2020 Half Year Announcement

8 May 2020
Company Announcement
©Scott Technology Limited



SCOTT ANNOUNCES FY20 INTERIM RESULTS AND NEW STRATEGY

Automation and robotics solutions provider, Scott Technology Limited (NZX: SCT), has today released
its unaudited interim results for the six months to 29 February 2020 (1H20).

Results Snapshot
$M
1H20 IFRS 16
adjustments
1H20
Pre IFRS 16
1H19
Revenue 101.8 - 101.8 111.4
EBITDA (12.2) (0.2) (12.4) 10.4
Non-trading adjustments
1
(11.8) - (11.8) -
Normalised EBITDA
2
(0.4) (0.2) (0.2) 10.4
NPAT/NLAT (13.7) (0.2) (13.9) 5.2
Normalised NPAT 0.8 (0.2) 0.6 5.2
Net Debt 20.2 - 20.2 12.9
Operating Cashflow 0.9 2.4 (1.5) (6.4)

The results reflect strong growth in the USA offset by softening economic conditions in key markets,
as noted last year; lower volumes and lost overhead recoveries; the impact of COVID-19 in the second
quarter; and realising the financial impact on complex and challenging projects in New Zealand and
Australia, which are now either completed or nearing completion.

Strong sales growth has been seen in the USA and in parts of the service business, and value continues
to be added by acquired businesses, particularly Transbotics and Bladestop.

Revenues in Australasia, Europe and China softened as the economic slowdown and uncertainty
around Brexit and global trade noted last year continued into the first half of the financial year. In
addition, revenue in the second quarter was impacted by COVID-19 restrictions, particularly in Asia
with the China shutdown in January and February.

The challenging projects in Australia and New Zealand, as previously discussed, are now either
completed or nearing completion and the financial impact of these has been realised in 1H20.
Strengthened project management and more rigorous risk assessment for new projects has been
implemented to ensure delivery of projects on specification, on time and on budget. New projects
which were underway prior to the COVID-19 lockdown are recommencing as restrictions ease,
although there may be some deferral of timing. The start-up of the recently announced Rio Tinto
project will benefit Australian revenue in 2H20.

Long term demand for smart automation and robotic solutions is expected to remain strong, driven
by businesses wanting to remove labour costs, increase safety and improve efficiencies.

1
1H20 includes non-cash, non-trading adjustments of $11.8m comprising $10.4m impairment adjustments and a $1.4m
provision for the closure of the DC Ross operations. See Notes 4 and 5 of the FY20 Interim Financial Statements for further
details.
2
Normalised EBITDA and Normalised NPAT exclude non-trading adjustments.

©Scott Technology Limited | Confidential document


For the six months to 29 February 2020, r evenue was $101.8m and EBITDA was $(12.2)m including
non-trading adjustments of $(11.8)m, with the company reporting a Net Loss After Tax (NLAT) of
$(13.7)m.

Non-trading adjustments comprise a non-cash $(10.4)m impairment adjustment and a $(1.4)m
restructuring provision for the closure of the DC Ross operations in Dunedin as previously announced
3
.

Excluding non-trading adjustments, Normalised EBITDA was $(0.4)m with Normalised Net Profit After
Tax of $0.8m. The EBITDA result reflects the impact of reduced revenue, lower volumes leading to
lower recoveries and margin erosion.

Net debt was $20.2m as at 29 February 2020. The company has satisfactory debt facilities in place and
a supportive banking arrangement, and also has support from its majority shareholder, JBS Australia.

The Board has resolved not to pay an interim dividend for the year ended 31 August 2020.

New Strategy
The past five years has been a period of rapid acquisition growth for the company, resulting in a
diverse reach across sectors, customers and geographies. With a new leadership team in place and
given the changing operating environment, Scott is now moving to streamline its business and will
focus on leveraging core strengths and expertise which offer profitable sustainable growth and
margins.

The company’s new strategy will build on five pillars – Customer Partnerships, Leading Edge
Technology, One Global Team, Operational Excellence and a Robust Global Platform. In particular,
Scott will be increasing its focus on repeat, profitable sales of developed and proven technology,
products and services which are core to the Scott Group; and increasing its service and support
offering for customers.
New project design & development will be carefully risk assessed and R&D
activities will become highly focused on core technologies, with additional, carefully targeted
strategic projects aimed at delivering positive commercial growth opportunities.

Business Restructure
In line with the new strategy, the company is transitioning to a streamlined, regionally focused
business model with four regions - Australasia (New Zealand & Australia), Europe, North America
and China. Each will be led by a Regional Director with local teams providing product expertise, sales
and customer support.

Manufacturing plants will become Centres of Excellence where each plant will have a specific focus
on a product or industry sector, rather than all plants striving to produce a number of different and
often highly complex systems and products.


3
See Notes 4 and 5 in the Interim Financial Statements for further detail

©Scott Technology Limited | Confidential document

The business and workforce will be right-sized for the new strategy and operating environment,
resulting in a reduced cost base. This will include the consolidation or closure of a number of
facilities including the closure of the Kürnbach facility in Germany with production moved to other
plants, the proposed consolidation of Melbourne manufacturing into the Sydney plant and closure of
the Brisbane office. Scott will also commence a sales process for its niche high temperature super
conducting business in Wellington, HTS-110, which is considered non-core.

Outlook
The longer term outlook for the company remains positive and the impact of COVID-19 on
businesses around the world has demonstrated the benefit of automation and robotics solutions,
which allow work to be carried out safely and efficiently.
In line with its new strategy, Scott has identified four key sectors which leverage Scott’s leading
technology platforms and offerings - Mining, Meat, Appliances, Material Handling & Logistics - with
strong growth opportunities in each.
COVID-19 will have a material impact on FY20 results, with travel restrictions and access to customer
sites affecting Scott’s ability to design, progress and commission a number of projects. A number of
responses have been taken in response to COVID-19 and the financial impact of these will be seen in
the FY20 full year results. This includes costs associated with the restructuring of the global business
platform to make it more efficient and deliver improved customer outcomes. Revenue is expected to
recover as restrictions are lifted and businesses recommence projects and capital expenditure.

CEO of Scott Technology, John Kippenberger, said: “Industries around the world will continue to
search for innovative and reliable automation and robotic solutions to make their businesses safer,
smarter, more productive and efficient. Scott’s new strategy and streamlined regional business model
positions the company to take advantage of this and deliver earnings growth and margin improvement
while reducing risk.

“Scott is recognised as a leader in the industry. We have significant IP in the products and systems
which we have developed and we will be commercialising these further, while continuing the
innovative development of systems for which we are known. Our new strategy will build on our
expertise and capabilities as we make our business more focused and more efficient.”

