2018 Half Year Report

INTERIM
REPORT
2018
SCOTT TECHNOLOGY LIMITED

CONTENTS
03
CHAIRMAN & MANAGING
DIRECTOR’S COMMENTARY
05
ACQUISITION OF ALVEY GROUP
06
STATEMENT OF COMPREHENSIVE INCOME
07
STATEMENT OF CHANGES IN EQUITY
08
BALANCE SHEET
09
STATEMENT OF CASH FLOWS
10-14
NOTES TO AND FORMING PART OF THE
INTERIM FINANCIAL STATEMENTS

CHAIRMAN & MANAGING
DIRECTOR’S COMMENTARY
The Directors are pleased to report the
company has achieved a surplus before
tax of $4.8 million for the six months
ended 28 February 2018, an increase of
13% on the $4.2 million recorded for the
first half of the 2017 financial year.
For this six months, the company’s
EBITDA of $6.4m is an increase of 25%
over the previous corresponding period’s
$5 .1m delivering 4.2 cents earnings per
share, an increase of 27% over the 3.3
cents per share in 2017. Total revenue
of $67.5m is a 19% increase on the
$56.7m recorded in 2017. The growth
experienced during this half year has
been driven from organic activities,
through uptake of the company’s own
developed technologies, and continues
the trend set in the prior year.
Scott Technology continues to see strong
demand for our automation and robotics
technology and capability. A strong order
intake over recent months has pushed
forward work for large projects to a record
high and we anticipate operating at near
full capacity providing the confidence
to continue to expand our capabilities in
certain areas. As part of this, our plans for
the Dunedin site expansion are complete,
awaiting final building consents.
Recent acquisitions have been successfully
integrated with the global team working
effectively as one. The announcement and
subsequent completion of the acquisition
of Alvey Europe supports our strategy to
grow our skill base and to establish critical
mass in our key markets.
The operating cash outflow of $2.6m
reflects increased inventory and billings
driven by growth, along with our position
where the company is at the early stage
of our significant forward work. Our
strong balance sheet with cash of $21.7m,
has been utilised to support substantial
growth and we expect this to continue as
we enter our next growth phase.
3

Review of Operations
Our operating margins for the half year
ended 28 February 2018 were ahead of
those reported for the first half of 2017.
For the six months to February 2018,
EBITDA margin was 9.5%, an increase from
the 9.0% recorded in the six months to
February 2017.
Major growth during the period occurred
within the company’s activities in the
Americas, Asia and Europe. Collectively,
revenue across these geographies
increased 74% to $2 0.1m. This
international growth is underpinned by
the continued rollout of our Bladestop
bandsaw safety technology beyond
Australasia and further supported by
strong demand for our automated
systems in Germany, China, and the
USA. Operating profit in the Americas
increased 20%, while Asia and Europe
moved from a loss to a $0.3m profit. We
see exciting prospects for Europe for both
organic growth and with the additional
opportunities provided by the pending
Alvey acquisition.
During the year we achieved a major
milestone with our first complete system
design and build in China. This has provided
the confidence to take on further complete
system builds in the current year.
In Australia and New Zealand our
operating margins improved slightly on
revenues that increased 5% over the
previous corresponding period. Growth
in the sale and uptake of our meat
processing technologies is expected
to accelerate in the second half of the
year, following a longer than expected
completion time for previous projects and
a period of reduced activity in Australia
caused in part by the ongoing discussions
and uncertainty over the Red Meat
Industry roll out of DEXA systems into all
Ausmeat accredited facilities.
During the first half of this year we
commenced substantial development
projects for our meat processing
customers, including a start in the Pork
and Poultry sector in addition to Beef
and Lamb. Our research and development
activities underpin our ongoing growth
and are undertaken, both alone and
with customer, industry or Government
support. The commitment to develop
technologies and capabilities is significant
and spread across all areas of the business.
Dividend
The Directors have declared an interim
dividend of 4.0 cents, unchanged from
2017. The dividend will be fully imputed,
payable on 24 April 2018 and the Dividend
Reinvestment Plan will apply.
Looking Ahead
With a full order book providing
momentum into the second half of the
2018 year, and the contribution expected
from the acquisition of Alvey, the Directors
are confident that building on strong
foundations will deliver growth in line with
our strategic intent.
The company continues to see strong
demand for our skills and capabilities and
this, combined with commercialisation of
the company’s technologies, will underpin
organic growth. The Directors and
management are confident that adding
acquisition growth to organic growth will
provide strong value propositions for all
stakeholders.
Chris C Hopkins
Managing Director
Stuart J McLauchlan
Chairman
4

