Annual Report 2002 - Scott Technology Ltd

SCOTT TECHNOLOGY LIMITED 2002 ANNUAL REPORT

CONTENTS
Highlights 1
Chairman’s Report 2
Chief Executive’s Report 5
Board of Directors 9
Financial Statements 10
Trend Statement 20
Shareholder Information 21
Directors’ Interests 22
Auditor’s Report 23
Directory 24

HIGHLIGHTS
Diversification continues – both
industry and geographic
Successful acquisition of CBS
Engineering
Forward work and orders received
at record levels
Partnership with dynamic meat
processing company, PPCS, to
develop innovative automation for
meat processing.
page 1
FINANCIAL CALENDAR
Annual Meeting
Thursday 5th December 2002 at 4.00 p.m.
at Christchurch Netball Centre, 455 Hagley
Avenue (South Hagley Park), Christchurch.
Proxies close
Tuesday 3rd December 2002 at 4.00 p.m.
Final Dividend
record date 29th November 2002
payable 5th December 2002
Bonus Issue 1 for 8
allotment date 29th November 2002

The Directors are pleased to report that Scott Technology
Ltd achieved a significant profit improvement for the
year ended 31 August 2002 of $3,671,000. The net
profit after tax of $2,433,000 compared with a net
profit after tax of $415,000 in the previous year. This
result was achieved on group sales for the year of $29.2
million, a significant increase over the $16.6 million
achieved in the previous corresponding year. The profit
for the second half of the year was at near record levels
for the company, with an operating surplus before tax
for the six months of $2,658,000, representing a major
improvement on the $614,000 earned in the second
half of last year.
page 2
This result further strengthens an already impressive
balance sheet, with total shareholders’ equity increasing
by $1.5 million from $12 million in 2001 to $13.5
million at 31 August 2002. The net working capital
position improved over the year and was $5.8 million
at 31 August 2002, a pleasing increase from the $4.3
million at August 2001. Net operating cash inflows for
the year of $7.2 million, reflect both the performance
achieved during the year and the receipt of advance
payments from customers for projects to be completed
after the year-end. The balance sheet strength is
highlighted by the fact the company carries no debt and
has $6.6 million of cash on hand at year-end.
CHAIRMAN’S REPORT
Graeme J. Marsh
Chairman

DIVIDEND
The Directors have declared a final dividend of
8.0 cents per share, bringing the total dividend
for the year to 11.0 cents per share. This
compares to a total dividend of 5.5 cents per
share paid in respect of the 2001 year, and is
in line with the dividend of 11 cents per share
paid in respect of the 2000 and 1999 years.
The dividend will be fully imputed and a
supplementary dividend will apply to overseas
shareholders.
BONUS ISSUE
The present level of forward contract orders
and profitability, together with strong current
sales enquiries, provides Scott Technology with
a solid base to build on the results of the past
year. As an indication of the Board’s confidence
in the future performance of the company, the
Directors have declared a one for eight nontaxable
bonus issue of shares. This bonus issue
will be made immediately following payment of
the final dividend. This also acknowledges
shareholders’ commitment to Scott Technology
over the past two years when the company’s
performance was affected by a downturn in its
international markets.
industries. This industry diversification was
boosted during the year by the purchase in
February 2002 of the CBS Engineering, Auckland
business to complement Scott Automation’s
Dunedin base. Of particular value is the team
of experienced technically skilled staff and strong
history of automation in the package handling
industry, which provides an attractive addition to
the Scott Automation business plan. Scotts also
took over the CBS Australian marketing office in
Sydney and this gave the Scott group a strong
presence in this important market.
Scotts also purchased the Betts Wine equipment
business from CBS. Betts is one of New Zealand’s
largest suppliers of equipment to the wine industry
and the importation of world-class wine processing
plant is supplemented by the design and
construction of specialised robotic and logistics
handling equipment manufactured in the Auckland
complex.
Since balance date, Scotts have purchased the
one hectare industrial premises in Auckland
previously leased from CBS. This provides the
company with a major freehold industrial site
with considerable potential for future expansion.
page 3
The company’s depreciation charge each year
covers most of the plant replacement programme
and Directors intend to utilise a high proportion
of tax-paid profits for the foreseeable future for
the payment of dividends. At this time it is the
intention to at least maintain the rate of dividend
on the increased capital and this will be subject
to profitability forecasts being met and no
unforeseen factors affecting our markets.
COMPANY STRATEGY
Scott Technology’s new management team is now
firmly in place, with the company’s strategic plan
continuing to be implemented and further
developed. The company’s broad strategy includes
diversification in both the geographical market
to continue its success in the appliance industry,
and also expansion into other industries through
Scott Automation Ltd, which has the objective of
leveraging the company’s considerable intellectual
knowledge and experience into non-appliance
Scott Technology Ltd recently announced the
development of a successful joint venture with
PPCS Limited. Both companies are world leaders
in their respective markets and are working
together to re-engineer the meat processing
industry. This exciting development has the
potential to revolutionise the meat processing
industry and provide both PPCS and Scott the
opportunity to further consolidate their position
as world leaders in their respective industries.
Currently, the majority of the group’s forward
work is in the area of appliance automation and
with substantial orders received for new production
lines, the management team has sought new
innovative ways to expand existing capacity.

