Scales Stock

Thank you for standing by, and welcome to the Scales Corporation's Half Year Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Andy Borland, Managing Director. Please go ahead.

Good morning. I'd like to welcome you Scales interim results announcement for the 6 months ended 30 June 2026. With me is Ben Washington, Scales' CFO. Earlier this morning, we lodged our results with the NZX, which included the presentation pack that we'll base our comments on for this call. Ben and I will run through the slides, then take questions at the end.

An agenda is provided on Slide 2. We thought we'd start our presentation on Slide 4 with a quick recap of the Scales Group, 3 global operating divisions, which all have different business models, but all operate within the agribusiness sector. Global Proteins has 2 main business areas, the manufacture and supply of petfood, ingredients and the supply of edible proteins. Horticulture comprises Mr Apple, our vertically integrated Apple business; Furn Ridge Fresh, our fresh produce exporter; and Profruit, a premium juice manufacturer.

And Logistics provides air and sea freight services to both internal and external customers, primarily within the perishable food sector. And as you can see from Slide 5, we're a truly global business spanning multiple geographies, but with a focus on the North America and Asia markets.

On to our results for the first half of 2026, and as you can see from Slide it's been another very positive period with record first half earnings. This has been driven by both organic and transactional growth, and in particular, the M&A activity that we undertook within global proteins last year. Putting some numbers to those record results. Revenue increased 105% (sic) [ 104.9% ] to $762 million (sic) [ $762.1 million ]. Underlying EBITDA grew 18% (sic) [ 17.9% ] to $102 million (sic) [ $102.2 million ]. Underlying NPAT rose 10% (sic) [ 10.1% ] to $62 million (sic) [ $62.4 million ] and underlying net profit attributable to shareholders increased 7% (sic) [ 6.7% ] to $52 million. As a result, earnings per share has increased $0.02 to $0.36 per share for the 6-month period.

In respect of the divisions, on Slide 8, I'm pleased to report that we had top line revenue growth across all divisions. Within Global Proteins, our EBITDA margin was impacted as a result of our increased shareholding in the edible proteins businesses in the third quarter last year as this is a higher revenue, lower margin operation. However, petfood ingredients margins grew strongly.

Horticulture had another solid growing season with a further shift towards premium varieties targeted to the Asia and Middle East markets. Sales run rates were very strong in the first half of the year, and this offset a slightly lower packout rate.

Lastly, Logistics performed well continuing to increase volumes despite ongoing geopolitical issues and continuing to deliver best-in-class service to both internal and external customers.

I'll now pass on you to Ben, who will run through the financial results for the first half of the year in more detail.

Thanks, Andy. For those of you with a copy of the results presentation, we're now on Slide 10. This slide comprises the key financial metrics for the group for the first half of 2026 compared to the first half of last year. I'll refer to the financial results measured on an underlying basis, which includes the effects of IFRS 16 and that excludes the impact of acquisition accounting and certain one-off items detailed in the appendices of the presentation.

I'd also just like to note impairment provision of $19.7 million has been recognized within our reported earnings in respect of the loan to the Esro Petfood joint venture. This impairment has been excluded from our underlying results. As you can see, revenue has more than doubled year-on-year, primarily due to the consolidation of the edible proteins from the third quarter of last year. This has also contributed to the change in gross margin mix between 2 periods. Whilst operating expenses increased with the consolidation of edible proteins business, we did achieve operating leverage overall.

As a result, operating expenses as a percentage of revenue decreased from almost 8% in the first half of 2025 to 5.5% for the year. As Andy mentioned, the group resulted in a strong profit growth for the first half year. With underlying EBITDA increasing by nearly 18% to $102.2 million. The underlying net profit after tax attributable to shareholders increased by nearly 7% to $52 million.

The next slide summarizes our financial position. Whilst there are several movements between June 2025 and June 2026, it's important to note that the balance sheet at 30 June last year did not include the edible proteins business or Meateor Australia. It is therefore important to consider the position as at 31st of December 2025 for comparing purposes. In addition to the effects of bringing in the edible proteins businesses, net working capital at 30 June 2026 has increased by a faster sales run rate in Horticulture, increasing its the June receivables balance.

Net debt has also impacted our Horticulture's seasonal working capital, together with higher input costs of inventory for Global Proteins. Whilst the quantum of the net debt balance at 30 June 2026 has increased compared to both June '25 and December '25, it remains only 0.7x the rolling 12-months EBITDA, similar to other periods. As in previous years, we expect net debt to reduce in the second half of the year as Horticulture seasonal working capital requirements unwind. In other words, as cash is collected from our Horticulture debtors. Finally, the group has extended its term debt facilities with Rabobank and Westpac for a further 3 years.

On to Slide 12. The movement in net debt between December and June can be apportioned into 4 main areas. Firstly, strong cash earnings from each of the divisions, a disciplined approach to CapEx, predominantly within the Horticulture division. Payment of dividends including those in respect of our noncontrolling interests, and as I previously mentioned, an increase in working capital, largely seasonal from the Horticulture division.

Moving on to a review of the divisions, starting with Global Proteins. As you'll see on Slide 14 of the presentation, in addition to presenting Global Proteins' underlying results for the 6 months to 30 June 2025, we've provided pro forma results as if the increased investment in Meateor Australia, Fayman International and ANZ Exports had taken place from the start of 2025, this offers a year-on-year comparison of the division on a like-for-like basis. Of particular note is the reduction in EBITDA margins in June 2026, which, as previously mentioned, is due to the higher volume, lower margin model of the edible proteins business. However, EBITDA margin is significantly more comparable between June '25 and June '26 when viewed a like-for-like basis.

Most businesses within in the division performed well. We're seeing strong demand for global petfood ingredients. However, supply remains tight across Australia and New Zealand. Shelby delivered a very strong result, driven by favorable product mix and a new in-plant collection facility. Meateor also contributed strongly, driven by positive demand. Unfortunately, the results -- the divisional results were impacted by the disruption of Esro Petfood, which has provided us with some challenges. Our immediate focus is to stabilize operations and assess the long-term strategic plan within the region. On the edible proteins side, the Fayman business continued to grow sales across Asia and the U.S.

As you can see in the pie chart on Slide 15, around 57% of our total protein volumes were sold to the North American market. We source product in this market, both locally and globally to meet customer needs. Asia was our second biggest market at around 30% of sales with the addition of the edible proteins business growing sales into both Asia and North America. Petfood ingredient volumes grew around 11% due to our investment in production capacity in prior periods, reaching operation levels. This, along with improved efficiencies, also increased petfood ingredients revenue and underlying EBITDA per kilogram.

Moving on to Horticulture on Slide 16, which produced another solid result. Whilst there was some disruption to Middle East sales, this was compensated by robust demand in Asia. As mentioned, Mr Apple sales run rate was higher than last year at around 66% of forecasted own-grown export volume being sold as at 30 June 2026 compared to 54% last year. Profruit had another solid 6 months with healthy production levels, comparable sales volumes to last year and strong sales in the U.S. market. Increased fuel cost and freight from the Middle East conflict have impacted EBITDA margin.

On Slide 17, we continue to see an increase in the proportion of sales to Asia. We expect sales to the important Asian and Middle East markets to account for around 91% of export sales volumes this year. This compares to around 84% last year. Mr Apple's total export volumes are forecast to be around 3.5 million TCEs for the year with a packout rate of around 75%. Whilst both of these metrics are slightly down on last year, they have been offset by a continuation of our strategy to increase market exposure to Asia and Middle East and increase the proportion of Mr Apple's premium varieties -- premium variety volumes to 79%. Once again, Dazzle and Posy have driven the premium volume growth as planting of these varieties approach maturity.

Lastly, on to Logistics, which produced a robust result with underlying EBITDA down only 6% (sic) [ 6.2% ] from last year's exceptional first half performance. This is particularly pleasing considering the ongoing geopolitical tensions and associated fuel price challenges. There was a significant increase in demand for air freight, primarily from the dairy sector, together with modest increase in sea freight volumes. I'll now pass you back to Andy.

Thanks, Ben. Sustainability remains at the forefront of our mind, and we continue to make progress on our ESG and sustainability projects and goals. A selection of projects, as shown on Slide 20, and I'd just like to touch on a few of them. The availability and efficiency of energy is important to us from both an environmental and cost point of view. Consequently, we're currently assessing our process and technology options in order to improve our energy efficiency and to ensure resilience towards energy availability and cost.

In respect of our people goals, we're committed to ensuring that Scales is the best workplace that it can be. Mr Apple has had a people strategy in place for several years, and I'm pleased to say that we've leveraged this knowledge and implemented our first formal group-wide people strategy, extending a common framework across the group. We also recently completed our gender pay gap assessment across our New Zealand businesses. Our first pay equity review was undertaken in 2020. So this more recent assessment provides us with an up-to-date baseline going forward. Lastly, I'd like to look -- I'd like to update you on our key divisional strategic priorities and provide an outlook for the full year.

On to Slide 22 now. Within Global Proteins, one of the most processing priorities to stabilize Esro Petfood and in conjunction with that, assess the long-term plan for our European operations. We've also focused on broadening our supply base in Australia and what has become a relatively tight supply market. This would diversify any potential associated supply risk.

Horticulture's long-term strategy of investing in premium varieties targeted towards the Asia and Middle East markets continues with ongoing orchard redevelopment program. We also continually assess efficiency in automation opportunities within our post-harvest operations.

Lastly, Logistics is focusing on what it does best, which is deliver best-in-class service to both internal and external customers while navigating volatility in the global freight market. The division continues to actively pursue new customers whilst continuing to strengthen long-standing relationships with existing customer base.

In respect of the full year outlook, the directors would like to advise an increase in the FY '26 guidance range of underlying net profit after tax attributable to shareholders to between $55 million and $60 million. And providing this guidance [indiscernible] would like to note, Mr Apple's sales run rate for the first 6 months this year was higher than the run rate in the same period last year, around 7% of Mr Apple's export crops to be sold, which compares to around 18% this time last year. Ongoing geopolitical tension in the Middle East and final pricing remain areas of risk.

We continue to remain cautious in Global Proteins due to ongoing geopolitical uncertainty and tight product supply in certain markets, but we remain confident with the medium-term outlook and strategic growth initiatives that we have in place for the division.

Our Logistics business has successfully managed the impact of geopolitical tension, increased fuel costs, and ongoing freight disruption in the first half of the year. However, we will keep a close watch on the ongoing impact of this disruption in the second half of the year.

That concludes today's formal presentation, I'd like to direct you towards the appendices, which provides additional information, including the reconciliation of reported earnings to underlying earnings for the group and each of our divisions. We're now happy to take questions.

[Operator Instructions] Your first question comes from Rob Morrison from Craigs.

Congratulations, Andy and Ben and the wider team for a really good result. Kicking off with the guidance range, so you've obviously upgraded it, and there's a bunch of assumptions that book in the top and the bottom. Can you just run me through what you're assuming for the divisions at the top and the bottom end?

Yes. We've kept it pretty broad, as you know, with our guidance, Rob, in terms of not being directly specific about each of the divisions. But clearly, on the downside, we've got to bring in quite a lot of debtors from the sales of apples. And we do have as -- increased opportunity for quality claims. But we've factored those in relative to the bottom and the top of the grade of the guidance.

Yes. Maybe a couple of other observations there, Rob. We obviously had a record result for the horticulture business last year. We don't anticipate we'll repeat that year-on-year. Equally, you'll see the numbers had a very good result for Global Proteins. We don't anticipate, I guess, that run rate to necessarily continue through the second half. There are some challenges around suppliers in certain markets, and we've had some very good favorable contracts through the first half.