5
Scott recently announced the acquisition
of the Alvey Group Headquartered in
Belgium with operations in France, Czech
Republic and the UK. This transaction was
completed in April 2018.
Specialists in palletising, conveying and
warehouse automation, Alvey is closely
aligned to Scott, with complementary
products and markets.
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 overall production process from raw
materials receipt to final distribution.
ACQUISITION OF ALVEY GROUP
5
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.
Alvey has a wide portfolio of industrial
services and systems including
conventional and robot palletisers,
depalletisers, pallet conveyors, case
conveyors, order preparation systems,
stacker cranes and other material
handling equipment, complemented by
their warehouse management software
package, Maestro+.

STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
6 mths
28 Feb 18
(Unaudited)
$’000s
6 mths
28 Feb 17
(Unaudited)
$’000s
12 mths
31 Aug 17
(Audited)
$’000s
Revenue
6 7, 47 256,670132,631
Other income
8401261,935
Share of joint ventures’ net surplus/(deficit)115 (31)220
Raw materials, consumables used & other expenses
(39,308)(32,976)( 7 7, 3 4 0 )
Employee benefits expense
(22,729)(18,686)( 4 0,143 )
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND
AMORTISATION (EBITDA)6,3905 ,10 317, 3 0 3
Depreciation & amortisation
(1,772)(1,205)(2,987)
Finance costs
(71)(40)(67)
Interest received
213353664
NET SURPLUS BEFORE TAXATION
4,7604, 21114,913
Taxation expense
(1,605)(1,324)(4,648)
NET SURPLUS FOR THE PERIOD AFTER TAX
3 ,15 52,88710,265
Other Comprehensive Income
Translation of foreign operations
228(172)(607)
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR NET OF TAX3,3832,7159,658
Net surplus for the period is attributable to:
Members of the parent entity
3 ,1422,4989,890
Non controlling interest
13389375
3 ,15 52,88710,265
Total comprehensive income is attributable to:
Members of the parent entity
3,3702,3269,283
Non controlling interest
13389375
3,3832,7159,658
Cents per ordinary share
Earnings (attributable to members of the parent entity):
Basic
4.23.313.2
Diluted
4.23.313.2
Net tangible assets:
Basic
76.965.973.5
Diluted
76.965.973.5
6

STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
Fully Paid
Ordinary
Shares
$’000s
Retained
Earnings
$’000s
Foreign
Currency
Translation
Reserve
$’000s
Non
Controlling
Interest
$’000s
Total
$’000s
Six Months Ended 28 February 2018
(Unaudited)
Balance at 31 August 201771,31228,064(2,267)4797,15 6
Net surplus for the period after tax
-3 ,142-133 ,15 5
Other comprehensive income for the
period net of tax--228-228
Dividends paid (6.0 cents per share)-(4,481)--(4,481)
Issue of ordinary shares under
dividend reinvestment plan2,557---2,557
Balance at 28 February 2018
73,86926,725(2,039)6098,615
Six Months Ended 28 February 2017
(Unaudited)
Balance at 31 August 201671,31224,279(1,660)66994,600
Net surplus for the period after tax
-2,498-3892,887
Other comprehensive income for the
period net of tax--(172)-(172)
Dividends paid (5.5 cents per share)-( 4,107 )--( 4,107 )
Acquisition of minority interest in
subsidiary-990-(997)(7)
Balance at 28 February 2017
71,31223,660(1,832)(61)93,201
Twelve Months Ended 31 August 2017
(Audited)
Balance at 31 August 201671,31224,279(1,660)66994,600
Net surplus for the year after tax
-9,890-37510,265
Other comprehensive income for the
year net of tax--(607)-(607)
Dividends paid (9.5 cents per share)-( 7, 0 9 5 )--( 7, 0 9 5 )
Acquisition of minority interest in
subsidiary-990-(997)(7)
Balance at 31 August 2017
71,31228,064(2,267)4797,15 6
7

