E2V.L Regulatory News (E2V)

15 November 2010

e2v technologies plc

Half-year results for the six months to 30 September 2010

e2v technologies plc, the specialist provider of technology solutions for high performance systems announces its half-year results for the six months ended 30 September 2010:

·; Reported revenue up 10% to £105.4m.

·; Adjusted* operating profit recovered to £16.4m reflecting anticipated cost savings and contribution from 'one-off' sales.

·; Adjusted* operating profit margin of 16% (H1 2010: 4%).

·; Cash generated from operations of £16.9m; £5.0m used to fund restructuring.

·; Order book of £167m at 30 September 2010 (30 September 2009: £134m), with £147m (30 September 2009: £98m) for delivery in coming 12 months, of which £12m is for last time buy product.

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. Adjusted profit before tax is before amortisation of acquired intangibles and all exceptional items.

** Adjusted earnings is profit before amortisation of acquired intangibles and all exceptional items less tax effect where applicable.

Note 'H1 2010' refers to the prior period covering the 6 months ended 30 September 2009.

Commenting on the results, Keith Attwood, Chief Executive said:

"e2v has performed strongly in the first half of the financial year ending 31 March 2011 and is significantly ahead of the comparable period last year. Excluding the impact of 'one-off' orders, underlying sales in the period were maintained, as expected, at the same level as last year. In addition, our order book for the coming 12 months has improved by around 50% compared with the position as at 30 September 2009. We have made considerable progress with the implementation of our industrial restructuring programme and this will continue through to completion in 2011.

Given the strength of our current order book, we expect trading to continue at a similar run rate in the second half of this financial year. Our strategic attention is now focused on the growth strategy we presented in July. This will result in an increase in expenditure in the second half on our key R&D projects and geographic expansion programmes in Asia and the US. Cash flow is anticipated to be flat in the second half of this financial year. The Board believes the Group is well positioned for the future."

Further enquiries:

Interim management report

Review of the half-year

SUMMARY

e2v has performed strongly in the first half of the financial year ending 31 March 2011, a year of transition, as we implement the major industrial restructuring programme announced last October and our growth strategy announced in July.

Revenue increased by 10% in the first half to £105.4m (H1 2010: £96.2m). This included 'one-off' revenue for certain overdue orders and last time buy orders of £10.2m, so our underlying revenue was maintained at the same level as the comparable period last year.

Adjusted* operating profit of £16.4m was significantly ahead of the comparable period last year of £3.6m and represents a margin of 16% (H1 2010: 4%). The order book for delivery in the coming 12 months as at 30 September 2010 was £147m, an increase of 50% compared with the position at the end of September last year.

We have made considerable progress with our industrial restructuring programme, incurring payments of £5.0m in the period and increasing inventory by £3.6m in anticipation of the planned facility closures. Cash generated from operations of £16.9m, enabled us to reduce our net borrowings by £5.4m in the period with net borrowings of £39.4m at 30 September 2010.

In order to accommodate the higher than planned level of orders for last time buy products associated with the Grenoble operation, we have decided to defer the closure of the front end CCD wafer fabrication facility to the end of June 2011. We remain mindful of the importance of completing the remaining activities of this programme at both Lincoln and Grenoble to timetable.

Given the strength of our current order book, we expect trading to continue at a similar run rate in the second half of this financial year. Our strategic attention is now focused on the growth strategy.

The growth strategy set out our plans for delivering sustained organic growth and increasing our addressable markets. This is underpinned by the financial restructuring completed last financial year and the ongoing accelerated industrial restructuring programme which is rationalising the cost base. The divisional structure was simplified and re-focused, providing sub-systems and solutions within six core applications and two growth applications. Research and development (R&D) expenditure has been re-allocated between the divisions to prioritise the selected growth programmes. Geographic expansion is focused in Asia and the US to increase market share in these important and growing markets.

We have formed e2v aerospace and defense inc. and this will provide the platform for the expansion of the Group's US aerospace and defence businesses. The approach for Asia has been decided and its implementation started.

