SCT - Scott Tech

[percy]

Answer: On 28th October the late Ian's shares were transferred to the J I Urquhart Trust. So that takes away any overhang of SCT shares in the market. Or does it? Perhaps the trustees of the J I Urquhart Trust will be compelled by law to sell down some SCT shares as part of their duties of being 'prudent' (not having too many of their eggs in one basket). Anyone know the legal requirements of this situation?

SNOOPY

Do not Know.Athough the shares have gone into a trust we do not know if Ian left "special" instructions in his will.If not a trustee would have to be very careful.As well as his "overweight" SCT holding there were some rather large holdings in illiquid shares. I think a trustee would be more worried about them thanSCT which is proving to be a very good investment. I feel sure a trustee would want to have more"balanced" potfolio.I know Ian cashed up a lot of shares a few years ago and put a lot of money with SBS,.so there may not be any hurry to sell or reposition the portfolio.

[Snoopy]

Do not Know.Athough the shares have gone into a trust we do not know if Ian left "special" instructions in his will. If not a trustee would have to be very careful.

Perhaps Ian did leave 'special instructions'. But the trustees would have their own legal requirements to follow. I remember a legal case a few years ago when the trustees were severely criticised by the judicial system for having too many assets in 'safe' fixed interest investments, I think because an interim beneficiary wanted income, which eroded the inflation adjusted value of the portfolio over a decade or so. I remember some discussion in the media at the time about how future trustees could not just ignore the composition of a portfolio in relation to understood prudent investment practice. Can trustees really be directed from beyond the grave? I would love to know!

SNOOPY

[percy]

Perhaps Ian did leave 'special instructions'. But the trustees would have their own legal requirements to follow. I remember a legal case a few years ago when the trustees were severely criticised by the judicial system for having too many assets in 'safe' fixed interest investments, I think because an interim beneficiary wanted income, which eroded the inflation adjusted value of the portfolio over a decade or so. I remember some discussion in the media at the time about how future trustees could not just ignore the composition of a portfolio in relation to understood prudent investment practice. Can trustees really be directed from beyond the grave? I would love to know!

SNOOPY

Yes I remember that case well.You can do anything from the other side.ie leave all your money to cats protection society.You could put in your will your SCT shares can not be sold for 10yearsThat is what a will is.However if no provision is in the will you would have to do as you point out 'prudent investment practice",Ian's portfolio would cause any trustee headaches.{Big large ones!!!}I note Patrick Lee @Craigs mentioned on shareholder notices.Patrick is a very experienced "prudent" broker,so trustees should get good advice.

[Snoopy]

On 13th September2010, Ian Urquhart second largest shareholder in SCT with 15.1% of shares on issue (source 2009 Annual Report) passed away. He was 76. The death notice in the Press named no living family, but Ian seemed to have been a bit of a mentor to younger investors in his last few years according to the article in Saturday 25ths Press. Looks like he will be sadly missed. Perhaps this represents the start of a real passing of the baton to a younger generation of investor at SCT? In any event I will be watching with interest to see what happens to Ian's strategic stake.

Four years on and through cash issues and bonus shares the J.I Urquart Family A/C has reduced their share in Scott Technology to 12.25% as at the last reporting date (23rd September 2013).

I wonder how many shareholders noticed that last week saw the biggest number of SCT shares traded all year. On one day alone the volume was over 450,000. There are only 5 shareholders who could have sold that many shares: Oakwood Securities (associated with former Chairman Marsh), JI Urquart A/C, Fisher Funds, Southern Capital Limited (associated with former director Trevor Scott) and SIL Long term holdings (associated with Dunedinites Eion Edgar and Alan McKenzie). Of those SIL Long Term holdings most closely matches the number of shares sold. Eion Edgar cashing up? It will be interesting to double check against the top 20 shareholder list in the annual report.

SNOOPY

[Marilyn Munroe]

Snoopy said;

"I remember a legal case a few years ago when the trustees were severely criticised by the judicial system for having too many assets in 'safe' fixed interest investments,"

Mulligan (deceased) v Pyne Gould Guinness Trust Ltd & Anor [1998] 1 NZLR 481, is the case you were probably referring to.

Boop boop de do

Marilyn

[Snoopy]

A good turnout of shareholders made their way to Scott Technologies Mace's Road headquarters for the AGM presentations and a post AGM tour of the facilities, with senior staff assisting.

