Preliminary Results

Zytronic PLC
11 December 2007


For Immediate Release                                           11 December 2007



                                  ZYTRONIC PLC                                            
                          ('Zytronic' or the 'Company')
                                        

      Preliminary Results for the year ended 30 September 2007 (unaudited)


Zytronic Plc, a leading specialist manufacturer of touch screens and optical
filters for electronic displays, announces its preliminary results for the year
ended 30 September 2007.


Highlights

Financial

   • Group turnover of £11.4m decreased by 7% (2006: £12.3m)
   • Profit before tax decreased to £0.64m (2006 restated: £1.27m)
   • Tax charge of 15.6% (2006 restated: 12.0%)
   • Basic EPS of 3.7p (2006 restated of 7.8p)
   • Proposed final dividend maintained at 2.0p - total for year 3.0p (2006:
     3.0p)

Operational

   • Increasing sales of ZYPOS(R) touch sensors
   • ATM sales returning to higher, more normal levels
   • Appointment of new distributors takes total to 36
   • Significant investment in refurbishment of freehold property and plant
     and equipment for new ZYPOS manufacturing facility

On outlook, Chairman John Kennair said:


'The return to higher levels of ATM sales, together with the growth in sales of
ZYPOS touch sensors should enable an improvement in gross margins. We expect
that continuing strong sales growth in all product groupings will reduce the
Group's dependence upon the ATM market in the future and anticipate a
substantial improvement in the overall future profitability of the business. We
look forward to the remainder of the current financial year with renewed
confidence.'


Enquiries:

Zytronic Plc                  (Today: 020 7466 5000; thereafter 0191 414 5511)
John Kennair, Chief Executive
Denis Mullan, Finance Director

Buchanan Communications               020 7466 5000
Richard Darby, Isabel Podda

Brewin Dolphin Securities Limited
Alan Stewart, Corporate               0845 213 4213

Finance
Jamie Cumming, Corporate              0845 213 4203

Broking
Jock MacDonald, Corporate Sales       0191 279 7418




Notes to Editors

Zytronic is an industry leader in the development and manufacture of customised
optical filters to enhance electronic display performance. It is also an
innovator in the production of specialised and transparent laminates for niche
markets.

Based on this lamination expertise, Zytronic has developed a unique range of
touch sensor products employing Projected Capacitive Technology (PCTTM) which
enables the pointing device to sense through an anti-vandal screen in front of
the display. This system offers significant benefits to electronic display
manufacturers.

Operating from three modern factories near Newcastle-upon-Tyne in England,
Zytronic assembles touch sensors and filters, utilising special glass and
plastic materials, in environmentally controlled clean rooms.


Chairman's statement

I am pleased to report to you on the results for the year ended 30 September
2007 and to inform you that the weakness in our ATM sales, reported in my August
trading statement, appears to be behind us, with sales now returning to higher,
more normal, levels.


Results

Turnover for the year under review decreased by 7% to £11.4m (2006 £12.3m)
caused by this lower demand in the ATM sector. Gross margins declined by 1.2%,
also as a result of the reduction in ATM volumes, leading to a decrease in
pre-tax profits to £0.64m (2006 restated £1.27m). Basic earnings per share
amounted to 3.7p (2006 restated: 7.8p).


Trading

The reduced performance in the ATM sector masks significant progress in the rest
of the business for the year ended 30 September 2007. All areas of the Group's
touch screen business outside the ATM sector have shown substantial growth, with
overall sales growth of 75% in the year under review. Sales of ZYPOS(R) touch
sensors, which were first introduced in 2006, have shown growth this year of
340% to £1.4m. Sales of ZYTOUCH(R) touch sensors, outside the ATM sector,
increased by 27% to £2.2m.

It is pleasing to note that the Group has gained new customers over the year,
assisted by the appointment of further distributors and representatives taking
the total to 36. Sales growth of non-ATM touch screen products has resulted not
only from the expansion of geographical markets but also from their growing use
in widely diversified markets, with new customers being won in fields of
vending, ticketing, transport passenger information systems, gaming and
self-service.