For this growth strategy, we have targeted c.8% pa underlying growth, to start to be delivered in the summer of 2012, and c.15% underlying operating profit margin, within 18 months of July 2010. With the benefit of the 'one-off' orders and the progressive reduction in costs as the restructuring plan is implemented, we have reached the second target in this period.

GROUP OVERVIEW

The results for the first half of the financial year ending 31 March 2011 reflect the progress made since starting the restructuring plans and the steady performance of the underlying business.

Reported sales increased by 10% in the first half to £105.4m (H1 2010: £96.2m). The 'one-off' revenue provided £10.2m, arising from the last time buys on the Grenoble front end wafer fab and the delivery of overdue orders caused by the industrial disruption in France in the fourth quarter of the last financial year. New business, being new products or new customers in the year, made up approximately 17% of sales (FY 2010: 14%). The proportion of sales generated from sub-systems and solutions in the period was approximately 33%. Sales in the underlying business were effectively flat at £95.2m with strong demand in radiotherapy and machine vision partially offset by lower demand in Electronic Countermeasures (ECM), as expected, and technical issues that have delayed delivery on some specific space programmes. The proportion of revenue from the defence market is 7% in the UK and 13% in the rest of Europe. We consider that the effects of the UK's SDSR have been anticipated in current forecasts.

In the main application segments, sales were up in radiotherapy by 26%, machine vision by 150% and aerospace and defence semiconductors by 3%, but down in space by 57%, science by 12% and ECM by 26%. In the remainder of the Group's activities sales were up 20%. The percentage of sales outside Western Europe have effectively stabilised at 48% (H1 2010: 47%). Sales to Asia Pacific increased by 13% and sales to North America also increased by 13%, whilst sales to Western Europe only increased by 7%.

Gross profit increased by 52% to £40.3m (H1 2010: £26.6m) due to the benefit of the additional sales on the relatively fixed cost base and the cost reductions that continue to be delivered under the restructuring programme. Actions taken to address low margin product lines, including rationalisation of the product portfolio, selective price increases, yield and other production improvements have also improved margins.

R&D expenditure was down at £5.8m (H1 2010: £6.1m) reflecting the deferred start on a number of programmes prior to the approval of the growth strategy. R&D expenditure has been refocused with the savings in R&D principally due to the reduction in programmes in Grenoble being redirected to support key growth initiatives in RF power solutions. The deferred programmes have now started, utilising sub-contract resources where necessary to accelerate delivery, which will result in more activity in the second half of this financial year.

Selling and distribution costs increased by £0.6m to £8.5m (H1 2010: £7.9m). This reflects higher costs due to the higher level of activity.

Administrative expenses, excluding amortisation of acquired intangibles, business improvement programme costs and fair value gains on foreign exchange contracts, increased by 6% to £9.6m (H1 2010: £9.0m) including increased exchange differences charges of £0.6m.

Amortisation of acquired intangible assets decreased to £3.5m (H1 2010: £4.5m) as a result of a number of the acquired intangibles becoming fully amortised in the period. Fair value gains on foreign exchange contracts amounted to £0.8m (H1 2010: £2.7m). Business improvement costs were £1.0m (H1 2010: £nil) reflecting the expected restructuring costs that are expensed as incurred.

The adjusted* operating margin increased to 16% (H1 2010: 4%). Reduction in costs of £6.5m and improved margin on low margin product of £1.5m combined with the contribution from the 'one-off' sales of £4.8m accounted for the £12.8m improvement in adjusted* operating profit. Cost reduction of £3m relates to the benefit of last year's cost savings offset by a return to full time working and £3.5m relating to further cost reductions implemented in the year which represents approximately £7m on an annualised basis.

Finance costs before exceptional items increased by 16% to £2.5m (H1 2010: £2.1m) reflecting the increased margin payable on the bank facility entered into in September 2009, despite the lower levels of borrowings. The resulting adjusted* profit before tax increased substantially to £13.9m (H1 2010: £1.6m).

