DIRECTORS’ REPORT

Financial Commentary

The Group’s unaudited result for the six months ended 28 February 2010 was a net profit before tax of $1.4 million, compared to an unaudited loss before tax of $0.7 million for the six months ended 28 February 2009.

Group revenue for the six months was $20.3 million, compared to Group revenue of $13.5 million for the six months ended 28 February 2009. A pleasing aspect of the first six months’ result is the strong positive cashflow from operations of $1.6 million.

Review of Operations

The improved performance and trading conditions that we saw in the second half of 2009, continued into the first half of 2010.  During this period we have been successful in securing significant system sales within the Appliance, Precious Metals and Meat Processing markets. Contracts for new projects destined for Australia, Brazil, China, Chile and the USA have stretched our capacity to a point where we have a requirement for additional resources. In addition to these new projects, we have been working on, and completing, production lines for customers in Australia, Turkey, USA and Spain.

We continue to see increased activity within our meat processing market and this has been boosted by the establishment of Scott Technology Australia Pty Ltd in Sydney. An Australian General Manager has been appointed who has significant experience in the meat industry, both within Australia and worldwide.

Development work is carrying on to extend our product offering and world leading technology. This is in addition to the rollout of our commercialised systems and we are pleased to report another X-Ray Primal System was successfully installed at a New Zealand meat processing plant during this period.  The past six months has seen an uplift in the global appliance market with enquiries increasing toward normal levels. We are also seeing this in our minerals and precious metals markets where the strong combination of Rocklabs’ industry experience with Scott’s expertise in large automated systems is being recognised by the market.

Dividend and Bonus Issue

In late March the Directors paid an interim dividend of 1.25 cents per share, together with a 1 for 10 nontaxable bonus issue which also participated in the dividend. This reflects the Directors’ confidence in the growth and trading ability of the company supported by the underlying strength of the company’s balance sheet.

With a strong balance sheet, improved trading conditions and a talented team of people, we are positioned to deliver on a growing level of current work and future prospects. We continue to assess business and growth opportunities and will progress those where there is a positive impact on earnings and where strong synergies exist.

Stuart J McLauchlan, Chairman  
Christopher C Hopkins, Managing Director

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	2010 Half Year Announcement.pdf	155.3 KB