25 - Teledyne e2v · Business Overview 04 l Chairman’s and Chief Executive’s Statement 06 l...

e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights

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Business Overview

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Chairman’s and Chief Executive’s Statement

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Business Review

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Board of Directors

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Corporate Responsibility Review

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Directors’ Report

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Corporate Governance Report

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Directors’ Remuneration Report

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Five year history

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Consolidated Financial Statements

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Company Financial Statement

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Business Overview

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e2v’s objective is to be a global leader in the design and supply of specialist components and sub-systems that enable the world’s leading systems companies to deliver innovative solutions for medical & science, aerospace & defence, and commercial & industrial markets.

Who we are

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2010 2009 £m £m

Sales 201.2 233.2

Adjusted* operating profit 15.0 27.4

Loss before taxation (9.7) (28.4)

Adjusted** earnings per share 6.67 p 19.08 p

Loss per share (1.66)p (21.75)p

Full year dividend per share - 2.7 p

Cash generated from operations 40.0 43.0

Net borrowings 44.8 137.3


2006

112.3

2007

173.9

2008

204.6

2009

233.2

2010

201.2

63.2

49.1

106.1

67.8

108.7

95.9

126.2

107.0

105.0

96.2

Reported sales £m

2006

15.0

2007

24.7

2008

29.1

2009

27.4

2010

15.0

10.7

4.3

17.6

7.1

18.6

10.5

15.8

11.6 11.4

3.6

Adjusted* operating profit (£m as restated)

2006

27.2 18.1

79.5 80.293.6 94.4 88.0

137.3

105.2

44.8

2007 2008 2009 2010Net borrowings £m

2006

10.7

2007

16.3

2008

19.0

2009

19.1

2010

6.77.8

2.9

11.4

4.9

13.2

5.8

12.6

6.54.7

2.0

Adjusted** EPS pence (£m as restated)

Reported sales £m

2006

112.3

2007

173.9

2008

204.6

2009

233.2

2010

201.2

63.2

49.1

106.1

67.8

108.7

95.9

126.2

107.0

105.0

96.2

Reported sales £m

2006

15.0

2007

24.7

2008

29.1

2009

27.4

2010

15.0

10.7

4.3

17.6

7.1

18.6

10.5

15.8

11.6 11.4

3.6


2006

27.2 18.1

79.5 80.293.6 94.4 88.0

137.3

105.2

44.8

2007 2008 2009 2010Net borrowings £m

2006

10.7

2007

16.3

2008

19.0

2009

19.1

2010

6.77.8

2.9

11.4

4.9

13.2

5.8

12.6

6.54.7

2.0


Adjusted EpS** pence (as restated)

2006

112.3

2007

173.9

2008

204.6

2009

233.2

2010

201.2

63.2

49.1

106.1

67.8

108.7

95.9

126.2

107.0

105.0

96.2

Reported sales £m

2006

15.0

2007

24.7

2008

29.1

2009

27.4

2010

15.0

10.7

4.3

17.6

7.1

18.6

10.5

15.8

11.6 11.4

3.6


2006

27.2 18.1

79.5 80.293.6 94.4 88.0

137.3

105.2

44.8

2007 2008 2009 2010Net borrowings £m

2006

10.7

2007

16.3

2008

19.0

2009

19.1

2010

6.77.8

2.9

11.4

4.9

13.2

5.8

12.6

6.54.7

2.0


Net borrowings £m

2006

112.3

2007

173.9

2008

204.6

2009

233.2

2010

201.2

63.2

49.1

106.1

67.8

108.7

95.9

126.2

107.0

105.0

96.2

Reported sales £m

2006

15.0

2007

24.7

2008

29.1

2009

27.4

2010

15.0

10.7

4.3

17.6

7.1

18.6

10.5

15.8

11.6 11.4

3.6


2006

27.2 18.1

79.5 80.293.6 94.4 88.0

137.3

105.2

44.8

2007 2008 2009 2010Net borrowings £m

2006

10.7

2007

16.3

2008

19.0

2009

19.1

2010

6.77.8

2.9

11.4

4.9

13.2

5.8

12.6

6.54.7

2.0


Adjusted* operating profit £m (as restated)

l Net debt reduction from £137m to £45m

l Sales down 14%, reflecting anticipated reduced demand; markets now largely stabilised

l Run rate costs reduced by £7.5m in the year (14% reduction on an annualised basis) and other within year non-recurring savings of £5.5m

l Adjusted* operating profit of £15m, down 45%

l Adjusted** earnings per share down 12.41p at 6.67p

l Cash generated from operations of £40.0m, deployed in debt reduction

l Reported loss before taxation of £9.7m after

– Business improvement programme costs and provision – £18.7m

– Offset by:

– Fair value gains on financial instruments – £2.6m; and

– profit on sale of Lincoln site – £3.7m

l Equity raise of £52m net completed in December 2009

l Order book at 31 March £161m (2009: £154m) with £132m (2009: £104m) for delivery in coming 12 months of which £12.5m is ‘one-off’

l Consultation on restructuring for Lincoln and Grenoble completed in the year on timetable. programme cost reduced from £33m to £26m reflecting additional customer demand to deliver annual benefits of c.£26m

First half

Second half


e2v.com 3* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items.

** Adjusted earnings is loss for the year before amortisation of acquired intangibles and all exceptional items less tax impacts where applicable.


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Images courtesy of: NASA and BAE Systems

Business OverviewRevenue by division

£65.6m (£83.8m)

Imaging

£53.8m (£65.2m)

Advanced CCD and CMOS imaging sensors and cameras for applications including:l Earth observation

l Space science and life science imaging

l Military surveillance

l Industrial process control

l Advanced data collection

l Dental x-ray systems

High performance electron devices and sub-systems for applications including:l Radiotherapy cancer treatment machines

l Defence electronic countermeasures

l Radar systems

l Stellar satellite amplifiers

l Digital television transmitters

l Industrial laser and welding machines

Electron devices and sub-systems


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Business Overview e2v technologies plc Annual Report and Financial Statements 2010

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Images courtesy of: NASA and BAE Systems

A range of professional sensing products for applications including:l Environmental safety

l Fire, rescue and security thermal imaging

l X-ray spectroscopy

l Automotive alarm and security systems

l Microwave radar and safety and arming devices

Specialist semiconductors, including: l Own design high speed data converters

l High reliability microprocessors in partnership with Freescale Semiconductor

l MRAMs in partnership with Everspin

l packaging and test and obsolescence management services for high reliability integrated circuits for aerospace & defence programmes

l Own design sensor data acquisition utilising mixed signal application specific devices

£50.9m (£53.3m)

Sensors

£30.9m (£30.9m)

Specialist semiconductors

Business OverviewRevenue by division


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Business Overview e2v technologies plc Annual Report and Financial Statements 2010

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Chris GeogheganChairman

Keith AttwoodChief Executive

Over the last 18 months, the business has experienced extremely challenging trading conditions which required the implementation of aggressive short term cost reduction actions during the first half of 2009/10 and an acceleration of the established business improvement programme to significantly reduce the fixed cost base of the business.

The first key step to implementing this plan was to refinance the Group. This was completed in December 2009 with the positive support of shareholders for a firm placing and rights issue that raised £52m net (£56m gross) and the Group’s banks in providing a new, 3 year facility of £107m at 31 March 2010 rates. The combination of the equity raised and £40m generated from within the business has enabled the Group to reduce net borrowings from £137m to £45m at 31 March 2010.

The second key step is the implementation of the accelerated business improvement programme. In the UK, this includes the transfer of manufacturing operations from our Lincoln site to our Chelmsford site, along with the establishment of an engineering centre in Lincoln, and the integration of business management into the Electron Devices and Sub-systems division (EDS). In France, this includes the closure of the CCD wafer fab in Grenoble and significant resizing affecting other activities on this site. Further restructuring actions, primarily related to the UK programme initiated in 2008/09, were also successfully implemented during the year.

We launched appropriate employee consultations for these major changes in October 2009 which were completed within our planned timetable by the end of the financial year. Following this process, the cost of the accelerated programme is anticipated to be £26m reflecting additional customer demand to deliver annual benefits of c.£26m. Within the year we sold the site in Lincoln and acquired a smaller, modern building for the engineering centre in Lincoln in May 2010.


The lower worldwide demand we have experienced over the last 18 months required us to take decisive action to re-establish the business through this difficult period and reposition it for the future.

Overall, the Board expects the restructuring programme to provide the potential level of profitability on a broadly flat level of turnover that was previously anticipated at the time of the equity raise.

The third key step in the overall programme is to return the Group to organic growth. In October we indicated a shift in our strategic direction towards moving up the value chain and increasing the provision of solutions to our customers. In January, we retained OC&C Strategy Consultants to assist us in carrying out our strategic review.

We plan to brief investors on the outcome of this review in July 2010.

Financial performanceWe anticipated lower activity during the year and this has been reflected in the revenues for the Group being £201m, a decrease of 14% compared with the previous year. Due to stringent cost management during the year, in a challenging environment that included some two months of industrial disruptions in Grenoble, the Group achieved an adjusted* operating profit of £15.0m (2009: £27.4m), operating loss £6.0m (2009: loss £19.5m). Given the level of reorganisation taking place in the business and amortisation charged for past acquisitions, the Board considers that the adjusted* operating profit more accurately reflects the comparable performance of the underlying business.

The Group reduced its run rate costs by £7.5m in the year (a 14% reduction on an annualised basis), partly under the business improvement programme provided for at 31 March 2009 and partly under the accelerated business improvement programme put in place this year. The within year charge for this programme was £18.7m after brought forward accruals, with further charges of £3.6m expected to arise over the coming two financial years. In addition, within the year non-recurring costs savings of £5.5m were implemented.

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. ** Adjusted earnings is loss for the year before amortisation of acquired intangibles and all exceptional items less tax impacts where applicable.


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Chairman’s and Chief Executive’s Statement e2v technologies plc Annual Report and Financial Statements 2010

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As a result of this major programme, the Board considers that the Group will have realigned its capacity with the current level of turnover and have a scalable platform to support additional demand when this arises.

These business improvement programme charges of £18.7m (2009: £6.8m) along with amortisation of acquired intangibles of £8.6m (2009: £8.6m), fair value gains on foreign exchange contracts and interest rate swaps of £2.6m (2009: loss of £4.7m) offset by the profit on sale of the Lincoln site of £3.7m (2009: £nil) and the gain on redenomination of borrowings of £2.6m (2009: £nil) have resulted in a Group loss before taxation of £9.7m (2009: £28.4m loss).

Adjusted** earnings per share were 6.67p (2009: 19.08p) and earnings per share amounted to a loss of 1.66p (2009: 21.75p loss).

With the Group’s focus on debt reduction during the year, reduced working capital including inventory contributed £14.0m to operating cash flow (2009: £6.7m). Capital expenditure was also reduced to £3.1m (2009: £10.7m) and no dividend was paid in the year, in accordance with the conditions of the banking facilities.

Overall, this generated cash flow from operations of £40.0m (2009: £43.0m) which was used to achieve 44% of the reduction in the level of net borrowings in the year to a closing position at 31 March 2010 of £45m, the balance being provided by the net proceeds of the equity raise of £52.2m.

The order book at 31 March 2010 was £161m (2009: £154m), an increase of 4.5% despite the longer term contracts in radiotherapy continuing to run through their term. £132m of this order book is due for delivery in the coming 12 months (2009: £104m). Some £9m of the order book is for last time buys on the Grenoble front end wafer fab and some £3.5m is estimated to be additional overdue orders as a result of the industrial disruption there in the fourth quarter of last financial year. Excluding this ‘one-off’ business, the underlying order book for the coming 12 months is strengthened compared with last year with a lower order gap for the first half of the current financial year than for the prior period.

The BoardThe Board consists of the Chairman, three independent Non-Executive Directors and two Executive Directors. Chris Geoghegan joined the Board as Chairman in October 2009. Our thanks to George Kennedy for his 5 years as Chairman, including supporting the Company through its flotation in 2004.

Our peopleThis year’s creditable performance was delivered by a huge effort across the organisation in very difficult circumstances. The Board recognises and thanks all staff for their dedication, perseverance and commitment over the course of a very challenging year, and for the ongoing support as the extensive restructuring programme is implemented.

OutlookOur increased underlying order cover for the coming 12 months, compared with the prior year leads us to consider that our markets have largely stabilised. Our cost base has been reduced, and will reduce further with the phased implementation of our restructuring plans. We therefore consider 2010/11 to be a year of transition in which, with our continued focus on cost management, capital investment and working capital control we anticipate that net cash flow (after restructuring costs) should be broadly neutral.

Keith AttwoodChief Executive

Chris Geoghegan Chairman


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Business Review

Market overviewe2v serves three broad market sectors; aerospace & defence, medical & science, along with commercial & industrial.

Our business model is to support specific application segments within these broad market sectors, which require specialised technology and process skills over the longer term. We are often a leader in these specific applications.

The largest of these market sectors is aerospace & defence, where the e2v addressed market is estimated to be £1.1bn and which accounts for 46% of our sales (2009: 41%), of which defence accounts for 81% (2009: 85%). We have experienced continued growth in the space sector with commercial aerospace activity remaining steady although activity has reduced in the global defence market, and in particular we see demand in the defence markets supported by the electron devices and sub-systems division continuing to weaken.

The second largest sector is commercial & industrial, where the e2v addressed market is estimated to be £0.8bn and which accounts for 28% of our sales (2009: 30%). After the substantial decrease in activity we reported last year, demand has stabilised and showed strong recovery in the fourth quarter in some of these applications.

Medical & science is the smallest sector, where the e2v addressed market is estimated to be £0.3bn and which accounts for 26% of our sales (2009: 29%). Medical sub-sectors served by the Group have recovered during the course of the year, although provision of Charge Coupled Devices (CCD) product to the dental imaging sector has continued to decline. The scientific sector continued to grow overall, although we lost some market share serving x-ray spectroscopy applications.

Business structureThe Group was organised into four divisions that are supported by Group functions:

l Electron devices and sub-systems High performance electron devices and sub-systems for applications including radiotherapy cancer treatment machines, defence electronic countermeasures and radar systems, satellite communications amplifiers, digital television transmitters and industrial laser and welding machines;

l Imaging Advanced CCD and Complementary Metal Oxide Semiconductor

(CMOS) 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;

l Specialist semiconductors Including own design high speed data converters, high reliability

microprocessors in partnership with Freescale Semiconductor, Magnetic Random Access Memory (MRAMs) in partnership with Everspin, packaging and test and obsolescence management services for high reliability integrated circuits for aerospace & defence programmes, and own design sensor data acquisition utilising mixed signal application specific devices;

l Sensors A range of professional sensing products for applications including

environmental safety, fire, rescue and security thermal imaging, x-ray spectroscopy, automotive alarm and security systems, microwave radar and safety and arming devices.

Group functions cover:l Global operations with responsibility for all manufacturing and

supply chain activity;

l Global sales that manage our customer relationships throughout the world through a combination of e2v’s own sales and support offices

and a network of distribution partners and representatives; and

l Support services including commercial, human resources, IT and finance.

For the coming year, the sensors division has been rationalised with the businesses currently based in Lincoln transferred to the EDS division and its remaining portfolio of businesses will be reported in the corporate centre. The strategy to review businesses not core to the Group continues and the creation of an expanded instrumentation business in safety and security products is also under consideration.

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


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Business Review e2v technologies plc Annual Report and Financial Statements 2010

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Financial overviewThe Group achieved revenue of £201.2m (2009: £233.2m), adjusted* operating profit of £15.0m (2009: £27.4m) and an operating loss of £6.0m (2009: loss £19.5m).

Revenue and adjusted* operating profit by division was as follows:

Revenue Adjusted* operating profit 2010 2009 2010 2009 £m £m £m £m

Electron devices and sub-systems 65.6 83.8 11.5 15.7Imaging 53.8 65.2 0.5 4.3Specialist semiconductors 50.9 53.3 6.7 13.1Sensors 30.9 30.9 (0.4) (1.6) 201.2 233.2 18.3 31.5Centre-Corporate (3.3) (4.1) 15.0 27.4

In line with decreased demand in the year across most of the Group’s activities, reported sales decreased by 14%. Excluding the full year impact of the acquisition of Qp, the underlying business decreased by 17%. Although there was growth in the smallest division, sensors, the performance in the other three main divisions declined. Sales fell in each of the Group’s market sectors: aerospace & defence by 3%, medical & science by 22% and commercial & industrial by 20%. By geographical spread revenue was steady in Asia pacific and the Rest of World with lower sales in UK, Europe and North America. New business, being new products or customers in the year, made up approximately 14% of sales. The fourth quarter was impacted by the industrial disruption in the Grenoble facility, which only returned to normal working in the latter part of March, although a significant effort was made to recover overdue orders and provide products to meet customer demands. As a result there was a shortfall in revenue in imaging and specialist semiconductors and the increase in overdue orders is estimated at £3.5m.

Gross profit decreased by 22% to £61.2m (2009: £79.0m) and represented 30.4% of sales (2009: 33.9%). The lower volume reduced gross profit due to the reduction in sales being greater than the reduction in the relatively fixed operating cost. The anticipated lower volumes resulted in management taking short term measures to reduce costs in the first half, including a period of short time working in the UK and US, an extended summer shutdown in France, a range of additional overhead control measures and rephasing of research and development (R&D) expenditure. In the second half the Group carried out consultation on its extensive restructuring programme in France and the UK and continued tight management of overhead and R&D spend.