The Group's restructuring programmes in the UK and France have progressed in line with plan with more than 75% of the planned headcount reduction achieved at the end of October 2010. Expenditure to date is £5.0m of which £4.0m has been charged against the provision established at 31 March 2010 and £1.0m which has been expensed in the period. There was a net reduction in permanent headcount across the Group of 83 between 31 March 2010 and 30 September 2010 offset by an increase in temporary workers of 62. The decision to change the closure date of the Grenoblefront end wafer fabrication facility has deferred some £1.5m of expenditure with the result that the cash spend on the reorganisation plan this financial year is now anticipated to be around £14m and the total programme spend is now anticipated to be reduced further from £26m to £24m.

Profit before tax amounted to £10.1m (H1 2010: £2.6m).

The underlying tax rate for the first half was 29% (H1 2010: 20%) due to the increase in the proportion of profits generated in France compared with the prior year. However, cash tax payable is lower, due to the benefit of tax losses and provisions in France, which means that the group is not currently tax paying in France. At the current level of trading and as the restructuring continues to utilise the provisions, it is anticipated that the group will return to being tax paying in France within 12 months.

Adjusted* earnings per share increased to 4.53p (H1 2010: 1.97p) and reported earnings per share amounted to 3.37p (H1 2010: 2.70p).

Operating cash flow in the first half was £16.9m (H1 2010: £22.0m) after an increase in inventory of £7.7m and restructuring payments made of £5.0m. Tax payments of £4.4m (H1 2010: receipt £4.3m) were due to timing of receipts for R&D tax credit claims in France, and increased payments on account reflecting the improved profitability. Furthermore, in the prior period tax refunds had been received in the UK relating to a number of prior periods. After capital expenditure and capitalised R&D investment, other financing costs (including the payment of fees relating to the rights issue) and movements due to exchange rates, the overall net reduction in borrowings in the period amounted to £5.4m.

At 30 September 2010 the net borrowings amounted to £39.4m. The total drawings under the bank facility arrangement was £54.5m of which £35.3m was drawn in Sterling with the balance being drawn in US dollars. During October 2010 the Group exercised a voluntary cancellation of £24.6m (at 30 September 2010 exchange rates) of the undrawn committed revolving facility. Following this cancellation, the remaining facility (at 30 September 2010 exchange rates) is £77.1m, £41.8m of which is Sterling denominated with the balance being US dollar denominated. We are now exploring opportunities to have more flexibility on the terms governing the Board's ability to declare dividends within the bank facility arrangements.

Operating working capital (defined as inventories, trade and other receivables less trade and other payables) has increased by 13% since 31 March 2010 to £42.1m. Within operating working capital, inventories increased by 23% to £42.8m, of which half is inventory to support the restructuring programmes and 'one-off' orders.

The order book at 30 September 2010 was £167m (30 September 2009: £134m) of which £12m is for last time buy product with £147m (30 September 2009: £98m) for delivery in coming 12 months, a 50% increase on the prior period.

BUSINESS OVERVIEW

RF power solutions

Sales for RF power solutions increased by 5% to £39.9m (H1 2010: £38.2m).

In radiotherapy the strong demand from Original Equipment Manufacturers (OEMs) continued for new systems and ongoing spares with one multi-year contract extended during the period. Progress has been made in the development of the new high power magnetron with a customer order received for prototypes for evaluation. The design of the next generation modulator is progressing and is being developed in conjunction with customers regarding their specific requirements.

In ECM, as anticipated, activity reflects delays in order placement and the lower order book, although there has been some short term demand for upgrade work on RF sub-systems. We consider that the effects of the UK's SDSR have been anticipated in current forecasts. The development programme for a world leading ultra wide band ECM sub-system platform has started and development continues on a number of early stage projects for the UK Ministry of Defence.

e2v has continued to progress the use of high power RF energy targeted at a number of bulk material processing applications. For vermiculite processing, the prototype system has been successfully tested and the production version is planned for availability at the end of the financial year. A drill cutting decontamination preliminary demonstrator is on trial with the customer. In respect of mining/mineral extraction, a microwave generator has been shipped and commissioned for extended customer evaluation.

Within the remaining business, that largely provides technology for commercial and industrial applications, there has been strong demand from OEMs driven by new systems and from distributors for spares. In respect of some lower margin product lines, pricing, rationalisation and yield improvements have improved margins.