ENDS

For more information, visit www.scottautomation.com
or contact:

John Kippenberger
Chief Executive Officer, Scott Technology
T: +64 21 964 045
E: j.kippenberger@scott.co.nz


Media and investor contact:
Jackie Ellis
T: +64 27 246 2505
E: jackie@ellisandco.co.nz



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 also go a step beyond engineering

©Scott Technology Limited | Confidential document

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, Belgium, Czech Republic, France, Germany, China, Australia and New
Zealand, customers in 88 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.

---

SCOTT
TECHNOLOGY
FY20 INTERIM
RESULTS
8 MAY 2020

RECENT PARTNERSHIPS

1H20 OPERATING ENVIRONMENT
•Softening economic conditions noted in key markets, including the impact of global
trade and Brexit, prior to the impact of COVID-19 restrictions across the globe.
•Strong sales growth in USA and some parts of the service business, offsetting reduced
revenue in New Zealand, Australia and China.
•Value continues to be added by acquired businesses, particularly Transboticsand
Bladestop
•Impact of COVID-19 restrictions at the end of the half year period, particularly in Asia
with China shutdown in January and February.
•Softer NZD compared to EUR and USD.
•Continued strong interest from potential customers for automation and robotics.

1H20 RESULTS SUMMARY TABLE
$M
1H20IFRS 16
adjustments
1H20
Pre IFRS 16
1H19
Revenue101.8-101.8111.4
EBITDA(12.2)(0.2)(12.4)10.4
Non-trading adjustments
1
(11.8)-(11.8)-
Normalised EBITDA
2
(0.4)(0.2)(0.2)10.4
NPAT/NLAT
2
(13.7)(0.2)(13.9)5.2
Normalised NPAT/NLAT0.8(0.2)0.65.2
Net Debt20.2-20.212.9
Operating Cashflow 0.92.4(1.5)(6.4)
1.HY20 includes non-cash, non-trading adjustments of $11.8m comprising $10.4m impairment and a $1.4m provision for the
closure of the DC Ross operations. See Notes 4 and 5 of the HY20 Interim Financial Statements for further details.
2.Normalised EBITDA and Normalised NPAT exclude non-trading adjustments.

1H20 RESULTS SUMMARY
•Revenue reduced by 10% compared to prior comparative period (pcp) - NZ, Australia
and Asia down on pcp, offset by strong US sales.
•Change in R&D funding with the end of the Callaghan Growth Grant and transition to
R&D tax credit scheme in NZ - reduced to $0.2m compared to $1.2m in prior comparative
period.
•EBITDAimpacted by reduced revenue, lower volumes leading to lower overhead
recoveries, margin erosion and forex impact
•Non-trading adjustments comprise a non-cash $(10.4)m impairment and a $(1.4)m
restructuring provision for the closure of the DC Ross operations in Dunedin as
previously announced.
•Improved operating cashflow, benefitting from timing of project milestones and
invoicing.
•No interim dividend has been declared.

REVENUE BY OPERATING REGION
0
5
10
15
20
25
30
35
40
New
Zealand
AustraliaEuropeAsiaUSA
$MILLIONS
•Revenue down 10% due to existing economic
trends as well as impact of COVID-19 restrictions
•Positive growth in USA with strong performance
from Bladestopand Transbotics
•Asia impacted by COVID-19 shutdown in China,
during January and February
•Lower volumes in NZ and Australia
•New Rio Tinto contract will provide additional
revenue in both NZ and Australia in 2H20

NORMALISED EBITDA
Normalised EBITDA of $(0.4)m reflects the following:
•Sales mix - higher proportion of lower margin products sold during the period
•Significant project complexities across both meat and mining projects leading to
cost overruns
•Lower overhead recovery due to lower project volumes.
•Margin compression, particularly in Europe
•Increased sales and marketing costs compared to pcp, primarily due to forex
impact.
•New strategy and restructure to commence in 2H20 to streamline the business,
with focus on leveraging core strengths and expertise which offer profitable and
sustainable growth and margins.
1H20 EBITDA of $(12.2)m including non-trading adjustments of $(11.8)m

NEW FIVE-YEAR STRATEGY
OUR MISSION
Delivering smart automation solutions that
transform industries and lives.
OUR VISION
To be the first choice for businesses around the
world wanting smart automation and robotic
solutions which make their businesses safer, more
productive and more efficient.
OUR GOALS
•Establish and maintain leadership positions in
our areas of expertise
•Deliver positive customer outcomes
•Continue to build on our global brand and
reputation for delivering exceptional
automation and robotics solutions
•Build a highly focused and efficient global
operating platform
•Deliver sustainable and profitable returns and
reduce risk

ENGINEERING SCOTT TO HIGH PERFORMANCE
2020 - 2025
FOUNDATIONS FOR
PROFITABLE GROWTH

AUTHENTIC CUSTOMER PARTNERSHIPS
•Focusondeliveringexcellencetocustomersinourtargeted
sectors–Mining,Meat,Appliances,MaterialHandling&
Logistics.
•Strongcustomerrelationshipswithstreamlinedpointsof
interactionandregionalsupport& execution.
•LeveragetheScottbrandandreputationforbest-in-class
design,deliveryandservice.
Buildauthenticcustomerpartnershipswhichyieldrepeatbusinessandgrowth
opportunities.

LEADING EDGE TECHNOLOGY
•PivottheProject/Product/Servicemixfrom60/20/20to40/30/30todrive
growthandmargins,whilereducingrisk.
-Project: Bespoke customer solutions focused on areas of expertise to
reduce risk, improve customer delivery and generate higher margins.
-Products: Repeat, profitable sales of developed and proven technology,
products and systems which are core to the Scott Group and offer
strong margins.
-Service: Structured long-term support and servicing of products and
technologies, driving safety, performance and efficiency at customer
sites.
-R&Dactivitiesfocusedontargeted,strategicandcommercial
innovationopportunities.
LeverageScott’sleadingtechnologyplatformsandofferings.

ONE GLOBAL TEAM
•Enableend-to-endteamownershipandaccountabilityforcustomer
outcomesandshareholderreturns.
•Provideeffectiveregionalleadershipandexecutionwithsupport
fromtheNewZealandHeadOffice.
•ContinuetodriveaGroup-widesafetyculture; inourfactories,
duringinstallationsandwhilsttravelling.
•Investintalentdevelopment,engagementandretention.
•Alignremunerationandincentivestructurestodriveahigh-
performanceculture.
CreateaneffectiveglobalScott‘identity’andculture,witha focusondelivering
excellenceandpositivecustomeroutcomes.

OPERATIONAL EXCELLENCE
•Identify,evaluateandpricedevelopmentriskupfrontandbuild
effectiverisk-sharingmodelswithglobalcustomers.
•Excelinprojectmanagementdisciplines,designandengineering
controls.
•ImplementstrongfinancialmanagementsystemsGroup-wide.
Robustsystems,controlsandprocessestoensuredeliveryofprojectsonspec,on
timeandonbudget

ROBUST GLOBAL PLATFORM
•Agileandefficientfixed-vs-variablelabourcoststructure.
•Streamlinedregionallyfocusedbusinessplatformwithfour
regions- Australasia(NewZealand&Australia),Europe,
NorthAmericaandChina.
•Centresofexcellencewhereeachplantwillhavea specific
focusona productorindustrysector.
Buildanoperationsinfrastructurematchedtoourgrowthcurve.

