2022 Annual Meeting Webcast

if i could have everyone's attention please uh great to see you all here um i'm particularly pleased to be here uh it's always a bit of a drama as you know uh traveling um between australia and new zealand but it is happening so yeah i said i'm really pleased to be here and while zoom and uh other online uh vehicles are a great fallback there's nothing like as i said last year being here personally and particularly seeing you all on a you know a personal basis in a certainly more than single dimensional basis which is what you see on zoom so um pleased to be here it's my uh my pleasure to welcome you to the 110th annual meeting of the company and the eighth since we became a listed company last year we had held our first ever hybrid annual meeting and we're doing so again this year whether you're here in person or joining us online i'd like to thank you and welcome you all as you may recall from last year shareholders proxies and guests attending the murder the meeting virtually will be able to hear and see a live webcast in addition shareholders and proxies have the ability to ask questions and vote on resolutions and i'll provide further details on those matters shortly now just some housekeeping matters for those of you who have joined us here in person first i'd like to remind you as a matter of courtesy to turn your mobile phones to silent also in the unlikely event of an emergency and we need to leave please do so through the marked exits and the venue staff will be available to help us there i'm pleased to confirm that we have a quorum and therefore declare the 2022 annual shareholders meeting of scales corporation limited open the items of business for this meeting and the resolutions to be considered by shareholders are contained in the notice of meeting which were sent to shareholders on the 6th of may our order of proceedings is shown first i'll briefly comment on the highlights of the last 12 months followed by review by andy borland our managing director then we'll attend to the resolutions where we'll cover each resolution in turn and invite questions specific to those items i'll shortly open the online voting and explain the voting process following that i'll explain the process for asking questions excuse me once the meeting is complete we hope that those of you present will join us for refreshments it will also be an opportunity to meet the directors and our senior managers and raise any questions you may have on an informal basis with regard to the online voting process if you're eligible to vote you will be able to cast your vote under the vote tab as shown on the screen once the voting has opened the resolutions will allow votes to be submitted to vote simply select your voting direction from the options shown you can vote for all resolutions at once or by each resolution separately your vote has been cast when the tick appears now to change your vote simply select change your vote you have a bit the ability to change your vote up until the time i declare voting closed you may submit questions on each resolution but being put to shareholders using the question process for those of you who have joined us in person those share those shareholders who are entitled to vote and proxies who have discretion as to how they vote should have received a voting or proxy form when they registered upon arrival at the meeting if you completed a postal vote you don't need to complete another voting or proxy form if you haven't received a voting or proxy form at the time of voting please go to the computer share desk in the foyer where their representatives will be able to assist you after voting you should place your voting or proxy form in one of the ballot boxes which will be passed around the room i'll invite you to vote up after all the resolutions have been introduced to the meeting i now declare voting open on all items of business for those of you attending via computer share online meetings platform the resolutions will now be open in the vote tab please submit your votes at any time i will give you a warning before i move to close voting so you will have plenty of time to vote and you will also get warning when the voting will close now i'd like to quickly summarize the process for asking questions online questions can be submitted at any time if you have a question to submit during the meeting please select the q a tab on the right half of your screen anytime as currently shown type your question into the field and press send your question will be immediately submitted should you require assistance of any sort you can type your query and one of the computer share team will assist using the chat function alternatively you can call computer share on eight double zero six five zero zero three four please note that while you can submit questions from now on i won't address them until the relevant time in the meeting please also note that your questions may be moderated or if we receive multiple questions on the one topic amalgamated together finally due to time constraints and importantly to ensure all shareholders have a chance to ask a question i ask that you limit yourself to asking two questions we may run out of time to answer all of your questions but if this happens we will answer them in due course via email for those of you present we'll offer you the opportunity to ask questions on or speak to each resolution being put to shareholders at the appropriate time as i indicated there will also be an opportunity to ask questions of individual directors and management informally after the meeting now what i'd like to do now is introduce my fellow directors who are in attendance either in person or online they are andy borland you all know andy is our managing director nick harris nick is our chair of scale's health and safety and sustainability committee and an independent director mark hutton mark is chair of scale's nomination and rem committee he's also chair of our finance and treasury committee and also an independent director alan isaac alan's the chair of our audit and risk committee and also an independent director now joining us online is nadine tunnelly nadine is a member of the health and safety and sustainability committee and an independent director and i'll just add that nadine certainly intended to be here but unfortunately she's been struck down with well we all know covert joining us also online is chi shin he is a director representing china resources i'd like to also note that members of scales management and staff are in attendance here and online as well as our external auditors deloitte and our lawyers anthony harper in addition kelly brown our future director is here in the audience now just a overview 2021 was another challenging year for many businesses including scales and we don't need reminding of that as we all too well know covert 19 affected areas such as labor availability markets supply chains and logistics our life was as we all know turned somewhat upside down however as in 2020 all of scales businesses operated throughout the lockdowns and the various