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HY TO 28/02/2001 PROFIT $11,000 ($1.553M) DIV 1.5CPS

12:00AM, 6 Apr 2001 | HLFYR

CONSOLIDATED OPERATING STATEMENT FOR THE HALF YEAR ENDED 28 FEBRUARY 2001
 
Unaudited (NZ$`000)
                                                     Current        Previous
                                                      Period   Corresponding
                                                                      Period
OPERATING REVENUE
 Sales revenue                                        8,822          14,797
 Other revenue                                            -               -
Total Operating Revenue                               8,822          14,797
OPERATING SURPLUS (DEFICIT)
 BEFORE UNUSUAL ITEMS AND TAX                           200           2,335
Unusual items
 for separate disclosure                               (168)              -
OPERATING SURPLUS (DEFICIT)
 BEFORE TAX                                              32           2,335
Less tax on operating surplus                            21             782
Operating surplus (deficit)
 after tax but before minority
interest                                                 11           1,553
Less minority interests                                   -               -
Equity earnings                                           -               -
OPERATING SURPLUS (DEFICIT)
 AFTER TAX ATTRIBUTABLE
 TO MEMBERS OF LISTED ISSUER                             11           1,553
Extraordinary items after tax                             -               -
Less minority interests                                   -               -
Extraordinary items after tax
 attributable to members of the
 Listed Issuer                                            -               -
TOTAL OPERATING SURPLUS
 (DEFICIT) AND
 EXTRAORDINARY ITEMS
 AFTER TAX                                               11           1,553
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Minority
 Interest                                                 -               -
Operating Surplus (Deficit)
 and  Extraordinary  Items after
 Tax attributable  to Members
 of the Listed Issuer                                    11           1,553
EPS                                                     0.1             7.9
SHAREHOLDERS' EQUITY
  ATTRIBUTABLE TO MEMBERS
 OF THE HOLDING COMPANY                              11,622          11,313
 
The Directors of Scott Technology Ltd advise that the unaudited result for
the six months ended 28/02/2001 was a profit of $11,000 after deducting
abnormal costs of $168,000.  This result compares to an unaudited profit for
the six months ended 29/02/2000 of $1,553,000.  Scott Technology Ltd group
sales for the six months were $8,462,000, compared to $14,797,000 in the
previous half-year.
 
Total shareholders' equity as at 28/02/2001 was $11.6m, compared with $11.3m
at 29/02/2000.  The improvement in the net working capital position, which
was $3.5m at 28/02/2001, compared to $2.5m at the same time the previous
year, reflects the release of capital committed to contract work in progress
and debtors.  The operating cash outflow of $1.0m for the half-year compares
with an operating cash outflow of $1.7m for the previous half-year. This
outflow is a matter of timing, with significant contract billings and build
up of trade debtors at 28/02/2001.  Since the end of the half-year, $3.2m of
debtors has been received by the company.
 
The Directors have declared an interim dividend of 1.5cps, compared to 4.5cps
in the previous half year.  This dividend will be payable on  03/05/2001 and
will be fully imputed, with a supplementary dividend being applied to
overseas sharseholders. Record date: 27/04/2001
 
The Directors are disappointed at the results for the financial year which
have been impacted by the completion of several major contracts, the global
slow-down, particularly in North America, and cost over-runs on a major
European contract.
 
The strong demand emanating from our traditional markets in the Americas over
the past two years was partly driven by energy efficiency regulations in the
U.S.A., which led to an abnormal level of appliance orders during that
period.  Your Directors outlined this position in the Annual Report and
stated that "the company's current workload is lower than last year and the
Directors anticipate a reduced level of profitability in the first half of
the current financial year."
 
The Directors are confident that the current downturn in capital investment
activities world-wide will correct itself in due course and the company is
currently working on contracts for customers in the U.S.A., Mexico and
Australia.
 
Earlier this year the company reviewed its employee levels, with a consequent
reduction in staff numbers that resulted in an abnormal charge to our
half-year profit of $168,000 for redundancy costs.
 
In 1999 the company contracted with a major European public company to design
and build a series of appliance lines for a new factory in Poland.  This was
an ambitious project, involving the highest level of global technology, and
while the project is now virtually complete and operating successfully, the
company experienced significant cost over-runs, partly due to language and
translation difficulties.  However, Scott Technology now has installed
equipment which forms an integral part of one of the most modern appliance
manufacturing facilities operating in Europe.   This will be a very strong
marketing feature for the future.
 
During the past year, the company has explored a number of acquisition
possibilities, including an Australian company that is heavily involved in
production machinery for the automobile industry.  We have also held
discussions with a New Zealand company with considerable experience in
automated lines for one of our primary industries.  In both cases, the cost
of acquisition and dated technology led to the Directors deciding not to
proceed with either acquisition.
 
The Directors have undertaken a major review to position the company for a
more competitive world market and intends to leverage its intellectual
knowledge and experience into industries with considerable potential for
Scott-type automated applications.  The company is currently working on its
first prototype for this diversification.
 
The Directors have also reviewed the structure and management of the company
on the retirement of Peter Whitehead as Managing Director.  The company's
Director of Engineering, Kevin Kilpatrick, has been appointed Chief Executive
and his 28 years of engineering and technical experience will provide the
leadership required to achieve the full operating potential of the company.
Mr Kilpatrick is already committed to a significant cost-out programme for
Scott Technology.
 
Following a decade of relative prosperity for Scott Technology, the past six
months has been a challenging time but the company is financially strong,
with no term debt, has management with a passion to succeed, and is committed
to leveraging its technology capabilities where it identifies potential.
Management are committed to a continuing review of, and improvement in, the
way the company operates.
 
Our global markets are facing slowing economic conditions which inevitably
lead to a reassessment of their capacity requirements but Scott Technology is
in the process of becoming an even leaner, more highly responsive and
technically capable innovator and producer of high technology production
lines which are capable of creating considerable economic wealth for their
owners.
 
Scott Technology intends to capitalise on these strengths and anticipates a
return to appropriate profit levels in the medium term.
End CA:00065995 For:SCT    Type:HLFYR      Time:2001-04-06:15:50:06 Encrypt:Y