Adjusted* operating profit increased by 39% to £6.5m (H1 2010: £4.7m) due to the benefit of higher sales, reduction in warranty costs and ongoing cost reduction actions.

The order book at 30 September 2010 was marginally lower at £77.9m (H1 2010: £79.8m), reflecting delivery against the multi-year radiotherapy customer orders.

In radiotherapy, the key management action is to finalise the plan for the next generation radiotherapy product road map in conjunction with customers. For bulk materials processing, the next steps are to win the first order for a commercial vermiculite system and to receive an order for a full scale drill cuttings system for a one year trial. We will be implementing the first phase of staff appointments at e2v aerospace and defense inc. to support the US defence strategy and similarly for our Asia expansion.

High performance imaging solutions

Sales for High performance imaging solutions were up 13% to £27.7m (H1 2010: £24.6m).

Machine vision has seen strong demand from the distribution network and OEMs for both cameras and sensors particularly in the Asia Pacific region. This application segment has also benefited from the delivery of the overdue orders arising due to the industrial disruption in France last financial year. The new generation of Complementary Metal Oxide Semiconductor (CMOS) cameras for very high speed applications are due to be launched in the next quarter.

Space imaging has seen significantly lower sales as a number of technical issues have led to delays in delivery. This reflects the technical nature of the programmes in this sector which involve significant new technology developments. Despite these issues, the order book remains strong and we expect to substantially recover in the second half. A significant order for CMOS sensors was awarded in July by the European Southern Observatory. The contract is to provide CMOS sensors for the European Extremely Large Telescope. The US sales force has been transferred to e2v aerospace and defense inc. as part of our geographic expansion programme.

Scientific imaging has experienced lower sales due in part to one major customer moving to a second source during last year. The development of the new 8uL3 sensor is ongoing but is unlikely to be completed this financial year. This sensor aims to improve image resolution that we offer at current sampling rates and is targeted at products for research applications in life science.

The other businesses have experienced growth due to the last time buy activity in dental associated with the closure of the front end CCD wafer fabrication facility in Grenoble along with strong demand for e2v's second generation CMOS based dental sensors.

Adjusted* operating profit was £4.5m compared with a loss of £1.0m in the prior period. This is due to the additional volume in machine vision, the last time buys and implementation of the restructuring plan which is reducing the cost base.

The order book at 30 September 2010 was £52.7m (H1 2010: £35.4m).

Key management actions for the division are to establish local sales, application engineering and service in Asia to support further expansion in this key region. The space imaging team is focused on resolving the technical issues and accelerating customer milestone recovery. In the UK fab, we plan to manufacture the first samples of CCD linear sensors previously produced in Grenoble for machine vision and space (earth observation) applications.

Hi-rel semiconductor solutions

Sales for Hi-rel semiconductor solutions increased 19% to £29.6m (H1 2010: £24.9m).

Aerospace and defence semiconductors has experienced strong demand for its test and assembly services in Grenoble but lower demand in the US. It has also benefited from the delivery of overdue orders arising due to the industrial disruption in France last financial year. Orders have been placed with Freescale Semiconductor for additional product to support the estimated future demand for 68k-series microprocessors and agreement has been reached with Freescale that e2v will be the sole source for these products for the future. As part of the restructuring programme further product development has ceased in the Application Specific Integrated Circuits (ASICs) business, whilst support is being maintained for products previously developed for existing customers.

For Semiconductor Lifecycle Management (SLM), there have been additional orders from prime contractors for the Eurofighter Typhoon programme for the 68k-series microprocessors. In the US the SLM offering has been launched at the Diminishing Manufacturing Sources and Material Shortages Show (DMSMS) in October. We have secured two small multi-year contracts with prime defence contractors in the US.

Adjusted* operating profit increased by 193% to £8.2m (H1 2010: £2.8m), reflecting increased activity and the benefit from restructuring.

The order book at 30 September 2010 was higher at £34.9m (H1 2010: £16.1m), reflecting the 68k-series microprocessor orders.