alert level changes and we ensured that the health well-being and safety was the top priority for our staff i'll speak more about the efforts of our exceptional team shortly notwithstanding those difficulties an extraordinary effort was made by everyone in the apple team to pick pack and export the harvest food ingredients continued its remarkable growth path exceeding its long-term avatar target of 25 million dollars a target that was only set at the end of 2018 and the strategic benefit provided by scales logistics was evidenced in relation to the ongoing supply chain difficulties ensuring both scales businesses and our external customers were able to successfully export their produce as a result and with the benefit of diversification our results succeeded our revised guidance issued following our interim results last year with dividends being paid as planned 2021 put a strain on everyone both personally and professionally and it shouldn't be understated and we are extremely grateful for the tremendous efforts of all of our staff in supporting our customers suppliers local communities and each other throughout the year across the business our people face the challenges that were presented to them with strength and ingenuity their ability to adapt was tested every day as we strive to update safe work practices in line with changing situations our staff's courage was vital to ensure that our essential products and services continue to reach customers we're extremely proud of their enterprising spirit resourcefulness and extraordinary effort as in previous years we also observed the importance of our critical rsc workers within our team compared to 2020 the rsc workforce was approximately 14 lower over the key harvest period which place significant pressure on our local permanent team we're also aware of the mental and emotional toll that the last two years have brought and considered a number of strategies to help one of the tools that we implemented is a partnership with groov previously called mentemia a mental health and wellbeing platform that provides practical tips and tools to help our employees take control of their daily mental well-being andy will touch on this again later in the address despite the trying times teams have pulled together and the positive results driven and supportive cultural scales has shone through i'd like to take this opportunity to extend our thanks on behalf of the board to the full team of scales for their contribution and commitment which has once again been invaluable i also want to point out at this point to particularly commend the executive team of andy andrew van workum john sainsbury kent richie and steve canelli for the strength and i emphasize this leadership that they have shown over the past two and a half years that leadership has delivered in spades for scaled shareholders i can assure you of that in terms of governance we're pleased to have commenced the process around our board succession assisted and guided by specialist governance advisors boardworks as part of that process mark hutton and i indicated at last year's agm that we will not seek re-election at the current end of our current term which is scheduled to end in two years time and we'll continue to update you on our succession plans as they progress we're also delighted to welcome chi shin as our china resources representative on to the board during 2021 in addition to kelly brown our fifth future director kelly's tenure ends today and i'd like to thank her for a contribution over the past 12 months kelly treated the role seriously and i hope that she feels she has benefited from the experience in addition jeff smith was appointed as our chief operations and sustainability officer at the end of january this year jeff brings a wide range of operational supply chain strategy and investment experience from across the agri-business sector we believe these appointments serve to strengthen our already robust leadership and senior management group i'd now like to hand you over to andy who'll give you a broader update on last year and provide you up to date on sustainability and business operations for each of our trading businesses following andy's presentation we'll move to the formal business of the meeting as always we welcome feedback on any matters raised during today's presentation or other general matters in relation to the group over to you eddie thanks tom taller than me and good afternoon ladies and gentlemen the current slide summarises the topics that i'll cover in my presentation today which includes a review of 2021 an update on sustainability a summary of our individual business performance and commentary on the current year first a quick recap of some financial and operational highlights of the 2021 financial year this slide shows some of our financial and volumetric measurements for 2021 a few which i'll go through in more detail later despite the difficulties presented we set a record revenue target performance together with a substantial 29 increase in pet food ingredient volume sold this next slide illustrates a summary of our earnings over the last five years including the record revenue the group also generated very pleasing increases in both underlying ebitda and underlying npat attributable to shareholders moving on to some more detail in respect of our 2021 results together with the 9 increase in revenue we achieved a 15 increase in underlying ebitda 20 increase in underlying inpat which was another record result and an 8 increase in underlying inpat attributable to shareholders accordingly earnings per share were up 27 on the prior year this was an overall outstanding result which we believe was aided by our strategy of diversification together with the exceptional performance of all the teams the next slide summarizes some of the divisional highlights for 2021 and horticulture a lower volume of fruit and cost pressures were balanced by strong in-market pricing mr apple also commenced the automation of its fockatoo pack house and the insulation of trade nesting machines as tim has already mentioned food ingredients experienced an outstanding year with significant increases in volumes sold revenue and profitability we believe the division's diverse geographical locations proved beneficial for this result and logistics performed strongly in what were extremely trying conditions for the logistics industry as a whole the expertise provided by the division was invaluable to both internal and external customers this slide shows the movements and divisional earnings over the last five years most noticeable is the significant growth trajectory of the food ingredients division more on this later moving on to our balance sheet which continues to show a strong financial position the movement in capital employed mainly reflects capital expenditure primarily primarily at mr apple and revaluation of land and buildings in line with accounting standard requirements some of our capex projects are pictured on the slide other movements include an increase in working capital in line with our increase in revenue and a