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More robots....I wonder if they get them half price?
http://www.odt.co.nz/news/business/2...ooks-expansion
$6 million Finegand upgrade as firm looks at expansion
By Glenn Conway
Created 05/09/2008 - 05:00
Click photo to enlarge
[1]
Silver Ferns Farms Finegand plant manager Graeme Stanbury in the old chilling room, which will be expanded over the coming weeks. Photo by Glenn Conway. A multimillion-dollar fit-out during the off-season at Silver Ferns Farms' Finegand plant should lay to rest any doubts about the long-term future of Clutha's largest employer, manager Graeme Stanbury said.
Following a $20 million upgrade which included a new effluent treatment plant and boiler system, the plant, near Balclutha, is now undergoing a $6 million upgrade of its lamb cutting and beef boning departments.
Another $5 million will be spent on annual site maintenance.
The plant last season recorded a record beef kill of 61,286, surpassing the previous best kill of 60,996 in 2003, and up 11,663 on the 2007 figure.
The plant also processed more than 100,000 extra stock compared with the previous season.
Mr Stanbury said there was no doubt Silver Fern Farms was positioning Finegand to be a key player long into the future.
The investment showed the plant was thriving and was here to stay. At its peak, it employed more than 900 staff.
Alterations had started in the lamb cuts department, increasing the flow of products and creating extra chilling capacity.
After trials at its Silverstream plant, boning robotics technology would be introduced into this area in the coming season.
Developed by Dunedin-based Scott Technology, the system broke down carcasses, making precise cuts.
Two machines would be installed, but the rest of that process would still be carried out manually.
The company was deliberately increasing its chilled lamb cutting and fresh lamb kills as it gradually moved towards extending the killing season, Mr Stanbury said.
"We definitely want to lengthen the season . . . that means more production but also more work for our staff."
In time, it would look into processing the 100,000 bobby calves predicted to be available locally.
This could add up to an extra six weeks to the season.
New machinery, more space and better facilities in the beef boning room were also planned, with a new carton storage facility, extra carcass conveyers and larger staff amenities.
Mr Stanbury said these projects were the first two stages of a three-stage development.
Next season, more improvements to the boning room were likely as the company looked at improved product identification services, which would help make it easier to market the company's product abroad.
Customers wanted to know more about where their meat came from, Mr Stanbury said.
The new beef processing facilities should be ready for an October 28 start to the killing season, while the first sheep and lamb chain kills should be in mid-November.
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Originally Posted by Sideshow Bob
More robots....I wonder if they get them half price?
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$6 million Finegand upgrade as firm looks at expansion
By Glenn Conway
Created 05/09/2008 - 05:00
<snip>
the plant, near Balclutha, is now undergoing a $6 million upgrade of its lamb cutting and beef boning departments.
<snip>
Alterations had started in the lamb cuts department, increasing the flow of products and creating extra chilling capacity.
After trials at its Silverstream plant, boning robotics technology would be introduced into this area in the coming season.
Developed by Dunedin-based Scott Technology, the system broke down carcasses, making precise cuts.
Two machines would be installed, but the rest of that process would still be carried out manually.
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Yes Silver Fern will get half the profits, because they are 50% shareholders with SCT in the 'Robotic Technologies Ltd.' company that sells the robots. That doesn't equate to Silver Fern getting the robots at half price though.
SNOOPY
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It was tongue in cheek........
Hopefully there will be profits to half!!
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Looks like their new premises down Kaikorai Valley are nearly ready - well I think it is their premises? Irony is next to the old Burnside Freezing Works.....
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Have just been digesting the FY2008 Annual Report that arrived in my mailbox today.
It was good to see SCT move back into profit (albeit modestly) for the last six months of the year. Also we at last got full disclosure of the 'Rocklabs' acquisition. There is a big picture of Rocklabs founder and General Manager, Ian Devereux, on page 7 looking very happy. Devereaux has every reason to look this happy, with his bank account boosted to the tune of $6m in cash! (page 36). This is rather more than I had guessed as a 'top up' in addition to the previously disclosed payment of $4m in SCT shares. Still with that much cash in his bank account, Ian won't be needing to offload any of his newly issued SCT shares in a hurry.