CHAIRMAN’S REPORT
page 4
This has been achieved by the introduction of shift
work, particularly in the design and the
manufacturing of components where the full and
efficient utilisation of the company’s resources is
critical to increase in-house manufacturing capacity.
The company has utilised significant sub-contract
resources and the company’s new base in Auckland
will assist to access a wider range of subcontractors
within the Auckland industrial area.
CORPORATE GOVERNANCE
The Board of Directors maintains effective control
over the company as well as monitoring executive
management.
The Directors meet monthly throughout the year
and oversee all matters of corporate governance,
development of long-term strategic plans and
financial management.
The Board comprises four non-executive Directors
and two Executive Directors.
When Scott Technology Ltd was established as
a separate public company in 1997, Directors’
fees totalling $100,000 were approved. Lesser
amounts were expended annually for the five years
from 1997 until 2002 and as from 1 September
2002 the total Directors’ fees have been increased
to the $100,000 p.a. being the total approved
in 1997.
AUDIT COMMITTEE
The Scott Technology Ltd Audit Committee
overviews internal controls and financial reporting
and reviews the company’s financial procedures
with the company’s auditors.
REMUNERATION COMMITTEE
The non-executive Directors comprise the
Remuneration Committee which sets overall
remuneration for executive Directors and other
senior management.
TREASURY COMMITTEE
The Treasury Committee overviews the company’s
treasury practices, including foreign exchange
cover and short-term cash investments.
SPECIAL RESOLUTION
A special resolution will be put to shareholders
at the Annual Meeting to remove a clause requiring
mandatory retirement of Directors at age seventy,
as this is inconsistent with the Bill of Rights. The
New Zealand Stock Exchange has expressed a
strong preference that this clause be removed.
OUTLOOK
The year has been one of considerable
advancement for Scott Technology. The Directors
believe that the company is in a very strong
position, with record levels of orders received
and the diversification into non-appliance industries
well under way. Scott Automation’s developing
expertise in robotics enables it to undertake
complex automation projects which keep it at the
forefront of global technology. There are few
companies who can offer this level of integration
and Scott Automation is looking to expand the
market beyond Australasia for such automation
expertise.
The current business problems faced by some
major companies in the U.S.A. stem from
aggressive over-priced acquisitions and mergers
with ridiculous levels of debt and a lack of
corporate governance by Boards of Directors
dominated by management. Fortunately we have
not experienced such a trend in New Zealand
and Scott Technology Ltd must rank as one of
the country’s most conservative listed companies,
with no debt, substantial short-term cash
investments, and no intangibles in its balance
sheet. Your Board of Directors will continue to
act in a responsible manner, utilising its
considerable finance resources in the best
interests of the company and its shareholders.
The Directors are very pleased with the current
outlook and international acceptance of Scott
products and have confidence that the company
will continue to improve the rewards to all
stakeholders.
The Directors take this opportunity to acknowledge
our dedicated management and staff for their
continuing commitment and application during
this exciting time in the company’s development.
I also thank my fellow Directors for their continued
support, wise counsel and enthusiasm. The team
approach is very important at Scott, where the
real value of the company is not in bricks and
mortar but is in the people that make the vision
a reality.
Graeme J. Marsh
Chairman

The past financial year has been a very progressive
period that has seen considerable diversification
and growth occur within the company. The
business downturn experienced during the previous
year continued to impact on the company’s
performance through to mid-year whereupon the
anticipated release of capital expenditure,
particularly from within the North American
appliance manufacturing industry, resulted in a
progression of very significant high value orders
being secured by the company. This workload has
provided the base for a highly accelerated and
significant lift in performance through year-end
and well into the future.
REVIEW OF OPERATIONS
The year began with a number of lower value
orders carried forward from the previous year.
These orders, secured within a highly competitive
environment at reduced margins, extended into
industries beyond appliance manufacture and
provided provided a base workload but limited
opportunity for improved performance.
page 5
CHIEF EXECUTIVE’S REPORT
Kevin J. Kilpatrick
Chief Executive Officer
Several orders of significant value were secured
from Australia, the United States of America and
Mexico during the first quarter initiating the
performance lift that contributed to the modest
mid-year result. These orders, boosted by several
further high value orders secured from China,
Australia, the United States of America and New
Zealand during the second half of the financial
year, set the course from recovery to renewed
growth which contributed to the year-end result.
At year-end the company was working on nine
major production systems with four automated
production systems under construction or
undergoing testing at the Company’s Dunedin
facility and a further five large appliance production
systems under construction at the company’s
Christchurch facility. Subsequent to year end
orders for a further three systems, destined for
the United States of America and Brazil have
been received.

CHIEF EXECUTIVE’S REPORT
Fitting-out automated
assembly machine.
page 6
During the year, a production system was
designed, constructed and shipped to a customer
in China. This project, the company’s second for
the independent Chinese appliance producer, was
integrated with a system previously provided by
Scott. The installation, commissioning and signoff
have subsequently been successfully completed,
further cementing our excellent relationship with
our client and furthering the company’s reputation
and credibility within the Chinese market.
The current year has seen a period of acquisition,
diversification and growth. This is in contrast to
the consolidation measures implemented last
year in response to the business downturn in the
company’s market at that time. The workforce
has increased in both Dunedin and Christchurch
in line with expansion requirements and in
accordance with our current growth strategy.
The centralisation of appliance business in
Christchurch has allowed major efficiency gains
to be realised and the establishment of Scott
Automation in Dunedin has set the course for
diversification. The acquisition of the business
assets of Auckland based CBS Engineering during
the year, renamed Scott Automation – Package
Handling Division, and its integration into Scott
Automation, both achieves and allows further
diversification and growth opportunities in robotics.
Engineering and technology strengths that exist
within the company continue to be developed and
enhanced through ongoing training, educational
programmes and through targeted recruitment
programmes.
SCOTT TECHNOLOGY LTD
The company’s sales and marketing programme,
led by our Sales & Marketing Manager, Gordon
Todd, has achieved record levels of sales and
has cemented the company’s position as a supplier
of choice for the major American whiteware
appliance manufacturers.
Market analysis indicates the current surge of
demand from the North American market is
driven by economic recovery factors combined
with the emergence of niche markets for higher
cost “fashion” products. Because of changing
trends in the global appliance industry, this
demand is expected to continue for several years.
Whiteware appliance production in China
continues to increase at a very significant level
in terms of units produced for both local
consumption and export. Scott Technology is
currently pursuing specific options to improve
our credibility and ability to penetrate this market.
It is anticipated that the developing China market
will provide increased opportunities for Scott.