revaluation of foreign exchange derivatives again in line with accounting requirements our net cash position at 31 december decreased by around 15.5 million compared to december 2020 due primarily to the investment in the mr apple's new wakatoo focus cool storm notwithstanding this movement we continue to be in a strong position to invest in growth opportunity as they occur an increase in other liabilities was due to increase in deferred tax liabilities the next section i'd like to cover is sustainability it's been a very busy year from an environmental point of view and some of our environmental projects both big and small are listed on the slide one of our bigger undertakings last year was the commissioning of the new fox 2 cool store we're proud to note that not only does the cool store provide operating and financial efficiencies it also provides environmental efficiencies such as a reduction in the movement of freight other projects included a soil health project to help us understand our impact on the ecosystem and in-house carbon footprint assessment undertaken for meteor new zealand and the receipt of a report from aut on the potential carbon sequestration of apple trees all of these are covered in more detail in the sustainability section of our annual report which i encourage you to read whilst we don't treat our staff as just numbers this current slide provides a few statistics about our workforce a number which we are proud of we endeavor to provide an environment where staff can develop and grow we were delighted that one of our team members celebrated their 45th year working with us that level of knowledge and expertise is difficult to replace we also seek to provide an equal opportunities workplace and hope that the success of our female senior leadership team and staff members helps to inspire others as tim mentioned earlier all our businesses con continue to operate during lockdowns and level changes in 2021. using our pandemic preparedness policies we are also able to adapt our covert 19 response as necessary including new contact tracing technology i'd also like to stress how important health and safety is to our group from a physical mental and emotional viewpoint a view a few of our health and safety initiatives are noted on this slide including our partnership with groove a business established by sir john kirwan and technology entrepreneur adam clark to help people with their mental health it provides an evidence-based self-care product for workplaces including practical tips and tools to help users take control of their daily mental well-being we're eager to embed mental health and well-being into the daily working lives of our staff and look forward to seeing the impact of that has moving on to an update about divisional businesses starting with horticulture whilst we over we encountered an overall decrease in apple volumes in 2021 there was a pleasing six percent growth and premium varieties including significant growth and sales of dazzle and posey over the 10-year period this represents a compound annual growth for premium varieties of 14 which aligns with their orchard redevelopment strategy the decrease in traditional volumes was mainly a result of inclement weather and a decrease in the number of traditional variety orchards due to the orchard redevelopment as mentioned earlier we achieved an overall increase in pricing this was due to a combination of reduced in-market volumes better fruit size for certain varieties and strong demand for varieties such as dazzle resulting in prices that were above prior year levels for most varieties total export volumes decreased by just under two just under five million tcs with external grower volumes reflecting a challenging season for nelson growers during last year we commenced our multi-year investment and automation plan to increase productivity and sustain margins with installation of trading nesting machines at the fox 2 pack house this complements the commissioning of the fokker 2 cool store in february which has already provided financial and operating efficiencies we believe that when finished the automation project will result in focus being one of the world's most automated apple pack houses and will significantly enhance pro labor productivity mr apple continued to plan and redevelop its orchard with 35 hectares converted into primarily dazzle and nz prints varieties during winter 2021. this together with our intensive planting techniques are expected to help increase prices and yields as the orchards reach commercial scale we believe the outcomes from these projects will help us to sustain our margins pleasingly we experience strong growth in our asia and middle east markets last year was some with them accounting for around 72 percent of sales and that of china comprising around 20 and of that china conference compromising comprising 20 sorry however i'd like to note that sales to russia this year have been suspended for obvious reasons we've continued to invest excuse me in their branding and marketing strategies with a particular focus on customers in these key markets in addition to consolidating dazzle's early strong and growing presence there we we undertook market research with consumers in china vietnam and thailand to provide a baseline baseline of brand awareness affinity and conversion and whilst the mr apple brand is seen as meaningful the market research identified there was opportunities to differentiate it and and make it more relevant so new simplified branding has been developed for mr apple with a couple of examples shown on the slide this continues to link to the mr apple five-point promise and is being incorporated in packaging and other marketing and advertising material moving on to food ingredients and that's its outstanding performance for the year as mentioned earlier the division generated significant increases in volumes revenue and profitability in 2021 reflecting both the ongoing demand for global pet food and the benefit of its geographical protein diversification strategy shelby in particular couldn't continue to grow strongly this was assisted by increased volumes being available through the commissioning of a new plate freezing capacity in the toll processing facility at dodge city kansas underlying ebitda of 35 percent about 35 million a 52 increase on last year significantly exceeded the food ingredients long run ebitda target of 25 million which was only set three years previously volumes were down on only slightly on last year's record volumes due to a lower availability of product and yield again strong domestic markets help negate some of the difficulties in export the pet food industry continues to grow with reported increase in global pet food products over eight percent in 2021 led by a 17 increase in the asia pacific region north american markets rose at the second highest rate of almost 13 there is also reported increase in global pet food sales including an increase of almost 10 in the usa in 2020 and there was a projected five percent increase for 2021. as in recent years the strengths of the industry is