POWER
MANAGEMENT
LED
DBS
AUDIO
Zetex plc Annual Report 2007 cov2
1 Financial highlights
2 Chairman’s statement
4 Chief executive officer’s business review
6 Financial review
10 Directors and board committees
12 Directors’ report
14 Remuneration report
24 Corporate governance
31 Independent auditor’s report
33 Statement of directors’ responsibilities
34 Consolidated income statement
35 Consolidated balance sheet
36 Consolidated statement of recognised 
income and expenditure
37 Consolidated cash flow statement
38 Company balance sheet
39 Group accounting policies
47 Company accounting policies
49 Notes to the financial statements
84 Shareholder information
Contents 2007 2006 Change
Reported results
Group revenue US$k 126,810 124,134 +2,676
£k 64,638 67,168 -2,530
Adjusted gross margin % 32.9% 30.5% +2.4%
Adjusted operating profit £k 3,993 2,787 +1,206
Reported profit before income tax £k 7,749 1,601 +6,148
EBITDA £k 15,315 9,057* +6,258
Dividend incurred per share p 2.15 2.15 -
Underlying results
Adjusted operating profit at constant currency £k 5,496 2,787 +2,709
Effect of inventory level change £k (765) (4,240) +3,475
Underlying adjusted operating profit at
constant currency £k 6,261 7,027 -766
Balance sheet
Net cash balance £k 15,847 9,966 +5,881
Inventory £k 14,656 14,180 +476
Capitalised R&D £k 4,256 3,600 +656
*Revised from prior year.
Financial highlights During 2007, Zetex made significant progress 
in executing the group’s reshaped strategy,
increasing market penetration against the
backdrop of a difficult market whilst improving
operational efficiencies.
The group increased product investment targeted
at those areas which promise the best returns, 
and further strengthened its sales and engineering
force to better exploit international markets
particularly in the Far East.
The financial results for 2007 reflect the early
fruits of the hard work that has gone in to
improving Zetex’ financial performance. They 
are a credit to our management team in the light
of the substantial headwinds of difficult markets
and a weak dollar experienced by the group 
during the year.
Group financial results
Revenue for the year was $126.8 million 
(£64.6 million), an increase of 2.2 per cent 
(2006: $124.1 million (£67.2 million)), against 
a market decline in Zetex’ sector of 3 per cent.
Group adjusted operating profit rose to 
£4.0 million (2006: £2.8 million), an increase 
of 43 per cent. Revenues would have been higher
by another $8 million but for one US distributor
going into Chapter 11 and another losing a 
major customer of its own, making these results
all the more creditable whilst still increasing
investment in R&D and sales.
After the share of the profit of the associate, 
net finance income of £0.6 million and adjusted
items of £3.2 million profit, which principally
relates to the disposal of Gem Mill and the 
pension curtailment, group profit before tax 
for 2007 was £7.7 million (2006: £1.6 million).
After a taxation expense of £0.4 million (2006:
£0.9 million credit), the profit from continuing
operations attributable to shareholders was 
£7.3 million (2006: £2.5 million).
Earnings per share was 7.28p (2006: 2.54p) and
7.23p on a diluted basis (2006: 2.52p). Adjusted
earnings per share was 4.13p (2006: 2.59p).
Dividend
On 14 September 2007, the board paid an 
interim dividend of 0.70p per share in respect 
of 2007. At the Annual General Meeting to 
be held on 28 April 2008, the board will be
recommending a final dividend of 1.45p per 
share in respect of the 2007 financial year. This
will be paid on 6 June 2008 to shareholders on 
the register at the close of business on 9 May
2008. The total dividend in respect of 2007
financial year will therefore be unchanged 
from that for 2006 at 2.15p per share.
Board change
Nick Hawkins resigned as a director and CFO 
on 20 February 2008 to take up an opportunity 
to become CFO of a larger company on a 
pre-IPO basis. The board recently announced 
the appointment of Chris Smith as Chief Financial
Officer of Zetex plc with effect from May 2008.
Chris Smith, ACA (age 44), is currently European
Finance Director at Scapa Group plc, an international
adhesive tape manufacturing business. Prior to 
his role at Scapa he held a number of roles at
Courtaulds plc and Akzo Nobel, the international
specialist coatings, fibres and chemicals group,
including seven years based in Germany and 
Hong Kong. Chris brings to Zetex over 15 years 
of senior operational finance experience in a
variety of industries and geographies.
Foreign currency 
The board uses hedging arrangements designed 
to cover unmatched surplus currencies, mostly
relating to US dollars. The hedging arrangements
enabled Zetex to achieve an average rate of 
US$ 1.92/£ in 2007 compared to an average spot 
rate of US$ 2.00/£. Hedging arrangements 
2
Chairman’s
statement comprise forward contracts, collars and options.
The commercially effective hedging policy has
limited the impact of the weakening US dollar on
the consolidated income statement during the year.
The board’s policy on currency hedging 
continues to aim to protect the group in the 
short-to medium-term against exchange rate
movements and to provide a level of currency
certainty for operational purposes.
For 2008 the group has hedged around 
95 per cent of its 2008 net revenues at a rate 
of US$1.97/£.
Further information on the group’s foreign
exchange hedging arrangements can be found 
in the chief executive officer’s business review.
Pension scheme
At 31 December 2007, the Zetex Group Pension
Scheme (the Pension Scheme) showed an IFRS
deficit of £5.2 million (2006: £8.2 million) as
calculated under IAS 19. The Pensions Committee
of the board has been working with the trustees 
of the Pension Scheme to manage the pensions
liability. Following a consultation with employees
and the trustees, the defined benefit section 
of the Pension Scheme was closed to future 
accrual on 1 September 2007. This reduced the
pension fund deficit by £2.2 million. A defined
contribution section of the Pension Scheme 
was opened for future employer and 
employee contributions.
The triennial valuation of the pension scheme 
took place on 5 April 2007 which showed a deficit
of £3.9 million (under the scheme specific funding
measure). Agreement has been reached with 
the trustees on a repayment plan to extinguish 
the remaining scheme specific funding deficit over
the years 2009 to 2012. A special contribution 
of £1 million was made in September 2007 and a
further £1 million will be made in 2008, thereby
reducing the deficit further.
Outlook
Market conditions during 2008 will continue 
to be challenging, in particular in the first half 
as global economic growth is expected to be 
slow. Industry analysts forecasts vary widely but
generally expect that growth in 2008 will occur
primarily during the second half. As a result 
of the significant progress made in repositioning
and strengthening the group, the board continues
to anticipate that market penetration will grow 
in 2008. However, recognising the difficult market
conditions, first half revenues are not expected 
to be significantly ahead of the second half 
of 2007, growth being delivered in the second 
half as conditions improve and new products 
gain traction.
Liz Airey
Chairman
21 February 2008 Market environment
The market for semiconductors grew around 
2 per cent in 2007. The first half demand was
impacted by excess inventory and growth in the
second half was not as strong as forecast. Worthy
of note is that the market for discrete and analog
products shrunk by 3 per cent, with double digit
unit growth being more than offset by average
selling price decline.
This time last year I was quite critical about the
forecasted recovery as I felt it did not have a solid
foundation. Industry spokesmen have adopted 
a very conservative to negative view about 2008.
However, I am more optimistic as I do see the
industry in better shape than when we entered 2007.
With inventories generally at the right level and
limited new capacity ramping up, demand and supply
seem to be more balanced than for a long time.
With the uncertainty regarding the overall worldwide
economy, it is however prudent to plan for only
moderate growth for the industry.
Most market researchers are currently forecasting
around 6 per cent growth for the industry.
Revenue, profit and channels
Despite this difficult market environment, Zetex
managed to achieve growth with revenues of
$126.8 million, up by $2.7 million or 2.2 per cent
from 2006.
Adjusted operating profit was up from 2006 
by 43 per cent from £2.8 million to £4.0 million.
Almost all the financial metrics have been
adversely impacted by the significant strengthening
of sterling versus the dollar. A further examination
of this impact is provided below.
Strengthening our distribution network is essential
to fully exploit our product portfolio. As part of
this strategy we added two distributors in the first
half in Asia and two distributors in Europe in the
second half. 
Whilst these additions did not contribute
significantly to our revenues in 2007, these new
distributors are now trained and active in the
market place and we expect to see a positive
impact on our revenues during the course 
of this year.
Inventory and cash
The group continued to improve its cash position
and cash reserves increased by 59 per cent to
£15.8 million.
As previously reported, we plan to keep our
inventory in a band between £14 million and 
£15 million. The inventory at the end of 2007 was
£14.7 million. We continued to improve the mix
and kept aligning it with our selling strategies.
Markets, growth prospects, trends
As in previous reports, I will expand on some of
the technologies and products on which we focus.
First I want to cover some market trends relevant
for Zetex. I am very pleased to see some of the
expectations we have had at Zetex for some time,
turning into reality.
Reflecting on 2007, the progress made in solid
state lighting technologies has, in many ways,
gone beyond our expectations. The efficiency
improvement of LED technology has encouraged
the traditional lighting industry to believe that 
LED’s are becoming a mainstream light source.
This has initiated a whole series of new R&D
programs to embrace much more aggressively the
development of mainstream LED lighting fixtures.
Looking forward to 2008, I believe that it will 
be the year when solid state lighting starts to
become the future of general lighting.
Most of these programs are still in an early 
stage but are progressing well. Moreover 
because energy efficiency is high on the agenda 
of governments wanting to act on climate change
issues, this will drive legislation and encourage
support initiatives.
4
Chief
executive
officer’s
business review The group, with its strong product portfolio and
customer engagements, is in a good position to
further capitalise on these accelerating developments.
In August I described some of the initiatives to
upgrade our design and selling capabilities. After
our initial focus in Asia we expanded this and I am
pleased to report further progress by adding two
distributors in Europe.
These initiatives are starting to show a tangible
impact which we expect to accelerate during the
course of the year.
Research and development
New products are the life blood of our industry. 
We increased our investment in R&D from 
£6.6 million in 2006 to £7.2 million in 2007, of
which £4.3 million was capitalised. This represents
11 per cent of revenues and whilst this was
broadly in line with our longer term strategic plan,
we moderated spending in line with slower than
anticipated market growth.
As forecast in August, we completed the verification
of our digital audio chip set in Q4, and expect
production silicon to become available as planned
in Q3 of 2008. We continue to win further quality
customers, although the necessary technical
support of this disruptive technology initially limits
the number of new engagements. This situation
will continue until the final revision of the chip 
set becomes available, as mentioned above, 
in Q3 2008. This will be the foundation of a robust
set of reference designs, reducing the required 
day to day technical support.
We continue to work hard to enrich our portfolio 
of high brightness LED drivers. One of the highlights
was the announcement of the first dedicated chipset
for a high volume LED based retrofit alternative 
to a light bulb called in the industry MR16.
This chipset was announced in November and 
in order to shorten the time to revenue, the group
followed up with the robust reference design at 
the very beginning of the year. In the meantime,
we shipped over a hundred evaluation boards 
to more than 30 different customers. Whilst it is
exciting to be providing disruptive technologies 
for very high volume applications, the design-in
cycle and production ramp is considerable and
tends to be in the 24 month range. As previously
reported we do expect revenues from these
technologies in Q4 2008 accelerating in 2009.
We continued to strengthen our industry leading
high performance bipolar discrete portfolio by
adding products targeting specific high volume
application where the technology brings value 
to the customer and their end product. We are 
in the process of releasing more than a dozen
MOSFETs designed using a foundry based process,
and we are demonstrating real progress in using
third party IP and manufacturing sources.
I would like to draw to your attention the 
progress that we are making with our products 
for the digital broadcasting systems (DBS) 
market. As previously reported, we command 
a market share of above 50 per cent for circuits
incorporated in the low noise block (LNB) of
satellite antenna dishes. Whilst these products
contributed towards our fixed costs, they are
having a negative impact on average gross profit
margins, as prices were driven down primarily by
enterprises reverse engineering Zetex’ products.
We did engage in a program converting and 
adding functionality to our DBS products using
advanced foundry technologies. I am very pleased 
to report that the company executed well and 
the design-in of the new products is gaining
traction quickly. We expect to see improved DBS
margins in the fourth quarter of 2008. Results
Group revenue in 2007 increased by $2.7 million
or 2.2 per cent to $126.8 million (£64.6 million).
The market Zetex serves declined 3 per cent in the
same period. The significant changes in US dollar
to sterling rates resulted in a decline in sterling
terms of £2.8 million.
Adjusted operating profit was strongly ahead of
the prior year at £4.0 million, an increase of 43
per cent and equivalent to a return on sales of 6.2
per cent. Overall, operating profit was impacted by
£1.5 million as a result of currency changes, after
benefiting £1.3 million from hedge contracts.
At constant currency and before inventory
overheads movement, underlying return on sales
was 9.7 per cent (2006:10.5 per cent).
Revenue
Revenue growth would have been higher but for
the group’s second largest distributor in the USA
filing for Chapter 11 bankruptcy, which was reported
at the interim stage. Additionally, our largest US
OEM lost its position with a major customer during
the year for technical reasons unrelated to Zetex.
Together, these accounted for a reduction in
revenue in excess of US$8.0 million. Consequently,
USA revenue was 11 per cent lower year on year.
Excluding these account losses, revenue in the
Americas was 34 per cent up on 2006 in dollar
terms, demonstrating strong underlying growth.
Asia revenue started to show the benefit of
investment in field sales and applications staff with
revenue ahead 4 per cent, again in dollar terms.
The European region enjoyed good real growth
although the transfer of a major account to 
Zetex USA reduced the US dollar net growth to 
just 1 per cent.
As a result, regional revenue was 50 per cent
generated in Asia, 36 per cent in Europe and 
14 per cent in USA (2006: 49 per cent, 37 per 
cent and 14 per cent respectively).
Zetex continued its drive towards servicing previous
smaller OEM customers through distribution
channels and, as a result, grew distribution revenue
to 66 per cent of total revenue.
The group has for a number of years adopted a
prudent approach to recognition of distributor
revenue, only recognising it in the consolidated
income statement when the products have been
sold on by the distributor to the end customer,
even though the distributors have only limited
return rights. In this way, $2.3 million of revenue
was not recognised in the results for 2007,
equivalent to approximately £0.4 million gross
profit, larger numbers than in previous years
(2006: $0.1 million and £0.1 million respectively)
as distribution business becomes more significant
to the group as a whole.
In the case where the distributor has no return 
or cancellation rights, this revenue is recognised
on shipping.
Research and development
R&D is a crucial investment in future growth.
In 2007, the group increased investment in R&D 
to £7.2 million (2006: £6.6 million), representing
11.1 per cent of revenue (2006: 9.8 per cent).
Absolute expenditure was 9 per cent higher than
the previous year.
The group has stringent criteria before capitalising
R&D. Of the £7.2 million (2006: £6.6 million)
overall expenditure, £4.3 million (2006: £3.6
million) was capitalised as product, process or
package development, an increase reflecting the
enhanced quality of investment in new products
designed to bring economic benefit in the years
ahead. £2.9 million (2006: £3.0 million) expensed
direct to the consolidated income statement.
Additional charges expensed to the consolidated
income statement are asset impairment £0.6 million
(2006: £0.5 million) and amortisation of £1.7
million (2006: £1.4 million).
Therefore, the overall consolidated income
statement charge relating to R&D totalled 
£5.2 million (2006: £4.9 million).
Sales and marketing
As part of our reshaped strategy, we have deliberately
increased investment in field sales and applications
engineers, particularly in Asia. A new sales office
was opened in Taipei during the year. Further
heads were recruited in marketing and application
engineering. In local currency terms, people 
costs in our regional sales and applications offices
6
Financial review increased by 11 per cent. It is expected that these
investments should start to bear fruit in 2008 
and beyond.
Adjusted items
Adjusted items comprise such costs or profits that
the board believes should be brought to the attention
of shareholders as a result of being unusual in
nature or non-recurring, or simply items that merit
separate disclosure. Principal amongst these items
for the year under review were:
Relocation and rationalisation costs
£0.3 million (2006: £0.4 million)
This represents costs related to the support costs,
including security costs, of the previous operating
site, Gem Mill, in Chadderton, UK. This was 
sold during the year. Also included in this total 
are residual pension-related costs related to the
previous Trend business that was disposed in 2004;
Profit on sale of Gem Mill site
£2.0 million (2006: £nil)
In April 2007, the group completed the disposal 
of the Gem Mill property. This profit represents the
difference between sale proceeds and book value
less associated sale costs;
Pension curtailment
£2.2 million (2006: £nil)
As previously announced, the group made
significant alterations to its pension arrangements
in relation to the defined benefit scheme, the key
changes being replacing the link to final salary 
by reference to fixed current salary plus RPI and
replacing future accrual into the defined benefit
scheme by fixed percentage contributions into 
a defined contribution scheme;
Corporate advisor costs
£0.3 million (2006: £nil)
During 2007, one off costs were incurred in
relation to corporate advisors.
Cash flow analysis
During 2007 the net cash position has increased
from £10.0 million to £15.8 million at 31 December
2007. Strong working capital management coupled
with the proceeds from the sale of Gem Mill,
resulted in the improved cash position.
Inventory increased from £14.2 million to £14.7
million in the year as a part of deliberate policy 
to support new product initiatives. A change in 
the mix of inventory had an adverse profit impact
of £0.8 million (2006: £4.2 million). Improvements
in working capital management generated a 
£1.9 million cash inflow in the year.
The board continues to believe that it is necessary
to maintain an appropriate level of net cash going
forward to provide both the flexibility to pursue
investment opportunities and to sustain
technology development programmes through
cyclical industry downturns.
In more detail, the principal drivers behind the
improvement of cash flow were:
• profit before tax (excluding 
Gem Mill and pensions 
curtailment) +£3.6 million
• sale of Gem mill +£3.0 million
• defined benefit Pension 
Scheme special contribution -£1.0 million
• dividends paid -£2.2 million
• excess of depreciation and 
amortisation over capital 
expenditure +£2.0 million
• working capital management +£1.9 million
Capital expenditure (including capitalised
development costs) was higher at £6.1 million
(2006: £5.4 million).
Balance sheet analysis
Our total capital investment in the year totalled
£6.3 million (2006:£4.9 million), of which 
£2.1 million (2006: £1.3 million) was committed to
tangible assets, £3.5 million (2006: £2.2 million)
related to product development and £0.7 million
(2006: £1.4 million) to the development of our
technology platforms. The main tangible capital  expenditure related to various specific capital
projects in our foundry at Zetex Technology Park.
Another key operational goal is to maintain or
improve the inventory turns, which had already
been significantly reduced in 2006. Overall
inventory was marginally higher at the year end 
as part of a deliberate strategy to support sales
initiatives, although the mix was skewed towards
lower overhead bearing products, hence the
consolidated income statement charge of £0.8
million. Measured in turns on a like for like basis,
inventory turns improved by over 10 per cent 
from Q4 2006 to Q4 2007.
The group’s previous operating site at Gem Mill
was sold to a national house builder and, as a
consequence, the current asset for sale in the
2006 consolidated balance sheet is no longer 
on the 2007 consolidated balance sheet.
Working capital was £1.9 million lower reflecting
increased creditor days from 44 to 58. Debtor days
increased slightly from 40 days to 41 days, although
there was positive cash flow of £0.5 million 
(2006: outflow of £1.3 million).
Tax
In our interim report we indicated that the group’s
medium term effective tax rate should be in the
range 15 per cent-25 per cent.
The total effective tax rate for 2007 was a 5.3 per
cent charge (2006: 58.5 per cent credit). It should
be noted that there were a number of one off
items including the Gem Mill sale, pension deficit
reduction and movement in German tax rate which
have all impacted this.
The group generates taxable profits and losses in
several jurisdictions, principally the UK, Germany,
USA and Hong Kong and consequently benefits
from overseas tax rate differentials.
Dividend
The charge to retained earnings for 2007, under
IFRS, represents the amounts paid during the
financial year, being the final dividend for 2006 of
1.45p per share and the interim dividend for 2007
of 0.70p per share. The total amount paid was
£2.2 million (2006: £2.2 million).
The board is recommending an unchanged final
dividend of 1.45p per share for 2007.
Currency hedging
The group’s principal revenue currency is US dollars
followed by Euros. Conversely, the currency of the
largest component of the cost base is pounds sterling,
then US dollars and Euros. Consequently, the group
is exposed to fluctuations in exchange rates.
In order to protect its short- to medium-term cash
flows and hence profitability, the group has adopted
a formal policy of foreign currency hedging. The
key aspects of this policy are as follows:
• objective is to smooth the effect of currency
movements on the consolidated income
statement;
• cover must be taken for the following 18 months
and may be extended by a further six months;
• minimum cover levels range from 90 per cent for
the current and following quarter to 20 per cent
for the quarter furthest out;
• permitted instruments are restricted to forward
contracts, vanilla options and collars.
It is not the policy of the group to take speculative
positions on currency. The group does not
undertake any hedging of its consolidated balance
sheet.
For 2008 the group has hedged approximately 
95 per cent of its 2008 forecast revenues at a 
rate of US$ 1.97/£.
Defined benefit pension scheme
The group operates both a defined contribution
and defined benefit pension scheme. The defined
benefit pension scheme was closed to new
members in 2002.
Note 9 to the financial statements sets out the
accounting basis of the defined benefit pension
scheme under IAS 19.
As previously indicated in September 2007, 
the group made certain changes to its pensions
arrangements. Principal amongst these were the
change from final salary link to August 2007 
salary plus RPI (capped) and the replacement of
future accruals into the defined benefit scheme 
by payments to a defined contribution scheme.
8
Financial review These changes resulted in a one-off curtailment
effect of £2.2 million.
At the end of 2007 scheme assets were valued at
£59.4 million (2006: £58.4 million) compared to
actuarial benefit obligations totalling £64.6 million
(2006: £66.7 million). The resulting IAS19 deficit
of £5.2 million at 31 December 2007 was lower
than the £8.2 million deficit at 31 December 2006
largely as a result of the changes to the scheme
explained above, although it should be noted that
the deficit may and will change as a result of
fluctuating equity markets.
The current investment strategy of the trustees 
is a 60:40 split in favour of equities. The last
triennial valuation was performed as at 5 April
2007 and the valuation has been completed and
the next triennial valuation is due on 5 April 2010.
The way forward
Our industry is cyclical, although the amplitudes
appear to be more moderate than in the past.
While we deal with the realities of the markets we
keep focused on what has the potential to make
the difference, execute our strategies and effectively
deal with stumbling blocks along the way.
I am confident about the long and mid term
growth potential of the semiconductor industry.
The biggest unknown factor remains the
uncertainty of worldwide economic developments.
While certain newer products have the potential 
to achieve high growth even under difficult market
conditions, the majority of our portfolio is still
subject to general market forces.
One of my personal objectives is to reduce time 
to first revenues and breakeven.
This is the drive behind numerous reference
designs targeting high volume applications
introduced to the market during the fourth
quarter.
Whilst admittedly this objective is only partially
under our control, we must keep focused on this 
in order to create and accelerate value creation 
for our shareholders.
I believe that the industry is in a good position 
to capitalise on the continued volume growth.
I want to thank all of our employees for their
commitment, skills and help and support I have
received over the course of the year.