Letter to Scott Technology from Danny W. Bothe, Broan-NuTone LLC
“July 24, 2002 marked the tenth anniversary of
the Range Hood System dedication and start-up
as an integrated system.
Since then, almost 14,000,000 products have
been completed through the system made to the
highest quality standards in the industry.
The system has operated almost flawlessly for
this 10-year period. Productivity, uptime and
output far exceed expectations, die sharpening
intervals exceed 500,000 hits and paint quality
levels of 99%+ are the norm.
These results can only be achieved with superior
equipment based on a solid foundation of world
class engineering and professionals.
The Scott team of multi-talented, skilled and
dedicated members is to be congratulated for
their critical role in this success.
We will certainly never forget and do frequently
recall the many individual and collective efforts
that transformed this evolutionary concept of
manufacturing into a reality.
I wanted to inform you of this milestone
achievement and hope you and the good people
of Scott Technology are doing well.”
Sincerely,
Danny W. Bothe
Advanced Manufacturing Engineering Manager
Broan-NuTone LLC
Scott Technology Ltd’s manufacturing effort, led
by Philip Johnston as Operations Manager, has
achieved near record sustainable throughput.
Contributing greatly to this success, is Damon
Page as Chief Design Engineer, Glenn Rose as
Chief Controls Engineer and Iain Sillars as
Workshop Manager who have led their teams to
new levels of productivity and technical
achievement. This has been achieved through the
development of specialised project management
techniques combined with a skilled, highly
motivated, energetic and well lead workforce.
The centralisation of the appliance business in
Christchurch, combined with resource utilisation
improvements, which include the introduction of
an extensive nightshift operation, has realised
significant efficiency and throughput gains.
SCOTT AUTOMATION LTD
The establishment of Scott Automation Ltd in
Dunedin, led by Andrew Arnold as General
Manager and supported by Brian Rekittke as
Operations Manager, has progressed well through
the year with a large “milestone” robotic
automation system being designed and
constructed for an Australian customer. This
project has established Scott Automation as a
serious contender within the robotics automation
industry and has provided an automation
precedent having significant export potential.
The company recently announced a joint venture
between itself and PPCS Limited where both
companies are working together to re-engineer
the meat processing industry. The first stage of
a jointly developed robotic meat processing line
is being field tested at one of PPCS’s processing
plants. It is envisaged that this development will
form part of a move towards a fully automated
boning room, with major benefits expected to
flow to PPCS and its farmer owners. A patent is
pending which has been filed to protect the
intellectual property developed on this project.
The establishment of Scott Automation Ltd’s
Package Handling Division in Auckland, through
the acquisition of the business assets of CBS
Engineering Ltd, has created a bridgehead for
Automation within the center of New Zealand
industry and established connections in Australia.
page 7

CHIEF EXECUTIVE’S REPORT
Appliance production system being
commissioned in Christchurch.
The Package Handling Division, led by Paul Denton,
adds a further dimension to Automation’s business
into industries including the food, dairy, wine and
beverage industries to name a few.
An important element of the Package Handling
Division is the supply of equipment to the Wine
industry through the activities of David Betts who
led the Betts Wine business within CBS
Engineering. Betts is the leading supplier of
equipment to the Wine industry and this
complements the design and build of our own
robotic palletising and package handling systems
for this sector of the market.
A patent application has been filed for the
company’s new “zero pressure” conveyor, which
was recently showcased with much interest at
the recent Packtech exhibition in Auckland.
Scott Automation’s systems partnership with
Kuka Roboter GmbH of Germany provides
opportunities to enhance the package handling
division’s competitive advantage.
OUTLOOK
The prime challenge for the management of Scott
Technology for the coming year will be resource
management to achieve throughput requirements
to meet schedules and maintain profit
expectations.
The North American market has emerged from
the downturn, as signified by the contracts both
secured and pending.
The Chinese economy continues to grow rapidly
and is expected to provide a substantial market
for the company in the future, with greater long
term potential than even the U.S.A.
The management of Scott Technology Ltd faces
the future with considerable confidence, arising
from a record level of secured orders and
customer negotiations for future contracts. The
company has confirmed orders through the 2004
year and new management initiatives to increase
productivity are continuing to produce excellent
results.
page 8
Kevin Kilpatrick
Chief Executive Officer

Graeme J. Marsh
CBE, BCom, FCA, Life FNZIM,
FInstD
Dunedin
Chairman of Directors
Appointed Director 1969
Mr Marsh is Chairman of Mercy
Hospital Dunedin Limited, Oakwood
Securities Limited, Cooke Howlison
Ltd, Director of Dunedin City Holdings
Limited, a Member of Marsh Limited
Advisory Board, and a Councillor of
the University of Otago.
Trevor D. Scott
BCom, FCA (PP), FNZIM
Dunedin
Appointed Director 1997
Mr Scott is a Chartered Accountant in public
practice and Chairman of Arthur Barnett Limited,
Pacific Edge Biotechnology Ltd, a Director of
Donaghys Limited, NZ Light Leathers Ltd, Mercy
Hospital Dunedin Limited, New Zealand Seed Fund,
and several other private companies. He is a
Councillor of the University of Otago.
Eion S. Edgar
CNZM, BCom, FCA, ACCM
Dunedin
Appointed Director 1997
Mr Edgar is Chairman of Forsyth Barr Group Ltd, Sinclair Investments
Ltd, and a Director of Mobile Surgical Services Ltd, Mr Chips Ltd,
Royal & Sun Alliance Insurance (NZ) Ltd, and Structureflex Holdings
Ltd. He is also Chancellor of the University of Otago, Trustee of
Arts Foundation of New Zealand, Trustee of the Halberg Trust,
member of N.Z. Olympic Committee, a Director of the Edgar Sports
Centre Inc, and Honorary Consul for Finland.
Graham W. Batts
CEng., FIPENZ, NZCE
Dunedin
Appointed Director 1969
Mr Batts joined the company in 1956 and was Managing
Director from 1969 to 1999. He spent a further 18
months in an executive role based in London assessing
the European market. Since retirement from his executive
role in October 2000, Mr Batts has remained a
Consultant to the Company and is Chairman of the newly
formed subsidiary, Scott Automation Limited.
Kevin J. Kilpatrick
FNZIM, NZCE
Christchurch
Chief Executive Officer
Appointed Director 2001
Mr Kilpatrick joined the company in 1968 as an Engineering
Draughting apprentice, became Junior Design Engineer in 1972
and was promoted to Project Engineer in 1975. From 1983
to 1995 Mr Kilpatrick was the Manager of the Christchurch
Engineering Division and an executive board member. He was
appointed Chief Executive Officer and a Director of Scott
Technology Limited in March 2001.
Christopher C. Hopkins
BCom, CA
Dunedin
Chief Financial Officer
Appointed Director 2001
Mr Hopkins joined the Donaghys Group, which
included Scott Technology Ltd, in 1994 as Corporate
Services Manager. In 1996, he assumed
responsibility for the finance and administration
for the company and oversaw the transition to a
public listed company in 1997. He was appointed
a Director of Scott Technology Ltd in August 2001.
SCOTT TECHNOLOGY BOARD OF DIRECTORS
page 9

