Scott shareholders' patience rewarded

A reporting season described by one broker as patchy, has received some welcome news as Scott Technology advised it was trading ahead of last year and would reward shareholders.

The Dunedin technology company will report its interim result on March 31, but has advised the New Zealand Stock Exchange that it expects to report a net surplus before tax and will pay an improved dividend and make a share issue.

Craigs Investment Partners broker Peter McIntyre said the strong result would be welcomed by the market, but it was also a boost for Dunedin.

"It is good news because the reporting season for the six-month period has been patchy," he said.

Scott would reward shareholders with a 1.25c dividend for the year to March 26, 2010, to be paid on March 31, and make a one-for-10 non-taxable bonus share issue which would also qualify for the dividend payment.

Scott Technology directors said in a statement the interim dividend and bonus issue reflected their confidence in the growth and trading ability of the company and the strength of the company's balance sheet.

"The bonus issue also acknowledges shareholders' commitment to Scott Technology over the past two years, when the company's performance was affected by a downturn in its international markets."

Mr McIntyre said Scott had been prudently managed and benefited from what he called "southern conservatism", which resulted in little or negligible debt on its books.

"It hasn't been a growth-at-all-costs approach, which has stood them well in the last two years."

Scott was reaping rewards from some strategic moves, especially the 2008 purchase of Rocklabs, which makes sample preparation equipment and reference materials for the metals and mineral industries.

The Auckland-based company exports to 92 countries around the world and Mr McIntyre said it had benefited from the growth in mining in recent years, which had boosted Scott's result.

It has also benefited from the diversity of its business: a Christchurch-based automated assembly line operation, Dunedin-based meat industry robotics joint venture and a new stainless steel fabrication and dairy-automation business, Fab-Tech, along with Rocklabs.

Mr McIntyre said although Scott was reliant on exporting, it had diverse markets, which gave it some flexibility and security against market fluctuations.

Looking ahead, Mr McIntyre expected Scott to continue to be conservatively managed.

"I don't think they will go on the acquisition trail, but build on the technology they have got so far and look at exporting it."

At Scott's annual meeting in December, chairman Stuart McLauchlan hinted of better times ahead, with $40 million of work under negotiation and more than $20 million of projects under contract.

For the full year to August 2009, Scott's accounts returned to the black.

A $390,000 profit followed a $1.1 million loss for the previous year.

In 2008 it did not pay a dividend and in 2009 it paid 1c.