Scott Technology Limited Annual Meeting 2019
CHAIRMAN’S ADDRESS 2019
I have pleasure in reporting on the 2019 financial year at this the 23
rd
Annual Meeting of Scott Technology Limited.
In 2019 Scott delivered revenue of $225m and a net profit after tax of
$8.6m.
We disclosed at the half year the bottom line performance was
impacted by a number of challenging projects. Fortunately we are
pleased to report the nearing of completion for
these projects.
Once commissioned, these projects which predominantly cover the
meat and mining divisions, will add to our suite of new technologies
and products which are already being taken to market.
Scott revenues have grown strongly over the past few years. The
directors are mindful profitability has lagged this growth
in revenue
with the acceleration of our R & D program that has been in place to
maximise the assistance we receive from Meat & Livestock Australia
and the New Zealand and Australian Governments contributing to
this. The coming year and subsequent years will see a normalisation
of our R&D spend
with a focus on the successful commercialisation of
our current offerings.
Scott is now well into the full integration of the recent acquisitions
which includes Alvey, Transbotics and the recent bolt on acquisition
of Normaclass, which was completed in May of this year. This
integration includes the removal of any duplication throughout the
group.
Scott now has manufacturing facilities in New Zealand,
Australia,
Europe, China and the US which has greatly diversified our reliance
away from any one geographic region.
This has always been the company’s strategy, to diversify industries
and geographies, as well as developing or acquiring a range of
technologies to enable the provision of true end‐to‐end solutions
for
our many customers.
As mentioned in previous AGM addresses, the dark shadow of the
Trump tariffs is now really having an impact on supply chains that have
served most trading nations well, lifting many millions of people out
of poverty.
The concern is the slowdown in Europe, China
and now the US. The
US economy is held out as the strongest among its peers but recent
key economic indicators are all slowing down at a time when the US
internal deficit has now passed the trillion dollar mark, equating to 5%
of GDP on the back of the generous tax breaks given.
We are hopeful the trade stand‐off between the US and China is
resolved soon before there is further fall out.
Despite this, Scott has a healthy
forward order book with a number of
large projects in the final stages of negotiation. This is being driven by
businesses wanting to remove labour from their processes due to the
sharp reduction in labour force participation in most geographies as a
result of an ageing workforce. This is also a
reflection of the continued
focus on Health & Safety improvement now required in work places
around the world.
Scott is an innovation company, at the heart of this is our great staff.
If the innovation that Scott develops was easy there would be many
others doing what Scott does. As
we know this is not the case so we
should be mindful that our people are always challenging the norm
and looking where they are able to disrupt and improve processes in
the work environment.
The vast majority of our staff have tertiary or higher qualifications. Our
contribution to the
New Zealand economy due to this innovation was
$216m of export earnings which is 96% of our revenues.
We welcomed Derek Charge as a further independent director, Derek
is an experienced executive with a background in textile
manufacturing, heavy manufacturing, mining and minerals processing
as well as experience in supply chains and marketing throughout Asia,
particularly China and Japan.
I would also like to thank my fellow Directors,
Andre, Brent, Edison,
John Berry and John Thorman who are always available to provide
assistance and wise counsel when needed.
Our major shareholder, JBS, continues to provide resources on a
global basis to facilitate and assist Scott in its dealings around the
many jurisdictions we are now operating in.
I
would also like to thank Chris Hopkins and all of the Scott employees
for their dedication in what has been a challenging year but one that
has laid the foundations for the coming years.
Finally, to our shareholders, your continued support is appreciated,
the final dividend of 4 cents per
share which has been paid in addition
to the 4 cent interim dividend.
The directors, in setting the final dividend, took into account the
increased working capital needs of the company and believe this to be
a fair balance in order for the Company to reinvest in its business for
the future.
---
MANAGING DIRECTOR’S ADDRESS
Thank you Stuart
Each and every year Scott accumulates knowledge, technical
expertise, people and experience. We do this to create value for
shareholders, and it is worth looking at the value that we have created
since listing in 1997.
A fundamentalist would say we create value through
our profits,
about 70% of which has been paid as dividends over the last 20 years
and the rest retained as reserves. Capital has come from you, as
shareholders – these fund our net assets.
On the graph total capital and reserves have been plotted along with
accumulative gross dividends.
Since listing in 1997 we have paid out
cumulative total gross dividends of over $90m, in excess of the $80m
of capital contributed by shareholders over the same time. Our
current market capitalisation, or value, of the business is
approximately $175m, meaning that the company has created $62m
of economic
value added.