STATEMENT OF FINANCIAL PERFORMANCE
For the year ended 31 August 2002
Consolidated
Parent Company
2002 2001 2002 2001
Note $000 $000 $000 $000
Group sales 29,192 16,629 18,392 16,341
Operating surplus before tax 1 3,671 646 3,069 613
Income tax charge 2 (1,238) (231) (1,022) (222)
Net surplus after tax 2,433 415 2,047 391
page 10
STATEMENT OF M0VEMENTS IN EQUITY
For the year ended 31 August 2002
Consolidated
Parent Company
2002 2001 2002 2001
$000 $000 $000 $000
Equity at 1 September 2001 12,026 11,905 11,381 11,284
Surplus
Net surplus after tax 2,433 415 2,047 391
Other movements
Dividends paid to owners (979) (294) (979) (294)
Equity at 31 August 2002 13,480 12,026 12,449 11,381
The notes appearing on pages 13 to 19 form part of, and are to be read in conjunction with, this statement.

STATEMENT OF FINANCIAL POSITION
As at 31 August 2002
Consolidated
Parent Company
2002 2001 2002 2001
Note $000 $000 $000 $000
Equity
Share capital 3 7,440 7,440 7,440 7,440
Capital reserves 4 676 676 676 676
Revenue reserves 4 5,364 3,910 4,333 3,265
Total shareholders' equity 13,480 12,026 12,449 11,381
Current liabilities
Trade creditors 1,504 620 1,050 500
Contract claims (net) 5 4,012 - 4,945 -
Sundry creditors and accruals 1,198 541 973 673
Employee entitlements 823 577 632 551
Provision for warranty 6 150 150 150 150
Provision for tax 110 17 118 27
7,797 1,905 7,868 1,901
21,277 13,931 20,317 13,282
Non current assets
Property, plant and equipment 7 7,442 7,624 5,651 7,577
page 11
Investments
Subsidiary companies 8 - - 2,113 (395)
Other investments 43 88 43 88
43 88 2,156 (307)
Deferred tax benefit 9 146 34 146 34
Current assets
Cash and bank 10 6,581 1,988 6,967 1,955
Trade debtors 6,350 3,353 4,989 3,187
Sundry debtors and prepayments 293 67 232 66
Inventories 11 422 326 176 319
Contract work in progress (net) 5 - 451 - 451
13,646 6,185 12,364 5,978
21,277 13,931 20,317 13,282
For and on behalf of the Board of Directors, which authorised the issue of the financial report on 24 October 2002.
G. J. Marsh K. J. Kilpatrick
Director
Director
The notes appearing on pages 13 to 19 form part of, and are to be read in conjunction with, this statement.

STATEMENT OF CASH FLOW
For the year ended 31 August 2002
Consolidated Parent Company
2002 2001 2002 2001
Note $000 $000 $000 $000
Cash flows from operating activities
Cash was provided from:
Receipts from operations 31,584 18,044 22,198 17,797
Interest received 178 46 177 46
31,762 18,090 22,375 17,843
Cash was applied to:
Payments to suppliers and employees 23,267 15,271 14,839 14,846
Interest paid 18 112 12 112
Company taxes paid 1,258 323 1,259 298
24,543 15,706 16,110 15,256
Net cash from operating activities 12 7,219 2,384 6,265 2,587
page 12
Cash flows from investing activities
Cash was provided from:
Sale of property, plant and equipment 4 75 - 75
Sale of investments 45 78 45 78
49 153 45 153
Cash was applied to:
Purchase of property, plant and equipment 481 201 319 201
Investments placed - 4 - 4
Purchase of business assets 13 1,213 - - -
1,694 205 319 205
Net cash used in investing activities (1,645) (52) (274) (52)
Cash flows from financing activities
Cash was applied to:
Dividends paid 979 1,567 979 1,567
Net cash used in financing activities (979) (1,567) (979) (1,567)
Net movement in bank position 4,595 765 5,012 968
Less effect of exchange rate change on foreign
currency balance (2) (7) - -
Opening bank position 1,988 1,230 1,955 987
Closing bank position 6,581 1,988 6,967 1,955
Represented by:
Cash and bank 6,581 1,988 6,967 1,955
The notes appearing on pages 13 to 19 form part of, and are to be read in conjunction with, this statement.

STATEMENT OF ACCOUNTING POLICIES
Reporting Entity
Scott Technology Limited is a public company registered
under the Companies Act 1993. Scott Technology Limited
is a reporting entity for the purposes of the Financial
Reporting Act 1993. The financial statements of the
company have been prepared in accordance with the
Companies Act 1993 and the Financial Reporting Act
1993.
Measurement base
The accounting principles recognised as appropriate for
the measurement and reporting of earnings and financial
position on an historical cost basis are followed by the
group, with the exception that certain property, plant and
equipment have been revalued.
Specific accounting policies
The specific accounting policies which materially affect
the measurement of profit, financial position and cash
flows are as follows:
1. Basis of consolidation
The consolidated financial statements are prepared from
the audited accounts of the parent company and its
subsidiary companies. All significant intercompany
transactions have been eliminated on consolidation.
2. Valuation of assets
2.1 Land and buildings
Land and buildings are revalued at appropriate intervals,
not exceeding three years, to independent valuations.
2.2 Plant, equipment and vehicles
Plant was revalued in 1993 by an independent valuer
pursuant to a fair value adjustment following the purchase
of the minority shareholding in Scott Technology Ltd by
the then parent company, Donaghys Limited. Revalued
plant is recorded at this independent valuation less
depreciation and subsequent additions are recorded at
cost less depreciation. Equipment and vehicles are valued
at cost less depreciation.
2.3 Investments
Investments in subsidiaries are valued at cost. Other
investments are included at cost.
2.4 Debtors
Debtors are stated at estimated realisable value after
providing for doubtful debts.
2.5 Inventories
Stocks and work in progress are valued at the lower of
cost or net realisable value. Cost is principally determined
on a “first-in first-out” basis, and in the case of
manufactured goods includes direct materials, labour and
production overheads.
2.6 Contract work in progress
Contract work in progress is recorded as an accumulation
of the costs incurred to date, including overhead, plus
any recognised profit less amounts received or receivable
by way of progress payments on each particular contract.
3. Income recognition
3.1 Long-term contracts
Profit on long-term contracts is accounted for using the
percentage of completion method. At balance date an
assessment is made of the percentage of completion and
costs associated with the work done. Included in sales
is the value attributed to work completed, which includes
direct costs, overheads and profit. Provision is made for
estimated future losses on the entire contract from the
date that it is recognised that a contract loss may be
incurred.
3.2 Depreciation
Depreciation has been charged on a straight line basis
so as to write off the cost or valuation of the property,
plant and equipment to their residual value over their
estimated useful lives. The estimated useful lives in the
major categories are as follows:
Buildings
Plant, equipment and vehicles
4. Taxation
40 - 50 years
3 - 12 years
Tax allocation accounting procedures are followed whereby
the income tax expense is matched with the accounting
profit after allowance for permanent differences. Income
tax on net cumulative timing differences is set aside to
the deferred taxation account at current rates using the
liability method. Deferred tax is not accounted for on
buildings as these are expected to be held long-term.
5. Financial instruments
The company enters into off balance sheet financial
instruments to reduce exposure to fluctuations in foreign
currency exchange rates and interest rates. These
financial instruments are subject to market risk that
market rates may change but any changes would generally
be offset by opposite changes in the items being hedged.
6. Foreign currencies
Foreign currency transactions are translated to New
Zealand dollars at exchange rates ruling on the date of
payment, or receipt, or the rate included in applicable
financial contracts. Variances are dealt with in the
statement of financial performance.
Assets and Liabilities in foreign currencies are translated
into New Zealand dollars at the exchange rates current
on balance date or at the rate included in applicable
financial contracts. Variances are dealt with in the
statement of financial performance.
7. Cash flows
For the purpose of the statement of cash flows, cash and
cash equivalents are considered to be cash on hand and
in banks, net of bank overdrafts.
Changes in accounting policies
There have been no changes to accounting policies during
the year.
page 13