Hans Rohrer
CEO
21 February 2008
9
02 4 12
Net cash £ millions
68 16
-7 -5 -3 1 -1 0
Operating profit bridge
FY 2006
exl 2006 inv effect
underlying FY 2006
2007 inv effect
overhead increase
FX effect
growth/margin
rev rec
FY 2007
Cash flow elements
net cash 31.12.06
operating profit*
dividend
depn & amort
capex & R&D cap
Gem Mill
inventory
other w.cap/pensions
net cash 31.12.07
€ hedging – forward contracts
1H 2008 
2H 2008
1H 2009
5.6 million
5 million
2 million
US$ hedging – forward contracts
01234567
£ millions
5 9 13 15
Net cash £ millions
37 11
1H 2008 
2H 2008
1H 2009
23.9 million
23.5 million
9.3 million
Inventory stability
2H 2004
1H 2005
2H 2005
1H 2006
2H 2006
1H 2007
2H 2007
02 4 10 14 18 20
£ millions
6 8 12 16
Continued cash rebuilding
1H 2005 
2H 2005
1H 2006 
2H 2006
1H 2007
2H 2007
10 14
* pre Gem Mill, post other adjusted items and post all IFRS (except R&D) 10
Directors
Biographies
Liz Airey
Appointed non-executive Chairman of the
company in April 2003, is also Chairman of the
J P Morgan European Fledgeling Investment Trust
plc and a non-executive director of Tate & Lyle
PLC, AMEC plc and Dunedin Enterprise Investment
Trust plc. For 9 years to 1999 she was Finance
Director of Monument Oil and Gas plc. (Born 1959.)
Hans Rohrer
Joined the board as Chief Executive Officer 
on 1 February 2006. He began his career in 
R&D at Diehl Data Systems before moving on to
Texas Instruments where he held engineering and
marketing positions. He has worked for the bulk of
his career (1980-1998) at National Semiconductor.
During his seventeen year tenure at National
Semiconductor, he held several management
positions amongst them vice president and general
manager Europe and vice president for VLSI/mixed
signal products. Hans then became President of
TSMC-Europe. Hans holds a master’s degree in
electronics and received business and management
education from Stanford University, California and
INSEAD, Paris. (Born 1949.)
Nick Hawkins
Joined the board on 3 April 2006 as Chief Financial
Officer. He was previously Chief Financial Officer 
of McMillan-Scott, a publishing company. Prior to
that he held a number of roles at European Colour,
the international specialist pigments and performance
coatings group, including over seven years as CFO.
Before his time at European Colour, he worked in 
a number of senior financial positions in the UK and
overseas, principally in global, technology-driven
manufacturing businesses. Nick resigned from 
the company on 20 February 2008. (Born 1961.)
Colin Greene
Joined the board as an executive director in 
March 2004, as Director of Marketing and was
appointed Chief Operating Officer in December
2004. He joined Zetex Semiconductors plc 
in 1997, having previously spent 10 years with
National Semiconductor, most recently as 
European Marketing Manager for all analog
products. (Born 1956.)
Professor Jim Norton
Chartered Director and non-executive director 
of the company, joined the board in October 
2000. He was appointed as senior non-executive
independent director in April 2003. He was
Executive Chairman of Deutsche Telekom Ltd 
until October 2002 and is a non-executive director
of F & C Capital and Income Investment Trust plc.
He is also a board member of the UK Parliamentary
Office of Science and Technology and a senior
policy adviser for the Institute of Directors. 
(Born 1952.)
Robert Venter
Non-executive director of the company since 
May 1993. He is Chief Executive and director 
of Allied Electronics Corporation Limited, a
Johannesburg Stock Exchange listed electronics
company based in South Africa and is also a 
non-executive director of Bytes Technology 
Group Limited and Allied Technologies Limited.
From 1988 to 1990 he was a Vice President 
of Corporate Finance at Bear Stearns & Co., 
Inc (Los Angeles). (Born 1960.)
Martin Geh
Non-executive director of the company since
October 2004. He is currently Managing Director
and Regional Vice President, Asia Pacific Region, 
at Logitech. Prior to Logitech, he was President 
of Asia Pacific region at Lucent Technologies, 
Vice President of Asia Pacific region at Apple
Computers, and he also held several senior roles 
at Intel in Asia and the USA. A Singapore resident,
he began his career at Intel Semiconductors,
Oregon, USA. (Born 1965.)
Barry Waite
Non-executive director of the company since 
July 2003. He is non-executive director of NASDAQ
listed Kulicke and Soffa Industries and Innovative
Micro Technology (a MEMS manufacturing company
based in Santa Barbara) and is senior advisor 
to Investor Growth Capital, a fund managed out 
of New York. He was previously President and 
CEO of Chartered Semiconductor Manufacturing
(Singapore) and is based in the USA. (Born 1948.) 11
Name Board AuditRemunerationNominationBudget RiskPensions
Position Committee Committee Committee Committee Committee Committee
Liz Airey Non-Executive
Chairman x x x Chairman
Professor Senior
Jim Norton Independent
Non-Executive x Chairman x x
Hans Rohrer CEO x x
Nick Hawkins CFO x x
Colin Greene COO x Chairman
Martin Geh Independent
Non-Executive Chairman x
Robert Venter Non-Executive x x Chairman
Barry Waite Independent
Non-Executive Chairman x x
Board and board committees  The board of Zetex (the company) presents 
its annual report to shareholders, together with 
the audited financial statements of the group 
for the year ended 31 December 2007.
Principal activities
Zetex is an international supplier of analog
semiconductor solutions for power management
applications.
Business review
The directors are satisfied with the strategy of 
the group, including the operations of the group
outside of the UK, and believe it is well positioned
to successfully develop in the field of analog
semiconductor solutions.
More information is contained in a review of the
operation and financial position of the group which
is set out in the chairman’s statement on pages 2
and 3, in the chief executive’s business review on
pages 4 to 8 and in the risk analysis contained in
corporate governance report on pages 28 and 29.
The information in these reports, necessary to
fulfil the requirements of the business review, is
incorporated into the directors’ report by reference.
Results and dividend
The audited financial statements for the year ended
31 December 2007 are set out on pages 34 to 83.
The profit attributable to shareholders was £7.3m
(2006: £2.5m).
The directors recommend a final dividend in
respect of 2007 of 1.45p per ordinary share. An
interim dividend of 0.70p per ordinary share was
paid on 14 September 2007. Under International
Financial Reporting Standards, dividends are
recognised in the accounts of the year in which
they are paid or, in the case of a final dividend,
when approved by shareholders. The amount
recognised in the 2007 accounts and set out in
note 5, comprises the final dividend in respect 
of 2006 and the 2007 interim dividend. The final
ordinary dividend in respect of 2007, if approved,
will be paid in cash on 6 June 2008 to those
shareholders on the register at the close of
business on 9 May 2008.
Share capital
At 31 December 2007 there were 104,246,390 
ordinary shares in issue. 292,154 shares 
were issued during the year, of which 165,365 
shares were issued to satisfy the exercise of share 
options and 126,789 shares were allotted to the
non-executive directors in lieu of part or all of
their net cash fees. Details are given in note 13 
to the financial statements.
Directors
The names of the directors of the company at 
the date of this Report, their biographical details
and membership of Board committees are given 
on page 10.
In accordance with the Articles of Association 
of the company, at the forthcoming AGM, Martin
Geh and Robert Venter will retire by rotation and
offer themselves for re-election.
No service contract exists or is proposed between
the company and any director, which is not
terminable within one year. Martin Geh and Robert
Venter, in common with the other non-executive
directors, do not have service contracts.
The interests of the company’s directors and 
their families in the share capital of the company
as at the date of this report are given in the
remuneration report on page 20. The Register 
of Directors’ Interests of the company (which is
open to inspection) contains full details of the
directors’ shareholdings and options to subscribe.
Details of the executive directors’ options to
subscribe for shares in the company are disclosed 
in the remuneration report on page 19.
During the year, each of the directors signed 
a deed of indemnity with the company in
accordance with the articles of association.
Substantial interests
As at 20 February 2008 the company had 
been notified of the following material interests
representing more than 3 per cent of its issued
share capital:
Innovation
Programmes for the creation of new products and
process technologies for competitive advantage
continue to be critical activities to secure the
group’s future success. Expenditure on innovation
in the year was £7.2m (2006: £6.6m) with £2.9m
(2006: £3.0m) charged directly to the consolidated
income statement.
12
Directors’ report No of Shares per cent
Dr W P Venter and related family trusts 34,467,510 33.06
Aberforth Partners 22,584,664 21.63
The Capital Group Companies Inc. 6,131,500 5.88
Morley Fund Management 3,589,145 3.44
Zetex Employee Share Ownership Plan Trust 3,200,899 3.07
Financial risk management
Details of the financial risk management objectives
and policies of the group, including the policy for
hedging each major type of forecasted transaction
for which hedge accounting is used and the
exposure of the group to price risk, credit risk,
liquidity risk and cash flow risk are discussed 
in the corporate governance report on pages 28
and 29.
Significant agreements
The company has major contracts with customers
and suppliers that would be impacted by a change
of control. The disclosure of the nature of these
contracts would be prejudicial to company’s
trading position.
Employment
The group is a responsible employer and has
adopted corporate values and standards designed
to help guide employees in their conduct and
business relationships. A core group policy is that
of equal opportunity in the selection, training,
career development and promotion of employees,
regardless of gender, age, racial origin, religion,
sexual orientation and whether disabled 
or otherwise.
Political and charitable donations
No political or charitable donations were made 
by the group in either 2007 or 2006.
Supplier payment policy
It is the general policy of the group to develop
relationships with suppliers which include making
payments consistent with established agreed
practices. In view of the international nature of the
group’s activities there is no universal code or
standard on payment practices but group companies
are expected to establish terms of trade consistent
with the above policy and with the markets 
in which they operate. The group’s creditors 
were paid on average 58 working days in 2007
(2006: 44 days) from the receipt of invoice.
Auditors
A resolution to reappoint Ernst & Young LLP as the
company’s auditors and authorising the directors
to determine their remuneration will be put to the
forthcoming AGM.
In accordance with Section 234A of the Companies
Act 1985, each of the Directors:
• is not aware of any relevant audit information 
of which the Group’s auditors are unaware; and 
• has taken all the steps that he ought to have
taken as a Director in order to make himself
aware of the relevant audit information and to
establish that the Company’s auditors are aware
of that information.
Articles of Association
The Directors will be proposing resolutions at the
forthcoming Annual General Meeting to amend the
Articles of Association to implement the clauses 
of the Companies Act 2006 which came into effect
during 2008. Full details are set out the in the
accompanying circular to shareholders.
Annual General Meeting
The circular convening the Annual General Meeting
to be held on Monday, 28 April 2008 at 2.00pm 
at the offices of Citigate Dewe Rogerson Ltd, 
3 London Wall Buildings, London Wall, London
EC2M 5SY is sent to shareholders with this report
together with an explanation of the items of
business, and a proxy card.
By order of the Board
Julia Morton
Secretary, Zetex plc
21 February 2008
Registered office:
Zetex Technology Park, Chadderton
Oldham OL9 9LL
Registered number: 1378777
13 This report complies with the Directors’
Remuneration Report Regulations 2002 (the
Regulations). This report has been approved 
by the board of the company and will be put 
to shareholders for approval at the AGM on 
28 April 2008.
Information not subject to audit
Remuneration Committee
Working within the remuneration framework
determined by the board, the Remuneration
Committee (the Committee) is the sole determinant
of the total remuneration packages of the company’s
executive directors and the most senior group
executives. The Committee is comprised entirely 
of non-executive directors: Martin Geh (Chairman),
Liz Airey, Professor Jim Norton and Barry Waite.
Martin Geh was appointed as Chairman of the
Committee on 1 January 2008.
Remuneration policy
The Committee seeks to attract, retain and
motivate executives capable of achieving the
group’s objectives in a competitive international
environment. Its approach is consistent with the
group’s overall philosophy that the remuneration
packages of all staff should be competitive and
reflect current market conditions. Accordingly,
independent advice is obtained periodically from a
leading independent firm of remuneration specialists
providing comparable market data and guidance as
to the criteria to be used in establishing pay levels.
The remuneration packages of executive directors
have been structured to include, in addition to
basic salary, short and longer term incentives
designed to improve shareholder value and align
the interests of executives as closely as possible
with the interests of shareholders.
This report sets out the company’s current policy
on executive directors’ remuneration and, so far 
as practicable, that for future years. The inclusion
in the report of remuneration policy in respect 
of years after 2007 is required by the Regulations.
The Committee is able to state its remuneration
policy for 2008 with reasonable certainty, but is
less certain that this policy will continue without
amendment in subsequent years. This is because
the Committee considers that a successful
remuneration policy needs to be sufficiently
flexible to take account of future changes 
in the company’s business environment and in
remuneration practice. Any changes in policy 
for years after 2008 will be described in future
Remuneration Reports, which will continue to be
subject to shareholder approval. All statements 
in this report in relation to remuneration policy
should be read in light of this paragraph.
Independent advice
The Committee worked with Kepler Associates
during the year who provided advice on share
incentive issues and the executive directors’ pay
and bonus scheme. No other person materially
assisted the Committee on remuneration decisions.
Compliance
The group has complied with the Combined Code’s
provisions relating to directors’ remuneration.
Remuneration packages
The details of the individual components of the
executive directors’ remuneration packages and
service contracts are set out below. The Committee
has set the packages for the executive directors 
so that the majority of the remuneration is
performance related.
Basic salary and benefits
Each executive director’s basic salary is reviewed
annually from 1 January with account taken of
individual and group performance during the year,
achievement of objectives, salary levels elsewhere
in the group and market level benchmarks provided
periodically to the Committee by external
consultants. Executive directors also receive a car
allowance and private health insurance benefits
which are subject to income tax. Benefits in kind
do not form part of pensionable salary.
Annual cash incentive
The company operates an annual performance
related bonus scheme for each executive director.
Bonuses are paid upon the attainment of specific
stretching financial targets based on sales growth,
improvement in inventory turns, operating profit
and cash. Annual bonuses are considered by the
Committee and the board to be an important
element of the executive directors’ remuneration
package. In accordance with the terms of the
Combined Code, bonuses for executive directors
14
Remuneration report are not pensionable. A fundamental review 
of bonus structures and targets was undertaken
during 2007. Accordingly, the maximum bonus 
for executive directors was raised from 60 per cent
to 80 per cent of gross basic salary. 25 per cent 
of any earned bonus after tax would be taken 
in deferred shares under the 2007 Bonus Co-
Investment Plan. The 80 per cent is split into two
elements, up to a maximum of 60 per cent based
on shared performance targets and not less than
20 per cent based on personal targets. For the
CEO, the maximum bonus was raised from 75 per
cent to 100 per cent, split up to a maximum of 80
per cent on performance and not less than 20 per
cent on personal targets, again with 25 per cent
after tax taken in deferred shares. The shared
performance targets for executives are structured
as: 17 per cent for the achievement of ‘threshold’;
43 per cent for the achievement of ‘on target’; 
and 60 per cent for the achievement of ‘stretch’.
Shared performance targets for the CEO are
similar: 23 per cent for the achievement of
‘threshold’; 57 per cent for the achievement of 
‘on target’; and 80 per cent for the achievement of
‘stretch’. Interpolation is linear once the threshold
is exceeded. 2007 bonuses were paid against
stretching targets based on faster inventory turns
(1 share out of 8), improved net cash (1 share out
of 8) US$ revenue growth target (3 shares out of 8)
EBIT (3 shares out of 8) and 20 per cent relating 
to personal targets. The total bonus paid on
performance against this weighted combination 
of targets was 35 per cent to the executive
directors and 40 per cent to the CEO.
Share based incentives 
The Committee believes that share based incentives
encourage the matching of interests between
executive directors and shareholders. Accordingly,
executive directors participated in the 2007
Executive Share Option Scheme (the 2007 Scheme)
at the discretion of the Committee. The 2007
Scheme was approved by shareholders at the 
AGM on 25 April 2007.
Under the 2007 Scheme, the aggregate market
value of the shares under all options granted to 
a participant in any calendar year will not exceed
200 per cent of the participant’s basic salary at 
the time the option is granted, unless the
Committee is satisfied that there are exceptional
circumstances (e.g. in the event of recruitment), 
in which case the limit is four times the
participant’s basic salary.
Options awarded under the 2007 Scheme were 
not granted at a discount to the prevailing market
price (this was also the case for the now expired
Zetex 2003 Executive Share Option Scheme and
the Zetex 1994 Executive Share Option Scheme).
Options must be held for three years before they
are exercisable. Options must be exercised within
10 years of grant. Options granted under the 2007
Scheme are also subject to performance conditions
which are set out later in this report.
Executive Directors also participated in the 2007
Bonus Co-Investment Plan (the BCP) during the
year which was approved by shareholders at the
AGM on 25 April 2007.
The BCP requires participants to use a mandatory
percentage, (selected by the Committee, but so 
as not to exceed 25 per cent), of their after tax
annual bonus to acquire shares in the company. 
If they wish, participants can also voluntarily apply
a further percentage of their after tax annual
bonus to acquire shares in the company. Such
voluntary percentage will be subject to a cap set 
by the Remuneration Committee, such cap not to
exceed 25 per cent. After acquiring the shares in
the company the participant must place the legal
title to the shares with the company’s Employee
Share Ownership Trust in order to receive
matching awards under the BCP. All awards made
under the BCP are structured as nil cost options
and shall be subject to stretching performance
targets measured over four years. Details of the
performance conditions are set out later in this
report. If during the relevant performance period, 
a participant disposes of the shares acquired 
with the voluntary percentage of his after 
tax annual bonus the award relating to such 
matching shares will lapse. If a participant ceases
to be an employee before the end of the relevant
performance period, then the shares acquired 
with the mandatory percentage of his after tax
annual bonus will be forfeited and the matching
award relating to such shares will lapse. The 
BCP has been designed to encourage long term
ownership of shares in the capital of the company
by the senior executives so as to align their
interests with those of shareholders, and also to
15 provide incentives for those executives to remain
with the group over the medium to long term.
Awards were made under the BCP on 28 June 2007
to executive directors and senior executives. For
this award, the nominated participants were invited
to surrender up to 50 per cent of their net annual
bonus for 2006 to invest in investment shares in
the BCP. Matching investment share awards were
granted to the participants. Details of the awards
to the executive directors are set out below. The
mandatory percentage was not used for the 2006
bonuses but will be applied for all future bonuses.
Shareholders also approved the establishment 
of the 2007 Performance Share Plan (the PSP) at
the 2007 AGM. The PSP is intended to incentivise
employees outside the senior executive group.
Accordingly, nil cost options under the PSP were
awarded to certain employees during the year 
by the Committee. The awards under the PSP are
normally exercisable on the third anniversary of
the date of grant. The awards are not subject to
performance conditions. Executive directors did
not participate in the PSP during the year.
Executive directors are eligible to participate in the
company’s all-employee savings related share option
scheme (the Sharesave Scheme) on the same terms
as other employees. This scheme operates within
specific tax legislation which includes a requirement
to finance exercise of the option using the
proceeds of a monthly savings contract. Exercise
of such options is not subject to satisfaction of a
performance target since this is an all-employee
share scheme.
Details of the share options held by executive
directors under the company’s share based incentive
plans and the Sharesave Scheme are given below.
Retirement benefits
Colin Greene is a member of the Zetex 
Group Pension Scheme (the Pension Scheme), 
a contributory defined benefit group pension 
scheme whereby retirement benefits are based 
on final remuneration and length of service are
funded through a separate trustee administered
scheme. Contributions to the Pension Scheme 
are agreed between the trustees and the company 
on the advice of an independent actuary taking
into account the funding position of the Pension
Scheme. The actuary carries out a full valuation of
the Pension Scheme every three years. The valuation
was carried out on 5 April 2007. On 1 September
2007, the defined benefit section of the Pension
Scheme was closed to future accrual, following a
consultation with employees. A defined contribution
section of the Pension Scheme was opened to
future accrual.
Colin Greene participates in the Pension Scheme
on the same basis as other members. A sum 
equal to 7 per cent of his base salary is paid into
the defined contribution section of the Pension
Scheme. A sum equal to 12 per cent of Hans
Rohrer’s base salary is paid as a salary supplement
for investment in a personal pension plan of his
choice. A sum equal to 7 per cent of the base salary
of Nick Hawkins was invested in a personal pension
scheme of his choice.
Remuneration of non-executive directors
The fees for non-executive directors are
determined by the board from time to time within
the limits stipulated in the company’s Articles 
of Association and having regard to the level of
non-executive directors’ fees paid by comparable
companies. The non-executive directors did not
participate in the determination of their remuneration.
Non-executive directors do not participate in the
company’s share incentive schemes.
Service contracts 
The service contracts of the executive directors 
are terminable with six months’ notice from the
company and the executive directors. During 
the year, the board amended the service contracts
of the executive directors to increase the notice
period to 12 months in the event of a change 
of control.
Non-executive directors do not have service
contracts but have letters of appointment with 
the company covering a specified three-year term
of office. The letters of appointment for Liz Airey,
Martin Geh, Professor Jim Norton, Robert Venter
and Barry Waite to enable them to specify a
percentage, subject to a minimum of 25 per cent, of
quarterly cash fees (after deduction of applicable
income tax and national insurance deductions) to
subscribe for Zetex shares at the closing middle
market price on the day of allotment.
16
Remuneration report Performance graph
The performance graph shows the company’s 
total shareholder return performance (with
dividends reinvested) over the preceding 
five financial years compared to that of the
Techmark 100 index and the FTSE All Share 
index. Total shareholder return reflects the
theoretical growth in value of a shareholding 
over the period, assuming that gross dividends 
are re-invested to purchase additional shares 
at the closing price applicable on the 
ex-dividend date.
The Techmark 100 index and the FTSE All Share
index were selected as they represent broad 
equity market indices and the Committee 
therefore considers them as an appropriate
comparison for the company.
17
Date of contract/ Unexpired terms Notice period
letter of appointment (months) (months)
Executive Directors
Hans Rohrer 29 December 2005 N/A 6
Colin Greene 8 March 2004 N/A 6
Nick Hawkins 6 February 2006 N/A 6
Non-Executive Directors
Liz Airey 2 February 2006 12 N/A
Martin Geh 15 October 2007 32 N/A
Jim Norton 3 October 2006 20 N/A
Robert Venter 15 October 2007 32 N/A
Barry Waite 25 July 2006 18 N/A
1.The executive directors are appointed for an indefinite period.
2.The letters of appointment for the non-executive directors do not contain a provision for a notice period. 
3.Robert Venter and Martin Geh retire by rotation and, being eligible, offer themselves for re-election at the 
forthcoming AGM.
4.Nick Hawkins resigned as a director on 20 February 2008.
5.Biographical details of the directors, as at the date of this report, can be found on page 10.
0
50
100
200
250
300
Dec 04 Dec 05 Dec 06 Dec 07 Dec 03
150
ZETEX
– TOT RETURN IND
FTSE TECHMARK 100 (£) 
– TOT RETURN IND
FTSE ALL SHARE 
– TOT RETURN IND
TSR (REBASED TO ZETEX)
There are no pre-determined special provisions 
for executive directors or non-executive directors
with regard to compensation in the event of loss of
office. The Committee considers the circumstances
of individual cases of early termination and
determines compensation payments accordingly
having regard to any requirement for executive
directors to mitigate their damages on termination
of employment.
