Thank you for standing by, and welcome to the Scales Corporation Limited Full Year Results. All participants are in a listen-only mode. There will be a presentation, followed by a question and answer session. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Andy Borland, Managing Director. Please go ahead. Welcome to Scales' full year results announcement for the year ending 31 December 2023. With me is Steve Kennelly, our CFO, and Geoff Smith, our Chief Operating Officer. Earlier this morning, we launched our results with NZX, including a slide pack that we'll base our comments on during this call. We'll run through the slides and then take questions. If you have further questions after the call, we'll be available for the rest of the day. With respect to an agenda, we'll go through the results and performance for 2023, then provide you with our current outlook for 2024. Moving on to a summary of last year's results. After a disruptive year, we're pleased to report a very commendable group performance with earnings at the top end of guidance. Underlying NPAT attributable to shareholders was NZD 19 million, and reported NPAT attributable to shareholders was NZD 5.2 million. Our performance was underpinned by strong Global Proteins result and also benefited from our strategy of diversification. Horticulture produced an admirable result, despite the effects of Cyclone Gabrielle, and Logistics successfully navigated lower volumes and troubles in key trade routes to deliver a solid result. Turning to slide 6. As in previous years, we've highlighted a few of our key slides. I'll go into these in more detail throughout the presentation. However, I'd just like to recognize the hard work, effort, and resilience by each member of the Scales team that's gone into producing these results. I'll now pass over to Steve to run through the financial results for the year. Thanks, Andy. The table on slide eight summarizes our group underlying and reported results. As Andy mentioned earlier, it was a testing year for the group, but our overall performance was positive, with underlying NPAT attributable to shareholders of NZD 19 million, which was at the top end of our previously advised guidance range. Reported NPAT attributable to shareholders was of NZD 5.2 million, was down on last year's NZD 19.4 million. However, this year's result included goodwill impairment and asset write-downs at Mr Apple of almost NZD 11 million, which were primarily due to the impact of Cyclone Gabrielle and related market conditions. Underlying NPAT and EBITDA were also below last year, at NZD 38.4 million and NZD 67.5 million respectively. Revenue was down 9% to NZD 565.4 million on last year's record revenue. Slide nine summarizes our five-year performance graphs for underlying NPAT attributable to shareholders, underlying EBITDA and revenue. Slide 10 sets out our performance by division. Andy will elaborate later, but in summary, the expanded Global Proteins division produced a strong underlying EBITDA of NZD 54.5 million. We received our first full year's contribution from Fayman, and continued to invest in our two newer investments, Meateor Australia and Esro Petfood. Horticulture produced a robust underlying EBITDA of NZD 14.8 million, despite the effects of Cyclone Gabrielle. This was part due to higher end market prices, which helped to offset lower volumes. We expect the effects of the cyclone to be largely limited to the 2023 apple season. There was also a solid underlying EBITDA from logistics of NZD 4.3 million, despite being impacted by lower produce volumes, as well as tensions in trade routes. Slide 11 shows the five-year underlying EBITDA trends for each of our divisions, noting that both Global Proteins and Logistics delivered record earnings in 2022. Our financial position is summarized on Slide 12. Our movement in net cash mainly relates to dividend payments, including those to minority shareholders, CapEx, including cyclone-related CapEx, and investment into Fayman, Meateor Australia, and Esro Petf oods. The movement of working capital primarily reflects realignment of trade and other receivables, trade and other payables, and inventories in line with more historic levels. I'll now hand back to Andy. Thanks, Steve. Moving on to a more detailed look at Global Proteins, there were relatively small decreases in revenue and earnings compared to the last year's record results, with the division's profit margins remaining in line with last year. As Steve mentioned, this year's result included a full year contribution from our Edible Proteins investment, Fayman, as well as the initial trading losses of Meateor Australia and Esro Petfood. Pet food and ingredient volumes also decreased compared to last year, primarily due to customers returning to lower pre-COVID inventory levels, and also our transition in Australia. We anticipate that for some proteins, inventory rebalancing will continue into the first half of financial year 2024. As you'll see from the table and graph on the right-hand side, we've incorporated the edible proteins volumes sold by Fayman as a separate data series. It's been a pleasing first full-year performance by Fayman, and we believe that as an edible protein exporter and distributor, it complements our pet food ingredients operations well. The next slide illustrates the overall growth trend for our pet food ingredients operations in terms of revenue and underlying EBITDA per kilogram.... As you can see, there's been a significant upwards trends from 2019 onwards, with a 55% increase in revenue per kilogram and a 201% increase in underlying EBITDA per kilogram. The slight