Alvey Group Acquisition

Scott Technology Limited 
630 Kaikorai Valley Road 
Private Bag 1960 
Dunedin 9054 
New Zealand 
 +64 3 478 8110 
               www.scottautomation.com 
 
©Scott Technology Limited   
 
21 February 2018


Listed Company Relations
New Zealand Exchange Limited
PO Box 2959
Wellington


Dear Sir/Madam

ACQUISITION OF ALVEY GROUP

We are pleased to announce today that the Board has approved in principle the
purchase of the business assets and intellectual property of Alvey Group,
Headquartered in Belgium with operations in France, Czech Republic and the UK.

Specialists in palletising, conveying and warehouse automation, Alvey is closely aligned
to SCOTT, with products and markets that are complementary to SCOTT. This is a key
development that adds to our overall automation capabilities, while helping fulfil our
strategic expansion goal and accelerating our access to international markets.

With a history that spans over 50 years, Alvey brings with it a high caliber workforce and
expertise that will greatly add to our product range and software capabilities, while
allowing Scott access to skills and technology faster than could be developed in-house.

Due diligence has been completed with the next step being finalisation of the sale and
purchase agreement and a target acquisition date of 4 April 2018. The transaction has a
value of €12.1 million, subject to final adjustments, and is expected to have a positive
impact on earnings from completion.

The purchase will be funded by cash reserves (SCOTT’s August 2017 cash balance was
NZ$26.7m).
 

About Alvey

Alvey is an exciting acquisition for SCOTT with great potential for both companies.
Strategically this will allow SCOTT to build an end-to-end automation offering for the
production process from raw materials receipt through to warehousing and final
distribution.

Alvey Group specialises in tailor-made industrial automation projects. Alvey systems
help increase efficiency in plants, where the handling of secondary packaging, semi-
finished or finished products is involved.

    
 
©Scott Technology Limited 
 
Alvey has a wide portfolio of industrial services and systems including conventional and
robotic palletisers, depalletisers, pallet conveyors, case conveyors, order preparation
systems, stacker cranes and other material handling equipment, complemented by its
warehouse management software package, Maestro+.

The business is currently owned by its managing director, Maarten Van Leeuwen, and
other senior executives, who will remain with the company and help drive its future
growth alongside SCOTT.

Alvey reported revenue of €33.6m for its most recent financial year ending March 2017.
Revenue has grown at a compound annual growth rate of 14% over the past five years.
The purchase price represents a multiple of 4.5x earnings before interest, tax,
depreciation and amortisation for its most recent financial year ending March 2017.

The Scott Board is excited about the opportunities that the acquisition of Alvey will
provide to the Scott Group.



Yours faithfully





S J McLauchlan C C Hopkins
Chairman Chief Executive
Ph: +64 27 433 5481 Ph: +64 3 478 8430
 
 
 
 
 
About Scott
At Scott we automate the future. The production line machinery we design and build
deliver productivity gains and exceptional reliability to many of the world’s leading
manufacturers. We go a step beyond engineering production solutions to actually
revolutionising entire industries – using robotics to automate manual processes and
create genuine competitive advantage.
For over 100 years Scott has looked to tomorrow and rapidly responded to shifting
needs. Today, we have production bases in the United States, Germany, China,
Australia and New Zealand, customers in over 80 countries, and a real commitment to
developing new technology and bringing it to market. Across everything we do you will
discover true quality, advanced engineering and a renowned design aesthetic.
Scott. Quality that lasts. Quality that inspires.
 
Learn more about SCOTT and ALVEY at www.scottautomation.com and www.alvey.eu

---

21 February, 2018
Acquisition of
AlveyGroup

Transaction summary
Revenue to March 2017:€33.6m (NZ$56.5m)
Multiple:Approx. 4.5x historic March 2017 EBITDA
Location:Headquartered in Belgium along with operations in France, Czech
Republic and the UK
Staff:250
Expected acquisition date:4 April 2018
Payment from cash reserves
NZ dollar figures based on a EURNZD rate of 1.6805

Company overview
Palletisers and depalletisers
Pallet conveyors
Case conveyors
Order preparation systems
Stacker cranes
In-house software to run and manage automation
processes (Maestro+ and EvoLink)
Offering: Automated and robotic systems for handling the internal logistics of secondary
packaging (trays, carton boxes, crates) and pallets.
AlveyGroup company profile video
Fully integrated: Design, build,
assembly, supporting software and
subsequent service contracts
Customer base: Predominately from
the manufacturing and distribution
sectors (with an emphasis on food)
across Western and Eastern Europe
(including Russia)

