SCT - Scott Tech

[sanctus671]

What's your thoughts on the half year result released today, Snoopy?

[Snoopy]

Net profit after tax was $2.887m for HY2017, up 48% from the $1.948m HY2016 figure. I guess a 50% rise in earnings before tax sounds better than a 48% rise in earnings after tax?

We have to allow things to bed in to the new capital structure.



If we use U.S's eight year average 'half year on half' year adjustment, then we can estimate the full year profit as:

$2.887m + (2.6 x $2.887m)= $10.393m

$10.393m / 74.680m shares = 13.9c full year eps

At $2.87, SCT is on a projected PE ratio of:

287/ 13.9 = 20.6

Value? You be the judge.

SNOOPY

What's your thoughts on the half year result released today, Snoopy?

Net profit after tax was $3.155m for HY2018, up 9.3% from the $2.887m HY2017 figure.

We still have to allow things to bed in after the Alvey acquisition. The acquisition date was 4th April, so nothing from Alvey has contributed to this latest half year reporting period.

If we use U.S's eight year average 'half year on half' year adjustment, then we can estimate the full year profit as:

$3.155m + (2.6 x $3.155m)= $11.358m

I am looking for a 5/12 months profit from Alvey of:

5/12 x $8.470m = $3.529m

($11.358m + $3.529m) / 74.680m shares = 19.9c full year eps

At $3.50, SCT is on a projected PE ratio for FY2018 of:

350/ 19.9 = 17.6

I am quite happy with that, considering that next year we should have a twelve month profit contribution from Alvey, up from just five. Of course I am assuming, using the U.S. formula that the profit contribution will be much greater in the second half year. There is no particular reason why this should happen, apart from the fact that historically it has! This year looks to be no different from the half year comments:

"Growth in the sale and uptake of our meat processing technologies is expected to accelerate in the second half of the year following a longer than expected completion time for previous projects and a period of reduced activity in Australia caused in part by the ongoing discussions and uncertainty over the Red Meat Industry roll out of DEXA systems into all Ausmeat accredited facilities."

SNOOPY

[sb9]

2

1

11:10:35 am

335

1,313,445

$4,400,040

Off market

Biggie....

[Snoopy]

2

1

11:10:35 am

335

1,313,445

$4,400,040

Off market

Biggie....

A squiz at the latest published share register (AR2017) indicates there are only three outfits that could sell that many shares in one transaction.

1/ Majority sharehodler JBS (very unlikely, if they wish to remain a majority shareholder. It would also be inconsistent with them acquiring more shares in last years DRP).
2/ Oakwood Securities owned by former CEO Graeme Marsh. Oakwood reduced their percentage holding during the JBS takeover, and they may be looking to reduce it some more now that Graeme marsh is getting on a bit and there is no Mrash representation at Scott operating company level.
3/ The "JI Urquart Family A/C" estate who disastrously reduced their holding just at the wrong (capital raising ) time. Since Ian Urquart , a great Scott Tehnology stalwart, died they have gone on record as not being supportive of the company.

My pick is that it is 3. If we don't get a substantial security holders notice soon, then that will be confirmed by a process of elimination (both JBS and Oakwood would have to issue one, if it was them selling).

SNOOPY

[sb9]

A squiz at the latest published share register (AR2017) indicates there are only three outfits that could sell that many shares in one transaction.

1/ Majority sharehodler JBS (very unlikely, if they wish to remain a majority shareholder. It would also be inconsistent with them acquiring more shares in last years DRP).
2/ Oakwood Securities owned by former CEO Graeme Marsh. Oakwood reduced their percentage holding during the JBS takeover, and they may be looking to reduce it some more now that Graeme marsh is getting on a bit and there is no Mrash representation at Scott operating company level.
3/ The "JI Urquart Family A/C" estate who disastrously reduced their holding just at the wrong (capital raising ) time. Since Ian Urquart , a great Scott Tehnology stalwart, died they have gone on record as not being supportive of the company.

My pick is that it is 3. If we don't get a substantial security holders notice soon, then that will be confirmed by a process of elimination (both JBS and Oakwood would have to issue one, if it was them selling).

SNOOPY

Thanks for taking time to explain it Snoops, I think it could be no.3 as well.

[Snoopy]

You are right about Mark Waller.
He will not be a party to any acquisition that does not add real value.
Never has,never will.

Mark Waller has done his dash with Scotts! A late announcement to the market today sees him resign his directorship from the end of April! This will be a huge loss to the company, as Mark was the disciplined acquisitions master. Hopefullly Scotts won't need to do any more acquisitions for a while!

Chris Staynes retired at the last AGM. So Scott is in the unenviable position of having only one independent director left: Chairman Stuart McLauchlan. Curiously there has been no announcement on replacing the retiring independent directors. Does the NZX allow only one independent director of a listed company? Maybe the last independent director standing needs to call an independent directors conference to confer? McLauchlan could interview himself over porridge on one of those cold Dunedin mornings. Maybe they need to bring Graham Batts back as a director? After all, he is back on the payroll again already, so it would be a low cost option.

SNOOPY

[Snoopy]

Scott is in the unenviable position of having only one independent director left: Chairman Stuart McLauchlan. Curiously there has been no announcement on replacing the retiring independent directors. Does the NZX allow only one independent director of a listed company? Maybe the last independent director standing needs to call an independent directors conference to confer? McLauchlan could interview himself over porridge on one of those cold Dunedin mornings. Maybe they need to bring Graham Batts back as a director? After all, he is back on the payroll again already, so it would be a low cast option.

Wow, I have never seen an announcement quite like this! Scott's battling to fulfill their legal obligations!

------------

INTERIM DIRECTOR APPOINTMENT & INDEPENDENCE DETERMINATION

Interim Director Appointment

The Board has appointed Mr John Thorman as a Director effective from 1 May 2018. The Board has determined that Mr John Thorman is an Independent Director.

Following the retirement of Mr Mark Waller, the Board commenced a search for a suitable replacement Independent Director with the appropriate skills and experience. To date the search has been unsuccessful and to ensure the Company complies with the requirements for independent and New Zealand based Directors, this interim appointment has been made.

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The board has appointed a new director and gone on record as saying he is not up to the task! Extraordinary! I wonder if Mr Thorman will be adding 'incompetant interim director' to his resume?

SNOOPY

[Sideshow Bob]

Doesn't read well does it!

[sanctus671]

Feel bad for John Thorman. Better that they are strict with who they eventually appoint than settling for mediocre though. Just hope they find someone soon.

[forest]

John Thorman is likely a very capable director who might just have skills different to what SCT like to add to the board.