CYT Cynotech Holdings Limited

Revenue from ordinary activities: $NZ5461; 46.00%

The Directors of Cynotech Holdings Ltd announce a net surplus of $1,039,339 (unaudited) for the six month period to the end of June 2007. This is an increase of 382% over the result announced for the June 2006 half year. The half year profit achieved to June 2007 also compares favourably with the net surplus of $1,508,221 reported for the full year to 31st December 2006.
Directors report that the Cynotech Finance Group, which includes the operations of Budget Loans Ltd and the loans acquired from National Finance 2000 Ltd (in Receivership), has performed very positively.
The Group's manufacturing operations have not been so successful and we continue to grapple with an economic environment and an industry sector which are not conducive to producing reasonable levels of profit from this business.

A number of warrant holders exercised there warrants at 27th June. Cynotech Holdings Ltd now has 82,013,275 shares on issue and Group consolidated shareholders' equity totals $8,345,029 which is 40% of the total consolidated assets figure of $20,799,853.
The Cynotech Group continues to be very conservatively financed and the Group is well placed to weather a period of rather high borrowing costs brought about by Reserve Bank policy.

Receivables in the Cynotech Finance Group have increased to $12,778,944 (2006 $4,119,405)

The Directors expect that the second half of the financial year to December 2007 will produce continuing satisfactory results to build on the achievements of the first half.

Allan Hawkins
Chairman
Cynotech Holdings Ltd
Phone 09 5206073
Fax 09 9122142
Email allan@cynotech.co.nz

PO BOX 9846, Newmarket, Auckland, New Zealand
Phone: 64-9-520-6073 - Facsimile: 64-9-912 2142 - Email: Finance@cynotech.co.nz

Chairmans comments - Annual meeting 26th April 2007

The results we were able to report for this financial year were quite gratifying to your board and to the management team. A number of things finally came right and the profit better reflected the amount of effort that our management and staff put in.

We believe that our figures are conservatively reported and that we are on the road to report continuing increases as we go forward. A major move was made this year with the appointment of Brett Tawse as Managing Director. His appointment was a major step in providing for a succession plan for my own position. Brett has been very successful in taking control of the day to day operations of the Group. This appointment also assisted in improving some aspects of corporate governance by spreading part of the role previously undertaken solely by the Chairman.

Total assets of the Group increased to $20 million at year end, up from $8 million the previous year to give a sound base of earning assets going forward. Shareholders are aware that a proportion of the National Finance receivables have no dollar value in the accounts and these will be brought to account as collection action runs its course.

I have commented previously about the difficult year that our manufacturing operations had. Fortunately this is showing some improvement but we still have a way to go to arrive at an acceptable result.

This year the Cynotech Finance Group made a major contribution to the results. We are fully lent at present and we are underway with the preparation of a debenture prospectus to broaden our funding base. We intend to keep the finance group quite conservatively financed with a low gearing ratio.

Your Directors have recommended a final dividend this year to be paid on 4th May. Shareholders in respect of 49,000,000 shares have elected to take shares in lieu of dividend. The strike price for the issue of those shares has not yet been set and in terms of the rules for the dividend reinvestment plan it will be based on 87.5% of the average share price for this week - the period is 23rd to 30th April. We expect to issue around 950,000 new shares in lieu of cash dividend payments.

As we proceed through the meeting I will ensure that you all have ample opportunity to ask questions or to comment about the Company. For the meeting today we have received proxies in respect of 26,566,814 shares. We thank all of those shareholders for their support.

Thank you to the shareholders and proxy holders who have come to the meeting today. I want also to take this opportunity to sincerely thank all of our shareholders for their support of the Cynotech Group. We now have a very tight share register and a number of large shareholders have emerged showing real commitment to our Company.

Thank you.

Chairman's report

Financial results

Cynotech Holdings Ltd and its subsidiary companies have produced an excellent result for the year to 31st December 2006. After a slow start to the year we have substantially lifted the performance levels in the Group, particularly in the Cynotech Finance Group to produce an acceptable Group consolidated result for the year.

Net surplus after tax for the year ended December 2006 was $1,508,221. This compares to the profit of $724,370 for the 2005 reporting year, an increase of 108%. The results and comparatives are reported on the basis of the IFRS accounting format following the Group's decision to convert to IFRS for the last financial year, thus achieving the transition one year ahead of the requirement in terms of the accounting standards.