Okay. Just on that Global Protein, so it looks like Shelby had a really good first half growth, so if you look at that UNPAT to minority shareholders, which is mostly Shelby, it seems to me, that was up about 32%. And the guide is assuming a pretty big deceleration in the second half it looks like the guide range is for a negative 3% to negative 16% fall in the second half for that UNPAT to minorities, again, which is mostly Shelby. So what's driving that?

There's a couple of things there, Rob. It's a little bit complex. With the Esro Petfood piece, we've obviously taken control of that for accounting purposes. So the minority interest is going to go through Esro Petfood during the second half as well. So that's sort of compensating. My observation or my comment on Shelby would be that we would expect to deliver some growth on second half of last year, we just don't think that it will repeat the run rate of the first half.

Sure, that's great. Just in terms of the -- and thanks a lot guys for the improved disclosures. So just in terms of what all the divisions did within Global Proteins. So I can see the organic Global Proteins net profit is up 7%, but the net profit to shareholders is down a couple of percent. It looks like Meateor New Zealand is up about a $1 million, Shelby SPS is up a little, which is great. Esro Europe is down about $2 million. Can you just talk about what you're seeing in Fayman International, Meateor Australia in the half?

Yes. The Fayman International business has grown year-on-year top line sales. The margins are under pressure in that business. Gross margin is under pressure a little bit year-on-year. Meateor Australia business had a very good first half. We have acknowledged that supply is tight. But I think a key beneficiary for us in that first half has been we carry some inventory over in the first half, we don't have that same luxury in the second half in a tight supply market.

Okay. And then just in terms of the next steps for Esro Europe, it kind of sounds like your perhaps considering the viability of the operation. How soon could that be wound down? And what kind of losses would it incur while that's happening?

Look, pretty -- very manageable for us. We -- Yes, we're working through the -- obviously, our joint venture partner had some difficulties there, entity that went into administration. And yes, we're in the process of, as Ben said, sort of like taking control of it. And yes, we -- look -- pretty confident of getting solution through this next period to the end of the year. And we want to continue operating in that geography. It's a massive market and a good opportunity, remains a good opportunity for Scales' global partnering.

Our next question will come from Adrian Allbon with Jarden.

This might be a tough question, so, I'm just looking for a ballpark, and I know like particularly for Mr Apple, like FX has kind of wrapped into the broader negotiations. But like how much of -- like is it possible to sort of call out, was there any sort of super normal FX benefit that you kind of, I guess, benefited from in the first half. Obviously, the [indiscernible] dollar was quite weak. Just wondering if there's anything you could isolate on that front for us.

Yes, on that one, we are hedged sort of 5 years out. So it's largely all hedged Adrian. There is a little bit of currency benefit, but it's not significant in the first half, but it's pretty modest.

Okay. All right. And then just maybe staying with you, Ben, just in terms of those Esro challenges, are they sort of normalized in proteins number and the underlying estimate that you provided for that division?

Yes. So the trading performance is included in the underlying result and it is included in the forward-looking view. So the only thing we've stripped out is the provision for the loan from the underlying performance.

Okay. And in the counsel you've given us for the second half, given is that Esro will join the noncontrolling interest, is that right?

Correct. Yes. So from an accounting perspective, we will consolidate 100% of the result and then 50% of it whilst we remain in the 50% joint venture, we'll go through that noncontrolling in the second half.

And have you got -- have you made a placeholder for that loan...

Yes, yes.

Are you able to kind of -- like, obviously, it's hard for us to have any sort of idea or like how material is it?

Well, I think we've given you the first half performance, which is sort of a $3 million loss for our 50% share. We wouldn't expect to repeat that necessarily in the second half. So there will be an improvement on that in the second half. But we don't expect it to be profitable.

Okay. Okay. So there's -- yes, somewhere between a minor loss and half of that loss would be reasonable for us.

Yes.

Okay. Just in the apples business. Look, I guess you've recorded -- at this moment in time, you sold more and the packout rate is lower compared to last year. Would it be reasonable -- would it be reasonable to expect around about a $10 million loss at the NPAT level for the second half?

Yes, it's within the ballpark. Yes.

And just in terms what the efficiency options that you talk about, I think that -- I think Andy was talking about that on Slide 20 -- sorry, 22, how linked or contingent are they on your sort of activities that were sort of quite watchful on the industry consolidation?

Not really. No. It's -- one of the ones is and Profruit. We're a big gas user there. The prices have gone up for gas and electricity. So we're just looking at ways to get more efficient in that business. We've got -- some of the specialist equipment in there is getting quite aged, if you want to call it that. And so there's probably an investment to -- the payback is super good because the new kit uses a lot less energy on a per kilogram, if you want, of product. So it's really in those sort of areas, Adrian, that we're trying to look for improvement, yes. So definitely.

I think the other one, Adrian, is there are some efficiencies we've identified in some of our protein businesses around plate freezing and the like. So we think we can invest some CapEx and get some efficiency over time.

Okay. No, that's helpful. So like in terms of horticulture, I guess the big strategy that you're calling out has driven the value is essentially the shift up into the premium varietals where you're running at kind of under 80% at the moment. And so this stuff is more just sort of backfilling just to kind of keep -- sort of keep a watchful on the costs and then I guess the industry consolidation allows you to sort of optimize the orchard land that you've got and potentially take on a few more opportunities as they sort of fit in on the varietal and the price front? Is that sort of how you would see that vertical?

We've certainly picked up a number of leases, I think, in total, about 100 hectares, 80 to 100 of leases that have come out of that range of, if you want to call it, business failures and the Hawke's Bay.

On that -- is that over the first half?

And it was a better last year as well. We picked up some late in the year, and we've picked up some more recently. And they are really just helping us target more growth for our premium varieties and help keep the volume stable as we redevelop.

Okay. And then maybe a final question on Logistics. You're calling out like I think the air freight boost from a dairy sector. Do you think that like that, they're sort of crested now like the Middle East? Or is it still ongoing?

Look, it comes and goes. I mean it's a bit -- certainly we love it when it's full bore. But yes, yes, you're right, the continuity of it is variable, let's just say.

Okay. But you haven't -- like it's not a dollar for that sort of forecast in the second half for Logistics and sort of back to sort of, I guess, [indiscernible].

Yes, exactly.

[Operator Instructions] Our next question we'll hear from Paul Koraua with Forsyth Barr.

Just a couple of quick ones. The first is just on Esro, and now it's been a challenging sort of 6 months, but sort of down at the operational level, like what has changed after your JV partner going into receivership? And what do you have control of to sort of give us a little bit of comfort that $5 million loss does tighten up in the second half?

Look, well, we've got people over there, the 3 of our senior people have sort been in that business, working with the team on operations, working with the suppliers and the customers to stabilize it and get it back up to where it was. I mean, prior to the intervention, we were -- the business was profitable, it was doing solid volume, and that's come off and we're busy looking to get it back to those sort of levels, and we expect to see good progress of that in the next -- in the second half.

And then just a second 1 on Global Proteins. So even on a like-for-like basis, you did see a little bit of that margin squeeze at the EBITDA level, sort of 140 basis points or so. Does that come down to the supply issues you're talking about? And how should we think about that running into the second half where it sounds like it's still pretty challenging out there.

I think there's 2 components to that piece, Paul, the petfood ingredients business actually margins have been really healthy and actually growing. It's on the edible protein, on the edible piece that the margins have been a bit compressed and challenged. And obviously, it has a weighting, so it skews the overall part, if that makes sense. So we're actually in a good healthy margin growth for the ingredient side of the business. It's on the edible piece where the margin is a bit of a tighter year-on-year.

Yes. Also, that makes sense. And then maybe just the last 1 is, you used to have the slide on some of the initiatives you are working on in the U.S., and one of those was that fish and poultry JV that you guys started up over there. Could you just give us a little bit of an update on how that's progressing and how that fits into the plan?

Yes, going really well. It's a start-up, if you want to call it that. So it's not a high investment, but we've got a great team of people working with us there, and they're picking up volume. It's a trading business at the moment. And we continue to look for opportunities to deepen the involvement, I suppose, by starting the processing like what we do with Meateor and Shelby.

Cool. Congrats on a good result, guys.

And your next question will come from David Oxley with ACC.

Just a quick question. Rob's assumption that the vast majority of the noncontrolling interest is -- relates to Shelby. A, is that correct? And b, can you give us a steer on how that whatever the number is 10-point-something million does actually split between the 2 minorities?

Yes. For the first half, the noncontrolling interest is largely the Shelby business as it has been. I guess it's in the forward view, following 30 June, we'll be consolidating 100% of Esro in the second half. Is that clarified for you?

So no, the 15% of ANZ Exports, is that 0?

It's not 0, but it's pretty minor in the context in the first half. So part of business.

Less than 1 or less than 5 or...

About 1 if not 1, yes.

About 1. Okay. That's helpful. And the other thing I just wanted to quickly ask on -- sorry, also yes, on the Horticulture business, the packout is obviously slightly weaker than you suggested at the end of May. It looks like the aggregate result for Mr Apple was going to be fairly similar to what we were expecting. It presumably implies that pricing has been reasonably decent. Could you comment on what pricing has been like both for the traditional and the premium varietal sort of underlying relative to PCP?

Yes. So we've definitely seen some really strong pricing on the premium varieties, and we've seen some good pricing also on the traditional. I think there's been a mix shift as well. So where the market shift, so where the product has gone. So we've seen strong demand from Asia. We've obviously seen some challenges into the Middle East, and that change in market has certainly been beneficial across both varieties.

So I think last time you spoke, you were suggesting that the PCP was particularly buoyant because you had larger-than-normal fruit size and that for reasons which I still don't understand apparently leads to better pricing on a per trade basis. So the sort of suggestion was, bearing in mind, you're normally somewhat conservative, like-for-like in market prices might be down in '26 relative to '25. It sounds like that's been overly cautious. Is that fair?

Probably. Yes. And look, I think what's happened as Ben said is if you're selling less the Middle East than we thought and more to Asia, Asia sells better than the Middle East anyway. So that's really compensated a lot, David. It's been a strong market in Asia. The Chinese market had a tough weather event during their harvest the volumes, we were selling into a very, if you like, open and nearly not empty, but a positive market from the get-go.

Right. Okay. That makes sense. And just on the sort of weird accounting you have to go through with regard to Mr Apple. Obviously, last year, for want of a better word, there was far less spoiled fruit than you'd anticipated at the half year, and that got adjusted late in the piece from memory, hence, bumper result from Mr Apple last year. Can we be confident that -- and I know you're looking forward, and that's the difficult kind of forecast. But can we be confident that this year is more likely to be a kind of normal second half, first half split, i.e., not a lot of profit coming in, in the second half. That would seem to be consistent with previous comments around Mr Apple, a good year, but not quite as good as last year.

Yes, that's right, David. We've gone back -- it's obviously difficult to tell. We've still got some time to play out, but we've gone back and looked at sort of the historical averages and use that as a proxy for what we think claims and sort apples, as you call it, there may be in the second half. So we've gone back to a consecutive sort of position that we've looked at historically over time. I wouldn't expect it to be the result we had in the second half of last year.

Right. Okay. And just you've don't really disclose much on it, but Profruit, is that just up or down relative to last year given the issues you've talked about?

Slightly back but still on track for what we thought it would do.

Right, right. Okay. And sorry, just finally, is there any sort of -- given the sort of way that working capital goes around 1H and 2H? Is there any sort of steer on where we should be thinking the full year net debt number might come in at?

Yes, it should come down from a reasonably -- reasonable amount from where it is. But obviously, with the higher sell-through rate of Horticulture, we've got a lot more receivables on our books, would expect that to convert to cash in the second half. So we definitely think there will be a reasonable reduction in net debt between the half and the full year results.

And your next question will come from Greg Main with JBWere.

Just a question more about looking forward. You're describing this El Nino event as the super one, prior experience how has El Nino may be impacted on the trees' productive capacity going forward? And then if you do get a super dry period, what has it sort of done to production?