Expenditure on R&D has decreased to £12.1m (2009: £17.1m). This is due to tighter management, rephasing of spend and greater focus on priorities. Net R&D spend was reduced by £3.5m after excluding the impairment charge of £1.5m in the prior year.

Selling and distribution costs decreased by 15.5% to £15.2m (2009: £18.0m) reflecting the cost saving measures taken including head count reduction and lower marketing and communication spend.

Administrative expenses decreased to £40.0m (2009: £63.4m). Administrative expenses include a number of the items added back to adjusted* operating profit of £21.1m (2009: £45.4m) detailed overleaf. The remaining administrative expenses of £19.0m (2009: £18.0m) increased by 5.6% (£1.0m) reflecting a full year of Qp partially offset by cost control measures including a reduction in head count and short time working.

Overall, the Group reduced the head count by 165 people during the year and achieved a reduction of £7.5m (a 14% reduction on an annualised basis) in its run rate cost base. Run rate costs include overheads, the costs of holding inventory and warranty. In addition non recurring cost reductions including short time working and research and development were £5.5m.


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Business Review

Adjusted* operating profit The adjusted* operating profit is considered to reflect more accurately the underlying performance of the business and is calculated as follows:

2010£000

2009£000

Operating loss (6,037) (19,535)

Included in administrative expenses:

Amortisation of acquired intangible assets 8,600 8,628

Impairment of acquired intangible assets - 24,579

Impairment of plant and equipment - 2,500

Business improvement programme expenses 18,682 6,826

Fair value (gains)/losses on foreign exchange contracts (2,489) 2,894

Profit on the sale of the Lincoln site (3,739) -

Included in research and development costs:


Adjusted operating profit 15,017 27,440

Amortisation of acquired intangibles of £8.6m (2009: £8.6m) reflects the lower amortisation arising after the impairment charges made principally in the prior year of £24.6m, offset by a full year’s amortisation of Qp intangibles of £1.1m. The Group has carried out its annual impairment reviews and considers that there is no impairment of acquired intangible assets to be recognised this year (2009: £24.6m).

Business improvement programme expenses of £18.7m, (2009: £6.8m) are in respect of the restructuring plans being undertaken by the Group and set out in more detail below.

The Group’s policy is to put in place forward contracts to sell surplus currencies based on its trading forecasts, with the level of coverage decreasing over the next 12 months. The mark to market adjustment amounted to a gain of £2.5m (2009: loss of £2.9m) and is described as fair value gains on foreign exchange contracts. The gain reflects the fair value of the forward US dollar contracts held by the Group as at the 31 March 2010, which extend over a period of 12 months to March 2011.

The gain on fixed assets reflects the profit on the sale of the Lincoln site for £3.7m net of costs. The first payment for the sale of this site of £2.2m was received on 31 March 2010 with the final payment of £2.0m to be received by 31 March 2011, following the site being fully vacated.

Image: thyratron used for high energy physics and cancer radiotherapy treatment

machines with our fast tune magnetron and compact modulators.



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Key performance Indicators (KpIs)The Group currently uses a range of financial and non-financial KpIs to monitor the business on a monthly basis. The current KpIs are rolling 12 month sales, rolling 12 month adjusted* operating profit, 12 month order book, rolling 12 month return on sales and rolling 12 month return on total assets, which is rolling 12 month adjusted* operating profit as a percentage of rolling 12 month total assets. Sales profit and order book are covered in detail in this review of the Group and divisional performance. Rolling 12 month return on sales was 7.5% (2009: 11.8%) and rolling 12 month return on total assets was 5.7% (2009: 9.9%).

Non-financial KpIs are discussed in detail in the Corporate Responsibility Review and include employee attendance percentage, the number of reportable accidents in a year, percentage reduction in our carbon footprint, Business in the Community (BITC) Environmental Index and customer satisfaction.

Finance chargesNet finance costs before exceptional items were £5.7m (2009: £7.1m), a reduction of 20% compared with the prior year. In the first half of the year lower bank base rates more than offset the increased borrowing. In the second half the margin paid increased in the third quarter to 475 basis points (bps) reflecting the terms of the new banking facility and this reduced to 275 bps in the final quarter as a result of the ratio of total borrowings to earnings before interest, tax, depreciation and amortisation as defined in the facility agreement (leverage ratio) falling to below 2:1 on completion of the equity raise. The reduction of the leverage ratio was a result of the operating cash generation of £40.6m and the net proceeds of the rights issue of £52.2m.

The Group’s policy is to hedge a minimum of 75% of the interest due on its term loans and the Group’s banking agreement requires the Group to follow this policy. The fair value gain on the interest rate swaps held by the Group amounted to £0.1m (2009: loss of £1.8m). The gain represents the fair value of the current interest rate swaps, net of the costs incurred on cancellation of one of the previous contracts.

The Group currently has a 3 month GBp LIBOR swap covering £26.3m of Sterling term loan fixed at 1.96% and a 3 month US dollar LIBOR swap covering $24.4m of US dollar term loan fixed at 1.38%. The GBp LIBOR swap amortises in line with the scheduled term loan repayments. In addition, at the year end, the Group also had a ¤24.7m Euro interest swap contract with a floor of 3.31% which was cancelled in May incurring a cancellation fee of ¤0.7m. The interest rate swaps provide cover over 75% of the term loans which secures borrowing rates on the hedged amounts at a maximum of 4.7% based on the Group maintaining the leverage ratio below 2:1.

Exceptional interest costs include the write off of the unamortised debt issue costs relating to the previous banking facility of £0.7m as the Group entered into a new facility on the 29 October 2009. Costs associated with the new facility of £3.6m will be amortised over the expected life of the facility. Exceptional finance income included £2.6m of exchange gains on re-denomination of borrowings arising on the transfer of the Group’s Euro denominated debt into Sterling in the summer of 2009.

TaxationThe tax credit for the year is £7.5m (2009: £7.1m). The effective tax rate for the year ended 31 March 2010 amounts to 76.7% (2009: 25.0%) including adjustments relating to prior years. The tax credit in the current year has benefited from tax credits for research and development in the UK and France of £2.3m (2009: £4.3m), and the benefit of the restructuring provisions in France, which are subject to higher rates of taxation and the gain on the sale of the Lincoln site that was taxed under capital gains tax rules which resulted in a lower effective rate on the gain.

The Group generated profits in the UK and US which are subject to tax at 28% and c.40% (including state taxes) respectively. In France the Group made losses. The standard rate of tax in France is c.34%. Tax losses totaling £10m have been carried back to prior periods and are available to be relieved against future tax payments. In the event that future tax payments are not sufficient to relieve these amounts over the next five years, this would result in a refund of tax previously paid. Tax losses of £3m arising in France have been carried forward and are available to be relieved against future taxable profits. £13m of the restructuring provision in France will be deductible as the provision is utilised. In respect of research and development tax credits in France, these are received in cash based on the level of qualifying spend regardless of whether the Group has made taxable profits or losses.

CurrencyThe manufacturing operations in the UK, France, US and Switzerland sell through the Group’s global distribution network, and are therefore subject to transactional and translational risks, particularly in relation to the US dollar which accounts for 35% (2009: 38%) of the Group’s sales. Where US dollars are forecast to exceed US dollar costs, the surplus US dollars are sold under foreign exchange contracts in accordance with the Group’s hedging policy. In the year ended 31 March 2010 US dollars were sold under exchange contracts at an average rate of $1.76 = £1 (2009: $1.93 = £1). The Euro denominated sales revenue is more than offset by Euro costs.

The Group is also subject to translational risks on the retranslation of its foreign currency denominated borrowings. In the first half the Group put in place a forward contract to fix the rate at which it re-denominated the Euro denominated debt into Sterling generating a gain of £2.6m. The Group does not currently hedge the retranslation of its US dollar denominated borrowings into Sterling, the presentational currency. Currently 52% of the Group’s borrowings are in US dollar with the remainder in Sterling.

In the year ended 31 March exchange rates applied were:

Cash flow and net borrowingsAt the 31 March 2010 net borrowings amounted to £44.8m (2009: £137.3m), a reduction of £92.5m since 31 March 2009 of which 44% was internally generated and 56% from the proceeds of the equity raise.

The net cash inflow generated from operations was £40.0m, a decrease of £3.0m over the year ended 31 March 2009. This has been achieved despite lower levels of profit, due to cash generation from working capital and cost control measures. The continued focus on reducing inventory generated £5.9m (2009: £8.2m) and debtors reduced by £10.0m (2009: £1.7m). The sale of the Lincoln site provided £2.2m in the year. Restricting investment in tangible fixed assets and software reduced spend to £3.1m (2009: £10.8m), a reduction of 71%, and R&D spend to £0.7m (2009: £2.6m), a reduction of 73%.

The equity raise secured £52.2m net of costs and completed in December 2009.

2010 2009 2010 2009

US dollar 1.59 1.75 1.51 1.43

Euro 1.13 1.22 1.12 1.07

Average Year End


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Business Review

Borrowing facilitiesDuring the year, the Group agreed new banking facilities which, at 31 March 2010 rates, total £107.5m and expire in December 2012. These comprise a term loan of $32.5m and £35.0m and three general purpose facilities of $32.5m, ¤22.0m and £10m respectively. At 31 March 2010, a total of £72.6m had been drawn on these facilities consisting of $57m and £35m being the cash generating currencies of the business in the year.

The term loans are repayable in yearly instalments of £10m on 31 December 2010 and 2011 with the balance being repayable on 31 December 2012. The general purpose facilities are available to the Group in full until 31 December 2012 subject to the terms of the facility and are available for general corporate purposes.

Interest is payable at 275bps over the interbank rates when the ratio of consolidated net borrowings to consolidated EBITDA is below 2:1 increasing to a maximum of 475bps if the ratio of consolidated net borrowings to consolidated EBITDA is above 3:1. Interest rate swaps are in place in accordance with the Group’s hedging policy.

The facility is subject to the following key covenants as at 31 March 2010:

Image: CCD imaging device used on NASA’s Solar Dynamics Observatory to examine

the evolution of solar activity and refine our understanding of space weather.

Consolidated net borrowings/ consolidated EBITDA <3.25 : 1 1.6 : 1

Consolidated EBITA/consolidated net interest payable

>2.25 : 1 3.8 : 1

Net operating cash flow/debt service >1.50 : 1 4.0 : 1

Covenant Actual

In the coming year, headroom for the net operating cash flow/debt service covenant reduces significantly when loan repayments commence in December 2010.

The banking facility does not permit dividends to be paid until the Group’s net cash flow after restructuring costs and debt service has been positive for 12 months.

Restructuring The overall restructuring programme that was announced in October 2009 is now anticipated to cost £26m. It comprised £3.8m relating to accruals made in the prior year, £18.7m reflecting the provision made in the current financial year and £3.6m of other costs to be incurred in the future.

The formal consultation period for the restructuring of the Grenoble facility was completed in March 2010 and this has now moved into implementation over the coming year with the closure of the front end CCD wafer fab planned for February 2011. This will result in a number of the products currently part of the imaging division being subject to last time buys including all CCD dental intra and extra-oral products, as well as some CCD industrial sensors. Specialist semiconductors is also part of the restructuring programme in Grenoble, with phased headcount reductions in the areas of the business where volumes have decreased and also reflecting a sharpened focus where the division is investing in future R&D spend.

The benefit of the significant cost reductions associated with the headcount reduction and the closure of the Grenoble wafer fab will not be realised in full until the following year.

In respect of Lincoln the consultation period was concluded during February 2010 and the plan is now being progressed to the implementation phase. The existing site has been sold for £4.2m with £2.2m received in the financial year and a new property purchased in Lincoln which will house the microwave engineering centre.

The manufacturing activity of the Lincoln based microwave business is being transferred to Chelmsford and a microwave engineering centre will be established in a new facility in Lincoln. From April 2010 the microwave and automotive businesses, based in Lincoln, will be reported as part of the EDS division where this was previously reported within the sensors division. Detailed plans have been agreed with customers with the focus placed on ensuring continuity of supply for the site to be vacated during the fourth quarter of this financial year. The transfer will reduce headcount and overheads, with phased savings over the 2010/11 financial year with the full impact not being becoming effective until the last quarter when the current site in Lincoln will be vacated.

In respect of the sensors division, in the first half of the year the long term biosensors R&D activity ceased. From April 2010 the Lincoln based businesses will be reported in EDS division. The balance of activity that remains in the sensors division will be reported in the corporate centre whilst the portfolio continues to be reviewed.

The timing of the remaining spend in relation to the restructuring programme is approximately £18m in the year ending 31 March 2011 and approximately £6m in the year ending 31 March 2012.


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Case Study High power RF systems

The e2v Centre for Industrial Microwave processing (e2v CIMp) was formed through a partnership between researchers in the National Centre for Industrial processing at the University of Nottingham’s Faculty of Engineering, and e2v.

The centre is a focus for the commercialisation of innovative technologies that will harness the benefits of microwave processing for use in a wide range of bulk material processing industries.

This year we have taken two strategically important orders for our High power RF business. The first being with the University of Nottingham for a microwave generator in connection to a bulk material processing project co-funded by the East Midlands Development Agency under an ongoing technology framework grant, and the second with an international company for proof of concept.

Electron devices and sub-systems OperationsOur electron devices and sub-systems division, which is based in the UK, manufactures a range of high performance electron devices and sub-systems for medical & science, aerospace & defence and commercial & industrial markets. The applications include radiotherapy cancer treatment machines, defence electronic countermeasures, radar systems, satellite communications amplifiers and digital television transmitters.

FinancialsWith reduced activity across all of its sectors sales in electron devices and sub-systems decreased by 21.7% to £65.6m (2009: £83.7m).

The division’s adjusted* operating profit was £11.5m (2009: £15.7m), a reduction of 27%. This was due to lower volumes partially offset by savings achieved from headcount reduction, short time working and reductions in warranty, selling and administration costs.

The order book at 31 March 2010 was £68m (2009: £76m), the main drivers for the reduction were the impact of multi-year radiotherapy orders which continue to run their term and decline in defence orders. The order book relating to defence was £13m (2009: £17m), down 23%. The orders due for delivery in this financial year improved to £48m (2009: £42m), up 14%. The order book including the Lincoln business for delivery in this financial year is £60m (2009: £55m).

Markets

Medical & scienceThe medical & science customers served by the division require high performance, high reliability products and have long term spares requirements. The principal application served is the cancer radiotherapy market which is driven by the increasing improvement in cancer detection an ageing population and the desire for more accurately targeted treatment. Our Original Equipment Manufacture (OEM) customers are the most significant route to market and these include Tomotherapy, Elekta, Varian and Siemens. Key drivers for the market include new equipment demand that was affected by the reduced level of investment in hospital facilities, whereas the underlying demand for spares is primarily driven by the installed base. Spares represent c.65% of sales.

Within the medical market, the division supplies magnetrons, thyratrons, modulators and services mainly to the large OEMs but also to end users through distribution. The division is the world’s largest manufacturer of pulse magnetrons and a world leader in magnetron technology. The division’s modulator systems are specifically designed for use in linear accelerators, the kind used in radiotherapy machines. When combined with the division’s magnetron, this sub-system provides a reliable, accurate, high energy, pulsed microwave source for electron acceleration.

During the year e2v entered into a unique support agreement with Tomotherapy, for an initial term of three years. Under the agreement, Tomotherapy pays e2v a monthly fee per installed equipment to cover the purchase, repair and replacement of magnetrons.

e2v sales into radiotherapy applications were flat overall but adjusting for stock movements, reflected the overall trend of modest underlying growth. In the first half there was lower demand for both new systems, due to lack of credit facilities for end-users and due to destocking amongst the OEMs, whereas second half volumes showed an improving trend for new build equipment and a return to run rate demand for spares.

The recently prototyped high power magnetron is designed specifically for the medical and industrial linear accelerator markets and provides an alternative to klystrons in high average and peak power applications. When combined with the modulator in development, it provides a smaller, more flexible footprint than conventional approaches. The focus for the division’s ongoing R&D programme for the medical market is the development of a sub-system incorporating this high power, tunable S-Band magnetron and the next generation modulator.

Sales in the science market are usually for high power switching applications and were buoyed by the delivery of large quantities of hydrogen thyratrons to the prestigious Spring8 science facility in Japan – one of Japan’s top infrastructure projects.



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Business Review

The completion of the switch in summer 2009 from analogue to digital TV in the US reduced broadcast sales, which fell 42%. Marine radar sales were down 6%, reflecting destocking and a reduction in the number of new vessels built. Cargo screening activity was muted with a shift in security focus from cargo to passenger screening. Other industrial markets were dampened by the general economic environment, but stabilised in the second half, with signs of recovery in both sales and enquiries in the last quarter.

In the commercial & industrial sector the focus of the R&D effort is on high power RF applications, where we have engaged with a number of international companies involved in materials processing. In collaboration with the University of Nottingham, we are addressing a number of opportunities presented by the availability of reliable, high power RF energy to improve fundamental process characteristics. Orders have been received for complete generator and applicator sub-system prototypes.

Imaging OperationsOur imaging division, which is based in Chelmsford, UK and Grenoble, France, supports advanced CCD and CMOS based imaging sensors and, at product level, cameras for a range of medical & science, aerospace & defence and commercial & industrial markets including high end applications in spectroscopy and scientific imaging, sensors and focal plane arrays for space exploration and earth observation, dental x-ray radiography, Optical Coherence Tomography (OCT), machine vision and Automated Data Collection Systems (ADCS). The division currently operates CCD fabs in Chelmsford and Grenoble. As part of the previously announced restructuring, the CCD wafer fab in Grenoble is scheduled to close in February 2011.