Company overview

Company overview – Locations
Belgium
93 staff
Location: Deerlijk– 60km west of Brussels
50 year history
Corporate head office
Two-thirds of engineering staff
Hosts the majority of project management staff
Some modest production
Czech
Republic
132 staff
Location: Podivin– near Czech/Austrian border; 90km north of Vienna
20 year history
Principal production and assembly site
Sites also at two other locations for metal works and software engineering
France
25 staff
Location: Two sites – one in Ploemeur(North West) and one in Marseille
(South East)
50 year history
Sales and service
UK
1 staff
Location: Birmingham
Company incorporated in 2015
Sales and service
United Kingdom
France
Belgium
Czech Republic
Scott Germany

Company overview – March 2017 revenue snapshot
73%
25%
3%
AutomationServicesSoftware
Revenue by activity in FY17
Revenue by end customer – prior 3 years
Revenue to March 2017:€33.6m (NZ$56.5m)
Equivalent to approx. 42% of Scott’s FY17 revenue
5 year CAGR of 14% pa
Composition:73% from projects (design through to build and integration) and
25% from service work such as maintenance contracts, 24/7
hotlines, spares, modifications & upgrades
Approx. 70% of revenue in past 3 years from food industry
participants
35%
25%
18%
12%
8%
4%
Frozen potatoes &
vegetables
Dairy & special
nutrition
Others
Hygiene paper
Bakery
Snack foods

Company overview - People
A very high calibre Senior Executive
Maarten van Leeuwen
Group Managing Director
15 years with Alvey
Led a management buyout in 2011 which
positioned Alveyfor the shape it takes today
Frederic Hermier
Group Sales Director
11 years with Alvey
Also involved with the 2011 management
buyout
Olivier Claerbout
Group Engineering Director
1 year with Alvey(but 3 years as ISO and
VCA advisor)
Aaron Vanwalleghem
Group Operations Director
15 years with Alvey
Senior executive snapshot
•Average tenure of 10 years
•Average age of 41
•Majority are fluent in speaking and
writing English (English is the official
language of the company)
•All senior executives will remain post
transaction

Strategic rationale
Build an end-to-end
automation offering
• Fills a gap in our offering
• Complementary
• One-stop-shop
Add to our overall
automation capabilities
[Automation = hardware +
software + electrical +
analytics + integration]
Accelerate market
access
Get skills and/or
technology faster than
developing in-house
• Technology transfer across
the wider Group

Strategic rationale
Building an end-to-end automation offering for the overall
production process from raw material receipt to final
distribution.
Scott
Raw material
receipts
Production &
manufacturing
process
PackagingPalletising
Internal
logistics
External
transport
Warehousing
and distribution
Alvey
Raw material
receipts
Production &
manufacturing
process
PackagingPalletising
Internal
logistics
External
transport
Warehousing
and distribution
Scott +
Alvey
Raw material
receipts
Production &
manufacturing
process
PackagingPalletising
Internal
logistics
External
transport
Warehousing
and distribution
None
Low
Medium
High
Key: Level of expertise

Strategic rationale – Business appeal
High calibre
management team
and workforce
Robust systems
and internal
processes
Low cost
manufacturing
European
scale/visibility
Meaningful entry
into backend
logistics
Direct application
to JBS
opportunities
Existing expertise
in chilled/frozen
factory
environments
Greatly add to our
software
capabilities
EPS accretive
Like minded
company culture

Strategic rational – Synergy opportunities
Ta ke Alveyinto new markets via our Scott channels
• Geographies – Germany, USA, Australia, New Zealand and China
• Key customers – JBS
• Applications – meat processing
Utilise key aspect of Alveyacross Scott globally
• Service business model
• Software engineering expertise
• Maestro+ and EvoLink
Utilise Al vey ’slow cost production in Czech Republic for the wider Group
Support entry of key Scott technology into Europe
• Meat processing into Europe
• Bladestop into Europe
Cost reductions from greater purchasing power
Support Alvey to move into related technologies and new customers groups
Stronger balance sheet to support Alvey with bigger projects

Proformarevenue snapshot
Scott
(12 month actual to August 2017)
$133m
Alvey
(12 month actual to March 2017)
$57m
Proforma
(Scott historic + Alveyhistoric)
$190m
NZ dollar figures based on a EURNZD rate of 1.6805