Announcement

FLLYR: SCT: Scott Technology Full Year Announcement 04:57p.m. 
SCT  
24/10/2019 16:57  
FLLYR  
PRICE SENSITIVE  
REL: 1657 HRS Scott Technology Limited  
 
FLLYR: SCT: Scott Technology Full Year Announcement  
 
The Directors of Scott Technology Limited ('Scott') report total revenues of  
$225m up 24%, on the $182m revenues achieved in the prior year. Revenue  
growth this year has primarily come from a full 12 months result from the two  
acquisitions completed in 2018.  
 
The bottom line performance for the current year was impacted by a number of  
challenging projects. These projects were discussed in our market update  
released to the NZX on 9 July. The company is pleased to report that we are  
nearing completion of these projects, noted in our market updated dated 9  
July, and do not expect the projects to greatly impact on profitability in  
the year ahead. A positive outcome from these projects is a suite of new  
technologies and products which we are already taking to market.  
 
Through the year, Scott maintained a strong commitment to Research and  
Development ('R&D'). The Board made a conscious decision to accelerate R&D  
spend to make the most of Australian tax credits and the NZ Government's  
expiring R&D growth grant which is being replaced by the new tax credit  
scheme. Scott's total gross Research and Development exceeded $14.0m in the  
current year, representing 6% of our total revenues (2018: $11m). The Board  
has taken a conservative, but prudent, approach by expensing R&D.  
Significant progress has been made during the year toward expanding  
technologies and developing new solutions that will deliver results in the  
years ahead. Examples of technology developed during the year include:  
 
o 3KG sample mill - the "Gryst" Mill  
o Poultry trussing system developed in conjunction with Pilgrims Pride in the  
USA  
o Bladestop connect software for Industry 4.0 application  
o Automated fire assay system for Gold analysis  
o Automated sample preparation systems for coal, aggregates and iron ore  
o Cobotic (Collaborative Robot) solutions for welding and palletising  
 
o Warehouse management software to enable complete turnkey systems for  
logistics and warehouse  
o Customised and specialised heavy lift and natural navigation Automated  
Guided Vehicle (AGV) solutions  
o Industry 4.0 enabled high level, high speed palletiser  
o Beef scribing system  
o Lamb loin deboner  
o X-Ray enabled Pork Primal processing system  
 
Our total IP portfolio has grown to over 200 patents covering 40 core product  
families and over 80 trademarks.  
 
Earnings before interest tax depreciation and amortisation (EBITDA) of $20.0m  
increased 4% from $19.3m in the prior year. EBITDA in 2019 includes the  
impact of accounting changes required by the adoption of three new NZ  
International Financial Reporting Standards (NZ IFRS). The major impact of  
the adoption of new standards arises from the revised treatment of leases  
previously treated as operating expenses which are now recorded as a  
right-of-use asset and lease liabilities on the balance sheet with the lease  
expense replaced by a depreciation and interest expense. The net impact is  
an increase of assets by $17.0m and an increase in Liabilities of $17.4m with  
a $0.4m decrease in the net surplus before tax and an increase in EBITDA of  
$4.0m.  
 
Sales into our Appliances, Industrial Automation and Materials Handling &  
Logistics sectors achieved double digit growth. The acquisition of Alvey in  
2018 provided a major boost to the Materials Handling & Logistics sector  
where revenues increased 126% and the acquisition of Transbotics (AGV's)  
driving a 52% increase in revenues from the Industrial Automation sector.  
 
Steps have been taken to improve our operational performance. Our German  
facility has been moved under the wider European management team with  
manufacturing consolidated into our Czech operations. We have narrowed our  
focus in Auckland to concentrate on standard products and increased our  
capacity in Melbourne, Sydney, Christchurch and Dunedin to provide the  
necessary skills and experience to ensure large projects are appropriately  
resourced.  
 
At balance date the company had total bank debt of $16.4m against total  
shareholder's funds of $111.8m, compared to $105.7m (restated) in 2018.  
During the year cash was used to settle the deferred portion of the Alvey  
acquisition completed in 2018 and to acquire the bolt on business of  
Normaclass, which provides beef grading technology with extensive  
installations in Europe and Uruguay. Cash was also applied to the building  
extension in Dunedin which is nearing completion. Management's focus is  
firmly on delivering the operational benefits and efficiencies expected from  
our expanded business. The Scott Group is well positioned to deliver  
significant profitable growth supported and driven by our strategy.  
 
Dividend  
 
The Directors have declared a final dividend of 4.0 cents per share for the  
year ended 31 August 2019, payable on 26 November 2019.  
 
With strong growth and an associated increase in working capital  
requirements, your Directors have held the dividend to a 70% payment ratio in  
order to fund these requirements.  
 
With the interim dividend of 4.0 cents per share paid in May 2019, the total  
dividend for the year is 8.0 cents per share. The final dividend will not be  
fully imputed due to a greater portion of earnings being generated offshore.  
The Dividend Reinvestment Plan will apply.  
 
Outlook  
 
We are in a good position to continue to grow but we will be cautious in our  
approach in order to protect cash flow and grow the bottom line. The  
learnings and challenges from the past year will strengthen the business and  
fine tune the skills and experience of our people.  
 
Our forward order book and opportunities continue to grow at a steady rate,  
despite the fact of global economic uncertainty in our markets slowing the  
conversion of enquiries to orders. We have sufficient confidence in our sales  
prospects and operational developments to target further growth and a lift in  
performance in the year ahead.  
End CA:00343203 For:SCT Type:FLLYR Time:2019-10-24 16:57:52  

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