Financials Sales in imaging decreased by 18% to £53.8m (2009: £65.2m).

The division’s adjusted* operating profit before taxation was £0.5m (2009: £4.3m), a reduction of 88%. This was due to dramatically lower volumes in the dental market, offset by a reduction in R&D achieved by a re-phasing of some programmes and reductions in third party spend.

The order book at 31 March 2010 was £47m (2009: £40m), the main drivers were; Last Time Buy (LTB) orders for CCD dental products, strong demand from OCT, and a ramp-up demand for CMOS sensors for automatic data collection. The LTB orders will be non-recurring and reflect the decision to close the front end fab in Grenoble. The orders relating to space activities were £23m (2009: £25m), down 7%. The orders due for delivery in FY2011 were £43m (2009: £33m), up 31% and include £9m of LTB orders and c.£1.5m of overdue orders resulting from the industrial disruption in Grenoble in the last quarter.

Markets

Medical & scienceThe dental x-ray radiography market is a long established market, in which we have been a major vendor since the beginning. The market is driven by the ageing population increasing demand for healthcare, a drive to digital technologies to lower patient exposure to radiation and early detection of problems.

e2v provides dental equipment manufacturers with custom design CCD and CMOS dental image sensors that drive electronics for intra-oral and extra-oral devices. The route to market is through OEMs including planmeca, palodex, Cyber Medical who provide the equipment to the end users through their distribution networks.

The demand for dental CCD sensors has continued to fall, especially for intra-oral applications, as CMOS solutions become available with more

Aerospace & defenceEstablished long term relationships with industry leading defence primes are based on the division’s ability to design and manufacture specialised high-reliability components and sub-systems. The market is driven by the availability of governmental funding including urgent operational requirements for current conflicts, the changing threats to military assets and by political pressure to reduce casualties have an impact on demand. Technology for some applications, like radar, is shifting from tube to solid state, whilst new applications are also emerging for vacuum tube technology.

The division provides magnetrons, coupled-cavity Travelling Wave Tubes (TWTs), helix TWTs and modulators as well as design and development services. Key customers are the system level OEMs, including BAE Systems, Selex, Raytheon and Thales. For some applications e2v also contracts directly with the end users or governmental laboratories and their technology groups. A gradual shift to sub-systems fits with market opportunity as OEM customers implement increased buy vs. make decisions. product mix is being changed by end-user desire to extend the life of existing military assets – where e2v has significant legacy business. e2v’s non-International Traffic in Arms Regulation (ITAR) technology is a key advantage versus US competitors, in our international markets.

The division’s products and services are used in a range of Electronic Counter Measures (ECM) and Radio Frequency (RF) radar applications. Typical applications in ECM include TWTs and complete RF sub-systems. There were lower levels of demand for new RF sub-systems in the year, but new orders for maintenance and upgrade of the installed base were secured. The contract for supply of TWTs for towed decoys on the US Navy’s Superhornets moved into the low rate initial production phase. Other significant contracts included sub-systems for the Seawolf missile programme in service support contract.

The UK Ministry of Defence (MOD) continues to contract directly with e2v for novel solutions, providing funding for the development of new technologies, including high power microwave sources. Several new contract wins have been obtained, for development projects with the potential for future volume supply into new applications.

While the second half saw a significant upturn in bid activity, sales activity continued to weaken reflecting delays in order placement and the continued decline in traditional radar business, falling 11% year on year.

R&D programmes are focusing on the further development of RF sub-systems, along with other customer-funded programmes.

Commercial & industrialCommercial & industrial markets served include broadcast communications, radar for commercial shipping, harbours and aircraft and industrial applications including RF processing, induction and dielectric welding, lasers and cargo screening. The broadcast market has been affected adversely by the switch from analogue to digital TV but helped by the growth in satellite communications. Commercial radar markets are driven by regulation for commercial shipping and have been affected by fewer launches and lower shipping activity. Other sectors were also impacted by the general economic environment and lower industrial output and investment. Overall sales fell 26% year on year.

The key products are triodes and tetrodes and gridded tubes for industrial applications, klystrons, Inductive Output Tubes (IOTs) for digital and analogue Ultra High Frequency (UHF) TV transmitters, satcom amplifiers for outdoor broadcast, high power linear accelerator (LINAC) magnetrons for cargo screening and RF generator systems for industrial materials processing. There are diverse routes to market through major OEMs for new systems and then through distributors and service partners to supply end-user spares. OEM customers include Garmin, Honeywell and Huettinger while Alphatron is a key distribution partner.



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Case Study Hubble upgrade

In May 2009, NASA’s Hubble Space Telescope was successfully upgraded with e2v imaging sensors. The team at e2v has been working closely with NASA over many years to develop high performance sensors that were integrated into a new camera system for the telescope. The high profile project was successful, with the revitalised Hubble returning wonderful images and proving the telescope to be more powerful than it has ever been.

functionality enabling lower system costs. e2v’s second generation CMOS sensors, introduced in September 2009, started to generate sales this year. The segment has also been affected by the economic slow down and the impact of industry consolidation. The CCD sensor business is expected to continue to decline, although the last time buys will offset this decline in the coming year. The dental CCD market is becoming dominated by large vertically integrated suppliers. With the closure of the front end fab e2v is withdrawing from the dental CCD market to concentrate on our dental CMOS offering, by promoting our Demoniac USB family, that has been developed and is the result of the R&D investment over the last 2 years.

OCT applied to ophthalmology is a relatively new market, started in 1996 but which grew strongly in the following years when Spectral-Domain (SD) OCT was introduced. e2v supplies the line scan camera used in most SD-OCT engines on the market, the main customers include Optovue. The growth in this market is fuelled by the ageing population generating a demand for early detection of eye diseases. Furthermore this technique is non-invasive, thus examination does not have a high cost, leading to better comfort for patients and savings for health providers. Equipment purchases have slowed down this year due to global economic downturn.

The science market is for high end applications in spectroscopy and scientific imaging where ultra-high sensitivity particularly in low light levels is needed. The division provides Electron Multiplication CCD (EMCCD) sensors and cameras to OEMs including Andor, Roper, Spectral and Hamamatsu. Sales in the science market declined partly due to one major customer moving to a second source.

Aerospace & defenceThe division is a world leading supplier of high sensitivity image sensors to the global space sector. The sector requires high reliability products for ground and space astronomy, space science, environmental observation and land observation.

The need for countries to maintain independent observation capabilities is driving a growing demand for land observation, with several new programmes started this year, especially in Europe. The analysis of climate change is also driving investment in new environmental programmes. Overall, this market has not suffered from the general economic conditions, and has experienced a strong continuing growth in demand.

e2v provides mostly CCD sensors into this market sourced from the fabs in Chelmsford and Grenoble. However, e2v has started to demonstrate the feasibility and performance advantage of CMOS in some applications including ocean imaging and hyperspectral imaging. The route to market is direct with imaging equipment or satellite manufacturers including Ball Aerospace, Lockheed Martin, Thales and Astrium. e2v is recognised for technical excellence by the world’s major space agencies, including NASA, ESA, CNES, JAXA and CSA, with whom our R&D programmes and roadmaps are discussed to support future requirements.

Revenues in the space sector have grown by 30.5% in the year driven by major programmes for earth land observation (including the first phase of the CSO strategic programme that will be the successor of Helios France programme) and for the space science sector (including the final phase of the Gaia programme, for ESA).

Commercial & industrialThere are a wide variety of industries that have a requirement for our middle to high end specification machine vision sensors and cameras including raw material production (paper, glass and metal), food sorting and electronic and semiconductor process inspection. The products form part of larger industrial equipment and therefore significantly influenced by the cycles of investment in new capacity and replacement cycles in manufacturing plants, driven by demand in the general economy. e2v is internationally recognised for the quality of its CCD sensors and cameras which we design and manufacture. We are working on a new generation of CMOS cameras for very high speed applications, which should be introduced in 2011.

The route to market is our network of dedicated local partners who integrate the industrial sensors and cameras into their products, including Rauscher, Chronix but we also supply directly to OEMs including Cognex. Machine vision sales have declined by 13% reflecting the reduction in capital spend in industrial markets, though in the second half there has been a strong recovery particularly in the Asian markets. For the past 3 years, e2v has been working in close relationship with major players of the ADCS market to develop standard and custom CMOS sensors with high performance shutter capabilities, and a high degree of functional integration.

The market segments are 1D/2D barcode scanning, with end products including hand-held readers, terminals, fixed scanners and OEM engines. The end markets include logistics, transportation and retail. Growth in this market is driven by a combination of the progressive replacement of laser technology by passive imaging detection, and the increasing number of applications opened by the adoption of 2D scanning as opposed to 1D. Our recently launched CMOS ADCS product has generated orders from 2 major OEMs within this market.


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Specialist semiconductorsOperationsOur specialist semiconductors division, which is based in Grenoble, France and Santa Clara, US provides data converters, microprocessors, assembly and test services, military spec high reliability legacy components, sensor signal conditioning Application Specific Integrated Circuits (ASICs) and Application Specific Standard products (ASSps) for aerospace & defence and commercial & industrial markets, and operates Qualified Manufacturers List (QML) certified semiconductor manufacturing facilities at both locations.

FinancialsSales in specialist semiconductors decreased moderately by 4.5% to £50.9m (2009: £53.3m), which reflects the inclusion of Qp Semiconductor, Inc. (Qp) for the full year although overall existing markets declined and sales were down 24% excluding the contribution from Qp.

The division’s adjusted* operating profit was £6.7m (2009: £13.1m), a decrease of 49%. This was due to lower sales in the data converters, microprocessor and mixed signal ASIC product groups. This was partially offset by cost reduction in Grenoble and by the benefit of a full year of Qp’s activity, compared to 6 months last year.

The order book at 31 March 2010 was £29m (2009: £20m). The main reason for the increase is due to orders related to the End of Life (EOL) 68K processors for the Eurofighter programme. The orders due for delivery in FY2011 were £26m (2009: £17m), up 49%, and include c.£2.0m of overdue orders resulting from the industrial disruption in Grenoble in the last quarter.

Markets

Aerospace & defenceThe market demands high spec, high reliability components. There is demand for improved performance and connectivity for embedded computers, increased bandwidth and higher resolution to acquire and process data; demand for long term support, and redesign of discontinued products. With our capabilities in both design of new semiconductor technologies as well as providing packaging and test services, which can extend the life of otherwise obsolete semiconductors, both new and legacy systems and programmes are supported.

e2v designs high speed data converters, which are used in leading edge signal conversion applications such as wide-band satellite receivers, wireless LAN and RF infrastructures used in military and aerospace applications. e2v offers market leading package and screening options; making high reliability semiconductors available to aerospace & defence platforms via OEMs and distribution channels.

Sales for the data converters product group were down 17% over last year. The R&D investment in data converters is to continue to provide the highest performance analogue to digital converters available in the market targeted at aerospace & defence platforms.

In partnership with Freescale Semiconductor, e2v offers a range of high reliability microprocessors for use in avionics, defence and space applications. e2v is working with Everspin to provide similar services for Magnetic Random Access Memory (MRAMs) devices. Sales of microprocessors were down 24% over the prior year, due to lower demand and the industrial dispute in our Grenoble plant.

e2v’s chip assembly and test business provides an outsourcing option to customers that want to move away from in-house testing, due to the efficiencies they can gain by focusing on pure manufacturing. e2v has seen an increase in this business of 34% over last year within the aerospace market. Medium term customer demand has increased the visibility of this activity and justified retention of staff that were originally planned to be included in the Grenoble site rationalisation.

The focus of development for the microprocessors is development of the existing products as well as new high reliability offerings based on Freescale Semiconductor’s powerpC™ based microprocessor.

e2v provides obsolescence mitigation services by designing or re-engineering otherwise obsolete semiconductors along with wafer storage, foundry transfer facilities and assembly and test services. These high reliability semiconductors are made available through a network of industrial distributors as well as direct OEMs.

An important contribution in obsolescence mitigation is made by Qp, which has the second largest number of semiconductor components approved for use by the US military. In the current year sales were £15.6 million, up 117% from last year, due to the benefit of having a full 12 months of sales. The focus of the R&D developments for Qp include die replacement (where no supply is otherwise available) for which there is ongoing product demand and new product design in order to expand its product offerings.

Case Study Obsolescence mitigation

In March 2010 e2v’s specialist semiconductor division demonstrated its long experience in obsolescence mitigation through an agreement with Freescale Semiconductor to extend the life of 68K-series microprocessors for military, aerospace, commercial & industrial markets.

e2v will continue manufacture for all markets, following discontinuance of these popular products by Freescale Semiconductor.

This arrangement is based on e2v’s long term experience in extending the availability of strategic semiconductors used in the aerospace & defence markets. These Freescale products will remain available from e2v for the next 10 years, or longer.



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In Grenoble, we have received a number of orders to the total value of £12.7m for the Eurofighter Typhoon programme consisting of a number of orders from sub-contractors to the Eurofighter programme for 68K-series microprocessors and additional services secured for a minimum of 10 years under an obsolescence mitigation programme.

Commercial & industrialThe smart sensor market for sensor signal conditioning ASICs and ASSps is for applications in industrial automation, industrial detectors, automotive safety and security, engine management and climate control applications. Demand in these markets has declined.

e2v designs products for selected customers selling directly to the large OEMs in the industrial and automotive markets. There are only a limited number of new designs currently being worked on and a number of existing programmes are coming to an end. Order demand for products has declined because of the downturn in the industrial and automotive markets. The sales for these markets are down 50% on the prior year, and, as part of the reorganisation, support will be maintained for products developed for existing customers.

SensorsOur sensors division in the year ended 31 March 2010 comprised a portfolio of businesses based in the UK and Switzerland covering thermal imaging, x-ray detectors, gas sensors and air quality sensors along with microwave, automotive and high speed electronic businesses at Lincoln. The businesses sell into the range of the Group’s markets, across the medical & science, aerospace & defence and commercial & industrial sectors. From April 2010 the sensors division has been reorganised with the businesses currently based in Lincoln reporting as part of the EDS division. The remaining businesses will be reported in the corporate centre whilst the portfolio continues to be reviewed.

Financials Across the portfolio of activities, sales in the sensors division overall were stable at £30.9m (2009: £30.9m). There were, however, changes in the mix with the non-Lincoln businesses demonstrating sales growth of 15% whilst the sales for the Lincoln based businesses declined by 14%.

The division’s adjusted* operating loss was £0.4m (2009: loss £1.6m), an improvement of 74%. In relation to the non Lincoln businesses the adjusted* operating loss was £0.1m (2009: loss £1.2m). The improvement in performance was due to the closure of the biosensors programme, substantial growth in the MiCS automotive business and improved profitability in the thermal imaging business through increased revenue and purchase price reductions in materials.

The order book at 31 March 2010 was £17m (2009: £18m), excluding the Lincoln business the order book was £4m (2009: £5m) reflecting a shift in the scientific instruments business where customers are buying in a 6 month rather than 12 month cycle. The orders due for delivery in FY2011 were £14m (2009: £14m), and excluding the Lincoln businesses such orders were £3m (2009: £4m).

portfolio

Lincoln based businessesThe Lincoln microwave business supplies electronic sub-systems, modules and components for defence, airborne radar, and communications systems, medical and automotive markets. In line with the overall economy, the commercial sector was challenging during the year, though there are signs of recovery in commercial radar sales. The defence sector was affected by programme phasing on several key platforms such as Eurofighter Typhoon.

The high speed electronics business also based in Lincoln has been developing and manufacturing Exploding Foil Initiators (EFIs) and Electronic Safety and Arming Units (ESAU). These products are manufactured in Lincoln with 100% European content, providing a key differentiator over competitive US-based products with ITAR restrictions. The devices are predominantly used in complex weapon systems such as missiles and torpedoes developed by key European OEMs. The business is growing by securing positions on a broad range of platforms and programmes.

AutomotiveThe MiCS air quality sensors are manufactured in Switzerland. The sales of the MiCS products have grown by 128% due to the adoption of air quality sensors on new car platforms particularly in the Chinese market. This has moved the MiCS business to breakeven.

Case Study Argus fire fighting cameras

This year saw e2v celebrating 2 important contracts for Argus thermal imaging cameras. The first, with London Fire Brigade in the UK, came following a lengthy and challenging series of comparative tests, where the Argus4 came out on top and the second was with the Royal Australian Navy.

The Australian order, worth over half a million pounds, confirms Argus4’s dominance in the naval market. In addition to this continued service with the Australian and UK Navies, Argus thermal imaging cameras serve the Swedish, Indian and pakistan Navies, the US Coastguard, and thousands of fire and police departments all over the world.


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Business Review

Thermal imagingThe business’ range of Argus fire and security cameras has shown good underlying growth of 16%. The route to market is direct to end users in the UK and through distributors for the rest of the world predominantly outside of North America. The growth in the sale of cameras has been driven by an expansion of the routes to market in key emerging territories, the successful delivery of substantial orders to customers such as the London Fire Brigade and a new product launch.

Scientific instrumentsThe scientific instrument business specialises in the manufacture of high specification x-ray detectors for a wide range of x-ray spectroscopy applications under the ‘Sirius’ brand. The scientific business showed modest growth during the year driven from stronger demand from one key OEM. However, a second OEM, who had been traditionally vertically integrated, has developed an in-house product a little ahead of expectation so reducing demand in the second half. The main route to market is direct to key accounts and major OEMs (including Jeol in Japan). A key focus for the coming year will be on driving sales through the launch of new products into the X-ray Fluorescence (XRF) analysis market.