The good news for Shareholders, including JBS, who bought in at the
time of the scheme of arrangement in 2016, is that the compound
returns since then have been in excess of 23% per annum, taking into
account dividends and capital growth.
Statement of Financial Performance / Results for the
Year
Our revenues increased 24%, however, as noted by the Chair, for
various reasons the increase in revenues has not been reflected in our
bottom line performance. Several accounting changes required by
new accounting regulations in 2019 had significant impact, both
positive and negative.
In addition, and more importantly, as
flagged in our March update,
several projects with development and execution issues, had a
negative impact on our bottom line. These projects, although
detracting from bottom line performance, have delivered additional
new technologies, and in several cases, new standalone products that
can be taken to market. This highlights our approach to
research and
development where costs are expensed with resulting intellectual
property remaining off balance sheet.
Looking at the balance sheet, Scott’s total equity increased by $6m
during the year after $3.2m of net dividends paid and now totals
$112m.
Our cash position changed dramatically from 2018 through to 2019,
with significant capital expenditure including the new Dunedin
building, and a build‐up of work in progress underpinning growth and
business activities in market.
We have several projects that are being funded in work in progress
until the projects are
either delivered, or proven in production. You
may ask “why do we do this?” We do this because customers need
encouragement to be the early adopter of new technologies. We also
do it to create a future revenue stream based on throughput volumes
and to secure contracted service revenues over
the contract period.
These contracts have a minimum take or pay that provides limited
downside, but significant potential up‐side for future revenues.
This chart shows the growth profile of revenues over ten years, the
first five years reasonably slow with a rapid increase in the last five
years. Scott
achieved a 19% compound annual growth rate over 10
years and more than 30% in the last five years. Also highlighted on
this chart is our EBITDA over the same period, which although
reasonably strong, needs to continually increase to keep up with
revenue growth.
I like to remind everyone we are ‘one business’ that undertakes
automation and robotics, however, we sell into, and have, specialist
domain knowledge and experience in the five industries described.
This table details the growth of revenues into each target industry
sector. Meat Processing and Industrial Automation started from a
very low basis and have both grown significantly ‐ Meat Processing,
driven primarily by organic growth, and Industrial Automation,
boosted by the acquisition of RobotWorx and Transbotics. The
Materials Handling sector commenced in 2018 through the acquisition
of Alvey and represents a large proportion of our total European sales.
This revenue
matrix provides an indication of where we deliver our
technology. Our largest market, Europe, where we sell into a small
range of sectors, followed by North America, with a wider range of
industry sectors. America is also the market that we believe, will
provide the most opportunities for us in the
future, including
substantial cross‐selling opportunities for Materials Handling.
Australia comes in third and New Zealand well down, representing
only 4% of total revenues.
The revenue bridge shows the movement in where our manufacturing
occurs.
This chart breaks down the revenue by customer, geography – last
year and this year, highlighting the majority of growth from Europe
and North America, primarily driven from the 2018 acquisitions of
Alvey in Europe and Transbotics in North America.
Revenue by industry sector highlights the same story; Industrial
Automation
growth from Transbotics in North America and Materials
Handing & Logistics growth from Alvey in Europe. It is worth noting
that both Mining and Meat Processing sectors slowed in 2019 but we
expect Mining to rebound significantly in 2020, which I’ll touch on
later and Meat Processing will continue to be
restrained as we develop
and introduce new technology in species beyond lamb – again I’ll
touch on market opportunities later.
Segment results reflect our manufacturing base. Scott manufacturing
activities are grouped into three regions – Australasia, Americas, Asia
and Europe. Australasia, primarily influenced by Mining and Meat
Processing, slowed in
2019. Both Mining and Meat Processing were
impacted by technology developments and delivery issues noted
earlier. We have addressed, or are addressing, the underlying issues
and we do not expect to repeat in 2020.
Again, we see future growth in the America’s, driven by increased
market opportunity and the addition
of Transbotics, based in the USA,
likewise Europe growth due to the addition of Alvey.
As noted earlier, it is difficult to directly compare prior years’ results
with 2019’s due to accounting changes, driven by compliance with
International Financial Reporting Standards. I’d like to touch on some
of the more significant factors effecting 2019 reported results.
1. Lease Accounting – Leases that were previously recorded
as a
rental expense are now capitalised on the balance sheet as a
right of use asset and a corresponding lease liability. The rent
expense is removed and replaced by a depreciation charge and
a notional interest. This change had a net negative impact on
the bottom line of approximately
$0.6m.