We're pretty well protected from drought or dry conditions with our good irrigation, water rights and irrigation systems, Greg. So hot dry summer for us is what we prefer than a wet summer, believe it or not. I mean the more sun the apples get, the better in many most cases in terms of color, and then keeping the water up as important during a dry period, but we've got good water takes and systems.

There are no further questions at this time. I'll now hand back to Mr. Borland for closing remarks.

Well, thanks very much, everybody. Appreciate the interest, and we'll look forward to providing you with an update later in the year. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Good afternoon, ladies and gentlemen, and I'm Mike Petersen, Chair of Scales Corporation. And it's my pleasure to welcome you all to this annual meeting. Thanks for coming out today. I know it's a beautiful day outside, and you would probably rather be enjoying it in the sun. But we're thrilled to have you in attendance here, not only in person but online as well as through the virtual meeting today.

It's a 114th Annual Meeting of the company, the 12th since it became a listed company and my fourth as chair. Once again, we're holding a hybrid annual meeting and whether you are here in person or joining us online, I'd like to thank you and welcome you all.

As you may recall, shareholders, proxies and guests attending 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. I'll provide further details on those matters shortly. Just wanting to roll off on the floor.

Some housekeeping matters for those of you who have joined us in person. First, I'd like to remind you as a matter of courtesy to please turn your mobile phones to silent. Also, if there's an emergency we need to leave, please do so through the marked exits. Staff will be available to help us in the eventuality that, that happens.

I'm pleased to confirm that we have a quorum and, therefore, declare the 2026 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 was sent to shareholders on the 10th of March.

Our order of proceedings is as shown on the current slide. I'll briefly comment on the highlights of the last 12 months, followed by a review by Andy Borland, our Scales Managing Director. We'll then attend to the resolutions where we'll cover each resolution in turn and invite questions specific to those items. I'll explain the process for asking questions, then I'll open the online voting and explain the voting process.

Once the meeting is complete, we hope that those of you present will join us for refreshments. This will also be an opportunity to meet the directors and senior management of the group and raise any questions you may have on an informal basis.

Firstly, I'll now summarize the process for asking questions. For those of you attending the meeting virtually, if you'd like to submit a question, the Q&A is always open. So please feel free to submit questions throughout the meeting. These will be addressed at the relevant time. To do so, please select the Q&A tab on the right half of your screen as currently shown. Type your question into the field and press send. Your question will be immediately submitted.

Good afternoon, ladies and gentlemen, and I'm Mike Petersen, Chair of Scales Corporation. And it's my pleasure to welcome you all to this annual meeting. Thanks for coming out today. I know it's a beautiful day outside, and you would probably rather be enjoying it in the sun. But we're thrilled to have you in attendance here, not only in person but online as well as through the virtual meeting today.

It's a 114th Annual Meeting of the company, the 12th since it became a listed company and my fourth as chair. Once again, we're holding a hybrid annual meeting and whether you are here in person or joining us online, I'd like to thank you and welcome you all.

As you may recall, shareholders, proxies and guests attending 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. I'll provide further details on those matters shortly. I just want this morning to roll off on the floor.

Some housekeeping matters for those of you who have joined us in person. First, I'd like to remind you as a matter of courtesy to please turn your mobile phones to silent. Also, if there's an emergency we need to leave, please do so through the marked exits. Staff will be available to help us in the eventuality that, that happens.

I'm pleased to confirm that we have a quorum and, therefore, declare the 2026 Annual Shareholders Meeting of Scales Corporation Limited open. The items of business for this meeting and the resolutions to be considered by shareholders contained in the notice of meeting, which was sent to shareholders on the 10th of March.

Our order of proceedings is as shown on the current slide. I'll briefly comment on the highlights of the last 12 months, followed by a review by Andy Borland, our Scales Managing Director. We'll then attend to the resolutions where we'll cover each resolution in turn and invite questions specific to those items. I'll explain the process for asking questions, then I'll open the online voting and explain the voting process.

Once the meeting is complete, we hope that those of you present will join us for refreshments. This will also be an opportunity to meet the directors and senior management of the group and raise any questions you may have on an informal basis.

Firstly, I'll now summarize the process for asking questions. For those of you attending the meeting virtually, if you'd like to submit a question, the Q&A is always open. So please feel free to submit questions throughout the meeting. These will be addressed at the relevant time. To do so, please select the Q&A tab on the right half of your screen is currently shown. Type your question into the field and press send. Your question will be immediately submitted.

Should you require any assistance of any sort, you can type your query and one of the Computershare team will assist us in the chat function. Alternatively, you can call Computershare on 0-800-650034. Questions may be moderated or if we receive multiple questions on one topic, amalgamated.

Due to time constraints and to ensure all shareholders have a chance to ask a question, I ask that you limit yourself to asking 2 questions, please. And any questions that are not answered in time will receive an e-mail response after the meeting.

For those of you present here today, we'll offer you an opportunity to ask questions on or speak to each resolution being put to shareholders at the appropriate time. As I mentioned earlier, there will also be an opportunity to ask questions of individual directors informally after the meeting.

With regard to online voting, if you are eligible to vote, you'll be able to cast your vote under the Vote tab as shown on the screen. Once the voting is open, resolutions will allow votes to be submitted. And 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. To change your vote, simply change simply select change your vote, you're able to change your vote up until the time I declare voting closed. You may submit questions on each resolution being put to shareholders using the question process.

For those of you that have joined us in person here today, those shareholders who are entitled to vote and proxies too 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 Computershare desk in the foyer where their representatives will be able to assist you. After voting, please 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 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 the Computershare online meeting platform, the resolutions will now be opened on the Vote tab. Please submit your votes at any time. I'll give you a reminder before I move to close voting.

I know those are quite complex instructions, but I assume everyone's got them under control. And if you need any hand or any advice at any time, please don't hesitate to contact one of our teams that are sitting here today.

Before I go further, I'd like to introduce my fellow directors, who are in attendance. They are Andy Borland, our Managing Director; Tony Batterton, who's Chair of our Scales, Nominations and Remuneration Committee Chair and also Chair of the Scales Finance and Treasury Committee and an Independent Director; Miranda Burdon, Chair of the Health and Safety and Sustainability Committee and an Independent Director. Nick Harris as an Independent Director; and Paul Munro, Chair of Scales' Audit and Risk Management Committee and an independent director.

I'd also like to introduce our latest future Director, Emma Crutchley, where is Emma in the audience here. Beside David, there we go. Great. Nice to have you onboard Emma. I could see David. I just couldn't see Emma Crutchley. Emma has been great. We love that future director position, and it's been great to have Emma on board.

We also have members of Scales management and staff in attendance. So thank you for those people. Deloitte, our auditors, and Anthony Harp, our lawyers are also in attendance. So I'm delighted to welcome everyone to the meeting. I'm very pleased to declare that Scales delivered record results across all its earnings measures for full year 2025.

Our underlying EBITDA was $137.6 million, an increase of 50% on last year. Underlying net profit after tax attributable to shareholders was $61.8 million, an increase of 82% and reported NPAT attributable to shareholders was $101 million, an increase of over 200%. There were strong performances across all of our divisions. Horticulture produced an outstanding result. There was a strong performance from Global Proteins and another good result from our Logistics team.

We declared an interim dividend of $0.125 per share in December last year in respect to the 2025 financial year and expect to declare a final installment early next month. These are fantastic results, and we're really delighted to be able to report these record results to you today.

2025 was another successful year for transactions with the group increasing its investments in Shelby, Meateor Australia, Fayman International and ANZ Exports. This takes our investment in Shelby to 67.5% and ANZ exports to 85% with Meateor Australia and Fayman International now being fully owned. Due to these investments, I'm pleased to note that we've increased the Global Proteins full year '27 underlying EBITDA target from $70 million to $85 million.

Governance is extremely important to us, and we continue to review and refresh our director and senior management teams. Accordingly, I'd like to take a moment to acknowledge Alan Isaac, who retired as a director in October last year. Alan was a major contributor to Scales' governance program, served on the board for over 11 years. And not only was Alan the Chair of the Audit and Risk Management Committee, he also chaired the due diligence committee as part of Scales' listing process. With his accounting and finance background, he provided excellent financial knowledge and wise counsel.

In Alan's place, we were pleased to welcome Paul Munro to the Board in October last year. Paul also has a significant accounting and finance background as well as an extensive governance experience from a wide range of public and private entities. Welcome to you, Paul, and already Paul's contributed significantly in his time with Scales.

We also announced that Steve Kennelly is stepping down as CFO in May of this year with Ben Washington replacing him. Steve has been with Scales since 1993 in a variety of accounting and finance roles being appointed as CFO in 2011. However, we are pleased to advise that Steve isn't leaving us completely as he's going to take up a new role as Company Secretary and we'll be able to retain that institutional knowledge that he's brought through that -- through his time with the company.

We're really pleased and excited to welcome in Ben Washington in Steve's place and Ben's with us here today. Ben will start in June, joining us from KMD Brands, where he's held several senior leadership positions, most recently as CFO of Kathmandu. We were also pleased to announce last month the appointment of Geoff Smith as CEO of the Horticulture in the Logistics division; and Charles Ferguson, as CEO of Global proteins.

These appointments as divisional CEOs are really important to the Scales Group and are designed to provide more dedicated leadership across our divisions, support the execution of strategy and enable continued growth. Geoff was previously our Chief Operations Officer, where Charles joins us from Synlait where he held senior executive leadership roles. Charles is not here today, but he's going to start with the Scales in June this year.

Finally, as I mentioned earlier, Emma Crutchley joined us as a future Director and would like to thank Emma for insight contribution and participation. Scales' Board of Directors is always looking for ways to improve transparency for shareholders without compromising commercial sensitivity on key matters relating to the business.

We regularly review our continuous disclosure requirements to make sure we're adhering to best practice governance and strive to make improvements and reporting framework. This year, we have received feedback from some shareholders about gender diversity on the Board, the time period between the release of the 2025 annual report in the Annual Shareholder Meeting, and request for further details about senior management LTI and STI remuneration targets.

I would be happy to expand on this further during the questions if required in the general business section of this meeting. But I can assure shareholders that we are addressing all of these issues, and we'll have these completed prior to our next Annual Shareholders' Meeting.

As in previous years, the group in its results would not be what they are without the commitment and enthusiasm of each Scales' team member. We're extremely fortunate to have such a dedicated workforce with each of them embracing Scales' culture and delivering exceptional results, and I'd like to say a very big thank you to them all.

Health, safety and wellbeing remains a core focus for us with continued integration into our businesses. Health and safety for us is about culture. It's not about compliance, and we put a real effort on this over the past 12 months.

We executed a number of initiatives last year including independent health and safety assessments across key businesses as well as developing an improvement road map for the next few years. There is also a strong emphasis placed on leadership engagement and training, including a session for the Board and senior leaders focusing on the governance. We also undertook a staff engagement survey for all New Zealand businesses. And pleasingly, this confirms strong and consistent engagement pride and teams and confidence and leadership.

We plan to roll this out globally next year. We also continue to progress Mr. Apple's people strategy across a number of areas. Our local communities where we operate are extremely important to us. And during 2025, we supported various initiatives as noted on screen. We consider our involvement in these kinds of initiatives carefully, ensuring that we partner with businesses and organizations that are aligned to our values and provide a long-term social impact.

I'll now hand over to Andy, who will update you further on last year's results and activities. He will also provide an update on the transactions undertaken in 2025 and also provide a brief outlook for the group. Following Andy's presentation, we'll move to the formal business of the meeting.

However, before Andy takes over, I'd like to acknowledge our dedicated staff members working across the world. I can't emphasize this enough. These people come together to form teams within our global organization working to make Scales the best it can be. These people are the heart of our business and allow us to achieve the successful delivery of our strategy and the results that you're hearing about today.