Gas sensorsAs an independent supplier of a range of quality gas sensors to OEMs, the division focuses on product reliability and support via specialist engineers. The significant order from China in the prior year did not recur with the result that sales are down 37% from the prior year, exacerbated by poor market conditions in the US. However, there were some positive indications of improving demand during the later part of the year.

Group functionsThe divisions are supported by an international sales organisation, group operations and support services including commercial, human resources, IT and finance.

SalesThe sales function has sales offices in 5 locations and supports the divisions through managing customer relationships and the global network of distributors and representatives. The sales activity has refocused office reach and associated cost whilst adding channels in Asia in the year. A flatter sales structure has been introduced increasing the number of member’s of the sales force who are remunerated on individual sales targets.

OperationsThe Group operations function is responsible for the main manufacturing sites in Chelmsford, Grenoble, Santa Clara and Lincoln, as well as the smaller sites in the UK and Switzerland. Group operations are also responsible for supply chain and procurement and has a dedicated purchasing office in Taipei. The Group operations function has delivered a number of key initiatives during the year. Supply chain has been focused on working in partnership with our key suppliers to lower the cost of materials used in production which has generated material savings against the prior year costs of £1.9m. The inventory reduction programme has seen inventory reduce by £5.9m (14%). This has been achieved at the same time as improving the availability of finished goods stock for items that are sold from stock rather than against order. The returns cycle has been significantly reduced with the result that the average time to deal with customer returns has decreased by 63 days since September 2009. Operations are responsible for maintaining the manufacturing facilities whilst controlling spend on tangible assets and made a significant contribution to the reduction in capital spend in this financial year.

Support servicesSupport services include commercial, human resources, IT and finance. These costs are allocated to the divisions. The central costs of £2.6m (2009: £2.3m) are the costs relating to e2v technologies plc and are not allocated. The increase in the unallocated costs reflects increased professional fees reflecting the level of corporate activity including the strategy review.

Case Study Launch of the e2v CEI

In November 2009 over 80 top level representatives from the academic and business communities gathered at The Open University’s campus to celebrate the opening of the e2v Centre for Electronic Imaging (e2v CEI). The e2v CEI is a collaboration between The Open University and e2v and is dedicated to the research and development of advanced technologies for electronic image sensing and provides knowledge exchange between the UK technology industry and the academic world.


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Board of Directors

Board of Directors

Jonathan Brooks Independent Non-Executive Director

Jonathan is a non-executive director of Aveva Group plc, an LSE-listed engineering IT software provider to the plant, power and marine industries and Xyratex Limited, a NASDAQ-listed provider of enterprise class data storage sub-systems and network technology. He is also Chairman of picochip Inc., a venture capital-backed company developing wireless processors. Between 1995 and 2002, he was Chief Financial Officer and a Director of ARM Holdings plc. Jonathan was appointed to the Board in 2004.

Ian Godden Independent Non-Executive Director

Ian, after being UK Managing partner and European Board Member of Booz Allen and Hamilton, and UK Managing partner of Roland Berger Strategy Consultants, started up a successful consultancy serving industrial and technology companies which he subsequently sold in the late 1990s. Ian is now Chairman of ADS and its subsidiary, Farnborough International. Ian is also president and CEO of Glenmore Energy (USA), non-executive director of KBC Advanced Technologies, and a non-executive director of Bristow Group Inc. He was appointed to the Board in 2003.

Anthony Reading MBE Senior Independent Non-Executive Director

Anthony was appointed to the Board in 2004. He was an executive director of Tomkins plc and Chairman and Chief Executive of Tomkins Corporation, USA, for 11 years, until the end of 2003. He is currently a non-executive director of Laird plc and Taylor Wimpey plc, and previously a non-executive director of George Wimpey plc and Spectris plc.

Chris Geoghegan Chairman

Chris joined the e2v Board as Chairman in October 2009. prior to this Chris was a group executive director of BAE Systems plc from 2002 until 2007 and a past president of the Society of British Aerospace Companies. He has over 30 years of experience in the aerospace industry having spent most of his career in the commercial aircraft sector and was appointed one of three chief operating officers of BAE Systems plc. Chris was a key player in the growth and establishment of Airbus as Managing Director of the Airbus Company and a member of the executive board of Airbus Industrie. He also has substantial experience in the military aerospace sector, having been responsible for BAE Systems’ European Defence joint ventures and its Defence Electronics companies. He is currently the Chairman of Hampson Industries plc and senior independent director of Kier Group plc, Volex plc and SIG plc.

Keith Attwood Chief Executive

Keith has over 25 years, of commercial management experience, gained in telecommunications, avionics and electronic components. He has held a range of senior positions within UK industrial companies, including Operations Director (GEC-Marconi Avionics Ltd) and project Director (GpT Ltd), prior to joining the Group as Managing Director in 1998. Keith led the MBO of e2v from Marconi plc in 2002 and floated the Company on the London Stock Exchange in July 2004. He is past Chair and Vice Chairman of the CBI East of England Regional Council.

Charles Hindson Group Finance Director

Charles joined the e2v Board in May 2009. Charles’ last role was Chief Executive, and prior to that Group Finance Director, of Filtronic plc, a UK listed specialist electronics manufacturing group. previously, he was Finance Director at Eutelstat S.A. and held various positions with the BT Group, British Gas plc, price Waterhouse and 3i plc.


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Employeese2v recognises the importance of people to its ongoing success. Its competitiveness in the market is dependent on employing the right people with the right skills in the business.

Our policy is to:l Comply with all legislation

relating to employee relations in the countries in which we operate.

l Maintain an equal opportunities policy in line with, and going beyond, regulations.

l Comply with, and where possible exceed, health & safety regulations.

l Maintain a learning and development programme for employees.

l Facilitate and encourage two-way communication at e2v, including a secure ‘whistle-blowing’ process and annual employee survey.

l Maintain and benchmark a remuneration policy ensuring e2v offers competitive work packages.

l Create a great working environment at e2v where people want to work.

l Encourage all employees to live the company’s 4 key values.


At e2v we strongly believe that we should consider the interests of the global community when conducting our business, ensuring that we function in an ethical and responsible way at all times. This involves considering the impact of our activities on society and the environment at large, as well acting responsibly towards our customers, suppliers, employees, shareholders and communities.

We redefined our policies and framework for Corporate Responsibility in 2009 and believe that they have provided us with a solid base, which we have both consolidated and used to develop our approach, ensuring that we go further than just complying with statutory requirements.

Investorse2v promotes two-way communication with current and potential investors.

Our policy is to:l Ensure timely delivery of

information in line with regulatory requirements.

l provide information in paper format whilst promoting the electronic provision of information via our investor relations website.

l Make an additional annual presentation to investors and analysts.

l Retain a financial pR consultancy to ensure all communication is timely, appropriate and in accordance with best practice.



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Supply Chaine2v works to build long-term relationships with its suppliers and customers, encouraging ethical and environmental considerations in all its dealings.

Communitye2v operates in the heart of local communities. The business is also an integral part of those communities across all e2v locations. As a consequence e2v recognises the responsibility that comes with this position.

Environmente2v continues to focus on minimising any adverse impact on the environment stemming from both the activities of the company and its employees.

Our policy is to:l Make a positive contribution

and show consideration to our neighbours and the community in which we operate.

l Support local organisations through charitable giving.

l promote an open two- way dialogue with local communities and stakeholders.

l Support local schools and learning institutions through training and organisations such as STEM TEAM Essex (formerly SETpoint).

Our policy is to:l Maintain operational and

management systems to facilitate compliance with environmental legislation.

l Encourage all persons working on behalf of the Group, through training and communications to take personal responsibility to minimise their adverse impact on the environment and to contribute towards meeting group objectives and targets.

l Encourage environmentally sound design practices at all stages of product life cycles.

l Seek all practical ways to reduce emissions to land, sea, air and water through responsible management of our business processes.

l Manage energy usage and greenhouse gas emissions for efficiency and minimal waste, through appropriate investment in process controls and continuous improvement plans.

l Use best available techniques to minimise waste by preventing, reducing, re-using or recovering (inc. recycling) waste material.

Our policy is to:l Assess all potential suppliers

against an ethical and environmental questionnaire prior to being added to our supplier lists.

l Communicate and treat our suppliers/customers with fairness and courtesy as dictated by our internal values.

l Work with all of our customers and suppliers regarding environmental initiatives, encouraging them to help us to jointly reduce the environment impact of our work.

l Work in partnership with our suppliers to enhance the quality and performance of the items they supply.

l Work in partnership with our customers to develop and improve both e2v’s products and the systems in which our products are incorporated.



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Investorsl e2v is a member company of the FTSE4Good Index, the responsible investment index calculated

by global index provider FTSE Group. This was renewed in 2010.

l The Group continues to consider timely and accurate communications with analysts and investors as a priority.

An investor and analyst day was not held in 2010 (as occurred in January of 2008 and 2009) as market updates had been provided during the Firm placing and Rights Issue. Other communication processes include the Annual General Meeting, (where shareholders have an opportunity to question the Board), interim and full year results presentations, interim trading updates and Regulatory News Statements, as appropriate. In addition, the Group responds to individual requests for information.

Communication channels to investors continue to include the delivery of paper based documentation, face to face communication and online channels, including Regulatory News Statements and e2v’s investor relations website; where amongst other data, the Firm placing and Rights Issue documentation, interim and annual reports were posted.

Employeesl We maintain a global Intranet with content in both French and English to cover the two

predominant languages used by our people and including an employee forum to encourage communication and open discussion.

l Attendance levels averaged 97% during 2010 across the Group (2009: 97%).

e2v’s core values are a cornerstone to attracting and retaining the right people to maintain the ongoing health and success of the business. We endeavour to deliver an environment where all our employees feel proud to work for us and understand the importance of embracing these values, of:

l Integrity

l Connectivity

l Innovation

l Raising the bar

A further tranche (the sixth) of the Company’s share save scheme was issued in the period.

Our Smart Thinking Award & Recognition Scheme (STARS) is an important means by which we recognise employees who go the extra mile, with instant and quarterly awards available to celebrate the achievements of both individuals and teams.

We are also committed to developing all of our people and have a comprehensive, innovative and high quality learning and development programme in place, including a ‘learning theatre’ programme to develop our future leaders. All of these initiatives are underpinned by our commitment to creating a discrimination-free environment for our people, with a positive whistle-blowing culture and where our policies meet, and often exceed, legal requirements.

Eleven of e2v’s Chelmsford employees have been awarded the ‘Young Enterprise Essex Volunteer Award’ by Young Enterprise East of England (YEEE) for their work with local schools, acting as Business Advisors for the YEEE Company programme, where teams from the schools learn the essential elements of setting up and running a small business.

e2v also continues to support STEM TEAM Essex (Science, Technology, Engineering and Mathematics Network), a UK wide organisation, sponsored by the Department of Business Enterprise and Regulatory Reform. e2v has around 20 ambassadors who facilitate at Group events and go out into schools and colleges to work with young people, raising interest and awareness of careers in these subjects and developing a pipeline of motivated and capable people into science, technology and maths-related careers.

Case Study Apprentice of the year

e2v’s Apprentice Awards Evening is an important event in our calendar. It recognises the broad value of apprentices to companies like e2v, helping us bring through highly motivated young people with knowledge and experience relevant to our specialised business, whilst also allowing us to celebrate individual excellence.

The most prestigious award of the evening – the “Apprentice of the Year” award – went to third-year apprentice Chris Hill, pictured here with Apprentice Manager, Bob Randall. Awards were also presented to those apprentices who have this year completed their Foundation Modern Apprenticeships and Full Framework Advanced Modern Apprenticeships.



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Occupational healthThere were 13 (2009: 8) reportable accidents across the Group in 2010 and 111 (2009: 136) non-reportable accidents.

e2v ensures access to competent occupational health advice and support through the retention of a third party provider. The service provider offers a wide range of support including absence management, ill health assessment, medical investigations and specialist referrals. e2v accepts our responsibility to protect our workforce from adverse health effects while at work and to enable the workforce to be adequately screened an occupational health service is available for employees in addition to first aid facilities. Employees can be referred to specific specialists at company expense to expedite investigations and diagnosis. There are dedicated budgets allocated to the department which are reviewed annually. In addition e2v employees have confidential telephone and internet access to qualified counsellors and lawyers. Effectiveness of the provision is measured by absence patterns and ill health/occupational disease reporting.

During the period e2v specifically monitored ‘Swine Flu’ infections through a global action team. Infection rates were relatively low and managed through normal absence processes.

Health & safetye2v has made significant improvements in the management of Health & Safety and proactively encourages the development of this service with support from director level. e2v now works to a Group HSE Management System that includes the identification and control of relevant aspects and impacts that may affect employees, contractors and the wider public. The e2v Group aims to gain OHSAS 18001 certification by the end of 2010. In relation to our processes and activities, reportable injuries remain below the national average. There were no reportable diseases or work related ill health throughout 2009.

Accidents are included in the statistics if they occurred during working time, including while travelling on company business or as a result of work (accidents on private journeys between home and work are excluded). In the UK, reportable accidents are based on the requirements of the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (RIDDOR), in other countries, local regulations are used.

Communityl e2v supports nine core global charitable organisations associated with its major facilities and

made 35 separate donations in matched support of employee fundraising activities.

l e2v continues to support the whoosh! Learning Centre, based at our headquarters in Chelmsford and run in partnership with Essex County Council (ECC) and the Learning and Skills Council. whoosh! is open to both e2v employees and all members of the local community and has 1700 members.

l e2v supports the e2v foundation, a charitable investment fund, run by Essex Community Foundation (ECF).

l e2v is engaged with and strives to play an active part in the communities in which our people live and work.

l Our charity committee has maintained its global reach supporting charities local to our global facilities, both encouraging and supporting voluntary activity and fundraising by employees.

e2v employees have been engaged in a number of fundraising events: including raising £6,000 by growing moustaches for the Movember campaign for prostate cancer research, £1,000 for Macmillan’s Cancer Care nurses and more than £6,500 for the core charities through many and various fundraising events. In addition e2v donated £5,800 in matched funding, where employees had raised money for their chosen charities.

Although no additional funds were added to the e2v foundation this year, the total foundation value remains at approximately £105,000. In accordance with ECF rules, £2,395 of the interest generated was released and donated by the Charities’ Committee to good causes.

We also help our local communities by encouraging young people’s interest in business, science and technology, working with national programmes such as Young Enterprise and STEM TEAM.

Case Study Dyspraxie mais fantastique

e2v’s charities committee offers support to employees raising money for charities close to their heart.

This year we were able to support 35 individual requests from our employees, which included sponsoring a meeting for Dyspraxie mais fantastique through our Grenoble facility, where a greater understanding of the condition was promoted by putting people in the position of children suffering from dyspraxia to help them understand the difficulties of this condition.

In addition an event was held at our Grenoble site to collect food, toys, ship with Secours populaire an organisation dedicated to help families in need of support.



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Environmentl e2v is a member of Business In The Community (BITC) and completed

our submission to the BITC Environmental Index in 2010, achieving a gold (94%) award.

l As part of this submission e2v calculates its carbon footprint across all global sites. Local targets are set and combined into an overall Group target and performance measure. e2v reduced its carbon footprint by 15.4% in the year to 31 December 2009 when compared to 2008, against a target of a 3% reduction.

l e2v’s Bright Green programme is a global initiative focussing on the continuous improvement of our systems and processes to manage and minimise our impact on the environment.

e2v has, since 1997, incorporated the requirements of ISO14001 into its Environmental Management System at both Chelmsford and Lincoln sites. Environmental Management Systems are in place at all other e2v sites and our updated plan is to gain ISO14001 certification at all of our sites by 2012.

e2v recognises the impact that human activity has on climate change and remains committed to reducing our footprint and in following guidance and regulations regarding greenhouse gas emissions and managing and reducing our impact our operations have upon the environment.

e2v uses the BITC Environmental Index to benchmark our Environmental Management System against other substantial UK organisations. In 2009 e2v shadowed the index, scoring 53%. In 2010 a target of achieving a bronze (70%) award was set. In fact e2v was awarded gold (94%) and commended by Amita Vaux of BITC commenting, “I am not aware of another organisation that has made such a substantial jump in their performance. I give credit to e2v for the methodology that they have used, which we will commend to other organisations”. This will be expanded upon in the coming year to include measurement against the full BITC Corporate Responsibility (CR) Index.

Although e2v achieved a 15.4% reduction in our carbon footprint against a target 3% reduction, it should be recognised that a significant contribution to this reduction came as a result of the economy rather than purely efficiencies in working practices.

A decision has been made not to use carbon offsetting within e2v. Any changes will therefore be from the direct effect of e2v’s activities.

Supply chainl Group inventories was £35.5 million (2009: £42.4million) after

absorbing the impact of exchange rate variances.

l A framework has been developed for a new Supplier Accreditation Scheme, for production suppliers, based on cost, quality, service and health, safety & environmental criteria. It will go live in 2011.

At e2v we aim to build long term partnership based relationships at every point in our supply chain, from material supply, through delivery, to ongoing service and support for our customers; maintaining a focus on the quality, safety and availability of our products and services whilst supporting ethical and environmentally sensitive business practices.