The service contracts of the executive directors
and letters of appointment of the non-executive
directors include the following terms: The remuneration package of each executive
director includes non-cash benefits. Hans Rohrer
and Colin Greene are provided with a car allowance
and private health insurance. Nick Hawkins was
provided with a car allowance and private 
health insurance.
The figures shown for pensions above are the
contributions paid by the company to the Zetex
Group Pension Scheme, other than for Hans Rohrer
and Nick Hawkins. The company pays the pension
contribution directly into the personal pension
scheme of Nick Hawkins and pays a salary
supplement to Hans Rohrer.
Professor Jim Norton was paid in respect of his
work for the board in excess of the agreed
expectation of 25 days per annum at the rate of
£1,000 a day for the year to 31 December 2007. 
A one off additional payment of £9,500 for 9.5
additional days worked during 2007 was made 
to Professor Norton.
There were no amounts paid to executive directors
by way of expense allowance that were chargeable
to UK income tax.
Share options 
The interests of the executive directors as at 
31 December 2007 under the company’s share
option schemes are as follows:
18
Remuneration report
Information subject to audit
Directors’ emoluments
Fees and Performance Pension 2006
Year ended salaries related Benefits contributions Total Total
31 December 2007 £’000 £’000 £’000 £’000 £’000 £’000
Executive
Hans Rohrer 240 96 13 29 378 436
Colin Greene 167 58 12 13 250 267
Nick Hawkins 169 59 12 12 252 198
Non-Executive
Liz Airey (Chairman) 68 - - - 68 60
Martin Geh 29 - - - 29 25
Jim Norton 45 - - - 45 30
Robert Venter 32 - - - 32 27
Barry Waite 32 - - - 32 27
782 213 37 54 1,086 1,070
Colin Greene is a deferred member of the defined benefit section and an active member of the defined contribution
section of the Pension Scheme. Options at Granted Exercised Lapsed Options at Options
1 January during during during 31 December Option normally
2007 the year the year the year 2007 price exercisable
Executive
Hans Rohrer
2003 Executive
Option Scheme 1,239,436 - - - 1,239,436 53.25p **30.12.08-29.12.15
2007 Executive
Option Scheme - 300,000 - - 300,000 84.5p 06.06.10-05.06.17
- 1,411,765 - - 1,411,765 51.0p 07.12.10-06.12.17
2007 Bonus 
Co-Investment 
Plan - 100,554 - - 100,554 0.00p 28.06.08-27.06.12
Colin Greene
1994 Executive
Option Scheme 30,000 - 30,000 - - 70.0p *04.08.00-03.08.07
100,000 - 26,865 - 73,135 33.5p *29.09.01-28.09.08
92,500 - - - 92,500 76.5p *29.03.02-28.03.09
80,000 - - - 80,000 133.5p *01.09.02-31.08.09
30,000 - - - 30,000 299.5p *29.02.03-28.02.10
145,000 - - - 145,000 355.0p *31.07.03-30.07.10
120,000 - - - 120,000 470.0p *24.10.03-23.10.10
50,000 - - - 50,000 306.0p *08.03.04-07.03.11
19,000 - - - 19,000 149.5p *04.04.05-03.04.12
31,000 - - - 31,000 142.0p *08.05.05-07.05.12
70,000 - - - 70,000 56.5p *26.03.06-25.03.13
2003 Executive
Option Scheme 50,000 - - - 50,000 72.5p *31.07.06-30.07.13
125,000 - - - 125,000 150.0p *01.04.07-31.03.14
150,000 - - 150,000 127.5p 18.02.08-17.02.15
Sharesave
Scheme 3,542 - - - 3,542 131.6p 01.01.08-30.06.08
2007 Executive
Option Scheme - 200,000 - - 200,000 84.5p 06.06.10-05.06.17
2007 Bonus 
Co-Investment 
Plan - 28,187 - - 28,187 0.00p 28.06.08-27.06.12
Nick Hawkins
2003 Executive
Option Scheme 383,721 – - - 383,721 86.0p ***10.04.09-09.04.16
2007 Executive
Option Scheme - 200,000 - - 200,000 84.5p ***06.06.10-05.06.17
2007 Bonus
Co-Investment 
Plan - 46,277 - - 46,277 0.00p ***28.06.08-27.06.12
No amount is payable by an executive director on the grant of share options.
No amendments have been made during the year to terms of options already granted to executive directors.
* Denotes options that have vested.
** Denotes options that lapsed on 21 February 2008 due to performance conditions not being satisfied.
***Denotes options that lapsed on 20 February 2008 following the resignation of Nick Hawkins.
Details of the interests as at 31 December 2007 and 31 December 2006 of the directors and their families 
in the shares of the company and its subsidiaries are set out below, all being beneficial.
19 Zetex 5p 2007 2006
ordinary shares £’000 £’000
Liz Airey 264 216
Colin Greene 73 29
Martin Geh 12 2
Jim Norton 34 23
Hans Rohrer 158 90
Nick Hawkins 73 55
Robert Venter 161 122
Barry Waite 57 38
The executive directors have a technical interest in
the 3,200,899 Zetex shares owned by the Employee
Share Ownership Trust (ESOT), as executive
directors of the company and as actual or potential
beneficiaries of the ESOT.
Options granted under the 1994 Executive Share
Option Scheme are subject to performance conditions.
For options granted to the executive directors 
up to 1999, the options only become exercisable 
if the growth in Zetex earnings per share over a
rolling period of three consecutive years exceeds
the rate of inflation (as measured by the UK Retail
Prices Index (RPI)) over the same period by at least
six per cent.
For options granted from 2000 to 2003, the options
became exercisable if growth in Zetex’ earnings
per share over a rolling period of three consecutive
years exceeds the rate of inflation (as measured 
by the RPI) over the same period by at least nine
per cent. For options granted under the 2003
Executive Share Option Scheme, the performance
conditions used were as follows:
For options granted to a participant over shares
with an aggregate market value of up to 100 
per cent of salary (or the part of an option with 
a value of 100 per cent of salary where the
aggregate market value is higher), the exercise
shall be conditional on the company’s growth
in earnings per share (EPS) over the three years
following grant exceeding the increase over the
same period in the RPI plus an average of five 
per cent per annum. For the part of grants with an
aggregate market value in excess of 100 per cent
of salary the condition shall be on a sliding scale
basis with full exercise only capable for EPS growth
over the three years following grant exceeding RPI
plus an average of 11 per cent per annum.
To the extent that options are not exercisable 
after three years, the performance conditions may
be retested after years four and five (from a fixed
base). To the extent the performance conditions
have not been met after five years the options 
will lapse. For options granted to the executive
directors the performance conditions may only 
be retested after year four and to the extent 
the performance conditions have not been 
met after four years the options will lapse. 
From 1 September 2004, all options granted 
were subject to the performance conditions set 
out above and are not be subject to retesting. 
Such options shall either vest or lapse after 
three years.
For options granted under the 2007 Executive
Share Option Scheme (2007 Scheme), 50 per cent
of the options are subject to a performance target
based on 3-year growth in operating profit per
share (Operating Profit Target) and the other 
50 per cent of the options are subject to a
performance target based on the company’s total
shareholder return (TSR), measured over a 4-year
period, outperforming a comparator group of
sector peers (TSR Target). Details of these targets
are set out below.
In relation to the Operating Profit Target, the
company’s operating profit per share is based
on audited annual operating profit before 
adjusted items, IAS 19 adjustment for changes 
to the valuation of pension fund assets and the
consolidated income statement effect of increasing
or decreasing inventory, divided by the average
number of shares in issue. On the grant of an
option, the target level of 3-year growth in
operating profit per share was set by the
Committee with regard to the company’s
long-term plan and other relevant benchmarks.
The options subject to the Operating Profit 
Target will vest according to a sliding-scale
vesting schedule set by the Committee on the 
date of grant.
In relation to the TSR Target, the company’s 
TSR shall be measured over a period of four years
commencing on the first day of the financial year
of the company in which the Option is granted.
The company’s TSR will be compared to companies
which are deemed by the Committee to be the
20
Remuneration report company’s sector peers (Comparator Group). The
Comparator Group in relation to the options granted
during 2007 were Advanced Micro Devices, Analog
Devices, Austria Microsystems, Dialog Semiconductor,
Diodes, Fairchild Semiconductor, Freescale
Semiconductor, International Rectifier, Intersil,
Linear Technology, Maxim Integrated Products,
Micrel, National Semiconductor, ON Semiconductor,
Sipex, ST Microelectronics, Supertex, Cirrus Logic,
Pericom Semiconductor and Texas Instruments.
If the company’s annual TSR is equal to the
median of the annual TSR for the companies in 
the Comparator Group (Lower Target) then 20 
per cent of the Shares subject to the TSR Target
will vest. If the company’s annual TSR exceeds
the median of the annual TSR for the companies 
in the Comparator Group by 10 per cent or more 
per annum (Upper Target) then all of the Shares
subject to the TSR Target will vest. The company’s
out performance of the Comparator Group will 
be based on an approach whereby, for example, 
if Comparator Group median TSR were 10 per cent
p.a. over the 4-year period, TSR-based awards
would vest in full only if the company’s TSR were
21 per cent p.a. or higher (i.e. 1.10 x 1.10 = 1.21).
Where the company’s annual TSR falls between
the Lower Target and the Upper Target, the number
of Shares subject to the TSR Target shall vest 
on a straight-line basis between 20 per cent and 
100 per cent.
For the awards made under the 2007 Bonus 
Co-investment Plan (the BCP), performance will 
be measured over a 4-year period commencing on
the first day of the financial year of the company 
in which an award is granted (Performance Period).
Three quarters of the Shares subject to an award
will be subject to a revenue target (Revenue Target).
One quarter of the Shares subject to an award 
will be subject to a total shareholder return 
target (TSR Target).
Awards subject to the Revenue Target will be 
split into three equal tranches, each equal to 
one-quarter of the total awards subject to an
award. Each tranche will vest according to a
sliding-scale vesting schedule set by the
Committee around revenue targets to be based 
on US$ year-end revenue, as published in the
audited annual accounts, and set for each of 
the first, second and third financial years of 
the Performance Period. Revenue targets were set 
by the Committee with regard to the company’s
long-term plan and other relevant benchmarks.
Awards will vest in full for a performance level
assessed by the Committee to be equivalent to
upper quartile performance.
To the extent that the revenue target is met 
at the end of the relevant financial year, the
awards subject to that target shall vest at the 
next anniversary of the award grant date (a Vesting
Date). To the extent that the revenue target is not
met at the end of the relevant financial year, the
shares subject to that target shall not vest.
In relation to the TSR Target, the company’s TSR
shall be measured over the whole of the Performance
Period. The company’s TSR will be compared to
companies which are deemed by the Committee 
to be the company’s sector peers (Comparator
Group). For awards made in 2007, the Comparator
Group in relation to the initial grant of awards
under the BCP shall be Advanced Micro Devices,
Analog Devices, Austria Microsystems, Dialog
Semiconductor, Diodes, Fairchild Semiconductor,
Freescale Semiconductor, International Rectifier,
Intersil, Linear Technology, Maxim Integrated
Products, Micrel, National Semiconductor, 
ON Semiconductor, Sipex, ST Microelectronics,
Supertex, Cirrus Logic, Pericom Semiconductor 
and Texas Instruments.
If the company’s annual TSR is equal to the
median of the annual TSR for the companies 
in the Comparator Group (Lower Target) then 
20 per cent of the Shares subject to the TSR Target
will vest. If the company’s annual TSR exceeds the
median of the annual TSR for the companies in 
the Comparator Group by 10 per cent or more 
per annum (Upper Target) then all of the Shares
subject to the TSR Target will vest. The company’s
out performance of the Comparator Group will be
based on an approach, whereby for example, if
Comparator Group median TSR were 10 per cent
p.a. over the 4-year period, TSR-based awards
would vest in full only if the company’s TSR were
21 per cent p.a. or higher (i.e. 1.10 x 1.10 = 1.21).
Where the company’s annual TSR falls between
the Lower Target and the Upper Target, the number
of Shares subject to the TSR Target shall vest on 
21 22
a straight-line basis between 20 per cent and 
100 per cent.
To the extent that the TSR Target is met, the
awards subject to that target shall vest at the next
anniversary of the award grant date. To the extent
that the TSR Target is not met, the shares subject
to that target shall not vest.
The closing middle market price of the company’s
shares at 31 December 2007 was 47.75p and the
range during the year was 101.5p to 45.0p.
There has been no change in the directors’ interests
in options granted by the company between the
end of the financial year and the date of this report,
except the shares in relation to Nick Hawkins,
which lapsed on 20 February 2008 following his
resignation. The Register of Directors’ Interests
(which is open to shareholders’ inspection)
contains full details of directors’ options
to subscribe for shares in the company.
Pension entitlements
The pension entitlement of Colin Greene who
served during the year and was a full member of
the Zetex Group Pension Scheme is set out below.
The pension arrangements for Hans Rohrer and
Nick Hawkins are set out on page 16.
Transfer Transfer
Accrued value of Change Contribution value of
pension accumulated in transfer paid by Change increase after
at 31 Increase Increase total accrued value of director in transfer inflation and
December in pension in accrued pension at accumulated during value less directors
(pa) (pa) (pa) 31 December value the year contribution contributions
2007 2006 2007 2006 
Colin
Greene £18,040 £16,530 £1,510 £841 £202,524 £183,629 £18,895 £5,544 £13,351 £5,922
Colin Greene is a deferred member of the defined benefit section and an active member of the defined contribution
section of the Pension Scheme.
Following the closure of the defined benefit 
section of the Zetex Group Pension Scheme on 
1 September to future accrual, contributions were
made to the defined contribution section on behalf
of Colin Greene. Total contributions (both employer
contributions and employee contributions made 
via salary sacrifice) of £8,073 to the defined
contribution section. Of the total contributions,
half relate to employer contributions and half 
to employee contributions. 
Approved by the board of Zetex plc on 
20 February 2008.
Signed on behalf of the board by
Martin Geh
Chairman, Remuneration Committee
21 February 2008
Remuneration report excellence through 
design innovation The board of Zetex is committed to high standards
of corporate governance throughout the group. 
A brief description of the role of the board and its
committees together with the board’s statement
on Internal Controls follows. The board confirms
that it has complied with the provisions of the
Combined Code throughout 2007, save as
specified below.
The board 
The Zetex plc board comprises, as at the date 
of this report, two executive directors and five
non-executive directors: Nick Hawkins resigned 
as director on 20 February 2008. Details of the
composition of the board, its committees and
individual biographies can be found on pages 10
and 11. At each annual general meeting one-third
of the directors retire by rotation and submit
themselves for re-election by shareholders. 
Non-executive directors are appointed for
specified three year terms of office, renewable
thereafter subject to review and mutual agreement.
The fees payable to the non-executive directors
are established by the full board. Induction is 
available to directors on appointment and training
thereafter as appropriate. The service contracts 
of the executive directors each contain a six month
notice period provision. During the year, the 
board amended the service contracts of the
executive directors to increase the notice period 
to 12 months in the event of a change of control.
The board is collectively responsible for 
promoting the company’s success and prosperity
by directing its affairs in the long-term interests 
of shareholders, whilst also meeting the proper
interests of employees, customers, suppliers 
and other stakeholders. All directors are equally
accountable in law for this stewardship and
decisions are taken by all directors sharing 
the same relevant and timely information and
combined knowledge and experience. The 
non-executive directors have a particular
responsibility to ensure that the group’s
operational performance and progress on 
its strategy is fully examined and monitored. 
The chart below sets out the approximate time
spent by the board on strategic, operational,
financial and corporate governance issues during
the year at its meetings:
The board sets the group’s strategic aims 
and ensures the necessary financial and human
resources are in place to meet these objectives. 
To enable them to do this the board met regularly
during the year, either by telephone conference 
or in person, and there was frequent contact to
progress company business between board and
committee meetings. The schedule of matters
reserved for board decision ensures a correct 
level of attention and control, with certain 
areas of authority delegated to six standing
committees which each operate under written
terms of reference. A copy of this is available 
on the company’s website, or from the 
Company Secretary.
Board committees
There are six committees of the board: each one 
is described below. The terms of the reference 
are available on the company’s website or from 
the Company Secretary who is Secretary to all the
committees.
The Audit Committee is chaired by Barry Waite. 
Its other members are Liz Airey and Robert Venter.
The Committee met during the year as required 
to undertake its principal duties. The report of 
the Audit Committee is set out below. The Chief
Executive Officer, Chief Operating Officer and
Chief Financial Officer are invited to attend its
regular meetings as are the other non-executive
directors who are not committee members. All
three members of the committee have extensive
24
Corporate governance
Board & Committee Business
Corporate & Investor Relations
Company Secretarial 
& Governance
Operations & Finance
Annual Budget
Strategy
36%
24%
21%
8%
7%
3% management and financial expertise. Liz Airey as 
a former CFO is considered to have the relevant
financial experience. The committee holds
executive sessions at each meeting where the
committee meets separately with the CFO and 
the Group Financial Controller who is also
responsible for internal audit. The committee also
holds regular conference calls to update members
between its formal meetings.
The Remuneration Committee was chaired by
Professor Jim Norton in 2007. Martin Geh was
appointed as Chairman of the committee on 
1 January 2008. Its other members now comprise
Liz Airey, Professor Jim Norton and Barry Waite.
The committee met during the year as required 
to undertake its principal duties namely, to make
recommendations to the board on the framework
of executive remuneration policy and to determine
the remuneration packages of executive directors
in line with the policy adopted by the full board.
The remuneration report is set out on pages 
14 to 23.
The Nomination Committee is chaired by Professor
Jim Norton. Its other members are Liz Airey, Hans
Rohrer and Robert Venter. The committee ensures
that there is a formal and transparent procedure
for the selection and appointment of new directors
to the board. It met during the year to appraise
and make recommendations to the board. During
the year, the committee discussed the appointment
of a new Chief Financial Officer to the board.
The Budget Committee is chaired by Robert Venter.
Its other members are Hans Rohrer, Colin Greene,
Martin Geh and Barry Waite. Nick Hawkins served
as member of the Committee until he resigned as
a director on 20 February 2008. It monitors the
implications of the annual budget on the group’s
agreed strategy, reviews the group’s financial 
and operational plans, considers and reports to 
the board on the potential impact of proposed
corporate transactions, reviews capital expenditure
within financial parameters set by the board and
reviews the terms of the group’s banking facilities.
The Pensions Committee is chaired by 
Liz Airey and includes Professor Jim Norton and
Dave Benstead, Group HR director. Nick Hawkins
served as member of the Committee until he
resigned as a director on 20 February 2008. The
committee works with the trustees of the Zetex
Group Pension Scheme to manage the pension’s
liability of the company.
The Risk Committee became a committee of the
board during the year, having previously been 
a committee reporting to the Audit Committee. 
It was chaired by Nick Hawkins until he resigned 
on 20 February 2008. Colin Greene has been
appointed as Chairman in his place. The committee
comprises Dave Benstead (Group HR director),
Professor Jim Norton, Colin Greene, Franz
Riedlberger (Chief Technology Officer), Davy Lo
(Chief Marketing Officer) Frank Marx (Chief Sales
Officer) and Ken Clithero (Quality, Health, Safety
and Environment Manager). The committee 
is responsible for the development of risk
management strategy and processes within the
company and for overseeing the implementation 
of this strategy.
The Chairmen of the committees of the board,
other than the Chairman of the Pensions Committee
and the Chairman of the Risk Committee, receive
an additional annual fee. The other members 
do not receive additional fees in respect of their
membership or attendance at the meetings of the
committees. Total fees of non-executive directors
are shown on page 18.
The table on the following page shows the 
number of meetings held in the year by the 
board and board committees and the attendance 
record by each directors.
Shareholder communications
The board recognises its ongoing duty to provide
to its shareholders a balanced and understandable
assessment of the group’s position and prospects,
and holds communications with shareholders in
high priority. The board welcomes the opportunity
to meet shareholders at general meetings and to
respond directly to their questions. There is also
regular dialogue with institutional investors as well
as general presentations after results announcements.
More formally, a full annual report and accounts 
is sent to all shareholders, who also receive a half
yearly report and interim management reports,
both by hard copy and electronically.
25 Combined Code compliance 
The board confirms that it has complied throughout
the accounting period with the provisions of the
Combined Code, except that under Code provision
A.4.1 and Code Provision C.3.1, neither the
Nomination Committee nor the Audit Committee 
is deemed to comprise a majority of independent
non-executive directors. This is because the Code
does not regard the non-executive Chairman, 
Liz Airey, as independent by virtue of her
Chairmanship. However, whilst not recognised 
as being such by the Combined Code, the board
considers Liz Airey to be independent following 
a formal evaluation process which looked at time
commitment and independence of mind.
Corporate social responsibility 
The group is committed to being a responsible 
and positive member of the communities in which
it operates and recognises the mutual benefits
thereto of good corporate citizenship. Acting
lawfully and ethically is a prerequisite in everything
the group does. It aims to be commercial and fair,
to maintain its integrity and professionalism, and
to respect the needs of shareholders, employees
and the local community.
Through its framework of management systems
and structures and its formal internal control
process which feeds through the organisation
culminating (as part of the formal schedule 
of matters reserved for the board) with board 
review, any areas of significant risk to the group’s
short and long-term value arising from social,
environmental or ethical matters affecting the
group are identified, assessed and monitored.
Employment
The group is a responsible employer and has
adopted corporate values and standards designed
to help guide employees in their conduct and
business relationships. A core group policy is 
that of equal opportunity in the selection, training,
career development and promotion of employees,
regardless of gender, age, racial origin, religion,
sexual orientation and whether disabled or otherwise.
Zetex plc remains committed to creating 
an employment environment that will attract, 
retain and motivate employees of high calibre.
Throughout the group emphasis is placed upon
personal development and training to meet both
today’s needs and those of the future. It is group
policy wherever practicable to continue to employ
26
Member attendance during the year ended 31 December 2007
Nomination Remuneration Budget Audit Risk Pensions
Board
(1) 
Committee Committee Committee Committee Committee
(2)
Committee
Number of 
meetings held 12 2 8 3 8 5 4
Non-Executive 
Directors
Liz Airey 10 2 8 N/A 8 N/A 4
Jim Norton 10 2 8 N/A N/A 4 4
Martin Geh 10 N/A 6 3 N/A N/A N/A
Robert Venter 10 2 N/A 3 8 N/A N/A
Barry Waite 10 N/A 6 3 8 N/A N/A
Executive Directors
Hans Rohrer 12 2 N/A 3 N/A N/A N/A
Colin Greene 12 N/A N/A 3 N/A 5 N/A
Nick Hawkins 12 N/A N/A 3 N/A 4 4
(1) 
Two quorum board meetings relating to results announcements were attended by executive directors only.
(2) 
The Risk Committee became a committee of the Board in July 2007.
Corporate governance and to promote the career development of 
existing employees who have become disabled.
The board remains committed to employee
involvement throughout the group. Employee
communication and consultation is encouraged at
all levels on a regular basis throughout the group
and employees are systematically provided with
information on matters of concern to them 
as employees.