RIGHT-SIZING THE GLOBAL PLATFORM
REGIONALLY FOCUSED BUSINESS
PLATFORM
Programme to streamline the global
platform has commenced.
Proposed changes:
•Closure of the Kürnbachfacility in
Germany with production moved to other
plants
•Consolidation of Melbourne manufacturing
into the Sydney plant and closure of the
Brisbane office.
•Sale of HTS-110, a niche high
temperature super conducting business
which is considered non-core.
•Consolidation of Fabtech operations into
Dunedin plant.
•Cessation of Scott LED which is
considered non-core.

INDUSTRY OUTLOOK
MINING: Strong interest from the sector, particularly for automating sample preparation. This
includes upgrading laboratories at existing sites, but also within the number of new mines which are
heading towards commissioning in 2020/21 in both Australia and North America.
MATERIALS HANDLING & LOGISTICS: COVID-19 on the heels of a difficult two years in Europe, has
seen many companies deferring capital expenditure for six to 12 months. However, expect that
more companies will invest in their homeland and will automate factories to reduce dependence on
production lines manned by people. Scott’s global reach ensures it is well placed to serve these
customers, as and when needed.
APPLIANCES: A varied industry outlook by region, with more challenging conditions in Europe, a fast
recovery in China post-COVID-19 and good growth in the USA with many companies reshoring
manufacturing.
M EAT: Continuing automation of processing systems, with positive and growing interest in Scott
technologies in lamb, beef, port and poultry. Labour shortages continue to drive demand for
automation solutions.

IMPACT OF COVID-19
•Increasing awareness of benefits of automation.
•Reinvestment in local manufacturing vs offshore.
•While some customers are conserving cash and deferring projects for a short period, others are
accelerating new projects and delivery timelines.
•Travel restrictions and access to customer sites affected Scott’s ability to implement, progress and
commission a number of projects.
•Anticipating and preparing for a spike in restart service and support across USA and Europe.

OUTLOOK
•LONG TERM TRENDS REMAIN POSITIVE for the automation and robotics industry.
•NEW 5-YEAR STRATEGY will see Scott focus on areas of expertise and continued innovation to
drive growth and margins while reducing risk.
•GLOBAL GROUP RESTRUCTURE UNDERWAY with transition to a streamlined, regionally focused
business model with manufacturing plants moving to become specialised Centres of Excellence.
This will right size the business and workforce for the new strategy and operating environment,
and reduce the cost base.
•RECOVERY FROM COVID-19 - while revenue is expected to recover as regional lockdowns are lifted
and work recommences, Scott expects FY20 earnings to be materially impacted.
•FY20 RESULTS OUTLOOK – FY20 full year results will reflect impact of COVID-19, as well as
implementation costs associated with the new strategy. No FY20 forecast is being provided.

THANK YOU

NON-GAAP FINANCIAL INFORMATION
Non-GAAP financial information:
Scott has used several non-GAAP measures
when discussing financial performance.
These include EBITDA, NormalisedEBITDA
and NormalisedNPAT/NLAT. Management
believes that these measures provide useful
information on the underlying performance
of Scott’s business. They may be used
internally to evaluate performance, analyse
trends and allocate resources. Non-GAAP
financial measures should not be viewed in
isolation nor considered as a substitute for
measures reported in accordance with NZ
IFRS.
20
Non-trading Adjustments:
Impairments
•$(0.2)m relating to non-core LED business which has
ceased trading
•$(0.4)m - cessation of a research collaboration
project
•$(3.7)m - cessation of dairy technology development
project
•$(6.1)m – costs relating to closing out of a number of
non-performing projects as previously advised
Restructure Provision
•$(1.4)m restructuring provision for the closure of a
facility in Dunedin as announced on 29 November
2019.

GLOSSARY OF TERMS
•EBITDA: Earnings/ Loss before the deduction of interest, tax, depreciation and amortisation. 1H20
EBITDA was impacted by a number of non-trading adjustments totaling $(11.8) million, details of
which are included in Scott’s Interim Financial Statements.
•Normalised EBITDA: This means EBITDA excluding non-trading adjustments.
•NormalisedNet Profit After Tax/Net Loss After Tax: NPAT/NLAT excluding the impact of non-
trading adjustments.
21

DISCLAIMER
•This presentation has been prepared by Scott Technology Limited (NZX: SCT).The information in this presentation is of a general nature
only. It is not a complete description of SCT.
•This presentation is not a recommendation or offer of financial products for subscription, purchase or sale, or an invitationorsolicitation for
such offers.
•This presentation is not intended as investment, financial or other advice and must not be relied on by any prospective investor. It does not
take into account any particular prospective investor’s objectives, financial situation, circumstances or needs, and does notpurport to
contain all the information that a prospective investor may require. Any person who is considering an investment in SCT securiti es should
obtain independent professional advice prior to making an investment decision, and should make any investment decision havingre gard to
that person’s own objectives, financial situation, circumstances and needs.
•Past performance information contained in this presentation should not be relied upon (and is not) an indication of future
performance.This presentation may also contain forward looking statements with respect to the financial condition, results of operations
and business, and business strategy of SCT. Information about the future, by its nature, involves inherent risks and uncertainties.
Accordingly, nothing in this presentation is a promise or representation as to the future or a promise or representation thatantransaction
or outcome referred to in this presentation will proceed or occur on the basis described in this presentation. Statements or assumptions in
this presentation as to future matters may prove to be incorrect.
•Financial measures used in this presentation should not be considered in isolation from, or as a substitute for, the informationprovided in
SCT’s financial statements available at
https://www.scottautomation.com/.
•SCT and its related companies and their respective directors, employees and representatives make no representation or warranty of any
nature (including as to accuracy or completeness) in respect of this presentation and will have no liability (including for negligence) for any
errors in or omissions from, or for any loss (whether foreseeable or not) arising in connection with the use of or reliance on, information in
this presentation.