The global procurement team has been developing our procurement strategy, specifically in the areas of:

Commodity management strategyWe have a continuously evolving global sourcing strategy that maximises commercial competitiveness whilst minimising supply chain vulnerabilities. The global procurement team continues to drive the consolidation of spend through chosen strategic suppliers, ongoing formal negotiation process including global spend aggregation, savings roadmap, and commodity specific strategies.

Supplier relationship managementWe are rationalising and managing our supplier base through the use and continuous development of best in class supplier relationship management and negotiation techniques. This includes the benchmarking of current suppliers to assess areas of focus and opportunity.

Supplier accreditation schemesA Supplier Accreditation Scheme framework has been developed for production suppliers, based on cost, quality, service and health, safety & environmental criteria. There will be annually evolving scorecard criteria and weighting to reflect e2v’s ongoing business requirements whilst accelerating focus, exploring synergies/opportunities to the mutual advantage and benefit of both parties.

Suppliers will be given one of four classifications and will be heavily encouraged and coached to progress through the hierarchy. The scheme is based on membership by invitation only and works on continuous improvement methodology that leads into phase two of the programmes which will provide the data feed for the creation of a preferred supplier list.


Image: New high speed analogue to digital converter for high speed data storage,

Gigabit Ethernet and automatic test equipment.


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Directors’ Report

The Directors present their annual report and the audited financial statements for the year ended 31 March 2010. The Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The Company financial statements have been prepared in accordance with UK Generally Accepted Accounting practice (UK GAAp).

principal activityThe Group’s principal activity is the design and supply of specialist components and sub-systems into niche sectors within the medical & science, aerospace & defence and the commercial & industrial markets. As discussed in the Business Review, the Group is organised into business divisions which are supported by a number of Group functions.

The Group has manufacturing operations in the UK, France, USA and Switzerland and sales and distribution operations in the UK, USA, Germany, France and Hong Kong, as well as an established global network of agents and distributors covering the Americas, Europe, Middle East, Africa, Far East and Australia.

Review of business and future developmentsA review of the year’s operations, including the Group’s key performance indicators, along with the outlook for the coming year, is contained in the Chairman’s and Chief Executive’s Statement, Business Review and Corporate Responsibility Review.

Results and dividendsThe loss before taxation amounted to £9,720,000 (2009: £28,405,000). The loss attributable to ordinary shareholders amounted to £2,266,000 (2009: £21,299,000).

As detailed in Note 12, no dividends have been paid during the year (2009: £4,913,000). The Directors do not recommend the payment of a final dividend (2009: £nil).

Directors and officersprofiles of all Directors at the date of this report are set out on page 17. The current members of the Board are detailed on page 17. Chris Geoghegan was appointed Non-Executive Chairman with effect from 1 October 2009 following George Kennedy’s retirement on the same day from the Board. As previously reported, Mike Hannant stepped down from the Board of Directors on 28 May 2009 following a transition period with Charles Hindson who was appointed Group Finance Director with effect from 5 May 2009.

Sally Weatherall resigned as Company Secretary on 23 September 2009 when Charlotte parmenter was appointed to the position.

The beneficial and non-beneficial interests, including family interests, of the Directors in the share capital of the Company and details of Directors’ share options are detailed in the Directors’ Remuneration Report.

Directors’ indemnity insuranceThe Company has indemnified the Directors of the Company and all its subsidiaries against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third party indemnity provision was in force during the year and is still in place as at the date of this report.

Directors’ Report

principal risks and uncertaintiesAs noted in the Corporate Governance Report, the Board has adopted processes to identify, evaluate and manage the significant risks faced by the Group. The more significant risks and uncertainties faced by the Group are set out as follows.

Global political and economic conditionsDemand for the Group’s products and services are a factor of wider economic conditions. During an economic slowdown it is possible that demand for certain products and services provided by the Group may reduce. Furthermore the Group’s products are supplied for use into industries which are dependent on and subject to, government policies, national and international political considerations and budgetary constraints which are outside the control of the Group. These risks are mitigated to a degree by the diverse nature of the Group’s products and its expanding geographical spread. Furthermore the current economic climate may increase the risk that parties with whom the Group trades, both customers and suppliers, become unable to meet their commitments to the Group. The Group seeks to manage this risk by performing credit checks and taking third party comfort, including letters of credit, where appropriate.

Financial risks The Group is exposed to foreign currency and interest rate risks. Functional currency transactional risk arises when operating subsidiaries enter into transactions denominated in currencies other than their functional currencies. This risk is managed by hedging significant exposures, usually by means of forward exchange contracts. Translational exposure arises on the translation of overseas earnings, investments and relevant borrowings into sterling for consolidated reporting purposes. Net asset translational risk is mitigated, in part, by foreign currency borrowings. The Group does not hedge translational exposure arising from profit and loss items. Due to the Group’s long term debt obligations, an exposure exists to movements in interest rates, which is managed by the use of hedging arrangements. Furthermore the loan facilities entered into by the Group include a number of financial and non-financial covenants. Breach of these covenants would constitute events of default under such facilities which might result in these borrowings becoming immediately repayable. The need to remain in compliance with these covenants could restrict flexibility in the management of the Group and may limit the Group’s ability to pursue certain business opportunities. Credit risk to financial institutions is limited by restricting the range of counterparties to those with high credit ratings. Liquidity risk is managed by monitoring forecast and actual cash flows and ensuring that sufficient committed facilities are in place to meet possible downside scenarios.

Restructuring programmes In response to the current global economic downturn, tougher trading conditions and their material impact on the Group’s businesses and operating expenses, the Group has instigated various cost reduction and restructuring initiatives which affect the Group’s operations primarily in France and in the UK. The Group’s expectations of the financial costs and benefits of these initiatives are based on certain assumptions reflecting the completed consultations and variables regarding, among other things, future market conditions in relation to the Group’s principal businesses. These variables may be subject to matters outside the control of the Group which may delay implementation or make these


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initiatives more costly or result in them not returning the anticipated cost savings. Furthermore, these programmes have reduced staff morale and the disruption to production has resulted in increased overdue deliveries to customers. The Group is seeking to minimise these risks through planned transition arrangements and increased levels of employee and customer engagement.

Markets and customers The Group can be subject to variations in profitability attributable to individual product lines and markets as a result of the timing and quantum of orders, the introduction of new product lines and the applicable legislative and regulatory framework. Specifically, the Group operates in a multiple number of diverse yet specialist markets supplying a small number of dominant customers in these markets. As a result, the Group has specific sector dependencies which are influenced by changes in the sourcing policy of these customers which may result from changes in customer policy and re-positioning within the value chain.

Competition including advancement in technologyThe Group’s business is the design and manufacture of highly technical and specialised products requiring input from skilled personnel. There can be no assurance that any of the Group’s products will achieve the required specification or deliver to the customer’s expectations and products are continually at risk of being superseded as a result of improvements in alternative technologies that provide the same or comparable functionality. Thus the Group may incur significant liabilities for warranty claims, defects of its products or product recalls. The future success of the Group also depends upon the Group’s ability to retain and develop the skilled personnel. The Group seeks to minimise these risks through managed and focussed research and development programmes, specification certainty, clear contractual arrangements and appropriate staff remuneration and incentive arrangements.

production and supply Across the Group there are a number of strategic partnerships, which in the event of cessation of these relationships or an interruption on the supply of these products could result in a disruption to the business. The Group also relies on external suppliers for specialist materials and sub-assemblies, supply of foundry, packaging and test services, placing orders for small quantities of highly specialised products. In periods of high demand for these services, the Group may experience delays in the supply as suppliers prioritise customers with volume orders. Certain components are sourced from overseas. Events outside of the Group’s control could result in delayed deliveries of these products. Events could also disrupt the Group’s manufacturing capabilities at their various locations. Irrespective of the adequacy of insurance coverage, this could cause delays in production and loss of sales and customers. A range of hazardous materials is used at the manufacturing sites. Failure to provide a safe work environment for its employees could have a number of negative outcomes, including: fines and penalties, loss of key customers and reputational damage. The Group is committed to maintaining a safe place of work and has in place quality and safety processes. Failure to protect the Group’s intellectual property, principally confidential know-how, could result in a loss of sales. The Group mitigates this risk by the use of operational and management systems, including a requirement that suppliers, customers and employees adhere to confidentiality obligations with respect to the treatment and disclosure of such know-how. Furthermore, patent protection is used to protect certain products and manufacturing processes from competition.

Environmental and regulatory The Group is subject to numerous laws and regulations both in the United Kingdom and internationally, which regulate health and safety, employment, environmental, taxation, exports and other operating items. Failure to comply with such legislation and regulations may harm the business or the Group’s reputation. The Group draws upon the experience of relevant employees and outside advisors in order to ensure compliance with the various requirements. Additional environmental legislation may increase operating costs that the Group mitigates, where possible, through improved efficiencies. Unforeseen changes in legislation can have an adverse impact on operations.

property, plant and equipmentLand and buildings at the Group’s facility in Grenoble were acquired at fair value in July 2006 and have not subsequently been revalued. The Group’s site at Lincoln in the UK was sold during the period, for a price of £4.2 million resulting in an exceptional gain of £3,739,000 (See note 5). Although there have been no formal valuations carried out for the remainder of the Group’s land and buildings, the Directors believe the market value to be in excess of book values.

The Group acquired a new site within the Lincoln area in May 2010 to house principally the engineering centre of the e2v microwave electronics business.

Research and developmentThe Group continues to commit significant resources to existing product enhancement as well as the introduction of new products for established and emerging markets. Resource is also invested in a number of collaborative relationships with key universities to achieve leverage, knowledge exchange and access to and training of talented young scientists and engineers. This is achieved through various mechanisms including a number of Knowledge Transfer partnerships. Customers fund directly a proportion of expenditure on product enhancement and new product development whilst the amount funded by the Group amounted to £12,072,000 (2009: £17,133,000).

Takeover directivepursuant to s992 of the Companies Act 2006, which implements the EU Takeovers Directive, the Company is required to disclose certain information. Such disclosures, which are not covered elsewhere in this Annual Report, include the following:

l The Company’s Articles of Association (Articles) give power to the Board to appoint directors, but require directors to submit

themselves for election at the first Annual General Meeting following their appointment and for re-election where they have been a director at each of the preceding two Annual General Meetings and were not appointed or re-appointed by the Company at, or since either such meeting. The Articles may be amended by special resolution of the shareholders and are available to view on the Company’s website.

l The Board of Directors is responsible for the management of the business of the Company and may exercise all the powers of the

Company subject to the provisions of the relevant statutes, the Company’s Memorandum of Association and the Articles. The Articles contain specific provisions and restrictions regarding the Company’s power to borrow money. powers relating to the issuing and buying back of shares are also included in the Articles and such authorities are renewed by shareholders each year at the Annual General Meeting.


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l Certain agreements of the Group take effect, alter or terminate upon a change of control of the Group following a takeover, including

its bank loan agreements and company share plans and certain commercial trading contracts.

l There are no restrictions on the transfer of securities, restrictions on voting rights and agreements between shareholders.

Share capitalDetails of the issued share capital, together with movements in the Company’s issued share capital are given in note 25.

The Company launched a firm placing and rights issue in October 2009 which upon completion in November and December 2009 resulted in the issue of 152,283,353 new ordinary shares of 5p. As a consequence of this and subsequent exercises under SAYE schemes the total number of issued ordinary shares in the Company, as at the latest practicable date prior to the publication of this report, is 214,854,056, with a nominal value of £10,742,000.

The Company has one class of ordinary share which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreement between the holders of the Company’s shares that may result in restrictions on the transfer of securities or on voting rights.

Creditor payment policyThe Group does not have a standard or code of conduct which deals specifically with the payment of suppliers; however whenever the Group is satisfied that the supplier has provided the goods or services in accordance with the agreed terms and conditions it seeks to abide by the payment terms agreed with the individual supplier. The Group’s average creditor payment period at 31 March 2010 was 76 days (2009: 59 days).

Charitable and political donationsDetails of charitable donations are given in the Corporate Responsibility Review. No donations were made to any political parties.

Interests in voting sharesAt 27 May 2010 the Company had been notified of the following interests of 3% or more in the Company’s ordinary shares.

Percentage of ordinary

share capital

No. of ordinary shares of

5p each

Aberforth Partners 21.23 45,617,522

SVG Advisers 9.93 21,334,148

AXA Investment Managers 9.02 19,378,316

Aviva Investors 6.78 14,571,898

Legal and General Investment Management 6.44 13,827,490

Hermes Pensions Management 5.55 11,931,099

Henderson Global Investors 4.94 10,615,322

Schroder Investment Management 4.57 9,816,370

Scottish Widows 3.48 7,482,779

Cazenove Capital Management 3.30 7,098,675

Disabled employees and employee involvementThe Group endeavours to provide equality of opportunity in recruiting, training, promoting and career development to all, irrespective of race, ethnicity, religion, sexual orientation, gender or age. The Group gives full consideration to applications for employment from a person with a disability where a person with a disability can adequately fulfil the requirements of the role and workplace adjustments can be made to facilitate this appointment.

Where existing employees become disabled it is the Group’s policy, wherever practicable, to provide workplace adjustments to ensure continuing employment under normal terms and conditions, and to provide training and career development and promotion opportunities, wherever appropriate.

A review of employee involvement is given in the Corporate Responsibility Review.

Going concernAs highlighted in the 2009 Annual Report and Financial Statements, the Board was working with finance providers and was reviewing a range of options for a more long term capital structure for the business. Considerable progress has been made during the year ended 31 March 2010 and the Group has reduced net borrowings (excluding capitalised borrowing costs) from £137,290,000 at 31 March 2009 to £44,817,000 at 31 March 2010. This has been achieved through the following:

l Raising £55,839,000 gross of equity in December 2009 through a firm placing and rights issue, which was used to reduce borrowings;

l The announcement in October 2009 of an extensive acceleration of its business improvement programme, involving a restructuring for which formal consultations have now been completed, and which are being implemented progressively over the period to June 2011;

l Securing a new banking facility, on 29 October 2009, which runs to 31 December 2012, that became effective on 31 December 2009. Under this agreement the Group continues to be subject to covenant undertakings that require operating performance to meet certain financial covenants; and

l Other actions including the reduction of costs, the restriction of capital expenditure, the close control of working capital and the conversion of debt denominated in Euros to Sterling.

As discussed in the outlook section of the Chairman’s and Chief Executive’s Statement, the Group’s markets appear to have largely stabilised and the Group’s cost base has been, and is continuing, to be reduced. The Group’s plans also provide for the Group to support its likely initiatives to return to growth with higher levels of expenditure for research and development and capital expenditure for regular equipment replacement and new product introduction than in 2009/10.

The Group’s banking facilities include quarterly covenants that the banks set across a wide ranging suite of measures that provide the Group with reduced headroom at certain times during the life of the facility.

The Directors of the Group have prepared detailed profit and cash flow forecasts through to 30 September 2011. In preparing these plans, the Directors have considered the risks to the activities in the business including those arising from the focus on meeting customers’ needs and the implementation of the major restructuring programme.


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Directors’ Report

Taking into account the level of the order book at 31 March 2010 (£161 million), the reduced likelihood of industrial disruption to the business, having completed the formal consultation process with staff, and the internal oversight of development expenditure, including capital expenditure, the Directors consider that the Group will remain within its covenant requirements for the forecast period, and therefore, the Directors believe that it is appropriate to prepare the financial statements on a going concern basis.

Directors’ statement of responsibilitiesThe Directors are responsible for preparing the Annual Report and Financial Statements in accordance with law and regulations.

Company law requires the Directors to prepare financial statements for each year. Under the provisions of this law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the Company financial statements in accordance with United Kingdom (UK) Accounting Standards and applicable law.

In preparing those financial statements, the Directors are required to:

l Select suitable accounting policies and then apply them consistently;

l Make judgements and estimates that are reasonable and prudent;

l State that the Group financial statements have complied with IFRS as adopted by the European Union, subject to any material departures

being disclosed and explained; and

l State for the Company financial statements whether the applicable UK Accounting Standards have been followed, subject to any material

departures being disclosed and explained.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Annual Report for the year ended 31 March 2010 is published in hard copy printed form and made available on the Group’s website. The Directors are responsible for the maintenance and integrity of the annual report on the website in accordance with UK legislation governing the preparation and dissemination of financial statements. Access to the website is available from outside the UK, where comparable legislation may be different.

Responsibility statements under the Disclosure and Transparency Rules Each of the Directors, as at the date of this report, confirms to the best of his knowledge that:

l The financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company

and the Group;

l The Directors’ Report includes a fair review of the development and performance of the business and the position of the Company and

the Group together with a description of the principal risks and uncertainties that it faces.

provision of information to the auditors Having made enquiries of fellow Directors and of the Company’s auditors, each of the Directors at the date of approval of this report confirms that:

l To the best of his knowledge and belief, there is no information (that is information needed by the Group’s auditors in connection with

preparing their report) of which the Company’s auditors are unaware; and

l The Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to

establish that the Company’s auditors are aware of that information.

AuditorsA resolution to reappoint Ernst & Young LLp as auditors will be put to the members at the Annual General Meeting.

By order of the Board

Charlotte parmenter Secretary

4 June 2010

e2v technologies plc Company No: 4439718 Registered office: 106 Waterhouse Lane, Chelmsford CM1 2QU


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e2v technologies plc recognises the importance of, and is committed to, high standards of corporate governance and as such the Board acknowledges its contribution to achieving management accountability, improving risk management and creating shareholder value. This statement explains how the Group has applied the main and supporting principles of corporate governance and describes the Group’s compliance with the provisions set out in Section 1 of the Combined Code on Corporate Governance published by the Financial Reporting Council in June 2008.

