Friday 25th October 2019
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The Overseas Investment Office has reached a deal with the majority owner of Scott Technology following a corruption investigation.
The foreign ownership regulator launched a probe into JBS Australia in 2017, a year after it gained consent to buy just over half of the NZX-listed industrial automation specialist. JBS Australia is a subsidiary of Brazil’s JBS, the largest meat processor in the world.
Owners of foreign-owned companies in New Zealand are required to be of “good character” and the regulator has found that two majority shareholders of JBS Australia, Joesley and Wesley Batista, do not meet this requirement, having admitted to bribing officials in Brazil.
However, the OIO has found that the pair don’t have control over JBS Australia or its investment in Scott, and says that JBS Australia has given assurances about its control, and has ensured at least half the board, excluding the managing director, is independent.
In a statement, OIO group manager Vanessa Horne said if the brothers resume control, then the regulator could ask JBS Australia to sell its shares in the company.
“These arrangements, among others, give us confidence that neither Scott Technology nor its other shareholders will be negatively impacted by the corrupt actions of the Batistas.”
“The corrupt actions took place offshore and we’re satisfied that Scott Technology’s New Zealand employees and investors were not put at risk.”
The company released results yesterday, reporting net profit fell 20 percent to $8.6 million, despite a 24 percent increase in revenue driven by new acquisitions.
Total revenue at the firm for the 12 months to August 2019 came in at $225 million, up from $182 million the previous year.
This was helped by the purchase of Belgian warehouse automation company Alvey, which increased logistics revenue by 126 percent, and US-based automated guided vehicle manufacturer Transbotics lifted revenue in its division by about half.
Scott warned in July that the European market, where more than half its staff are located, has been restrained due to uncertainty surrounding Brexit.
At the time, it also said delays from one major meat sector contract and Australian mining projects had hurt the bottom line, but noted that they will not impact profitability in 2020.
Shares in Dunedin-based Scott fell 7 percent this morning to $2.27. They have declined by more than 15 percent this year.
Scott said it is now firmly focused on delivering efficiencies from its expanded business. Earnings rose to $20 million from $19.3 million.
Scott’s total research and development spending came in at about 6 percent of revenue, up to $14 million from $11 million. The company’s financial statements record $2.03 million in R&D grants in 2019, up from $1.86 million the year prior.
The company has bank debt of $16.4 million against total shareholders funds of $111.8 million.
Scott declared a final dividend of 4 cents per share, a 70 percent payout ratio, retaining funds to support its increasing working capital requirements.
“We are in a good position to continue to grow but we will be cautious in our approach in order to protect cash flow and grow the bottom line. The learnings and challenges from the past year will strengthen the business and fine tune the skills and experience of our people,” the company said.
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