SCT - Scott Tech

[winner69]

Would you have found it easier to understand had it been written in Maori.?
Utu.!

Don't think so mate

Anyway Scott language seems to be Double Dutch and that is hard to translate into Maori

Maybe clever old Snoops could do it

E noho rā

[Snoopy]

Net Surplus was $1.146m. The EPS calculated from this.

Thanks for the correction Winner. My $1.436m figure included 'cash flow hedge reserve adjustment' and a 'translation of foreign operations' which distorted the operational result. I will use your normalised figure instead.

What then was last years EPS calculated on .....did they have heaps more shares or something to make sense of 1.3 cents. Sort of implies 60m plus shares back then. Do you know Snoops?

Working back through the calculation now Winner.

SNOOPY

[Snoopy]

Snoops, I have sussed it

The EPS is based on 'Net Surplus attributable to Members of the parent entity' line in the Income statement divided by the Weighted Average Number of shares

The 1.3 cents last year was based on a Net Surplus of $0.541m / this year $1.062M

Non-controlled interests are not included

Got that - easy peasy eh

IIRC correctly Winner, I had trouble with this calculation last year and never figured it out. So you have done well to unravel the whole mystery in just an hour or so! I know that in FY2014 Scott's had a number of joint ventures that were technically not under Scott Technology management total control, even if effectively they were.

No doubt Scott's are just following accounting standards and everything is correct. I don't agree with that presentation from an investment perspective though. As a shareholder, surely 'my' share of a non-controlled entities earnings is still mine? Non controlled entity earnings should be included in that eps figure in my view. The controversy is much less in HY2015, because the non-controlled entity bit of the earnings is much smaller, and within the rounding of error margin.

But no doubt you will just use the reported bottom line (better not to use the Comprehensive Income line, just the Net Surplus line) and period end number of shares

Yes 'net surplus' is my preferred figure to look at. Based on that figure 'net surplus' eps is up:

2.54c/1.91c = up 33.0%, not the 92% claimed (when non controlled profits are excluded).

And yes I do use the total number of shares on issue at balance date. Not some kind of 'weighted average' number of shares on issue over the earnings period. As well as being easier to calculate, shares issued during the period remain on issue in future periods. So comparing earnings going forwards, it is really not as useful to have the prior comparative earnings spread over an historical number of shares that are less than the number of shares on issue today.

SNOOPY

[winner69]

Whatever the current numbers are really shocking from what was being achieved a few years ago

Things not going to plan or something ..... I haven't really followed for years

[Snoopy]

Snoops, I have sussed it

The EPS is based on 'Net Surplus attributable to Members of the parent entity' line in the Income statement divided by the Weighted Average Number of shares

The 1.3 cents last year was based on a Net Surplus of $0.541m / this year $1.062M

Non-controlled interests are not included

Got that - easy peasy eh

My working on the HY2014 eps calculation, the way SCT do it (excluding non-controlled entities):

$0.541m/ 42,793,002 = 1.26 cps

Not too different to the 1.3cps claimed (the same within rounding error).

SNOOPY

[Snoopy]

Whatever the current numbers are really shocking from what was being achieved a few years ago

Things not going to plan or something ..... I haven't really followed for years

SCT has been affected by the reducing business in the mining sector (Rocklabs) Winner. Section 6.2 of the interim report shows what is happening.

Most mining equipment sales came under the 'standard equipment' banner. SCT took the high temperature superconductor joint venture business fully in house during the year just gone. That should have added to 'standard equipment' sales. Yet standard equipment sales revenue declined from $8.201m to $7.204m over the comparative period, even as net profit increased. The message here is that without some high margin superconductor sales, maybe Rocklabs is in even worse trouble than the sector comparative figures would lead you to believe? Even so profits are being made. Perhaps the best strategy in the current market is to start losing serious money? Do that and SCT might suddenly be worth billions, just like Xero!

Meanwhile the old chestnut of automated manufacturing lines (most of the 'Automated Equipment' segment) continues to make money for the company.

Of course the real case for investing in SCT (IMO) rests around all those years of toil put into meat industry robotics, truly world leading stuff.

------

"NS Innovations Pty Limited (NSIL) is a joint venture between Scott Technology Limited and Northern Co-Operative Meat Company Limited of Australia. NSIL was formed in August 2010 and has a balance date of 31 August."

"Scott Technology Limited’s share of NSIL’s net surplus was $Nil for the six months ended 28 February 2015."

"Scott Technology Limited’s joint venture with Silver Fern Farms Limited, Robotic Technologies Limited (RTL), was formed in October 2003 and has a balance date of 31 August. RTL’s principal activity is the marketing and development of (primarily lamb) meat processing equipment and the management of the intellectual property associated with these developments. Scott Technology Limited’s share of RTL’s net surplus was $37,000 for the six months ended 28 February 2015."

------

No money being made in Australia five years into the joint venture. But $37,000 banked in NZ after twelve years of work.

$0.037m/45.195m = 0.0c (earnings per share)

All that research and development being made over the years, and all profits disappear into the margin of error. But keep the faith fellow shareholders. One day soon.....

SNOOPY

[Snoopy]

NTA has reduced from 71.7 cents ps to 30.8 cents ps.
Intangibles assets [? ] have increased from $186,000 to $12,131,000. !!!! A lot of very valuable intangibles???
Goodwill has nearly doubled going from $10,813,000 to $20,081,000.
Take Intangibles and Goodwill off the equity of $48,078,000 and the reasons for the capital raising become very clear.

You are being a bit harsh on the intangible front aren't you Percy?

MAR only acquired in January 2015. Robotworx not even on the books for a year. Yet you are already considering what will happen when all this goodwill generated through these robotics acquisitions is written off! I really hope all that goodwill hasn't yet gone down the drain.

SNOOPY

[percy]

You are being a bit harsh on the intangible front aren't you Percy?

SNOOPY

Very harsh....,but am using SCT's figures..
I have found taking intangibles and goodwill out of the balance sheet gives a very clear picture of a company's equity.
It is one of the first things I do when beginning research on a company.It has saved me making big mistakes.
With SCT total assets are $88,235,000.
Total equity is shown as $48,078,000 or 54.48% ...which is healthy.
However when you take off $20,081,000 goodwill and Intangibles of $12,131,000 you are left with Total equity of only $15,866,000 supporting total assets of $88,235,000.Therefore your equity ratio has gone from a healthy 54.48% to a very unhealthy 17.98%.

[Snoopy]

$1.085m divided by 41.520m shares on issue equates to 2.6cps (half year earnings). I see that 1.3cps earnings figure in the accounts for SCT as released Percy. But I think it might be a mistake.

HY2014 eps calculations

$0.820m/41.520m = 2.0cps (using net surplus for period on end of year shares)
$0.541m/41.520m = 1.3cps (using net surplus for period attributable to the parent entity on end of year shares)

As previously suggested, I used the total comprehensive income (including the cash flow hedge reserve and translation of foreign operations) of $1.085m instead. That figure was the best match for the dividend paid over the period.

SNOOPY

[Carpenterjoe]

Shoot Me Dead,

at least 27 mil in debt and still paying a divi?

lets hope the thirteen million spent on a business with sixty grand in its account is worth it.


On the up side, with the way the AU reserve bank is devaluing the dingo dollar, expect the gold miners to start purchasing machinery again.