Statement by the Directors on compliance with the Combined CodeThe Group has complied with the provisions set out in Section 1 of the Combined Code throughout the year.

The Board of DirectorsThe Group is headed up by an effective Board which currently comprises the Chairman, Chief Executive, Group Finance Director and three Non-Executive Directors. Anthony Reading is the Senior Independent Director and Chairman of the Remuneration Committee. Jonathan Brooks, the Chairman of the Audit Committee, is the member of that Committee who is deemed to have recent and relevant financial experience. The Chairman was considered to be independent upon appointment and all of the Non-Executive Directors are considered by the Board to be independent. Their biographies above demonstrate sufficient experience to bring independent judgement to the Board and the success of the Group.

The Articles of Association require that Directors retire in the third calendar year following the year in which they were elected or re-elected. Any Director appointed by the Board is required to submit themselves for re-election at the next Annual General Meeting after appointment. Chris Geoghegan, Chairman, will therefore be submitting himself for election at the Annual General Meeting. In addition Ian Godden will retire by rotation at this Annual General Meeting and submits himself for re-election.

Role of the Board membersThe Non-Executive Directors’ primary responsibilities are to:

l Ensure the principles of Corporate Governance are applied;

l Approve the strategy for the business;

l Ensure the strategy is being implemented; and

l provide independent advice on the implementation of the strategy and other day to day matters where their experience is relevant.

The Executive Directors’ primary responsibilities, together with members of the senior management team are to:

l Formulate the strategy of the business and obtain Board approval; and

l Implement the approved strategy subject to agreed levels of authority.

There exists a clear division of responsibilities between the Chairman and the Chief Executive. The Chairman’s primary role includes ensuring that the Board functions properly, that it meets its obligations and responsibilities and that its organisation and mechanisms are in place and are working effectively. The Chief Executive’s primary role is to provide overall leadership and vision in developing, with the Board, the strategic direction of the Group. Additionally, the Chief Executive is responsible for the management of the overall business to ensure strategic and business plans are effectively implemented, the results are monitored and reported to the Board and financial and operational objectives are attained.

The Board’s responsibilities are discharged by way of monthly Board reviews (except in August and December) and other Board meetings, as required to approve matters beyond the authority limits of the Chief Executive. In addition there is attendance at meetings of the Committees of the Board as well as attendance at regular business division and function reviews when senior members of executive management, who are not Board members, attend. Matters beyond the authority limits of the Chief Executive include, for example, the approval of customer quotes over the approved financial limit set by the Board, certain activities relating to mergers and acquisitions as well as approval of the annual budget.

Conflicts of interestIn line with the Companies Act 2006, the Company has established a robust procedure requiring Directors to seek appropriate authorisation prior to entering into any outside business interests. Actual or potential conflicts of interest are reviewed by the Board.

Board meetings and attendanceIn addition to the committee meetings noted above, there were 17 general board meetings during the year. All committee and board meetings were quorate. The Board also convened ad-hoc meetings during the year to deal with specific business requirements. The full details of all board and committee meetings and attendances is shown in the following table:

BoardAudit

CommitteeRemuneration

CommitteeNomination Committee

Number of meetings 17 6 7 5

C Geoghegan (1) 8 - 3 -

G Kennedy (2) 8 - 2 4

K Attwood 17 - - 5

C Hindson (3) 15 - - -

M Hannant (4) 3 - - -

A Reading 16 6 7 5

J Brooks (5) 16 6 7 2

I Godden 14 3 - -

(1) Appointed on 1 October 2009. (2) Resigned on 1 October 2009. (3) Appointed on 5 May 2009. (4) Resigned on 28 May 2009. (5) Appointed to the Nomination Committee during the period and following

appointment attended all meetings.


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principal board committeesThe Board has established the following committees whose individual terms of reference have been reviewed during the year.

Audit Committee The Committee is chaired by Jonathan Brooks and has met six times during the year. Other members of the Committee are Anthony Reading and Ian Godden. The Chairman, Chief Executive and Group Finance Director attend Audit Committee meetings by invitation and the audit partner attended four meetings during the period. At meetings reviewing the interim and full year results the Non-Executive Directors exercise their right for discussions with the audit partner where no Executive Directors are present. The terms of reference of the Audit Committee include:

l Keeping under review the effectiveness of the financial reporting and internal control policies and procedures for the identification, assessment and reporting of risks;

l Reviewing the arrangements for what is commonly known as ‘whistle blowing’;

l Considering the requirements for establishing an Internal Audit function;

l Making recommendations to the Board in relation to the appointment and re-appointment of the external auditors as well as overseeing the selection process of any new audit appointment;

l Keeping under review the relationship with the external auditors including assessments of independence and objectivity as well as fee levels and terms of engagement;

l Reviewing the findings of the audit with the external auditors; and

l Reviewing the consistency of accounting policies on a year to year basis and across the Group.

The Audit Committee monitors fees paid to the auditors for non-audit work. During the year £399,000 of non-audit work fees were paid. The Company engages other independent firms of accountants to perform tax consulting and other consulting work. The Committee has monitored the level of non-audit services provided by the external auditor with a view to ensuring objectivity, independence and cost effectiveness.

The Board continues to review the key risks to the business through the Group’s risk management process, managed by the Group Finance Director.

Remuneration Committee The Committee is chaired by Anthony Reading and has met seven times during the year. Other members of the Committee are Jonathan Brooks and Chris Geoghegan. The Chief Executive and senior human resources manager within the Group attend all meetings (but the Chief Executive is not involved in deciding his own remuneration). The Group Finance Director attends when requested. The terms of reference of the Committee include:

l Agreeing with the Board the framework or broad policy for the remuneration of the Executive Directors and other members of executive management, as well as reviewing the appropriateness and relevance of the policy;

l Determining targets for any performance related pay schemes and approving total annual payments under the schemes;

l Reviewing all share incentive plans, the related performance targets and all awards made under the schemes;

l Determining the individual remuneration packages of senior management within the agreed policy as well as contractual arrangements, including pension provisions;

l Determining the procedure for vetting, authorising and re-imbursement of claims for expenses for all directors; and

l Establishing selection criteria, terms of reference and selection and employment of remuneration consultants.

Full details of Directors’ remuneration and policies applied by the Board are set out in the Directors’ Remuneration Report in the Annual Report.

Nomination Committee The Committee is chaired by Chris Geoghegan. The other members of the Committee are Keith Attwood, Anthony Reading and Jonathan Brooks who was appointed to the Committee during the year. The Committee has met five times during the year. The terms of reference of the Committee include:

l Regular review of the structure, size and composition of the Board;

l Formal, rigorous and transparent procedures for new appointments to the Board;

l The formal selection and nominations for Board approval of any new Board appointments; and

l provision of recommendations to the Board regarding succession, re-appointment and membership of the Audit and

Remuneration Committees.

During the year specialist recruitment consultants advised on candidates for the role of Group Finance Director and Chairman based on a profile and detailed job description provided by the Group. All short listed candidates were interviewed individually by the Directors before a final selection was made and a recommendation made to the Board.

Induction and trainingAny new Directors will receive induction upon their appointment to the Board covering the activities of the Group and its key business and financial risks, the terms of reference of the Board and its Committees and the latest financial information of the Group. Ongoing training is provided as necessary. Directors may consult with the Company Secretary at any time on matters related to their role on the Board. All Directors have access to independent professional advice at the Group’s expense where they judge it necessary to discharge their duties, with requests for such advice being authorised by the Chairman or the Company Secretary.

performance evaluation of the BoardThe Chairman and Company Secretary undertook a performance evaluation of the Board which required an assessment, by each individual director, of the performance of the Board and its Committees by way of an anonymous questionnaire and ratings process. The results of this assessment were reviewed by the Board and there were no areas of concern. The Senior Independent Non-Executive Director also led a performance review of the Chairman, which required an assessment, by each Director, of the performance of the Chairman. This assessment was reviewed by the Board and there were no areas of concern.


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Communication with shareholdersThe Annual Report and Financial Statements and the Interim Report provide investors with a half yearly balanced view of the Group’s activities and performance. The interim results were distributed to all shareholders in October 2009. Investors are also welcome to attend the Annual General Meeting. Apart from the Annual General Meeting, the principal form of communication with private investors is the Company’s web site which is updated regularly with Company information.

The Chairman is available to institutional investors and the principal contact points are the Chief Executive and Group Finance Director. The Senior Independent Non-Executive Director, Anthony Reading, is also available to whom investors may address any concerns they may have. presentations are given to individual institutions, or on a Group basis if preferred, following the announcement of interim and full year results. Site tours and ad-hoc meetings are also arranged where requested.

Control environment and internal controlsThe Directors acknowledge that they are responsible 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 the Group’s strategic objectives, and can only provide reasonable and not absolute assurance against material misstatement of loss.

An ongoing process, in accordance with the guidance of the Turnbull Committee on internal control, has been established for identifying, evaluating and managing the significant risks faced by the Group. This process has been in place throughout the year under review and up to the date of approval of the financial statements. The Board regularly reviews the process.

In addition the Board considers the significance of environmental, social and governance matters relevant to the business of the Group as part of its regular risk assessment procedures and Board constitution as detailed in the Governance Report and in this section.

The Group’s key risk management processes and system of internal control procedures include the following:

Management structure: The Group has adopted procedures for the delegation of authority and authorisation levels, segregation of duties and other control procedures. Appointments to the most senior management positions within the Group require Board approval.

Share capital structure: Information about the share capital structure of the Company is discussed in the Directors’ Report and in note 25.

Identification and evaluation of business risks: The major financial, commercial, legal, regulatory and operating risks within the Group are identified through a range of review meetings at the relevant management level. Senior management are also involved in the preparation of an annual risk assessment report which is reviewed by the Board.

Information and financial reporting systems: The Group’s comprehensive planning and financial reporting procedures include detailed operational budgets for the year ahead and a three year rolling business plan, both of which are approved by the Board. performance is monitored on a regular basis through monthly reporting and regular forecast updates. Management and specialists within the finance department are responsible for ensuring the appropriate maintenance of financial records and processes that ensure all financial information is relevant, reliable, in accordance with the applicable laws and regulations, and

distributed both internally and externally in a timely manner. A review of the consolidation and financial statements is completed by management to ensure that the financial position and results of the Group are appropriately reflected. All financial information published by the Group is subject to the approval of the Audit Committee.

Investment appraisal: All capital expenditure and research and development projects require detailed written proposals and go through strict authorisation processes. All acquisitions are subject to Board approval and commercial, legal and financial due diligence is carried out if a business is to be acquired.

Throughout the Group there are clear lines of delegated authority covering the full range of financial commitments. A schedule of delegated authority for the Board to the Chief Executive is agreed annually and items requiring Board approval are either agreed at monthly board meetings, or at intervening meetings specifically arranged for the purpose.

At the monthly board meetings, the Non-Executive Directors review the reports presented to them by the Chief Executive and Group Finance Director, which include a review of the financial results. This review compares current year to previous year and the annual operating plan as well as a current year forecast and order book levels.

At the current time the Board are of the opinion that a formal internal audit function is not considered necessary due to the structure and size of the Group, widespread executive involvement in the day to day business and the levels of review undertaken by the executive management and reported to the Board.

A formal ‘whistle blowing’ policy is operated and is included in the Group’s employee handbook.

On behalf of the Board

Jonathan BrooksChairman of the Audit Committee

4 June 2010



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Remuneration Committee The Remuneration Committee is responsible for recommending to the Board the framework and broad policy for the remuneration of the Chief Executive, the Group Finance Director, and such other members of the executive management as it is requested to consider. The remuneration of the Chairman and Non-Executive Directors is a matter reserved for the Executive Directors.

Members of the Committee are appointed by the Board and their terms of reference are available on the Company’s website. Anthony Reading currently chairs the Committee, which meets at least twice a year, and its other members are Chris Geoghegan and Jonathan Brooks. George Kennedy was a member of the Committee prior to his resignation. The Board considers that all members of the Committee are independent directors. Chris Geoghegan is a member of the Committee because the Board considers it essential that the Chairman be involved in setting remuneration policy (although he is not party to any discussion directly relating to his own remuneration). The Chief Executive is given notice of all meetings and has the right to attend them, and is consulted on the remuneration of other executives. However, the Chief Executive does not take part in discussions that relate directly to his own remuneration.

In addition, the Chairman of the Remuneration Committee regularly consults with senior members of the Group’s HR function (who also attend certain committee meetings) to ensure that due account is taken of pay and conditions elsewhere in the Group when the remuneration policy of the Executive Directors is determined.

The Committee has no formally appointed advisers on remuneration policy. However during the year it has sought advice from Hewitt New Bridge Street who provided services to the Company in connection with the operation of the Company’s remuneration arrangements. Hewitt New Bridge Street provide no other services to the Company.

Remuneration policy The overall policy applied for the year ended 31 March 2010 and that will apply for the year ending 31 March 2011 is to ensure that Executive Directors are fairly and competitively remunerated and incentivised in a manner consistent with the Group’s strategic objectives. The current remuneration packages combine basic salary, benefits and pension contributions together with a performance-related annual bonus and share incentive awards. The Committee believes that the overall packages offered to Executive Directors should provide the right balance of fixed and performance-related pay and be appropriate for the size, scale and geographic scope of the organisation as well as be competitive relative to other companies within its sector.

In line with the Association of British Insurers’ Guidelines on Responsible Investment Disclosure the Remuneration Committee will ensure that the incentive structure for Executive Directors and senior management will not raise Environmental, Social or Governance (ESG) risks. More generally, with regard to the overall remuneration structure there is no restriction on the Committee which prevents it from taking into account ESG matters, nor more general operational risks.

The individual components of the remuneration arrangements offered are:

Basic salary and/or feesBasic salary for each Executive Director is determined taking account of the individual’s performance and responsibilities and comparable market rates. More particularly, the Committee reviews benchmark data provided by independent remuneration consultants sourced from two groups of companies as follows: (i) a group comprising broadly similar sized companies from the electronic & electrical equipment, aerospace & defence and technology hardware & equipment sectors and (ii) a group comprising companies from all sectors (excluding financial companies) of a broadly similar size in terms of market capitalisation, turnover and international scope. The most recently conducted review showed that the base salaries payable to the Executive Directors in the year ended 31 March 2010 were below the median. Basic salary is reviewed annually and is the only element of remuneration that is pensionable. Notwithstanding the below median salary positioning, Executive Director salaries were reviewed on 24 March 2010 and no increases were proposed for the year ended 31 March 2011 (which follows no increase in the prior year). Therefore, the salaries of the Executive Directors for the forthcoming year will be: Keith Attwood –£253,000, Charles Hindson – £200,000. During the year all Board members volunteered to receive reduced levels of compensation during June, July and August 2009. This reduction equated to an annual reduction of 6.2% and reflected the difficult economic conditions faced by the Group at that time and similar cost reduction initiatives volunteered by a number of operating businesses.

Fees for the Chairman and Non-Executive Directors are determined taking account of the individual’s responsibilities including chairing committees of the Board, time required to devote to the role, and comparable market rates.

Benefits Benefits comprise the provision of a company car or car allowance and health insurance. Non-Executive Directors do not receive any benefits.

pensions The Group operates a defined contribution, HM Revenue and Customs approved, pension scheme and also makes contributions into individual personal pension arrangements where these are required. The Company makes contributions of 15% of basic salary to the relevant pension schemes in respect of Executive Directors. Executive Directors are entitled to enhance this through salary sacrifice arrangements and additional voluntary contributions subject to HM Revenue and Customs limits. Non-Executive Directors’ fees are non-pensionable.


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performance related annual bonusAn annual bonus is payable to Executive Directors subject to the attainment of specific targets which are based on Group performance. The normal maximum bonus opportunity is 100% of salary. Non-Executive Directors are not entitled to a bonus. As previously reported, the Remuneration Committee reserves the right, in exceptional circumstances, to amend the targets during the year if it feels that changes, in such factors as the marketplace or the Group’s strategy, have resulted in the existing targets no longer providing an appropriate incentive to the individual. The Committee believed that it was appropriate for the Earnings per Share (EpS) targets set at the start of the 2009/10 financial year to be replaced mid year by a set of challenging adjusted* operating profit targets that were considered by the Remuneration Committee as no less challenging, given the circumstances faced by the Group at the time of the adjustment, than the original EpS targets. The threshold level of adjusted* operating profit, below which no bonus was payable, was set at £15 million. To take account of the mid-year timing of this adjustment, there was a pro rata reduction in the size of the bonus opportunity to 50% of basic salary. A similar treatment was made to all other management bonus schemes and arrangements during the year.

Share incentives The Group’s policy is to align the interests of employees with those of shareholders. To achieve this, the Remuneration Committee has established the following schemes:

l Long Term Incentive plan

l Executive Share Option plan

l Share Incentive plan

l Share Save Scheme

The Committee is currently reviewing the operation of the Group’s share incentive arrangements, with such review also incorporating a consultation with the Company’s major shareholders, to ensure that they remain effective, fully reflect the Group’s circumstances and take due account of market and best practice. The results of this review will be explained in next year’s report, with details provided of the size and structure of any awards that are made following the conclusion of this review.

