Half Year Results
12:00AM, 29 Mar 2005 | HALFYR
HALF YEAR REPORT FOR THE SIX MONTHS ENDED 28 FEBRUARY 2005
Following the regular monthly Board meeting held earlier today in
Christchurch, the Directors of Scott Technology Ltd report that the company's
unaudited result for the six month period ended 28 February 2005 is an
operating surplus before tax of $1,677,000 resulting in a tax paid profit of
$1,105,000, compared to $1,868,000 in the previous half year. Group sales
for the six months were $21.9 million, the majority of which are in
international currencies, and this compares to group sales of $16.9 million
for the previous half year.
As foreshadowed by the Directors last year, the principal challenge facing
Scott Technology Ltd was the high value of the New Zealand dollar and the
company indicated it would meet this challenge by continuing to secure
contracts in the global market, albeit sometimes at lower margins. However,
margins have been maintained through efficiency and productivity initiatives.
Our international sales have increased substantially but on conversion to
New Zealand dollars the result is a reduction in our reported profit.
Having regard to the very high level of forward orders secured globally, the
Directors have confidence in the company's trading position and have declared
an interim dividend of 4.0 cents per share. The share register will close
for the dividend calculation on 29 April 2005. The dividend will be payable
on 5 May 2005 and will be fully imputed with a supplementary dividend being
applied to overseas shareholders.
Scott Technology's core business is the design, manufacture and installation
of sophisticated production systems specifically engineered for the global
manufacturing industry and the company is a worldwide leader in this field.
To date the company's representative office in Shanghai China has produced
excellent results with the securing of several contracts, including the
supply of an appliance production system to Haier, one of the worlds leading
appliance manufacturers. This contract, to be installed in China, is of
significant strategic value and is expected to lead to further contracts with
Asian appliance producers. The Shanghai office has also contributed
significantly to the company's procurement of technical components from
A further highlight of the half year was the securing from a major Turkish
Public Company, a contract to build an appliance production system to be
installed in Russia. This is in addition to the contract secured late last
year to supply three appliance production systems for installation in Turkey.
Both of these contracts were secured with the provision of long term finance
supported by a payment guarantee issued by the New Zealand Government through
their Export Credit Office.
Scott Technology's development and diversification strategy has introduced
its appliance production system expertise to the robotics industry and
several successful hi-tech processing systems have been developed for the
meat and food related industries.
The company has invested heavily in the research and development of
automation for the meat industry and also in robotic and automated
warehousing technology particularly for the food industry. The company's
automation advancement programme for the meat industry includes the
development of robotic systems. These systems which are currently being
successfully trialled, undertake repetitive applications with improved yields
and provide significant advantages for processors including Health & Safety
issues. This investment, the cost of which has been expensed and not
capitalised, is expected to begin generating sales during the second half of
this year. These sales will initially be Australasian based and will help
balance our exposure to foreign currencies.
Scotts has secured a very significant contract to build multiple production
systems for an Australian company about to embark on a global launch of an
innovative patented product. This initial contract, valued at $9 million,
provides long term opportunity for the company with multiple repeat contracts
The company has recently completed an automated warehousing solution that is
now successfully installed in Auckland. Further similar opportunities are
being actively pursued in both New Zealand and Australia.
As part of its continuing focus upon international competitiveness the
company is currently undertaking a review of its operations with the
objective of further reducing its operating costs and improving margins.
This will include increased offshore component sourcing and the installation
of new generation high-efficiency machine tools.
Scott Technology Ltd has a strong equity base and although the timing of
current contracts has increased its work in progress and working capital
requirements, this is expected to correct itself later in the year. The
challenges facing Scott Technology Ltd are those facing all exporters and
manufactures alike and the Directors see the current position as part of our
business and global currency cycle. The Directors and management continue to
view the future with optimism.