2. Research and Development – as noted earlier, the company has
taken a very conservative approach to research and
development by expensing as incurred.
3. Revenue Recognition – A change in the revenue recognition for
long term construction projects means that we have phased out
recognising profit on a
percent complete basis for smaller
projects undertaken, primarily in the USA. This had a negative
impact in the current year of approximately $0.4m.
4. Foreign Exchange Translation of Goodwill ‐ previously our
goodwill was recorded at historical cost. After discussion with
our auditors and a technical review, it was agreed that goodwill
denominated in foreign currencies should be restated into New
Zealand dollars at current exchange rates. This resulted in a
restatement of total
comprehensive income attributable to
shareholders in the 2018 year which increased by $1.3m in 2018
and by $0.6m in 2019.
Next year will see further changes in relation to the way
Government assistance for R&D is recorded in New Zealand. In
2019 our R&D growth grant is included in other operating
income ‐
top line. For Scott this concluded in 2019 and is replaced by an R&D
tax credit for 2020 and beyond ‐ bottom line tax paid. This not only
distorts our income ratios, but impacts cash flow as there is a delay
in obtaining tax credits, whereas the grants were paid
quarterly.
Scott Business Review
Before I recap on our business it is worth noting the key drivers and
opportunities in the market. Scott, as an automation and robotics
company, is well positioned to take advantage of changing
economic times.
Customers in our target markets and industries want to address the
major issue of labour shortage. Shortage of labour and high
turnover is everywhere. We see it across all geographies and
within most of our customers. Other significant drivers are
productivity, profitability, yield, quality and health & safety.
Automation & robotics
can address any, or all, of these.
Scott’s global presence is now established in all key markets. With
the right people in the right place, our diversification and
acquisition strategy complete, focus is now firmly on performance
and delivery.
Health & Safety
Health & safety is so important to
everyone at Scott ‐ this starts
with the Board and ends with our staff, visitors and contractors –
who all have a right to go home after each day working for Scott,
no worse for wear in terms of their health and wellbeing.
Scott’s safety performance continues to improve and is
trending in
the right direction. Safety, as with all areas of our business, is
subject to continuous process improvement and commitment.
I noted before that our strategy, to build a global company with
sufficient presence, scale and technology to produce profitable
growth, is largely in place. The company’s focus shifts to deliver
repeat and profitable sales of technology, to take our
developments in pork, poultry and beef to market, expand our
service in maintenance revenues and do it well.
In the Meat Processing sector the opportunity is to take the
technology, skills and experience we have developed on lamb into
other species. This work is well underway.
Lamb technology is well developed with few competitors but has a
small addressable market.
Beef is developing technology for Scott
with few competitors and a very large addressable market. The
addressable markets for pork and poultry are similarly large but
with more competitors. Competition comes from historical, fixed
automation, typically out of Europe, that has been designed for
similar sized animals raised in controlled
environments. The
particular skill set that Scott has, is the ability to provide flexible,
smart automation that can deal with naturally varying product. In
this regard we are world leaders.
Opportunities for the Mining sector is primarily for Scott’s sample
preparation systems but through recent developments, extends
into field automation, such as robotic refuel, robotic idler change
and automated fire assay.
We have seen rapid growth and interest in our automated guided
vehicles and we expect this to continue. Appliances
and Metal
Forming and Materials Handling market sectors are more subdued.
In summary, our strategy is to focus on execution and delivery
through integration and consolidation of our recent acquisitions
into ‘one Scott’, further enhancement of our Service and Spare
Parts offering around the globe, a sharper focus on research
and
development and continual expansion of digital solutions.
Bladestop has become a large, important part of our business and
we have achieved a number of milestones in the past year.
In terms of digital – we recognise that it is an important aspect of
our business and will drive additional
value in our future. Digital
technologies underpin our smart automation. Future opportunities
lie in building our technology into packaged solutions for our
customers.
Research & Development
$14m was spent on research and development in the year to 2019
– over 6% of revenues. We have a sizeable IP portfolio with a range
of trademarks and approximately 50 inventions with 200 patents in
over 30 countries. Much of our R&D is guided, and often
contributed
to, by our customers. Where this is not possible, we
look to reduce risk by engaging with industry bodies or Government
agencies. Scott’s R&D covers a wide range of technologies and
advanced capabilities that support automation solutions.
Outlook
Design and build of long term custom projects now make up 57%
of total revenues. Several years ago this percentage was far higher.