---

SCOTT TECHNOLOGY LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Six Months Ended 29 February 2020
6 mths 6 mths 12 mths
29 Feb 20 28 Feb 19 31 Aug 19
(Unaudited) (Unaudited) (Audited)
Note $’000s $’000s $’000s
(restated)

Revenue 2 101,835 111,426 225,093
Other income 195 1,237 2,441
Share of joint ventures’ net surplus 72 182 444

Raw materials, c onsumables used and other expenses (64,252) (66,787) (134,792)
Employee benefit e xpenses (38,242) (35,650) (73,176)
────── ─────── ───────
OPERATING (LOSS)/EARNINGS BEFORE INTEREST, TAX,
DEPRECIATION AND AMORTISATION
(OPERATING EBITDA) (392) 10,408 20,010

Impairment of assets 4 (10,391) - -
Restructuring provision 5 (1,429) - -
────── ─────── ───────
(LOSS)/EARNINGS BEFORE INTEREST, TAX,
DEPRECIATION AND AMORTISATION (EBITDA) (12,212) 10,408 20,010

Depreciation and amortisation (5,032) (4,164) (8,969)
Finance costs (1,050) (728) (1,715)
Interest received 10 14 20
────── ─────── ───────
NET (LOSS)/SURPLUS BEFORE TAXATION (18,284) 5,530 9,346

Tax credit – research & development tax credits (Australia) 1,168 1,112 1,112
Taxation credit /(expense) 3,441 (1,492) (1,854)
────── ─────── ───────
NET (LOSS)/SURPLUS FOR THE PERIOD AFTER TAX (13,675) 5,150 8,604
══════ ═══════ ═══════

Other Comprehensive (Loss)/Income
Cash flow hedges - 370 370
Translation of foreign operations 422 (578) 765
────── ────── ──────
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD (13,253) 4,942 9,739
NET OF TAX ══════ ══════ ══════

Net (loss)/surplus for the period is attributable to:
Members of the parent entity (13,896) 5,010 8,690
Non controlling interest 221 140 (86)
────── ─────── ───────
(13,675) 5,150 8,604
══════ ═══════ ═══════

Total comprehensive (loss)/income is attributable to:
Members of the parent entity (13,484) 4,802 9,825
Non controlling interest 231 140 (86)
────── ────── ──────
(13,253) 4,942 9,739
══════ ══════ ══════

Cents Per Ordinary Share

Earnings per share (weighted average shares on issue):
Basic (17.8) 6.6 11.3
Diluted (17.8) 6.6 11.3

Net tangible assets per ordinary share (at period end):
Basic 32.9 50.9 50.4
Diluted 32.9 50.9 50.4

SCOTT TECHNOLOGY LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Six Months Ended 29 February 2020






Six Months Ended 29
February 2020

Fully Paid
Ordinary
Shares
(Unaudited)
$’000s


Retained
Earnings
(Unaudited)
$’000s
Foreign
Currency
Translation
Reserve
(Unaudited)
$’000s

Non
Controlling
Interest
(Unaudited)
$’000s

Cash Flow
Hedge
Reserve
(Unaudited)
$’000s



Total
(Unaudited)
$’000s


Balance at 31 August 2019 80,073 31,949 (170) (35) - 111,817
Net loss for the period after
tax

-

(13,896)

-

221

-

(13,675)
Other comprehensive income
for the period net of tax

-

-

432

-

-

432
Transfer between reserves - - (10) 10 - -
Dividends paid (4.0 cents per
share)

-

(3,102)

-

-

-

(3,102)
Issue of ordinary shares under
dividend reinvestment plan 1,749 - - - - 1,749
Balance at 29 February 2020
81,822 14,951 252 196 - 97,221






Six Months Ended 28
February 2019

Fully Paid
Ordinary
Shares
(Unaudited)
$’000s


Retained
Earnings
(Unaudited)
$’000s
Foreign
Currency
Translation
Reserve
(Unaudited)
$’000s

Non
Controlling
Interest
(Unaudited)
$’000s

Cash
Flow Hedge
Reserve
(Unaudited)
$’000s



Total
(Unaudited)
$’000s


(restated) (restated)

(restated)


Balance at 31 August 2018 75,647 31,335 (935) 51 (370) 105,728
Change in accounting policy - (451) - - - (451)
Net surplus for the period after
tax

-

5,010

-

140

-

5,150
Other comprehensive income
for the period net of tax

-

-

(578)

-

370

(208)
Dividends paid (6.0 cents per
share)

-

(4,554)

-

-

-

(4,554)
Issue of ordinary shares under
dividend reinvestment plan 2,590 - - - - 2,590
Balance at 28 February 2019
78,237 31,340 (1,513) 191 - 108,255






Twelve Months Ended 31
August 2019

Fully Paid
Ordinary
Shares
(Audited)
$’000s


Retained
Earnings
(Audited)
$’000s
Foreign
Currency
Translation
Reserve
(Audited)
$’000s

Non
Controlling
Interest
(Audited)
$’000s

Cash
Flow Hedge
Reserve
(Audited)
$’000s



Total
(Audited)
$’000s


Balance at 31 August 2018 75,647 31,335 (935) 51 (370) 105,728
Change in accounting policy - (450) - - - (450)
Net surplus for the period after
tax

-

8,690

-

(86)

-

8,604
Other comprehensive income
for the period net of tax

-

-

765

-

370

1,135
Dividends paid (10 cents per
share)

-

(7,626)

-

-

-

(7,626)
Issue of ordinary shares under
dividend reinvestment plan 4,426 - - - - 4,426
Balance at 31 August 2019
80,073 31,949 (170) (35) - 111,817

SCOTT TECHNOLOGY LIMITED
CONSOLIDATED BALANCE SHEET
As at 29 February 2020
29 Feb 20 28 Feb 19 31 Aug 19
(Unaudited) (Unaudited) (Audited)
Note $’000s $’000s $’000s
(restated)
CURRENT ASSETS
Trade debtors 30,339 32,611 38,993
Other financial assets 8 787 271 1,207
Sundry debtors 2,504 4,192 3,204
Inventories 22,931 21,130 22,559
Contract assets 23,758 32,402 32,863
Receivable from joint ventures and associates 1,069 1,516 1,552
Plant and equipment held for sale - 345 345
Taxation receivable 2,302 - -
─────── ────── ───────
83,690 92,467 100,723
NON CURRENT ASSETS
Property, plant and equipment 20,360 15,991 20,259
Capital work in progress - 1,590 -
Investment in joint ventures and associates 1,444 1,109 1,371
Other investments - - 400
Other financial assets 8 - 51 9
Goodwill 57,473 54,722 57,951
Deferred tax asset 2,542 - -
Intangible assets 14,072 14,639 15,405
Right of use asset 14,738 12,987 16,996
─────── ─────── ───────
110,629 101,089 112,391
─────── ─────── ───────
TOTAL ASSETS 194,319 193,556 213,114
═══════ ═══════ ═══════
CURRENT LIABILITIES
Bank overdraft 8,975 5,673 4,737
Trade creditors and accruals 31,853 24,138 31,057
Lease liabilities 3,910 3,281 4,081
Other financial liabilities 8 831 359 2,541
Contract liabilities 13,062 17,954 16,529
Employee entitlements 9,704 9,611 10,298
Provision for warranty 1,811 1,838 1,546
Payable to joint ventures 703 557 393
Taxation payable - 610 218
Current portion of term loans 2,679 4,181 4,217
Deferred settlement on purchase of business 1,938 1,504 2,385
─────── ─────── ───────
75,466 69,706 78,002
NON CURRENT LIABILITIES
Other financial liabilities 8 868 797 969
Employee entitlements 801 984 939
Lease liability 11,446 9,754 13,311
Deferred tax liability - 1,060 626
Term loans 8,517 3,000 7,450
─────── ─────── ───────
21,632 15,595 23,295
EQUITY
Share capital 81,822 78,237 80,073
Retained earnings 14,951 31,340 31,949
Foreign currency translation reserve 252 (1,513) (170)
──────── ──────── ────────
Equity attributable to equity holders of the parent 97,025 108,064 111,852
Non controlling interest 196 191 (35)
──────── ──────── ────────
TOTAL EQUITY 97,221 108,255 111,817
──────── ──────── ────────
TOTAL LIABILITIES & EQUITY 194,319 193,556 213,114
════════ ════════ ════════