Key positive performance indicators for the group this year include:

Dec-06 Dec-05

$ $

* Group net surplus increased by 108% 1,508,221 724,370

* Total assets increased by 139% 20,126,747 8,405,898

* Finance receivables increased by 344% 11,395,756 2,568,638

* Shareholders funds increased by 63% 7,242,334 4,435,094

Dividend

Your Directors have recommended the payment of a dividend of .5 cents per share to shareholders. A maiden dividend of .5 cents per share was paid in respect of the 2005 year. The dividend at the rate of .5 cents (1/2 of a cent) per share will be paid to those shareholders on the register at 5pm on 20th April 2007. Shareholders will be able to take new shares in the Company at a discount to market in lieu of a cash dividend if they so wish.

Group equity

A number of warrant holders took the opportunity on 27th June 2006 to pay up the shares attaching to the warrants. 15,264,137 new shares were issued and capital increased by $1,526,414. Cynotech now has 79,488,084 shares and 5,000,000 convertible notes on issue and 18,866,239 warrants.

Earnings yields

Earning rate on average total equity 25.83%

Earning rate on average total assets 10.57%

Total proposed dividend payment $422,440

Manufacturing operations

The Hamilton manufacturing operations had a difficult year. January 2006 sales were well under budget due to seasonal factors. This was followed in the next few months with a downturn in sales to the supermarket sector with changes in the ownership of one of the major supermarket chains and labour problems at the same chain adversely affecting both volumes and margins. This change in ownership also lead to a change in trading terms with the other major supermarket group.

We put in place a major cost cutting program and unfortunately had some redundancies. The manufacturing operation has now settled down and even though its results in 2006 were unsatisfactory we are particularly confident of much improved sales and profits as we progress through 2007.

Satellite

The management of Satellite Phone operations has contributed to profit for the year.

Finance Group operations

The finance group had a particularly satisfying year and performed strongly in terms of total receivables and profitability. The finance group includes Budget Loans Ltd, Cynotech Finance Group Ltd and the National Finance division. The acquisition of the receivables book of National Finance 2000 Ltd (In receivership) has been a successful move and our experienced credit and debt collection team has had a very positive effect in terms of the collection of National Finance Loans.

The value of total finance receivables carried in the balance sheet increased to $11.396 million but the face value of finance receivables under credit management is $27 million. The finance group is conservatively funded with a high level of equity. There have not been any adverse effects for us from the three highly publicised receiverships in the finance sector during 2006. Indeed we purchased receivables out of one of the receiverships so there has been a net benefit to us.

We will continue to take a cautious approach to this sector in 2007. We will however have to increase our borrowing levels as we proceed through the year in order to have the necessary funds available to fulfill our planned receivable increases in the current financial year.

Our people

The staff in the manufacturing operations had a hard year and the level of redundancies we were forced to make put added pressure on others. We now have a dedicated and hardworking group of management and staff.

Management and staff in the finance companies have worked particularly hard and we have been totally impressed at the way the team have handled the pressures arising from the natural increase in receivables this year and in the way they have handled the workload from the National Finance acquisition.

Directors

Mr Kevin McDonald retires by rotation and offers himself for re-election at the Annual General Meeting.
Mr Brett Tawse was appointed to the position of Managing Director during the year.

Shareholders

The number of shareholders has again reduced during the year as larger shareholders consolidated and added to their holdings. The largest shareholders have been very supportive.

Forward outlook

We have confidence in the ability of the Cynotech Group to perform well going forward. To achieve our growth objectives in the finance sector it will be necessary for us to source deposits and other external funding but we do intend to keep the overall debt to equity ratios at conservative levels.

The growth strategies that we have in place include:

* performing to the highest levels with our current businesses and staying focused on improved performance

* strategically developing our manufacturing alignments

*being prepared to look at alternative businesses which are undervalued, under performing, or showing good growth potential

The results that have been achieved this year show that the Group is in good shape and ready to take on new challenges and to put in place increases in volumes and profitability that will lead to continued performance.

Allan Hawkins - Chairman

Brett Tawse - Managing Director