On behalf of the Board, we would like to thank all of our people across the world for the ongoing contribution to the success of our group. As always, we welcome feedback on any matters raised today during today's presentation or other general matters in relation to the group and we're happy to do that, as I say, in the questions and general business after the presentations conclude, and we'd be delighted to also have those conversations informally with you at the end of the meeting today.

Andy, I'd like to pass over to you to cover off some further details.

Thanks, Mike, and good afternoon, everyone. I did mention -- well, we mentioned before a fellow Dave Foot, if you want to put your hand up, David. David is a Director from Australia. He's on Australian subsidiaries, a professional director, both here and in Australia, and we welcome your input David and wisdom.

So I'll start with a brief overview of 2025. A few of our key numbers are highlighted on this slide. A couple of items of particular note that revenue was just under $900 million, which was an increase of 54% on last year. In addition, Mr. Apple exported 3.7 million TCEs of its own grown apples, which are up 21% compared to 2024.

Our 5-year performance for underlying NPAT attributable to shareholders underlying EBITDA and revenue illustrated on this slide showing the significant increases in those measures in FY '25 compared to prior years. Moving on to some more detail in respect of our 2025 results. As Mike mentioned, the group achieved record results across all its earnings and measures driven by growth strategies across all the divisions.

There was also a positive impact from our increased shareholders and our joint venture businesses. You'll note that the 2024 results have been restated, which is due to an increase in apple tree valuations at Mr. Apple. The net impact of those prior year adjustments to an underlying NPAT attributable to shareholders level was around $200,000.

The graphs on this slide show the 5-year underlying EBITDA for each of the divisions and again show the increases in earnings in FY '25 compared to prior years. As you can see, the 2024 results for Horticulture have been restated, but there is no restatement for either Global Proteins or Logistics.

I'll now provide a bit of more detail for each of the divisions. Global Proteins generated a solid result with increases in both pet food ingredient volumes and edible protein volumes of 9% and 10%, respectively. And we realized the benefits of our increased joint venture investments with increases in revenue, underlying EBITDA and underlying EBIT compared to last year.

Shelby, Meateor Australia, Meateor New Zealand and Fayman International performed particularly well. Shelby had a solid performance, while it transitioned to a new toll processing facility. Meateor Australia and Meateor New Zealand performed significantly ahead of forecast with margins ahead of expectations. And Fayman International had a strong performance, increasing sales to both the Southeast Asia region and U.S. markets.

Esro Petfood continued to progress through its start-up phase whilst also transitioning to a new processing facility. Revenue and margin per kilogram of volumes sold within pet food ingredients business have been influenced by changes in business mix, which resulted in a small decrease in revenue per kilogram. However, improved margins across Meateor New Zealand, Meateor Australia and Esro resulted in increased underlying EBITDA per kilogram.

Turning to Horticulture. 2025 was an exceptional year for the Horticulture division with increased volumes, higher average prices and an increased proportion of premium variety volumes such as Dazzle and Posy. The addition of the Bostock orchards last year helped to fast track these factors. Mr Apple's own grown export volumes increased 21% compared to last year with external grower volumes increasing 49%.

This was helped by very good growing conditions as well as the integration of the Bostock orchards. Premium apple volumes accounted for 74% of export apples sold, a slight increase on 2024 with significant growth in Dazzle and Posy apples. 2025 volumes were significantly higher than all previous years and 16% higher than 2021, which was our previous record year.

Sales into the Asia and Middle East markets also grew compared to last year with marketing, sales promotions and customer support in these markets, supporting the volume increases. Profruit also continued to perform extremely well, delivered another excellent performance aided by strong sales prices in its export markets.

The forecast percentage of premium variety apples for the next 3 years is depicted on the current slide, along with our forecast volumes. In addition to integrating the Bostock orchards and continuing our orchard redevelopment program, we're continuing to develop exciting new premium varieties, which have been grafted onto existing trees and are expected to supply a new wave of growth.

As a result, we currently project that premium varieties will account for around 80% of export volumes by 2027. And last but certainly not least, our Logistics business for the second year running Logistics -- Scales Logistics produced a record result. Whilst both ocean freight and airfreight volumes were up on last year, airfreight volumes showed a significant 81% increase due to strong volumes from the dairy sector and a positive cherry season.

The division also benefited from strong apple volumes. This helped Scales Logistics to produce a 21% increase in revenue and a 10% increase in underlying EBITDA. The group's overall financial position and net debt reflected the investments made in Global Proteins joint ventures businesses during FY '25. However, our financial position remains strong for further investment opportunities.

The most significant cash outlays last year were those required for our joint venture investments, other significant expenditure, including dividend payments including those to minority shareholders and CapEx. Sustainability continues to be a key focus for us. And during 2025, we completed a refresh double materiality assessment in order to understand our stakeholder priorities.

In terms of environmental projects, we're looking forward to releasing etch climate statement later this month, which will be our third report of this nature. During 2025, an assurance exercise was undertaken to confirm our Scope 1 direct and Scope 2 indirect greenhouse gas emissions data and analysis of Scope 3 raw material emissions was progressed.

In our regenerative planting trials, that is planting trials that aim to restore soil health increased biodiversity and enhanced ecosystem function continued at Mr. Apple and pleasingly, these showed early indications of improved soil health and fruit quality.

With a global market presence, Scales focuses on providing customers, investors and regulators with confidence in our business units consistently to meet or exceed market access, product quality and assurance requirements. So we regularly complete third-party audits and assurance programs.

We're also keen to share some of the knowledge that we've gained, and last year, Mr. Apple established a new export initiative to support Maori kiwi fruit growers to access international markets, particularly in the Middle East. This reflected a shared commitment to strengthening grower participation in global value chains, while supporting inclusive economic development and resilient market access for Maori grown produce.

Additional details of these and other projects were provided in the sustainable section of our annual report, and we also look forward to sharing more detail in our climate statements.

As Mike already touched on, 2025 was another successful year for transactions with increased investments in Shelby, Meateor Australia, Fayman International and ANZ exports. Shelby's performance has been fundamental to Scales' success in recent years with earnings growth since our initial investment materially exceeding expectations. We believe the various initiatives are in place and this business will contribute to our Global Proteins targets.

Meateor Australia's progress from start-up to full production has been extremely pleasing. The Australian market is also of high strategic importance and this increased investment will allow us to continue to explore growth opportunities. Fayman International and ANZ exports have exceeded our initial expectations and play an important role in the edible protein sector with a focus on Australian exports. They're currently capitalizing on the strong global beef market with Australia being a key worldwide supplier.

The strong connections these businesses have to the Australian supply network also assist Meateor Australia. These acquisitions reflect Global Proteins' ambition of increasing our joint venture shareholdings over time. And as Mike also mentioned, the division's FY '27 underlying EBITDA target has increased from $70 million to $85 million.

In terms of the overall group outlook, we're pleased to confirm our previously advised guidance range of underlying NPAT attributable to shareholders of between $50 million to $55 million. The underlying NPAT and underlying EBITDA also remain as previously advised. However, as you will appreciate, geopolitical uncertainty is expected to continue throughout this year.

In terms of divisions, we expect Global Proteins to continue to perform strongly and realize the benefits of its increased joint venture investments. And Horticulture picking and packing is well advanced for the 2026 apple season with a crop of around 3.5 million TCEs forecast. Pricing is expected to be positive, impacted by a number of factors, including favorable foreign exchange rates.

Profruit and Fern Ridge are trading positively. And we expect Scales Logistics to continue to contribute positively and are pleased to note that as continued to experience strong airfreight demand in the year-to-date. That concludes my presentation. We'll answer questions following the resolutions.

But in the meantime, I'll pass back to Mike to cover the formal part of today's meeting. Thank you.

Thanks, Andy. And I know there's a lot of information in there. But hopefully, you've had some time to digest that and we'll be able to answer any questions you might want covered off later in the general business part of the meeting. 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.

Current best practice for shareholder voting is by way of poll. Accordingly, a poll will be held for each of the resolutions. I and my fellow directors hold the following undirected proxies. With respect to Resolution 1, authorization for the directors to fix the auditor's remuneration for the coming year, 172,800 shares. With respect to Resolution 2, the election of Paul Munro as non-Executive Independent Director, 172,800 shares. With respect to Resolution 3, reelection of Miranda Burdon as a Non-Executive independent director, 172,800 shares. With respect to Resolution 4, reelection of Nick Harris as a Non-Executive Independent Director, again, 172,800 shares. With respect to Resolution 5, reelection of myself, Mike Petersen, as Non-Executive Independent Director, 172,800 shares.

With respect to Resolution 6, authorization that the maximum total pool of directors' remuneration payable by Scales to directors be revised, 192,800 shares. Your Board supports these resolutions, and we intend to vote all these shares in favor of the resolutions.

I'll now move on to each of the resolutions, and I'll do them independently. Resolution 1 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 as 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 authorized to fix the auditor's remuneration for the coming year. Are there any questions on this resolution?

Thank you. We'll now move to the next resolution. Resolutions 2 to 5 relate to the reelection of a director. The NZX listing rules state that directors must not hold office without reelection past the third annual meeting following the director's appointment or 3 years, whichever is longer. In addition, any director appointed by the Board during the year is required to offer themselves for election by shareholders at the next meeting. Accordingly, Paul Munro offers himself for election, whilst Miranda Burdon, Nick Harris and I are required to retire at this meeting and offer ourselves for reelection. Resolution 2 relates to the election of Paul Munro.

Paul was appointed to the Board in October 2025 and a brief biography for him was included in the Notice of Meeting. Paul being eligible, offers himself for election, and the Board unanimously supports his election and recommends that shareholders vote in favor of Resolution 2.

I'd now like to invite Paul to briefly address the meeting on his proposed election. Thank you, Paul.

Thanks very much, Mike, and good afternoon, everybody. As Mike summarized, it was my privilege to be appointed to the Board of Scales Corporation in October last year. As has been noted, I succeeded Alan Isaac as the Chair of Scales Audit and Risk Committee, and I'm very aware of the big shoes I've got to fill taking on Alan's role.

Alan did a fantastic job for 12 years governing this company. And I think the results are certainly reflective of the diligence and the expertise that Alan brought to the table. So I'll endeavor to do a good job following in his footsteps.

Scales is a great company. Scales is an iconic company. Scales is a company with over 100 years of history, and there's not many New Zealand companies that can actually say that. The role that Scales plays is focused is primarily on the primary sector. The primary sector is a really key part of our economy. I think we all know that, and I'm sure shareholders you all know that, and that's probably part of why you're invested in Scales. The primary sector for a long time has been the backbone of the New Zealand economy, and I think it will continue to be the backbone of our economy as we move forward.

And so it's my privilege to be able to play a small role in supporting Scales on that journey. I bring experience to my governance roles from 24 years at Deloitte, where I was a corporate finance partner. I then spent 6 years as the CEO of a publicly owned investment company that owned a $5 billion asset portfolio spread across a range of commercial infrastructure investments.

And over that time and since I left that CEO role, I've spent over 15 years in independent governance roles, spanning public sector, private sector and spanning a number of different industries.

As I said, it's an absolute privilege to have been invited to join the Scales' Board. I really appreciate your support. I appreciate my fellow director support and the support of the Scales management team. And thank you very much for listening.

Thank you, Paul. While I now move as an ordinary resolution that Paul Munro be elected as a Non-executive independent director. Are there any questions on this resolution?

What do you see as the greatest risk to Scales future profitability?

Just to repeat the question in case that doesn't come through. Paul, what do you see as the greatest risk to Scales' profitability?