Health and safety
The group maintains as a primary objective the
highest standards of safety for its employees and
the public. The group operates comprehensive
health and safety policies and management
programmes, which are an integral part of the
internal control risk management process. Copies
of the group’s health and safety policy in place
and approved by the board are available from the
Company Secretary and on the company’s website.
Environment
Environmental management is regularly monitored
by the board through the group’s internal control
risk management process. Copies of the group’s
environmental polices in place and approved 
by the board are available from the Company
Secretary and on the company’s website. The
group remains committed to continual improvement
in its environmental performance with progress
being made during the year.
Further details can be found on the company’s
website.
Board performance evaluation
The board reviews its own performance annually.
During 2007, the board used external consultants
to assist in the evaluation of its progress and has
conducted an internal review since year end. The
assessment covers the functioning of the board as
a whole, and a similar review of the effectiveness
of the board committees is also carried out. The
Chairman also reviews with each of the directors
their individual performance, contribution and
commitment to the company and any further
development of skills. Following discussions 
with the other directors, the Senior Independent
Non Executive Director similarly reviews with the
Chairman her performance. The board considers
the results of the performance evaluations when
making its recommendations regarding election
and re-election of directors.
Internal control
The board acknowledges that it is has overall
responsibility for the group’s system of internal
control and for reviewing its effectiveness. 
The system is designed to manage rather than
eliminate the risk of failure to achieve business
objectives and can only provide reasonable and not
absolute assurance against material misstatement
or loss. It includes financial, operational and
compliance controls, and risk management.
The board confirms that there is a process for
identification, evaluation and management of
significant risks to the achievement of the group’s
strategic objectives. The key elements of this
process are: 
• A Risk Committee reviewing corporate risk issues.
• Regular reports from the Risk Committee and 
the Audit Committee to the board.
The board is ultimately responsible for the 
review of risk management processes. A system 
of embedded risk management, which has been 
in place throughout 2007, helps to safeguard 
the company’s assets. The Risk Committee 
is responsible for the development of risk
management strategy and processes within the
company and for overseeing the implementation 
of this strategy. It does this by ensuring the
company’s framework for the identification,
assessment, mitigation, documentation and
reporting on all areas of risk is ‘fit for purpose’
and that appropriate assurance arrangements 
are in place in relation to these risks. Throughout 
the year the board receives reports from the Audit
Committee and the Risk Committee to confirm
compliance with all major internal and external
requirements along with the existence of
appropriate controls and processes to manage
risks and to provide details of material risks 
and control weaknesses.
The Risk Committee is responsible for developing
risk management and assurance practices across
27 the business, sponsoring activity to promote the
development of enhanced risk awareness generally
and assigning appropriate responsibility for risk
management within the organisation.
Specifically it reviews the risk strategies, policies,
management, initiatives, targets and the risk
performance of the business and, where appropriate,
its suppliers and contractors. This incorporates 
the building of a risk aware culture within the
organisation through training and education,
developing risk response processes, including
contingency and business continuity and
championing risk management at strategic 
and operational levels.
Risk assessment and evaluation take place as 
an integral part of the annual strategic planning
cycle which allows Zetex to identify country
specific risks. The process of risk management
identifies mission critical activities to define the
processes through which the committee seeks
systematically to identify, analyse, assess, treat
and monitor the business risks faced by the
company. These business risks, together with the
identified mitigating measures and responsibilities,
are then recorded in risk registers.
Once any risks have been identified which might
hamper achievement of the strategic objectives,
each committee member is required to document
how these risks will be managed and what mitigating
activities have been put in place in respect of each
significant risk. Processes have been established
for reporting and managing any material failures.
Comments on the key risks perceived by the 
board are set out below:
Risk analysis
Zetex is a small player in a highly competitive
market undergoing continual technological and
geographical change. The success of its strategy
will depend on its ability to innovate products
successfully and bring them speedily to this fast
moving market. Its ultimate success will depend 
on the end demand for its customers’ products.
The group’s key financial and business risks
include key personnel attraction and retention,
cyclical product demand, shortages of raw materials,
the cost of energy, the ability to generate new
bookings, customer concentration, our ability to
introduce new products, manufacturing, credit
risk, liquidity, pricing and foreign exchange
volatility.
Key personnel
Our success depends to a significant degree on 
the contributions from our key people. The board
puts considerable emphasis on its ability to recruit
and retain the right people.
New product introduction
A critical element of the future success of 
the group is its ability to develop new products,
enhance existing products, develop its technology
platforms and to meet the continually changing
requirements of our customers.
To this end, the group already invests heavily in
R&D activities and intends to maintain or increase
this level of investment.
Intellectual property
The group has to be proactive in protecting its 
intellectual property (IP). At present significant 
IP rests in the group’s manufacturing processes.
Going forward, IP protection will become
increasingly important and more difficult as 
the application specific portfolio diversifies. 
The group pays close attention to protecting 
these rights.
Demand generation
The group is dependant on the ability of its sales
network to generate demand for both new and
current products. We, on a regular basis, hire 
high calibre field sales and applications engineers
with appropriate knowledge and experience and 
in the appropriate locations for our products 
and customers.
The business also constantly reviews and trains its
portfolio of distribution and representative partners
to ensure that they are capable of delivering fresh
demand for new and existing products.
Pricing 
The group operates in a competitive market where
selling price erosion is normal and expected in
order to maintain and gain market share. Zetex
has been successful in the past at maintaining 
its gross margins by a combination of cost downs 
on manufactured devices and product range
improvements.
28
Corporate governance Pricing of input costs is dynamic. Sub-contracted
foundry and assembly services are partially driven
by capacity. Silicon, gold, copper, oil and energy
are also key cost components with pricing risk.
Where possible, we fix prices for 12 months or
more to minimise short-term pricing shocks.
Customer concentration
The largest customer of the group is a distributor,
representing approximately 7 per cent of revenue
(15 per cent if other regional entities of the same
group are included), although this distributor
services a large number of Original Equipment
Manufacturers (OEMs). The largest direct OEM
customer represents approximately 3 per cent 
of group revenue. The Board recognises that this
concentration is significant but believes that it 
is a manageable risk.
Cyclical demand
As a result of fluctuations in global economic
activity, inventory levels in the supply chain and
foundry capacity, semiconductor demand can
fluctuate. To protect against this, Zetex aims 
to retain adequate cash reserves and achieve 
a suitable break-even point.
Materials and supplies
Zetex is dependant on certain materials and
services, in particular silicon, foundry and assembly
capacity as well as critical utilities such as clean
water and electricity. We hold several months’
inventory of silicon and maintain a number 
of foundry and assembly house relationships, 
although many products and package types are not
immediately transferable between sub-contractors.
Manufacturing
The group manufactures wafers at its two foundries
in the UK, in general to manufacture its standard
discrete and IC products. We also operate assembly
facilities in Germany and at a joint venture in China.
Processes that are either beyond our capacity 
or technology capability are sub-contracted to
third party foundries and assembly plants. We 
are dependant on these various facilities to supply
our demand and to maintain quality.
The group is protected in the short-term by
inventory and mitigates risk by adherence to quality
standards, backed by audits and certification.
Wherever possible, back up sourcing is qualified.
Credit
Zetex’ customers are predominantly large blue
chip OEMs, contract equipment manufacturers 
and distributors. The group regularly reviews 
the credit worthiness of significant customers and
credit references are sought for major new customers
where relevant. The board recognises that credit
risk is a feature of all businesses, especially
international businesses. However, it believes that
all reasonable steps to mitigate loss are taken.
Liquidity
Zetex had liquid cash and short-term deposit
reserves of £15.8m at 31 December 2007. The
board believes that, even in a cyclical downturn 
of the market, the group has adequate resources
to fund ongoing cash requirements in the 
medium term.
Foreign exchange
As explained above, the group is not naturally
hedged, with excess US dollar income and excess
pound sterling and Euro costs.
The group protects against short to medium-
term fluctuations in exchange rates through 
the application of its foreign exchange hedging 
policy (described above).
Utility supplies are single source but the risk 
of anything other than short-term disruption 
is considered by the board to be minimal.
Going concern
As referred to in the liquidity section above, 
the directors have a reasonable expectation that
the group has adequate resources to continue in
operational existence for the foreseeable future.
For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
The board confirms that this process accords with
the Turnbull Guidance, is regularly reviewed and
has been in place for the year under review and 
up to the date of approval of this annual report.
The Audit Committee has reviewed the
effectiveness of the above system of internal
control during the period covered by this report
and has reported to the board on the result of 
this review.
29 Report of the Audit Committee
The committee met during the year to undertake
its principal duties, namely:
• to review the financial conduct of the group’s
affairs, to review and monitor the results of the
business risk self-assessment process operated
by the group and its internal controls;
• to recommend the appointment, scope and 
fees of the external auditors and to consider the
independence of the external auditors, including
a review of non-audit services provided by the
external auditor;
• to consider the effectiveness of the external
audit process;
• to review the integrity of the half year and
annual financial statements and any formal
announcements for submission to the board;
• to review the working capital position of the
group and present its conclusions to the board
as to whether the business is a going concern;
• to review legal, regulatory and current accounting
standards, matters that may have a material
impact on the financial statements and related
company compliance policies; 
• the effectiveness of the group’s foreign exchange
hedging strategy;
• to direct, monitor and review the work of the
group’s internal audit function;
• to review and report to the board with regard 
to any actual or potential litigation pertaining 
to the group; and 
• to review the arrangements by which employees
of the group may raise concerns in confidence
about possible improprieties in the matter of
financial reporting or other matters.
The committee monitors the level and nature 
of non-audit work undertaken by the external
auditors, Ernst & Young, to limit the risk of
conflicting interests. During the year, Ernst 
& Young undertook no non-audit work for 
the company or group. 
The committee carried out an annual review 
of the independence, performance and objectivity 
of the external auditors. The review examined
whether the auditors followed the appropriate
professional standards and best practice and 
have in place internal systems and checks to
ensure that the audit team is able to carry out 
an independent audit. The committee remains
satisfied with the objectivity, performance and
independence of the external auditors.
The Audit Committee carried out an annual 
review by way of a self-assessment of its 
efficiency and effectiveness using an externally
produced review questionnaire, the results of 
which were satisfactory.
30
Corporate governance We have audited the group and parent company
financial statements (the financial statements) 
of Zetex plc for the year ended 31 December 
2007 which comprise the Consolidated Income
Statement, the Consolidated and Company Balance
Sheets, the Consolidated Cash Flow Statement, 
the Consolidated Statement of Recognised Income
and Expense and the related notes 1 to 27. These
financial statements have been prepared under 
the accounting policies set out therein. We have
also audited the information in the Remuneration
Report that is described as having been audited.
This report is made solely to the company’s
members, as a body, in accordance with Section
235 of the Companies Act 1985. Our audit work
has been undertaken so that we might state to the
company’s members those matters we are required
to state to them in an auditors’ report and for no
other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to
anyone other than the company and the company’s
members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors 
and auditors
The directors’ responsibilities for preparing the
Annual Report and the group financial statements
in accordance with applicable United Kingdom law
and International Financial Reporting Standards
(IFRS) as adopted by the European Union, and for
preparing the parent company financial statements
and the Remuneration Report in accordance with
applicable United Kingdom law and Accounting
Standards (United Kingdom Generally Accepted
Accounting Practice) are set out in the Statement
of Directors’ Responsibilities.
Our responsibility is to audit the financial
statements and the part of the Remuneration
Report to be audited in accordance with relevant
legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the
financial statements give a true and fair view and
whether the financial statements and the part 
of the Remuneration Report to be audited have
been properly prepared in accordance with the
Companies Acts 1985 and whether, in addition,
the group financial statements have been properly
prepared in accordance with Article 4 of the IAS
Regulation. We also report to you whether in our
opinion the information given in the Directors’
Report is consistent with the financial statements.
In addition we report to you if, in our opinion, 
the company has not kept proper accounting
records, if we have not received all the information
and explanations we require for our audit, 
or if information specified by law regarding
directors’ remuneration and other transactions 
is not disclosed.
We review whether the Corporate Governance
statement reflects the company’s compliance with
the nine provisions of the 2006 Combined Code
specified for our review by the Listing Rules of 
the Financial Services Authority and we report if it
does not. We are not required to consider whether
the board’s statements on internal control cover 
all risks and controls or form an opinion on the
effectiveness of the group’s corporate governance
procedures or its risk and control procedures.
We read other information contained in the 
Annual Report and consider whether it is
consistent with the audited financial statements.
The other information comprises only the
Directors’ Report, the unaudited part of the
Remuneration Report, the Chairman’s Statement,
the Chief Executive Officer’s Business Review, the
Corporate Governance statement and the Report of
the Audit Committee. We consider the implications 
for our report if we become aware of any apparent
misstatements or material inconsistencies with 
the financial statements. Our responsibilities 
do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and 
Ireland) issued by the Auditing Practices Board. 
An audit includes examination, on a test basis, of 
evidence relevant to the amounts and disclosures
31
Independent auditor’s report 
to members of Zetex plc  32
in the financial statements and the part of the
Remuneration Report to be audited. It also includes
an assessment of the significant estimates and
judgments made by the directors in the preparation
of the financial statements and of whether the
accounting policies are appropriate to the group’s
and company’s circumstances, consistently applied
and adequately disclosed.
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 statements and the
part of the Remuneration Report to be audited are
free from material misstatement, whether caused
by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy
of the presentation of information in the financial
statements and the part of the Remuneration
Report to be audited.
Opinion
In our opinion:
• the financial statements give a true and fair 
view, in accordance with IFRSs as adopted by 
the European Union, of the state of the group’s
affairs as at 31 December 2007 and of its profit
for the year then ended;
• the group financial statements have been
properly prepared in accordance with 
the Companies Act 1985 and Article 4 
of the IAS Regulation;
• the parent company financial statements 
give a true and fair view, in accordance with
United Kingdom Generally Accepted Accounting
Practice, of the state of the parent company’s
affairs as at 31 December 2007;
• the parent company financial statements 
and the part of the Remuneration Report to 
be audited have been properly prepared in
accordance with the Companies Act 1985; 
and
• the information given in the Directors’ Report 
is consistent with the financial statements.
Ernst & Young LLP
Registered auditor
Manchester
21 February 2008
Independent auditor’s report 
to members of Zetex plc  The directors are responsible for preparing 
the Directors’ Report and the group and parent
company financial statements, in accordance 
with applicable law and regulations.
Company law requires the directors to prepare
group and parent company financial statements 
for each financial year. Under that law the 
directors have elected to prepare the group
financial statements in accordance with IFRS as
adopted by the EU and have elected to prepare 
the parent company financial statements in
accordance with UK Accounting Standards.
The group financial statements are required 
by law and IFRS as adopted by the EU to present 
fairly the financial position and the performance 
of the group; the Companies Acts 1985 and 2006
provide in relation to such financial statements
that references in the relevant part of that Act to
financial statements giving a true and fair view are
references to their achieving a fair presentation.
The parent company financial statements are
required by law to give a true and fair view 
of the state of affairs of the parent company.
In preparing each of the group and parent
company financial statements, the directors 
are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgments and estimates that are
reasonable and prudent; 
• for the group financial statements, state whether
they have been prepared in accordance with IFRS
as adopted by the EU;
• for the parent company financial statements,
state whether applicable UK Accounting
Standards have been followed, subject to any
material departures disclosed and explained in
the parent company financial statements; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the group and the parent company
will continue in business.
The directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
parent company and enable them to ensure that its
financial statements comply with the Companies
Acts 1985 and 2006. They have general responsibility
for taking such steps as are reasonably open to
them to safeguard the assets of the group and to
prevent and detect fraud and other irregularities.
So far as the directors are aware, there is no
relevant information of which the company’s
auditors are unaware. The directors have taken 
all steps that they ought to have taken to make
themselves aware of any relevant audit information
and to establish that the company’s auditors are
aware of that information.
The directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
33
Statement of directors’
responsibilities 34
2007 2007 2007 2006 2006 2006
£’000 £’000 £’000 £’000 £’000 £’000
adjusting adjusting
Notes adjusted items reported adjusted items reported
Revenue 1 64,638 – 64,638 67,168 – 67,168
Cost of sales (43,384) – (43,384) (46,682) – (46,682)
Gross profit 21,254 – 21,254 20,486 20,486
Adjusted item:
bad debt 2 – (310) (310) –––
Gross profit 21,254 (310) 20,944 20,486 – 20,486
Non direct 
operating costs (17,261) – (17,261) (17,699) – (17,699)
Operating profit 3,993 (310) 3,683 2,787 – 2,787
Adjusted items:
Relocation and 
rationalisation costs 2 – (292) (292) – (364) (364)
Severance costs 2 ––– – (861) (861)
Sale of Gem Mill 2 – 1,954 1,954 –––
Share based payments 2 – (86) (86) – (135) (135)
Pension scheme
curtailment 2 – 2,235 2,235 –––
Corporate advisory costs 2 – (325) (325) –––
Operating profit pre share
of associate’s profit 3,993 3,176 7,169 2,787 (1,360) 1,427
Share of post tax profits 
of associate 
accounted for using 
the equity method 8 17 – 17 24 – 24
Operating profit 4,010 3,176 7,186 2,811 (1,360) 1,451
Finance revenue 2 721 – 721 314 – 314
Finance costs 2 (158) – (158) (164) – (164)
Profit before income tax 4,573 3,176 7,749 2,961 (1,360) 1,601
Income tax 3 (409) 937
Profit for the period 
attributable to equity
holders of the parent 1 7,340 2,538
Earnings per share 4 7.28p 2.54p
Diluted earnings per share 4 7.23p 2.52p
All results relate to continuing operations.
The notes on pages 49 to 81 form part of these financial statements.
Consolidated income statement
Year ended 31 December 2007 35
2007 2006
Notes £’000 £’000
Assets
Non current assets
Property, plant and equipment 6 26,833 30,310
Intangible assets 7 15,093 13,055
Deferred tax 3 5,601 5,901
Investment in associate 8 69 37
47,596 49,303
Current assets
Inventories 10 14,656 14,180
Current tax 313 159
Trade receivables and prepayments 11 9,091 9,744
Derivative financial instruments 21 – 1,151
Cash and cash equivalents 12 16,252 10,730
40,312 35,964
Assets held for sale 6a – 947
40,312 36,911
Total assets 87,908 86,214
Liabilities
Current liabilities
Bank loans and overdrafts 14 405 764
Current portion of long term liabilities 15 230 316
Trade and other payables 17 11,488 9,630
Current tax 855 1,031
12,978 11,741
Non current liabilities
Derivative financial instruments 21 197 –
Deferred tax 3 6,739 8,037
Provisions 16 231 231
Defined benefit pension scheme 9 5,196 8,240
Long term liabilities 15 961 761
13,324 17,269
Total liabilities 26,302 29,010
Net assets 61,606 57,204
Equity
Share capital 13 5,212 5,198
Share premium 13 36,255 36,093
Own equity instruments 13 (4,420) (4,731)
Foreign exchange differences 13 (1,194) (1,174)
Net unrealised gains and losses 13 210 892
Retained earnings 13 25,543 20,926
Equity shareholders’ funds 13 61,606 57,204
The financial statements were approved by the board of directors on 21 February 2008 and are signed on its behalf by
Hans Rohrer
CEO
The notes on pages 49 to 81 form part of these financial statements.
Consolidated balance sheet
As at 31 December 2007 36
2007 2006
Notes £’000 £’000
Profit for the period attributable to equity holders 
of the parent 7,340 2,538
Foreign exchange loss on translation of foreign subsidiaries (20) (1,239)
Actuarial (loss)/gain on defined benefit pension scheme 9 (483) 2,373
Foreign exchange (loss)/gain from hedging activities (197) 1,253
Foreign exchange (gain)/loss transferred from equity (1,151) 1,016
Income tax credit/(charge) on items taken directly to equity 3 666 (1,277)
Net (expense)/income recognised directly in equity (1,185) 2,126
Recognised income relating to the period 6,155 4,664
The notes on pages 49 to 81 form part of these financial statements.
Consolidated statement 
of recognised income 
and expenditure
Year ended 31 December 2007 37
2007 2006
Notes £’000 £’000
Operating activities
Net profit for the period before income tax 1 7,749 1,601
Adjustments for:
Depreciation and impairment of property, plant and equipment 5,617 5,720
Amortisation and impairment of intangible assets 2,512 1,886
Finance cost 2 158 164
Finance revenue 2 (721) (314)
Profit on sale of property, plant and equipment 2 (1,954) (1)
Share based payments 2 86 135
Change in value of associate 8 (50) (24)
(Increase)/decrease in inventories (422) 5,758
Decrease/(increase) in receivables 508 (1,263)
Increase/(decrease) in payables 1,772 (1,616)
Difference between pension contributions paid and amounts 
recognised in the consolidated income statement (3,978) (487)
Cash flows from operating activities 11,277 11,559
Income tax paid (882) (319)
Net cash flows from operating activities 10,395 11,240
Investing activities
Purchase of property, plant and equipment (1,800) (1,184)
Investment in intangible assets (4,256) (4,213)
Proceeds from sale of property 2,995 –
Finance revenue 2 721 314
Net cash flows from investing activities (2,340) (5,083)
Financing activities
Issue of ordinary shares 176 552
Sale of own shares held in ESOT 152 20
Finance lease principal repayments (256) (453)
Dividends paid to group shareholders 5 (2,168) (2,148)
Finance cost 2 (158) (164)
Net cash flows from financing activities (2,254) (2,193)
Increase in cash and cash equivalents 5,801 3,964
Movement in cash and cash equivalents
At start of period 9,966 6,010
Increase in the year 5,801 3,964
Effect of exchange rate changes on cash balances 80 (8)
At end of period 12 15,847 9,966
The notes on pages 49 to 81 form part of these financial statements.
Consolidated cash flow
statement
Year ended 31 December 2007 38
2007 2006
Notes £’000 £’000
Fixed assets
Investments 22 38,000 38,000
38,000 38,000
Current assets
Receivables 23 974 3,642
Cash and cash equivalents 4,908 5,515
5,882 9,157
Creditors: amounts falling due within 1 year 24 (932) (542)
Net current assets 4,950 8,615
Total assets less current liabilities 42,950 46,615
Provisions for liabilities and charges 25 (154) (231)
Net assets 42,796 46,384
Equity
Share capital 13 5,212 5,198
Share premium 26 36,255 36,093
Own equity instruments 13 (4,420) (4,731)
Retained earnings 26 5,749 9,824
Equity shareholders’ funds 42,796 46,384
The financial statements were approved by the board of directors on 21 February 2008 and are signed on its behalf by
Hans Rohrer
CEO
Zetex plc.
The notes on pages 81 to 83 form part of these financial statements.
Company balance sheet
As at 31 December 2007 39
Zetex plc is a company domiciled in the United Kingdom. The consolidated financial statements for the year ended 
31 December 2007 comprise those of the company and its subsidiaries.
1. Statement of compliance
The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS)
and International Financial Reporting Interpretation Committee (IFRIC) interpretations as endorsed by the European Union
and those parts of the Companies Acts 1985 and 2006 applicable to companies reporting under IFRS.