How did SCT pay for all of this? For the first time they have term bank debt on the SCT balance sheet, to the tune of $4.74m +$0.494m = $5.234m. At an interest rate of 9.81% (p41) that means interest payments due of $0.513m to the ANZ bank for FY2009.
We learn from p39 that Rocklabs Limited's banking facilities require EBIT to exceed interest expense by 1.5 times and further require Rocklabs's equity (including shareholder advances) not to fall below 40% of its total assets. If we require that same EBIT test to Scott Technology as a whole, that means SCT EBIT for FY2009 will be at least $770,000. That equates to a net SCT group profit, assuming a 30% tax rate, of $180,000. If SCT did 'achieve' that result in FY2009 it would be their second worst year on record (the worst being FY2008). So the debt position of SCT, while now a consideration, appears sound.
Other things we learned from the report is that once again we expect no net cash from the robotics division (page 6). All earnings are to be ploughed straight back into product development. On a separate note, it was very disappointing to see the Silver Fern/PGW joint venture pulled. A side effect will be a slowdown in the meat works robot roll out program. I suspect the SCT share price has suffered in recent weeks as a result of the Silver Fern/PGW deal collapsing.
Of particular interest in the small print was a note on page 30 , announcing the emergence of Scott Euro Limited, a joint venture with "Industrial Process Solution" of Italy. Could these be the same Italians who were in past years Scott's deadly competitors? If so it would be a major coup to have them 'on board' in Europe.
On page 4 of the Annual report CEO Hopkins states:
"Recent significant orders have enabled the company to see past the global gloom and to position ourselves for future development and growth. In addition we are also in final negotiations with several key customers in relation to potential new projects."
I sure hope Hopkins is right, and with the market the way it is I can afford to wait before I buy more shares to see if he is. In the meantime I would like to draw shareholders attention to item 4 on the upcoming AGM agenda, billed as the retrospective approval of the issue of shares for the Rocklabs acquisition. In fact it is nothing of the kind. It is actually an OK to issue more shares for as yet unnamed potential acquisitions. For this reason I will be voting AGAINST this motion even though I approve of the Rocklabs acquisition.
If motion 4 is lost this will not mean SCT cannot make further acquisitions. It means any such acquisitions will have to be approved by shareholders - a very good thing I think. Giving the board a free reign to issue up to 5 million new shares at today's discounted share price *without* shareholder approval does not seem to be in the interests of existing shareholders. For this reason I hope as many shareholders as possible will join me in voting AGAINST this motion.
SNOOPY
discl: hold SCT
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NBR runs a weekly column where they invite leading exporters to write a piece. In the November 14th edition that leading exporter was Chris Hopkins, MD of Scott Technology.
Chris goes through a very interesting description of how they manage quoting for jobs and getting paid by their overseas customers. It pays to read the column, but briefly....
SCT used to be in the powerful position of being able to demand partial payments by cash on delivery of their production line manufacturing systems. This has become harder with the credit crisis as even established companies are having their credit lines reviewed by their banks. To get closer to their customers SCT have always quoted jobs in local currency.
Hopkins uses an NZ government guarantee scheme for exporters to lock in certainty of payment as soon as a firm order is received. This enables SCT to hedge the expected overseas payments from 'project start to overseas site installation', thus providing certainty of NZD cashflow to their NZ manufacturing workshops.
Chris explains it much better than I just have. But as a shareholder the article gave me a lot of confidence that SCT are unlikely to be caught out by a big job (and all of their jobs are big) going bad as a result of an overseas banker pulling the plug on a project.
SNOOPY
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Originally Posted by Snoopy
But as a shareholder the article gave me a lot of confidence that SCT are unlikely to be caught out by a big job (and all of their jobs are big) going bad as a result of an overseas banker pulling the plug on a project.
Scott Technology made press release on October 7th. The following comments are the closing comments of that news release.