Yes, that's a really good question. I think one of the benefits that Scales does have is that it's a diversified portfolio of investments spread across 3 sectors Logistics, Horticulture and Edible Proteins or Proteins rather. I think that does, in many ways, spread that risk, but inherently, any company operating business world today is subject to risks that we can't control, ranging from things like climate change to operating in environments where you can't control the impact that cyclones may have on your apple crop over the weekend.

And so nothing is without risk, but I think Scales is actually really well positioned to navigate the future, and we've certainly got a very capable management team and a very well developed and mature risk framework that's used day to day by the management team and the board to monitor risks and make sure that the mitigations are in place to manage them successfully. Thank you.

Thanks, Paul. Any further questions for Paul? Okay. Thank you very much. We're going to move to Resolution 3 now, which relates to the reelection of Miranda Burdon. Miranda was first appointed to the Board in 2022, and a brief biography for her was included in the Notice of Meeting. Miranda being eligible, offers herself for reelection, and the Board unanimously supports her reelection and recommends that shareholders vote in favor of Resolution 3. I'd now like to invite Miranda to briefly address the meeting on her proposed reelection.

Thanks, Miranda. Over to you.

Good afternoon. I'd like to thank you, the shareholders, for the opportunity to support the growth and continued prosperity of Scales Corp. as an Independent Director. Scales is a business, as we've heard, that has enormous heritage in the primary sector and one that continues to lead and to innovate to deliver ongoing growth.

My career has been heavily centered on the primary sector in New Zealand, albeit predominantly on the commercial side of many of the good things in life, such as mushrooms and cucumbers and other covered crops, dairy and wine, all the important stuff. And this has been helpful. The past 3 years have reflected the somewhat mercurial nature of the primary sector, but also the benefit of our continued diversification.

I enjoy my role at Scales and am fortunate to be able to utilize my combined experience, including that gleaned from the entrepreneurial endeavors that I've been involved in to support the different divisions of Scales in its growth journey.

My governance experience has involved roles in private boards, Crown entities, sector bodies such as Emerging Proteins New Zealand as well as charitable initiatives where I have most recently been the Chair of the Live Ocean Foundation, which is an entity founded by Peter Burling and Blair Tuke and committed to Ocean Health.

So one of the elements, and I'm repeating Paul's comments to some extent, one of the elements that continues to impress me at Scales is the commitment of the executive team and the caliber of people that we have involved in our organization. The team has demonstrated good systems and organization and resilience that as a business will continue to stand us in good stead.

As the Chair of the Health, Safety and Sustainability Committee, it's been very visible just how much work has taken to achieve these outcomes. So I look forward to continuing to support the team and the business. And again, I thank you for your support.

Thanks, Miranda. I'd now like to move as an ordinary resolution that Miranda Burdon be reelected as Non-Executive Independent Director. Are there any questions on this resolution? No, thank you very much.

Resolution 4 relates to the reelection of Nick Harris. Nick was first appointed to the Board in 2014, and a brief biography for him was included in the notice of meeting. Nick being eligible, offers himself for reelection, and the Board unanimously supports his reelection and recommends that shareholders vote in favor of Resolution 4.

Nick has indicated that if reelected, he intends to retire from the Board prior to the next annual meeting at which he would be required to stand for reelection. Following next confirmation of his retirement, the Board will look to appoint an additional director in accordance with the Board's succession plan.

I'd now like to invite Nick to briefly address the meeting on his proposed reelection. Over to you, Nick.

Thank you, Mike. As Mike mentioned, I've been involved in Scales back start 2012, when I came on as an independent director of the storage in the Logistics division, this being Polarcold, Whakatu Coolstores, Liqueo, Meateor and Scales Logistics. In 2014, when Scales floated, I became a Director of Scales Corporation. Over the following years, I've been on the Audit and Risk Committee and more recently have gone on the Board of Scales Australian investments in Fayman International and Meateor Australia, along with David.

Outside of Scales, I've been in the meat industry all my life, having helped set up a large bacon, ham and small goods company. Kao-Pei, Hellers, my currently day to day, as still being involved in the meat industry from my family business, Harris Farms, an integrated meat company in Cheviot Farming, got 1,000 hectares of irrigated land, and we process animals on our farm, abattoir and processing facility. We now have a site in Christchurch as well.

I am a qualified accountant and have over the last 35 years, helped support many not-for-profit trade associations, sporting entities and committees, trusts and boards. Having worked in a large business has helped me understand the day-to-day commitment that our senior executives make here.

Along with my knowledge in the meat industry, this has been advantageous at Scales as we have expanded into the Global Protein market. I look forward to serving you the Scales shareholders and working with the Scales team and our Board for another year. But as stated in my citation for this AGM, I plan to stand down from the Board over the next 12 months. Thank you all.

Thank you, Nick. I'd now like to move as an ordinary resolution that Nick Harris be reelected as a Non-executive independent director. Are there any questions on this resolution? Okay. Thank you very much. We'll now move to the next resolution, which I'll ask Andy to introduce.

Thank you. We'll now move to the next yes, right. This -- jumping the gun there. Thanks, Mike. The Resolution 5 relates to the reelection of Mike Petersen. So Mike was first appointed to the Board in 2023, and a brief biography for him was included in the notice of meeting. Mike being eligible, offers himself for reelection, and the Board unanimously supports his reelection and recommends that the shareholders vote in favor of Resolution 5.

I now invite Mike to briefly address the meeting on his proposed reelection. Over to you, Mike.

Thank you, Andy. And look, it's a real privilege to be here again today and up for reelection. For those of you who don't know me at all, I'm a farmer from Hawke's Bay, 35 years farming, moved into governance roles about 25 years ago, and I've had a real privilege of operating in the agribusiness sector.

It really is -- and you can see today in New Zealand's current environment, the agribusiness sector is the place that's holding this country together. And I'd like to think that in some small way I've contributed to some of the companies that have succeeded and flourished.

And that's what I really enjoy doing. I -- as you can see on the board there, I'm a current Director and Chair of Scales Corporation, a Director of ANZCO Foods. I'm also a Director of a number of other private and locally held companies across the agribusiness sector, and I'm currently involved in sharing a water security project in Hawke's Bay as well.

I just have a huge passion for agribusiness. It's something that I love. It's where my real connection and heart is. And people talk about governance roles. If you don't have empathy with the sector you're involved in or the roles that you're doing or the people you're working with, then you shouldn't be there.

And this is -- Scales Corporation is exactly the company that I really have empathy with and enjoy serving alongside the amazing people that we have here today. I was -- it was an interesting start to my role in Scales when I started in 2023, and that was the annual meeting. My very first meeting was that I came in to Chair -- I chaired the Board meeting and chaired the annual meeting that same day on my very first board meeting. So I was really thrown into the fire a bit.

But look, I've absolutely loved the last 3 years during the time it's flown by. And I think we've achieved a lot. If you look at the results today, we've tripled the underlying NPAT attributable to shareholders and 2025 is a record result. So I'm not going to claim credit for the share price, but after Cyclone Gabriel, it was pretty low at around $2.80 and we're nearing $6 today.

So I don't think that's necessarily a reflection of me and my role. But certainly, I think if you look at the teams that we put together the people that are in the company today and the next step and the next stage of the people that are coming into the company with these divisional CEO roles, I think the future for Scales is very exciting indeed.

I love being here with the people, the culture of this company is fantastic. And look, I would really welcome and appreciate your support in voting me back as a director for the coming 3 years. So I can help contribute more to this wonderful company of yours. Thank you.

Thanks, Mike. I now move as an ordinary resolution that Mike Petersen be reelected as a Non-executive independent director. Are there any questions on this resolution. No questions, right? I'll hand back to you. Thank you.

Thanks. I'll now pass back to you, Mike, it says here now Andy. Thank you very much. Okay. Resolution 6 relates to a proposal to increase the maximum total pool of directors' remuneration available for your Board of Directors by $130,000 being the equivalent of AUD 110,000 per annum to $755,000 per annum for the 2026 year and onwards effective from the close of this annual meeting. Shareholder approval for this has required under NZX Listing Rule 2.11.1. An appropriate fee structure is important to ensure that Scales can continue to attract and retain the right governance skills and experience to govern your business and that those directors are being fairly remunerated for the work they do.

The proposed increase in the directors' fee pool was being sought as a consequence of Scales increasing its shareholding in its Australian-based Global Proteins joint ventures last year, which resulted in Meateor Australia, Fayman International and ANZ Exports becoming wholly or partially owned subsidiaries of Scales.

Each of these entities currently has 2 directors, who received combined director fees of AUD 110,000 per annum, and these fees now need to be accommodated within Scales' fee pool. For the avoidance of doubt, current fees payable per director are remaining unchanged. I just want to be clear about that.

I now move as an ordinary resolution that the maximum total pool of directors remuneration payable by Scales to directors and their capacities of directors be revised from $625,000 per annum to $755,000 per annum. In accordance with the NZX listing rules, the directors and the associated persons are restricted from voting on this resolution. Are there any questions on this resolution? I understand there's a bit of complication here.

But the incorporation of these joint ventures becoming subsidiaries of ours, we need to include these in the pool. And look, it's lovely to have David Foot here with us from Australia, who's actually serving a really good role for us on that Australian company of ours. So are there any questions from any of the shareholders? Okay. Thank you.

Okay. Ladies and gentlemen, that concludes our discussion on the items of business. I'll close the voting online very shortly. If you haven't already done so, please cast your votes now. A reminder of how to vote online is shown on screen. Computershare will now collect the voting papers from shareholders in the room.

Once all the votes have been cast, they will be counted by the company's share registrar, Computershare 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.

I'll now pause to allow you to finalize voting and put your ballots into the boxes as they're being passed around the room before we move to general questions.

[Voting]

Good everyone is there, do you think? Thank you very much. Everyone put their votes in the box. For those online, okay, ladies and gentlemen, voting is now closed. Thank you very much. We'll now move on to general questions. And if there are any questions on the financial results, the business update or any other matters you'd like to raise. For those online, please do so through the Computershare online meeting platform.

A reminder of the process is shown on screen. For those of you present, I'll open the floor to any questions. Just a reminder, if we run out of time to answer questions here today, we'll respond to any additional questions in writing following the meeting. Ladies and gentlemen, the floor is open. The floor is yours and over for questions. Here, sir?

Sorry, just remind you to please wait until the microphone comes because then the people online won't be able to hear the question.

Yes. I am Frank Stewart. I represent the New Zealand Shareholders Association. Each year before the annual meeting, we do a governance report for a company. And we look at about over 100 items and we condensed that down to 15. I should have said before, I'm not actually a shareholder because I transferred my shares to my -- one of my grandchildren. I've still got an interest.

As I said, we're convinced -- condensed the items down to 15 categories. And of the 15 categories, I guess we would have marked you A plus for 13 of them. And for 2 of them, there was a couple of minor things and would mark it as an A.

So it's quite a good result. And over 20 years of involvement with the New Zealand Shareholders Association, I don't look at all the reports of companies, but that's the most impressive one I've ever seen. So that's good.

Thank you very much. Now we always appreciate. We always appreciate feedback from the shareholders association.

A couple of questions when I ask because there's about 60 people in the room. How many are online?

Yes. And Mr. Kennelly has got that answer?

Sorry, that has changed during the meeting, but currently 47.

47 online.

And the second question is you haven't mentioned it at all. So can I assume that you're not directly affected by the events in the Gulf?

Look, thank you for the question about the events in the Gulf. We are affected, but you would've heard in Andy's report about the guidance for the coming year that at this stage, there is nothing that we know that will affect the guidance that we've provided to the market. And so we're reiterating our current guidance, which has stayed the same.

On the both protein foods you're producing a lot of edible Foods. Could you expand what they are?

So the question, Andy, is difference between the edible and nonedible, so explain on the edible foods part of the business, please?

