SCT - Scott Tech

[Snoopy]

	Australasia Manufacturing	Americas Manufacturing	Europe Manufacturing	China Manufacturing	Overall
Revenue (a)	$112.060m	$37.248m	$53.981m	$12.945m	$216.234m
Revenue %ge	51.82%	17.23%	24.96%	5.986%	100%
Segment NPBT (a)	$16.291m	$3.322m	$1.895m	$2.534m	$24.042m (b)
subtract Admin NPBT Adjustment	($6.242m)	($2.075m)	($3.006m)	($0.721m)	($12.044m)
equals NPBT Adjusted	$10.049m	$1.247m	($1.111m)	$1.813m	$11.998m
less Taxation (a)	($1.112m)	($0.737m)	($0.501m)	($0.121m)	($2.471m)
equals NPAT adj	$8.937m	$0.510m	($1.612m)	$1.692m	$9.527m
Notional Tax rate (T / NPBTadj)	11.1%	59.1%	-45.1%	6.7%	20.6%
NPAT profit margin (NPATadj / R)	8.0%	1.4%	(3.0%)	13.1%	4.4%
Divisional Interest Income (a)	$0m	$0m	$0.003m	$0.099m	$0.102m
less Divisional Interest Costs (a)	($0.160m)	($0.194m)	($0.392m)	($0m)	($0.746m)
less Admin Interest Costs	($0.329m)	($0.109m)	($0.158m)	($0.038m)	($0.634m)
equals Divisional Net Interest Expense (I)	($0.489m)	($0.303m)	($0.547m)	$0.061m	($1.278m)
EBIT Adjusted (NPBTadj+I)	$10.538m	$1.550m	($0.564m)	$1.752m	$13.276m

Notes

a/ Information marked (a) in the above table is straight from Section A3 in the annual report. Other rows of information are derived.
b/ But an individual entry marked (b) is derived.

Observations from the Above

1/ Australasia is from where most of the 'product' output (Bladestop and Rocklabs Output) is sourced. Perhaps then, it is unsurprising that this geographical region is the most profitable?
2/ The very low tax bill from Australasia may be a reflection of tax being offset by government grants of $0.625m (AR2021 p39).
3/ The 'standard product line' based in the Americas - Robotworx - looks to have had a poor year, given the other substantive US based business, Transbotics Automated Guided Vehicles, seems to have had a good year with the tyre manufacturers (AR2021 p10). Although maybe the closing remark on Transbotics "we see a positive future'" means that the present is not yet so positive?

Assuming Transbotics revenue of $20.3m (my post 798, Note B, assume no growth over FY2020) and an EBITDA margin of 20%, this translates to a Transbotics EBITDA of 0.2x$20.3m=$4.06m. Total depreciable capital assets acquired when the business was purchased in FY2018 were valued at just $0.144m (AR2018 p61). So I am estimating the annual depreciation charge on these assets to be close to zero. Much more significant is the goodwill acquired on acquisition of $7.100m. This goodwill is revalued annually because the value of overseas goodwill, even if constant in its home currency, varies with exchange rates. (It would also vary if the goodwill was amortised, but this has not happened). I intend to ignore the annual exchange rate related amortisation fluctuations.

For interest charges, and to be conservative, I will apportion all of this years US funding cost of $0.194m to Transbotics. I can therefore estimate EBT for Transbotics to be:

NPBT(Transbotics) = EBT(Transbotics) = EBITDA - I - D - A = $4.06m - $0.194m - $0m - $0m = $3.866m = $3.9m

If my estimates are anywhere near correct, this would suggest that 'Robotworx', -the second hand robot refurbishment and resale company-, operated at an EBT loss over FY2021 of around $0.300m. (Ref AR2021 p43, Total 'America's NPBT' was $3.332m. $3.3m-$3.9m = -$0.300m.)

Standard Product' (I believe largely 'Robotworx') revenue slumped from $22.860m in FY2019 down to $15.198m (FY2020) before recovering $17.153m (FY2021).

4/ The Alvey acquisition (automated conveying systems) in Europe (c.f. my post 649 estimated EBT = $11.764m) looks like it has turned to disaster (EBT now is -$1.111m). O.K. that actual figure for FY2021 includes a Scott machine shop workshop and assembly area in the Czech republic, and 'Normaclass' in France. Nevertheless I don't believe EBT for Europe reflects well on what was principally the old Alvey automated conveyor business.

5/ China manufacturing, which designs and installs production lines for appliance manufacturers, had the highest net profit margin. But they are very dependent on workload. During the outbreak of the Covid-19 crisis over FY2020 work dried up, and so did profits. Scott's China, over 2HY2021, moved to a new facility almost three times the size of the old location "to maintain their growth trajectory" (Ref: Cover letter from AR2021 announcement). Meanwhile new appliance manufacturing lines in the US (as opposed to US manufacturers with their appliance production lines based in China) continue to be serviced from the 'appliance line centre of excellence' in Christchurch N.Z..

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