downward trend in EBITDA per kilogram this year can, in part, be attributable to the startup losses of Meateor Australia and Esro Petfood. There are a number of factors that have driven this trend, which we've summarized on the slide, including: an increase in processed product, a change in product mix, and the introduction of blending and new product development at key US facilities. These factors have improved our product mix, increased our yields, and produced higher margins. This has been complemented by a continued performance in supply chain management, building on 20 years of excellent service for our customers. We thought we'd summarize the considerable strategic progress that has been made by Global Proteins in 2023. It's been a busy year for the division. The Meateor Australia plant was commissioned, with its first sales being made in Q4, and the first processing line at Esro Petfood was commissioned in Q4 also, with salmon and beef processing underway. Both these investments have seen as being extremely strategically important for the long term, and we'll be investigating other locations and opportunities for site optimization through 2024. In addition, as mentioned in the previous slide, new blending capability has been introduced into Hastings and Dodge City facilities. Moving on to Horticulture. It's fair to say that it was a difficult year for Horticulture, with a number of challenges presented to the business. As previously mentioned, the Horticulture division generated a very commendable result, given the physical, financial, and volumetric impacts of Cyclone Gabrielle. Unsurprisingly, volumes were lower, resulting in a decline in revenue and underlying EBITDA. However, margin remains in line with 2022. The focus on the supply of premium varieties to Asian and Middle East markets continued, with Dazzle and Posy performing strongly. You'll have heard the saying, "A picture is worth a thousand words," and I think you'll agree that this slide encapsulates that phrase. These are just a couple of the images that capture the condition of our orchards immediately following Cyclone Gabrielle. As you can see from the before photos, the land and trees were devastated, which was upsetting and distressing to everyone involved. However, as we reported earlier in the year, thankfully, all our team members remained safe. Thanks to the incredibly hard work and tenacity of our Horticulture team, together with support from local and national government, most of the orchards have been remediated. Only about 5% of the land that we've retained is yet to be replanted. In fact, if we didn't have photographic evidence, then when looking at the after photos, it would almost be hard to believe that the cyclone had such a devastating effect. Fortunately, the impact of Cyclone Gabrielle is expected to be largely limited to the 2023 season, with volumes and performance in 2024 anticipated to return to more normal levels. Slide 19 summarizes Horticulture's main KPIs. Mr Apple experienced a strong finish to the 2023 season, which was in part due to limited supply of fruit in key markets. This, in turn, contributed to higher end market pricing and an overall increase in the weighted average pricing for both premium and traditional varieties. Sales were supported by targeted marketing activities across the Asia and Middle East regions, including in-store sampling, branded displays, increased digital and social media, and season launch events. Increasing end market prices for our premium varieties, such as Dazzle and Posy, have reinforced our strategy to focus on these varieties. Development of these varieties was accelerated during 2023, following the cyclone, and we anticipate maintaining prices as plantings mature. Moving on to Logistics. The division produced a steady result, despite the impact of reduced volumes of produce and the need to navigate difficulties in key trade routes. We expect some of these difficulties to remain in place during 2024. However, the division performed strongly, producing earnings that were in line with the results of 2019 and 2021. As we've mentioned previously, the strategic benefits that this division brings to the group can't solely be measured in KPIs, and it continues to be an extremely important part of Scales. Moving on to capital management. ROCE was affected by lower current year earnings, and it should also be noted that both Global Proteins and Logistics generated record results in 2022, which has in turn produced significantly higher ROCE percentages last year. Overall, group ROCE was 10.8%, which is below our target of 12.5%. Horticulture accounts for the majority of CapEx, most of which was related to the remediation of the orchards post-Cyclone Gabrielle. The main CapEx related to planting and regrafting, but it's also included tractor replacement and repairs to windmills, RSE accommodation, and irrigation. Shelby has invested collection and processing plant at a supplier facility, further securing supply. Future investment will continue to be prioritized towards Global Proteins. Moving on to sustainability. We've continued on our sustainability journey this year, and we look forward to releasing our climate-related disclosure report in April. In the meantime, this slide summarizes some of the initiatives undertaken in 2023. People continue to be on top of mind, being the lifeblood of our business. In addition to support given to employees post-cyclone, Mr Apple has continued to make good progress on its people strategy with initiatives such as leadership programs and new digital systems.... Our environmental programs included water and