SCL
25/02/2016 08:30
FLLYR
PRICE SENSITIVE
REL: 0830 HRS Scales Corporation Limited
FLLYR: SCL: 2015 Annual Results announcement
SCALES CORPORATION DELIVERS RECORD PROFIT, 112 PER CENT ABOVE 2014
Highlights - 12 months to 31 December 2015
o FY2015 financial results above both IPO forecast and FY2014:
o Net Profit for the Year of $38.9 million, 87 per cent above IPO forecast
and 112 per cent above FY2014.
o Underlying Net Profit of $35.7 million, 71 per cent ahead of IPO forecast
and 80 per cent above FY2014.
o Underlying EBITDA of $61.4 million, 49 per cent ahead of IPO forecast and
54 per cent above FY2014.
o All divisions exceeded IPO forecast and FY2014 profit.
o Outstanding performance from Horticulture division.
o Auckland coldstore opened November 2015, on time and on budget and to
strong customer demand.
o Further significant investments and developments through the Storage &
Logistics division including the long-term edible oil storage contract,
acquisition of a Napier-based bulk liquid processing facility, and strong
organic growth in airfreighting operation Balance Cargo will underpin
medium-to-long term growth outlook for this division.
o Excellent performance from Food Ingredients strengthened through strong
trans-Tasman procurement.
Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today
reported its FY2015 full year results, achieving record profitability for the
group which is now in its 104th year of trading.
At $38.9 million, Net Profit for the year (including non-cash IFRS
adjustments) is 87 per cent ahead of the IPO forecast and 112 per cent above
the FY2014 result. Earnings per share from continuing operations for FY2015
was 27.9 per share up from 14.1 cents per share in FY2014.
Scales Corporation chairman Jon Mayson says: "It's an extremely pleasing
result, made possible by the outstanding commitment, attitude and drive of
the entire Scales team.
"All three operating divisions reported an increase in contribution above the
IPO forecast and the Horticulture division in particular performed
exceedingly well in FY2015."
Scales Corporation managing director Andy Borland notes: "The FY2015 result
reflects the impact of careful and diligent investment to respond to the
needs of our customers. Five years ago we began a process to invest heavily
in Scales - revitalising our assets, investing in our people, and investing
in the culture. We believe our FY2015 result has been made possible by that
investment."
Mr Borland says Scales continues to actively invest in its business with
$15.8 million in capital expenditure during FY2015, of which $11.3 million is
categorised as 'growth capital expenditure'.
"On the balance sheet we managed to lower net debt to $16.2 million at 31
December 2015. That brings average net debt for the year down to $32.5
million which is 24 per cent lower than Average Prospective Net Debt as noted
in our Prospectus.
"This places Scales in a very strong financial position, with considerable
headroom on all banking covenants," Mr Borland says. "Scales' stronger than
forecast financial position enabled us to pay both an increase in our interim
dividend to 6.5 cents per share and a special dividend of 4 cents per share
in January 2016 following a final FY2014 dividend of 7 cents per share paid
on 10 July 2015.
"The board expects to declare a final dividend of 6.5 cents per share in May
with payment in July." Mr Borland says.
Divisions
Horticulture
The Horticulture division delivered outstanding growth, with Underlying
EBITDA increasing from $23.9 million in FY2014 to $40.0 million in FY2015, an
uplift of 67 per cent for the year, Mr Borland says.
"This improvement in profit was largely a result of an excellent performance
from our premium varieties. During the past five years especially we have
made significant investments in our premium varieties and brand positioning,
including Mr Apple, Diva, Fern Ridge Fresh and other brands.
"It is pleasing to see that investment deliver both a material increase in
volume and price during FY2015. 418,000 more premium TCEs were exported in
FY2015 than in FY2014, an increase of 40 per cent. Improved premium varietal
mix, especially higher volumes of NZ Queen and Diva, coupled with continued
strong demand for our premium apples contributed to the New Zealand dollar
FOB pricing for premium varieties increasing by 15 per cent in FY2015.
"During FY2015 we sold more than 3.15 million TCEs of our own-grown fruit,
beating a volume target we had set down for FY2018. Accordingly we have
established a new target of 3.5 million TCEs of our own-grown fruit by
FY2020," Mr Borland says.
Storage & Logistics
"The Storage & Logistics division also achieved strong growth in
profitability with Underlying EBITDA increasing from $12.3 million in FY2014
to $16.3 million in FY2015.
"This was due to a return to more normal levels of trading from this division
as well as a number of significant milestones achieved during the second half
of FY2015."
These material and structural developments will secure ongoing growth from
this division for the medium term and include:
o The opening of Scales' Auckland coldstore in November 2015, on time and to
budget and to stronger than anticipated demand. The purpose-built coldstore
uses state-of-the-art coldchain technology and practices to deliver a
superior service whilst minimising environmental impact. On the site
rainwater is collected and reused and power use is limited through highly
thermally efficient construction and by the use of sophisticated temperature
monitoring.
o Developments in the bulk liquid storage business Liqueo. A new 20-year
contract to store edible oils at Scales' Timaru facility commenced in August.
Also in the second half of the year the division acquired a complementary
bulk liquid processing facility in Napier, securing additional revenue and
cost efficiencies and providing room for continued growth.
o Continued strong organic growth in Scales Logistics and its airfreighting
operation Balance Cargo. Airfreight tonnes managed increased by 79 per cent
for the year to more than 2,800 tonnes.
Food Ingredients
Mr Borland says another outstanding result has been returned by Scales' Food
Ingredients division which produced an Underlying EBITDA of $7.6 million, 33
per cent ahead of FY2014.
"Within the division Meateor sold 20,220 tonnes of pet food ingredients, 23
per cent higher than FY2014 sales volumes and made possible through our
strong trans-Tasman procurement relationships.
"Meateor delivered an EBITDA that was 100 per cent higher than our IPO
forecast, whilst Profruit's factory ran 24 hours a day, 7 days a week from
mid-March to mid-September to produce 6.65 million litres of juice
concentrate," Mr Borland says.
Outlook
Looking ahead, Mr Mayson says: "Although apple picking for the FY2016 crop
has yet to begin, early signs for the crop size and quality are positive.
This, coupled with a generally supportive environment for our businesses,
allows us to reaffirm guidance provided late last year for FY2016 EBITDA of
between $48 million and $55 million."
Contact
Andy Borland, Managing Director, Scales Corporation Limited, Mob: 021 975
999, email: [email protected]
About Scales Corporation
Scales Corporation is a diversified agribusiness group. It currently
comprises three operating divisions: Horticulture, Storage & Logistics and
Food Ingredients. The company's diverse spread of activities gives Scales
broad exposure to New Zealand's agribusiness sector. Scales Corporation was
founded in 1897 as a shipping business by George Herbert Scales. Today it
employs more than 500 staff New Zealand wide. Find out more at
www.scalescorporation.co.nz.
End CA:00278262 For:SCL Type:FLLYR Time:2016-02-25 08:30:10