BALANCE SHEET
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
6 mths
28 Feb 18
(Unaudited)
$’000s
6 mths
28 Feb 17
(Unaudited)
$’000s
12 mths
31 Aug 17
(Audited)
$’000s
CURRENT ASSETS
Cash and cash equivalents
21,68232,81026,670
Trade debtors
20,05313,5 4 017,833
Other financial assets
419472144
Sundry debtors and prepayments
2,4291,037947
Inventories
19,21410,66016,272
Contract work in progress
--4,10 8
Receivable from joint ventures and associates
2,2241,8631,909
Plant and equipment held for sale
345-345
66,36660,38268,228
NON CURRENT ASSETS
Property, plant and equipment
14,07112,41514,249
Capital work in progress
254-319
Investment in joint ventures and associates
1,2328901,118
Goodwill
29,9872 9, 91129,987
Deferred tax asset
902,206969
Receivable from joint ventures and associates
-137-
Intangible assets
10,53611, 8 7 311, 311
5 6 ,1705 7, 4 3 257,953
TOTAL ASSETS
122,536117, 8 14126,181
CURRENT LIABILITIES
Trade creditors and accruals
8,6809,40616,590
Finance lease liabilities
203230
Other financial liabilities
2101821
Employee entitlements
5,3233,3164,272
Provision for warranty
1,2911,0961,300
Payable to joint ventures
1,16 7214547
Taxation payable
2 ,1521,6863,691
Contract work in progress
3,4472,310-
Current portion of deferred settlement of intangible
asset purchase
-1,066-
22,29019,30826,431
NON CURRENT LIABILITIES
Employee entitlements
1,6122,0672,568
Finance lease liability
194026
Non current portion of deferred settlement of intangible
asset purchase
-3 ,19 8-
1,6315,3052,594
EQUITY
Share capital
73,86971,31271,312
Retained earnings
26,72523,66028,064
Foreign currency translation reserve
(2,039)(1,832)(2,267)
Equity attributable to equity holders of the parent
98,55593 ,14 097,10 9
Non controlling interest
606147
TOTAL EQUITY
98,61593,20197,15 6
TOTAL LIABILITIES & EQUITY
122,536117, 8 14126,181
8

STATEMENT OF CASH FLOWS
AS AT 28 FEBRUARY 2018
Notes
6 mths
28 Feb 18
(Unaudited)
$’000s
6 mths
28 Feb 17
(Unaudited)
$’000s
12 mths
31 Aug 17
(Audited)
$’000s
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from/(applied to):
Receipts from operations
73,30760,576126,908
Interest received
213353664
Net GST received/(paid)(230)531(65)
Payments to suppliers and employees
(73,547)(49,023)(111, 3 6 5 )
Interest paid
(71)(40)(67)
Taxation paid
(2,265)( 2 ,15 3 )(2,668)
Net cash inflow/(outflow) from operating activities 2
(2,593)10,24413,407
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from/(applied to):
Purchase of property, plant, equipment and
intangible assets(797)(6,790)(12,976)
Sale of property, plant and equipment
3990337
Advance from joint ventures
305(306)(293)
Repayment of advance to Employee Share
Purchase Scheme
--2
Purchase of business
--(375)
Purchase of non controlling interest in subsidiary
-(550)(550)
Net cash outflow from investing activities
(453)( 7, 5 5 6 )(13,855)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided from/(applied to):
Repayment of borrowings
(18)(15)(31)
Dividends paid
(4,481)( 4,107 )( 7, 0 9 5 )
Issue of share capital under Dividend
Reinvestment Plan
2,557--
Net cash outflow from financing activities
(1,942)( 4,12 2 )(7,126)
Net decrease in cash held
(4,988)(1,434)( 7, 5 74 )
Add cash and cash equivalents at beginning of
the period
26,67034,24434,244
Balance at end of the period
21,68232,81026,670
Comprised of:
Cash and cash equivalents
21,68232,81026,670
9

FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
1 – FINANCIAL STATEMENTS
Statement of Compliance
The unaudited interim financial statements have been prepared in accordance with Generally Accepted
Accounting Practice in New Zealand (“NZ GAAP”). They comply with New Zealand equivalents to International
Financial Reporting Standard 34 (“NZ IAS-34”) “Interim Financial Reporting” and other applicable financial
reporting standards as appropriate for profit orientated entities. Compliance with NZ IAS-34 ensures
compliance with International Accounting Standard 34 “Interim Financial Reporting”.
These financial statements have been prepared using the same accounting policies as the previously published
annual financial statements as at 31 August 2017. These interim financial statements should be read in
conjunction with the policies disclosed in the annual financial statements.
2 - NOTES TO THE CASHFLOW STATEMENT
6 mths
28 Feb 18
(Unaudited)
$’000s
6 mths
28 Feb 17
(Unaudited)
$’000s
12 mths
31 Aug 17
(Audited)
$’000s
Net surplus for the period
3 ,15 52,88710,265
Adjustments for non-cash items:
Depreciation and amortisation
1,7721,2052,987
Net loss/(gain) on sale of property, plant and equipment6-(73)
Deferred tax
879(603)201
Share of net deficit/(surplus) of joint ventures and associates(115 )31(220)
Impairment of net assets (QMT Machinery Technology (Qingdao)
Co Limited)
--(936)
Add/(less) movement in working capital:
Trade debtors
(2,220)2,293(2,000)
Other financial assets - derivatives
(275)1,0041,332
Sundry debtors and prepayments
(1,482)88174
Inventories
(2,942)1,683(3,929)
Contract work in progress
7,5551,17 3(5,245)
Taxation payable
(1,539)(226)1,779
Trade creditors and accruals
( 7, 9 10 )1,0448,228
Other financial liabilities - derivatives
209(440)(619)
Employee entitlements
95(262)1,19 5
Provision for warranty
(9)(4)200
Movements in working capital disclosed in investing/financing
activities:
Movement in foreign exchange translation reserve relating to
working capital
228(172)(607)
Working capital relating to business purchases/amalgamation
--675
Working capital relating to purchase of non controlling interest
-543-
Net cash inflow from operating activities
(2,593)10,24413,407
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
10

FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
3 - CONTINGENT LIABILITIES
6 mths
28 Feb 18
(Unaudited)
$’000s
6 mths
28 Feb 17
(Unaudited)
$’000s
12 mths
31 Aug 17
(Audited)
$’000s
Payment guarantees and performance bonds
15,0683,5507,711
Stock Exchange bond
757575
Rental bonds
26516-
Maximum contract penalty clause exposure
3 ,1812,3171,501
Payment guarantees are provided to customers in respect of advance payments received by the Group for
contract work in progress, while performance bonds are provided to some customers for a period of up to one
year from final acceptance of the equipment.
Scott Technology Limited has a payment bond to the value of $75,000 in place with ANZ Bank New Zealand
Limited in favour of the New Zealand Stock Exchange.
The Group has exposure to penalty clauses on its projects. These clauses relate to delivery criteria and are
common in international contractual agreements. There is a clearly defined sequence of events that needs to
occur before penalty clauses are imposed.
4 - SEGMENT INFORMATION
4 .1 Products and Services from which Reportable Segments Derive Their Revenues
The Group’s reportable segments under NZ IFRS-8 are:
• Australasia Manufacturing
• Americas Manufacturing
• Asia and Europe Manufacturing
Australasia is reported as a single segment due to the integrated nature of customers, manufacturing, sales
and financing activities across New Zealand and Australia.
Asia and Europe is reported as a single segment due to the integrated nature of customers, manufacturing and
sales activities across Asia and Europe.
Information regarding the Group’s reporting segments is presented below.
4.2 Segment Revenues and Results
The following is an analysis of the Group’s revenue and results by reportable segment. For the purposes of
NZ IFRS-8 allocations are based on the operating results by segment. The Group does not allocate certain
resources (such as senior executive management time) and central administration costs by segment for
internal reporting purposes and therefore these allocations may not result in a meaningful and comparable
measure of profitability by segment.
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
11

Six Months Ended
28 February 2018
(Unaudited)
Australasia
Manufacturing
$’000s
Americas
Manufacturing
$’000s
Asia & Europe
Manufacturing
$’000s
Unallocated
$’000s
Total
$’000s
Revenue
47, 3 6 711, 3 818,724-6 7, 47 2
Operating profit
7, 6 0 0716254-8,570
Depreciation and
amortisation
(1,242)(70)( 217)(243)(1,772)
Share of net surplus/(deficit)
of joint ventures
11042(37)-115
Interest revenue
1-1211213
Central administration costs
and foreign exchange
---(2,295)(2,295)
Finance costs
(1)--(70)(71)
Net profit/(loss) before
taxation
6,4686881(2,397)4,760
Taxation (expense)/credit
( 2 ,107 )(185)-687(1,605)
Net profit/(loss) after
taxation
4,3615031(1,710)3 ,15 5
Six Months Ended
28 February 2017
(Unaudited)
Australasia
Manufacturing
$’000s
Americas
Manufacturing
$’000s
Asia & Europe
Manufacturing
$’000s
Unallocated
$’000s
Total
$’000s
Revenue
45,0916,2635,316-56,670
Operating profit/(loss)7, 2 0 2598(648)-7,15 2
Depreciation and
amortisation
(825)(76)(121)(183)(1,205)
Share of net deficit of joint
ventures
-(18)(13)-(31)
Interest revenue
2--351353
Central administration costs
and foreign exchange
---(2,018)(2,018)
Finance costs
(1)--(39)(40)
Net profit/(loss) before
taxation
6,378504(782)(1,889)4, 211
Taxation (expense)/credit
(1,945)(149)219551(1,324)
Net profit/(loss) after
taxation
4,433355(563)(1,338)2,887
4.2 Segment Revenues and Results (cont.)
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
12