For long term contracts, we have approximately seven months of
forward work ahead of us. This is less than target, however, several
significant opportunities which we expect to secure in the next
month, will take us to, and beyond,
our target.
Although we have significant project work underway the challenge,
as always, is to efficiently balance the workload between our
various facilities.
Service and Spare Parts continues to grow as the amount of
equipment we have in‐market expands. With customers struggling
to recruit people for their own maintenance and service, we are
seeing increasing demand from customers for ongoing and long
term service contracts.
Growth will be bottom line focussed and
be driven through the
deployment of our existing and new technologies.
Management Changes
As notified earlier to the market and to Scott staff, I am stepping
aside as CEO. I am not leaving the business but will remain in the
business taking on the role of Sales Director.
I
have completed 25 years of service for the company. It’s been a
fantastic journey so far, I have lived and learned so much. Some of
my colleagues now call me an ‘honorary engineer’ although I only
got as far as an Accounting and Finance Degree.
In my career with Scott I
have had three significant phases – the
first from 1994 – 2001 as CFO and business driver.
This followed some challenging years from 2001 to 2006 ‐ I really
had to hone my business skills and engineering skills, when I was
tasked to lead the diversification of Scott following a period of
significant hardship arising from the 2001 downturn in our sole
primary market of the USA. Scott revenues
in that year dropped
45% from $31m to $17m and we had to reinvent the company.
During this time I had the privilege and honour to work with two
great individuals ‐ Graeme Marsh and Graham Batts, who are both
inspiring mentors.
The third and latest phase from 2006 to
2019 – the last 13 years,
has been as CEO and Managing Director, working with an
exceptionally talented team of individuals to deliver on the
company’s diversification strategy, developing and rolling out new
technologies with the odd acquisition thrown in. The rapid growth
and expansion of the business has taken a
toll on myself personally
and on the family and it was time to reflect. When the CFO left
earlier in the year the finance team stepped up and took on
additional responsibilities – I allocated what time I could to assist
as far as possible.
It has been a great journey, and it’s not over, but I need to step
back. My passion and enthusiasm remains as high as ever.
I saw the impact on the team of the uncertainty that we had
following the departure of our CFO and the delay in finding a
replacement. I am delighted we have found a very good
replacement in Kate Rankin who officially joins the team in January.
On a sadder note, our COO, Richard Jenman, who has been with us
for nearly two years, is leaving at the end of the year. Richard is a
great
team builder and I would like to thank and acknowledge the
impact he has made in his time with Scott.
Finally, I am pleased to note the appointment of John Kippenberger
as Scott’s newest CEO. John Kippenberger is here today and starts
tomorrow.
I look forward to supporting John and all
the great people at Scott.
Thank you and back to you Mr Chairman.
---
WELCOME
– Annual
Meeting
2019
Company
Business
Review
Chris
Hopkins
November
2019
•
Outline
Results
–year
ended
31
August
2019
Scott
Business
Review
Research
&
Development
Outlook
Scott
Annual
Meeting
2019
Shareholder
Value
Market
Cap
$175m
‐
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sharecapital vrs Market
Cap
Capital
Reserves
Gross
Cumm.
Dividends
Economic
Value
Added
=
$62m
(=
the
amount
by
which
Market
Cap
exceeds
shareholder
capital
+
reserves)
2019
2018
(restated)
Change
$000
$000
$000
Revenue
225,093
181,779
Other
operating
income
2,441
2,064
Share
of
joint
ventures'
net
surplus
444
510
Raw
materials,
consumables
used
&
other
expenses (134,792)
(109,381)
Employee
benefits
expense
(73,176)
(55,171)
Operating
EBITDA
20,010
19,801
209
Due
diligence
&
acquisition
costs
‐
(496)
EBITDA
20,010
19,305
705
Interest
revenue
20
369
Depreciation
&
amortisation
(8,969)
(4,225)
Finance
Costs
(1,715)
(403)
Net
surplus
before
taxation
9,346
15,046
(5,700)
Taxation
expense
(742)
(4,274)
Net
surplus
for
the
year
after
tax
8,604
10,772
(2,168)
Other
comprehensive
income
1,135
(504)
Total
comprehensive
income
for
year
net
of
tax
9,739
10,268
(529)
Earnings
per
share
11.3
14.3
Consolidated
Statement
of
Comprehensive
Income
2019
2018
(Restated)
$000
$000
Change
Cash
(4,737)
12,473
Current
portion
loans
(4,217)
(3,321)
Deferred
settlement
(2,385)
(6,275)
Net
Cash
(11,339)
2,877
(14,216)
Trade
debtors
38,993
37,064
Inventories
22,559
22,825
Contract
WIP
(Net)
16,334
3,077
Trade
creditors
(31,057)
(30,322)
Taxation
payable
(218)
(2,738)
Working
Capital
46,611
29,906
16,705
Other
net
current
assets
and
liabilities
(12,551)
(8,604)
(3,947)
Sub
Total
Current
+
cash
22,721
24,179
(1,458)
Non
Current
excl.
