541 (2022: 975,164) shares were on issue to key management personnel in accordance with the
Share Scheme described in note D2.
In December 2023, 322,956 Performance Share Rights were issued to key management personnel in accordance with
the PSR Scheme described in note D2.
54

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
G3. RELATED PARTY DISCLOSURES (CONTINUED)
20232022
$000's$000's
Transactions with equity accounted entities
Revenue from sale of goods4,0792,428
Revenue from services7,3886,179
Loss on related party loans2,044-
Dividends and distributions received7501,875
Interest received32324
Materials and services received(1,001)(998)
Trade receivables at balance date1,628924
Purchase of property, plant and equipment-15
Related party loans12,6792,842
On 31 October 2022, Meateor Group Limited along with the other joint venture partners, agreed a financing arrangement
with Meateor Australia Pty Limited for a term of 5 years. The total facility provided to Meateor Australia Pty Limited
is AUD 4 million with the interest rate on the drawdown balances charged at 5% per annum.
As at 1 July 2023 the financing arrangement with Meateor Australia Pty Limited was amended to nil interest over the term
of the loan. The loan balance has been recorded using the effective interest method.
On 9 August 2023 a financing arrangement was agreed with Esro Petfood B.V. The total facility available to Esro Petfood B.V.
is EUR 15m. Interest is charged on each drawdown calculated quarterly at an interest rate of EURIBOR plus 4%.
G4. CONTINGENT LIABILITIES
There is no contingent liaibilities as at 31 December 2023 (2022: Nil).
G5. CYCLONE GABRIELLE
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 2023 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.
The impact of Cyclone Gabrielle has been considered as part of the current year valuations performed. Refer to note C1.
(b) Leases
Some leases of orchards damaged by Cyclone Gabrielle were not renewed at their renewal dates, prior to 30 June 2023.
The leased orchards not renewed included 41 hectares of planted apple trees.
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.
Refer to note G2.
55

Scales Corporation Limited
Notes to the financial statements for the year ended 31 December 2023
G5. CYCLONE GABRIELLE (CONTINUED)
(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. Refer to note C1.
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 $4.8m relating to insurance
proceeds. Insurance proceeds are included in other income in the statement of financial performance.
Refer to note B3.
(d) Goodwill
The directors have determined that there is an impairment of the Mr Apple CGU as at 30 June 2023, as the carrying value
exceeded the recoverable amount. Refer to note C4.
(e) Government grants
The Group recognised a total of $1.98m government grant revenue related to Cyclone Gabrielle relief programs, included in
other income. Refer to note B3.
G6. EVENTS OCCURRING AFTER BALANCE DATE
There were no events occurring subsequent to balance date which require adjustment to or disclosure in the
financial statements.
(2022: Amendment to the lending facility agreements with Rabobank and Westpac. The facility of AUD 25 million was
drawn down 7 February 2023.
Cyclone Gabrielle resulted in flooding of some the Group's Hawke’s Bay orchards. The initial assessment is that 4 of 15
orchards were impacted. Of the four damaged orchards, three had extensive damage and one moderate. Further limited
crop damage is also anticipated to the remaining orchards from the effects of the cyclone. Crop/fruit damage from the
event is not covered by insurance. The 2023 harvest started prior to the cyclone and, with 3% picked, there is still a
substantial proportion of the crop available and remaining to be harvested for export. Picking has recommenced, with
cool-storage and packing activities back underway. Group packhouses and coolstores remain fully operational.
Other than disclosed above, the impact on unharvested agricultural produce, land and buildings, apple trees, or goodwill
carrying values is not able to be quantified as at the financial statement authorisation date.
Group does not expect material operating impact on its other business units, which accounted for the majority of
Group's operating profits for previous years.)
56

Independent Auditor’s Report
To the Shareholders of Scales Corporation Limited
Opinion We 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 2023, 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 material accounting policy information.
In our opinion, the accompanying consolidated financial statements, on pages 4 to 56, present fairly,
in all material respects, the consolidated financial position of the Group as at 31 December 2023,
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 opinion
We 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 Company in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board and
the International Ethics Standards Board for Accountants’ International Code of Ethics for
Professional Accountants (including International Independence Standards), and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor and other assurance services, we have no relationship with or
interests in the entity. These services have not impaired our independence as auditor of the
Company and Group.
Audit materiality We 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 $1.9m.
Key audit matters Key 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.
57

