Scott Technology not only starts the new year with a strong balance sheet and bulging order book but it also has a $36million war chest for new acquisitions.
During Scott's annual shareholders' meeting in Christchurch in December, Scott outlined in detail its programmes for commercialisation and research and development in the year ahead.
Scott managing director Chris Hopkins' report to shareholders at the time said a key part of Scott's success during the past decade had been the new products and technologies developed for its customers.
''Not all our activities are successful but with perseverance and determination, the majority have been brought to market,'' Mr Hopkins said.
The Dunedin-based company was continuing to formalise its R&D process and its structure to improve outcomes, he said.
''We have a structured evaluation process to collect, review, action and monitor progress against business cases that are stress-tested by the management team.
The result was ''a healthy list'' of new products and offerings Scott was able to commercialise plus ''a long list'' of R&D projects at various stages of development, he said.
As if to underscore the diversity dynamic, Mr Hopkins noted that at a recent management meeting there were people from seven countries speaking five languages.
In an interview, Mr Hopkins said the company's annual R&D ratio remained around 5%-10% of annual turnover, and while some financial input came from New Zealand customers, more R&D funding was coming from Australia and Europe.
''We often have the concept but need to spend time developing it. We've got customers on board at that time who help build the system,'' he said.
While a prototype development could cost Scott $2.5-$3million, there was already a customer on board who would offset costs by buying the first system for $2million, he said.
He said Scott's future strategy was to invest across a range of platforms supporting its engineering vision for technologies and services to help the company grow.
''A key foundation is our people and we need to invest in recruiting, developing and retaining top talent. Scott's investment in R&D is increasingly important,'' he said.
Fast-changing technology globally meant Scott was seeing different needs and demands from its customers.
''Our formal R&D process has the objective of delivering new products and technologies in shorter timeframes. We will look for patent protection where we can.
''In other instances we rely on copyright or first mover advantage,'' he said.
Supporting engineering sales and marketing efforts with local staff in other countries ensured Scott could pick up and respond to emerging trends impacting on its customers.
There was a strong demand from both Scott's new 50.1% shareholder and customer, JBS, and from other external customers, to transfer and adapt technology to other species, including its lamb robotics to undertake beef and pork boning.
''This development is under way and we're confident it will be a faster path than our original lamb-processing systems,'' he said.
In order for JBS to attain the 50.1% controlling stake, Scott undertook a capital-raising through a scheme of arrangement, completed in April.
In total, $40million was raised from the combined rights issue to existing shareholders and an issue of new shares for JBS to top up to 50.1%.
Of the $40million raised, $15million was used to repay all debt, leaving $25million for Scott to target growth options. Its strong operating cashflows for the previous financial year further boosted Scott's cash position to $34million, as at last August.
Mr Hopkins was circumspect on what acquisitions were being considered, but said there were growing opportunities in Australia and Europe and the board preference was ''for a small number of large acquisitions''.
He said industrial automation revenues were at similar levels to the previous financial year.
''Through RobotWorx we sold 235 robots during the year, although higher costs and the reduced availability of robots for refurbishment have impacted margins.''
Increased revenues during the year from mining customers was driven by newly commercialised robotic technology, originating from Scott Australia, for truck refuelling, inspection and idler change systems for the extraction side of mining operations, he said.
The recent acquisition of the business assets of Somako Hirsh + Attig GmbH, based in Kurnbach, Germany, provided the critical mass to deliver and support Scott's engineering solutions into a European market, which held much potential for Scott, he said.
''The acquisition included existing customer projects and inquiries which provided a boost to our appliance industry activity in the second half of the year.''
The appliance manufacturing industry remained largely in consolidation mode at present. However, Scott's inquiries had picked up in recent months and another large order, like the recent $US6 million order, would change Scott's outlook significantly.
''The demand for our technology from different end customers changes from year to year and this is one of the reasons for us to maintain the diversified range of industries in which we operate,'' Mr Hopkins said.
Scott's China operation was continuing to support manufacturing activities in all regions by its purchasing of low cost components and sub-assemblies.
''In addition, we continue to develop the skills and resources within China to deliver stand-alone or repeat systems directly into the Chinese market,'' he said.
Before the end of the financial year, Scott announced acquisition of the Bladestop business, in Australia. Bladestop, applicable to bandsaws in boning rooms, started commercial sales within the last two years.
When Scott acquired Machinery Automation & Robotics in January 2015 it also acquired a licence to develop and distribute Bladestop technology until June 2017, but exercised an option to acquire the business and got full ownership rights to the Bladestop technology in October.
''We had some breathing space to get to understand it ... then bought it in October,'' he said.
Staff in Christchurch had completed the assembly of presses for Range International; part of a repeat order for eight systems from Range during the year, which are due for delivery through 2017.
Scott's magnet systems, or HTS-110, was one of its highly specialised areas of capability and contributed positively to Scott's result this year, Mr Hopkins said.
Scott's robotic meat processing technology was ''starting to reach maturity'' and was being accepted as proven technology.
Manufacturing efficiencies during the year meant Scott could simultaneously build three primal lamb cut machines and four middle cut machines.
Mr Hopkins said in the short term he expected Scott's biggest opportunities to come from the mining and meat-processing sectors, where new products were already being commercialised.
''In the medium term, our R&D in areas such as AGV's (automated guided vehicles) and mobile robotics will drive growth in the wider industrial automation sector,'' he said.
However, for Scott to maintain its market share of equipment supplied to appliance manufacturers around the world it would need new ideas and better marketing.
It was good news for Scott and its staff that most skills, technologies and capabilities could be applied to any one of Scott's different target market customers.
''Many of our customers are finding it increasingly difficult to recruit and retain the staff they need for their own business. Many now see automation and robotics as essential to remain competitive,'' he said.
With significant new orders; amounting to more than the $6 million recently announced, and more expected, Scott was looking to increase its own manufacturing capacity and talent pool to provide more technical, service and support staff, Mr Hopkins said.