intangibles
Assets*
39,035
18,377
20,658
Liabilities*
(23,295)
(8,492)
(14,803)
15,740
9,885
5,855
Net
Tangible
Assets
38,461
34,064
4,397
Goodwill
57,951
56,561
1,390
Intangible
assets
15,405
15,103
302
73,356
71,664
1,692
Equity
111,817
105,728
6,089
*
Includes
Right
of
use
assets
of
$17.0m
and
Non
current
lease
liabilities
of
$13.3m.
Consolidated
Balance
Sheet
Revenue
Growth
Profile
-5,00005,00010,00015,00020,00025,000
0
20,00040,00060,00080,000
100,000120,000140,000160,000180,000200,000220,000240,000
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
30%
33%
19%
Revenue
5 year rev CAGR
3 year rev CAGR
Bladestop
Oct
16
MAR
Jan
15
RobotWorx
May
14
Somako
May
16
10 year rev CAGR
2H EBITDA
1H EBITDA
Alvey:
Apr
18
Transbotics:
Jun
18
EBITDA
Revenue
Turnkey:
Design
–
Manufacture
–Service
Palletisers
and
depalletisers,
conveyors,
stacker
cranes,
order
preparation
systems
In
‐
house
software
AGV
Specialist
Turnkey:
Design
–
Manufacture
–Service
Customers
globally
Manufacturing
facilities
in
Europe,
China,
Australia
and
NZ
Smart
automation
solutions
by
vision
and
sensing
Customised
systems
for
almost
any
application
Mobile
robotics
Refurbishing
and
spare
parts
Advanced
carcass
measurement
Process
optimisation
Yield
improvements
Proven
quality
and
safety
improvements
Automation
technology
for
sample
preparation
and
field
automation
A
new
standard
in
safety
and
yield
Automation
delivering
success
Our
Industry
Overview
Materials
handling
&
logistics
Industrial
Automation
&
Robotics
Meat
Processing
Appliances
Metal
Forming
Mining
Automation
Sector
Revenue
Breakdown
Sector Revenue
A
pril
2016JBS acquires 50.1% at $1.39 per share
A
ug balance date
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Accum
growth
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Meat processing
5
6
6
8
8
11
39
40
45
35
30
Industrial
1
3
8
7
9
31
31
40
36
54
53
Mining
19
28
34
29
14
17
22
26
33
30
11
A
ppliances
22
16
16
17
29
14
20
26
41
45
24
Materials handling
27
61
61
Total
47
54
64
60
60
72
112
133
182
225
179
Sales to JBS
0.3
3.2
5.6
6.2
Acquisitions
RobotWo
r
x
MAR Somako
Bladesto
p
A
lve
y
May-14
Jan-15 May-1
6
Oct-1
6
Apr-1
8
Rocklabs
Transbotics
1 April 2008
Jun-1
8
Revenue CAGR
1 year
3 yea
r
5 yea
r
10 yea
r
Meat processing
-23%
-7%
33%
27%
Industrial
52%
16%
15%
27%
Mining
-9%
7%
16%
5%
A
ppliances
11%
31%
35%
9%
TOTAL
24%
30%
33%
19%
Revenue Analysis
Revenue
matrix
for
2019
Financial
Year
By
Industry
and
location of
Customer
Geographical
location
of
the
customer
New
Zealand
Australia
North
America
South
America
Asia
Europe
Russia
Africa
Total
Appliances
124
10 9 1
45
Materials
handling
61
61
Meat
processing
51510
5
35
Mining
10
6
3
2
5
4
30
Industrial
automation
4
21
29
54
Total
9
47
69
3
12
75
6
4
225
Revenue
Bridge
FY18
to
FY19($000’s)
225,093
181,779
34,557
6,489
2,268
‐
50,000
100,000
150,000
200,000
250,000
FY18
rev
Asia/Europe
Americas
Australasia
FY19
rev
Revenue
by
Customer
Geography
($000’s)
0
10,00020,00030,00040,00050,00060,00070,00080,000
New
Zealand Australia
North
America
South
America
Asia
Europe Russia
and
former
states
Africa
and
Middle
East
2018
2019
Revenue
by
Industry
Sector
($000’s)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Appliances
MHL
Meat
Mining
Industrial
Auto
2019
2018
Segment
Results
2018
2019
change
2018
2019
change
Australasia
100,492
102,760
2,268
11,899
9,218
(2,681)
Americas
29,141
35,630
6,489
2,490
4,091
1,601
Asia
&
Europe
52,146
86,703
34,557
441
1,703
1,262
181,779
225,093
43,314
14,830
15,012
182
Unallocated (4,058)
(6,408)
10,772
8,604
Revenue
Surplus
after
Tax
Accounting
impact
0n
2019
and
beyond
Factors
affecting
2019
compared
to
2018
•
Lease
accounting
•
R
&
D
•
Revenue
recognition
•
Goodwill
restatement?