Yes. Look, it's a range of proteins, mainly beef, a lot of offal, a lot of beef offals going up into Asia. But in the America, the products we're sending to America are more meat trims, meat items. But yes, across the board, a very big proportion of beef, some chicken and a little bit of fish. That's right, yes.

Okay. So just to clear, the purchase from the meat processing companies. And you're right. I mean, certainly with the Fayman business, that's more of an edible business, edible foods business, but the bulk majority of our work in global proteins is inedible for pet food ingredients. Other questions? Questions in the room before we go to online. Yes, there's one in the middle here. Thanks, Lisa.

Regarding inedible proteins, where do you see the petfood thing in the next 5 years?

Yes. Thanks for the question, Keith. I'll just note that Keith was a boss of mine in 1981. J.E. Watson and Cole.

It wasn't that long ago.

No. Keith, the pet food sector is -- we still believe is a very strong sector to be involved in. Its growth in many countries is continuing. The growth in CAGR growth, we call it as a very solid number on the up. So we certainly are -- there's been the odd slowdown, particularly Middle America probably did a slowdown last year.

But funnily enough, the more commodity products and the high-end products went really well. And we're more exposed to the high-end side with the beef in America.

So yes, very positive about the outlook for the sector going forward.

Yes, there is a question in the front here.

Warren, a shareholder. I was wondering if you could explain the shareholding structure a bit more because we have things like net profit attributable to shareholders and then some of the net profit, not attributable to shareholders. So what is this structure?

It really reflects the minority shareholders have in the subsidiaries.

Joint ventures.

And the joint ventures, sorry. Yes. So well, the Shelby is a subsidiary. Yes. So it's really -- we've trying to report to you as our shareholders as the earnings that I guess you are making having adjusted for what they've -- the total company was making what was that, Steve? NPAT attributable the total number was nearly $100 million, yes, versus the $62 million was attributable to the shareholders in the room and the rest of the Scales shareholders.

So that means, for example, in Shelby, where we own 67.5% of that business, it's those earnings 67.5% of their earnings are attributable to you as shareholders, because the minority partner will take the balance.

Could you just clarify your policy on the level of dividend compared to earnings. Do you have a policy?

We do you have a policy -- We do have a policy, Steve, just to get 50% to 75%.

75%. Yes NPAT attributable. Net profit after tax attributable to shareholders, yes, between 50% and 75%. Very good. Any other questions in the room? Yes, sir. That was just a microphone. Thank you.

Thank you. Ian Upston, shareholder. I have Australian shares and it irritates me that is a New Zealand shareholder, I don't get the Australian franking credits. And vice versa, the Australians investing in New Zealand can't get our imputation credits and this needs to be brought to the attention of the politicians that it's restricting investment between the 2 countries. So how is the company treated as dividends from offshore investments as far as getting back in franking credits, if that's possible.

No, it's a very good point. And look, I'm not the accountant and I'll pass to maybe Paul or Tony to answer that question. But you've raised a very important issue where because a lot of our earnings -- a lot of our earnings are owned offshore and then the imputation credits are not available when we pay the dividends to shareholders in New Zealand. So Tony, did you want to expand on that? Or Paul or Steve?

I'll actually defer to my colleague, Jamal, and I wonder -- it's a rather complicated matter, and I wonder whether I could put you 2 together after the meeting to discuss that one.

I think I was broadly right, though, wasn't I?

The dividend, the imputation regime is relatively unique to the Australasian environment. At Scales in terms of paying dividends to our shareholders, we impute 50% of our dividends, and that's because we only have imputation credits available from our local earnings and that's the reason. So -- and that's not our Scales, then that's anyone operating in New Zealand with global operations runs up against that same issue.

So any New Zealand company operating out in the world that concept of dividend and mutation credit doesn't exist in the same way. So it's a good way of New Zealand companies distributing New Zealand profits back to New Zealand shareholders, that works really, really well. Once you get out to the global stage, that's not a concept that exists in the same way and it gets a lot more complicated by jurisdiction. Yes, effectively, there is that's what happens.

Yes. Your point is well noted. Okay. Any other questions in the room before we go to some online questions. Yes, in the front. We just go right down front here, John.

Russell Hint, a shareholder. I'd just like to hear about 2026. And how is our crop how are our crops going this year, particularly in view of the climate conditions that you guys have been facing up in the Hawke's Bay, et cetera.

I'm wondering whether Mr. Van Workum might want to comment. But yes, I'll trust you, Andrew, to give a brief update.

You might talk about every single apple.

Yes, look, we had put 3 pretty tough years until last year, and we'd argue the weather return back to normal last year and had a lovely crop. And we've been on target for the same thing this year, have a very nice spring. We had quite some weather in the middle of January, which knocked the fruit around EBIT. So that was -- but overall, nice rains, good cool nights and brilliant color. So very nice fruit looking fruit and eating fruit.

The storm that we were worried about a few days ago, that sort of yes, there was some wind. Not a lot of rain. I mean, the rain is quite good for us. It's not an issue at the moment. It's more the wind, but we're down to about 12% of the crop to pick. So most of the fruit is either in a carton on the way to market or in a cool store, we've got 120,000 wooden bins -- those big wooden bins full of fruit in cool stores. So we're sort of in the home stretch we're not quite jogging to the finish, but the finish is 2 weeks away. So we're in a very strong position. There's a nice crop this year.

Thank you. Thanks, Andrew. Well done. Very good. Steve, do you have any questions online that you'd like to...

We've got a number, Mike. So the first one comes from Allan King. Has the closure of the Strait of Hormuz affected trade to Middle East to date what percentage of our sales depend on the Strait being open?

Andy?

Yes. Look, we do send about or have sent of 6% to 8% of our crop to the Middle East and that some of that might get through overland route, but at the moment, it isn't. But -- it's a big Royal Gala market up there, and we can sell those Royal Galas and other markets. So we're thinking it's -- it's not what we prefer, but it's certainly something that we can mitigate.

Next question comes from Paul Grant. Is there an intention to increase Mr. Apple's plantings in Hawke's Bay.

Look, I think we're always looking at different opportunities. Clearly, our Bostock we talk about the Bostock transaction, but it was sort of a Craigmore transaction. We bought Land of John Bostock and Craigmore bought. So we bought developed land, a lot of from John. And -- but we sold undeveloped hectares to Craigmore, and they are an overseas entity, so they needed to do redevelopment.

So that deals sort of struck well. But we do look at our footprint around our capacity for packing and air bin capacity. So no, we don't want to plan another 500 hectares and have to do build another pack out that's half full. So it's sort of like filling in a box. You really want to be as efficient as possible when your infrastructure is working at maximum.

So we're pretty happy at the moment with our 1,200 hectares that we're farming, orcharding -- and while we're really doing inside that 1,200 though, we've talked about it as the new varieties that we're bringing through and being are more paying premium prices, good yields. So we're benefiting from the last 10 or 15 years of R&D, and that's where we're heading with that Mr. Apple business.

You'll see on our forecast for Horticulture that we sort of were at about 3.5 million and sort of peaked at about 3.7 million. But we are continually looking at opportunities to improve the premiumization of that mix. And so that's the exciting thing that we think about now as how can we continue to maintain that level to make sure our pack house is fully utilized, but increase the value of those apples coming off the orchards.

Next question comes from Grant. Do you see any opportunities sales arising from the misfortunes which have recently impacted McCains and Heinz Wattie in Hawke's Bay?

Well, I'm happy to try and answer that because I live in Hawke's Bay. Look, it has been tough and Hawke's Bay with the closure of McCains and Watties. And look, it potentially could open up some opportunities. There are certain ground that won't be growing vegetables in the next -- after next season because they've still got this team to follow through.

And some of that ground does have water consents available to it, which could open up some opportunities. But at this stage, it's very much unknown. I know that the current owners trying to sell those assets. We don't know whether anyone will come in and buy them and try to replicate what Watties and McCains were doing. But it certainly does open up some ground for apple growing, and we'll look at every opportunity.

Next question is from Ellen King, and it's simply $1 billion revenue this year?

$1 billion revenue this year? Question mark? We're very close.

I'd rather have $1 billion market cap.

$1 billion market cap, Andy is saying they'd be better for shareholders. Look, but look, we certainly are getting a tailwind with lowered New Zealand dollar, the value of the dollars, bringing returns back into New Zealand, which are stronger. But we're very early in the selling season for apples.

And there's quite a lot of uncertainty, particularly with the Strait of Hormuz and Iran war. So look, we're being very cautious as a board and as a company in trying to put projections out there at the moment, except we do know that we believe our current guidance is still intact, and we're going to strive to make sure that we -- those numbers.

Next question is from Marcus on Francisco, I think, is pronunciation. What is your view about growth in the New Zealand level industry over the next 5 to 10 years, maybe in comparison to the kiwi fruit industry?

Well, kiwi fruit is a behemoth that's growing incredibly and it's a fantastic industry. And look, apples is certainly still a growing industry. And you've seen a number of companies that have been growing their footprint and apples, particularly over the last few years. For us, we see modest growth in apples for us as a company. But you will have seen other companies that are expanding quite strongly, and they certainly see opportunities.

So a lot of it will depend, and we believe Hawke's Bay is the best place to grow apples in the world don't we, Andrew? Absolutely. A lot of it will depend on whether we can access water, and that's a real challenge for us in the region. Even though we're well secured, currently, any expansion would require water consent, and that's an ongoing challenge.

And last question online from Peter Hill. Is there a risk of fruit being grown offshore in competition as has happened with kiwi fruit in China?

Well, we're -- there are a lot of apples grown offshore in competition with New Zealand and some companies have a dual strategy of growing apples here onshore and then also growing offshore in the off season. So we're a little bit different.

We are preferring to grow all of our apples onshore, and we maximize the selling period throughout the year to ensure we get quality fruit into the market. So for us, that isn't an option. But look, we fully understand other company strategies and desires to do so.

And Andrew, do you want to make a comment on Fruitcraft and the new varieties?

Mr. Apple is a third shareholder in a company called Fruitcraft, and we find -- bring to the group, the 3 owners new varieties. We've got some really exciting things in front of us, and we're well on the journey with Dazzle which has proved a success.

We're pretty cautious about offshore because really, it's -- we look at it and say it's the New Zealand Apple ecosystem that matters most of all. And you can earn a few royalties offshore, but the return to New Zealand and your community can be 20x that if you get it right. I guess you've got PVRs protecting varieties and they can be hard to control in some countries like people do sometimes take water and do things.

What we fall back on is we're very reliant on things like trademark. So Dazzle is a very -- is getting to be a very established brand and market, and we can protect that through the world really strongly and a lot of countries we can protect PVR very strongly. So we're in a very strong position, but the New Zealand Apple ecosystem is what really matters to us. That's it.

Thanks, Andrew.

No more questions online.

No more questions online. Okay. Look, I'll just answer a question that came in via e-mail, Steve, I think, which is important. Look, we -- during the year, we applied to have a closed orchard, which is situated in Hawke's Bay, to be -- we applied for it to be included in what's called the Hawke's Bay Regional Council future development strategy.

And so there was a block of land that we thought might be suitable for which industrial use was -- it's one of our orchards. Look, that application was declined. And so that proposal has been put on hold and that's not going to happen.

So at this stage. We've committed to some adjoining landowners to come back and talk to them at any stage if we were to try and progress that project again. But look, they have asked me to address the question in front of you here today and look, I've committed to them personally.

We have visited them with Andrew on Easter Monday, committed to them personally to sit down around the table with them if we decide to progress this application further at this stage. So I just want to raise that and have it on the record. Thank you, Steve. Any other questions in the room, if there are no more online?

Okay, ladies and gentlemen. That concludes our discussion on the items of business and as there doesn't appear to be any further business for discussion, that brings us to the end of the formal business for Scales Corporation 2026 and Shareholders' Meeting. I'd like to thank you all for taking the time to connect with us today, whether it is online or in person. And I'd now like to declare the meeting closed.