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 August 2002
Consolidated
Parent Company
2002 2001 2002 2001
$000 $000 $000 $000
1. Operating surplus
The operating surplus is stated after charging:
Auditor's remuneration - audit services 29 20 29 20
- other services 42 2 2 2
Depreciation - Freehold buildings 81 81 81 81
- Leasehold buildings 45 54 - 54
- Plant, equipment and vehicles 852 820 513 795
Directors' fees 96 87 90 87
Foreign exchange translation 38 18 - -
Interest - bank overdraft 18 112 12 112
Leasing and rental costs 288 255 183 216
and after crediting:
Interest received 178 46 177 46
Foreign exchange gains 205 167 212 167
Gain on sale of property, plant and equipment 2 45 - 45
2. Income tax charge
page 14
Operating surplus before tax 3,671 646 3,069 613
Prima facie tax at 33% 1,211 213 1,013 202
Tax effect of permanent differences 27 18 9 20
1,238 231 1,022 222
Represented by:
Current tax 1,336 528 1,121 519
Deferred tax (99) (297) (99) (297)
1,237 231 1,022 222
Under/(Over) provision prior years - current tax 14 127 13 127
- deferred tax (13) (127) (13) (127)
1,238 231 1,022 222
3. Share capital
19,578,965 shares each fully paid 7,440 7,440 7,440 7,440
4. Movements in reserves
(a) Capital reserves
Asset revaluation reserve
Balance 31 August 2002 676 676 676 676
(b) Revenue reserves
Balance 1 September 2001 3,910 3,789 3,265 3,168
Net surplus after tax 2,433 415 2,047 391
Dividend paid from revenue reserves (979) (294) (979) (294)
Balance 31 August 2002 5,364 3,910 4,333 3,265

NOTES TO THE FINANCIAL STATEMENTS
Consolidated
Parent Company
2002 2001 2002 2001
$000 $000 $000 $000
5. Contract work in progress (net)
Costs incurred and estimated earnings
on uncompleted contracts 23,530 31,277 15,717 31,277
Progress claims receivable (27,542) (30,826) (20,662) (30,826)
(4,012) 451 (4,945) 451
6. Provision for warranty
Balance 1 September 2001 150 100 150 100
Expensed during the year (34) (251) (24) (251)
Increase in provision 34 301 24 301
Balance 31 August 2002 150 150 150 150
Accumulated 2002 2001
At At depreciation Book Book
cost valuation to date value value
$000 $000 $000 $000 $000
7. Property, plant and equipment
Consolidated
Freehold land - 410 - 410 410
Freehold buildings 46 2,810 162 2,694 2,763
Leasehold buildings 429 - 315 114 159
Total land and buildings 475 3,220 477 3,218 3,332
Plant, equipment and vehicles 6,390 5,439 7,605 4,224 4,292
6,865 8,659 8,082 7,442 7,624
Parent company
Freehold land - 410 - 410 410
Freehold buildings 46 2,810 162 2,694 2,763
Leasehold buildings - - - - 159
Total land and buildings 46 3,220 162 3,104 3,332
Plant, equipment and vehicles 3,201 4,556 5,210 2,547 4,245
3,247 7,776 5,372 5,651 7,577
page 15
Properties are valued in accordance with valuation reports of independent registered valuers
dated August 2000. The valuers used are Ford Baker Valuation who are members of the New Zealand
Institute of Valuers. Plant and equipment was independently valued by M J Austin of Fright
Aubrey in May 1993.
Parent Company
2002 2001
$000 $000
8. Investments in subsidiary companies
a) The parent company's investment in subsidiary companies comprised:
Shares at cost 1,002 2
Amounts owing from (to) subsidiary company 1,111 (397)
2,113 (395)
b) Scott Systems International Inc and Scott Automation Ltd are the principal trading subsidiaries,
and are 100% owned. All subsidiary companies have 31 August as their balance date.