Changes
to
occur
in
2020
•
In
NZ,
R
&
D
tax
credits
(Tax
Paid)
replace
grants
(top
line
other
revenue)
•
Outline
Results
–year
ended
31
August
2019
Scott
Business
Review
Research
&
Development
Outlook
Scott
Annual
Meeting
2019
key drivers in the short to medium term – market opportunities for :•
Industrial automation demand continues to intensify
•
Shortage of labour, declining unemployment rates, aging population
• Manufacturing work forces are strugglin
g to keep up with consumption growth
• Job preferences of millennials• High staff turnover becoming the norm (labour
turnover rates in the meat processing
industry have increased from 1.0%-1.5% per we
ek to 2.0-2.5% per week; This turnover
can represent up to 4% of
total processing costs);
•
Productivity and Profitability
•
Yield and Quality
•
Health & Safety
Key
Product
Drivers
/
Market
Opportunities
Melbourne, Australia
AUSTRALIA
Shanghai, China
ASIA
Qingdao, China
Wellington, New Zealand
Vancouver, Canada
Brisbane, Australia
Sydney, Australia
Perth, Australia
SOUTHAMERICA
Santiago, Chile
NEW ZEALAND
Auckland, New Zealand
Christchurch, New Zealand
Dunedin, New Zealand
NORTH AMERICA
Marion, Ohio
Marseille,
France
Ploemeur,
France
EUROPE
Deerlijk,
Belgium
Kürnbach,
Germany
Czech Republic
UK
Charlotte, North Carolina
OUR
GLOBAL PRESENCE
Commitment by all to safety at workSystems and ProcessesMonitoring effectivenessResults matter
Operations
–Health
&
Safety
Total
Injury
Frequency
Rate
–12
months
**As
at
20 November
Continued
efforts
in
communication,
employee
participation
and
leadership,
we
see
the
injury
rate
tracking downwards
.
Strategy
‐
to
build
a
global
company
that
has
a
sufficient
presence,
scale
and
technology
to
produce
profitable
growth.
•
Core
technologies
have
largely
been
developed
•
Focus
for
2020:
•
Repeat,
profitable,
sales
of
developed
and
proven
technology
•
Taking
Pork,
Poultry
and
Beef
developments
to
market
•
Growing
service
and
maintenance
revenues
•
Reviewing
all
areas
of
operations
to
improve
bottom
line
Strategy
&
Focus
Lamb
–Proven
with
small
addressable
market
Beef
–development
underway
will
be
prototypes
over
next
few
years.
Market
size
large
(10x
Lamb)
Pork
–started
with
Primal
cutting
based
on
lamb
Xray –
primal
knowhow.
First
system
in
2020.
Addressable
market
$200
– $500
million
(hundreds
of
multi
million
dollar
systems.Poultry
– proof
of
concept
delivered
with
first
commercial
system
build
underway.
Addressable
market
$20m+
over
next
three
years
with
other
similar
systems
to
follow.
Opportunities
for
Meat
Processing
Sector
Scott
Position
in
Market
few
competitors
Many
competitors
developing
developed
Scott
systems
for
meat
processors
Technology Readiness
Robo Prep
(robotic
sample
preparation
systems
for
Laboratories)
–System
technology
(Hardware
and
Software)
now
proven
with
multiple
installs
planned
for
2020.
Addressable
market
$20m
‐
$50m
per
annum.
Automated
Fire
Assay
–first
commercial
system
delivered
to
Gold
miner
in
Mexico.