2. Basis of preparation
The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest
thousand pounds (£’000) except when otherwise indicated. They are prepared on the historical cost basis modified to
include the fair valuation of derivative financial instruments, equity settled share based payment transactions and defined
benefit pension scheme assets and liabilities to the extent required or permitted under accounting standards and as set
out in the relevant accounting policies.
Critical accounting estimates
The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Material estimates and assumptions are made in particular regarding impairment testing, commercial viability of projects
related to development expenditure, parameters for measuring pension provisions, stock and trade receivable
provisioning.
Indefinite life intangible assets
The group determines whether indefinite life intangible assets are impaired on an annual basis and this requires an
estimation of the value in use of the cash generating units to which the intangible assets are allocated. This involves
estimation of future cash flows and choosing a suitable discount rate (see note 7a).
Commercial viability of development projects
The commercial viability of development projects are assessed based on estimates of future cash flows associated 
with some projects and the likelihood of reaching the market place. Such estimates are based upon the latest market
information and judgements of management.
Measurement of defined benefit pension liabilities
Measurement of defined benefit pension obligations requires estimation of future changes in salaries and inflation, 
as well as mortality rates, the expected return on assets and the selection of a suitable discount rate (see note 9).
Stock provisioning
Provisioning against stock is based on estimates of the timing of/and cash flows associated with revenues anticipated
from individual stock items. Such estimates are based upon the latest market information and judgements of management.
Trade receivable impairment
Provisioning against trade debt is based on estimates of the timing of/and cash flows associated with cash receipts 
in relation to outstanding customer debt. This is based both upon the age of outstanding debt and latest commercial
knowledge of the customer.
Group accounting policies 40
Group accounting policies
3. Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the company. Control exists when the company has the power, directly or 
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Subsidiaries are fully consolidated from the date on which control commences until the date that control ceases. The
acquisition method of accounting has been adopted. Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated.
All subsidiaries are directly controlled by the company.
Associates
An associate is an undertaking over which the group has significant influence and can participate in the financial and
operating decisions of the entity, but does not have control.
The group’s share of the results of associates is included in the consolidated income statement using the equity method
of accounting. Investments in associates are carried in the consolidated balance sheet at cost plus post acquisition
changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of
investments in associates include acquired goodwill.
If the group’s share of losses in an associate equals or exceeds its investment in the associate, the group does not
recognise further losses unless it has incurred obligations to do so or make payments on behalf of the associate.
Unrealised gains arising from transactions with associates are eliminated to the extent of the group’s interest in the entity.
4. Revenue recognition
The group recognises revenues from the sale of semiconductor products when the significant risks and rewards of
ownership have passed to the customer. This is generally when goods have been despatched to the customer, except
where the group sells to its distributors. In this event revenues are recognised when there are no further obligations 
on the group (which is typically when the distributor has sold the goods onto the end customer) and the revenues can 
be measured reliably. Revenue is measured at the fair value of the consideration received excluding discounts, rebates,
Value Added Tax and other sales taxes or duties.
5. Segmental reporting 
The group’s primary and only reporting format is by geographical segment. The geographical segments are organised
and managed separately as strategic business units that are subject to risks and returns that are different from those 
of segments operating in other economic environments.
6. Adjusted items
The group presents as adjusted items on the face of the consolidated income statement, those material items of 
income and expense which, because of the nature of the events giving rise to them, merit separate presentation to allow
shareholders to better assess trends of the elements of financial performance in the year so as to facilitate comparison
with prior periods and to assess trends in underlying financial performance. Such items include items of an unusual 
or non-recurring nature.
7. Interest income
Interest income is recognised for the period to which it relates on the accruals basis.
8. Dividends
Final dividends are recorded in the consolidated financial statements in the period in which they are approved by 
the company’s shareholders. Interim dividends are recorded in the period in which they are approved and paid. 41
9. Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation and any impairment in value.
Historical cost includes expenditure that is directly attributable to the acquisition of the items, including costs in relation
to acquisition and installation. Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group
and the cost of the item can be measured reliably.
All other repairs and maintenance are charged to the consolidated income statement during the financial period in which
they are incurred.
Depreciation is not provided for on freehold land or assets in construction. Depreciation on other property, plant and
equipment is calculated on a straight line basis to write off the cost less estimated residual value based on prices
prevailing at the balance sheet date over its anticipated useful economic life as follows:
(i) Freehold buildings 50 years
(ii) Plant and machinery 3-10 years
(iii) Fixtures and fittings 2-10 years
(iv) Motor vehicles 4 years
(v) Leasehold buildings Period of lease
Assets held under finance leases are depreciated over the shorter of the lease term or their useful economic life.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is 
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with their carrying amount and are included 
in the consolidated income statement.
10. Intangible assets
Goodwill
All business combinations are accounted for applying the purchase method.
On acquisition, the assets and liabilities and contingent liabilities of an acquired entity are measured at their fair value.
Goodwill arising on consolidation represents the excess of the cost of an acquisition over the fair value of the group’s
share of the net assets of the acquired subsidiary or associate at the date of acquisition. If the cost of acquisition is less
than the fair value of the group’s share of the net assets of the acquired entity (i.e. a discount on acquisition) then the
difference is credited to the consolidated income statement in the period of acquisition.
At the acquisition date of a subsidiary, goodwill acquired is recognised as an asset and is allocated to each of the 
cash generating units expected to benefit from the business combination’s synergies and to the lowest level at which
management monitors the goodwill. Goodwill arising on the acquisition of associates is included within the carrying value
of the investment.
Goodwill is not subject to amortisation. Goodwill is reviewed for impairment at least annually by assessing the recoverable
amount of each cash generating unit to which the goodwill relates. When the recoverable amount of the cash generating
unit is less than the carrying amount, an impairment loss is recognised.
Any impairment is recognised immediately in the consolidated income statement and is not subsequently reversed.
On disposal of a subsidiary or associate, the amount of goodwill attributable to that entity is included in the determination
of the profit or loss on disposal.
Goodwill arising on acquisitions before 1 January 2004 (the date of transition to IFRS) has been retained at the previous
UK GAAP amounts subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP
prior to 1998 has not been restated and will not be included in determining any subsequent profit or loss on disposal. 42
Group accounting policies
10. Intangible assets continued
Research and development (internally generated)
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and
understanding is recognised as an expense in the consolidated income statement as incurred.
An intangible asset arising from the group’s development activity is recognised only if all the following conditions are met:
• an asset is created that is separately identifiable;
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
This intangible fixed asset is then amortised on a straight-line basis over its estimated useful economic life less any
impairment in value.
Other intangible assets
An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable 
or arises from contractual or other legal rights and its fair value can be measured reliably.
These are stated at cost less accumulated amortisation and impairment losses. Amortisation is charged to the
consolidated income statement on a straight line basis over the estimated useful economic life of the asset less any
impairment in value.
11. Impairment of tangible and intangible assets
At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If such indications exist, the
recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where the asset
does not generate cash flows that are independent from other assets, the estimates the recoverable amount of the 
cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current 
market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, 
the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss 
is recognised as an expense immediately.
12. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and 
rewards of ownership of the asset to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the group at their fair value at the inception of the 
lease or, if lower, at the present value of the minimum lease payments as determined at the inception of the lease. 
The corresponding liability to the lessor is included in the consolidated balance sheet as a finance lease obligation. 
Lease payments are apportioned between finance charge and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the consolidated
income statement.
Rentals payable under operating leases are charged to the consolidated income statement on a straight line basis over
the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also
spread on a straight line basis over the lease term.
13. Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in 
the ordinary course of business less the estimated costs to completion and selling expenses. 43
The cost of inventories is based on the first-in-first-out method and includes expenditure incurred in acquiring the
inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work 
in progress, cost includes raw materials, other direct costs (including labour) and related overheads based on normal
operating capacity.
14. Trade receivables
Trade receivables are recognised and carried at the lower of their original invoiced value and recoverable amount. 
A provision for impairment of trade receivables is established when there is objective evidence that the group will not 
be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the
difference between the asset’s carrying amount and the present value of its estimated future cash flows. The amount 
of the provision is recognised in the consolidated income statement.
15. Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
16. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks or legal bodies, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the consolidated balance sheet.
17. Borrowings
Borrowings are recognised initially at fair value.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability
for at least twelve months after the balance sheet date.
18. Share capital
Ordinary shares are classified as equity.
Shares held in the parent company, Zetex plc, by employee share ownership trusts are recorded in the consolidated
balance sheet as a deduction from shareholders’ equity at cost.
19. Pension obligations
Group companies operate both defined benefit and defined contribution pension schemes. The defined benefit scheme is
funded through payments to funds administered by trustees and these are determined by periodic actuarial calculations.
Defined benefit schemes
The group has elected to recognise all cumulative actuarial gains and losses in relation to employee defined benefit
schemes at the date of transition. The liability recognised in the consolidated balance sheet in respect of defined benefit 
pension schemes is the present value of the defined benefit obligation at the balance sheet date less the fair value 
of scheme assets. The defined benefit obligation is calculated annually by independent actuaries using the projected 
unit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits 
will be paid and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses from experience adjustments and changes in actuarial assumptions are charged or credited
directly to equity.
The cost of providing benefits under the defined benefit scheme is determined using the projected unit credit method,
which attributes entitlement to benefits to the current period (to determine current service cost) and to the current and
prior periods (to determine the present value of defined benefit obligation) and is based on actuarial advice. Past service
costs are recognised in the consolidated income statement on a straight line basis over the vesting period or immediately 
if the benefits have vested. When a settlement (eliminating all obligations for benefits already incurred) or a curtailment
(reducing future obligations as a result of a material reduction in the scheme membership or a reduction in future 
entitlement) occurs, the obligation and related plan assets are re-measured using current actuarial assumptions and the
resultant gain or loss is recognised in the consolidated income statement during the period in which the settlement or
curtailment occurs. 44
Group accounting policies
19. Pension obligations continued
Defined benefit schemes continued
The interest element of the defined benefit cost represents the change in present value of scheme obligations resulting
from the passage of time and is determined by applying the discount rate to the opening present value of the benefit
obligation, taking into account material changes in the obligation during the year. The expected return on plan assets 
is based on an assessment made at the beginning of the year of long-term market returns on scheme assets, adjusted 
for the effect on the fair value of plan assets of contributions received and benefits paid during the year. The difference
between the expected return on plan assets and the interest cost is recognised in non direct operating costs.
Defined contribution schemes
For defined contribution schemes, contributions are recognised as an employee benefit expense when they are due.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments 
is available.
20. Share based payments
The company operates equity settled, share based compensation plans. The fair value of the employee services received
in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting
conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected 
to become exercisable. At each balance sheet date, the group revises its estimates of the number of options that are
expected to become exercisable. It recognises the impact of the revision of the original estimate, if any, in the
consolidated income statement and a corresponding adjustment to equity over the remaining vesting period.
The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and
share premium (the remainder) when the options are exercised except when the exercise of options is satisfied by shares
held by the group’s Employee Share Ownership Trust.
The group has taken advantage of the transitional provisions of IFRS 2 in respect of equity settled awards and has applied
IFRS 2 only to equity settled awards granted after 7 November 2002 that have not vested on or before 31 December 2004.
21. Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits when
it is demonstrably committed either to terminating the employment of current employees according to a detailed formal
plan without possibility of withdrawal or providing termination benefits as a result of an offer to encourage voluntary
redundancy.
22. Provisions
Provisions are recognised when the group has a present obligation, legal or constructive, as a result of past events, 
when it is more likely than not that an outflow of resources will be required to settle the obligation and when the amount
can reliably be estimated. Provisions are discounted to present value where the effect is material.
23. Government grants
Government grants are recognised when there is reasonable assurance that the grants will be received and that all related
conditions will be met. Government grants in respect of capital expenditure are credited to a deferred income account and
are released as income by equal annual amounts over the expected useful lives of the relevant assets. Grants of a revenue
nature are credited to income so as to match them with the expenditure to which they relate.
24. Taxation
Income tax expense represents the sum of the current tax payable and deferred tax. Income tax is recognised in 
the consolidated income statement except to the extent that it relates to items recognised in equity, in which case 
it is recognised in equity.
Current tax payable or recoverable is based on taxable profit for the year using tax rates enacted, or substantively
enacted, at the balance sheet date and any adjustment to tax payable in respect of previous years. 45
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities using tax rates enacted, or substantively enacted, at the balance sheet date with the following exceptions:
(i) provision for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries only to the
extent that, at the balance sheet date, dividends have been accrued as receivable; and
(ii) deferred tax assets are not recognised where the directors consider their recoverability unlikely. 
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the 
related tax benefit will be realised.
25. Foreign currency translation
Functional and presentational currency 
Items included in the financial statements of each of the group’s entities are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The consolidated financial statements are
presented in UK pounds sterling, which is the group’s functional and presentational currency.
Foreign currency transactions and balances
Transactions in foreign currencies, other than UK pounds sterling, are translated at the foreign exchange rate applying 
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date
are translated to UK pounds sterling at the foreign exchange rate applying at that date. Exchange differences arising on
translation are recognised in the income statement. Non monetary assets and liabilities that are measured in terms of
historical cost in a currency other than UK pounds sterling are translated using the exchange rate applying at the date 
of the transaction.
Financial statements of foreign operations
The assets and liabilities of foreign operations are translated to UK pounds sterling at foreign exchange rates applying at
the balance sheet date. The revenues and expenses of foreign operations are translated to UK sterling pounds at rates
approximating to the foreign exchange rates applying at the date of the transactions. Foreign exchange differences arising
on retranslation are recognised directly in a separate component of equity, the translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities 
of the foreign entity and translated at the closing rate.
26. Financial risk factors
The group’s activities expose it to the financial risks of changes in foreign exchange rates. The use of financial derivatives
is governed by a group policy approved by the board of directors which provides written principles on the use of financial
derivatives to hedge certain risk exposures. The group does not use derivative financial instruments for speculative
purposes.
In order to hedge its exposure to certain foreign exchange risks, the group enters into forward contracts and options.
Derivative financial instruments and hedging activities
Derivatives are recognised initially at fair value on the date a derivative contract is entered into and subsequently are
measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument and, if so, the nature of the item being hedged. The group designates derivatives 
as either:
(i)  a hedge of a highly probable forecast transaction or change in the cash flows of a recognised asset or liability 
(a cash flow hedge); or
(ii) a hedge of the exposure to change in the fair value of a recognised asset or liability (a fair value hedge).
Underlying the definition of fair value is the presumption that the group is a going concern without any intention 
of curtailing materially the scale of its operation.
All of the group’s hedging activities are deemed to be cash flow hedges. 46
26. Financial risk factors continued
Derivative financial instruments and hedging activities continued
In order to qualify for hedge accounting, the group is required to document from inception the relationship between the
item being hedged and the hedging instrument. The group is also required to document and demonstrate an assessment
of the relationship between the hedged item and the hedging instrument, which shows that the hedge will be highly
effective on an ongoing basis. This effectiveness testing is performed at each period end to ensure that the hedge
remains effective.
Cash flow hedges
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash
flows are recognised immediately in equity within the consolidated statement of recognised income and expenditure and
any ineffective portion is recognised immediately in the consolidated income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer
qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in
equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur,
the net cumulative gain or loss recognised in equity is transferred to the consolidated income statement.
Fair value estimation
The fair value of financial instruments which are traded in active markets is based on quoted market prices at the balance
sheet date.
The fair value of financial instruments which are not traded in an active market is determined by using valuation techniques.
The group uses a variety of methods and makes assumptions that are based on market conditions existing at each
balance sheet date.
27. New standards and interpretations applied
Zetex plc group financial statements have changed since 31 December 2006 due to new standards and interpretations
being issued since 1 January 2007. These new standard and interpretations include:
International Financial Reporting Standards (IAS/IFRSs)
• IFRS 7 (and IAS 32 and IAS 30) - ‘Financial Instruments - Disclosures’.
• IAS 1 - Amendments to ‘Capital Disclosures’.
28. New standards and interpretations not applied
IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these
financial statements:
International Financial Reporting Standards (IAS/IFRSs) Effective date
IFRS 2 Amendment to IFRS 2- Vesting Conditions and Cancellations 1 January 2009
IFRS 3 Business Combinations (revised January 2008) 1 July 2009
IFRS 8 Operating Segments 1 January 2009
IAS 1 Presentation of Financial Statements (revised September 2007) 1 January 2009
IAS 23 Borrowing Costs (revised March 2007) 1 January 2009
IAS 27 Consolidated and Separate Financial Statements (revised Jan 2008) 1 July 2009
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 12 Service Concession Arrangements 1 January 2008
IFRIC 13 Customer Loyalty Programmes 1 July 2008
IFRIC 14 IAS 19 - Limit of Defined Benefit Asset, Min Funding Requirements 1 January 2008
The directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the
group’s financial statements in the period of initial application.
Group accounting policies 47
The company financial statements for the year ended 31 December 2007 comprise those of the parent company only.
1. Statement of compliance
The financial statements have been prepared under the historical cost convention and in accordance with the Companies
Acts 1985 and 2006, and applicable accounting standards. 
The company financial statements have been prepared in accordance with UK GAAP and with the Companies Acts 1985
and 2006. The company has taken advantage of the exemption provided under section 408 of the Companies Act 1985
not to publish its individual income statement and related notes.
2. Basis of preparation
The company financial statements are presented in pounds sterling and all values are rounded to the nearest thousand
pounds (£’000) except when otherwise indicated. They are prepared on the historical cost basis.
3. Investments
Investments are valued individually at cost less any provisions required for impairment of value.
4. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term highly liquid
investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the company balance sheet.
5. Borrowings
Borrowings are recognised initially at fair value.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
6. Share capital
Ordinary shares are classified as equity.
Shares held in the parent company, Zetex plc, by employee share ownership trusts are recorded in the company balance
sheet as a deduction from shareholders equity at cost.
7. Provisions
Provisions are recognised when the company has a present obligation, legal or constructive, as a result of past events,
when it is more likely than not that an outflow of resources will be required to settle the obligation and when the amount
can reliably be estimated. Provisions are discounted to present value where the effect is material.
8. Pension costs
In the UK the majority of employees are members of either a defined benefit or a defined contribution scheme. The group
defined benefit pension scheme is run on a basis that does not enable individual companies within the group to identify
their share of the underlying assets and liabilities. In accordance with FRS 17, the company has accounted for the
scheme as a defined contribution scheme and will give additional disclosures in the consolidated financial statements.
This additional information is provided in accordance with IAS 19 Employee Benefits, however the directors believe that
information disclosed in accordance with that standard is not materially different to that which would be disclosed in
accordance with FRS 17. All defined contribution costs are charged to the company income statement as they fall due.
Company accounting policies 48
9. Taxation
The provision for taxation is based on the results for the period and takes into account tax deferred because of timing
differences between the treatment of certain items for tax and accounting purposes. Deferred tax is recognised in respect 
of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have
occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax with the
following exceptions: 
(i) provision for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries only to 
the extent that, at the balance sheet date, dividends have been accrued as receivable; and
(ii)deferred tax assets are not recognised where the directors consider their recoverability unlikely. 
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which
timing differences reverse, based on tax rates and laws enacted or substantially enacted at the balance sheet date.
10. Employee share ownership trust (ESOT)
The cost of the company’s shares held by the ESOT is deducted from shareholders’ funds in the company and
consolidated balance sheet. Where the group purchases the company’s equity share capital, the consideration is
recognised directly in shareholders’ funds. Other assets and liabilities of the ESOT are recognised as assets and 
liabilities of the company.
Company accounting policies 1. Segmental analysis
The group’s geographical segments are based on the location of the group’s assets. Sales to external customers
disclosed in geographical segments are based on the geographical location of its customers. 
The 2006 full year analysis has been restated so the United States of America is disclosed separately from the rest 
of the Americas. Total revenue figures remain unchanged and there is no impact on the consolidated income statement.
All results relate to continuing operations.
2007 2006
£’000 £’000
restated
Revenue by destination
Net segment sales
United Kingdom 6,338 5,027
United States of America 8,779 9,786
Continental Europe 17,245 19,847
Asia Pacific 31,456 31,834
Other geographical areas 820 674
64,638 67,168
Revenue by origin
Segment sales
United Kingdom 61,321 60,689
United States of America 10,515 13,131
Continental Europe 25,798 26,800
Asia Pacific 29,146 28,670
Inter-segment sales
United Kingdom (54,823) (55,522)
United States of America (7,319) (6,600)
64,638 67,168
Profit/(loss) by origin
Segment profit before income tax
United Kingdom 3,773 (1,093)
United States of America 272 22
Continental Europe 1,241 1,163
Asia Pacific 1,899 1,359
Other geographical areas 1 –
Net finance income 563 150
Profit before income tax 7,749 1,601
Income tax (409) 937
Net profit for the year 7,340 2,538
Notes to the financial 
statements
49 50
1. Segmental analysis continued
2007 2006
£’000 £’000
Assets and liabilities
Segment assets
United Kingdom 70,175 55,627
United States of America 1,334 2,199
Continental Europe 6,505 11,949
Asia Pacific 4,136 8,723
Unallocated assets (including tax) 5,758 7,716
Total assets 87,908 86,214
Segment liabilities
United Kingdom 16,708 12,671
United States of America 228 1,747
Continental Europe 1,422 4,957
Asia Pacific 152 101
Unallocated liabilities (including tax) 7,792 9,534
Total liabilities 26,302 29,010
Other segment information
Capital expenditure on tangible assets
United Kingdom 1,836 1,015
United States of America 5 4
Continental Europe 196 234
Asia Pacific 21 10
Depreciation of tangible assets
United Kingdom 5,176 5,296
United States of America 6 7
Continental Europe 363 396
Asia Pacific 31 21
Amortisation of intangible assets
United Kingdom 1,476 1,080
Continental Europe 419 338
Impairment of intangible and tangible assets
United Kingdom 307 468
Continental Europe 369 –
Notes to the financial 
statements 51
2. Revenues and expenses
2007 2006
£’000 £’000
Revenue
Sale of goods 64,638 67,168
Finance revenue 721 314
Finance revenue
Interest receivable on bank and other short term cash deposits 721 314
Finance costs
Interest payable on bank loans and overdrafts (112) (101)
Finance charges payable under finance leases and hire purchase contracts (46) (63)
(158) (164)
Group operating profit is stated after crediting:
Foreign exchange differences from hedging activities included in cost of sales* 1,331 310
Foreign exchange differences included in non-direct operating costs 476 188
1,807 498
*Recognised in revenue in 2007, recognised in cost of sales in 2006.
Depreciation 5,576 5,720
Amortisation 1,895 1,418
Impairment 676 468
Cost of inventories recognised as an expense 38,145 36,094
Write down of inventories to net realisable value 341 112
Government grants (92) (71)
Impairment of trade receivables** 162 78
Minimum lease payments recognised as an operating lease 280 137
Relate to continuing operations.
**Includes £310,000 adjusted bad debt.
2007 2006
£’000 £’000
Employee benefits
Wages and salaries 18,866 20,130
Social security costs 1,434 1,702
Pension costs 1,256 1,496
Termination payments – 861
Cost of share based payments 86 135
21,642 24,324
The average number of persons employed by the group during the year was as follows:
Number Number
Production 390 428
Sales and customer support 111 100
Development 69 74
Administration 77 77
647 679
Further details on directors remuneration are disclosed in the remuneration report on pages 18 to 22, which form part of
these financial statements.