being attributed to an increase in pet ownership due to covet 19 and a focus on pets health and well-being while supply chains continue to be impacted by strong global shipping demand as well as port and logistics constraints the impact on media new zealand and shelby was lessened due to their respective domestic commute customer bases so the global strategy for the pet food ingredients division is to be a key provider of pet food ingredients to a wide range of international brands whilst previous travel restrictions that limit our ability to pursue opportunities industry growth has reinforced our strategy of investigating both internal and external opportunities we're pursuing opportunities that will expand their geographical presence and protein offering and we're also seeking to expand their product range with added value and functional pet foods in addition due to our confidence in the market and particularly in the usa our division ceo john sainsbury is in the process of relocating to the usa on a permanent basis to further drive this growth john has previously lived and worked in the states and that along with his leadership abilities means he's able to hit the ground running and it's already reviewing a significant number of potential projects last but certainly not least is the logistics division the challenges faced by the supply chain and logistics interests have been well documented in the press and are unfortunately showing no sign of abating as a result the expertise and experience of the scales logistics team proved and continued to prove strategically important for other scales divisions as well as external customers an exceptional effort by the team provided a strong result with a five percent increase in revenue revenue and a 17 increase in underlying ebitda compared to 2020. this was despite a decrease in volumes freighter due to lower apple volumes and reduced sailings pressures are unfortunately expected to continue in the availability of containers and ships labor shortages increase costs and high demand so moving to the outlook for the current year our diversified agribusiness strategy continues to provide some mitigation to the global difficulties being experienced food ingredients continues to trade strongly and its earnings are now forecast to at least at least match those of last year apple prices are strong compared to last year and we have had a positive start to sales in asia and near markets due to a few reasons which will go into the next slide mr apple's crop volume was down around nine percent this year as a result we're pleased to reconfirm our initial market earnings guidance for 2022 at this present time i'd now like to give an update on trading for each of the divisions as mentioned within the horticulture division total pick volumes of around 4.3 million tces were lower than both originally forecast and 2021. however decrease in crop volume is not unique to mr apple in may pipfrick new zealand revised its crop estimate down by 15 percent for the hawke's bay region and 12 for the national crop by comparison mr apple's total pick volumes approximately 10 percent lower than its previous crop estimate for this year and 9 down on last year the decrease in their pick compared to last year was due to a number of factors this included a portion of orchard that was either not in production or producing at lower levels due to recent redevelopment into higher value proprietary varieties in addition approximately 23 hectares of least orchard principally planted nutritional varieties was not renewed weather also played its part as we've indicated on the slide the effect of these factors are summarized in the volume bridge chart at the bottom right of the slide notwithstanding the lower apple pick was another amazing effort by the team to harvest the crop packing is ongoing with the initial export packout rate in line with previous years and as i previously mentioned early pricing indications are positive with prices in the near markets up on 2021. this has helped negate the increase in overall costs especially with a substantial increase in sea freight expenses there has also been a positive start with posey and dazzle being well received across all markets mr apple expects to progress the focus to pack house automation project once this year's harvest is complete and we expect this will continue into next year well then if within our food ingredients our pet food business are continuing to form strongly in addition to organic growth john sainsbury is continuing to explore opportunities in the usa and elsewhere with value-adding options also being actively pursued in australia our exports have outperformed expectation and as of 31 december 23 we note that we'll no longer have an exclusive ongoing relationship with our existing supplier in terms of scales logistics difficult global supply chains conditions are ongoing with restricted shipping capacity labor shortage and increased costs however we're confident the logistics will continue to provide significant strategic support to its customers including mr apple and meteor in respect of overall group trading we are anticipating higher net interest income for the year in addition no material m a costs have been incurred to date so that concludes my presentation we'll answer questions following the resolutions but in the meantime i'll pass back to tim to cover the formal part of today's meeting thanks andy we'll now move to the business of the meeting all items of business are ordinary resolutions and are required to be passed by a simple majority of votes the resolutions that we'll be voting on today are as follows resolution one authorization for the directors to fix the auditor's remuneration for the coming year resolution two re-election of alan isaac as a non-executive independent director resolution three re-election of nadine tunnelly as a non-executive independent director resolution four re-election of andrew borland as a director resolution 5 election of qin qi xin as a non-executive director resolution 6 authorisation that the maximum total pool of director's remuneration payable by scales to directors be increased current best practice for shareholder voting is by way of poll accordingly i require that a poll be held for each of the resolutions i and my fellow directors hold the following undirected proxies with respect to resolution one authorisation for the directors to fix the auditor's remuneration for the coming year 202 129 shares with respect to resolution 2 re-election of alan isaac as non-executive independent director 208 192 shares with respect to resolution three re-election of nadine tunnelly as non-executive independent director 218 157 shares with respect to resolution 4 re-election of andrew borland as director two hundred and six thousand six hundred and sixty two shares with respect to resolution five election of qi shin as non-executive director one hundred 218 fifty seven with respect to resolution six authorization that the maximum total pool of director's remuneration payable by scales to directors be increased one hundred and