SCOTT TECHNOLOGY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended 29 February 2020
6 mths 6 mths 12 mths
29 Feb 20 28 Feb 19 31 Aug 19
(Unaudited) (Unaudited) (Audited)
Note $’000s $’000s $’000s
(restated)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash was provided from/(applied to):
Receipts from operations 115,326 105,936 213,712
Interest received 10 14 20
Net GST (paid)/received (413) (127) 109
Payments to suppliers and employees (112,919) (108,992) (208,218)
Taxation paid (1,080) (3,230) (4,897)
─────── ─────── ───────
Net cash in flow/(outflow) from operating activities 3 924 (6,399) 726

CASH FLOWS FROM INVESTING ACTIVITIES

Cash was provided from/(applied to):
Purchase of property, plant, equipment and intangible assets (1,445) (2,929) (7,229)
Sale of property, plant and equipment 777 525 266
Advance from joint ventures 792 683 479
Purchase of business (447) (4,830) (6,803)
Purchase of Investments (20) - (400)
────── ────── ──────
Net cash outflow from investing activities (343) (6,551) (13,687)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash was provided from/(applied to):
Repayment of borrowings (1,344) (572) (742)
Dividends paid (1,353) (1,964) (3,200)
Proceeds from borrowings 907 - 5,000
Lease payments (2,075) (1,932) (3,592)
Interest paid (954) (728) (1,715)
─────── ─────── ───────
Net cash (outflow) from financing activities (4,819) (5,196) (4,249)
─────── ─────── ───────
Net decrease in cash held (4,238) (18,146) (17,210)

Add cash and cash equivalents at beginning of the period (4,737) 12,473 12,473
─────── ─────── ───────
Balance at end of the period (8,975) (5,673) (4,737)
═══════ ═══════ ═══════

Comprised of:
(Bank overdraft) (8,975) (5,673) (4,737)
═══════ ═══════ ═══════

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020

1. SUMMARY OF ACCOUNTING POLICIES

The unaudited interim financial statements (Interim Financial Statements) presented are those of Scott Technology
Limited (“Company”) and its subsidiaries (“Group”). The Company is a profit oriented entity, registered in New Zealand
under the Companies Act 1993 and is a reporting entity for the purposes of the Financial Markets Conduct Act 2013.
The Company is listed with NZX Limited and its ordinary shares are quoted on the NZX Main Board.

The Group’s principal activities are the design, manufacture, sale and servicing of automated and robotic production
lines and processes for a wide variety of industries in New Zealand and overseas.

Basis of Preparation

The Interim Financial Statements have been prepared in accordance with the requirements of the NZX Listing Rules.

The Interim Financial Statements have been prepared in accordance with Generally Accepted Accounting Practice in
New Zealand (“NZ GAAP”). The Interim Financial Statements also comply with IAS 34 “Interim Financial Reporting” and
other applicable financial reporting standards as appropriate for profit orientated entities.

The Interim Financial Statements have been prepared on the basis of historical cost, except where otherwise identified.
The presentation currency used in the preparation of the financial statements is New Zealand dollars and all values are
rounded to the nearest thousand dollars ($000).

Accounting Policies

All accounting policies have been applied on a basis consistent with those used in the audited financial statements of
Scott Technology Limited for the year ended 31 August 2019. These Interim Financial Statements should be read in
conjunction with the policies disclosed in the annual financial statements.

Restatement of Prior Period

For the period ending 31 August 2019, the Group early adopted NZ IFRS 16 Leases, (NZ IFRS 16), with an effective
date of 1 September 2018. The Group has restated the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Changes in Equity, Consolidated Balance Sheet, Consolidated Statement of Cash Flows,
Note 3 and Note 7 as at 28 February 2019 to reflect the adoption of NZ IFRS 16. Refer to the audited financial
statements of Scott Technology Limited for the year ended 31 August 2019 for a discussion on how the transitional
provisions of NZ IFRS 16 have been applied.

For the period ending 31 August 2019, the Group restated the goodwill balances to recognise the foreign exchange
impact of goodwill associated with entities purchased in foreign currencies. The Group has restated the Consolidated
Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and the Consolidated Balance
Sheet as at 28 February 2019 to reflect the impact of this restatement.

Reclassification of Prior Period

For the year ended 31 August 2019, the Group reclassified interest paid in the Consolidated Statement of Cash Flows as
a financing activity rather than an operating activity due to the impact of adopting NZ IFRS 16 and the increased level of
debt the Group has entered into. This reclassification has been made to the Consolidated Statement of Cash Flows and
Note 3 for the period ending 28 February 2019 to ensure that these balances have been reported on a consistent basis.

With the adoption of NZ IFRS 16, the Group has reclassed some balances previously noted as finance leases into term
loans. These are loans that relate to the purchase of specific items of plant and equipment and do not meet the definition
of a lease under NZ IFRS 16. This reclassification has been made to the Consolidated Balance Sheet for the period
ending 28 February 2019 to ensure that these balances have been reported on a consistent basis.

Audit

The Interim Financial Statements for the six months ended 29 February 2020 are unaudited. Comparative balances for
the six months ended 28 February 2019 are also unaudited, whilst the comparative balances for the 12 months ended 31
August 2019 are audited.

Authorisation

The Interim Financial Statements were authorised by the Board of Directors on 8 May 2020. The annual financial
statements for the year ended 31 August 2019 were authorised by the Board of Directors on 24 October 2019.

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major
geographic manufacturing regions (segments) and revenue streams. Revenue from short term projects and service has
been combined as they are of a similar nature.