Key audit matter How our audit addressed the key audit matter
Valuation of Unharvested Agricultural Produce
Unharvested agricultural produce growing on bearer plants (apples), is
measured at fair value less costs to sell in accordance with NZ IAS 41
Agriculture.
The Group’s unharvested agriculture produce was valued at $24.2 million at
balance date as described in note C2. A revaluation loss of $0.8 million is
recorded in profit or loss.
Fair value less cost 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, expected 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, including weather events like Cyclone Gabrielle, 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/climate
or market risks and impacts of Cyclone Gabrielle, that would
impact the current crop valuation;
•Assessing and challenging the reasonableness of the risk-
adjusting discount rates;
•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
by comparing to the actual results for production per hectare
and sales prices;
•Engaging a Deloitte valuation specialist to review the valuation
model; and
•Checking the mechanical accuracy of the discounted cash flow
model.
Valuation of Apple Trees
As disclosed in note C1 the Group has apple trees valued at $2 5.4 million. A
revaluation gain of $ 0.7 million has been recorded in other comprehensive
income, with an impairment of $2.4 million recorded in profit and loss.
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.
The fair value of the apple trees are determined by an independent
registered valuer on the basis of a discounted cash flow analysis of forecast
income streams and costs from each orchard less the fair value of orchard
land and buildings in combination with the comparative sales approach.
By using the income approach, apple trees are independently valued on the
basis of a discounted cash flow analysis of forecast income streams and
costs from each orchard. The model uses a number of significant
unobservable inputs, in particular: production levels per hectare, orchard
gate returns (market prices), orchard costs, and discount rates.
In the current year, a number of inputs were inherently impacted by
Cyclone Gabrielle, including production levels, market activity and discount
rates.
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 the level of judgement involved in valuing the apple trees.
Our procedures focused on the appropriateness of the valuation
methodology and the key assumptions applied in the model.
Our procedures included, amongst others:
•Evaluating the Group’s processes in respect of the independent
val uation of the apple trees including its review of the valuation
methodology and determination of the key valuation
assumptions;
•Reviewed managements assessment of any further trees that
require impairment due to the impacts of Cyclone Gabrielle;
•Engaging a Deloitte valuation specialist to consider whether the
valuation methods applied and the discount rate used in the
orchard valuation calculations were reasonable;
•Assessing the competence, objectivity and integrity of the
Group’s independent registered valuer. This included assessing
the valuer’s professional qualifications, experience and
independence. It also included meeting with the valuer to
understand the valuation process adopted and to identify and
challenge the critical judgement areas in the valuation;
•Assessing the valuation methodology for consistency with the
prior year valuation and determining whether any changes to
the methodology were appropriate;
•Checking the mechanical accuracy of the discounted cash flow
models on a sample basis; and
•Challenging the reasonableness of the key assumptions by
comparing them to the prior year valuation, the Group’s internal
data and current market evidence. We focused on the
assumptions relating to production levels per hectare, orchard
gate returns (market prices), orchard costs, and discount rates;
oWe tested estimated production levels per hectare by
comparing orchard hectares in production with the
prior year valuation. We compared the production
levels per hectare to internal production data for the
season;
oWe tested the orchard gate returns by comparing
these to actual sales returns received during the
previous year;
oWe challenged orchard costs by comparing orchard
costs to the prior year valuation and actual costs
incurred;
oWe challenged the discount rates by comparing them
with prior year valuation discount rates and
considering the risks associated with the orchards;
58

Key audit matter How our audit addressed the key audit matter
and
oWe challenged the valuer on how the impacts (if any)
of Cyclone Gabrielle have been incorporated into the
valuation.
Group component auditor oversight
Scales Corporation has continued to grow its Global Proteins segment
including through its recent investment in Australian based FI Group
Holdings Pty Limited, ANZ Exports Pty Limited and Meateor Australia Pty
Limited (together the ‘Fayman entities') in October 2022. As disclosed in
note C3, 30 June 2023 reflects the first full year 12 -month equity share of
profits from the Fayman entities contributing $7.1 million (24%) to the
Group’s profit before tax of $29.8 million. The equity accounted share of
profits is a significant portion of the Group’s profits.
In addition to the impact on the Group’s profit we note the following:
•first time engagement for the Fayman entities with new
component audit firm based in Australia;
•the Fayman entities have different balance dates to Group; and
•first time adoption of NZ IFRS for the Fayman entities,
The level of audit effort has increased to address the matters noted above.
Given the significance of the equity accounted results of the Fayman
entities, and the increased level of audit effort in, obtaining sufficient audit
evidence over the new Fayman entities including, Group component
auditor oversight, this has been considered to be a key audit matter.
Our procedures focused on having appropriate involvement in the
component auditor’s risk assessment for the Fayman entities, including
involvement in the design of specific audit procedures, and oversight of
audit evidence to support conclusions.
We performed the following:
•Performed a Group risk and component materiality assessment
to determine the risks and scope of procedures to be performed
for the Fayman entities;
•Determined component specific materiality for the Fayman
entities and based on the nature, size and risks associated with
the Fayman entities assigned a level of significance for t he
component;
•Identified group specific risks associated to the Fayman entities,
including the extent of audit procedures, as a result of the
component significance;
•Communicated to the Fayman entities audit team significant and
other risks identified and the extent and nature of audit
procedures to be performed;
•Held discussions throughout the audit process with Fayman
entities audit team to oversee the work performed, conclusions
reached, including understanding any key judgements and
findings relevant to the Group audit;
•Performed a review of the Fayman entities auditor’s work
performed as part of their planning activities and the final audit
procedures in accordance with the referral instructions;
•Held discussions with Fayman entities management; and
•Performed a site visit to Melbourne where the Fayman entities
are located, meeting with local management and inspecting the
new manufacturing plant facilities. At the same time, we met
with the auditors of the Fayman entities and assessed the
auditor’s competency and skills to rely on evidence gathered on
our behalf to support the Group opinion.
The component auditor was required to provide written confirmation
to the group audit team explaining work performed, the results of that
work as well as key documents supporting significant findings or
observations. We performed an assessment of the appropriateness of
their procedures and conclusions by reviewing work completed.
Other information
The 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, and the Climate Related Disclosure, which is expected to
be made available to us after the date of the audit report.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information 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 and the Climate Related Disclosure, 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.
59