eighty 180 049 shares your board supports these resolutions and we intend to vote all these shares in favor of these resolutions i'll now move on to each of the resolutions resolution one relates to the remuneration of auditors this proposed ordinary resolution is to authorize the directors to fix the auditor's remuneration for the coming year in accordance with the companies act deloitte has automatically been reappointed the scales auditor as is usual with audit fees due to the complexity and changing nature of the company's affairs it is not possible to fix the remuneration at the beginning of the year i now move as an ordinary resolution that the board is authorised to fix the auditor's remuneration for the coming year are there any questions on this resolution thank you we'll move to the next resolution resolutions two through four relate to the re-election of directors the nzx listing rules state that the directors must not hold office without re-election pass the third annual meeting following the director's appointment for or three years whichever is longer accordingly ellen isaac nadine tunnelly and andy borland are required to retire at this meeting resolution two relates to the re-election alan isaac allen was first appointed to the board in 2014 and a brief biography for him was included in the notice of meeting alan being eligible offers himself for re-election and the board unanimously supports his re-election and recommends that shareholders vote in favour of resolution two i now invite alan to briefly address the meeting on his proposed re-election thanks alex thanks tim good afternoon everyone wherever you are today i welcome the opportunity to speak briefly to you by profession i'm a chartered accountant but i've had significant commercial experience with a number of leadership roles both in new zealand and internationally i mentioned the commercial experience because in my opinion experience is being underrated today in the interests of greater focus on diversity in many aspects of our life i retired from kpmg in 2006 after leading the firm in new zealand for 10 years and have been a professional company director since then in my governance roles i've had a number of audit and risk committee chair roles as i've done at scales since it listed in addition to my other current listed company rose oceana healthcare in scalara i have in recent times been on the board of other the enlisted companies opus wakefield hospital and flyway in part to respond to an observation made by the new zealand shelters association my other roles include chair of new zealand community trust chair of the basin reserve trust and deputy chair of the wellington free ambulance for two years up until the end of july last year i was the president of the new zealand institute of directors which apart from other interests facilitated me keeping up to date with many current and emerging governance issues again in response to an observation made by the new zealand shareholders association the board has strong focus on the skills required on the board to effectively govern scales and has a succession plan which is being referred to today by tim in this regard i confirm as a notice of meeting says that if re-elected this will be my last term as a director of scales i believe we have a great board with a high level of trust and respect in each other and i look forward to your support so that i can continue to add value to scales which is a strong balance sheet and is in my opinion well placed to achieve profitable growth thank you thank you alan i now move as an ordinary resolution having retired by rotation that alan isaac be re-elected as a non-executive independent director there any questions on this resolution thank you we'll now move to the next resolution resolution three relates to the re-election of nadine tunnley nadine was first appointed to the board in 2019 and a brief biography was also included in the notice of meeting nadine being eligible offers herself for re-election and the board unanimously supports her re-election and recommends that shareholders vote in favor of resolution three now to avoid some of the online glitches that we already had in the practice run for this i will actually read nadine's address to shareholders nadines this is from nadine apologies that i cannot be with you all in person today a reflection of our past two years have covered i would like to take the opportunity to thank the shareholders for supporting my ongoing involvement as an independent director of scales corporation i've been on the board just over three years now and thoroughly enjoy the role 12 months ago i accepted the role of chief executive for horticulture new zealand after four years the ceo of oaha honey limited manuka honey company in the wairapa these two roles along with my directorships at plant and food research and until late last year the strong wool action group limited has given me greater insights and understanding of our broader new zealand food and fibre sector and how and where that intersects into our international markets it has also allowed me to understand firsthand in many cases the ongoing and constant challenges of our scale ceos having pla have to face over the last few years with regard to covet i enjoy working with and supporting the scales health and safety well-being team especially over the last two years amidst this challenging covet environment the teams across the entire group have worked incredibly hard and has been that incredible team effort that meant our businesses could carry on operating when many others were unable to do at times as a director of scales i'm always proud to say that the team's commitment and dedication to continuous improvement for the group is directly reflected in our ongoing success i look forward to supporting that drive and commitment over a next term thank you i now move as an ordinary resolution having retired by rotation that nadine tunnelly be re-elected as a non-executive independent director are there any questions on this resolution oh sorry sorry yes yes no no it's a very appropriate question uh and something in terms of obviously the need for diversity and diversity is is much it's not necessarily physical but it's obviously has thought and view viewpoint and we certainly recognize the need for a focus in that regard and as we mentioned that opportunity to actually reinforce let's say diversity or certainly increase diversity on the board um is part of the renewal process that i referred to so as we indicated last year mark and i will be stepping down at the end of our term or towards the end of our term alan's made a commitment in terms of his re-election statement that will certainly provide the board with that opportunity to address the diversity issue and it's one which i can assure you is front of mind yeah now well until until we obviously look i understand it and i don't want to sound wishy-washy but what i'm really saying it is a key focus for the newborn you know the the board selection process and we're into that selection process at the moment and as i said it's