Robotic
Refuel
– Leading
miners
trialed
and
first
commercial
order
taken
in
2019.
Addressable
market
$50
–
$100
million.
Opportunities
for
Mining
Sector
Automated
Guided
Vehicles
(“AGVs”)
– Growing
footprint
for
specialised
vehicle
technology.
(Hardware
and
Software)
well
established
with
repeat
bluechip customers.
Demand
for
AGV’s
growing
at
rapid
rate
particularly
for
Scott
in
North
America.
Target
growth
30%
plus.
Appliances
and
metal
forming
– subdued
growth
expected.
Focus
on
repeat
customers
where
we
offer
unique
solutions.
Materials
Handling
–Europe
subdued
but
expected
cross
selling
opportunities
into
North
America
to
lead
to
further
growth.
Opportunities
for
Other
Sectors
Chrysos
Roboprep system,
for
installation
in
Kalgoorlie
in
Q2
2020.
Our
highest
capacity
prep
system
ever
(150
samples
/
hour).
Our
facility
is
preparing
samples
for
two
Chrysos PhotonAssay units,
which
offer
gold
analysis
that
are
comparable
to
Fire
Assay,
but
with
a
much
safer,
quicker,
simpler
preparation
and
analysis
process. This
will be
a
world
first
deployment
for
automated
sample
preparation
for
Photonassay.
Pork
Primal
System
Pork
Primal
System
To
deliver
on
Scott’s
Strategy,
the
focus
will
be
on:
•
Consolidation
and
further
integration
of
recent
acquisitions
into
Scott
– rollout
of
best
practice
systems
and
processes.
•
Cross
Selling
Opportunities
•
Service
and
Spare
Parts
•
Research
&
Development
–sharper
focus
•
Meat
processing
developments
continuing
•
Bladestop – new
and
expanded
product
range
rollout
•
Mining
technology
developments
•
Digital
solutions
(industry
4.0
and
machine
learning/AI)
well
established
within
Scott
and
complements
Hardware
Focus
Areas
Bladestop Bandsaws
Expanded
Bladestop product
range:
–
Development
of
Scott
600
saw
completed
–
CE
certification
and
specification
sorted
–
European
saw
now
shipping
–
Opportunities
beyond
“protein”
1.
Vision
and
image
analysis
2.
Package
Software
‐
Maestro
(ex
Alvey)
‐
TMO
(ex
Transbotics)
3.
IIOT
and
connectivity
‐
Equipment
reporting
‐
Diagnostics
‐
Maintenance
‐
OEE
4.
Machine
Learning
‐
AI
/
convolutional
neural
networks
5.
Augmented
Reality
6.
Virtual
Reality
–for
Marketing
and
Training
Strategy
– Digital
Direction
•
Outline
Results
–year
ended
31
August
2019
Scott
Business
Review
Research
&
Development
Outlook
Scott
Annual
Meeting
2019
•
R&D
expenditure
of
between
5%
and
10%
of
total
revenues
– $14m
spend
in
FY19
(6%
of
revenue)
•
Sizeable
IP
Portfolio
with
a
range
of
Trademarks
and
approx.
50
inventions
with
200
patents
covering
almost
30
countries
•
Demand
pull,
quick
outcomes
and
collaborative
approach
•
A
diverse
range
of
areas
including:
•
AGV's
•
Robotics
generally
including
collaborative
and
mobile
robotics
•
Digital
image
analysis
•
Advanced
vision
and
sensing
technologies
•
Software
for
end
to
end
solutions
Our
commitment
to
developing
and
bringing
new
technology
to
market
is
real.
We
invest
a
significant
portion
of
our
revenue
into
searching
for
better
ways
of
doing
things
Research
&
Development
•
Outline
Results
–year
ended
31
August
2019
Scott
Business
Review
Research
&
Development
Outlook
Scott
Annual
Meeting
2019
Outlook
Forward project work –approx. 7 monthsSignificant project work underwayService activity expandingGrowth will be :
Organic from existing technologiesBottom line focused
•
Fantasticjourneysofarover25years
•
3Phasestodate
1994 – 2001 CFO and business driver2001 – 2006 Executive Director leading diversification2006 – 2019 Delivering on diversification, new technologiesand acquisitions
•
Into a Sales Director role to see the Company into 2020 andbeyond
•
New CEO to start immediately
Management
Changes
Resolutions
Resolutions
1
–3
are
ordinary
resolutions
and
are
therefore
required
to
be
passed
by
a
simple
majority
of
the
votes
of
those
shareholders
entitled
to
vote
and
voting
on
the
resolutions.