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 use
This 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.
Nicole Dring, Partner
for Deloitte Limited
Christchurch, New Zealand
21 February 2024
60

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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

22 February 2024

COMMENDABLE GROUP PERFORMANCE IN A DISRUPTED YEAR

Highlights – 12 months to 31 December 2023

Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its FY2023 full
year results. Reported NPAT
1
Attributable to Shareholders was $5.2 million (FY2022: $19.4 million).
Reported earnings per share for FY2023 were 3.7 cents per share (FY2022: 13.7 cents per share).

Underlying
2
NPAT Attributable to Shareholders of $19.0 million (FY2022: $27.6 million) was at the top
end of market guidance. Underlying earnings per share for FY2023 were 13.4 cents per share
(FY2022: 18.3 cents per share).

• Group FY2023 financial results:
o Underlying NPAT of $38.4 million, down 17 per cent (FY2022: $46.4 million)
o Reported NPAT of $24.7 million, down 35 per cent (FY2022: $38.2 million)
o Underlying EBITDA of $67.5 million, down 13 per cent (FY2022: $77.9 million)
o Revenue of $565.4 million, down 9 per cent (FY2022: $619.2 million)

• Divisional summary:
o Global Proteins produced a strong performance, reflecting the ability of the division to
execute its strategy and adjust to market conditions
o The Horticulture division produced an admirable result, with higher in-market prices helping
to offset lower volumes caused by Cyclone Gabrielle
o Logistics generated a solid result despite the impact of lower volumes together with
geopolitical tensions in key trade routes

Mike Petersen, Chair of Scales Corporation, stated: “Our diversified strategy has, once again, proved
to be an important factor in our success in what was a disruptive year. This, combined with the ability

1
Net Profit After Tax
2
Underlying results exclude some New Zealand International Financial Reporting Standards (NZ IFRS) non-cash and other
adjustments. In line with current market practice, “Underlying” includes the effects of NZ IFRS 16 Leases. A reconciliation
between Net Profit and Underlying Net Profit, EBITDA and Underlying EBITDA is provided in Appendix A of our annual results
presentation pack.

2

of our divisions to execute their individual strategies during testing times, produced very commendable
Group earnings.”

“Global Proteins and Logistics performed strongly, with Horticulture producing an admirable result,
having dealt with the significant effects of Cyclone Gabrielle during the year. This is in no small part
due to the skills and resilience of the entire Scales team.”

Andy Borland, Managing Director of Scales Corporation, noted: “I would also like to mention the
aptitude and hard work of the Scales team. The Cyclone touched the lives of a significant number of
our staff members, and many more people within our Hawke’s Bay community. To see the results of
their hard work despite the adversity that they faced is testament to the strong culture that exists
within the Group as a whole.”

“We continue to keep Sustainability to the forefront of our minds, and it was an important factor during
the remediation of our orchards. A number of new initiatives were implemented throughout the year,
and we will be pleased to share details of those with you in our Climate Related Disclosure report,
which will be released in April 2024.”

“During the year we were delighted to announce the establishment of our joint venture with Esro Food
Group, which has provided us with a strategically important European presence for our Global
Proteins division. Significant progress has been made on this operation, with the first processing line
commissioned towards the end of the year.

We continue to operate with a strong financial position, with net cash of $12.0 million as at
31 December 2023.”

During 2023, Scales paid dividends of 19.0 cents per share
3
. Our dividend payments for FY2023 are
likely to revert to 2 instalments, with the first instalment of 4.25 cents per share having been paid on
18 January 2024. We will review, and advise on, a second instalment in respect of FY2023 in early
May 2024.