decarbonization initiatives at Meateor New Zealand and Meateor Australia, and also water efficiency initiatives at Shelby and Mr Apple. We look forward to providing some additional information in our annual report in more detail in our CRD report. Finally, I'd like to touch on our outlook for the financial year 2024. Overall, we have a positive outlook for 2024. We anticipate that Global Proteins will continue to perform strongly, despite some further rebalancing of inventories amongst its pet food manufacturing customers, as mentioned earlier. While Meateor Australia and Esro Petf ood made great progress in 2023, both these operations have some headway to make before they complete their start-up phases. However, once completed, we believe there will be a number of exciting opportunities to be realized, and we're looking closely, working closely with our partners on these. The horticulture season has commenced with the 2024 harvest and progress at Mr Apple. Current volumes indications are in line with those previously noted at 3.4 million TCEs. There's strong initial demand from the Asia and Middle East markets, and our first shipment of Posy departed for China earlier this month. Taking the above into account, we're pleased to reconfirm our previously advised guidance of underlying net profit after tax attributable to shareholders of between NZD 30 million and NZD 35 million. Lastly, dividend payments are expected to be made in two installments this year. The first installment of NZD 0.0425 per share was paid in January this year, and we'll review and advise on the second installment in early May 2024. Total dividend payments are expected to be between 50%-75% of underlying NPAT. That ends our formal presentation today; however, please note that Appendix A of the slide pack provides additional financial information and reconciles underlying earnings to reported earnings for each of our divisions, as well as the group. We're now happy to take questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matt Montgomerie with Forsyth Barr. Please go ahead. Good morning, Andy and Steve. I might just try and get into the destocking with customers in, in Global Proteins. I suppose you're reasonably clear on that it's lingering at the moment in, in certain proteins. Are you able just to comment more on, I guess, how you see this phasing through the course of the year? What, what proteins it's concentrated in, and I guess, what percentage of the business you think still has to go in terms of, yeah, just rebalancing inventories, et cetera? Yeah, look, it's we're just anticipating it in these first few months of FY 2024, and, you know, really do think it'll be reverting to normal patterns from the half year on. So it's just that, you know, there was the COVID effect. People picked up a lot more pets. We're hearing the stats of, you know, people returning pets to shelters and, you know, those sort of things. So we feel those trends are starting to, you know, absolutely, you know, return to more normal. And the product is probably not, you know, specific to any one product. It's more about the overall trend, is that... You know, the positive side is that our main customers and their premium products, you know, are still growing strongly. So, you know, we're not sort of seeing it as a major issue. Probably to add to that is, I think at the start of this year, at least anyway, we've seen definitely seeing customers pulling to contract, which is a positive sign, so I think that gives us we can be cautiously optimistic. Perfect. Thank you. I might stick with, with proteins just on the margin front. Looks like a reasonable pullback in the half, which is probably expected to more normalized levels. Are you able to comment on, I guess, the drag of, of the Meateor plant and, and Esro, and if you see sort of the second half run rate as indicative as the base heading into 2024? We sort of see the last quarter of this year as, you know, those two businesses hitting their, you know, more normal capacity would be what we'd hope for them to be. And, yeah, you're really starting to contribute. So it's, it's probably just, you know, the Melbourne plant is actually finished and operating, but it's just building up its volumes and, yeah, getting those cost efficiencies in place. In Europe, the Esro plant is, you know, ongoing under construction, and it's going to, you know... We're seeing that opening 1 October this year. You know, not opening, but getting more operationally efficient. So, yeah, full year impact for those two businesses would be, you know, in next year's results. Thank you. I might just go on the horticulture side, just on your volume assumptions for the year. You know, the 3.4 million looks so 20% below guidance that you set a few years ago when you set out the medium-term targets. Can you just sort of talk through the basis of the volume assumptions, and if we, I guess, over the medium term, should still be thinking about that sort of low- to mid-4 million number from a volume perspective in the hort business? Yeah, look, I think it's the older varieties are really, you know, battling in Europe, so we are pulling more of them out, you know, the Braeburns and Pink Lady. So, you know, we are in that process of redeveloping into the, you know, continuing to redevelop into the Dazzle, particularly Dazzle and Posy. So, you know, I sort of see the volumes probably not getting to the level that you've, you know, the prior targets, but, you know, more of the premium apples should show the results being, you know, overcompensating the loss in volume. Perfect. Thank you. I might just leave it