Six months ended 29 February 2020 (Unaudited)

Australasia manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 18,783 12,777 8,149 39,709
Inter-segment revenue
(1,726) (1,013) (466) (3,205)
Revenue from external customers 17,057 11,764 7,683 36,504

Timing of revenue recognition
- At a point in time - 11,764 7,683 19,447
- Over time 17,057 - - 17,057
17,057 11,764 7,683 36,504
Americas manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 9,906 5,591 8,470 23,967
Inter-segment revenue
1,726 898 (6) 2,618
Revenue from external customers 11,632 6,489 8,464 26,585

Timing of revenue recognition
- At a point in time - 6,489 8,464 14,953
- Over time 11,632 - - 11,632
11,632 6,489 8,464 26,585
Asia & Europe manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 29,243 5,099 3,817 38,159
Inter-segment revenue
- 115 472 587
Revenue from external customers 29,243 5,214 4,289 38,746

Timing of revenue recognition
- At a point in time - 5,214 4,289 9,503
- Over time 29,243 - - 29,243
29,243 5,214 4,289 38,746

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


2. REVENUE FROM CONTRACTS WITH CUSTOMERS (Cont)

Total manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 57,932 23,467 20,436 101,835
Inter-segment revenue
- - - -
Revenue from external customers 57,932 23,467 20,436 101,835

Timing of revenue recognition
- At a point in time - 23,467 20,436 43,903
- Over time 57,932 - - 57,932
57,932 23,467 20,436 101,835


Six months ended 28 February 2019 (Unaudited)

Australasia manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 26,195 20,068 5,442 51,705
Inter-segment revenue
296 (1,984) 146 (1,542)
Revenue from external customers 26,491 18,084 5,588 50,163

Timing of revenue recognition
- At a point in time - 18,084 5,588 23,672
- Over time 26,491 - - 26,491
26,491 18,084 5,588 50,163
Americas manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 4,650 11,316 288 16,254
Inter-segment revenue
- 1,694 - 1,694
Revenue from external customers 4,650 13,010 288 17,948

Timing of revenue recognition
- At a point in time - 13,010 288 13,298
- Over time 4,650 - - 4,650
4,650 13,010 288 17,948

Asia & Europe manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 31,230 2,941 9,296 43,467
Inter-segment revenue
(296) 290 (146) (152)
Revenue from external customers 30,934 3,231 9,150 43,315

Timing of revenue recognition
- At a point in time - 3,231 9,150 12,381
- Over time 30,934 - - 30,934
30,934 3,231 9,150 43,315

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


2. REVENUE FROM CONTRACTS WITH CUSTOMERS (Cont)

Total manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 62,075 34,325 15,026 111,426
Inter-segment revenue
- - - -
Revenue from external customers 62,075 34,325 15,026 111,426

Timing of revenue recognition
- At a point in time - 34,325 15,026 49,351
- Over time 62,075 - - 62,075
62,075 34,325 15,026 111,426


Twelve months ended 31 August 2019 (Audited)

Australasia manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 54,666 38,583 13,251 106,500
Inter-segment revenue
(1,551) (1,991) (198) (3,740)
Revenue from external customers 53,115 36,592 13,053 102,760

Timing of revenue recognition
- At a point in time - 36,592 13,053 49,645
- Over time 53,115 - - 53,115
53,115 36,592 13,053 102,760

Americas manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 10,578 20,906 2,091 33,575
Inter-segment revenue
74 1,954 27 2,055
Revenue from external customers 10,652 22,860 2,118 35,630

Timing of revenue recognition
- At a point in time - 22,860 2,118 24,978
- Over time 10,652 - - 10,652
10,652 22,860 2,118 35,630
Asia & Europe manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 62,690 4,310 18,018 85,018
Inter-segment revenue
1,477 37 171 1,685
Revenue from external customers 64,167 4,347 18,189 86,703

Timing of revenue recognition
- At a point in time - 4,347 18,189 22,536
- Over time 64,167 - - 64,167
64,167 4,347 18,189 86,703

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


2. REVENUE FROM CONTRACTS WITH CUSTOMERS (Cont)

Total manufacturing
Long term
contracts
Standard
equipment
Short term projects
and service work
Total
$’000s $’000s $’000s $’000s

Segment revenue 127,934 63,799 33,360 225,093
Inter-segment revenue
- - - -
Revenue from external customers 127,934 63,799 33,360 225,093

Timing of revenue recognition
- At a point in time - 63,799 33,360 97,159
- Over time 127,934 - - 127,934
127,934 63,799 33,360 225,093


3. NOTES TO THE CASH FLOW STATEMENT
6 mths 6 mths 12 mths
29 Feb 20 28 Feb 19 31 Aug 19
(Unaudited) (Unaudited) (Audited)
$’000s $’000s $’000s
(restated)

Net (loss)/surplus for the period (13,675) 5,150 8,604

Adjustments for non-cash items:
Depreciation and amortisation 5,032 4,164 8,969
Net loss/(gain) on sale of property, plant and equipment (115) (36) (237)
Deferred tax (3,168) (722) (1,456)
Share of net surplus of joint ventures and associates (72) (182) (444)
Movement due to IFRS 15 adjustment - - (450)

Add/(less) movement in working capital:
Trade debtors 8,655 4,453 (1,929)
Other financial assets - derivatives 429 1,257 363
Sundry debtors and prepayments 701 (669) 327
Inventories (372) 1,243 265
Contract work in progress 5,638 (11,371) (13,257)
Taxation payable (2,521) (2,128) (2,520)
Trade creditors and accruals 968 (5,946) 734
Other financial liabilities - derivatives (1,811) (1,307) 1,046
Employee entitlements (733) (2,334) (1,692)
Provision for warranty 265 (19) (311)
Interest paid 1,050 728 1,715

Movements in working capital disclosed in
investing/financing activities:
Movement in foreign exchange translation reserve relating to
working capital 422 1,261 (12)
Working capital relating to purchase of business and
non controlling interest 231 59 1,011
─────── ─────── ───────
Net cash inflow/( outflow) from operating activities 924 (6,399) 726
═══════ ═══════ ═══════

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


4. IMPAIRMENT OF ASSETS


6 mths 6 mths 12 mths

28 Feb 20 28 Feb 19 31 Aug 19

(Unaudited) (Unaudited) (Audited)

$’000s $’000s $’000s

Impairment of Scott LED assets 168 - -
Impairment of Investment in Veritide Limited 420 - -
Impairment of Scott Dairy development asset 3,715 - -
Impairment of other development assets 6,088 - -
10,391 - -

Scott LED is a company that sells LED lightbulbs. As a part of a review of the operations of the Group, this business
activity has been identified as being non-core to the Scott strategy. As a result, the assets related to Scott LED Limited
have been impaired and the business has ceased trading. The total amount of this provision at 29 February 2020 is
$168,000.

Scott holds an investment in Veritide Limited, (Veritide), a research collaboration that provides mobile handheld
scanners to identify visible and non-visible faecal contamination on meat carcasses. As at 29 February 2020, Veritide
had not secured any further funding to keep operating and Scott’s investment of $420,000 has been impaired as a result.