In the ATM sector, the reduction in our sales, almost entirely in the North
American market, has been due primarily to the reorganisation by two of our
major customers of their manufacturing and inventory control systems, enabling
them to achieve substantial reductions in stock levels. These reorganisations
were virtually complete by September 2007, following which we have experienced a
return to higher levels of trading.

Investment in ZYPOS

The building works relating to the new production facilities and clean rooms for
ZYPOS were completed by the beginning of October 2007. We have moved our
existing ZYPOS production facilities into this new factory and are already
producing ZYPOS touch sensors there. We will receive additional items of plant
and equipment early next year, further increasing capacity and the automation of
production.

The new production facilities should have a significant positive impact on the
cost base for the production of ZYPOS as we move through 2008.


Dividend

The Directors are pleased to recommend an unchanged final dividend of 2.0p per
share payable on 7 March 2008 to shareholders on the Register of Members on 22
February 2008. Following a dividend of 1.0p per share paid on 29 June 2007, this
will bring the total dividend for the year to 3.0p per share (2006 3.0p per
share).


Outlook

We are pleased that sales to our two major customers in the ATM market are
returning to higher levels. The Directors expect that continuing strong sales
growth in all product groupings will reduce the Group's dependence upon that
market in the future.

The return to higher ATM sales, together with the growth in sales of ZYPOS touch
sensors, which are increasingly being specified into a number of new
applications in Europe, the Far East and North America, combined with increased
manufacturing capacity in the new ZYPOS production facilities, should enable an
improvement in gross margins. Consequently, we anticipate a substantial
improvement in the overall future profitability of the business.





J M Kennair MBE
Chairman

11 December 2007




Group profit and loss account for the year ended 30 September 2007

                                                        Unaudited      Restated
                                                             2007          2006
                                               Notes        £'000         £'000
Group turnover                                             11,434        12,301
Cost of sales                                               7,989         8,449
Gross profit                                                3,445         3,852
Distribution costs                                            197           170
Administration expenses                                     2,541         2,356
                                                            2,738         2,526
Group operating profit                                        707         1,326
Interest payable                                              (73)          (59)
Interest receivable                                             7             6
Profit on ordinary activities before taxation                 641         1,273
Tax charge on profit on ordinary activities         3        (100)         (153)
Profit on ordinary activities after taxation                  541         1,120

Earnings per share
Earnings per share - basic                          5         3.7p          7.8p
Earnings per share - diluted                        5         3.7p          7.7p



The results for both the above years derive from continuing operations.


Group statement of total recognised gains and losses for the year ended 
30 September 2007
                                               Notes    Unaudited      Restated
                                                             2007          2006
                                                            £'000         £'000
Profit for the financial year                                 541         1,120

Total recognised gains and losses relating to                 
the year                                                      541         1,120

Prior year adjustment                              1           15

Total gains and losses recognised since last                  
annual report                                                 556



Group balance sheet at 30 September 2007

                                                           Unaudited   Restated
                                                                2007       2006
                                                               £'000      £'000
Fixed assets
Intangible assets                                              1,959      2,026
Tangible assets                                                5,350      3,831
                                                               7,309      5,857
Current assets
Stocks                                                         1,828      1,706
Debtors: amounts falling due within one year                   2,767      2,852
         amounts falling due after one year                      194          -
Cash at bank and in hand                                         140        493
                                                               4,929      5,051
Creditors: amounts falling due within one year                 2,201      1,837
Net current assets                                             2,728      3,214
Total assets less current liabilities                         10,037      9,071
Creditors: amounts falling due after more than one year        1,340        658
Provisions for liabilities and charges
Deferred tax                                                     477        365
                                                               8,220      8,048
Capital and reserves
Called up share capital                                          147        146
Share premium                                                  6,473      6,450
Profit and loss account                                        1,600      1,452
Shareholders' funds                                            8,220      8,048