NOTES TO THE FINANCIAL STATEMENTS
Consolidated
Parent Company
2002 2001 2002 2001
$000 $000 $000 $000
9. Deferred tax benefit
Balance 1 September 2001 34 (390) 34 (390)
Current year timing differences 99 297 99 297
Prior year adjustment 13 127 13 127
Balance 31 August 2002 146 34 146 34
10. Bank facilities
The Group's banking arrangements are fully secured by a debenture charge given over the assets
of Scott Technology Limited.
11. Inventories
The major categories are:
Raw materials 302 50 19 50
Other work in progress 120 276 157 269
422 326 176 319
page 16
12. Reconciliation of net surplus after tax
to net cash from operating activities
Net surplus after tax 2,433 415 2,047 391
Add/(less) non cash items
Depreciation 978 955 594 930
Increase/(decrease) in deferred tax benefit (112) (424) (112) (424)
Net (gain)/loss on foreign currency balance 2 7 - -
868 538 482 506
Add/(less) movements in working capital items
Decrease/(increase) in debtors (2,408) (2,474) (1,968) (2,475)
Decrease/(increase) in inventories & contract
work in progress 4,752 3,974 5,539 4,018
Increase/(decrease) in creditors and provisions 1,483 (355) 931 (343)
Decrease/(increase) in taxation refund due 93 331 91 348
Increase/(decrease) in inter-company creditors - - (857) 187
3,920 1,476 3,736 1,735
Less items classified as investing
Gain on sale of property, plant and equipment (2) (45) - (45)
Net cash from operating activities 7,219 2,384 6,265 2,587

NOTES TO THE FINANCIAL STATEMENTS
13. Acquisition of business assets
The business assets of CBS Engineering were acquired on 8 February, 2002 and the results of the
operations are included in the consolidated statement of financial performance as from that date.
The acquisition affected the statement of financial position and cash flows as follows:
Assets
Increases from
Acquisition
$000
Property, plant and equipment 317
Trade debtors 815
Inventories 471
Liabilities
Contract claims (net) (86)
Sundry creditors and accruals (304)
Net outflow of cash to the group 1,213
14. Imputation credits
Consolidated
Parent Company
2002 2001 2002 2001
$000 $000 $000 $000
page 17
Balance 1 September 2001 556 1,029 556 1,029
Taxation payments (net) 1,255 298 1,255 298
Imputation credits attached to dividends paid (482) (771) (482) (771)
Balance 31 August 2002 1,329 556 1,329 556
15. Contingent liabilities
Performance bond guarantees - 1,368 - 1,368
Stock exchange bond 75 75 75 75
75 1,443 75 1,443
In 2001, performance bond guarantees had been provided to customers in respect of a period
of warranty. These guarantees expired in January 2002 and June 2002.
The parent company guarantees the obligations of subsidiary companies.
16. Lease commitments
Lease liabilities at balance date are classified as due:
Within 1 year 183 183 183 183
Within 1 - 2 years 183 183 183 183
Within 2 - 5 years 550 550 550 550
Beyond 5 years 366 550 366 550
1,282 1,466 1,282 1,466

NOTES TO THE FINANCIAL STATEMENTS
Consolidated
Parent Company
2002 2001 2002 2001
$000 $000 $000 $000
17. Capital commitments
Capital expenditure not otherwise provided,
but for which commitments have been contracted for 900 - 900 -
18. Related party transactions
The Group rents premises from interests associated with Mr. G.J. Marsh. Such transactions
have been conducted on an arm’s length basis as follows:
Rental of premises 183 194 183 194
19. Segment information
The Group operates in the engineering industry and operates sales and service centres in Dallas,
USA and Sydney, Australia.
20. Financial instruments
The estimated fair values of financial instruments for the Group at 31 August 2002 were :
2002 2001
Carrying Fair Carrying Fair
amount value amount value
$000 $000 $000 $000
page 18
On balance sheet financial instruments
Cash and short term deposits 6,581 6,581 1,988 1,988
Trade debtors 6,350 6,350 3,353 3,353
Trade creditors 1,504 1,504 620 620
2002 2001
Face value Fair value Face value Fair value
$000 $000 $000 $000
Off balance sheet financial instruments
Foreign currency forward exchange contracts
with external banks
Group sells foreign currency 25,692 22,968 7,777 7,469
The following methods and assumptions were used to estimate the fair value of each class of financial
instrument.
On balance sheet financial instruments
The carrying amount is equivalent to the fair value.
Off balance sheet financial instruments
The fair value is based on the quoted market prices or foreign exchange spot prices for the applicable
financial instruments.
Collateral or other security to support financial instruments with credit risk is generally required.
Scott Technology Limited is not exposed to any concentration of credit risk other than the counterparty
risk with the bank in relation to the outstanding forward exchange contracts.

NOTES TO THE FINANCIAL STATEMENTS
21. Employee share purchase plan
On 10 April 1997 the company entered into a deed of trust creating the "Scott Technology
Employee Share Purchase Scheme". Under the deed Scott Technology advanced the scheme,
by way of an interest bearing loan of $337,000 to enable 24 senior employees to acquire shares
in the company at market value as assessed by an independent valuer. The deed places
restrictions on the transfer of shares to employees over periods of up to five years during which
time the shares and the attached voting rights are held by the trustees.
The trustees of the scheme are G.J. Marsh, T.D. Scott, G.W. Batts and C.C. Hopkins. The
Board of Scott Technology Limited has the power to appoint and remove trustees.
2002 2001
Shares held by trustees 1 September 2001 124,401 240,232
Shares transferred to staff during the period (66,660) (115,831)
Shares held by trustees 31 August 2002 57,741 124,401
The balance of loans owing by the scheme at 31 August 2002 was $38,928 (2001: $83,870).
22. Subsequent events
Purchase of property
Subsequent to year end the Group purchased a property at Wharf Road, Auckland for $900,000
(Government valuation $950,000).
page 19
Employee share purchase scheme
Subsequent to year end, an employee share purchase scheme has been established to offer shares
to employees on terms consistent with the provisions of section DF7 of the Income Tax Act 1994.
The scheme is available to all full-time permanent employees who have completed at least 24
months of continuous service with the company. Directors are not eligible to participate in the
scheme. Eligible employees are able to purchase shares to a total value of $1,950 per employee
on an interest-free basis for a period of three years. The shares allocated to eligible employees
will not be vested until the expiry or the full repayment of the loan by the employees. The trustees,
pursuant to a Trust deed, administer the shares in the scheme until ownership of the shares is
vested with the employee.
The trustees of the scheme are G.J. Marsh and C.C. Hopkins. The Board of Scott Technology
Limited has the power to appoint and remove trustees. On 5 December 2002 the scheme will
acquire 145,300 shares at a price of $1.30 per share which will be funded by an interest free
loan from Scott Technology Limited.