Innovation costs (research and development)
Innovation costs consist of £2,975,000 (2006: £2,946,000) charged directly to non direct operating costs and £1,895,000
(2006: £1,418,000) of amortisation of previously capitalised development costs.
Impairment costs of £616,000 (2006: £468,000) have been charged to non direct operating costs. 52
2. Revenues and expenses continued
Auditors remuneration
2007 2006
£’000 £’000
Audit of the financial statements 120 160
Taxation fees to other accountancy firms 176 70
Included in audit of the financial statements is £60,000 (2006: £58,195) that relates to the company.
Adjusted items
The items below have been disclosed separately on the face of the consolidated income statement as they are deemed
material items of income and expense which, because of the nature of the events giving rise to them, merit separate
presentation to allow shareholders to better assess trends of the elements of financial performance in the year so as to
facilitate comparison with prior periods and to assess trends in underlying financial performance. Such items include items
of an unusual or non-recurring nature.
Recognised in arriving at operating profit:
2007 2006
£’000 £’000
Relocation and rationalisation costs 292 364
Severance costs – 861
Sale of Gem Mill (1,954) –
Share based payments 86 135
Pension scheme curtailment (2,235) –
Corporate advisory costs 325 –
Bad debt 310 –
(3,176) 1,360
( ) Consolidated income statement credit.
The completion of the reorganisation and efficiency programme within the group meant that there were no severance 
costs in the year (2006: £861,000). However, the group did incur relocation and rationalisation costs of £292,000 
(2006: £364,000) in the United Kingdom in connection with consolidating its manufacturing operations in line with the
efficiency programme.
On 4 April 2007, the group sold its former operating site, Gem Mill, in Chadderton to a residential property developer 
for £2,995,000, achieving a profit on disposal of £1,954,000.
The group has increased the cumulative expected charge by £86,000 (2006: £135,000) for share based payments as 
new share options were issued in the year which are expected to vest. Offset against this were cancellations of existing
options due to employees leaving the business.
The Pensions Committee of the Board has been working to reduce the size and volatility of the pension scheme deficit.
Following a consultation with employees and the Trustees, the defined benefit section of the Pension Scheme was 
closed to future accrual on 1 September 2007. This generated a £2,235,000 reduction in deficit.
Costs of £325,000 (2006: £nil) were incurred in relation to corporate advisors.
A US based distributor entered into Chapter 11 Bankruptcy proceedings in the year. A provision was made for all 
remaining unprovided debt of £310,000.
Notes to the financial 
statements 53
3. Income tax
Major components of income tax expense are:
2007 2006
£’000 £’000
Consolidated income statement
Current income tax
Foreign tax 743 658
Amounts overprovided in previous years – (138)
743 520
Deferred income tax
Origination and reversal of timing differences 566 (1,159)
Impact of revised foreign tax rate (609) –
Amounts over provided in previous years (291) (298)
(334) (1,457)
Income tax expense/(credit) 409 (937)
2007 2006
£’000 £’000
Consolidated statement of changes in equity
Deferred income tax
Net deferred tax on employee benefits (pensions) 262 (579)
Net deferred income tax on cash flow hedges 59 (1,033)
Net deferred income tax on cash flow hedges settled during the period 345 335
Deferred income tax credit/(expense) 666 (1,277)
Reconciliation of effective tax charge
A reconciliation of income tax expense applicable to accounting profit before income tax at the UK statutory corporation 
tax rate to income tax expense at the group’s effective income tax rate for the periods ended is as follows:
2007 2006
£’000 £’000
Accounting profit before income tax 7,749 1,601
At the UK standard rate of corporation tax 30 per cent (2006: 30 per cent) 2,325 480
Adjustments in respect of previous years (291) (434)
Impact of revised foreign tax rate (609) –
Deferred tax movement not recognised previously (35) (1,012)
Permanent differences – sale of property (Gem Mill) (616) –
Permanent differences – others 592 110
Impact of pension curtailment (626) –
Research and development tax credits (300) –
Lower taxes on overseas earnings (31) (81)
Income tax expense/(credit) 409 (937)
Taxation in other jurisdictions is calculated at the rates prevailing within the respective jurisdictions. 54
3. Income tax continued
Deferred income tax relates to the following:
Consolidated
statement of
Consolidated Consolidated recognised income
balance sheet income statement and expenditure
2007 2006 2007 2006 2007 2006
£’000 £’000 £’000 £’000 £’000 £’000
Deferred income tax
Deferred income tax assets
Deferred income _ 90 (90) – – –
Revaluations of foreign exchange 
contracts (cash flow hedges) 
to fair value – – – – – (335)
Dilapidation provision 43 142 (99) 28 – –
Employee benefits 1,621 2,655 (1,295) (181) 262 (579)
Tax losses carried forward 3,708 2,637 1,071 2,280 – –
Finance leases 229 377 (148) (9) – –
Gross deferred income tax assets 5,601 5,901 (561) 2,118 262 (914)
Deferred income tax liabilities
Accelerated depreciation for 
tax purposes (2,438) (4,955) 2,517 76 – –
Development expenditure 
capitalised (2,972) (553) (2,419) (553) – –
Revaluations of foreign exchange 
contracts (cash flow hedges) 
to fair value 42 (394) 31 (31) 404 (363)
Employee benefits – – – 30 – –
Finance leases (232) – (232) – – –
Fair value adjustments on 
acquisition – mikron Germany (1,139) (2,135) 998 (183) – –
Gross deferred income tax liabilities (6,739) (8,037) 895 (661) 404 (363)
Deferred income tax credit/(expense) 334 1,457 666 (1,277)
The group has tax losses which arose in the UK of £5,971,000 (2006: £6,884,000) that are available indefinitely for offset
against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised 
in respect of these losses.
There are no income tax consequences for the group attaching to the payment of dividends by Zetex plc to its shareholders.
Notes to the financial 
statements 55
4. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity 
holders of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the period (adjusted for the effects of
dilutive options).
Adjusted earnings per share amounts are calculated by dividing the adjusted profit (as detailed below) by the weighted
average number of ordinary shares outstanding during the period (adjusted where appropriate for the effects of diluted
options).
The dilution effect is calculated on the full exercise of all ordinary share options granted by the group, including
performance-based options which the group considers to have been earned.
Shares held in the ESOT are excluded from the earnings per share calculation – 2007: 3,200,899 (2006: 3,222,684).
The following reflects the income and share data used in the total operations basic and diluted earnings per share
computations:
2007 2007 2007 2006 2006 2006
Basic EPS Diluted EPS Basic EPS Diluted EPS
£’000 (p) (p) £’000 (p) (p)
Net profit attributable to equity 
holders of the parent 7,340 7.28 7.23 2,538 2.54 2.52
Adjusted items:
Effect of relocation and 
rationalisation costs 292 0.29 0.28 364 0.37 0.37
Effect of severance costs ––– 861 0.86 0.86
Effect of sale of Gem Mill (1,954) (1.94) (1.92) –––
Effect of share based payments 86 0.09 0.08 135 0.13 0.13
Effect of pension scheme curtailment (2,235) (2.22) (2.20) –––
Effect of corporate advisory costs 325 0.32 0.32 –––
Effect of bad debt 310 0.31 0.31 –––
Effect of one time tax credit due 
to recognition of deferred tax asset ––– (1,311) (1.31) (1.31)
Adjusted profit attributable to equity 
holders of the parent 4,164 4.13 4.10 2,587 2.59 2.57
Weighted average number of 
ordinary shares for basic 
earnings per share 100,758,976 100,002,472
Effect of dilution from 
share options 751,044 569,836
Adjusted weighted average 
number of ordinary shares 
for diluted earnings per share 101,510,020 100,572,308
There have been no transactions involving ordinary shares or potential ordinary shares since the reporting date and before
the completion of these financial statements.
Adjusted earnings per share acknowledges that there have been material items of income and expense which, because of
the nature of the events giving rise to them, merit adjustment to allow shareholders to assess better trends of the elements
of financial performance in the year so as to facilitate comparison with prior periods and to assess trends in underlying
financial performance. Such items include items of an unusual or non-recurring nature. 56
5. Dividends paid and proposed
2007 2006
£’000 £’000
Declared and paid during the period
Equity dividends on ordinary shares:
Final dividend for the year 2005: 1.45p – 1,448
Interim dividend for the year 2006: 0.70p – 700
Final dividend for the year 2006: 1.45p 1,460 –
Interim dividend for the year 2007: 0.70p 708 –
2,168 2,148
Proposed for approval at AGM (not recognised as a liability at 31 December):
Equity dividends on ordinary shares of 5p each: 1.45p (2006: 1.45p) 1,512 1,459
6. Property, plant and equipment
Land and Assets in Plant and Fixtures Motor
buildings construction machinery and fittings vehicles Total
£’000 £’000 £’000 £’000 £’000 £’000
Year ended 31 December 2006
Cost
At 1 January 2006 12,106 – 53,080 8,382 18 73,586
Additions 237 216 555 255 – 1,263
Reclassifications – (196) 171 25 – –
Transferred to assets held for sale (1,080) – – – – (1,080)
Disposals – – (2) (45) – (47)
Translation adjustments (12) – (272) (33) – (317)
At 31 December 2006 11,251 20 53,532 8,584 18 73,405
Depreciation/impairment
At 1 January 2006 1,737 – 29,825 6,259 17 37,838
Depreciation 245 – 4,817 658 – 5,720
Transferred to assets held for sale (133) – – – – (133)
Disposals – – (2) (44) – (46)
Translation adjustments (2) – (259) (23) – (284)
At 31 December 2006 1,847 – 34,381 6,850 17 43,095
Net book value
At 31 December 2006 9,404 20 19,151 1,734 1 30,310
At 31 December 2005 10,369 – 23,255 2,123 1 35,748
Notes to the financial 
statements 57
6. Property, plant and equipment continued
Land and Assets in Plant and Fixtures Motor
buildings construction machinery and fittings vehicles Total
£’000 £’000 £’000 £’000 £’000 £’000
Year ended 31 December 2007
Cost
At 1 January 2007 11,251 20 53,532 8,584 18 73,405
Additions 418 178 1,382 80 – 2,058
Reclassifications (274) (168) 7,761 (7,319) – –
Disposals (600) – (112) (1) – (713)
Translation adjustments 88 2 606 14 – 710
At 31 December 2007 10,883 32 63,169 1,358 18 75,460
Depreciation/impairment
At 1 January 2007 1,847 – 34,381 6,850 17 43,095
Depreciation 297 – 5,156 123 – 5,576
Reclassifications – – 6,043 (6,043) – –
Disposals (600) – (112) (1) – (713)
Impairment – – 60 – – 60
Translation adjustments 53 – 555 1 – 609
At 31 December 2007 1,597 – 46,083 930 17 48,627
Net book value
At 31 December 2007 9,286 32 17,086 428 1 26,833
At 31 December 2006 9,404 20 19,151 1,734 1 30,310
During the year, computer equipment was reclassified from fixtures and fittings into plant and machinery as it was felt 
that this better represented their usage within the group.
The carrying value of property, plant and equipment held under finance leases and hire purchase contracts at 
31 December 2007 is £830,750 (31 December 2006: £643,750).
Leased assets and assets under hire purchase contracts are pledged as security for the related finance lease and 
hire purchase liabilities.
At 31 December 2006, Gem Mill was reclassified as an asset held for sale under IFRS 5. See note 6a below.
6a. Assets held for sale
At 31 December 2006, Gem Mill, the former head office and operating site of the group, was reclassified from a tangible
fixed asset to an asset held for sale and separately disclosed on the face of the consolidated balance sheet. This building
was sold on 4 April 2007 for £2,995,000. The profit on disposal is £1,954,000. This is reflected as an adjusted item on the
face of the consolidated income statement. 58
7. Intangible assets
mikron
intellectual mikron
property product T echnology Product Software
suite portfolio assets development licences Goodwill T otal
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Year ended 31 December 2006
Cost
At 1 January 2006 2,948 2,144 6,970 13,858 – 300 26,220
Reclassification 300 (2,144) – 2,144 – (300) –
Additions – – 1,443 2,157 613 – 4,213
Translation adjustments (63) – – (36) – – (99)
At 31 December 2006 3,185 – 8,413 18,123 613 – 30,334
Amortisation/impairment
At 1 January 2006 – – 2,448 12,945 – – 15,393
Amortisation – – 840 578 – – 1,418
Impairment – – – 468 – – 468
At 31 December 2006 – – 3,288 13,991 – – 17,279
Net book value
At 31 December 2006 3,185 – 5,125 4,132 613 – 13,055
At 31 December 2005 2,948 2,144 4,522 913 – 300 10,827
mikron
intellectual mikron
property product T echnology Product Software
suite portfolio assets development licences Goodwill T otal
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Year ended 31 December 2007
Cost
At 1 January 2007 3,185 – 8,413 18,123 613 – 30,334
Additions – – 734 3,522 – – 4,256
Translation adjustments 293 – – – – – 293
At 31 December 2007 3,478 – 9,147 21,645 613 – 34,883
Amortisation/impairment
At 1 January 2007 – – 3,288 13,991 – – 17,279
Amortisation – – 880 817 198 – 1,895
Impairment – – – 616 – – 616
Revaluations – – – ––––
Translation adjustments – – – ––––
At 31 December 2007 – – 4,168 15,424 198 – 19,790
Net book value
At 31 December 2007 3,478 – 4,979 6,221 415 – 15,093
At 31 December 2006 3,185 – 5,125 4,132 613 – 13,055
Notes to the financial 
statements 59
7. Intangible assets continued
Technology assets are capitalised at cost. This intangible assets have been assessed as having a finite life and are
amortised under the straight line method up to a maximum of five years. They are tested for impairment where an 
indicator of impairment arises.
Product development (including the mikron product portfolio) is capitalised at cost. This intangible asset has been
assessed as having a finite life and is amortised under the straight line method up to a maximum of three years 
(or four years for the mikron product portfolio). It is tested for impairment where an indicator of impairment arises.
During 2007, the group impaired product development costs with a value of £616,000 (2006: £468,000) stating these 
within non direct operating costs in the consolidated income statement.
All capitalised product development costs at the year end were reviewed for indications of impairment. Each product 
line was individually assessed to ensure its continued fulfilment of the capitalisation criteria of IAS 38 and whether any
indications of impairment existed per IAS 36. If it was no longer probable that the net present value of forecast cash 
flows exceeded the carrying value of the asset, then the asset was impaired.
mikron intellectual property suite and goodwill are not amortised but annually tested for impairment. See note 7a.
7a. Impairment testing of indefinite lived intangible assets
mikron intellectual property suite cash generating unit
The recoverable amount of the mikron intellectual property suite has been determined based on a value in use basis. 
To calculate this, cash flow projections are based on financial budgets approved by senior management covering a five
year period. The discount rate applied to the cash flow projections is 13 per cent.
2007 2006
£’000 £’000
Carrying amount of mikron intellectual property suite 3,478 3,185
Key assumptions used in the value in use basis of calculation of mikron intellectual property suite for the period reported:
a) Average sales prices for the cash generating unit based on historical performance.
b) Budgeted gross margins – the basis used to determine the value assigned to the budgeted gross margins is the
average gross margins achieved in the year immediately before the budgeted year, increased for expected efficiency
improvements.
The indefinite life ascribed to this class of asset is based on the leading edge internally transferrable design technology
acquired with the mikron business.
Sensitivity to changes in assumptions
Growth rate assumptions
Management recognises that a decline in the current level of sales could cause the carrying value of the unit to exceed 
its recoverable amount. In order for this to occur, then there would need to be a 20 per cent per annum decline on the
current level of revenues, either via lower volume or price erosion.
Based on the current market and sales prospects for these products (flat sales – 0 per cent growth), then the management
believe that such a volume impact is very unlikely.
Margins
Management recognises that a decline in the current gross margin of the product could cause the carrying value of the
unit to exceed its recoverable amount.
In order for this to occur, then there would need to be a 21 per cent reduction in gross margin per year.
Based on the current profitability of these products (circa 51 per cent) and the forecast manufacturing costs of the
business then management believe that this is very unlikely.
Based on flat sales at 51 per cent margin then the recoverable amount exceeds the carrying value by £2,600,000. 60
8. Investment in associate
The group has a 31.82 per cent interest in Zetex (Chengdu) Electronics Limited which is involved in the assembly of
electronic components in China.
Zetex (Chengdu) Electronics Limited is a private entity that is not listed on any public exchange and therefore there is no
published quotation price for the fair value of this investment. The reporting date and reporting year of Zetex (Chengdu)
Electronics Limited is the same as that of the group.
The following table illustrates summarised information of the investment in Zetex (Chengdu) Electronics Limited.
2007 2006
£’000 £’000
Share of associate’s balance sheet:
Current assets 449 373
Non-current assets 341 348
Current liabilities (201) (170)
Net assets 589 551
Provision against carrying value (502) (502)
Exchange (18) (12)
Carrying amount of investment 69 37
Share of associate’s revenue and profit:
Revenue 493 439
Profit 17 24
9. Employee benefits
Employee share incentive plans:
Share Options
The group has a number of share options plans:
ESO Schemes
The group has three Executive Share Option (ESO) plans for the granting of non-transferable options in Zetex plc to certain
executives, including executive and non executive directors and key employees.
Options granted under the plans vest on the first day that they become exercisable. Options must be held for three years
before they are exercisable and must be exercised within 10 years of grant. Options are subject to performance conditions.
1994 scheme
Options granted under the 1994 Executive Share Option Scheme are subject to performance conditions. For options
granted to the executive directors up to 1999, the options only become exercisable if the growth in Zetex earnings per
share over a rolling period of three consecutive years exceeds the rate of inflation (as measured by the UK Retail Prices
Index (RPI)) over the same period by at least six per cent.
2003 scheme
For options granted from 2000 to 2006, the options became exercisable if growth in Zetex’ earnings per share over a rolling
period of three consecutive years exceeds the rate of inflation (as measured by the RPI) over the same period by at least
nine per cent. For options granted under the 2003 Executive Share Option Scheme, the performance conditions used were
as follows:
Notes to the financial 
statements 61
9. Employee benefits continued
2003 scheme continued
a) For options granted to a participant over shares with an aggregate market value of up to 100 per cent of salary (or the
part of an option with a value of 100 per cent of salary where the aggregate market value is higher), the exercise shall
be conditional on the company’s growth in earnings per share (EPS) over the three years following grant exceeding 
the increase over the same period in the RPI plus an average of five per cent per annum. For the part of grants with 
an aggregate market value in excess of 100 per cent of salary the condition shall be on a sliding scale basis with 
full exercise only capable for EPS growth over the three years following grant exceeding RPI plus an average of 
11 per cent per annum.
b) To the extent that options are not exercisable after three years, the performance conditions may be retested after 
years four and five (from a fixed base). To the extent the performance conditions have not been met after five years 
the options will lapse. For options granted to the executive directors the performance conditions may only be retested
after year four and to the extent the performance conditions have not been met after four years the options will lapse.
From 1 September 2004, all options granted were subject to the performance conditions set out above and are not 
be subject to retesting. Such options shall either vest or lapse after three years. Where the company’s annual TSR 
falls between the Lower Target and the Upper Target, the number of Shares subject to the TSR Target shall vest on 
a straight-line basis between 20 per cent and 100 per cent.
2007 scheme
For options granted under the 2007 Executive Share Option Scheme (2007 Scheme), 50 per cent of the options are
subject to a performance target based on 3-year growth in operating profit per share (Operating Profit Target) and the 
other 50 per cent of the options are subject to a performance target based on the company’s total shareholder return
(TSR), measured over a 4-year period, outperforming a comparator group of sector peers (TSR Target). Details of these
targets are set out below:
a) In relation to the Operating Profit Target, the company’s operating profit per share is based on audited annual
operating profit before audited adjusted items (as defined under IFRS), IAS 19 adjustment for changes to the valuation
of pension fund assets and the Income Statement effect of increasing or decreasing inventory, divided by the average
number of shares in issue. On the grant of an option, the target level of 3-year growth in operating profit per share was
set by the Committee with regard to the company’s long-term plan and other relevant benchmarks. The options subject
to the Operating Profit Target will vest according to a sliding-scale vesting schedule set by the Committee on the date
of grant.
b) In relation to the TSR Target, the company’s TSR shall be measured over a period of four years commencing on the
first day of the financial year of the company in which the Option is granted. The company’s TSR will be compared 
to companies which are deemed by the Committee to be the company’s sector peers (Comparator Group). The
Comparator Group in relation to the options granted during 2007 were Advanced Micro Devices, Analog Devices,
Austria Microsystems, Dialog Semiconductor, Diodes, Fairchild Semiconductor, Freescale Semiconductor, International
Rectifier, Intersil, Linear Technology, Maxim Integrated Products, Micrel, National Semiconductor, ON Semiconductor,
Sipex, ST Microelectronics, Supertex, Cirrus Logic, Pericom Semiconductor and Texas Instruments.
If the company’s annual TSR is equal to the median of the annual TSR for the companies in the Comparator Group 
(Lower Target) then 20 per cent of the Shares subject to the TSR Target will vest. If the company’s annual TSR exceeds the
median of the annual TSR for the companies in the Comparator Group by 10 per cent or more per annum (Upper Target)
then all of the Shares subject to the TSR Target will vest. The company’s out performance of the Comparator Group will 
be based on an approach whereby, for example, if Comparator Group median TSR were 10 per cent p.a. over the 4-year
period, TSR-based awards would vest in full only if the company’s TSR were 21 per cent p.a. or higher (i.e. 1.10 x 1.10 =
1.21). Where the company’s annual TSR falls between the Lower Target and the Upper Target, the number of Shares
subject to the TSR Target shall vest on a straight-line basis between 20 per cent and 100 per cent.
PSP Scheme
Shareholders approved the establishment of the 2007 Performance Share Plan (PSP) at the AGM on 25 April 2007. Awards
as nil cost options are made over shares in the company to certain employees outside the senior management group. The
awards are normally exercisable 3 years from the date of grant and are not currently subject to performance conditions. 62
9. Employee benefits continued
BCP Scheme
Shareholders approved the establishment of the 2007 Bonus Co-Investment Plan (BCP) at the AGM on 25 April 2007.
Under the BCP , employees within the senior management group are obliged to buy shares in the Company using 
a mandatory percentage of the annual bonus (Mandatory Percentage). The Mandatory Percentage is set by the
Remuneration Committee, but is subject to a maximum of 25 per cent. Any Shares acquired using the Mandatory
Percentage are known as Deferred Bonus Shares. Under the BCP , and in addition to any Deferred Bonus Shares, the
participating employees has the opportunity to buy Shares using a voluntary percentage of the Annual Bonus (Voluntary
Percentage). The Voluntary Percentage is to be determined by the participating employee, but is subject to a maximum 
of 25 per cent. Any Shares acquired using the Voluntary Percentage are known as Investment Shares.
Following the acquisition of Deferred Bonus Shares and Investment Shares, the Trustee will grant, at the recommendation
of the Remuneration Committee, a Matching Award and an Investment Share Award to acquire such number of Shares 
as is equal to 1.5 times the Mandatory Percentage and the Voluntary Percentage of the gross annual bonus (before the
deduction of income tax and national insurance contributions). These awards are subject to performance conditions 
which are tested annually. If the performance conditions are satisfied, a quarter of the awards will become exercisable.