Divisions

Global Proteins
Underlying EBITDA for Global Proteins was $54.5 million (FY2022: $60.2 million), a decrease of 9 per
cent.

3
Scales declared the following dividends in respect of FY2022, which were paid in 2023:
• an interim dividend of 6.0 cents per share on 9 December 2022, paid on 16 January 2023
• a second interim dividend of 3.5 cents per share on 23 February 2023, paid on 31 March 2023
• a final dividend of 9.5 cents per share on 1 May 2023, paid on 7 July 2023

3

Mr Borland commented ”Global Proteins delivered a solid result in a year when its petfood ingredient
customers were rebalancing their inventories to lower, pre-COVID levels. This resulted in lower
volumes sold. Despite these new market conditions, the division performed well, adjusting its
operations accordingly.”

“Fayman delivered a pleasing first full year contribution, with its edible proteins operations
complementing our petfood ingredients operations.”

“The overall expansion of the Global Proteins division is providing a strong foundation for future
growth. Meateor Australia and Esro Petfood made excellent progress during the year, with both
businesses operational by the fourth quarter. Whilst these businesses are currently in transitional and
start-up phases respectively, we believe that these investments will be extremely strategically
important for the division in the long-term.”

Horticulture
The Horticulture division produced an Underlying FY2023 EBITDA of $14.8 million (FY2022:
$17.0 million), a decrease of 13 per cent.

Mr Borland observed “FY2023 was a very challenging year for the Horticulture division, as it was for
the entire Hawke’s Bay horticulture industry. However, the division produced a very commendable
result given the significant physical, financial and volumetric impacts of Cyclone Gabrielle.”

“Mr Apple’s own-grown export volume of 2,733k TCEs
4
was 18 per cent down on the prior year
(FY2022: 3,324k TCEs). However, Mr Apple experienced a strong finish to the season due, in part, to
limited supply in key markets, which in turn contributed to higher in-market pricing.”

“Mr Apple continues to focus on the supply of Premium varieties such as Dazzle
TM
and Posy
TM
to the
Asia and Middle East markets, a strategy that is supported by increasing in-market prices.
Development of these varieties was accelerated during 2023 and we anticipate higher sales volumes
as plantings mature.”

Logistics
Logistics delivered Underlying EBITDA, of $4.3 million (FY2022: $6.6 million), a decrease of 35 per
cent.

Mr Borland remarked “Ocean freight volumes for the Logistics division were impacted by a
combination of Cyclone Gabrielle and geopolitical tensions in key trade routes. In addition, its
airfreight volumes were, in part, affected by a slow start to the stone fruit season.”

4
Tray carton equivalent, a measure of apple and pear weight, defined as 18.6kg packed weight which equates to 18.0kg sale
weight.

4

“Notwithstanding these challenges, Scales Logistics was able to call on its supply chain experience to
navigate the difficulties and ensure on-time delivery of produce for both its internal and external
customers. We continue to appreciate the strategic value that the Logistics division brings to the
Group.”

Outlook

Mr Petersen noted: “Whilst 2023 was a difficult year, our teams dealt with the adversity with their usual
“can-do” culture. Looking forward to 2024, we anticipate a more normal year of trading, particularly for
Horticulture.”

“We anticipate that our petfood customers will continue to rebalance their inventory levels to pre-
COVID levels and note that Meateor Australia and Esro Petfood will continue to progress through their
transitional and start-up phases respectively. We look forward to realising exciting opportunities from
these key markets in the long-term.”

“Picking and packing has commenced at Mr Apple for the 2024 season and current crop indications
are positive. There is also strong initial demand for our early fruit.”

“Consequently, the Board is pleased to re-confirm the FY2024 guidance of Underlying Net Profit after
Tax Attributable to Shareholders of between $30.0 million to $35.0 million, implying an Underlying Net
Profit range of $47.0 million to $55.0 million and an Underlying EBITDA range of $81.0 million to $91.0
million.”

Mr Petersen also commented “As I progress through my first year as Chair, I have been impressed by
the tenacity and resilience of the Scales teams. On behalf of the Scales Directors and Shareholders, I
would like to thank each and every Scales team member for their hard work. Without them, we would
not be in the positive position that we are in.”

“I’m also delighted to advise that the Board has reappointed Andy Borland for a further 5-year term as
Managing Director. Andy’s contribution to the company has been significant and we look forward to a
continuation of this work for Scales Corporation in the coming years.”

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 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

5

by George Herbert Scales. Today it has operations across New Zealand, Australia, United States and
Europe. Find out more at www.scalescorporation.co.nz.

2023 Annual Results – announcement date Annual Shareholders’ Meeting and Director Nomination dates

Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.

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