there. Thank you. The next question comes from Christian Bell with Jarden. Please go ahead. Yeah, good morning, Andy and Steve. So just if I just start on Global Proteins, following along from previous questions, it sounds like you're cautiously optimistic, I think, as you described it, or quite comfortable around underlying demand for your product. But are you able to just... Like, are you like, sort of balancing the destocking that you're expecting to continue to see through '2024 with, I guess, more plants coming online at the end, in the last quarter of this year. Are you actually, are you expecting to return to growth in '2024? Or is it more likely to be flat to show the decline? Yeah, look, definitely more likely to come through in 2025, the growth, and it's really because of, yeah, that rebalancing being finished by, you know, half, you know, the, by June, say, and, and then these, you know, Australia gets up and running again. You know, obviously, it's replacing earnings we used to have and, you know, we had in Australia previously. So we get back into full operational, you know, rhythm in Australia and, you know, Esro Petfood also kicks in. And that full year impact of those two businesses would be shown in 2025. So, like, how, I mean, are you able to sort of provide like a clear picture on what—how to think about the growth story from here? So as you've sort of described, we've got Meateor Australia and Esro coming on. So, like, what type of volumes do you have capacity for, and would you expect them to be due in 2025, all going well? Well, we haven't sort of got down to the specific, you know, tonnage, you know, as a number, I suppose. We... You know, if you add, you know, Meateor Australia and Esro Petf ood with the growth projects we're working on in the USA, you know, we would see reasonable growth coming from 2024, 2025 on. We've got a number of initiatives in the States as well, that, you know, are going to be, you know, volume, volume accretive, in, in 2025, and so, you know, pretty positive for, you know, post, you know, in addition to twenty tw- you know, growth on 2022 would be our target for 2025. Growth, growth on 2022 in terms of volume or, like, earnings? All of the above. Okay, and sorry, like, what, where the initiatives you're talking about, like, is that more volumes going to new customers or existing customers? Are you sort of expanding geographically? Like, how should we think about how you actually achieve that growth? Yes, I would sort of see it being volume out of new initiatives, but also... And not so many, we're probably growing capacity to match the capacity that our customers are already putting in place. So, you know- Right ... Our biggest customers are continuing to build new plants and, you know, we're trying to, you know, our sort of goal is to help them fill those plants with the raw material they need. So basically, you're growing with your existing customers, which you've got reasonable kind of visibility over. Is that what you're saying? Yeah. Yeah. But then also, additionally, you know, obviously new customer, new customer base in Europe as well. And Okay ... We'd also see fish becoming a more, you know, a species that's gonna contribute more volume. Okay, okay. And so, how should we think about the mix of volume? There's obviously quite a large contribution from edibles this year, which looks like a lower value product compared to pet food. So how should we think about the future volume mix? Is it kind of most of your growth coming from edibles or more pet food? No, pet food. It'll be 2025 growth and just more beef, some more. And you know, trying to match our customers, the demands from our customers, you know, matching that supply. ... Great. It's just- There is an element of, well, we have an ability, I guess, to do, you know, dial up and down volume and particularly in America. Awesome. This might be a question for Steve. I was just a little bit confused on the graph that you provided in your presentation on slide 15, showing your sort of trajectory of revenue per kilo. It doesn't actually—like, it doesn't... Can you just explain it? 'Cause it doesn't make sense, 'cause if you divide your revenue by your total volumes this year, there's actually a decline in revenue per kilo, but on your chart, it's showing that it continues to go up. So, like, I'm just—I couldn't, I couldn't reconcile how you actually get your numbers. Yeah. So, it's Geoff here. That graph only represents the pet food volume, so it doesn't include the edible part of our volume. But if you take your NZD 2.56 revenue per kilo and multiply it by pet food volume, that's still more revenue than what you actually got for the year. Yeah. So we've had to make it comparative to pet food, we've had to add back LP's revenue. So that's Meateor Pet Foods LP, obviously, from an accounting point of view, we only include a share of Meateor Pet Foods LP's net profit before tax. So our reported revenue number doesn't include their revenue. But for the purposes of this graph, to illustrate things accurately, we've included Meateor Pet Foods LP's revenue. That's mainly 'cause their volume is included, so it was only appropriate to include their revenue. Okay. Okay, so this is a better sort of underlying, sort of picture of- Yeah. What's going on? If we hadn't have done that, yeah. Okay. Okay, cool. Sorry, just a couple questions on horticulture. Can you just, like, for your, you're expecting a recovery or normalization to more normal trading, sorry, normalization to of trading conditions in 2024. Can you just elaborate on your assumptions on pricing in comparison to 2023? 