very much front of mind so you can expect well you will expect to see more diversity on the new board over the coming terms once we have obviously in a position to give you names and we've made those appointments you'll obviously see that yes yes and but part of being the best person for the job it also means what's you know what is the best board that you can have and that board obviously needs diversity so um that's yeah obviously that's key we need the best people and diversity is obviously one of those criteria as i said you've got to measure the the board's performance is not measured by individuals it's measured by the whole okay um i'll move on resolution four relates to the re-election of andrew or as we know him better andy borland andy became managing director and was first appointed to the board in 2011 and a brief biography for him was included in the notice of meeting andy being eligible offers himself for re-election and the board unanimously supports his re-election and recommends that shareholders vote in favor of resolution four i now invite andy to briefly address the meeting on his proposed re-election thank you tim and um look i'd like to uh thank the board my bosses for um you know continuing to support me i thank you as shareholders for voting for me if you do i think this is my 15th scale's annual general meeting i'm very proud and privileged to be have been in this role for that time i um just i give thanks also to my team i've had a very strong loyal team across the various businesses that uh in scales and i feel working with them has been a absolute highlight of my 15 years at scales and i'd also like to point to my various i've had a lot of agri-business experience starting back in the days of being a banker in the rural bank and a westpac i feel like i've got a broad knowledge across the new zealand and global agribusiness scene this has been improved recently for my last five and a half years being on the rabobank board on that board i see a lot of trends and changing things that changing dynamics that are across the agribusiness scene on that has helped my broad knowledge and i bring help bring that back to scales to and and enhance and grow our diverse agribusiness uh business that we've got in scales so i think um again i reiterate uh my thanks for the support i've had and you know humbly look for your ongoing support and boats thanks andy it reminded me that we are his boss um i am i now move as an ordinary resolution having retired by rotation that andy borland be re-elected as executive director are there any questions on the resolution thank you we'll move to the next resolution resolution five relates to the election of directors appointed since the last annual meeting the anzac x listing rules state directors appointed by the board must not hold office without re-election past the next annual meeting following the director's appointment resolution five therefore relates to the election of chi shin ji shin was appointed the board in december 2021 and a brief biography for him was included in the notice of meeting shin being available offers himself for re-election or for election and the board unanimously supports his election and recommends that shareholders vote in favour of resolution five now again to avoid the glitches with the online connection i'll read shin's address to shareholders i was appointed last december as a the non-executive director representing china resources on the scales board my current role with china resources is the senior director of investment management i've been with china resources for nine years and have held director and cfo cfo roles within the group i have an mba from the university of north carolina at chapel hill and i am a cfa i think i bring a different perspective to the board from the aspects of strategy investment and understanding importantly of the chinese market i would welcome a term on the scales board and thank everyone for your support i now move as an ordinary resolution having retired by rotation the qi shin be elec as a director are there any questions on this resolution thank you we'll now move to the next resolution these are the ones that shareholders like resolution six relates to a proposal to increase the maximum total pool of directors remuneration available for your board of directors by fifty thousand dollars per annum from a total fee pool of six hundred thousand dollars to six hundred and fifty thousand dollars per annum effective from the close of this annual meeting shareholder approval is required under anz listing rule 2.11.1 appropriate fee structure is important to ensure that your company can continue to attract and retain the right director skills and experience to govern your business and that those directors are being fairly immuno remunerated for the work they do the proposed increase in the director's fee pool provides the board with a pool considered appropriate to remunerate a board of six non-executive directors including for associated committee work i now move as an ordinary resolution that the maximum total pool of director's remuneration payable by scales to directors in their capacity as directors be increased by fifty thousand dollars per annum from six hundred thousand dollars to six hundred and fifty thousand dollars per annum in accordance with the nzx listing rules the directors and their associated persons are restricted from voting on this resolution is there any discussion on this resolution oh sorry yes we we took into account obviously we looked at comparable companies in relation to remuneration of directors we also took into account the fact that for as to aid the transition process it won't necessarily be new director comes on existing director drops off that there might be a carrier a transition period so effectively that's where we were and from the work that we did you know it even in terms of increases in directive fees we were still around the medium we certainly were not the top and i says personally from my perspective we needed an amount of money available so we could actually attract good people the best people to be your directors and effectively you know we wanted to be in the market 2019 yeah mark's our chair of our group committee thank you i i know it's a favorite one for shareholders i yes sorry six years six and as said we're looking at obviously other renewal process that may increase um as i said as part of the transition so you know for example rather me dropping off from the day the new person arrives i might stay on as if a period of time to assist that transition so thank you for that we'll now move to finalize the voting and will answer general questions now once all the votes have been cast they will be counted by the company's share registrar computer share and scrutinized by the company's auditor the results of today's meeting will be released to the nzx on the completion of verification of voting if you've not already done so please cast your votes now and give your voting forms to computer share while we take questions now i think the boxes are going around at the moment