Much was made of the connection between economic productivity and the need for ongoing investment. SCT significantly made $NZ7m of research and development investment over the year, which represents around 15% of sales. If that sounds high it is because some of the one off project work done for customers is classified as Research and Development under our laws. This wasn't just cash lost to the company either. Government R&D tax breaks on both sides of the Tasman made this investment less cash negative than it other wise would have been.

An open day at the Finegand Meat Works near Dunedin was held for Australasian industry players in June 2010. MD Chris Hopkins was uncharacteristically enthusiastic at the reception they got from showing that dream on paper 7 years ago was now a working reality. The robotic beef processing line has been squarely aimed at the NZ and Australian markets so far. But there are now potential customers in England and Brazil that are showing interest. Hopkins envisages selling lots and lots of these systems now. Processing of lamb would require some robot reengineering, but remains another growth avenue for the future.

We were told that the automated milking shed joint venture is a largely seasonal rather than a year round development project. Nevertheless within a timeframe of 6 months to a year shareholders should prepare themselves for some positive developments with this joint venture. If it is anything like the meat robotics joint venture though, don't hold your breath for any significant profits from this for quite a few years!

The automated production line systems have a very full order book, with lines on the point of being commissioned in Brazil and Spain. This latter success it was pointed out is particularly meritorious as one of Scott's only true global competitors operates from Spain, so this sale was a bit of a coals to Newcastle event. The customer was Bosch Siemanns, manufacturer of high line appliances. BS have been very impressed by the way Scotts have conducted themselves and have a couple more production line projects on the go in Europe, in association with Scotts, the next being Turkey. Quality is apparently superiour to any work they have had done from german engineering companies and Scotts are a significantly cheaper supplier as well.

Helping keeping contract pricing competitive are 4x Euro 10m foreign exchange contract taken out at the rate of 1NZD = 0.4 Euro (!) This exchange rate will apply to all of these BS projects, and that more or less guarantees strong profitability in Europe for at least two years to come. Now we know how SCT have been able to do so well when the day to day exchange rate (1NZD =0.55 euro) is not nearly so favourable! One doubt I still have is the ability to keep costs on the workforce over periods when many outside contractors must be hired to complete tasks on time and on budget.

Nevertheless I left the meeting probably happier than I have ever been to be an SCT shareholder.

SNOOPY

[Marilyn Munroe]

Processing of lamb would require some robot re-engineering, but remains another growth avenue for the future.

SNOOPY

Your recollection of the above point differs from mine. I recall that the automated boning system was currently only capable of processing sheep meat. It would require some redesign to handle beef but was thought to be mainly a matter of scale and not seen as an difficult hurdle. The potential market for beef machines was said to greater than that for sheep.

I found the outlook from the top table to be quite positive and enjoyed the factory tour.

The refreshments afterwards were nice. There cannot have been many Sharechaters there, as was no danger of the supply of pies being under threat.

Boop boop de do

Marilyn

[percy]

Your recollection of the above point differs from mine. I recall that the automated boning system was currently only capable of processing sheep meat. It would require some redesign to handle beef but was thought to be mainly a matter of scale and not seen as an difficult hurdle. The potential market for beef machines was said to greater than that for sheep.

I found the outlook from the top table to be quite positive and enjoyed the factory tour.

The refreshments afterwards were nice. There cannot have been many Sharechaters there, as was no danger of the supply of pies being under threat.

Boop boop de do

Marilyn

MM.
I expect you know your boners!!!

[Marilyn Munroe]

MM.
I expect you know your boners!!!

You are probably making a snide remark about the amorous history of my alter-ego Marilyn.

But the real person behind the mask has worked in the freezing works in the past, so yes I used to know some boners.

Which brings me to band saws. They are nasty dangerous things, just as likely to cut the meat worker as the meat.

My opinion is that if these machines from Scott Technology eliminate band saws from boning rooms then they are doing Gods work.

Boop boop de do

Marilyn

[percy]

Yes I agree the boner machines will be welcome in freezing works,as you point out eliminating the dangerous band saws,and think it fitting you chose a fellow boner expert as your alter ego.I felt the comment was more factual than snide.!!!!???? I can just imagen MM in a meat works with Tony Curtis and Jack Lennon.