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Reduction of Staff

12:00AM, 27 Jun 2008 | GENERAL

27 June 2008

Listed Company Relations
New Zealand Exchange Limited
PO Box 2959
Wellington

Dear Sir/Madam

The Directors of Scott Technology Limited advise that the company is to
reduce staff numbers by approximately twenty across its Dunedin and
Christchurch sites.  Three quarters of these redundancies are voluntary.

Management undertook a lengthy consultative process involving staff and the
EPMU.  Management considered the current and anticipated trends in each of
its revenue streams and has been able to focus redundancies on
under-performing and non-core parts of the business.  The level of voluntary
redundancies has greatly assisted this process.

Following the completion of this process, Scott Technology Limited's staff
numbers will be approximately 60 in Dunedin, 70 in Christchurch and 35 at
newly acquired subsidiary, Rocklabs, in Auckland; a total of approximately
165 staff.

Scott Technology Limited is experiencing a change in its business model, with
less demand for the traditional machining and fabrication parts of the
business and greater demand for our innovation, design and robotics skills.

Lower worldwide demand for appliances has resulted in appliance manufacturers
reducing or cancelling capital expenditure on new production lines.  This has
impacted on our Christchurch based appliances division over the last nine
months.  While we are faced with reducing staff numbers now, we are also
continuing to pursue new opportunities for our appliances division,
particularly in China and Europe, albeit with long lead and build times.

However, opportunities for our automation and robotics division continue to
be plentiful and underlie the increasing demand for our innovation, design
and robotics skills.  We have recently won a contract to build a robotic
welding cell for a New Zealand based equipment manufacturer and are
undertaking the development of new automated processes for the dairy
industry.

Significant progress also continues to be made with the automated boning room
systems for the meat industry and we anticipate being able to announce
further sales in the near future.

With the continuing growth of the mining industry, newly acquired Rocklabs is
showing excellent results.  Our automation division is currently working on a
major laboratory analysis system which will add a robotic interface to one of
Rocklabs' existing systems.  We see these jointly developed automation
systems as being a significant contributor to the Scott Group in the future.

Many of these automation and robotics systems are heavily biased towards
"front end" design, rather than final manufacture which has driven the need
to reduce staff numbers.

Despite the need to reduce staff numbers, the Directors and management remain
very confident of Scott Technology Limited's future prospects.

Yours faithfully

Chris Hopkins
Managing Director