so please if you still to vote please put the votes in the boxes so if there are any questions on the financial results the business update or any matters that you'd like to raise please do so through the computer share online meetings platform a reminder of the process is shown on screen for those of you present i'll open the floor now to any questions and i just wanted to know if we do run out of time which we shouldn't hopefully we shouldn't we will respond to any additional questions in writing following the meeting now um as i think i said before we do have a lot of the number of the senior management here in the room so it is an opportunity either now or at the end of the meeting to uh have those people you know answer any specific questions you like but you know the floor is yours i don't have any questions but i'd like to make a couple of observations firstly like you i'm so grateful to have the opportunity to be here to attend this meeting rather than being at home trying to follow what's going on but secondly the last two years have been a very very difficult period for the business community of new zealand as well as the ordinary citizens of new zealand and a number of businesses are really finding it extremely difficult other export companies also finding so right now the kiwi fruit industry are crying out for people to pick their fruit they're cool cool stores around the country full of processed fish but cannot get fish uh shipping to to export their products but in our case we're it's all done we've organized the last two years we've organized staff we've got a big pool of temporary people who come in and working for us to achieve those results and and we're getting our products offshore so hopefully others here share my views but i live in wellington and i came here today because i personally wanted to congratulate the board on an outstanding two years of operation also the management team and the support shown by the band of employees thank you look thank you for that uh you quite rightly referred to the management team i mean um these guys will are sick of me saying this but um i've been around in agribusiness for i think my bio says 40 years it's getting closer to 50 now so i don't want to update that though so 40 years and i've worked in a lot of businesses i've worked in two listed companies um i was a senior exec in one you know i've worked for zestbury a ceo i have not seen a a culture of personal accountability so strong in any organization and you know if you you talk to people like well the one i know based on more from the food industry than let's say the food ingredients business so i'll pick out andrew van workum who's here today um you know andrew lives and breathes this business and he takes it personally and you know if you don't take things personally i don't think you're doing it the job you should be doing he takes it personally you know we've got john sainsbury who you know it's a from it's it's a complex it can be a relatively complicated business when you're managing or responsible for business on several continents um you know and they're led by a guy who you know when i first heard about andy when i think i was approached to be involved on the mr lap apple board which is 10 years ago or more they said oh he's a former banker i nearly said no straight away um but then i i met him because he's got a great he's got a uh he's got great eq and uh so i look i'm not so no disrespect to our current banker here tonight yeah sorry well you know i always go off script guys as you've seen but um look i i i think the thing is that um i'm not being self-congratulated because i'm not in that i'm i'm not in that square it's as it's the manny obviously we've got some great board members but you know the resilience of the management team um you know kent richie who has been involved in the logistics business like i say the shipping business all his life you know having some you know i don't know how many of you know the shipping business well i used to work as a shipping clerk at one stage i wasn't very successful at that career so i moved on pretty quickly i was moved on pretty quickly um but you know having people like kent who actually the business runs with based on experience and favors and having someone like ken in the business who can call on favors who understands what he's being told is whether it's true or not true i guess as i said what i'm saying we're fortunate to have a team and a great team and that's why we've been you know we're always pretty careful i'm i'm all for change i'm going back to the board again you know i'm all we do need to change and some of us have been there you know we've been there for the time that we need to be there and it's time to change but we are very careful about how we implement change and back to the point of i think with the gentleman at the back getting the right people is so critical because for me you lose the cult people businesses are all about people you can have the best ideas in the world but if you haven't got the right people to make it happen the idea is worth nothing so we're very careful about getting the right people and it goes to our growth strategy there are many opportunities out there there aren't a whole lot of good people who can make those opportunities happen so you know yeah i'm going on again but to me it's a real passion of mine and i think as shareholders you do need to held us to account if you think the people that are running the business aren't the right people anyway long long-winded thank you anyway for the comments they deserve it yeah yes um which has obviously been very successful and has been a great uh contributor scale success for my own information and perhaps information of other shareholders how much of the raw material for that division is derived from new zealand producers thank you um andy i'll get you to answer that yeah well um of approximately the 150 000 tons we talked we we um noted that we traded it'd be just a little under 10 000 from new zealand and it it has been as high as 15 or 16 000 in prior years but uh the reduction of the uh lamb you know numbers is because lamb is one of our big products that we export so it's probably the reduction has been about an increa a decrease in the lamb you know volumes farmed um more than you know us losing market share or anything like that but the other point about that i'd make about that in new zealand is that that product is a bit like what we do with our pro fruit uh ten years ago eighty percent of pro fruits juice was exported and now it's you know you know probably flipped the other way it's more 80 domestic and that's happening with uh that 10 000 tonnes of of pet food product is being sold more to new zealand manufacturers as they ramp up their production thanks annie sir again on the your pet food um you've branded your own apples uh and that sort of thing so i'm just wondering why don't you brand your own pet food yeah look it's a good question uh we we feel that you know our customers are those branded cus you know branded businesses uh purina mars muckers