Service contracts In line with best practice it is the policy of the Committee to offer Executive Directors service agreements with notice periods not exceeding twelve months. Current appointments are subject to rolling service agreements that can be terminated by twelve months’ notice as detailed below. Termination payments, based on basic salary and benefits only, are limited to contractual notice periods. Chris Geoghegan, Anthony Reading and Jonathan Brooks do not have service contracts but have letters of appointment with the Group. No notice is required to terminate their appointment. The services of Ian Godden are provided under a consultancy agreement with Godden Associates Ltd under the same terms as the letters of appointment for the Chairman and other Non-Executive Directors. A summary of the Directors’ service contracts and letters of appointment is listed below:

Contract date

Notice period

Unexpired Term(1)

K Attwood 21 July 2004 12 months 13 months

C Hindson 5 May 2009 12 months 25 months

C Geoghegan 1 October 2009 1 month 2 months

A Reading 25 June 2004 None 25 months

J Brooks 2 August 2004 None 13 months

Former Directors

M Hannant 21 July 2004 12 months Resigned 28 May 2009

G Kennedy 25 July 2004 None Resigned 1 October 2009

Consultancy Agreement Date

Notice period

Unexpired Term(1)

I Godden 23 January 2005 None 2 months

(1) Term remaining until Director’s retirement by rotation.

Executive Directors are permitted, with the agreement of the Board, to accept outside appointments provided that such appointments do not conflict with their duties as directors of the Company. Whether any fees payable in respect of such outside appointments are retained by the Executive Director or remitted to the Company is determined on a case-by-case basis. No Executive Director held any such appointment in the year ended 31 March 2010.



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Mike Hannant resigned from his role as Group Finance Director on 5 May 2009 and as a Company Director on 28 May 2009; his employment terminated on the 30 June 2009 and he received total emoluments of £208,305 during the year; £28,762 whilst a Director, £14,381 whilst an employee, and £165,162 for payment in lieu of notice which was paid in 11 monthly instalments from July 2009. He has been succeeded by Charles Hindson who commenced employment as the new Group Finance Director on 5 May 2009. Subsequent to the termination of his employment Mike Hannant provided services to the Group on an interim consultancy basis to assist with the preparation of the required documentation for the equity and debt transactions. Fees for this work totalled £99,735 in the year ended 31 March 2010.

George Kennedy resigned as Chairman of the Board on 1 October 2009 and has been succeeded by Chris Geoghegan who took position on 1 October 2009.

Shareholding guidelinesUnder the Company’s shareholding guidelines, which are operated to further align the interests of the Executive Directors and shareholders, Executive Directors will be expected to build up and retain shares equal in value to at least twice their respective basic salaries. Where Executive Directors hold shares above these levels then, with the prior approval of the Chairman, they may undertake sales of these excess shares and this will not be viewed adversely.

Employee Benefit Trust (EBT)The Company established the EBT in 2004 as a discretionary employee benefit trust, in which all employees of the Group are potentially beneficiaries. The Trustee is Lloyds TSB Offshore Trustee Limited, a professional offshore trustee. The main purpose of the EBT is to operate the Long Term Incentive plan (LTIp) and share option schemes following recommendations from the Remuneration Committee or Board. Shareholder approval has been given to allow the Trustee to hold no more than 5 per cent of the issued ordinary share capital of the Company, and as at 31 March 2010 the percentage was 0.37% (2009: 0.83%).

Directors’ interests The beneficial interests of the Directors in the ordinary share capital of the Company as at 31 March 2010 are set out in the table below, together with the beneficial interests at the end of the previous financial year.

There were no changes to the above interests between the year end and the date of this report. The increase in Directors’ holdings arose through Directors taking up allocations under the rights issue, with Charles Hindson participating in the firm placing, and the Chairman and Executive Directors also purchasing shares in the market subsequently.

performance graphThe graph below shows the change in the Total Shareholder Return (TSR) (with dividends re-invested) for the period since flotation to 31 March 2010 of a holding of a £100 investment in the Group’s shares against the corresponding change in a hypothetical holding of shares in the FTSE Electronics & Electrical Equipment sector. This sector was chosen as it represents the equity market index in which the Company is a constituent member.

200

180

160

140

120

100

80

60

40

20

0

31 Mar 05 31 Mar 06 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10

e2v FTSE All share electronics and electrical equipment sector

At 31 March 2010 Ordinary 5p shares

At 31 March 2009Ordinary 5p shares

K Attwood 2,976,664 1,375,643

C Hindson 1,460,000 -

C Geoghegan 203,512 -

A Reading 55,661 24,352

I Godden 100,034 43,765

J Brooks 33,142 14,500


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Information subject to auditLong Term Incentive plan (LTIp) past awards will vest on the third anniversary of the date of award to the extent that the performance targets have been met. The normal maximum annual award value under the plan is one times basic annual salary. To encourage participants to deliver above market returns to shareholders, for awards made to date, the targets relate to the Group’s TSR relative to the TSR of a specified list of peer group companies. 25% of an award will vest for median performance and an award will only vest in full if the Group’s TSR performance would place it in the top 20% compared to the peer group, with pro-rata vesting between 25% and full vesting. However, no award will vest (irrespective of the Group’s relative TSR performance) unless an adjusted EpS growth underpin of the Retail price Index (RpI) plus 2% over the three year performance period has been satisfied (unless the Committee considers, in exceptional circumstances, that it would be inappropriate to apply this underpin). There is also no provision for re-testing. The Group uses independent advisors to assess the extent to which the TSR performance conditions are satisfied. The following Directors and former Director participated in the LTIp during the year.

The number of shares subject to award was adjusted in December 2009 as a result of the placing and rights issue. The adjustment was made using a standard HM Revenue and Customs formula, to negate the dilutionary impact of the capital raising events. pursuant to the terms of the LTIp, Mike Hannant retained his award following his cessation of employment.

All LTIp awards have been granted as nil exercise price options and have no end date by which they must be exercised. The market price of the ordinary shares at 31 March 2010 was 39.5 pence (2009: 41 pence) and the range during the year was 36.25 to 110 pence.

The peer group for 2009 and 2008 awards comprises the following companies:

l Bodycote International l Castings l Charter l Chemring Group l Chloride Group l Cookson Group l Domino printing Sciences l Fenner l Halma l Hampson Industries l Hill & Smith Holdings l IMI

l Invensys l Laird l Meggitt l Melrose l Morgan Crucible Company l Oxford Instruments l pV Crystalox Solar l Qinetiq Group l Raymarine l Renishaw l Rotork l Senior

l Severfield-Rowen l Spectris l Spirax-Sarco Engineering l Tomkins l TT Electronics l Ultra Electronics Holdings l UMECO l Vitec Group l VT Group l Weir Group l Xaar

Grant date

Awards heldat 1 April 2009

Granted in the year

Lapsed in the year

Adjustment for rights issue

Awards held at 31 March 2010

Date from which exercisable

K Attwood

31.07.2006 69,700 - (69,700) - - 31.08.2009

16.07.2007 63,250 - - 36,838 100,088 14.07.2010

15.07.2008 99,850 - - 58,154 158,004 15.07.2011

24.06.2009 - 126,000 - 73,384 199,384 24.06.2012

C Hindson

05.05.2009 - 66,750 - 38,876 105,626 05.05.2012

24.06.2009 - 100,000 - 58,242 158,242 24.06.2012

Former Director

M Hannant

31.07.2006 37,700 - (37,700) - - 31.08.2009

16.07.2007 39,875 - - 23,223 63,098 14.07.2010

15.07.2008 62,950 - - 36,663 99,613 15.07.2011



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l Abacus Group l Amstrad plc (until 8 October 2007) l Chemring Group l Chloride Group l Dialight

(formerly The Roxboro Group plc)l Domino printing Sciences l Halma

l Laird l NXT l Oxford Instruments l Renishaw l Spectris l TT Electronics l Ultra Electronics Holdings

For awards granted prior to 2008, the peer group comprised the following companies:

The LTIp awards granted in 2006 lapsed during the year as the minimum level of TSR performance was not achieved over the vesting period.

Executive Share Option plan (ExSOp) The Group has an ExSOp for the granting of non-transferable market value options to certain employees over shares worth up to 100% of salary each year. The vesting period for the ExSOp is finite allowing eligible employees to exercise the option in a fixed period, once conditions are met. The options may not be exercised unless, over the vesting period, the Company’s EpS has increased by a fixed percentage above RpI as detailed in note 28 to the financial statements. No awards have been made to Executive Directors under this plan in the year ended 31 March 2010 (2009: Nil). The Committee has no present intention of making grants under this plan to Executive Directors in the forthcoming year.

Share Incentive plan (SIp)The Group has established a SIp which has been designed to qualify for approval by the HM Revenue and Customs. The plan contains three elements:

l Free shares, which are ordinary shares which may be allocated to an employee by the Company;

l partnership shares, which are ordinary shares which an employee may purchase out of their pre-tax earnings; and

l Matching shares, which are ordinary shares which may be allocated to an employee following the purchase of partnership shares.

No awards have been made to any employees under this plan as at 31 March 2010.

Sharesave Scheme (SAYE) The Group operates a HM Revenue and Customs approved Sharesave Scheme for all UK employees. Executive Directors can apply to join the scheme if they are UK employees. The following Directors and former Director participated in the scheme during the year.

Options under the plan were adjusted in December 2009 as a result of the placing and rights issue. The adjustment was made using a standard HM Revenue and Customs formula, to negate the dilutionary impact of the capital raising events.

Grant dateAwards held

at 1 April 2009Granted in

the yearLapsed in

the yearAdjustment for

rights issueAwards held

at 31 March 2010Date from which

exercisableExercise price

(pence)

K Attwood

11.01.2008 4,266 - (4,266) - - 01.03.2011 225.00

14.08.2009 - 15,921 - 9,272 25,193 01.11.2012 36.02

C Hindson

14.08.2009 - 15,921 - 9,272 25,193 01.11.2012 36.02

M Hannant

11.01.2008 4,266 - (1,066) 2,484 5,684 01.03.2011 225.00

Former Director


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Directors’ remuneration The remuneration of Directors who served during the year was as follows:

(1) From date of appointment on 5 May 2009. (2) From date of appointment on 1 October 2009. (3) For period to 28 May 2009, date of resignation as Company Director. (4) payment in lieu of notice, for loss of office in line with his service agreement, is being paid in 11 monthly instalments commencing July 2009.

Mike Hannant was also employed and paid a month’s salary and benefits in June 2009, at a total cost of £14,381 as an employee. In addition, subsequent to the termination of Mike Hannant’s employment he provided services to the Group on an interim consultancy basis to assist with the preparation of the required documentation for the equity and debt transactions. Fees for this work totalled £99,735 in the year ended 31 March 2010.

(5) For period to 1 October 2009, date of resignation.

During the year, a period of short-time working was agreed at a number of the Group’s sites, whereby 16 days of unpaid leave were taken over a 4 month period. The Directors participated in this programme with the effect being to reduce annual base salary by 6.2%.

Directors’ pension benefitsThe following pension contributions were made by the Company, either to the Company’s defined contribution scheme or to personal pension arrangements on behalf of the Executive Directors:

Approval This report was approved by the Remuneration Committee and has been approved subsequently by the Board of Directors.

On behalf of the Board

Anthony ReadingChairman of the Remuneration Committee

4 June 2010

Salary and/or fees

£000

Performance related bonuses

£000

Car allowance/ benefits in kind

£000

Payment in lieu of notice

£000

2010Total£000

2009 Total£000

K Attwood 237 127 26 - 390 266

C Hindson (1) 169 100 12 - 281 -

C Geoghegan (2) 60 - - - 60 -

A Reading 34 - - - 34 36

I Godden 31 - - - 31 33

J Brooks 34 - - - 34 36

Former Directors

M Hannant (3), (4) 26 - 2 165 193 172

G Kennedy (5) 42 - - - 42 95

Total 633 227 40 165 1,065 638

2010 £000

2009 £000

K Attwood 36 38

C Hindson 25 -

Former Director

M Hannant 4 24

Total 65 62


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Five year history

Five year history 2010 2009 2008 2007 2006

£000 £000 £000 £000 £000

Revenue

Electron devices and sub-systems 65,559 83,739 75,776 69,639 62,118

Imaging 53,814 65,224 60,578 53,096 27,326

Specialist semiconductors 50,936 53,323 39,826 28,044 -

Sensors 30,938 30,907 28,427 23,146 22,832

Total revenue 201,247 233,193 204,607 173,925 112,276

Adjusted(1) operating profit 15,017 27,440 29,092 24,653 14,953

Amortisation of acquired intangible assets (8,600) (8,628) (7,310) (6,047) (369)

Impairment of acquired intangible assets - (26,127) - - -

Impairment of plant and equipment - (2,500) - - -

Business improvement programme costs (18,682) (6,826) (1,996) - (819)

Profit on sale of Lincoln site 3,739 - - - -

Fair value gains/(losses) on foreign exchange contracts 2,489 (2,894) (357) - -

Acquisition and integration costs - - - (1,055) -

(Loss)/profit before tax and net finance costs (6,037) (19,535) 19,429 17,551 13,765

Net finance charges (3,683) (8,870) (5,682) (3,835) (1,849)

(Loss)/profit before tax (9,720) (28,405) 13,747 13,716 11,916

Income tax credit/(charge) 7,454 7,106 (1,948) (4,048) (3,768)

(Loss)/profit for the year attributable to equity holders of the parent company (2,266) (21,299) 11,799 9,668 8,148

Basic (loss)/earnings per share(2) (1.66)p (21.75)p 12.23 p 10.40 p 9.36 p

Adjusted(3) basic earnings per share(2) 6.67 p 19.08 p 19.03 p 16.31 p 10.68 p

Interim dividend paid - 2.70 p 2.45 p 2.20 p 2.00 p

Final dividend proposed - - 5.25 p 4.75 p 4.25 p

Cash generated from operations 40,001 43,048 29,669 19,539 26,469

Net debt (net of debt issue costs) 41,660 136,199 93,198 78,657 17,757

Average employee numbers 1,666 1,714 1,828 1,621 1,292

(1) Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items.

(2) Earnings per shares have been updated to take account of the rights issue during the year ended 31 March 2010.

(3) Adjusted earnings is (loss)/profit for the year before amortisation of acquired intangibles and all exceptional items less tax impacts where applicable.


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Consolidated income statement 40

Consolidated statement of comprehensive income 41

Consolidated statement of financial position 42

Consolidated statement of cash flows 43

Consolidated statement of changes in equity 44

Notes to the financial statements 45

Independent Auditor’s Report 84


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Consolidated income statement Year ended 31 March 2010

Consolidated income statement

Before exceptional

items & acquired

intangibles amortisation

Exceptional items &

acquired intangibles

amortisation (notes 5 and 9) Total

Before exceptional

items & acquired

intangibles amortisation

Exceptional items &

acquired intangibles

amortisation (notes 5 and 9) Total

Notes £000 £000 £000 £000 £000 £000

Revenue 3 201,247 - 201,247 233,193 - 233,193

Cost of sales (139,999) - (139,999) (154,223) - (154,223)

Gross profit 61,248 - 61,248 78,970 - 78,970

Research and development costs 6 (12,072) - (12,072) (15,585) (1,548) (17,133)

Selling and distribution costs (15,187) - (15,187) (17,973) - (17,973)

Administrative expenses (18,972) (21,054) (40,026) (17,972) (45,427) (63,399)

Operating profit/(loss) 15,017 (21,054) (6,037) 27,440 (46,975) (19,535)

Finance costs 9 (5,818) (719) (6,537) (7,735) (1,819) (9,554)

Finance revenue 9 160 2,694 2,854 684 - 684

Profit/(loss) before taxation 9,359 (19,079) (9,720) 20,389 (48,794) (28,405)

Income tax (expense)/credit 10 (246) 7,700 7,454 (1,704) 8,810 7,106

Profit/(loss) for the year 9,113 (11,379) (2,266) 18,685 (39,984) (21,299)

Attributable to:

Equity holders of the Company 9,113 (11,379) (2,266) 18,685 (39,984) (21,299)

Earnings/(loss) per share

Basic 11 6.67 p (1.66)p 19.08 p (21.75)p

Diluted 11 6.65 p (1.66)p 19.06 p (21.75)p

2010 2009


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Consolidated statement of comprehensive income Year ended 31 March 2010

2010 2009

Notes £000 £000

Losses on cash flow hedges - (80)

Deferred tax on losses on cash flow hedges - 22

Exchange differences on retranslation of foreign operations (719) 6,519

Exchange differences on net investment hedges 529 (2,094)

Actuarial losses on post-employment benefits 29 (345) (195)

Deferred tax on losses on post-employment benefits 118 -

Other comprehensive income and expense for the year (417) 4,172

Loss for the year (2,266) (21,299)

Total comprehensive income and expense for the year (2,683) (17,127)

Attributable to:

Equity holders of the Company (2,683) (17,127)

Consolidated statement of comprehensive income e2v technologies plc Annual Report and Financial Statements 2010

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Consolidated statement of financial position As at 31 March 2010 2010 2009

Notes £000 £000

AssETs

Non-current assets

Property, plant and equipment 13 31,366 40,251

Intangible assets 14 104,061 119,199

Income tax receivable 3,129 -

Deferred income tax asset 24 10,197 5,860

148,753 165,310

Current assets

Inventories 17 35,481 42,433

Trade and other receivables 18 51,194 61,109

Income tax receivable 2,026 2,498

Cash at bank and in hand 19 27,811 6,373

Total current assets 116,512 112,413

TOTAl AssETs 265,265 277,723

liABiliTiEs

Current liabilities

Borrowings 21 - (9,750)

Trade and other payables 20 (47,005) (52,567)

Other financial liabilities 22 (1,515) (4,200)

Income tax payable (5,619) (139)