For the awards made the 2007 Bonus Co-investment Plan (“the BCP”), performance will be measured over a four year
period commencing on the first day of the financial year of the company in which an award is granted (Performance
Period). Three quarters of the Shares subject to an award will be subject to a revenue target (Revenue Target). One 
quarter of the Shares subject to an award will be subject to a total shareholder return target (TSR Target). 
Awards subject to the Revenue Target will be split into three equal tranches, each equal to one-quarter of the total awards
subject to an award. Each tranche will vest according to a sliding-scale vesting schedule set by the Committee around
revenue targets to be based on US$ year-end revenue, as published in the audited annual accounts, and set for each 
of the first, second and third financial years of the Performance Period. Revenue targets were set by the Committee with
regard to the company’s long-term plan and other relevant benchmarks. Awards will vest in full for a performance level
assessed by the Committee to be equivalent to upper quartile performance. 
To the extent that the revenue target is met at the end of the relevant financial year, the awards subject to that target shall
vest at the next anniversary of the award grant date (a Vesting Date). To the extent that the revenue target is not met at the
end of the relevant financial year, the shares subject to that target shall not vest.
In relation to the TSR Target, the company’s TSR shall be measured over the whole of the Performance Period. The
company’s TSR will be compared to companies which are deemed by the Committee to be the company’s sector peers
(Comparator Group). For awards made in 2007, the Comparator Group in relation to the initial grant of awards under the
BCP shall be Advanced Micro Devices, Analog Devices, Austria Microsystems, Dialog Semiconductor, Diodes, Fairchild
Semiconductor, Freescale Semiconductor, International Rectifier, Intersil, Linear Technology, Maxim Integrated Products,
Micrel, National Semiconductor, ON Semiconductor, Sipex, ST Microelectronics, Supertex, Cirrus Logic, Pericom
Semiconductor and Texas Instruments.
If the company’s annual TSR is equal to the median of the annual TSR for the companies in the Comparator Group 
(Lower Target) then 20 per cent of the Shares subject to the TSR Target will vest. If the company’s annual TSR exceeds the
median of the annual TSR for the companies in the Comparator Group by 10 per cent or more per annum (Upper Target)
then all of the Shares subject to the TSR Target will vest. The company’s out performance of the Comparator Group will 
be based on an approach, whereby for example e.g. if Comparator Group median TSR were 10 per cent p.a. over 
the 4-year period, TSR-based awards would vest in full only if the company’s TSR were 21 per cent p.a. or higher 
(i.e. 1.10 x 1.10 = 1.21).
Where the company’s annual TSR falls between the Lower Target and the Upper Target, the number of Shares subject 
to the TSR Target shall vest on a straight-line basis between 20 per cent and 100 per cent. 
Notes to the financial 
statements 63
To the extent that the TSR Target is met, the awards subject to that target shall vest at the next anniversary of the award
grant date. To the extent that the TSR Target is not met, the shares subject to that target shall not vest. The closing middle
market price of the company’s shares at 31 December 2007 was 47.75p and the range during the 
year was 101.5p to 45.0p.
There has been no change in the directors’ interests in options granted by the company between the end of the financial
year and the date of this report. The Register of Directors’ Interests (which is open to shareholders’ inspection) contains 
full details of directors’ options to subscribe for shares in the company.
SRSO Scheme
The group operates a ‘Savings Related Share Option’ (SRSO) scheme open to UK employees. The scheme is designed to
encourage increased equity participation amongst employees through the allocation of share options in Zetex plc at a fixed
market price, which are paid for by employees by savings accumulated through monthly salary deductions. At the end of 
a three year period, employees’ savings can then be used to purchase the shares under option to them. Alternatively, the
employees can opt to have the savings reimbursed to them together with accumulated interest and the options then lapse.
2007 2006
Dates Number Number
Subscription normally 000 000
Share options outstanding Type Prices exercisable
2
restated
Options awarded 1997
1
ESO 55.0p 2000/2007 – 125
1
ESO 70.0p 2000/2007 – 60
Options awarded 1998
1
ESO 33.5p 2001/2008 73 139
Options awarded 1999
1
ESO 76.5p 2002/2009 420 604
1
ESO 133.5p 2002/2009 170 170
Options awarded 2000
1
ESO 299.5p 2003/2010 248 248
1
ESO 355.0p 2003/2010 509 509
1
ESO 470.0p 2003/2010 446 461
Options awarded 2001
1
ESO 306.0p 2004/2011 765 790
1
ESO 90.0p 2004/2011 108 118
Options awarded 2002
1
ESO 149.5p 2005/2012 325 333
1
SRSO 81.5p 2005 – 2
1
ESO 142.0p 2005/2012 304 318
1
ESO 71.5p 2005/2012 35 35
Options awarded 2003 ESO 56.5p 2006/2013 280 340
1
ESO 100.0p 2006/2013 100 100
ESO 72.5p 2006/2013 635 650
Options awarded 2004 ESO 150.0p 2007/2014 1,065 1,075
SRSO 131.6p 2007 245 262
Options awarded 2005 ESO 127.5p 2008/2015 600 600
ESO 96.0p 2008/2015 390 390
ESO 53.25p 2008/2015 1,239 1,239
Options awarded 2006 ESO 86.00p 2009/2016 384 384
Options awarded 2007 ESO 75.50p 2010/2017 228 –
ESO 84.50p 2011/2017 1,155 –
ESO 51.00p 2011/2017 1,606 –
PSP 0.00p 2010/2017 178 –
BCP 0.00p 2008/2011 264 –
11,772 8,952
1
Included within the list are options of 3,503,005 (31 December 2006: 3,835,411) that have not been recognised in accordance with IFRS 2
as the options were granted on or before 7 November 2002 or vested before 1 January 2005. These options have not been subsequently
modified and therefore do not need to be accounted for in accordance 
with IFRS 2.
2
There has been a restatement of the 2006 figures due to an omission in the prior year. 64
9. Employee benefits continued
The following table illustrates the movement in the number of shares and weighted average exercise prices (WAEP) 
of share options:
2007 2007 2006 2006
Number WAEP Number WAEP
000 (p) 000 (p)
2
restated
2
restated
Outstanding at the beginning of the period 8,952 156.42 10,907 148.56
Granted ESO 2,989 65.82 384 86.00
PSP 178 – ––
BCP 263 – ––
3,430 65.82 384 86
Exercised ESO (165) 67.94 (794) 60.80
1
ESO (219) 62.57 (25) 60.80
SRSO –– (6) 81.50
(384) 64.88 (825) 203.10
Lapsed ESO (208) 131.25 (1,132) 150.85
SRSO (18) 125.07 (382) 87.93
(226) 256.32 (1,514) 135.74
Outstanding at the end of the period 11,772 130.25 8,952 156.42
1
Exercised through the ESOT .
2
There has been a restatement of the 2006 figures to timing difference on the lapse/exercise of options.
The weighted average contractual life for the share options outstanding at 31 December 2007 is 10 years 
(31 December 2006: 10 years).
Employee Share Ownership Trust (ESOT)
The group has an Employee Share Ownership Trust (ESOT) which was established on 8 March 1999 to provide for the
future obligations of the group for shares awarded to employees on exercise of options granted to them by the company.
Under the scheme the trustee purchases the company’s ordinary shares in the open market using interest free loans
provided by the company. The shares acquired are held for distribution under the company’s ESOT . The ESOT has made
certain purchases of shares at the time certain options were granted, and hence are allocated against these options.
2007 2007 2006 2006
Number Number
000 £’000 000 £’000
Shares held by the ESOT
At start of the year 3,323 4,731 3,348 4,767
Shares disposed on exercise of options (122) (311) (25) (36)
At end of the year 3,201 4,420 3,323 4,731
Dividends on the shares owned by the trust are waived.
Notes to the financial 
statements 65
9. Employee benefits continued
The fair value of these plans are estimated as at the date of grant using the Binomial model and Black & Scholes model
respectively. The following table gives the assumptions made during the period:
2007 2006
Weighted average fair value (£) 0.22 0.22
Weighted average share price (£) 0.67 0.65
Weighted average expected dividend yield (per cent) 3.88 2.90
Weighted average expected volatility (per cent) 40.20 43.83
Weighted average risk free interest rate (per cent) 5.01 4.17
Weighted average expected life of option (years) 3.45 4.50
Pensions
Schemes based in the United Kingdom
The group operates a number of pensions schemes around the world, devised in accordance with local conditions and
practices. There are three UK schemes: two defined contribution stakeholder pension schemes and the defined benefit
(final salary) scheme. The assets of these schemes are held in separate funds. During 2002 the company closed the
defined benefit scheme to new members with all employees joining after 21 February 2002 being given the option to 
join the stakeholder pension scheme.
Following consultation with employees and the Trustees, the defined benefit section of the Pension Scheme was closed 
to future accrual on 1 September 2007. Hence, employee contributions into the defined benefit scheme ceased from 
1 September 2007 and was replaced by contributions into a stakeholder scheme. The closure also generated a one 
off £2,235,000 reduction in the pension fund deficit.
The directors have implemented changes to the assumptions used to reflect expected future events that will affect 
the cost of the benefits to which the group is committed to reflect a best estimate of likely future experience. These
assumptions are disclosed below.
In accordance with the recommendations of the scheme actuary, the group has maintained the rate of regular cash
contributions to reduce the deficit.
The total contributions to the defined benefit scheme in 2008 are expected to be £1,000,000 for the group, which relates to
special employer contributions. The cost to the group of the stakeholder pension schemes was £488,000 (2006: £167,000).
The company and group will review its contributions next year following completion of the required full triennial actuarial
valuation and will adjust them accordingly. 66
9. Employee benefits continued
Pensions
The following tables summarise the components of net benefit income/(expense) recognised in the consolidated income
statement and the consolidated statement of recognised income and expenditure for the year:
2007 2006
£’000 £’000
Consolidated income statement
Current service cost charged to non direct operating costs (835) (1,247)
Pension curtailment 2,235 –
Pension settlements – 100
Interest cost on benefit obligation charged to non direct operating costs (3,336) (3,169)
Expected return on plan assets credited to non direct operating costs 3,854 3,474
Net benefit income/(expense) 1,918 (842)
Consolidated statement of recognised income and expenditure
Actual return less expected return on pension scheme’s assets (218) 723
Experience gains and losses arising on the scheme’s liabilities (1,987) 430
Changes in assumptions underlying the present value of the scheme’s liabilities 1,271 1,220
Total actuarial (loss)/gain (934) 2,373
Total net income for scheme 984 1,531
Actual return on plan assets 3,636 4,197
The tables below detail the changes in the fair value of assets and liabilities of the scheme, the net liability shown in the
consolidated balance sheet:
2007 2006
£’000 £’000
Scheme assets at fair value at 31 December
Equities 36,534 36,610
Bonds 22,525 20,830
Cash 359 990
59,418 58,430
Changes in the fair value of scheme assets
As at 1 January 58,430 55,800
Expected return on scheme assets 3,854 3,474
Employer contributions 2,060 1,329
Member contributions 406 544
Benefits paid (5,114) (3,440)
Actuarial (losses)/gains (218) 723
At 31 December 59,418 58,430
Notes to the financial 
statements 67
9. Employee benefits continued
Pensions continued
2007 2006
£’000 £’000
Scheme deficit at present value at 31 December 
Present value of scheme liabilities (64,614) (66,670)
Fair value of scheme assets 59,418 58,430
Defined benefit pension scheme deficit (5,196) (8,240)
Movement in scheme deficit during the year
As at 1 January (8,240) (11,100)
Benefit income/(expense) 1,918 (842)
Contributions 2,060 1,329
Actuarial (losses)/gains (934) 2,373
At 31 December (5,196) (8,240)
Changes in the present value of the defined benefit pension liabilities
As at 1 January (66,670) (66,900)
Current service costs (835) (1,247)
Member contributions (406) (544)
Interest costs (3,336) (3,169)
Curtailment 2,235 100
Benefits paid 5,114 3,440
Actuarial (losses)/gains (716) 1,650
At 31 December (64,614) (66,670)
Benefit obligation assumptions
The valuation used has been based on the most recent actuarial valuation and updated by the scheme’s independent
actuaries to take account of the requirements of IAS 19 in order to assess the liabilities of the scheme as at 
31 December 2007.
The principal assumptions used in determining pension benefit obligations for the group’s defined benefit pension 
scheme is shown below:
2007 2006
per cent per cent
Discount rate 5.8 5.2
Expected rate of return on plan assets 6.7 6.7
Rate of salary increases n/a 4.3
Rate of Limited Price Indexation (LPI) pension in payment increases 3.4 3.0
Rate of increase in Post Guaranteed Minimum Pensions (GMP) pensions in payment 2.9 2.6
Rate of increase in LPI pensions in payment 2.4 2.3
Rate of revaluation of pensions in deferment 3.5 3.1
UK mortality assumptions
The mortality assumptions used have changed from those used last year.
In 2006, the mortality table PA92 projected to the year 2030 for non-pensioners and PA92 projected to the year 2010 for
current pensioners was used.
In 2007, a based table for mortality which is based on the PA92 series, has been used. This has then been adjusted to
reflect the recent experience of the Zetex Group Pension Scheme. There is an allowance for a rate of future improvements
in mortality based on a medium cohort projection with a minimum improvement rate of 1 per cent per annum. For male
pensioners aged 65, this represents a life expectancy at age 65 of 20.7 years (2006: 20.6 years). 68
9. Employee benefits continued
Pensions continued
Asset performance assumptions
Scheme assets are stated at their market values at the respective dates and overall expected rates of return are
established by applying a return on equities of 7.6 per cent, a return on bonds of 5.2 per cent and a return on cash 
of 5.5 per cent to reflect the Bank of England base rate at the year end.
The cumulative amount of actuarial gains and losses recognised since 1 January 2005 in the consolidated statement 
of recognised income and expenditure is £836,000 loss (2006: £353,000 loss). The directors are unable to determine 
how much of the pension scheme deficit recognised on transition to IFRS and taken directly to equity of £14,200,000 is
attributable to actuarial gains and losses since inception of the pension scheme. Consequently, the directors are unable 
to determine the amount of actuarial gains and losses that would have been recognised in the consolidated statement 
of recognised income and expenditure before 1 January 2004.
Deficit clearing payment plan
Following the valuation in April 2007, Zetex agreed to continue paying contributions of 12.4 per cent of pensionable
salaries until the end of August 2007. Zetex paid a special contribution of £1,000,000 in September 2007 and has agreed
to pay further contributions of £1,000,000 in March 2008 and £950,000 in each of April 2009, April 2010, April 2011 and
April 2012.
2007 2006 2005 2004
£’000 £’000 £’000 £’000
History of experience gains and losses
Fair value of scheme assets 59,418 58,430 55,800 46,800
Present value of scheme liabilities (64,614) (66,670) (66,900) (56,400)
Deficit in the scheme (5,196) (8,240) (11,100) (9,600)
Experience adjustments arising on plan liabilities (716) 1,650 (362) 750
Experience adjustments arising on plan assets (218) 723 5,542 600
Scheme based outside of the United Kingdom
A defined benefit scheme operates within one of Zetex’ foreign entities for an ex employee. This is a money purchase
scheme with guaranteed pension benefits, and under IAS is deemed a defined benefit scheme. In prior years, the liability
only has been recognised within short term creditors. This was due to uncertainty regarding the value of any annuity, 
which would become known on retirement of the employee. The employee has retired in the year and the annuity is due 
to crystallise. Due to the increased level of certainty of the asset, it is now deemed appropriate to reflect the asset and
liability in relation to this scheme. The liability was disclosed within ‘trade and other payables’ in prior years.
Notes to the financial 
statements 69
9. Employee benefits continued
Pensions continued
The following tables summarise the components of net benefit expense recognised in the consolidated income statement
and the consolidated statement of recognised income and expenditure for the year:
2007 2006
£’000 £’000
Consolidated income statement
Foreign exchange gains and other movements (82) (33)
Net expense to operating profit (82) (33)
Consolidated statement of recognised income and expenditure
Changes in assumptions underlying the present value of the scheme’s assets 451 –
Total actuarial gain 451 –
Total net income/(expense) for scheme 369 (33)
The tables below detail the changes in the fair value of assets and liabilities of the scheme, the net liability shown in the
consolidated balance sheet:
2007 2006
£’000 £’000
Scheme assets at fair value at 31 December
Annuity 451 –
451 –
Changes in the fair value of scheme assets
As at 1 January – –
Actuarial gains 451 –
At 31 December 451 –
Scheme deficit at present value at 31 December
Present value of scheme liabilities (451) (369)
Fair value of scheme assets 451 –
Defined benefit pension scheme deficit – (369)
Movement in scheme deficit during the year
As at 1 January (369) (336)
Actuarial gains/(losses) 451 (33)
Restriction on asset to value of liability (47) –
Foreign exchange (35) –
At 31 December – (369)
Changes in the present value of the defined benefit pension liabilities
As at 1 January (369) (336)
Other movements (47) (33)
Foreign exchange (35) –
At 31 December (451) (369)
Benefit obligation assumptions
The valuation used has been based on the most recent actuarial valuation and updated by the scheme’s 
independent actuaries to take account of the requirements of IAS 19 in order to assess the liabilities of the scheme 
as at 31st December 2007. 70
9. Employee benefits continued
Pensions continued
The principal assumptions used in determining pension benefit obligations for the defined benefit pension scheme is
shown below:
2007 2006
per cent per cent
Discount rate 6.0 6.0
Expected rate of return on plan assets 3.5 3.5
Rate of salary increases 0.0 0.0
Rate of Limited Price Indexation (LPI) pension in payment increases n/a n/a
Rate of increase in Post Guaranteed Minimum Pensions (GMP) pensions in payment n/a n/a
Rate of revaluation of pensions in deferment n/a n/a
Mortality assumption
Mortality is based on a calculation based on the workings of Klaus Heubeck who published a calculation table of the
mortality assumption specifically for Germany.
Asset performance assumptions
Scheme assets are stated at their market values at the respective dates and overall expected rates of return are
established by applying a return on bonds of 6.0 per cent.
The cumulative amount of actuarial gains and losses recognised since 1 January 2005 in the consolidated statement 
of recognised income and expenditure is £451,000 (2006: £nil). The directors are unable to determine how much of the
pension scheme deficit recognised on transition to IFRS and taken directly to equity of £451,000 is attributable to actuarial
gains and losses since inception of the pension scheme. Consequently, the directors are unable to determine the amount
of actuarial gains and losses that would have been recognised in the consolidated statement of recognised Income and
expenditure before 1 January 2004.
There is no historical experience of gains and losses.
10. Inventories
2007 2006
£’000 £’000
Raw materials 2,974 1,776
Work-in-progress 6,230 7,618
Finished goods 5,452 4,786
14,656 14,180
11. Trade receivables and prepayments
2007 2006
£’000 £’000
Trade receivables 7,939 8,392
Allowance for doubtful debts (108) (270)
Net trade receivables 7,831 8,122
Other receivables 619 467
Prepayments and accrued income 641 1,155
9,091 9,744
Notes to the financial 
statements 71
11. Trade receivables and prepayments continued
The group’s average credit period on sales of goods is 30 days. No interest is charged on the trade receivables.
The group has provided generally for 5 per cent (net of VAT) of all overdue debts and provided specifically against debts
where there is believed to be certainty of non recovery.
Before accepting any new customer, the group uses an external credit scoring system to assess the potential customer’s
credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed regularly.
Of the trade receivables balance at the end of the year, £900,000 (2006: £900,000) is due from the group’s largest
customer. There are no other customers who represents more than 5 per cent of the total balance of trade receivables.
Included in the group’s trade receivables balance are debtors with a carrying value of £100,000 (2006: £400,000) which 
are past due at the reporting date for which the group has not provided as there has not been a significant change in
credit quality and the amounts are still deemed recoverable. The group does not hold any collateral over these balances.
Ageing of past due but not impaired trade receivables:
2007 2006
£’000 £’000
30-60 days 74 362
60-90 days 17 67
91 429
Movement in the allowance for doubtful debts:
2007 2006
£’000 £’000
Balance at beginning of the year 270 192
Amounts written off in the year (310) –
Increase in allowance recognised in consolidated income statement 148 78
Balance at end of the year 108 270
In determining the recoverability of trade receivables, the group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due
to the customer base being large and unrelated. Accordingly, the directors believe there is no further credit provision
required in excess of the allowance for doubtful debts.
The group is not aware of any liquidation proceedings with regard to any of the outstanding receivables. However, specific
provision has been made against individual customers, where the recoverability of these debts is doubtful.
Ageing of impaired trade receivables:
2007 2006
£’000 £’000
60-90 days 24 2
90-120 days 8 44
over 120 days 76 224
108 270
12. Cash and cash equivalents
2007 2006
£’000 £’000
Cash at bank and in hand 4,572 3,888
Short term deposits 11,500 6,842
16,252 10,730 72
12. Cash and cash equivalents continued
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Short-term deposits are 
made for varying periods of between one day and three months depending on the immediate cash requirements of 
the group, and earn interest at the respective short term-deposit rates. The fair value of cash and cash equivalents at 
31 December 2007 are disclosed in note 21.
At 31 December 2007, the group had available £2,500,000 (31 December 2006: £2,500,000) of undrawn committed
borrowing facilities.
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the following:
2007 2006
£’000 £’000
Cash at bank and in hand 4,752 3,888
Short term deposits 11,500 6,842
Bank overdrafts (405) (764)
15,847 9,966
13. Issued capital and reserves
Number
000 £’000
Authorised
Ordinary shares of 5p each
As at 31 December 2006, 1 January 2007 and 31 December 2007 200,000 10,000
Ordinary shares issued and fully paid
At 1 January 2006 103,055 5,153
Issued for cash on exercise of options 799 40
Allotment of shares to non-executive directors 101 5
At 31 December 2006 103,955 5,198
Issued for cash on exercise of options 164 8
Allotment of shares to non-executive directors 127 6
At 31 December 2007 104,246 5,212
The company has various share option schemes under which options to subscribe for the company’s shares have been
granted to certain employees.