they all have those big branded production you know even in new zealand we sell to canine natural and ziwi and and really it's been a desire to not compete with our customer base so there's a whole lot of skill set required to build a brand and and what mr apple's building up their teams and that customer director consumer so we're a if you like business to business model and and we're finding that um you know a good space to be people say like it's a it's a commodity but you know i feel like you change a commodity through um the value add we create for it we change its shape you know we take the meat from the bones so we and we put it frozen we add a lot of logistics to that pet food to get it in in the location for the brand manufacturer to use it when you get you get a 20 time slot to get into the nestled denver plant and you daren't miss it because if you miss that with your truckload of ingredients you know you're you're back in the queue to get it in or or they could cancel it so um so air sort of strategy is sourced from global and and get it to the plants that the people want it for uh you know on time and you know inspect and i feel like that that's a skill set you know that the branded companies don't have so we've sort of doing things that they don't have but we certainly one of the main principles is not to compete with our customers yes ma'am thank you a comment last year i asked about the use of wallaby meat because of the processing for the people here today i'd like to comment that john sainsbury has followed up twice on my request and he has pointed out that he there are difficulties and but they are have looked at wallaby processing and with a firm who are doing feral deer in new zealand there's lots of extra costs and there's lots of um embargoes or difficulties with compliance but i just thought that people here would like to know what a positive response thank you and thank you to john look thank you that i've asked the same question of john about the kangaroos in my place at home but excess ones i mean i don't want to remove them all obviously any other questions yes um yeah look it's uh an interesting question i think uh we play within the game as we see it and um at the moment certainly the relationship china or between our customers in china and scales is very positive and very strong as well know um we our major single shareholder is china resources um so we can you know from that perspective we're comfortable and we continue to build on that and andy's part of a an investment we've made in terms of representation in china itself so like any market and and this includes markets in europe uh and well in anywhere in asia as well i mean how much fruit or how how much of the food ingredient or pet food ingredients we'd supply to any particular market we always review it in terms of not having too much dependence on my market because we have other risks as you well know phyto-sanitary risks those sorts of things where markets can close on you for reasons totally outside your control similar to the political risk that you're talking about here so we we monitor that um but uh but other than that we just have to deal with the day-to-day that we can control and that's what you know what we do well there's no more questions um i'll uh i'll close the that session off but again the back to one gentleman who said we're here um i was keen to get here by i was going to say fair means or foul oh sorry sorry steve there's a couple of questions online oh yes sir please you can hear me tim uh so the first one is uh what impact has the covert lockdowns in china had on our sales there this year well look what i might do is ask mr van workum to actually respond to that so andrew yeah look it's a good question it's it's the last couple years have been hugely challenging um but we've managed to maintain our sales in china it's very very good market for the mr apple business and our brand is very strong and and we represent in the order of 50 of the new zealand fruit that goes to that market so and we have a lot of long-term relationships particularly retail online developing that part of the business so it's very important it's been challenging but we've found a way to make it work thanks second part is in a time of logistical challenges has scales been able to get all desired product to market does mr ritchie want to answer that question thank you it's not a free lunch ken thank you tim uh well yes it's been a huge challenge to get all the fruit and food ingredients away sliding schedules have caused disruption ports of auckland hasn't been exactly uh easy path but i can assure you that both mr apple and meteorol product is on the water and we have all the capacity we need to ensure that we get both away thanks ken steve and lastly can you provide some background clarification of your hurdle rate for new investments is there a risk that this prevents you from seeing the wood woods for the trees how do you mr managing director well um yeah it's obviously a very uh unique time for her for you know returns on capital uh we've seen this um very very low interest rate environment and now lately the the increase is off a very low base but we've um we're still feeling that there's opportunities in the in the lane we're choosing to to um to swim in if you like on that front uh we have lowered the rocky hurdle to 12 and a half percent and we feel like there's opportunities in that space for us to invest the capital that we've got available i think as we've said before i mean we take a well-considered and i suppose somewhat conservative approach to that part or any new investments um it's taking us a while but you know we're confident we will achieve something in that space you know in the near term and that's all the online questions done thanks okay well look thank you and again i just wanted to say it's a real pleasure for me personally to be here um a real frustration on occasions that i haven't been able to get here i mean i'm talking throughout the year i've just been pleased to be able to make the agm in particular we are here so for those of you who've got us some of some questions of either the board or senior management please take the opportunity now to do that so we'll go and have a cup of tea and collar anyone you feel you want a collar and we actually appreciate the contact with you frankly uh particularly given you know the frustrations the last couple of years so again i thank you for coming so look um what we'll do now is i'll close the voting system in a couple of minutes so is there anyone who still has to get their vote in i mean if that's the case please let me know and we'll get that finalised so please make sure you have got it in steve can i now from your perspective close voting voting is now closed the results of all votes will be released to the nzx later today so as there's no further business i would like to thank you all for taking the time to connect with us today be it online or in person so i now declare the meeting closed and look forward to having a chat over afternoon tea thank you very much [Applause]