Scott boasts $28m in orders, $5m R&D grant

Scott Technology managing director Chris Hopkins addresses Scott shareholders at the company's annual meeting in Dunedin yesterday. Photo by Craig Baxter.
Scott Technology managing director Chris Hopkins addresses Scott shareholders at the company's annual meeting in Dunedin yesterday. Photo by Craig Baxter.
Listed automation and robotics company Scott Technology has entered its second century's trading with a full order book worth $28 million and received confirmation yesterday of a $5 million three-year Government research and development grant.

The company also predicted by 2015 it would be in a position to commercialise its automated cow-milking system.

Diversification in recent years into the meat and mining industries, dairying and superconductor magnetics, alongside the mainstay appliance manufacturing, was paying dividends in several areas, the about 60 shareholders at the annual meeting in Dunedin yesterday heard.

At the meeting Scott chairman Stuart McLauchlan announced the Government had awarded Scott a $5 million R&D grant, which is a 42% increase on the previous grant of $3.5 million the company received three years ago.

Mr McLauchlan said Scott was ''beginning its second century with a full order book'' - with signed contracts for $4 million of work from China, $10 million from Australia and $14 million from the United States.

''This will be a huge help in underpinning our research and development,'' Mr McLauchlan said.

For its full-year result Scott posted a $5.14 million after-tax profit, but despite what was a 16% decline gave shareholders a extra 2c special ''centenary'' dividend.

Revenue for the trading year to August, including 87% derived from overseas markets, declined from $63.7 million to $60 million, with earnings before interest and tax down from $8.7 million to $7.1 million and after-tax profit down from $6.1 million to $5.14 million.

While the result was down on last year's record profit, he was otherwise ''pleased'' with the result, and the full order book, Mr McLauchlan said.

Having spent $5.6 million in total on R&D in the past financial year, and $7 million the year before, 10%-12% of Scott turnover was annually invested in R&D, Mr McLauchlan said.

However, on questioning from the floor, he said the headline 10%-12% expense was softened by multimillion-dollar annual contributions from the New Zealand and Australian governments, joint venture partners and various agencies, he said.

Yesterday's $5 million Government grant is expected to be boosted by contributions from other companies and organisations.

Managing director Chris Hopkins said, while the mining sector had slowed during the previous year, Scott's diversification meant gains were made elsewhere, including robotics sales to Australia, sales to global food giant JBS Swift and an overall increase in appliances sales.

Scott's intellectual property comprises 23 inventions, covered by 56 patents, and it exports to 88 countries.

Scott has been hard hit in recent years by the strength of the New Zealand dollar and US dollar fluctuations, but with exports to other countries foreign exchange losses had been softened.

While meat robotics had taken about 12 years to develop, with several large commercial sales made recently, dairy R&D was in its sixth year and had moved from a prototype last year to a production model, which was now operating in a 80-bale rotary shed milking 800 cows, Mr Hopkins said.

''It's challenging getting it running at full spec [specifications].

''We're in year six of dairying, expect to have a limited number of sites next [dairy] season and are looking to have that ready for commercialisation by 2015,'' Mr Hopkins said.

When queried on the potential for product diversification being a ''risk to diluting resources'', Mr McLauchlan said each of the five sectors Scott manufactured for was reviewed annually.

''It's important to us to keep seeking growth in products and [other company] acquisitions,'' he said.

In a question from the floor, Mr McLauchlan defended Scott's purchase of Auckland properties it had been leasing this year, where its subsidiary RockLabs has been for several years, for $3.2 million, saying deciding to buy them was ''a no-brainer'' as it halved interest payments, compared with the leasing arrangements.

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