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A small profit after a significant loss for the first half of the year and after absorbing the cost of a number of one-offs such as redundancies which were forced on the Company by the global market conditions
Surviving the highest New Zealand dollar/United States dollar exchange rate in over 25 years
Acquisition of the Rocklabs business, with the addition of a very manageable $5 million debt on the balance sheet
The first commercial orders for automated boning room systems for the meat industry through associate company, Robotic Technologies Limited
Continuing expenditure on research and development in several aspects of the business - a key investment in the future
Near completion of the new Kaikorai Valley Road, Dunedin manufacturing facility, with design and administration staff having moved in shortly after balance date and the workshop operations to follow in late October
Maintaining a strong balance sheet and good cash flows
A good forward work position
Prospects in all markets improving
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Since those comments the NZD/USD exchange rate has come back substantially. I am not blind to the problems facing this company. The principal risk is the loss of key personnel during the downturn, leaving SCT scrambling for human capital as fortunes improve. However, this risk appears minimal with SCT quoting a 'good forward work position'. SCT may not be making much money on current jobs, although this will surely change as new orders come in at much lower exchange rates.
Have SCT moved to their new expanded premises just at the wrong time in the business cycle? Perhaps the timing could have been better. But long term SCT do need the space to expand and they now have this. Furthermore this kind of move is something that takes years of planning and it cannot be influenced by monthly market conditions.
Debt issues? Not really. The company debt facilities have only just been negotiated and the level of profitability required to service the new debt is minimal. Problems getting paid if a big customer goes bust? That is covered by the NZ governments letter of credit guarantees.
Timing wrong to get into the company? As a production line supplier work at SCT should trend upwards *before* any revival in consumer demand. IOW, SCT should take off first ahead of the recovering market.
Yet the share price is at an all time low! I know there are many other companies in this market that have been 'beaten down'. But really, how much lower can this company go? I put a silly bid into the market last week, not really thinking that I pick up any shares and it was filled at 91c. Thanks very much Mr Market! I think you are wrong, and it is time to take advantage of you.
SNOOPY
discl: hold SCT, and accumulating (having now doubled my holding over the last year).
Last edited by Snoopy; 24-11-2008 at 02:02 PM.
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Originally Posted by Snoopy
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Maintaining a strong balance sheet and good cash flows
A good forward work position
Prospects in all markets improving
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Since those comments the NZD/USD exchange rate has come back substantially. I am not blind to the problems facing this company. The principal risk is the loss of key personnel during the downturn, leaving SCT scrambling for human capital as fortunes improve. However, this risk appears minimal with SCT quoting a 'good forward work position'. SCT may not be making much money on current jobs, although this will surely change as new orders come in at much lower exchange rates.
Debt issues? Not really. The company debt facilities have only just been negotiated and the level of profitability required to service the new debt is minimal. Problems getting paid if a big customer goes bust? That is covered by the NZ governments letter of credit guarantees.
Yet the share price is at an all time low! I know there are many other companies in this market that have been 'beaten down'. But really, how much lower can this company go? I put a silly bid into the market last week, not really thinking that I pick up any shares and it was filled at 91c.
Just finished buying yet another tranche of SCT shares. That makes me sound like a big boy doesn't it? In fact the parcel of shares that I bought was the smallest I could without incurring excess brokerage charges.
I have stated before that I usually take about a month to make any share transaction. In this case it took me two days to make up my mind that I wanted more SCT shares and 30 days for my order in the market to be executed. When I first put in my order at 85c, I was within a couple of days overtrumped at 86c, then again at 87c. From that time the share price moved up to 90c, took an almighty leap up to $1 (on a 'massive' volume of something like 1500 shares) before the share price gradually dripped back to 95c, 90c, 87c until finally my order was filled yesterday. This is the kind of stress you need to go through to purchase even a minimal number of shares in this company. Today the share price has slammed through my self created 'support' level (which had been in the market for a month, and was taken out when I finally bought) and someone today picked up 10000 shares at 75c. Good for them.