Key management actions for e2v aerospace and defense inc. are to continue to refine the SLM offering, continue to build relationships with semiconductor OEMs and aerospace and defence primes to enhance Hi-rel product and SLM service offerings, drive the recovery plan for the US component sales and also to secure two major end of life product programmes, of which one should be in the US.

Central functions and all other businesses

Sales in the portfolio of businesses managed centrally decreased by 5% to £8.1m (H1 2010: £8.5m). There has been continued strong growth in the sales of MiCS air quality sensors into the automotive markets, and growth in thermal imaging and gas sensors. Sales in the scientific instruments business reflects the lower volume following one OEM moving to their in-house product. The businesses performed in line with their plan for the period. By the end of the financial year, we will have completed the strategic review of these businesses.

The divisions are supported by central functions and Group sales and operations. The Group sales function is expanding its geographic reach with plans being developed for two new sales offices in Asia and the expansion of the sales team, in the second half of the year. At e2v aerospace and defense inc. the sales team has been strengthened. Group operations have been focused on delivering the restructuring plan including the recovery of the overdue orders that arose due to the industrial disruption in France last financial year, the stock build to maintain customer supplies during the Lincoln manufacturing transfers and support the last time buy orders.

Dr Krishnamurthy Rajagopal was appointed as a non executive Director on 1 November 2010.

Principal risks and uncertainties for the second half

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 23 and 24 of the Annual Report and Financial Statements for the year ended 31 March 2010, a copy of which is available on the Group website at e2v.com. The Board considers that these remain a current reflection of the risks and uncertainties facing the business for the remainder of the financial year. The risks identified relating to the restructuring programmes remain, although these programmes are currently on plan to deliver the anticipated cost savings and customer demands continue to be met during these programmes.

Outlook

Given the strength of our current order book, we expect trading to continue at a similar run rate in the second half of this financial year. Our strategic attention is now focused on the growth strategy we presented in July. This will result in an increase in expenditure in the second half on our key R&D projects and geographic expansion programmes in Asia and the US. Cash flow is anticipated to be flat in the second half of this financial year. The Board believes the Group is well positioned for the future.

C Geoghegan K Attwood

Chairman Chief Executive

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. Adjusted profit before tax is before amortisation of acquired intangibles and all exceptional items.

** Adjusted earnings is profit before amortisation of acquired intangibles and all exceptional items less tax effect where applicable.

Note 'H1 2010' refers to the prior period covering the 6 months ended 30 September 2009.

Independent review report to e2v technologies plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010 which comprises the Condensed Consolidated Income Statement, Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Cash Flows, Condensed Consolidated Statement of Changes in Equity and the related notes 1 to 13. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of half-yearly financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

Cambridge

12 November 2010

Condensed consolidated income statement (unaudited)

six months ended 30 September 2010

Condensed consolidated statement of comprehensive income (unaudited)

six months ended 30 September 2010

Condensed consolidated statement of financial position (unaudited)

as at 30 September 2010

Condensed consolidated statement of cash flows (unaudited)

six months ended 30 September 2010

Condensed consolidated statement of changes in equity (unaudited)

six months ended 30 September 2010

As at 30 September 2010, other reserves includes: capital redemption reserve, £274,000; and own shares reserve £(5,000), both of which remain unchanged from the previous year end and half-year position.

Notes to the condensed half-yearly financial statements

six months ended 30 September 2010

1. Basis of preparation and significant accounting policies

Basis of preparation

These condensed half-yearly financial statements have been prepared in accordance with the accounting policies set out in the Group's 2010 Annual Report and in accordance with IAS 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the Financial Services Authority. The condensed half-yearly financial statements have been prepared on the going concern basis as the Directors, having considered all relevant information, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

These condensed half-yearly financial statements are unaudited but have been formally reviewed by the Company's auditors and their report to the Company is set out above. The financial information shown for the year ended 31 March 2010 in these condensed half-yearly financial statements does not constitute statutory financial statements as defined in Section 435 of the Companies Act 2006 and has been extracted from the Group's 2010 Annual Report which has been filed with the Registrar of Companies. The auditor's report on the financial statements contained within the Group's 2010 Annual Report was unqualified and did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006.

These condensed half-yearly financial statements were approved by the Board of Directors on 12 November 2010.