Group statement of cashflows for the year ended 30 September 2007

                                                           Unaudited
                                                              2007         2006
                                               Notes         £'000        £'000
Net cash inflow from operating activities         6a         1,348        1,529
Return on investments and servicing of finance
Interest received                                                7            6
Interest paid                                                  (71)         (48)
Interest element of finance lease rental payments               (2)         (11)
Net outflow from returns on investments and                    
servicing of finance                                           (66)         (53)
Taxation
Corporation tax paid                                           (29)        (230)
Capital expenditure and financial investment
Payments to acquire intangible fixed assets                   (202)        (159)
Payments to acquire tangible fixed assets                   (1,901)      (1,767)
Receipt from sale of assets                                      1            6
Net outflow from capital expenditure and           
financial investment                                        (2,102)      (1,920)
Equity dividends paid                                         (439)        (360)
Net cash outflow before financing                           (1,288)      (1,034)
Financing
Net receipts from new hire purchase                          
agreements/bank loan                                         1,123          750
Issue of ordinary share capital                                 24          238
Repayments of bank loans                                      (134)        (122)
Repayments of capital element of finance lease                 (78)        (149)
Net inflow from financing                                      935          717
Decrease in cash                                              (353)        (317)
Reconciliation of net cashflow to movement 
in net debt
Decrease in cash                                              (353)        (317)
Net receipts from new hire purchase 
agreements/bank loan                                        (1,123)        (750)
Repayments of bank loans                                       134          122
Repayments of capital element of finance lease                  78          149
Movement in net debt                                        (1,264)        (796)
Net debt at beginning of year                                 (380)          416
Net debt at end of year                            6b       (1,644)        (380)



1. Basis of preparation


The preliminary results have been prepared under the historical cost convention
and in accordance with applicable accounting standards. The preliminary results
have been prepared on the basis of the accounting policies set out in the
Group's statutory accounts for the year ended 30 September 2006, except that the
accounts take account, for the first time, of the requirements of Financial
Reporting Standard 20, share-based payment. The results for the year ended 30
September 2006 have been restated to reflect the application of FRS20.

The adoption of FRS 20 has resulted in a change in accounting policy for share
based-payment transactions. FRS 20 requires the fair value of options and share
awards, which ultimately vest, to be charged to the profit and loss account over
the vesting or performance period. For equity-settled transactions the fair
value is determined at the date of the grant using an appropriate pricing model.
For cash-settled transactions fair value is established initially at the grant
date and at each balance sheet date thereafter until the awards are settled. If
an award fails to vest as the result of certain types of performance condition
not being satisfied, the charge to the income statement will be adjusted to
reflect this.

Staff costs of £46,000 (2006: £39,000) and a deferred tax asset of £29,000
(2006: £15,000) have been recognised in the profit and loss account and the
balance sheet respectively.


2. Basis of consolidation

The Group results consolidate the financial statements of Zytronic plc and all
of its subsidiary undertakings drawn up to 30 September 2007.


3. Tax charge on profit on ordinary activities

                                                                       Restated
                                                                2007       2006
                                                               £'000      £'000
Current tax:
UK corporation tax                                                 -        (27)
Corporation tax over-provided in prior years                      12         10
Total current tax credit/(charge)                                 12        (17)
Deferred tax:
Origination and reversal of timing differences                  (112)      (136)
Group deferred tax                                              (112)      (136)
Tax charge on profit on ordinary activities                     (100)      (153)


Factors affecting current tax charge:
                                                                       Restated
                                                                2007       2006
                                                               £'000      £'000
Profit on ordinary activities multiplied by standard rate of    
UK corporation tax of 30% (2006: 30%)                           (192)      (382)
Expenses not deductible for tax purposes (includes               
amortisation of goodwill and licences)                            17        (54)
Deferred revenue expenses and tax credits                        146        110
Accelerated capital allowances                                    70         81
Current year tax losses carried forward                          (44)         -
Effects of small company/marginal rates of UK corporation tax      -         16
'Gain' on exercise of share options allowable for taxation         3        202
purposes but not reflected in the profit and loss account
Adjustments in respect of prior years                             12         10
Total current tax credit/(charge)                                 12        (17)


4. Dividends

The Directors propose the payment of a final dividend of 2.0p per share (2006:
2.0p), payable on 7 March 2008 to shareholders on the Register on 22 February
2008. This dividend has not been accrued in these Annual Accounts. The dividend
payment will amount to some £293,000.
                                                                2007       2006
                                                               £'000      £'000
Ordinary dividends on equity shares
Final dividend of 1.5p per ordinary share paid on 24 March       
2006                                                               -        215
Interim dividend of 1.0p per ordinary share paid on 30 June        
2006                                                               -        145
Final dividend of 2.0p per ordinary share paid on 16 March      
2007                                                             293          -
Interim dividend of 1.0p per ordinary share paid on 29 June      
2007                                                             146          -
                                                                 439        360

