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12:00AM, 13 Oct 2005 | FLLYR

FY to 31/08/2005 $315,000 ($3,716,000)

LISTED ISSUER: Scott Technology Limited


Audited NZ$'000

Current Period; Previous Corresponding Period


 Trading revenue                                    40,263;          35,789
 Other revenue                                          61;             104
Total Operating Revenue                             40,324;          35,893

OPERATING SURPLUS (DEFICIT) BEFORE TAXATION            459;           5,526

Less taxation on operating profit                      144;           1,810

OPERATING SURPLUS (DEFICIT) AFTER TAX                  315;           3,716

Extraordinary items after tax                            -;               -

Unrealised net change in value of investment properties -;      -

NET SURPLUS (DEFICIT) FOR THE PERIOD                   315;           3,716

Net Surplus (Deficit) attributable to minority interests        -;      -


EPS     1.3cps  14.9cps


The Directors of Scott Technology Ltd advise that the company earned an
audited operating surplus before tax of $459,000 on sales of $40.3m for the
year ended 31 August 2005.  This year's sales were the company's second
highest ever and the pre-tax surplus compares with the previous year's second
highest ever annual pre-tax profit of $5,526,000 achieved on sales of $35.8m.
 The year's result reflects the difficult trading conditions recently
experienced by the company and reported to the market in our profit warnings
announced to the Stock Exchange on 2nd June 2005, 17th June 2005 and 28th
July 2005.

The company designed and built a record amount of equipment during the year,
however a high New Zealand dollar, combined with an increasingly competitive
global market, resulted in a much reduced sales value in New Zealand dollars.
 Our operating margins had additional pressure during the year as a result of
the global demand for steel and the buoyant domestic economy which increased
our material, labour and local support costs with resulting cost overruns.

Research and development costs in the meat and robotics projects were fully
expensed.  The depreciation charge for the year was $1.1m.

Total shareholders equity at 31 August 2005 of $14.7m remains satisfactory
after payment of $2.7m in dividends to shareholders during the year.

The high level of work being undertaken and reduced margins resulted in an
increase in work in progress and a net operating cash outflow of $1.6m.  The
major contracts being underwritten by the NZ Export Credit Office require
Scotts to largely fund the work in progress with substantial payments on
completion of the contracts, resulting in some bank funding during the
construction period.

The balance sheet remains strong with good liquidity indicated by current
assets of $11.6m exceeding current liabilities by $4.7m.  At balance date the
company maintained its position of having no long term debt.

The Directors commitment to maintain a relatively high dividend pay out
resulted in a 4 cent interim dividend being declared and paid based on our
half year result.  Given the difficult trading conditions in the second half
of the year, the interim dividend exceeds our surplus for the year and
accordingly the Directors have decided not to pay a final dividend.  Scott
Technology has consistently paid a high proportion of its annual tax paid
earnings as cash dividends to its shareholders.  Tax paid earnings over the
past five years have totalled $12.5m and dividends paid in cash to
shareholders have totalled $10.4m over this period.

As previously reported, the company is continuing to take steps to improve
productivity and manufacturing efficiencies.  This includes an ongoing review
of our offshore purchasing of materials and components, to assist the company
offset the impact of the high New Zealand dollar.  The Board and management,
have undertaken a major review of the company's operating structure and this
continues to be an ongoing process as we seek to raise the company's
performance and competitiveness through refined design engineering, cost
reduction and efficiency improvement.  Mr Chris Hopkins, formerly Financial
Controller, has been appointed General Manager to focus on the company's
business management policies.

Scott Technology is a world leader in the design and manufacture of
sophisticated automated production lines and as current major contracts are
completed our appliance work load will reduce, but the company has a good
level of order enquiry globally, including a resurgence of interest from the
North American market.

A key business driver for Scott, is the timing of the completion of projects
and the commencement of new contracts.  At times an overlap can provide the
company with an excess work load, thus putting pressure on resources to
manage delivery expectations.

Worldwide there is an increasing trend towards factory automation to produce
more sophisticated products at economical prices and Scott Technology is well
placed to benefit from this global trend.

Over recent years Scott has diversified its technology skills into automation
in the meat and food industries and other related areas which has achieved a
more diverse business base.

Scott Automation has a strong current work load for clients in New Zealand
and Australia, somewhat lessening our dependency on sales in Euros and US

Scott Technology, like most exporters, has faced several operating
challenges, including an artificially high New Zealand exchange rate
substantially influenced by non trade related investment and speculation.
Only a small proportion of New Zealand's foreign currency transactions are
backed by exports or imports.  The balance is investment and speculative
activity.  As New Zealand's external deficit continues to deteriorate as a
result of cheap imports and increasing fiscal challenges to exporters, we
can, in due course, expect a realistic realignment in our currency.
Additionally, New Zealand is experiencing a very competitive labour market
exacerbated by a high level of net migration of people leaving New Zealand,
many of them highly skilled.  The record global oil prices has also impacted
shipping costs which disproportionally effects New Zealand exporters because
of our distance from the Northern hemisphere markets.

The Directors and executives of Scott Technology are absolutely committed to
directing the company's considerable resources to areas where Scotts can
apply their unique skills to achieve the financial results evident over
recent years.