TREND STATEMENT
2002 2001 2000 1999 1998
$000 $000 $000 $000 $000
Export sales 24,671 16,301 30,673 26,894 23,412
New Zealand domestic sales 4,521 328 - 538 726
Total group sales 29,192 16,629 30,673 27,432 24,138
Earnings
Operating surplus before tax 3,671 646 5,320 4,369 4,076
Income tax 1,238 231 1,746 1,477 1,368
Net surplus attributable to Scott Technology
Limited shareholders 2,433 415 3,574 2,892 2,713
Dividends paid or payable 979 294 2,154 2,154 1,958
Funds employed
Paid-up ordinary capital 7,440 7,440 7,440 7,440 7,440
page 20
Reserves and retained earnings 6,040 4,586 4,465 3,201 2,463
Shareholders' equity 13,480 12,026 11,905 10,641 9,903
Total liabilities 7,797 1,905 3,906 6,435 6,144
Total assets 21,277 13,931 15,811 17,076 16,047
Statistics
Net asset backing per share cents 69 61 61 54 51
Earnings per share cents 12 2 18 15 14
Earning rate on average shareholders'
equity % 19 3 32 28 28
Earning rate on average total assets % 14 3 22 17 19
Capital ratio (equity as % of total assets) % 63 86 75 62 62

SHAREHOLDER INFORMATION
Substantial shareholders
The following information is given in accordance with section 26 of the Securities Amendment Act 1988.
Names of substantial security holder
Number of shares in which a relevant interest
was held as at 11 October 2002
1. Silveracres Nominees Limited 3,501,547 17.9%
2. James Ian Urquhart 1,656,923 8.5%
3. AMP Henderson Global Investors (New Zealand) Limited 1,237,168 6.3%
(Includes non-beneficial relevant interests held by nominees)
The total number of issued voting securities of the company as at 11 October 2002 was 19,578,965 ordinary shares.
Under the provisions of the Securities Amendment Act 1988, more than one person can have a relevant interest in
the same shares. Messrs. G.J. Marsh, W. J. Marsh, and Mrs. E. Marsh all have a relevant interest in the shares
detailed in (1) above.
Distribution of shares by holding size Number % of total Shares % of total
1 - 1,000 1,698 41.8 866,333 4.4
1,001 - 5,000 1,782 43.8 4,547,497 23.2
5,001 - 10,000 365 9.0 2,709,507 13.8
10,001 - 100,000 213 5.2 4,591,035 23.5
100,001 and over 9 0.2 6,864,593 35.1
Total and percentage 4,067 100.0 19,578,965 100.0
Top 20 shareholders as at 11 October 2002 Shares %
1 Silveracres Nominees Limited 3,501,547 17.88
2 James Ian Urquhart 1,656,923 8.46
3 AMP Life Limited 703,319 3.59
4 NZGT Nominees Limited - AIF Equity Fund 280,189 1.43
5 Cogent Nominees Limited 231,696 1.18
6 Graham Batts 150,210 0.77
7 Kevin James Kilpatrick & Shireen Kilpatrick 128,636 0.66
8 Alice Mary Orr McKellar 112,073 0.57
9 Public Nominees NZ Equities Discovery Trust 100,000 0.51
10 Forbar Custodians Limited 91,176 0.47
11 Graeme James Marsh 89,779 0.46
12 National Nominees New Zealand Limited 79,998 0.41
13 McMillan Nominees Limited 73,661 0.38
14 Eunice Marsh 72,812 0.37
15 Catherine Smith & David Dew 70,786 0.36
16 Forsyth Barr Limited 60,930 0.31
17 Ms Moira Lynch 60,000 0.31
18 Scott Technology Limited Staff Scheme 57,741 0.29
19 Est. Ian Edmond Orr McKellar 55,813 0.29
20 Neville Garrett & Rosemarie Garrett 51,876 0.26
7,629,165 38.96
page 21
Employee remuneration
Remuneration and other benefits of $100,000 per annum or more, received or receivable by employees
in their capacity as employees were:
Salary range
Number of employees
$100,001 - $110,000 1
$110,001 - $120,000 2
$140,001 - $150,000 1
$150,001 - $160,000 1
The remuneration and other benefits of executive directors is included in the directors' interests.
The market surveillance panel of the New Zealand Stock Exchange has granted an ongoing waiver in respect of the
remuneration of the executive directors and other officers of Scott Technology Limited for services as employees (Listing
Rule 9.2.1). The waiver is provided on the basis that the remuneration paid is not out of line with general market trends.
Certificates to this effect are required to be provided by the company to the New Zealand Stock Exchange.