So what does all this mean? I would argue absolutely nothing. Even this high (for SCT) volume of shares traded today is only one three thousandths of the total shares on issue. I guess everyone has their own reasons for selling. But it is hard to fathom why someone who I suppose is a seasoned investor (only 317 people hold 10,000 or more SCT shares) would choose *now* to sell at 75c, just as the directors were buying back in at 90c. One reason could be that the world recession looks to be getting deeper and longer. That means the time for SCT to be getting back to a normal level of orders is being pushed out. The longer the recovery takes the longer SCT shareholders will need to hang on for their reward. But with the exchange rate going even more in exporters favour, when the recovery does come we can expect the share price bounce back to be big. Even now I regard my position in SCT as 'underweight'. So I will certainly be in the market for some more SCT shares in the future. In the meantime I will just let the share price bonce up and down a bit and move onto other things.
SNOOPY
discl: hold SCT
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Originally Posted by Snoopy
Just finished buying yet another tranche of SCT shares. That makes me sound like a big boy doesn't it? In fact the parcel of shares that I bought was the smallest I could without incurring excess brokerage charges.
I have stated before that I usually take about a month to make any share transaction. In this case it took me two days to make up my mind that I wanted more SCT shares and 30 days for my order in the market to be executed.
I will certainly be in the market for some more SCT shares in the future. In the meantime I will just let the share price bonce up and down a bit and move onto other things.
SNOOPY
discl: hold SCT
Déjà vu.
I see that I am back buying more SCT shares today. I have been supporting the share price for the last month. Someone overtrumped me in the bid price, so I hadn't actually bought any shares until last week. The balance of my order at 71c has taken until today to fill.
We are now only two weeks away from the half year profit announcement. No doubt the problems that Fisher and Paykel Appliances still seem to face means that anything connected with the whiteware industry is off the radar for New Zealand investors. Of course SCT have absolutely no debt issues, other than some shareholders thinking they carry too little debt. Also SCT are production line suppliers, which makes them very different to whiteware manufacturers.
The actual numbers in the half year result will be irrelevant. Of much more interest will be the outlook and whether SCT has a sufficient pipeline of work to keep that workforce idling along. If they do, then I will be lining up to buy more SCT shares. Unfortunately that means I will also be competing with the management who up until the results are released are prevented from buying as insiders. Nevertheless if that means I will have to pay more for my shares that purchase will came safe in the knowledge that the shares short term are worth more.
Long term I think SCT shares are worth much much more. But shareholders will need to ride out the industrial appliance cycle to crystallize that value. In the meantime from the value investor standpoint, I would quite like the SCT share price to go lower. Will I get my wish?
SNOOPY
discl: hold SCT
Last edited by Snoopy; 06-04-2009 at 01:18 PM.
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Originally Posted by Snoopy
We are now only two weeks away from the half year profit announcement.
The actual numbers in the half year result will be irrelevant. Of much more interest will be the outlook and whether SCT has a sufficient pipeline of work to keep that workforce idling along.
Long term I think SCT shares are worth much much more. But shareholders will need to ride out the industrial appliance cycle to crystallize that value. In the meantime from the value investor standpoint, I would quite like the SCT share price to go lower. Will I get my wish?
The half year result is out and it is poor as expected. The 'as expected' bit accounts for the share price going up slightly now the result information is in the public realm. So I didn't get my wish of a further (short term) share price decline :-( .
Part of the 'excuse' for the $0.5m half year loss is that the period includes significant costs and disruption due to the relocation of the Dunedin facilities. 'Other' expenses are up $1.1m over the corresponding period a year ago. Of course there is no way to know if all of that 'other' expenses increase is due to the move. But IMO it is a fair assumption that in an ongoing operational sense, SCT are not losing money.
The assistance of Scott Euro in winning a major project in Europe means that I would be surprised if SCT are looking at laying people off. That is the best news that shareholders could have hoped for in the current economic climate. I intend to keep hold of all of my shares as a result.
SNOOPY
Last edited by Snoopy; 06-04-2009 at 01:19 PM.
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