We'd just like to invite all of you here today to join us for some refreshments and some food outside. Chance to have an informal discussion with any of the directors or management team here today. So please feel free to join us I think Andrew Hepinster brought some of his tasty treats up. There might be some apples out there for you to take home as well, and we look forward to the conversation out in the foyer. Thank you very much.

Thank you for standing by, and welcome to the Scales Corporation Full Year Results Call. [Operator Instructions]

I would now like to hand the conference over to Mr. Andy Borland, Managing Director. Please go ahead.

Thanks, everybody. I'd like to welcome you to the Scales full year results announcement for the year ended 31 December 2025. With me is Steve Kennelly, Scales' CFO; and Geoff Smith, Scales' Chief Operations Officer. Earlier this morning, we lodged our results with the NZX, including a presentation pack that we'll base our comments on during this call. We'll run through the slides, and then we'll take questions. If you have further questions after the call, we'll be available for the rest of the day.

Our agenda is as shown on this slide, we'll go through the Slide 2, the FY '25 results and performance followed by our outlook for FY '26. First, a summary of FY '25's results. I'm pleased to announce that the group delivered record results across all earnings measures. Underlying EBITDA was $137.6 million, an increase of 50%. Underlying NPAT attributable to shareholders was $61.8 million, an increase of 82% and reported NPAT attributable to shareholders was $101 million, an increase of over 200%. There were strong performances across all our divisions. Horticulture produced an outstanding result. There was strong performance from Global Proteins and another record result from Logistics. We'll go into more detail on the following slides.

A few of our key numbers are highlighted here on Slide 6. A couple of items of particular note. Revenue was $900 million, an increase of 54% and Mr Apple exported 3.7 million TCEs of its own grown apples, which is up 21% compared to 2024.

I'll now pass over to Steve to run through the financial results for the year.

Thank you, Andy. As Andy mentioned, the group achieved record results across all its performance measures driven by the growth strategies across the divisions. There was also a positive impact from our increased shareholdings in our joint venture businesses. You'll also note that our prior year comparatives have been restated, which is due to an increase in apple valuations in FY '24 of approximately $6 million. The net impact of this restatement at an underlying NPAT attributable to shareholders level was around $200,000.

Our 5-year performance for underlying NPAT attributable to shareholders, underlying EBITDA and revenue are depicted on Slide 9, showing the increases in those measures compared to prior years. As Andy mentioned, there was growth in underlying EBITDA across each of our 3 operating divisions. Global Proteins generated a solid result with Shelby, Meateor Australia, Meateor New Zealand and Fayman International performing particularly well.

Esro Petfood continued to progress through its start-up phase. The Horticulture division produced an outstanding result through increased volumes, prices and improved variety mix. This result was also enhanced by the acquisition of the Bostock orchards in FY '24. And lastly, Logistics produced another record result driven by a significant increase in volumes.

Our divisional performance is summarized in the table on Slide 11. In addition to its 73% increase in earnings, the Horticulture division also generated a pleasing increase in underlying EBITDA margin. And the 5-year underlying EBITDA for each of the divisions is shown on Slide 12. As you can see, the prior year comparatives for Horticulture have been restated, but there was no restatement for either Global Proteins or Logistics.

The group's overall financial position and net debt reflect the investments made in Global Proteins joint venture businesses during FY '25. However, our financial position still allows for further investment opportunities. The most significant cash outlay last year were those required for our joint venture investments. Other significant expenditure included dividend payments, including those to minority shareholders and CapEx.

I'll now hand back to Andy.

Thanks, Steve. As we've already touched on, 2025 was another successful year for transactions and increased investments in Shelby, Meateor Australia, Fayman International and ANZ Exports. This takes our -- the Shelby investment takes our shareholding to 67.5% and ANZ Exports to 85% with Meateor Australia and Fayman International now being fully owned. Due to these investments, we've increased the Global Proteins FY '27 underlying EBITDA target from $70 million to $85 million.

The benefits of these increased investments are noticeable in the division's overall results with increases in revenue, underlying EBITDA and underlying EBIT compared to last year. There are also increases in both pet food ingredient volumes and edible proteins volumes of 9% and 10%, respectively.

In terms of the businesses within the division, Shelby had a solid performance whilst it has transitioned to a new toll processing facility. Meateor Australia and Meateor New Zealand performed significantly ahead of forecast with margins up on expectations. Fayman International had a strong performance, increasing sales to both Southeast Asia and U.S. markets and Esro Petfood continued to move through its start-up phase whilst also transitioning to a new processing facility.

Revenue and margin per kilogram of volumes sold within pet food ingredients business have been influenced by changes in business mix, which resulted in a small decrease in revenue per kilogram. However, improved margins across Meateor New Zealand, Meateor Australia and Esro resulted in increased underlying EBITDA per kilogram.

There's been excellent progress on the 9 key strategic projects that support Global Proteins growth target. Its new processing plants in the United States increased volumes and the Netherlands facility producing -- is producing high-quality product. The U.S. blending project is operating successfully and the first U.S. in-plant collection and cooling system is functioning well. Pleasingly, the second new in-plant collection and cooling system in the United States was commissioned in December 2025, which was ahead of schedule. In terms of ongoing projects, we're currently establishing a joint venture to trade fish and poultry in the U.S. The feasibility study for a second European site is progressing, and we're close to finalizing the options for additional processing capacity in New Zealand. Each of these initiatives are expected to contribute positively to the Global Proteins earnings target in future periods.

Turning to Horticulture. As previously mentioned, 2025 was an exceptional year for the Horticulture division with increased volumes, higher average prices and an increased proportion of premium variety volumes such as Dazzle and Posy. The addition of the Bostock orchards helped to fast track these factors. Profruit continued to perform extremely well, delivering another excellent performance aided by strong sales prices in its export markets. Trading business, Fern Ridge Fresh also had a very strong year.

Mr Apple's own grown export volumes increased 21% compared to last year with external grow volumes increasing 49%, helped by very good growing conditions and the integration of the Bostock orchards. Premium apple volumes accounted for 74% of export apples sold, a slight increase on last year with significant growth in Dazzle and Posy apples. Sales into the Asia and Middle East market also grew compared to last year with marketing sales promotions and customer support in these key markets supporting the volume increases. I'll touch on those activities soon. As I've mentioned, Profruit delivered an excellent result with whilst volumes of juice concentrate sold returned to a more normal level.

On Slide 22, the graph on the left of this slide illustrates the level of increase in premium apple volume sales last year. You also see that 2025 volumes are significantly higher than all previous years, 16% increase higher than 2021, which was our previous record year. The graph on the right shows the upward trend of the proportion of premium apple compared to traditional apple sales. This aligns with our strategy positioning us in the right direction to meet our target premium volume percentage.

The forecast percentage of premium variety apples is depicted on the current Slide 23, along with our forecast volumes. In addition to integrating the Bostock orchards and continuing our orchard redevelopment program, we're continuing to develop new exciting premium varieties, which have been grafted on to existing trees and are expected to supply a new wave of growth. We achieved increases in pricing for both our premium, traditional variety apples. This was helped by strong demand for apples in our key markets and by the Bostock orchards, which performed ahead of our initial expectations. Favorable exchange rates were also a positive factor.

Pricing also benefited from targeted marketing and promotional activity, which leads me nicely on to the next slide, 25. A selection of consumer marketing activities carried out by our Mr Apple team are shown on this slide. This included relaunching our Tmall store, the Alibaba business-to-consumer online marketplace launching Mr Apple channels on RedNote and Douyin, 2 Chinese social media and e-commerce platforms, continuing to provide Dazzle sponsorship of activity of active events.

We continued with metro advertising in Shanghai, Guangzhou and Taipei to reach busy commuters and launching a store locator on Mr Apple's official WeChat page to help consumers find their apples with our retail partners. The team more than doubled Mr Apple's branded presence in retail stores across Southeast Asia markets, increased its in-store point-of-sale material tenfold and tripled its in-store sampling sessions.

Moving on to Logistics. For the second year running, Scales' Logistics produced a record result while both ocean freight and airfreight volumes were up on last year. Airfreight showed significant 81% increase due to strong volumes from the dairy sector and a positive cherry season. The division also benefited from strong apple volumes. This helped logistics. Scales' Logistics produced a 21% increase in revenue and a 10% increase in underlying EBITDA.

Moving on to capital management. Our overall group ROCE was 14.6% compared to a restated 14.3% last year and a group target of 12.5%. Horticulture and Logistics produced excellent increases in returns, whilst Global Proteins ROCE was impacted by the investment in Meateor Australia, Fayman International and ANZ Exports. As is the nature of the business, the Horticulture division accounted for the majority of CapEx during the year. Projects of note included the ongoing orchard redevelopment program and our new high-pressure apple washer at Whakatu packhouse, both of which are expected to improve margins.

In addition, we've undertaken a significant upgrade to the RSE accommodation of Mr Apple. This investment included additional portacoms sleeping and dining rooms as well as additional furniture and whiteware. Other significant pieces of CapEx included the second in-plant collection and cooling system in the United States, as mentioned earlier.

Now on to sustainability. Sustainability continues to be a key focus for us. And during 2025, we completed a refreshed double materiality assessment in order to understand our stakeholders' priorities. In terms of people, we undertook an engagement survey for all our New Zealand businesses with our plan being to roll this out globally in 2027. We continue to integrate health and safety and well-being into our businesses and have developed an improvement road map covering the next few years. In terms of environmental projects, we're looking forward to releasing our climate statement in April, which will be our third report of this nature.

During the year, an assurance exercise was undertaken to confirm our Scope 1 direct and Scope 2 indirect greenhouse gas emissions data and the analysis of Scope 3 raw material emissions was progressed. And our regenerative planting trials at Mr Apple, which aim to restore soil health, increase biodiversity and enhance ecosystem function has continued. And pleasingly, these show early indications of improved soil health and fruit quality. We look forward to sharing more details of these and other projects in the sustainability section of our annual report as well as in our climate statement.

Moving on to governance. At last year's Annual Shareholders Meeting, Alan Isaac signaled his intention to retire from Scales' Board prior to the end of his current term, having secured a replacement director. Alan retired in October last year. Alan was a major contributor to Scales' governance program, serving on the Board for over 11 years. Not only was the Chair of the Audit and Risk Committee Management Committee, but he also chaired the Due Diligence Committee as part of Scales' listing process. With his accounting and finance background, he provided excellent financial knowledge and wise counsel.

In Alan's place, we're pleased to welcome Paul Munro to the Board in October last year. Paul also has a significant accounting and finance background as well as extensive governance experience from a wide range of public and private entities. We also announced that Steve Kennelly is stepping down as CFO in May of this year with Ben Washington replacing him.

Steve has been with Scales since 1993 and a variety of accounting and finance roles being appointed as CFO -- Scales' CFO in 2011. However, we are pleased to say that Steve isn't leaving us completely. He'll take up a new role as Company Secretary. And we're pleased to welcome Ben Washington in Steve's place. Ben will start in June, joining us from KMD Brands, where he's held several senior leadership positions, most recently as CFO of Kathmandu.

Lastly, our outlook for 2026. In terms of the overall group outlook, we're pleased to confirm our previously advised guidance range of underlying NPAT attributable to shareholders of between $50 million to $55 million. Underlying NPAT and underlying EBITDA also remain as previously advised.

In terms of the divisions, we expect Global Proteins to continue to perform strongly and realize the benefits of its increased joint venture investments. In Horticulture, picking and packing started for the 2026 apple season with a crop of around 3.5 million TCEs forecast. Pricing is expected to be positive, impacted by a number of factors, including favorable foreign exchange rates. Profruit is currently experiencing positive demand. We expect Logistics to continue to contribute positively and are pleased to note that it's continued to experience strong air freight demand in the year-to-date.