5. Earnings per share

Basic earnings per share (EPS) is calculated by dividing the profit attributable
to ordinary equity holders of the Company by the weighted average number of
ordinary shares in issue during the year. All activities are continuing
operations and therefore there is no difference between EPS arising from total
operations and EPS arising from continuing operations.

                                     Weighted                                  Weighted
                                      average                    Restated       average      Restated
                                       number      Earnings                      number      Earnings
                       Earnings     of shares     per share      Earnings     of shares     per share
                   30 September  30 September  30 September  30 September  30 September  30 September
                           2007          2007          2007          2006          2006          2006
                          £'000     thousands         pence         £'000     thousands         pence

Profit on ordinary
activities after
taxation attributable
to ordinary equity
holders                     541        14,640           3.7         1,120        14,414           7.8

Basic EPS                   541        14,640           3.7         1,120        14,414           7.8


The weighted average number of shares for diluted EPS is calculated by including
the weighted average number of shares under option.

                                     Weighted                                  Weighted
                                      average                    Restated       average      Restated
                                       number      Earnings                      number      Earnings
                       Earnings     of shares     per share      Earnings     of shares     per share
                   30 September  30 September  30 September  30 September  30 September  30 September
                           2007          2007          2007          2006          2006          2006
                          £'000     thousands         pence         £'000     thousands         pence

Profit on ordinary               
activities after 
taxation attributable 
to ordinary equity 
holders                     541        14,640           3.7         1,120        14,414           7.8

Weighted average 
number of shares 
under option                  -           147             -             -           220         (0.1)

Diluted EPS                 541        14,787           3.7          1,120       14,634           7.7


During the year 21,818 ordinary shares with an aggregate nominal value of £218
were allocated for cash at 110p each on the exercise of one option.


6. Notes to the statement of Group cashflows

(a) Reconciliation of operating profit to net cash inflow from operating
activities
                                                                       Restated
                                                              2007         2006
                                                             £'000        £'000
Operating profit                                               707        1,326
Depreciation                                                   490          429
Amortisation                                                   269          266
Profit on sale of fixed assets                                  (1)          (5)
Share options charge                                            46           39
Gross cash inflows                                           1,511        2,055
Increase in stocks                                            (122)        (505)
Increase in debtors                                            (96)        (216)
Increase in creditors                                           55          195
Net cash inflow from operating activities                    1,348        1,529


(b) Analysis of net debt
                                                 2006    Cashflows         2007
                                                £'000        £'000        £'000
Cash at bank and in hand                          493         (353)         140
Bank loan - chattel mortgage                      (83)          76           (7)
Bank loan - property                             (712)          58         (654)
Finance lease                                     (78)          78            -
Hire purchase agreements                            -       (1,123)      (1,123)
Net debt                                         (380)      (1,264)      (1,644)


7. Report and Accounts

The Board approved the preliminary release for the year ended 30 September 2007
on Monday 10 December 2007. The above unaudited results do not represent
statutory accounts. The audit report is yet to be signed. The audited accounts
will be mailed to shareholders shortly and will be available from the registered
office at Whiteley Road, Blaydon on Tyne, Tyne & Wear, NE21 5NJ.


The results for the year ended 30 September 2006 have been extracted from the
2006 accounts of Zytronic plc, which have been restated following the adoption
of FRS20, share-based payment, in the accounts for the year ended 30 September
2007. The 2006 accounts, which have been filed with the Registrar of Companies,
received an unqualified audit report and did not contain a statement under
Section 237(2) or (3) of the Companies Act 1985.


8. AGM Date

It is intended that the AGM will take place at the Company's offices at Whiteley
Road, Blaydon on Tyne, Tyne & Wear, NE21 5NJ on Tuesday 19 February 2008 at
2.00pm. Notice of the AGM will be sent to shareholders with the financial
statements.






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