The prior period covered the 6 months ended 30 September 2009 and is referred to as '1H 2010'.

The Condensed consolidated statement of financial position at 30 September 2009 and the Condensed consolidated statement of cash flows for the 6 months then ended have been restated. Goodwill has been increased and trade and other payables decreased by £144,000. There is a corresponding reduction in cash outflows on acquisition and an increase in cash outflows from trade and other payables.

Significant accounting policies

During the period the Group has adopted the following new standards, amendments to standards and interpretations issued under IFRS:

Standards:

IFRS 3 (2008), 'Business combinations' - Improvements to IFRS.

Amendments:

IAS 27, 'Consolidated and separate financial statements'.

IAS 32, 'Amendment to IAS 32: Classification of rights issues'.

Interpretations:

IFRIC 17, 'Distribution of non-cash assets to owners'.

IFRIC18, 'Transfer of assets from customers'.

The adoption of these standards and interpretations has had no impact on the Group.

2. Segment information

As disclosed in note 4 to the financial statements for the year ended 31 March 2010, in conjunction with the transfer of work from the Group's Lincoln facility, at the request of the Chief Executive, a number of changes to the internal reporting structure have been made such that a number of product lines associated with the Lincoln facility that were previously managed with the Sensors division have been transferred to the RF power solutions division. Furthermore the segments have been renamed as noted below.

Following these changes, for management purposes the Group is organised into three operating divisions. These three divisions are organised and managed separately based on the key products they provide and each is treated as an operating segment and a reportable segment in accordance with IFRS 8, 'Operating Segments'. The operating and reportable segments are:

RF power solutions (formerly Electron devices and sub-systems) which provide high performance RF power solutions for applications including: radiotherapy cancer treatment machines; defence electronic countermeasures and radar systems; satellite communication amplifiers; digital television transmitters; and industrial laser and welding machines.

High performance imaging solutions (formerly Imaging devices) which provide advanced CCD and Complimentary Metal Oxide Semiconductor imaging sensors and cameras for applications including: earth observation; space science and life science imaging; military surveillance; industrial process control; advanced data collection; and dental x-ray systems.

Hi-rel semiconductor solutions (formerly specialist semiconductors) which provide own design high speed data converters; high reliability microprocessors in partnership with Freescale Semiconductor; MRAMs in partnership with Everspin; and packaging and test and obsolescence management services for high reliability integrated circuits for aerospace and defence programmes.

All other, reported below, includes the results of the Group's Instrumentation activities, being the remaining businesses of the Sensor division. These are not a separately reportable segment and are for internal reporting purposes combined with Centre - corporate, which includes those unallocated costs directly associated with the management of the Group's public quotation and other related costs arising for the corporate management of the Group along with financing related activities.

The disclosures for the 6 months ended 30 September 2009 and year ended 31 March 2010 have been restated to reflect the updated Group reporting structure.

Geographical information

The Group's revenue from external customers and information about its non-current assets by geographical location are detailed below:

3. Exceptional operating items and acquired intangibles amortisation

After periods of consultation, business improvement programmes were provided for at the Group's Grenoble and Lincoln sites in the year ended 31 March 2010. Costs of £18,682,000 were recorded in that period and principally related to redundancy and associated costs, plant decommissioning costs and receivable provisions and which were offset by a credit resulting from the curtailment of the termination allowance and long service award plans. Further costs associated with these restructuring programmes were anticipated to arise during the subsequent two financial years. During the period ended 30 September 2010, as anticipated, costs of £959,000 have been expensed relating to moving production from Lincoln to Chelmsford and retention payments to staff, whilst payments of £4,217,000 have been made against the restructuring provision which had been established as at 31 March 2010.

4. Finance costs and finance revenue

5. Income tax

The tax charge for the period has been calculated on the basis of the Directors' best estimate of the underlying annual effective tax rate for the year of 29% (H1 2010: 20%). The increase in the rate is due to the increase in the proportion of profits generated in France compared with the prior year.