Twelve Months Ended
31 August 2017
(Audited)
Australasia
Manufacturing
$’000s
Americas
Manufacturing
$’000s
Asia & Europe
Manufacturing
$’000s
Unallocated
$’000s
Total
$’000s
Revenue
99,84617, 0 5 515,730-132,631
Operating profit/(loss)19,3092,068(509)-20,868
Fair value gain on purchase of
business
---936936
Depreciation and
amortisation
(2,267)(155)(197)(368)(2,987)
Share of net surplus of joint
ventures
175441-220
Interest revenue
1-26 61664
Central administration costs
and foreign exchange
---(4,721)(4,721)
Finance costs
(4)--(63)(67)
Net profit/(loss) before
taxation
17, 2141,957(703)(3,555)14,913
Taxation (expense)/credit
(5,031)(670)191,034(4,648)
Net profit/(loss) after
taxation
12 ,18 31,287(684)(2,521)10,265
Revenue reported above represents revenue generated from external customers. Inter-segment sales were
$0.9 million for the six months ended 28 February 2018 (six months ended 28 February 2017: $1.4 million).
The accounting policies of the reportable segments are the same as the Group’s accounting policies described
in Note 1. Segment profit represents the profit earned by each segment without allocation of central
administration costs, share of profits of joint ventures, investment revenue and finance costs.
5 - FINANCIAL INSTRUMENTS
The Group enters into foreign currency forward exchange contracts to hedge trading transactions, including
anticipated transactions, denominated in foreign currencies.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured to their fair value. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the
timing of the recognition in profit or loss depends on the nature of the hedging relationship. The Group
designates certain derivatives as cashflow hedges of highly probable forecast transactions.
4.2 Segment Revenues and Results (cont.)
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
13

The Group has categorised these derivatives, both financial assets and financial liabilities, as Level 2 under the
fair value hierarchy contained within NZ IFRS 13.
The fair value of foreign currency forward exchange contracts is determined using a discounted cashflow
valuation. Key inputs include observable forward exchange rates, at the measurement date, with the resulting
value discounted back to present values.
There have been no changes in valuation techniques used for foreign currency forward exchange contracts
during the current reporting period.
There were no transfers between fair value hierarchy levels during either the current or prior periods.
The fair value of financial instruments not already measured at fair value approximates their carrying value.
6 - ACQUISITION OF ALVEY GROUP
On 20 February 2018 the Board of Directors approved in principle the purchase of the business assets and
intellectual property of Alvey Group, Headquartered in Belgium with associated operations in France, Czech
Republic and the UK. Due diligence has subsequently been completed and the sale and purchase agreement has
been finalised, with an acquisition date of 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.
7 - SUBSEQUENT EVENTS
On 5 April 2018 the Board of Directors approved an interim dividend of four cents per share with full imputation
credits attached to be paid for the 2018 year (2017 interim dividend: four cents per share). The Dividend
Reinvestment Plan reintroduced by the Company in 2017 applied to this payment.
Fair value of derivative financial instruments
6 mths
28 Feb 18
(Unaudited)
$’000s
6 mths
28 Feb 17
(Unaudited)
$’000s
12 mths
31 Aug 17
(Audited)
$’000s
Other financial assets - derivatives:
Foreign currency forward contracts held as effective fair
value hedges
2101801
Foreign exchange derivatives
145148143
Foreign exchange collar option derivatives
64144-
Other financial liabilities - derivatives:
Fair value hedge of open firm commitments
(210)(180)(1)
209292143
5 - FINANCIAL INSTRUMENTS (cont.)
14
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS

15
630 Kaikorai Valley Road
Private Bag 1960
Dunedin 9054
New Zealand
t +64 (3) 478 8110
e info@scott.co.nz

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