Scott Dairy is automated milking technology for the dairy industry that has been developed over several years. During
the first half of the 2020 financial year, discussions with potential commercialisation partners ceased with no further
plans to commercialise this product at this stage. As a result, the total amount of the asset has been writte n down at 29
February 2020, totalling $3,715,000.

Impairment of other development assets is related to two non-performing projects based in Australia and New Zealand
that have been included in the 2020 half year financial statements. Both projects contained high levels of risk and when
combined with execution issues, led to unexpected additional costs to complete the project. In the current period,
discussions with the commercial partners ceased with no further plans to commercialise these products at this stage.
The majority of revenue associated with these projects was recognised in the 2017 and 2018 financial years. All
additional costs relating to these projects have been included in the 2020 half year financial statements.

5. RESTRUCTURING PROVISION

On 29 November 2019, the proposal to close the operations of DC Ross in Dunedin was announced. The operations
officially closed in April 2020. A provision of $1,429,000 to close the facility has been included in the 2020 half year
financial statements, primarily related to the write off of fixed assets where the book value of these assets is unlikely to
be recovered.

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


6. CONTINGENT LIABILITIES
6 mths 6 mths 12 mths
28 Feb 20 28 Feb 19 31 Aug 19
(Unaudited) (Unaudited) (Audited)
$’000s $’000s $’000s

Payment guarantees and performance bonds 12,359 9,069 14,339
Stock Exchange bond 75 75 75
Maximum contract penalty clause exposure 7,967 7,417 6,865

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.


7. SEGMENT INFORMATION

7.1 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.

7.2 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.

Six Months Ended Australasia Americas Asia & Europe
29 February 2020 Manufacturing Manufacturing Manufacturing Unallocated Total
(Unaudited) $’000s $’000s $’000s $’000s $’000s

Revenue 36,504 26,585 38,746 - 101,835
═══════ ═══════ ═══════ ═══════ ═══════
Operating profit/(loss) (137) 3,488 (134) - 3,217
Impairment of assets (10,391) - - - (10,391)
Restructuring provision (1,429) - - - (1,429)
Depreciation and amortisation (1,999) (396) (2,435) (202) (5,032)
Share of net profit of joint ventures 8 64 - - 72
Interest revenue 1 - 6 3 10
Central administration costs - - - (3,681) (3,681)
Finance costs (111) (106) (236) (597) (1,050)
─────── ─────── ─────── ─────── ───────
Net profit/(loss) before taxation (14,058) 3,050 (2,799) (4,477) (18,284)
Taxation expense 5,476 (863) (4) - 4,609
─────── ─────── ─────── ─────── ───────
Net profit/(loss) after taxation (8,582) 2,187 (2,803) (4,477) (13,675)
═══════ ═══════ ═══════ ═══════ ═══════

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


7. SEGMENT INFORMATION (Cont)

7.2 Segment Revenues and Results (Cont)

Six Months Ended Australasia Americas Asia & Europe
28 February 2019 Manufacturing Manufacturing Manufacturing Unallocated Total
(Unaudited) $’000s $’000s $’000s $’000s $’000s
(restated) (restated) (restated) (restated)

Revenue 50,163 17,948 43,315 - 111,426
═══════ ═══════ ═══════ ═══════ ═══════
Operating profit 6,136 2,804 4,423 - 13,363
Depreciation and amortisation (1,816) (101) (1,996) (251) (4,164)
Share of net surplus/(deficit) of joint
ventures (84) 250 16 - 182
Interest revenue - - 6 8 14
Central administration costs
and foreign exchange - - - (3,137) (3,137)
Finance costs (127) (6 ) (329) (266) (728)
─────── ─────── ─────── ─────── ───────
Net profit/(loss) before taxation 4,109 2,947 2,120 (3,646) 5,530
Taxation expense (633) (451) (321) 1,025 (380)
─────── ─────── ─────── ─────── ───────
Net profit/(loss) after taxation 3,476 2,496 1,799 (2,621) 5,150
═══════ ═══════ ═══════ ═══════ ═══════



Twelve Months Ended Australasia Americas Asia & Europe
31 August 2019 Manufacturing Manufacturing Manufacturing Unallocated Total
(Audited) $’000s $’000s $’000s $’000s $’000s

Revenue 102,760 35,630 86,703 - 225,093
═══════ ═══════ ═══════ ═══════ ═══════
Operating profit 16,426 4,915 6,048 - 27,389
Depreciation and amortisation (3,720) (323) (4,416) (510) (8,969)
Share of net surplus of joint
ventures (216) 605 55 - 444
Interest revenue - - 10 10 20
Central administration costs
and foreign exchange - - - (7,823) (7,823)
Finance costs (120) (147) (631) (817) (1,715)
─────── ─────── ─────── ─────── ───────
Net profit/(loss) before taxation 12,370 5,050 1,066 (9,140) 9,346
Taxation expense (3,152) (959) 637 2,732 (742)
─────── ─────── ─────── ─────── ───────
Net profit/(loss) after taxation 9,218 4,091 1,703 (6,408) 8,604
═══════ ═══════ ═══════ ═══════ ═══════


Revenue reported above represents revenue generated from external customers. Inter-segment sales were $2.1 million
for the six months ended 28 February 2020 (six months ended 28 February 2019: $2.1 million; twelve months ended 31
August 2019: $3.0 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.

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020

8. 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.

Fair value of derivative financial instruments

6 mths 6 mths 12 mths
29 Feb 20 28 Feb 19 31 Aug 19
(Unaudited) (Unaudited) (Audited)
$’000s $’000s $’000s
Assets:



At fair value

Foreign currency forward contracts held as effective fair value hedges - - -
Fair value hedge of open firm commitments 787 322 1,216
Foreign exchange derivatives - - -
787 322 1,216
Represented by:
Current financial assets 787 271 1,207
Non current financial assets - 51 9
787 322 1,216

Liabilities


At fair value

Foreign currency forward contracts held as effective fair value hedges 787 322 1,216
Fair value hedge of open firm commitments - - -
Foreign exchange derivatives 44 88 1,334
Interest rate swap contracts 868 746 960
Foreign currency forward contacts held as cash flow hedges - - -
1,699 1,156 3,510
Represented by:
Current financial liabilities 831 359 2,541
Non current financial liabilities 868 797 969
1,699 1,156 3,510

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.

SCOTT TECHNOLOGY LIMITED
NOTES TO AND FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
For the Six Months Ended 29 February 2020


9. GOING CONCERN AND THE IMPACT OF COVID-19

COVID-19 is having a significant impact on the global economy during the 2020 calendar year. The Group continues to
assess the likely impact on the business from the rapidly evolving COVID-19 situation.

At the date of signing these financial statements, the Group had put in place significant strategies to protect the health
and safety of the employees and the financial integrity of the Group, including:
• Putting the health and wellbeing of all employees and their families first,
• Following all Government regulations including limiting access to sites,
• Enabling employees to work from home where required, possible and viable,
• Stopping all capital expenditure and limiting all discretionary expenditure,
• Accessing available Government support for employees globally,
• Finalising negotiations with Scott’s major banking partner, ANZ Bank, enabling the Group to have the ability to
draw upon additional debt facilities if required, and
• Secured an additional funding line from our majority shareholder, JBS Australia.