DIRECTORS’ INTERESTS
Directors' shareholding as at 31 August 2002
Beneficially owned Held by associated persons Non-beneficially held
2002 2001 2002 2001 2002 2001
G.W. Batts 150,210 150,210 10,000 - 57,741 124,401
E.S. Edgar 12,500 12,500 10,000 10,000 - -
C.C. Hopkins 4,650 3,875 6,350 2,475 57,741 124,401
K.J. Kilpatrick 128,636 119,149 4,300 3,300 - -
G.J. Marsh 89,779 89,779 3,581,610 3,581,610 57,741 124,401
T.D. Scott 13,750 13,750 - - 57,741 124,401
399,525 389,263 3,612,260 3,597,385
page 22
Directors' share dealings
The details of disclosures by directors of acquisitions or disposals of shares directors held a relevant
interest in were:
Number of shares
Consideration
acquired Date Paid
G.W. Batts 10,000 April 2002 $19,583
C.C. Hopkins 4,650 1 May 2002 $3,135
K.J. Kilpatrick 9,487 1 May 2002 $6,396
1
These shares were acquired as part of, and in accordance with, the Employee Share Purchase Plan established in
1997. (refer note 21)
Use of company information
There were no notices from directors regarding the use of company information.
Disclosures of interests by directors
The following are general disclosures of interest given by directors of the company under section 140 of the Companies
Act 1993:
E. S. Edgar T. D. Scott
Chairman Forsyth Barr Group Ltd. Chairman Harraway & Sons Ltd.
Chairman Sinclair Investments Ltd. Chairman Hirequip Holdings Ltd.
Director Mr Chips Ltd. Chairman C.G. Surgical Ltd.
Director Royal & Sun Alliance Insurance (NZ) Ltd. Chairman Tamahine Holdings Ltd.
Director Structureflex Holdings Ltd. Chairman Zenoderm Ltd.
Director St. Andrews Group Ltd. Chairman Arthur Barnett Ltd.
Chancellor University of Otago Chairman Pacific Edge Biotechnology Ltd.
Consultant T D Scott Chartered Accountants
G. J. Marsh Director Mercy Hospital Dunedin Ltd.
Chairman Oakwood Securities Ltd. Director New Zealand Light Leathers Ltd.
Chairman Oakwood Properties Ltd. Director Oakwood Securities Ltd.
Chairman Cooke Howlison Ltd. Director Scenic Circle Group of Companies
Chairman Blackwell Motors Ltd. Director Donaghys Limited
Chairman Mercy Hospital Dunedin Ltd. Director Blis Technology Ltd.
Director Dunedin City Holdings Ltd. Director New Zealand Seed Fund
Director Dunedin Electricity Ltd. Director Otago Innovation Ltd.
Director Delta Utility Services Ltd. Director Endocrinz Ltd.
Director Citibus Newton Ltd. Councillor University of Otago
Director City Forests Ltd.
Member Marsh Limited Advisory Board C.C. Hopkins
Councillor University of Otago Director United Tooling Solutions Ltd.
K.J. Kilpatrick
Director Rapaura Vineyards Ltd.
Remuneration of directors
During the year to 31 August 2002, the total remuneration and other benefits attributed to the directors of the company
were as follows:
Directors Fees Other Remuneration Total
G.W. Batts 24,000 5,184 29,184
E.S. Edgar 18,000 - 18,000
C.C. Hopkins - 159,910 159,910
K.J. Kilpatrick - 220,866 220,866
G.J. Marsh 36,000 - 36,000
T.D. Scott 18,000 - 18,000
Directors' indemnity and insurance
The company has made arrangements for the insurance of its directors to cover risks arising out of acts or omissions
of directors and officers in their capacity as such.

AUDITOR’S REPORT
To the Shareholders of Scott Technology
Limited
We have audited the financial report on pages 10
to 19. The financial report provides information
about the past financial performance and financial
position of the Company and of the Group as at
31 August, 2002. This information is stated in
accordance with the accounting policies set out
on page 13.
Board of Directors’ Responsibilities
The Board of Directors is responsible for the
preparation, in accordance with New Zealand law
and generally accepted accounting practice, of a
financial report which gives a true and fair view of
the financial position of the Company and of the
Group as at 31 August, 2002 and of the results
of their operations and cashflows for the year
ended 31 August, 2002.
Auditor's Responsibilities
It is our responsibility to express an independent
opinion on the financial report presented by the
Board of Directors and report our opinion to you.
Basis of Opinion
An audit includes examining, on a test basis,
evidence relevant to the amounts and disclosures
in the financial report. It also includes assessing:
the significant estimates and judgements made
by the Board of Directors in the preparation
of the financial report, and
whether the accounting policies are appropriate
to the Company and the Group circumstances,
consistently applied and adequately disclosed.
We conducted our audit in accordance with
generally accepted auditing standards in New
Zealand. We planned and performed our audit so
as to obtain all the information and explanations
which we considered necessary in order to provide
us with sufficient evidence to give reasonable
assurance that the financial report is free from
material misstatements, whether caused by fraud
or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of
information in the financial report.
We provide taxation and consulting services to
Scott Technology Limited. Other than in our capacity
as auditors and the provision of taxation and
consulting services we have no relationship with
or interests in the Company or any of its
subsidiaries.
Unqualified Opinion
We have obtained all the information and
explanations we have required.
In our opinion:
proper accounting records have been kept by
the Company as far as appears from our
examination of those records; and
the financial report on pages 10 to19:
- complies with generally accepted accounting
practice;
- gives a true and fair view of the financial
position of the Company and the Group as
at 31 August, 2002 and the results of their
operations and cashflows for the year ended
on that date.
Our audit was completed on 24 October, 2002
and our unqualified opinion is expressed as at that
date.
Deloitte Touche Tohmatsu
Dunedin
page 23

DIRECTORY
page 24
Scott Technology Ltd - Head Office
Scott House
123 Crawford Street
Private Bag 1960
Dunedin
New Zealand
Telephone +64 (3) 477 0975
Facsimile +64 (3) 474 0934
Chief Financial Officer: C.C. Hopkins
c.hopkins@scott.co.nz
Scott Technology Ltd - Christchurch
10 Maces Road
P O Box 19667
Christchurch
New Zealand
Telephone +64 (3) 384 2029
Facsimile +64 (3) 384 3686
Chief Executive Officer: K.J. Kilpatrick
k.kilpatrick@scott.co.nz
Marketing:
Operations:
Scott Technology - Dallas
G.W. Todd
P.J. Johnston
Suite 214
1611 North IH35E
Carrollton, TX 75006
United States of America
Telephone +1 (972) 466 2543
Facsimile +1 (972) 446 1157
Manager:
Sales:
S. Campbell
s.campbell@scottec.com
I.A. Ure
Scott Automation Ltd - Dunedin
123 Crawford Street
Private Bag 1960
Dunedin
New Zealand
Telephone +64 (3) 477 0974
Facsimile +64 (3) 474 0934
General Manager:
Operations:
A.R. Arnold
a.arnold@scott.co.nz
B.W. Rekittke
Scott Automation Ltd - Auckland
48 Wharf Road
Te Atatu
Auckland
New Zealand
Telephone +64 (9) 834 2700
Facsimile +64 (9) 834 3863
Manager:
Betts Wine Division:
P. Denton
p.denton@scott.co.nz
D. Betts
Scott Automation Ltd - Australia
Unit 22, 244 – 254 Horsley Drive
Milperra
New South Wales 2214
Australia
Telephone +61 (2) 9773 1682
Facsimile +61 (2) 9773 1683
Manager:
A.J. Singh
a.singh@scott.co.nz
Share Registry
BK Registries
144 Tancred Street
P O Box 384
Ashburton
Telephone +64 (3) 308 8887
Facsimile +64 (3) 308 1311
Solicitors
Galloway Cook Allan
P O Box 143
Dunedin
Auditors
Deloitte Touche Tohmatsu
P O Box 1245
Dunedin
Bankers
ANZ Banking Group
Moray Place
Dunedin