Notes to the financial 
statements 73
13. Issued capital and reserves continued
Consolidated statement of changes in equity
Net
unrealised Foreign
Share Share Own equity Retained gains and exchange
capital premium instruments earnings losses differences T otal
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2006 5,153 35,586 (4,767) 18,623 (679) 65 53,981
Foreign exchange 
losses on translation 
of foreign subsidiaries– – – – – (1,239) (1,239)
Actuarial gains on 
defined benefit 
pension schemes – – – 2,373 – – 2,373
Dividend paid – – – (2,148) – – (2,148)
Net profit for the period – – – 2,538 – – 2,538
Issue of share capital 45 507 36 (16) – – 572
Foreign exchange 
gains from equity – – – – 1,016 – 1,016
Foreign exchange gains 
from hedging activities– – – – 1,253 – 1,253
Share based payments– – – 135 – – 135
Income tax on items 
taken directly to equity – – – (579) (698) – (1,277)
At 31 December 2006 5,198 36,093 (4,731) 20,926  892 (1,174) 57,204
Foreign exchange losses 
on translation of 
foreign subsidiaries – – – – – (20) (20)
Actuarial gains on 
defined benefit 
pension schemes – – – (483) – – (483)
Dividend paid – – – (2,168) – – (2,168)
Net profit for the period – – – 7,340 – – 7,340
Issue of share capital 14 162 311 (158) – – 329
Foreign exchange 
losses from equity – – – – (1,151) – (1,151)
Foreign exchange losses
from hedging activities– – – – (197) – (197)
Share based payments– – – 86 – – 86
Income tax on items 
taken directly to equity– – – – 666 – 666
At 31 December 2007 5,212 36,255 (4,420) 25,543 210 (1,194) 61,606
2007 2006
£’000 £’000
Net unrealised gains and losses reserve
Balance at beginning of financial year 892 (679)
Foreign exchange (losses)/gains from equity (197) 1,253
Tax credit/(charge) 666 (698)
Foreign exchange (losses)/gains from hedging activities (1,151) 1,016
Balance at end of financial year 210 892 74
13. Issued capital and reserves continued
Own equity instruments
This reserve records the company’s investment in its own share capital via the Zetex Employee Share Ownership Plan 
Trust (ESOT).
Net unrealised gains and losses
Recorded here is the proportion of gain or loss on a hedging instrument in a cash flow hedge that is determined to be 
an effective hedge.
Foreign exchange differences
This reserve is used to record foreign exchange differences arising from the translation of financial statements of foreign
subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.
14. Bank loans and overdrafts
2007 2006
Rate per cent Maturity £’000 £’000
Current
Bank overdrafts Bank of England +1 On demand 405 764
405 764
15. Long term liabilities
2007 2006
£’000 £’000
Current
Obligations under finance leases and hire purchase contracts (note 21) 187 316
Government grants* 43 –
230 316
Non-current
Obligations under finance leases and hire purchase contracts (note 21) 630 650
Government grants* 217 –
Employee benefits** 114 111
961 761
Government grants* were previously disclosed within ‘trade creditors and other payables’ and it is deemed that separate
disclosure is beneficial.
Government grants relate to benefits gained from local authorities to fund investment programmes in Germany. There 
are various conditions attached to these grants, and the overseas entity is audited on an annual basis by the German
authorities to ensure that such conditions are being met. Repayment is required of these grants if the German 
operation is closed or the assets are moved out of Germany.
Employee benefits** relate to long service days accruing over the working life of the individual from a period of at least 
five years and represents additional days leave that will be awarded.
Notes to the financial 
statements 75
16. Provisions
Legal Property 
disputereinstatement Total 
£’000 £’000 £’000
At 31 December 2005 – 383 383
Arising in the year 77 80 157
Released in the year – (309) (309)
At 31 December 2006 77 154 231
At 31 December 2007 77 154 231
Property reinstatement
Following the sale of Trend in March 2004, certain provisions were retained by Zetex plc to deal with possible dilapidations
claims on leases from premises previously occupied by Trend and other costs associated with the sale. This claim was
expected to be settled in 2007, however the group is still in negotiation with the counterparty, regarding this issue. This 
was originally expected to be settled in 2007, however discussions are still ongoing and are expected to complete in 2008.
Legal dispute
The company continues to contest vigorously the claim from Yi Mawtech, a former distributor of the group in Taiwan for
unpaid commissions, unspecified compensation and interest. $150,000 (£77,000 at year end exchange rates) is held within
Zetex (Asia).
17. Trade and other payables
2007 2006
£’000 £’000
Trade payables 3,596 1,187
Other taxes and social security 823 815
Accruals 3,282 3,690
Deferred income 2,759 2,585
Other creditors 782 1,180
Payable to associates 246 173
11,488 9,630
Trade and other payables are non-interest bearing and normally settled on 30-60 day terms. Payables to associates are
non-interest bearing and are normally settled within 30-45 day terms.
18. Commitments and contingencies
Operating lease commitments
The group has entered into commercial leases on certain motor vehicles, fixtures and fittings and land and buildings 
where it is not in the best interest of the group to purchase these assets. The leases have an average life of between one
and five years with renewal terms included within the contracts. Renewals are at the option of the specific entity that holds
the lease. There are no restrictions placed upon the lessee by entering into these leases.
Future minimum rentals payable under non-cancellable operating leases are as follows:
2007 2006
£’000 £’000
restated
Within one year 93 400
After one year but not more than five years 415 586
More than five years 334 –
842 986
The leases are secured by the assets leased.
2006 comparatives have been restated due to an omission in the prior year. 76
18. Commitments and contingencies continued
Finance lease and hire purchase commitments
The group has finance leases and hire purchase contracts for various items of buildings and fixtures and fittings, which
have no terms of renewal or purchase options and escalation clauses. Future minimum lease payments under finance
leases and hire purchase contracts together with the present value of the net minimum lease payments are as follows:
2007 2007 2006 2006
Minimum Present value Minimum Present value
payments of payments payments of payments
(note 21) (note 21) (note 21) (note 21)
£’000 £’000 £’000 £’000
Within one year 226 187 367 316
After one year but not more than five years 480 391 426 327
More than five years 257 239 355 323
Total minimum lease payments 963 817 1,148 966
Less amounts representing finance charges (146) – (182) –
Present value of minimum lease payments 817 817 966 966
The leases are secured by the assets leased.
Capital commitments
At 31 December 2007, the group had commitments of £1,504,600 (31 December 2006: £1,707,000) to acquire fixed
assets.
19. Related party disclosures
The consolidated financial statements include the financial statements of Zetex plc and the subsidiaries listed in the
following table.
2007 2006
per cent per cent 
Name Country of incorporation equity interest equity interest
Zetex Semiconductors plc England 100 100
Zetex (UK) Limited England 100 100
Zetex Inc USA 100 100
Zetex Neuhaus GmbH Germany 100 100
Zetex GmbH Germany 100 100
Zetex (Asia) Limited Hong Kong 100 100
The ultimate parent of the group is Zetex plc.
The group has a 31.82 per cent interest in Zetex (Chengdu) Electronics Limited.
The transactions in the year between the group and Zetex (Chengdu) Electronics Limited were:
2007 2006
£’000 £’000
Purchases 1,330 1,334
Sales 186 124
The balance at the year end between the group and Zetex (Chengdu) Electronics Limited was:
2007 2006
£’000 £’000
Trade payable balance 246 173
Notes to the financial 
statements 77
19. Related party disclosures continued
Compensation of key personnel
2007 2006
£’000 £’000
Short term employee benefits 1,032 1,075
Post-employment benefits 54 53
Share based payments 14 135
1,100 1,263
Key personnel (per IAS 24) comprise the executive and non-executive directors of the group.
20. Financial risk management objectives
The group’s principal financial instruments, other than derivatives, comprise bank overdrafts, finance leases and hire
purchase contracts, cash and short term deposits. The main purpose of these financial instruments is to raise finance for
the group’s operations. The group has other financial instruments such as trade receivables and trade payables which
arise directly from its operations.
The group also enters into derivative transactions, principally forward currency contracts. The purpose is to manage the
currency risks arising from its operations.
It is, and has been throughout the periods under review, the group’s policy that no trading in financial instruments shall 
be undertaken.
The main risks arising from the group’s financial instruments are interest rate risk, foreign currency risk, credit risk and
liquidity risk. The board reviews and agrees policies for managing these risks and they are summarised below. The group
also monitors the market price risk arising from all financial instruments.
Interest rate risk
The group’s interest rate risk arises from borrowings and finance leases. Borrowings issued at variable rates expose
the group to cash flow interest-rate risk. Finance leases at fixed rates expose the group to fair-value interest-rate risk.
Management do not consider the risk arising from finance leases to be significant.
Foreign currency risk
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US dollar, Euro and the UK pound. Foreign exchange risk arises from future commercial
transactions, recognised assets and liabilities and net investments in foreign operations.
To manage foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities
in the group use forward foreign currency contracts and foreign currency options. Foreign exchange risk arises when future
commercial transactions, recognised assets and liabilities are denominated in a currency that is not the entity’s functional
currency. The group is responsible for matching the net position in each foreign currency by using external foreign currency
contracts.
External foreign exchange contracts and options are designated at group level as hedges of foreign exchange risk on
specific future transactions on a gross basis.
The forward currency contracts and options must be in the same currency as the hedged item.
The group’s risk management policy is to hedge anticipated cash flows in each major currency for a subsequent period.
The group does not enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes.
The group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation 
risk. The group’s policy is not to hedge its related translation exposures as they represent an accounting rather than a 
cash exposure.
Credit risk
Zetex’ customers are predominantly large blue chip OEMs, contract equipment manufacturers and distributors. The group
regularly reviews the credit worthiness of significant customers and credit references are sought for major new customers
where relevant. The board recognises that credit risk is a feature of all businesses, especially international businesses.
However, it believes that all reasonable steps to mitigate loss are taken. 78
20. Financial risk management objectives continued
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities. The group aims to maintain flexibility in funding by keeping
committed credit lines available.
21. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values of all the group’s financial instruments 
that are carried in the financial statements.
Book value Book value Fair value Fair value
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Financial assets
Cash 4,752 3,888 4,752 3,888
Short term deposits 11,500 6,842 11,500 6,842
Derivative financial instruments in designated hedge – 1,151 – 1,151
Financial liabilities
Bank overdraft (405) (764) (405) (764)
Interest-bearing loans and borrowings:
Finance lease and hire purchase obligations (817) (966) (963) (1,148)
Derivative financial instruments in designated hedge (197) – (197) –
Interest rate risk
The group is exposed to some interest rate risk as entities in the group borrow funds at fixed and floating rates, however
this risk is limited due to the fact that the group has positive cash balances and does not currently have a major
requirement to borrow funds.
The following table sets out the carrying amount, by maturity, of the group’s financial instruments that are exposed to
interest rate risk:
Period ended 31 December 2007
Within 1-2 2-3 3-4 4-5More than 
1 year years years years years 5 years Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Fixed rate
Obligations under 
finance leases 
and hire 
purchase contracts187 152 75 80 84 239 817
Short term deposits11,500 – – – –  –  11,500
Floating rate
Cash assets 4,752 – – – –  –  4,752
Bank overdrafts (405) – – – –  –  (405)
Notes to the financial 
statements 79
21. Financial instruments continued
Interest rate sensitivity
A sensitivity analysis has been determined based on the exposure to interest rates at the reporting date and the stipulated
change taking place at the beginning of the financial year and held constant through the reporting period. A 50 basis point
change is used when reporting interest rate risk internally to key managements personnel and represents management’s
assessment of the possible changes in interest rates.
At the reporting date, if interest rates had been 50 basis points higher/lower and all other variables were constant, 
the group’s:
1. profit (before income) would increase/decrease by £71,000, (2006: increase/decrease of £38,000). This is mainly 
due to the group’s exposure on cash deposits.
2. other equity reserves would increase/decrease by £49,000 (2006: increase/decrease of £27,000) mainly as a result 
of the change in interest on cash deposits.
The average effective interest rate* in 2007 was 5.11 per cent (2006: 4.11 per cent).
*This was calculated based on interest received/average cash balances in the year.
Period ended 31 December 2006
Within 1-2 2-3 3-4 4-5More than 
1 year years years years years 5 years Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Fixed rate
Obligations under 
finance leases 
and hire 
purchase contracts (316) (109) (70) (75) (73) (323) (966)
Short term deposits 6,842 –  –  –  –  –  6,842
Floating rate
Cash assets 3,888 –  –  –  –  –  3,888
Bank overdrafts (764) –  –  –  –  – (764)
Foreign exchange risk
The group is mainly exposed to US dollars and Euros and used forward contracts to hedge this risk. All hedges are
deemed cash flow hedges.
Cash flow hedges – 31 December 2007
At 31 December 2007, the group held foreign exchange contracts and options designated as hedges of highly probable
expected future sales to customers in North and South America, Europe and Asia.
The contracts and options are used to reduce the exposure to foreign exchange risk. The terms of these contracts 
and options are as follows:
Weighted 
Average 
Exchange
Sell Maturity Rate
Forward contracts
USD 47,400,000 2008 1.97
USD 9,300,000 2009 1.96
EUR 10,600,000 2008 1.43
EUR 2,000,000 2009 1.41
The terms of the foreign exchange contracts and options have been negotiated to match the terms of the highly probable
future transactions.
At 31 December 2007 the cash flow hedges remaining were assessed to be highly effective and a net unrealised loss 
of £197,000 (2006: unrealised gain of £1,253,000) with deferred income tax credit of £750,000 (2006: charge of £394,000)
is included in equity with respect of these contracts and options. 80
21. Financial instruments continued
Foreign currency sensitivity
The following table details the group’s sensitivity to a 10 per cent change in exchange rates against the sterling
equivalents.
The 10 per cent is the rate used when reporting foreign currency risk internally to key management personnel and
represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis of the
group’s exposure to foreign exchange risk at the reporting date has been determined based on the change taking place at
the beginning of the financial year and held constant throughout the reporting period.
USD impact EURO impact
2007 2006 2007 2006
£’000 £’000 £’000 £’000
10 per cent depreciation in rates
(i) Profit or loss before tax (653) (1,348) (1,173) (2,408)
(ii) Equity* (2,443) (7,085) (1,531) (4,111)
10 per cent appreciation in rates
(i) Profit or loss before tax 798 2,121 1,434 3,017
(ii) Equity* 2,985 7,101 1,663 1,018
(i) This is mainly attributable to the exposure on net USD/EURO sales offset by gains against USD/EURO purchases,
gains/ (losses) on foreign exchange contracts and retranslation of foreign currency balance sheet items.
(ii) This is mainly attributable to issue above and change in fair value of derivatives at the end of the financial year 
and the impact of the translation of foreign owned subsidiaries translated into sterling.
*Excludes any deferred tax impact.
Credit risk
This refers to the risk that a counterparty will fault on its contractual obligations resulting in financial loss to the group.
The group has adopted a policy of only dealing with credit worthy counterparties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss from defaults. The group’s exposure and the credit ratings 
of its counterparties are continuously monitored.
Trade receivables consist of a large number of customers, spread across a number of geographical locations. Ongoing
credit evaluation is performed on the financial condition of accounts receivable.
The net amount of trade receivables reflects the maximum credit exposure to the group. No other guarantees or security
has been given.
Liquidity risk
Liquidity risk arises from the group’s ongoing financial obligations, including settlement of financial liabilities (mainly
comprising trade and other payables).
The group manages liquidity risk by maintaining adequate reserves and banking facilities using detail cash actuals 
and forecasts.
Cash flow hedges – 31 December 2006
At 31 December 2006, the group held foreign exchange contracts and options designated as hedges of highly probable
expected future sales to customers in North and South America, Europe and Asia. The contracts and options are used to
reduce the exposure to foreign exchange risk. The terms of these contracts and options are as follows:
Notes to the financial 
statements 81
21. Financial instruments continued
Weighted 
average
exchange
Sell Maturity rate
Forward contracts
USD 24,000,000 2007 1.86
USD 6,500,000 2008 1.86
EUR 4,500,000 2007 1.44
EUR 2,500,000 2008 1.42
Options
USD 22,716,670 2007 1.83
EUR 12,000,000 2007 1.46
Collars
USD 14,000,001 2007 2.00
USD 15,999,999 2008 2.00
The terms of the foreign exchange contracts and options have been negotiated to match the terms of the highly probable
future transactions.
At 31 December 2006 the cash flow hedges remaining were assessed to be highly effective and a net unrealised gain 
of £1,253,000 (2005: unrealised loss of £1,016,000) with deferred income tax charge of £394,000 (2005: £304,000 
income tax credit) is included in equity with respect of these contracts and options.
The terms of the foreign exchange contracts and options have been negotiated to match the terms of the commitments.
At 31 December 2005, a net unrealised loss of £1,016,000 with deferred income tax of £304,000 is included in equity 
with respect of these contracts and options.
Capital risk management
The group manages its capital to ensure that entities in the group will be able to continue as going concerns whilst
maximising the return to shareholders.
The capital structure of the group consists of cash and cash equivalents (as disclosed in note 12) and equity attributable 
to equity holders of the parent, comprising issued capital, reserves and retained earnings (as disclosed in note 13).
The group’s audit and budget committees review the capital structure on a regular basis through a review of cash
balances and short term working capital usage.
The group utilises short term cash requirements through a bank overdraft facility in the UK and short term leases for 
certain fixed assets.
However, it is the group’s current objective not to commit to any medium or long term debt, due to positive cash
flows/balances.
The group is not subject to externally imposed capital requirements.
22. Company investments
Shares in
group
undertakings
£’000
Cost
At 31 December 2006 82,033
At 31 December 2007 82,033
Provisions
At 31 December 2006 44,033
At 31 December 2007 44,033
Net book value 31 December 2007 38,000
Net book value 31 December 2006 38,000 82
22. Company investments continued
Subsidiary undertakings
The principal undertakings, in which the company’s interest at the year end in each undertaking is 100 per cent, is as
follows:
Country of incorporation
Subsidiary undertaking or registration Nature of business
Telemetrix Investments Limited England Intermediate Holding Company
Telemetrix Securities Limited England Intermediate Holding Company
Zetex Semiconductors plc England Manufacture and supply of specialised semiconductors
Zetex (UK) Limited* England Distribution of specialised semiconductors
Zetex Inc* USA Distribution of specialised semiconductors
Zetex Gmbh* Germany Distribution of specialised semiconductors
Zetex (Asia) Limited* Hong Kong Distribution of specialised semiconductors
Zetex Neuhaus Gmbh* Germany Manufacture of specialised semiconductors
* Indirect holding.
The companies operate and are incorporated in the countries in which they are registered and are held through
intermediate holding companies.
23. Company receivables
2007 2006
£’000 £’000
Amounts owed by group undertakings 844 3,533
Other debtors 29 15
Prepayments and accrued income 101 94
974 3,642
24. Company creditors
2007 2006
£’000 £’000
Amounts falling due within 1 year
Bank loans and overdrafts 139 33
Other tax, including social security 94 70
Accruals and deferred income 699 439
932 542
25. Company provisions for liabilities and charges
Property Legal
reinstatement dispute Total
£’000 £’000 £’000
At 1 January 2006 383 – 383
Released in the year (309) – (309)
Charged in the year 80 77 157
At 31 December 2006 154 77 231
Released in the year – (77) (77)
At 31 December 2007 154 – 154
Notes to the financial 
statements 83
25. Company provisions for liabilities and charges continued
Following the sale of Trend in March 2004, certain provisions were retained by Zetex plc to deal with possible dilapidations
claims on leases from premises previously occupied by Trend and other costs associated with the sale. This claim was
expected to be settled in 2007, however the company is still in negotiation with the counterparty, regarding this issue. This
was originally expected to be settled in 2007, however discussions are still ongoing and are expected to complete in 2008.
The company continues to contest vigorously the claim from Yi Mawtech, a former distributor of the company in Taiwan for
unpaid commissions, unspecified compensation and interest.
$150,000 (£77,000 at year end exchange rates) is held within Zetex (Asia).
26. Company capital and reserves
See note 13 for details of the share capital of the company and group.
Share Reserve Profit
premium for own and loss
account shares account
£’000 £’000 £’000
At 1 January 2007 36,093 (4,731) 9,824
Loss attributable to shareholders – – (1,747)
Dividends – – (2,168)
Issue of share capital 162 311 (160)
At 31 December 2007 36,255 (4,420) 5,749
As permitted by the Companies Act 2006 section 408, a separate income statement for the company has not been
included in these financial statements. A loss attributable to shareholders for the year ended 31 December 2007 of
£1,747,000 (2006: profit of £4,453,000) has been dealt within the income statement of Zetex plc.
Company Company
2007 2006
£’000 £’000
Reconciliation of movements in shareholders’ funds
(Loss)/profit for the financial year (1,747) 4,453
Dividend for the year (2,168) (2,148)
Retained (loss)/profit for the year (3,915) 2,305
New share capital issued (note 16) 176 551
Share based payments – 38
Sale of investment in own shares 151 20
Net (decrease)/increase in shareholders’ funds (3,588) 2,914
Opening shareholders’ funds 46,384 43,470
Closing shareholders’ funds 42,796 46,384
27. Company related party disclosures
The company has taken advantage of the exemption conferred by FRS 8 Related party disclosures not to disclose
transactions with members of the group headed by the company on the grounds that at least 90 per cent of the voting
rights in the subsidiary undertakings are controlled within the group and the company is included in the consolidated 
financial statements. 84
Shareholder information 
2008 financial calendar
Preliminary announcement of 2007 results 21 February 2008
Annual General Meeting 28 April 2008
Ex-dividend date for 2007 final dividend 7 May 2008
Record date for 2007 final dividend 9 May 2008
Payment of 2007 final dividend 6 June 2008
Announcement of interim results 31 July 2008
Ex-dividend date for 2008 interim dividend 13 August 2008
Record date for 2008 interim dividend 15 August 2008
Payment of 2008 interim dividend 19 September 2008
Financial year end 31 December 2008
Preliminary announcement of 2008 results February 2009
Zetex plc
Zetex Technology Park
Chadderton
Oldham OL9 9LL
T el: +44 (0) 061 622 4700
Secretary and registered office
Julia Morton
Tel: +44 (0) 161 622 4700
Fax: +44 (0) 161 622 4720
Email: investors@zetex.com 
Website: www.zetex.com
Zetex Semiconductors plc
Zetex Technology Park
Chadderton
Oldham OL9 9LL
T el: +44 (0) 161 622 4444
Zetex Inc
700 Veteran’s Memorial Highway
Suite 315, Hauppauge, NY 11788
USA
T el: +1 631 360 2222
Zetex GmbH
Kustermannpark, Balanstraße 59
81541 Munich
Germany
Tel: +49 89 45 49 49 0
Zetex Neuhaus GmbH
Waldweg 7
D-98724 Neuhaus am Rennweg
Germany
T el: +49 36 79 77 20
Zetex (Asia) Ltd
3701-04 Metroplaza
Tower 1, 223 Hing Fong Road
Kwai Fong
Hong Kong
T el: +852 26100 611
Shenzhen office
Room 4603-05 
Office Tower Shun Hing Square
DiWang Commercial Center
5002 Shennan Road East
Shenzhen, China
T el: +86 755 2583 3873
Taiwan office
2F No.58, Jhouzih Street
Neihu District, Taipei City 114
Taiwan R.O.C.
Tel: +886 2 8751 0212 Ext. 21
Zetex (Chengdu) Electronics Ltd
66 Donghong Road
Chenghua District
Chengdu, China 610051
T el: +852 26100 611 Registrars
Capita Registrars 
Huddersfield
Stockbrokers
ABN Amro Hoare Govett
London
Corporate adviser
NM Rothschild and Sons
Manchester
Financial public relations
Citigate Dewe Rogerson Ltd
London
Solicitors
Eversheds LLP
Manchester
Group auditors
Ernst & Young LLP
Manchester
Bankers
Barclays Bank PLC
Manchester
Tax adviser
PricewaterhouseCoopers LLP
Manchester
Pensions adviser
Watson Wyatt
Manchester
The paper used in this document is dirived from sustainable 
and managed forests. It is produced using vegetable based 
inks and is printed by Royle Print – a Carbon Neutral Printer. zetex.com