'Cause obviously you kind of, you participate in the, in the sort of or took advantage of, you know, lower supply. So what are your assumptions for pricing in 2023, basically? In 2020- Sorry. 2024? So we, we're assuming that in-market pricing is back a bit on 2023. Okay. When you say back a bit, like, how, like, is it negative 5%, 10%? Yeah, it'll be single, single figures. Yep. Okay, cool. And then I assume that you're sort of assuming a further cost normalization this year from better access to labor and freight costs coming down and things like that. Is that kind of baked in there? Freight's probably the best one, but, you know, it's, it's coming down, but, you know, we've still got the hangover of, you know, the prior government and, you know, forcing wage rate increases across the group, across the market. So that's been, you know, factored into our forecasting, but it's still disappointing. Right. Okay. Do you guys have an EBIT margin target? Yeah, do you have an EBIT margin that you're targeting anymore? 'Cause you used to provide that, but you don't anymore. Yeah, no. We're just... I guess we're just looking at the overall forecast position. We're gonna do some more work on that during the year, sort of, you know, post the 2023 year impact. Okay. But yeah, so like it's pretty, it's probably pretty unlikely that we're getting anywhere close to 12.5% anytime soon? Yeah, look, yeah, we'd have to do some work on that before we could really make any sort of informed comment. Okay, cool. Sorry, just one last question. For apples, your distribution into China, are you, like, exploring any new sort of ways or any sort of new forms of distribution, such as, like, online to offline or anything like that? Well, our apples go into those markets, but through people we sell to, so, you know, they're, they're across all of the, various avenues to the, to the consumer. It's just that, you know, we're not doing it directly ourselves, but we're definitely selling to, you know, entities that are getting, you know, access to those markets. So, you know, talking about, you know, if, does, you know, Mr Apple apples get sold over the internet? Absolutely. I mean, we've got... I was over there last year, and we went to, you know, a market that was, you know, auctioning off live their apples, and they were getting, you know, bought at, you know, at the auction, you know, online auction, and, you know, distributed directly to that customer. But one of our, you know, customers in China was facilitating that. Yeah, I guess the recent sort of economic challenges in China, what kind of pressure are you seeing on the products that you're selling? Are you sort of feeling it or- I think, yeah, particularly if you're talking about our new v- you know, Posy and Dazzle, we couldn't be more pleased the demand those two varieties are showing. I mean, that's sort of a premium product that seems to look through the challenges the economy is having. Okay, great. Okay, that's great. That was all my questions, so thank you. Cheers. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Joshua Dale with Craigs Investment Partners. Please go ahead. Good morning, Andy and Steve. Just starting with Global Proteins, the outlook for Shelby specifically, you know, your, your guidance, you know, particularly with regard to back selling a minority interest would imply slightly down for the year ahead. I mean, is, is that solely attributable to some impact from inventory rebalancing in FY 2024, or, or is there something else going on? No, it's just definitely the inventory, you know, you're rebalancing really. It's just, you know, following our customers, you know, trends. But again, later in the year, you know, we're anticipating, you know, that, turning around and, and, and picking up. Okay, great. On Meateor New Zealand specifically, you know, they had quite a soft year this year, FY 2023. I appreciate there's a rebalancing of land inventory going on, and also, you know, a land supply glut in Aussie that affected that. How do you expect that to play out in FY 2024? Just, yeah, if you like, normalized. You know, we were sort of seeing it definitely being a transition year to get back to, you know, those equilibriums where we go, the business performs better. So definitely would see that, those, the volume and pricing, you know, stay normalized to the more traditional trends. Okay. I mean, do you expect Meateor New Zealand to post a stronger result over the coming 12 months versus what you've just delivered? In 2025, we would... We 2024, I think, as Andy said, we it's still gonna be subject to rebalancing, given the, you know, the majority of its sales are land. Great. And, just the last one from me on horticulture. You mentioned at one point after the cyclone that some trees had been flooded. They appeared to be okay, but there was possibly a lingering risk of the tree dying at a later date. Is that risk behind you now, do you think? We think, yeah, pretty, pretty optimistic. I guess that's behind us. I mean, the trees look fantastic, they've got a good crop on them. So yeah, it's just been amazing how, you know, resilient they have been actually, given the treatment they got. Okay. That's great to hear. Thanks very much, guys. Thank you. There are no further questions at this time. I'll now hand back to Mr. Borland for any closing remarks. Well, thanks very much for attending the call. Yeah, obviously, we're available to take, you know, separate calls during the day. Yeah, thank you for your ongoing support and interest. That does conclude our conference call today. Thank you for participating. You may now disconnect.