Following the UK government's 2010 Emergency Budget the main rate of UK corporation tax has been reduced from 28% to 27% effective from 1 April 2011. The UK deferred tax balances have been calculated in accordance with this rate change and an increase in the tax charge of £59,000 has been recorded in the period in relation to this change. Further reductions to the main tax rate are proposed; these are not enacted and therefore have not been reflected in the tax charge.

6. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit/(loss) for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The denominators for the purpose of calculating both basic and diluted earnings per share have been adjusted to reflect the rights issue completed in December 2009.

Diluted earnings per share are calculated by dividing the net profit/(loss) for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period adjusted for the effects of dilutive options. As a result of the loss for year ended 31 March 2010, the share options are anti-dilutive and hence for that period have not been taken into account for the purposes of calculating diluted basic earnings per share.

Adjusted earnings per share is considered to more appropriately reflect the underlying performance of the business period on period.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

7. Dividends

No dividends have been declared during the 6 months ended 30 September 2010 (H1 2010: £nil) nor during the year ended 31 March 2010.

8. Property, plant and equipment

9. Intangible assets

During the 6 months ended 30 September 2009, additional consideration of £490,000 was paid to the former owners of e2v aerospace and defense inc. (formerly QP Semiconductor, Inc.) upon the realisation of certain tax assets.

10. Contingent liabilities and capital commitments

In the ordinary course of business, the Group may issue performance and advance payment guarantees to third parties. As at 30 September 2010 £2,277,000 (30 September 2009: £3,851,000; 31 March 2010: £3,790,000) were outstanding. The Directors are of the opinion that the risk to the Group associated with these guarantees is not material and consequently no provision is recorded.

At 30 September 2009, the Group had capital commitments of £1,605,000 (30 September 2009: £1,463,000; 31 March 2010: £727,000) principally relating to the acquisition of new plant and machinery.

11. Net borrowings

Net borrowings exclude capitalised borrowings costs which amounted to £2,290,000 at 30 September 2010, £1,960,000 at 30 September 2009 and £3,157,000 at 31 March 2010.

Effective 31 December 2009, the Group signed new banking facilities, which comprise term loans and a revolving credit facility and which expire on 31 December 2012. At 30 September 2010 exchange rates, the total facility is £101,674,000 (31 March 2010: £107,486,000). Repayments of the term loan of £3,201,000 have been made during the 6 months ended 30 September 2010 and a £10,000,000 repayment is scheduled on 31 December 2010 and annually thereafter. Provided covenants continue to be met, the draw down under the revolving credit facility is at the discretion of the Group and consequently the loan is treated as non-current. At 30 September 2010, the Group had available £47,205,000 (31 March 2010: £34,858,000) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

Effective 5 October 2010 the Group exercised a voluntary cancellation of £24,590,000, at 30 September 2010 exchange rates, of this undrawn committed revolving facility.

12. Other post-employment and other employment benefits

In addition to the state pension scheme, the French subsidiary based in Grenoble has arrangements where there are obligations to provide termination benefits and benefits 'Medailles du Travail' - long service awards. These are unfunded arrangements and the actuarial liability has been calculated at 30 September 2010 by a qualified actuary using the projected unit credit method. The cost of providing these benefits is charged to the income statement in the period in which those benefits have been earned by the employees. During the period ended 30 September 2010, a plan amendment has been enacted on the termination benefits plan, the liability of which is £206,000. This is being amortised over the remaining service life of the members of the plan.

13. Related party disclosures

Transactions between Group subsidiaries have been eliminated on consolidation. A list of subsidiaries can be found in the notes to e2v technologies plc, the parent company, financial statements in the Group's 2010 Annual Report.

Directors' Statement of Responsibilities

The Directors confirm, to the best of their knowledge, that this condensed set of financial statements has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union, and that the interim management report includes a fair review of the information required by the Disclosure and Transparency Rules of the Financial Services Authority, paragraphs DTR4.2.7 and DTR 4.2.8.

The Directors of e2v technologies plc and their respective responsibilities are listed in the Group's Annual Report for the year ended 31 March 2010. There have been no changes since that date.

On behalf of the Board

K Attwood C Hindson

Chief Executive Group Finance Director

12 November 2010 12 November 2010