Providing accurate forecasts in this rapidly evolving environment is challenging. As a result, the Group has announced
restructuring to reduce its cost base, as detailed in Note 10.

The Board of Directors believe that the actions taken by the company, along with the continued support of ANZ Bank
and JBS Australia, will ensure Scott is in a good position to successfully emerge from Covid-19.


10. SUBSEQUENT EVENTS

Strategy and Restructure

On 8 May 2020, the Group announced its new Scott 2020 – 2025 strategy. This includes a revised focus on growth
segments to core strengths, enhanced controls around project risk, and a restructure of the Group’s global operations to
right-size the business and reduce the overall cost base. This restructure includes the closure or sale of operations
which are no longer deemed to be a strategic fit for the Group.

This includes the closure of the manufacturing operations at Scott Automation GmbH, based in Germany. The
operations will be consolidated into other existing facilities. The closure of the German operations will take place in the
second half of the 2020 financial year. The estimated costs with closing the facility are $3.5 million.

The majority of the restructuring is expected to take place over the second half of the 2020 financial year, with closures
or sales of other operations likely to take place in the 2021 financial year.

Dividend

The board has resolved not to pay an interim dividend for the year ended 31st August 2020 (2019 interim dividend: 4
cents per share).

Directors
Andre Nogueira de Souza resigned as Director of Scott Technology Limited on 7 May 2020.

Alan Byers was appointed as Director of Scott Technology Limited, effective 8 May 2020.

SCOTT TECHNOLOGY LIMITED

STATUTORY INFORMATION

SUBSIDIARIES

Name of Entity Balance Date Country of
Incorporation
Ownership Interest &
Voting Rights
2020
%
2019
%
Parent Entity

Scott Technology Limited (i) 31 August New Zealand n/a n/a

New Zealand Trading Subsidiaries

Scott Technology NZ Limited (ii) 31 August New Zealand 100 100
Scott Automation Limited (iii) 31 August New Zealand 100 100
Scott Technology USA Limited (iv) 31 August New Zealand 100 100
QMT General Partner Limited (v) 31 August New Zealand 93 93
QMT New Zealand Limited
Partnership (vi)

31 August

New Zealand

92

92
Scott Separation Technology (vii) 31 August(**) New Zealand - 100
Scott Technology Americas Limited (viii) 31 August New Zealand 100 100
Scott Technology Europe Limited (ix) 31 August New Zealand 100 100


New Zealand Non Trading Subsidiaries

Scott LED Limited 31 August New Zealand 100 100
Rocklabs Limited 31 August New Zealand 100 100

Overseas Subsidiaries

Scott Technology Australia Pty Ltd (x) 31 August Australia 100 100
Applied Sorting Technologies Pty Ltd (xi) 31 August Australia 100 100
Scott Automation & Robotics Pty Ltd (xii) 31 August Australia 100 100
QMT Machinery Technology (Qingdao) Co Limited
(xiii)

31 December (*)

China

-

70
Scott Systems International Incorporated (xiv) 31 August USA 100 100
Scott Systems (Qingdao) Co Limited (xv) 31 December (*) China 95 95
Scott Technology GmbH (xvi) 31 August Germany 100 100
Scott Technology Belgium bvba (xvii) 31 August Belgium 100 100
Scott Automation NV (xviii) 31 August Belgium 100 100
FLS Group bvba (xix) 31 March Belgium 100 100
FLS Systems NV (xx) 31 March Belgium 100 100
Alvey do Brazil Comercio de Maquinas de
Automacao (xxi) 31 December (*) Brazil 100 100
Scott Automation a.s. (xxii) 31 August Czech Republic 100 100
Scott Automation SAS (xxiii) 31 August France 100 100
Scott Automation Limited (xxiv) 31 August United Kingdom 100 100
Normaclass (xxv) 31 August France 100 -
Rivercan S.A. (xxvi) 31 December (*) Uruguay 100 -

Joint Ventures

Robotic Technologies Limited 31 August New Zealand 50 50
Scott Technology Euro Limited 31 August Ireland 50 50
Scott Technology S.A. 31 August Chile 50 50
Rocklabs Automation Canada Limited 31 August Canada 50 50


(*) Determined by local regulatory requirements.
(**) Amalgamated into Scott Technology Limited on 31 March 2019.

SCOTT TECHNOLOGY LIMITED

STATUTORY INFORMATION (Cont)


DIRECTORS

Stuart McLauchlan Chairman and Independent Director
Edison Alvares Director
John Berry Alternate Director
Alan Byers Director (appointed 8 May 2020)
Derek Charge Independent Director
Brent Eastwood Director
Chris Hopkins Director (retired 10 December 2019)
Andre Nogueira Director (retired 7 May 2020)
John Thorman Independent Director and Audit Committee Chair


EXECUTIVES’ DETAILS

John Kippenberger Group Chief Executive Officer
Kate Rankin Group Chief Financial Officer


DIRECTORY

The details of the company’s principal administrative and registered office in New Zealand is:

630 Kaikorai Valley Road
Private Bag 1960
Dunedin 9054
New Zealand


SHARE REGISTRY

Link Market Services (LINK)

Physical Address: Level 11 Deloitte Centre
80 Queen Street
Auckland 1010
New Zealand

Postal Address: PO Box 91976
Auckland, 1142
New Zealand

Telephone: +64 9 375 5999
Investor enquiries: +64 9 375 5998
Facsimile: +64 9 375 5990
Internet address: www.linkmarketservices.co.nz

---

Scott Technology Limited

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)


Results for announcement to the market
Name of issuer Scott Technology Limited
Reporting Period 6 months to 29 February 2020
Previous Reporting Period 6 months to 28 February 2019
Currency NZD

Amount (000s) Percentage change
Revenue from continuing
operations
$101,835 -8.61%
Total Revenue $102,112 -9.52%
Net profit/(loss) from
continuing operations
$(13,675) -365.53%
Total net profit/(loss) $(13,675) -365.53%
Interim/Final Dividend
Amount per Quoted Equity
Security
The Company has resolved not to pay an interim dividend for
the year ended 31 August 2020.
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.329 $0.509
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
For commentary on the results, please refer to the commentary
in the related NZX release. Further information is also set out in
the unaudited financial statements of the Company for the 6
months to 29 February 2020 which accompany this information.
Authority for this announcement
Name of person

authorised
to make this announcement
Kate Rankin, Chief Financial Officer
Contact person for this
announcement
Kate Rankin
Contact phone number 03 478 8110
Contact email address k.rankin@scott.co.nz
Date of release through MAP

08 May 2020

Unaudited financial statements accompany this announcement.