We're happy to take, obviously, questions from now on.

[Operator Instructions] And the first question comes from the line of Rob Morrison with Craigs.

Congratulations on a record result and best of luck for the new role, Steve. I'd like to start off. So obviously, the your NPAT to shareholders for next year is down a fair amount, and it looks to be driven by normalization of Horticulture. So I'd like to assess how sustainable the Horticulture gains are. And kicking off with that, I know we've got a few headwinds to -- what are the headwinds? One of them is some of the land is going to be redeveloped in [ Hort ] orchards. So what reduction in land area are you assuming for next year roughly?

Look, none really. We've been able to work through the process of the redevelopment without material reduction in production, if you want to call it that. Because don't forget this new redevelopment done in prior years is coming on to maturity.

Yes. No, that makes sense. And so then there's this 5% guided fall in volumes. So I guess, therefore, you're assuming about a 5% fall in yield per hectare. So it's driven by falling yields, right?

Yes. Look, we use a sort of a rolling 5 years average model for our yields, and it's proven to be pretty reliable. And so I mean last year was a significant crop in terms of yield per hectare. So this is probably just a normalization to how we normally predict our yield.

Yes, yes, that makes sense. I guess -- yes, I'm not too sure how one season would inform the other. But put another way, so the harvest has started in late Jan. And I know it's really early days, but the exports are tracking very strongly. So to date, from what you've harvested, are you seeing this assumed reduction in yield?

Probably not. But as you rightly pointed out, Rob, there's a long way to go. We don't try and sort of forecast the results until we've got a lot more certainty. But it is still the end of February.

Yes. Fair enough. And just a little bit more color on the pricing. So you say you've assumed positive pricing for Hort. And I think the premium varieties have been growing high single digits over the past 5 years on average. So would you be assuming high single digits again? Or does that normalize to something like inflation?

Yes. Look, we generally -- I mean we're obviously cognizant of that currency cover we've got. We're cognizant of how the markets are going and color and size also contribute. So the size is down slightly this year compared to last year's bumper crop. So that might have a small impact on pricing as well. But at this early stage, we are pretty positive about how the markets are going.

Excellent to hear that. That's all super helpful. Just transitioning to Global Proteins. So the second in-plant collection and cooling system in the U.S. has been commissioned ahead of schedule. And obviously, that was the key driver of the big uplift in Shelby in FY '26. But I know that you've kept Shelby or the implied guidance for Shelby flat. How should I reconcile that? Is there a bit of weakness elsewhere? Or is it just conservatism?

I don't know if we've actually guidance for Shelby. We've guidance for Global Proteins, and we do see a bit of a positive uptick in the U.S. I mean there's no mucking around with tariffs. So that's a big plus for the Shelby business. But yes, look, we're seeing a positive uptick just through the normal trade, but the increase in net volumes coming from the new plant as well.

Okay. But just -- so just on the Shelby, you can kind of work it out because you guys guide to NPAT and then also NPAT to shareholders and kind of see what the payments to Shelby are and then use the percentage ownership you have in that to work it out. But so just -- it sounds like maybe things are tracking a bit more positively than you thought when you gave guidance in December, Shelby. Is that right?

Yes, possibly. And yes, well done for spotting that.

I'll squeeze one more in, if I may.

Sure.

Cool. So Tyson, obviously, a massive meat processor in the U.S., they shut down this big plant in Lexington. And it looks like that's about 5% of daily U.S. cattle slaughter, but it's kind of in your neighborhood. And obviously, that 5% will be magnified quite a bit for that area. So long story short, it looks like there would be a decrease of supply. Are you expecting to see some pressure on Shelby margins from that going forward?

No. Look, we generally can replace supply. I mean supply for beef in America is tight. The cattle killer is down across the board. That's pretty well known. So it's -- we're -- I guess, having diverse product range even within beef like the various offal categories and MDM, we can sort of move around, if you like, and be quite flexible to source product from either other plants or the different hearts and other organs. So it's certainly -- yes, we did notice that, that plant is shut, but we're not seeing it impact our financial position right at the moment.

Cool. That's wonderful. Congratulations again.

The next question comes from the line of Guy Hooper with Jarden.

Congrats on what was a really strong result. Can I just pick up a little bit more on the guidance settings and how you set that initial guidance, particularly within Horticulture. So if you assume sort of an average 5-year for the yields, what sort of -- what goes into the pricing assumptions for that fee guidance?

Yes. So end market, as Andy said, we use a rolling average. So there's probably a little bit of normalization in market prices assumed. But then we've got tailwind in FX, and we think freight is probably about the same. So that's the sort of, I suppose, the net picture pricing.

Okay. And when you say Logistics' expectation is to contribute positively for FY '26. Is that -- are we to assume year-on-year growth? Can you sort of talk about where that might be coming from, especially if we assume normalization and sort of yields?

Sort of talking sea freight here -- say logistics? Sorry, if you're talking sort of logistics and the cost of freight, we would see that being pretty similar to last year. Yes.

Yes. I mean the Logistics business.

Yes. So sorry, look, we can see some reasonable growth coming in that business. It does -- there is -- the cherry season is not as good as this year, hasn't -- wasn't as good as last year, but there's other products that are looking quite strong that will offset that. So we would like to see the business -- we expect to see some good reasonable positive growth in the earnings.

Yes. Can you just maybe talk a little bit even a sort of high level, what run rates are looking like within some of those Global Proteins divisions. It looks like, as you say, Australia has really ramped up to the back end of the half. And then Shelby was flat year-on-year, but you had some sort of transitioning going on. Can you sort of talk about the moving parts within those different businesses into '26?

Look, I think there's sort of a bit of change within the various areas, but look, pretty positive overall. We're sort of seeing good trading performance out of the Fayman International business. Clearly, the pet food out of Australia has had the tariff impact. So we're working through that. I just -- if we believe the latest announcement, the 10% is going to 15%. But we're having pretty positive discussions with our customers already on that. And yes, look, Shelby is a fantastic business that -- and it's got a little bit of growth coming this year, having had very, very good performance over the last 3 years.

Okay. And maybe just one last one for me. I think part of the rationale from going earlier on acquiring the additional stakes in the Aussie JVs was just around a better alignment and getting, I suppose, fast tracking some of the opportunities that you saw. Can you talk a little bit about how those are playing out and what those might look like?

Yes. I think there's just a bit more -- able to be slightly more collaboration between Meateor New Zealand and Meateor Australia. There's a bit -- we're able to support each other slightly better. I mean what -- well we're working together anyway. So it was sort of an incremental change there. On the other side of the trading business, again, it was just good to get the continuity there of the business and the relationships back to Meateor Australia as well with the meat companies. So we felt like it was a good move to bring that into the grand plan, if you want to call it of where we're heading with this global protein thing. In the end, we want to have a global footprint possibly with the same brand.

The next question comes from the line of Matt Montgomerie with Forsyth Barr.

Might start on the Global Proteins project on the slide deck that you've presented today, it looks like there's a few changes. So I might ask sort of 3-part question to start. So firstly, on the second in-plant cooling system in the U.S., noting ahead of expectations. Maybe just how that's come about? Is that a better market demand generally for pet food in the U.S.? Or is it customer-specific pull forward of demand?

And secondly, on Europe, I know you've paused the feasibility study there. Just any comments you could give. And then thirdly, sort of the establishment of a JV in the U.S. is new information today. So just any more color you can give there?

Yes. Look, on the second in-plant calling, it was just a -- it was -- the equipment was put in slightly ahead of schedule. So that got us off to a positive start. We really only -- we were forecasting a start from the 1st of Jan, and that hit the ground running, if you want to call it that, but that was just positive. I'll do the fish and poultry first because I forgot the second question already.

Europe, yes, look, we continue to investigate the second plant in Europe, but it has taken us longer to get the transfer out of -- remember, we started in [ Helchteren ], Belgium. So we've gone back to the Netherlands, which has been a net positive move because we're right beside our business joint venture partners facility there. So that is -- Europe is taking longer to get to where we want it to be, but we're still very positive about it, and we are still investigating the option of a second plant up there.

On the fish and poultry, we just sort of teamed up with a younger chap who's been in the industry with a sort of a supporting team and ourselves and Brett Frankel from Shelby and Michael Tierney, this guy's name, have done a 3-way joint venture to get us started trading in fish and poultry. Obviously, we've looked at various different avenues to get into that sector, and we're just, I guess, taking it slowly. It was virtually a start from scratch business and just getting us to understand the dynamics of a bit more of processing or trading at this stage, both fish and poultry.

And just on the last part there, Andy, so it won't be material in FY '26 and maybe not even '27, '28 sort of...

Yes. It's a slower burn. Yes. And it's a good way for us to get work with these guys. And ultimately, it will be a good business, no doubt.

Then just on Profruit in FY '25. So I appreciate you've given us volume numbers, but I might have missed it, but I can't see what the either EBITDA or NPAT contribution was in FY '25.

The same as the prior year.

Okay. Perfect. Okay. And then just on Horticulture, maybe I'll try to ask Rob's question in a different way. So I think if we go back 12 or 18 months or so ago, we were talking about maybe $55 million in EBITDA post IFRS, including Profruit. You've obviously just done $65 million. Is it fair to assume or maybe glean that number that you gave us a year or 2 ago is possibly on the conservative side if we look out 2 or 3 years and sort of normalized conditions?

Possibly. Possibly conservative. But we do -- we haven't moved our modus of forecasting that business. Yes. So it's -- obviously, we like to get the yield right and the markets and the pricing remain positive, but we still got a long way to go in this season.

Yes. No, that makes sense. And then, Steve, one for you. Just on the net debt, I suspect myself and the other analysts maybe just missed it at the time of the Australian acquisition, but your debt came in meaningfully higher than what at least I was expecting. And it looks to me there's some debt acquired with the Fayman acquisition. Is that just like a working capital facility and is there any seasonal component to it? And then maybe if you can try to give us a steer on where you think net debt will be at FY '26 on your current guidance?

Yes. I think in the pack we released when we did the acquisition, we were guiding to $57 million net debt. We ended up at $84 million. And yes, you're right, it's an increase in working capital. So there was an increased level of trading towards the end of the year. So -- and working capital responded to that. It's already started to work its way sort of back out. And it wasn't only in the Fayman and Meateor Australia business. We had slightly elevated levels at Mr Apple as well. So as far as the guidance for the end of this year, forecast currently would say something around $60 million. But yes, we still got a bit of work to do on that.

Yes. That makes sense. And then, Andy, just one on Shelby revenue in FY '27, and this is just sort of circling back to the initial targets you gave us a couple of years ago now, which I think was $330 million in revenue in FY '27. And that was basically all Shelby revenue, obviously, because of the ownership state at that point. Is that still roughly the right number we should be thinking about? Obviously, it sounds like the projects are going well. You're guiding for solid growth in Shelby this year.

Yes. I'm probably not as close to the revenue number as perhaps you're spot in there specifically. But I think on our target, revised target of $85 million EBITDA in 2027, we've -- that's been restated post the Aussie transactions, and we remain confident about that number. And Shelby has got, as you've spotted, a contribution to that growth, but we remain confident about that -- the assumptions there.

Yes. Do you think -- is there a world in which you do it in FY '26? Like you're guiding to pretty strong Shelby growth. It sounds like the Aussie business is going well and then the rest are pretty small contributors now.

It's February, Matt.

There are no further questions at this time. And I'll now hand the call back over to Mr. Borland for closing remarks.

Yes. Look, thank you very much, everybody, for participating in the call and your support. Yes, we're obviously very pleased with the results and proud of the team's effort across the globe. So yes, thank you. And happy to have calls later if anyone's got anything else to discuss. Thank you.

Thank you. This concludes today's conference. We thank you for your participation, and you may now disconnect.