Scott profits from diversification

Scott Technology directors (from left) Graham Batts, Stuart McLauchlan, Chris Staynes, Chris...
Scott Technology directors (from left) Graham Batts, Stuart McLauchlan, Chris Staynes, Chris Hopkins and Mark Waller. Photo by Craig Baxter.
Dunedin-based Scott Technology realised the benefits of its diversification programme in the year ended August 31, when its profit for the period increased substantially on the previous corresponding period.

Shareholders were rewarded for their loyalty with an increased final dividend of 4c and the decision by directors to implement a dividend reinvestment plan.

The company reported an operating profit of $5.5 million for the year, well up on the $390,000 reported in the previous period.

The profit after tax was nearly $2.8 million - again well up on the $265,000 reported in the previous period.

Earnings per share soared to 8.1c compared with 1.1c last year.

The result was well received in the market.

Craigs Investment Partners broker Chris Timms said the company was in a "sweet spot", helped by the currency.

"The currency has had a big impact on the result in the past, but Rocklabs was an amazing acquisition for them and it is now showing the benefits."

One of the other main features of the result was the amount of free cash flow which would enable Scott to consider options in the future, including making further acquisitions, he said.

Scott chairman Stuart McLauchlan said the result was particularly pleasing, as it was achieved during turbulent economic times.

The operating cash flow of $4.5 million enabled the company to reduce debt, purchase additional capital equipment and pay dividends.

The company was supported by a strong balance sheet, with total assets of $36.6 million and total bank loans of $3.9 million.

Along with the final dividend, an interim dividend of 1.25c was paid in March, taking the total to 5.25c a share for the year.

That was in addition to a one-for-10 non-taxable bonus issue during the year, which also participated in the dividends, he said.

The total dividend of 5.25c was an increase of 425% over the previous period and represented a payout of 59%.

"This reflects the directors' confidence in the growth and trading ability of the company, supported by the underlying strength of the company's balance sheet."

Scott Technology was a highly-skilled engineering company which specialised in custom design-and-build of automated robotic production systems, Mr McLauchlan said.

Scott was a world leader in its niche market, and it supplied production systems to many of the leading international companies spread around the globe.

Each of the company's markets responded differently to the global economic crisis and that required directors to be selective in their focus, he said.

"Benefits of the company's diversification are now being realised and opportunities continue to arise in all our target markets, through providing superior service and innovative solutions."

The company vision "To be the global innovator in automation" had kept Scott focused on developing technology and smart solutions to build a sustainable business, Mr McLauchlan said.

Due to the unique nature of the business, much of its activity could be classified as research and development.

The company spent close to $7 million on research and development over all activities during the year.

A key to the achievements in the past year had been the strategic relationships with customers, he said.

"This has enabled us to work together, to innovate and to drive successful outcomes for both our customers and ourselves.

"We are confident of achieving further progress in the year ahead and taking advantage of growth opportunities that exist," Mr McLauchlan said.

 

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