NZX
Listing
Rules
require
that
no
director
may
hold
office
(without
‐
re
‐
election)
past
the
third
annual
meeting
following
that
director’s
appointment,
or
3
years,
whichever
is
the
longer.
However,
any
such
directors
may
offer
themselves
for
re
‐
election
by
shareholder
approval
in
accordance
with
rule
2.3.
No
nominations
for
directors
were
received
from
shareholders.
The
Board
unanimously
recommends
that
shareholders
vote
in
favour
of
the
re
‐
election
of
Andre
Nogueira
and
the
election
of
Derek
Charge
as
Director
of
Scott
Technology
Limited.
Resolutions
1
–3:
Election
of
Directors
•
Andre
Nogueira
is
President
and
Chief
Executive
Officer
of
JBS
USA,
the
North
American
and
Australian
subsidiary
of
JBS
SA.
Assumed
the
role
of
CEO
on
Jan.
1,
2013.
•
Began
with
JBS
in
2007,
serving
as
Chief
Financial
Officer
through
2011.
•
Prior
to
working
for
JBS,
Mr.
Nogueira
worked
for
Banco
do
Brasil in
corporate
banking
positions
in
the
U.S.
and
Brazil.
•
Mr.
Nogueira
is
currently
a
Director
of
Pilgrim’s
Pride
Corporation,
Scott
Technology
Limited,
the
North
American
Meat
Institute
(NAMI),
the
NAMI
Executive
Committee
and
Rabobank’s
North
American
Agribusiness
Advisory
Board.
Please mark your voting cards in the way you wish to vote by ticking “FOR”,“AGAINST” or "ABSTAIN" in the appropriate place on the voting card.
Resolution
1:
Andre
Nogueira
‐
That
Andre
Nogueira be
re
‐
elected
as
a
Director
•
Derek
Charge
is
an
experienced
executive
with
a
background
in
textiles
manufacturing,
heavy
manufacturing,
mining
&
minerals
processing,
and
logistics
&
port
operations.
•
Derek
has
extensive
experience
in
establishing
supply
chains
and
marketing
throughout
Asia,
particularly
China
and
Japan.
•
Derek
is
Chief
Operating
Officer
of
Mohawk
Flooring
Australasia,
a
division
of
the
world’s
largest
flooring
company.
•
Prior
to
joining
Mohawk
he
held
a
number
of
executive
roles
with
BlueScope
Steel
Limited
‐
before
that
was
a
partner
of
Australian
law
firm,
Sparke
Helmore,
specialising
in
mineral
resource
development
and
environmental
planning
law.
Please mark your voting cards in the way you wish to vote by ticking “FOR”, “AGAINST” or"ABSTAIN" in the appropriate place on the voting card.
Resolution
2:
Derek
Charge
‐
That
Derek
Charge
be
elected
as
a
Director
To
record
the
reappointment
of
Deloitte
as
auditor
of
the
Company
and
to
authorise
the
Directors
to
fix
the
auditor’s
remuneration.
Please mark your voting cards in the way you wish to vote by ticking “FOR”, “AGAINST”or "ABSTAIN" in the appropriate place on the voting card.
Resolution
3:
Auditor
Resolution
4
is
a
special
resolution
and
is
therefore
required
to
be
passed
by
a
majority
of
75%
of
the
votes
of
those
shareholders
entitled
to
vote
and
voting
on
the
resolution
The
former
NZX
Main
Board
&
Debt
Market
Listing
Rules
(dated
1
October
2017)
have
been
replaced
by
updated
NZX
Listing
Rules
(dated
1
January
2019)
(“NZX
Listing
Rules”).
Scott
Technology
transitioned
to
the
new
NZX
Listing
Rules
on
13
May
2019.
The
changes
in
the
new
constitution
are
largely
to
ensure
that
the
constitution
complies
with
the
updated
requirements
under
the
NZX
Listing
Rules.
Some
clauses
and
terminology
in
the
constitution
have
also
been
updated
or
simplified
for
clarity.
Further
explanation
can
be
found
in
our
Notice
of
Meeting
which
is
available
on
the
NZX
website.
Please mark your voting cards in the way you wish to vote by ticking “FOR”, “AGAINST” or"ABSTAIN" in the appropriate place on the voting card.
Resolution
4:
Special
Resolution
‐
Constitution
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.