Provisions 23 (20,534) (6,567)

Total current liabilities (74,673) (73,223)

Net current assets 41,839 39,190

Non-current liabilities

Borrowings 21 (69,471) (132,822)

Other financial liabilities 22 (131) (915)

Provisions 23 (6,028) -

Employment and post-employment benefits 29 (2,839) (3,355)

Deferred income tax liabilities 24 (8,498) (13,729)

Total non-current liabilities (86,967) (150,821)

NET AssETs 103,625 53,679

CAPiTAl ANd REsERvEs

Called up share capital 25 10,742 3,128

Share premium 41,780 41,780

Merger reserve 26 44,579 -

Other reserves 26 269 269

Foreign currency translation reserve 26 5,218 5,408

Retained earnings 1,037 3,094

TOTAl shAREhOldERs’ fuNds ATTRiBuTABlE TO EquiTy hOldERs Of ThE PARENT COmPANy 103,625 53,679

These financial statements were approved by the Board of Directors and authorised for issue on 4 June 2010. They were signed on its behalf by:

Consolidated statement of financial position

K Attwood Chief Executive

C hindsonGroup finance director


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Consolidated statement of cash flows Year ended 31 March 2010 2010 2009

Notes £000 £000

Cash flows from operating activities

Loss before tax (9,720) (28,405)

Net finance costs 3,683 8,870

Operating loss (6,037) (19,535)

Adjustments to reconcile to net cash inflows from operating activities:

Depreciation of property, plant and equipment 10,249 10,204


Amortisation of intangible assets 12,007 12,674

Impairment of intangible assets - 26,127

Profit on sale of property, plant and equipment (3,609) -


Share based payment charges 422 625

Decrease in inventories 5,854 8,173

Decrease in trade and other receivables 9,959 1,735

Decrease in trade and other payables (1,827) (3,224)

Increase in provisions 15,472 875

Cash generated from operations 40,001 43,048

Income taxes received/(paid) 632 (1,297)

Net cash flows from operating activities 40,633 41,751

Cash flows from investing activities

Proceeds from sale of property, plant and equipment 2,188 201

Interest received 160 684

Purchase of property, plant and equipment (2,707) (9,221)

Purchase of software (372) (1,531)

Expenditure on product development (693) (2,612)

Acquisition of subsidiary, net of cash acquired 16 (490) (41,059)

Net cash flows used in investing activities (1,914) (53,538)

Cash flows from financing activities

Interest paid (3,590) (7,338)

Net proceeds from issue of shares 53,375 681

Dividends paid to equity shareholders of the parent - (4,913)

Payment of finance lease obligations - (13)

Proceeds from borrowings - 38,152

Realised exchange gains on re-denomination of Euro borrowings 2,604 -

Payment of cancellation fee on interest rate swap (890) -

Repayment of borrowings (65,175) (15,451)

Transaction costs of new bank loans raised (3,608) (184)

Net cash flows (used in)/generated from financing activities (17,284) 10,934

Net increase/(decrease) in cash and cash equivalents 21,435 (853)

Net foreign exchange difference 3 1,420

Cash and cash equivalents at 1 April 19 6,373 5,806

Cash and cash equivalents at 31 march 19 27,811 6,373

Consolidated statement of cash flows e2v technologies plc Annual Report and Financial Statements 2010

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Consolidated statement of changes in equity Year ended 31 March 2010

£000 £000 £000 £000 £000 £000 £000 At 1 April 2008 3,111 41,116 - 326 983 28,914 74,450

Other comprehensive income - - - (58) 4,425 (195) 4,172Loss for the year - - - - - (21,299) (21,299)Total comprehensive income - - - (58) 4,425 (21,494) (17,127) Issue of shares 17 664 - - - - 681Issue of shares by EBT on exercise of options - - - 1 - (1) -Share based payment - - - - - 625 625Deferred tax on share based payments - - - - - (37) (37)Equity dividends - - - - - (4,913) (4,913)At 31 March 2009 3,128 41,780 - 269 5,408 3,094 53,679 Other comprehensive income - - - - (190) (227) (417)Loss for the year - - - - - (2,266) (2,266)Total comprehensive income - - - - (190) (2,493) (2,683) Issue of shares 7,614 - 48,225 - - - 55,839Issue costs - - (3,646) - - - (3,646)Share based payment - - - - - 422 422Deferred tax on share based payments - - - - - 14 14At 31 march 2010 10,742 41,780 44,579 269 5,218 1,037 103,625

Total equity

Retained earnings

foreign currency

translation reserve

Other reserves

merger reserve

share premium

Called up share

capital

Consolidated statement of changes in equity

As at 31 March 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.


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Notes to the financial statements


1. Authorisation of financial statements and statement of compliance with IFRS

e2v technologies plc (Company) is a public limited company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The Company’s shares are publicly traded on the London Stock Exchange. The address of the registered office is given in the Directors’ Report. The nature of the Group’s operation and its principal activities are set out in the Business Review.

The consolidated financial statements of the Company for the year ended 31 March 2010 comprise the results of the Company and its subsidiary undertakings (together referred to as the Group).

These financial statements are presented in Sterling because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 2. All values are rounded to the nearest thousand (£000) unless otherwise indicated.

The financial statements were approved for issue by the Board on 4 June 2010.

The principal accounting policies adopted by the Group are set out below.

2. Summary of significant accounting policies

Basis of accountingThe financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) applied in accordance with the Companies Act 2006. The financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements comply with Article 4 of EU IAS Regulation.

The financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments. The principal accounting policies set out below have been applied consistently to all periods presented in these financial statements.

Going concernFollowing the firm placing and rights issue, the securing of a new banking facility and the progressive implementation of the accelerated restructuring plan, the Directors have concluded, based on the current cash flow and profit projections to 30 September 2011, that it is appropriate to prepare the financial statements on a going concern basis, as detailed in the Directors’ Report. These financial statements have therefore been prepared on a going concern basis which assumes that the Group will be able to meet its liabilities as they fall due for the foreseeable future.

Basis of consolidation The consolidated financial statements incorporate the financial statements of e2v technologies plc and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights.

The results of subsidiaries acquired or disposed during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Any unrealised losses arising from intra-group transactions are eliminated to the extent that they are recoverable.

The acquisition of subsidiaries is accounted for using the purchase method of accounting. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3, “Business Combinations”, are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5, “Non-Current Assets Held for Sale and Discontinued Operations”, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement.


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2. Summary of significant accounting policies (continued)

Foreign currency translation The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are retranslated into Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rate of exchange ruling at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

All exchange differences are recognised in the income statement in the period in which they arise except for: exchange differences on transactions entered into to hedge certain foreign currency risks; and exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation) which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment.

On consolidation, the assets and liabilities of overseas subsidiary undertakings are translated at the rate of exchange ruling at the balance sheet date. Income and expense items are translated at the average exchange rate for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of transactions are used. The exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity, within the foreign currency translation reserve. On disposal of a foreign operation, all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to the income statement.

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 rate of exchange ruling at the balance sheet date.

Property, plant and equipment Freehold buildings, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes are stated at cost less accumulated depreciation and any impairment in value.

Assets in the course of construction for production or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation on these assets commences when the assets are available for use.

Freehold land is not depreciated and is held at historical cost.

Depreciation is recognised so as to write off the cost of assets (other than land and assets under construction) less their residual values on a straight-line basis over the estimated useful life, as follows:

Freehold buildings 25 to 50 years

Leasehold improvements over the remaining lease term

Plant and equipment 3 to 10 years

Office equipment, fixtures and fittings 3 to 10 years

The carrying values are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of net selling price 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. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognised in the income statement in the administrative expenses line item.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item is derecognised.

Goodwill Goodwill arising on consolidation represents the excess of the cost of an acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of the subsidiary. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Impairment is determined by assessing the recoverable amount of the cash-generating unit, to which goodwill relates. If the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.


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Goodwill (continued) On disposal of a cash-generating unit or part of the cash-generating unit the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous United Kingdom Generally Accepted Accounting Practices (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 reinstated and will not be included in determining any subsequent profit or loss on disposal.

Intangible assets – research and development costs Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from the Group’s development activities is capitalised only if all of the following conditions are met: an asset is created that can be identified (such as software and new processes); it is probable that the asset created will generate future economic benefits; and the development cost of the asset can be measured reliably.

Internally generated intangible assets are amortised on a straight-line basis over their useful lives, the period of expected future sales, estimated at between three and five years. The amortisation is recorded as part of research and development costs in the income statement. Where no internally generated intangible asset can be capitalised, development expenditure is recognised as an expense in the period in which it is incurred.

When the asset is not in use, the carrying value of development costs is reviewed for impairment annually or more frequently when an indicator of impairment arises during the reporting period indicating that the carrying value may not be recoverable.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

Other intangible assets Intangible assets acquired separately are capitalised at cost and intangible assets acquired from a business acquisition are capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to the class of intangible assets. The useful lives of these intangible assets are assessed to be either finite or indefinite. Where amortisation is charged on assets with finite lives, this expense is taken to the income statement through the following line items:

Patents, trademarks and technology administrative expenses Customer relationships and agreements administrative expenses Software cost of sales and administrative expenses

Intangible assets, excluding development costs and software, created within the business are not capitalised and expenditure is charged to the income statement in the period in which the expenditure is incurred. Intangible assets are tested for impairment annually either individually or at the cash-generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.

Computer software purchased or internally generated for use that is integral to the hardware (because without that software the equipment cannot operate) is treated as part of the hardware and capitalised as property, plant and equipment. Other software programs are treated as intangible assets. Amortisation is provided so as to write off the cost of intangible assets on a straight-line basis over the estimated useful life, as follows:

Patents, trademarks and technology 5 to 10 years Customer relationships and agreements 4 to 10 years Software 2 to 7 years

Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using a first-in, first-out method. Net realisable value represents the estimated selling prices less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Provision is made for obsolete, slow-moving or defective items where appropriate. A net increase in provision for the year as a whole is recognised as an expense in the year whilst a net reversal of provision for the year as a whole is recognised as a reduction in expense.

Trade and other receivablesTrade receivables, which generally have thirty to sixty day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.

Cash and cash equivalents Cash in the balance sheet comprises cash at bank and in hand and short term deposits with an original maturity of three months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash as defined above.


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Interest-bearing loans and borrowings All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

A financial liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of an existing liability and the recognition of a new liability.

Borrowings are classified as current liabilities unless, at the balance sheet date, the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in the income statement using the effective interest method.

ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is based on the best reliable estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation and its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

Provisions for the expected cost of warranty obligations under local sale of goods legislation or contract terms are recognised at the date of sale of the relevant products, at the Directors’ best estimate of the expenditure required to settle the Group’s obligation.

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Pensions, other post-employment and other employment benefits The Group operates defined contribution pension schemes which require contributions to be made to a separately administered fund. Payments to defined contribution pension schemes are charged as an expense as they fall due. Payments made to a state-managed pension are dealt with as payments to defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.

The Group operates an unfunded defined benefit plan in France providing termination payments (post-employment benefit) to employees upon retirement and long service awards paid when the employee reaches certain lengths of service (other employment benefit). The cost of providing benefits is determined with actuarial valuations being carried out on each balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur. Those related to the termination allowance are recognised outside the income statement and are presented in other comprehensive income. Whilst those related to the long service award are recognised in the income statement. When a settlement or curtailment occurs, the obligation and related plan assets are re-measured using current actuarial assumptions and the resultant gain or loss is recognised in the income statement during the period in which the settlement or curtailment occurs.

Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.


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Share based payment transactions Employees (including Directors) of the Company receive remuneration in the form of share based transactions, whereby employees render services in exchange for shares or rights over shares (equity settled transactions). The cost of equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model, further details of which are given in note 28. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company (market conditions).

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date reflects the extent to which the vesting period has expired and management’s best estimate of the number of awards that will ultimately vest.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had invested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. If a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new shares are treated as if they were a modification of the original award.

The dilution effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (see note 11).

LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rental payments under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which the economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Revenue Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

Sale of goods

Revenue from the sale of standard products is recognised when all the following conditions are satisfied:

l the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

l the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

l the amount of revenue can be measured reliably;

l it is probable that the economic benefits associated with the transaction will flow to the entity; and

l the costs incurred or to be incurred in respect of the transaction can be measured reliably.

For the supply of non-standard products and services, revenue is recognised by reference to the stage of completion of the project. The stage of completion is determined either by reference to the proportion that costs incurred for work performed to date bear to the estimated total project costs, or by reference to the completion of a physical proportion of the work, dependent upon the nature of the underlying project. Revenues derived from variations on projects are recognised only when they have been accepted by the customer. Full provision is made for losses on all projects in the period in which they are first foreseen.

Interest revenue

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.


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Government grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants for research programmes are recognised as income over the periods necessary to match them with the related costs deducted in reporting the related expense. Government grants related to property, plant and equipment are treated as deferred income and released to the income statement over the expected useful lives of the assets concerned.

TaxationThe tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items of income or expense that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that the taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is measured on an undiscounted basis and is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax charged or credited in the income statement, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity, respectively.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Derivative financial instruments and hedgingThe Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including foreign exchange forward contracts and interest rate swaps. Further details of derivative financial instruments are disclosed in note 32.

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in the income statement immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the income statement depends on the nature of the hedge relationship. The Group designates certain derivatives as either hedges or the fair value of recognised assets or liabilities or firm commitments (fair value hedges), hedges of highly probably forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges), or hedges of net investments in foreign operations.

No derivative financial instruments have been designated as a fair value or cash flow hedge during the current or prior financial year.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

The Group uses foreign currency borrowings to hedge its investment in currency investments and classifies the hedging relationship as a net investment hedge. To the extent that the hedge is effective, changes in the fair value of the hedging instrument are recognised in other comprehensive income.

Classification of shares as debt or equityWhen shares are issued, any component that creates a financial liability of the Group is presented as a liability in the balance sheet, measured initially at fair value net of transaction costs and thereafter at amortised cost until extinguished on conversion or redemption.

Own shares e2v technologies plc shares held by the employee benefit trust are classified in shareholders’ equity as own shares and are recognised at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken to retained earnings. No gain or loss is recognised in the performance statements on the purchase, sale, issue or cancellation of equity shares.


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Critical accounting judgements and key sources of estimation uncertaintyIn the application of the Group’s accounting policies, management must make judgements, estimates and assumptions concerning the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based upon factors such as historical experience and other factors that are considered to be relevant. 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.

The following are the critical judgements and key sources of estimation uncertainty that the Directors have made in the process of applying the Group’s accounting policies and have the most significant effect on the amounts recognised in the consolidated financial statements: measurement and impairment of goodwill and other intangibles arising on acquisition (see note 15); the measurement of provisions for business improvement programme costs (estimation of termination payments and other future costs) (note 23); the measurement of work in progress (stage of completion and total costs to complete); the measurement of product warranty provisions (estimation of level of returns) (note 23); and the measurement of tax provisions and deferred tax assets (note 24).

Adjusted profit measuresIn order to provide the users of the financial statements with a more relevant presentation of the Group’s underlying performance, the layout of the income statement has been amended, including comparative information. Adjusted profit measures at the operating profit and finance cost levels are now disclosed, whereas in previous years only adjusted profit before tax was shown. Profit for the financial year is analysed between:

(a) profit before exceptional items and amortisation of acquired intangibles; and

(b) the effect of exceptional items and intangibles amortisation.

i. Exceptional items are material items of income and expense which, because of the nature and infrequency of the events giving rise to them, merit separate presentation to allow a better understanding of the elements of the Group’s performance for the financial year and are presented on the face of the income statement to facilitate comparisons with prior periods and assessments of trends in financial performance. Exceptional operating items include: business improvement programme costs; gains on sale of property; and fair value gains and losses on foreign exchange contracts. Exceptional finance costs include: fair value gains and losses arising on interest rate swaps; realised gains on the redenomination of borrowings; and write-off of debt issue costs.

ii. Amortisation of acquired intangibles, including impairment, has been shown separately to provide increased visibility over the impact of acquisition activity on intangible assets.

Further analysis of exceptional operating and finance items are provided in notes 5 and 9, respectively.

New standards and interpretations applied during the yearIn the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.

Amendments to IFRS 7, “Financial Instruments: Disclosures” – The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments. The amended disclosures are presented in notes 31 and 32.

IFRS 8, “Operating Segments” – Requires disclosure of information about the Group’s operating segments and replaces the requirements to determine primary (business) and secondary (geographical) reporting segments of the Group. The Group determined that the operating segments were the same as the business segments previously identified under IAS 14, “Segment Reporting”. Additional disclosures about each of these segments are shown in note 4 including revised comparative information.

IAS 1, “Presentation of Financial Statements (revised)” – Introduced the ‘Consolidated statement of comprehensive income’ which presents all items of recognised income and expense either in one single statement, or in two linked statements. The Group has elected to present in two statements, the ‘Consolidated income statement’ formerly the Group income statement, and the ‘Consolidated statement of comprehensive income’, formerly the Group statement of recognised income and expense. In addition it requires the reconciliation of movements in equity, previously disclosed in a note to the financial statements, to be presented as a primary statement, the ‘Consolidated statement of changes in equity’.

In addition to the above, the following standards and interpretations have been adopted in these financial statements and have not had a material impact on the Group’s financial statements in the period of initial application.

IFRS 2, “Share based payment” (revised) – The amendments clarify the accounting treatment of Group cash-settled share based payment transactions.

IAS 23, “Borrowing costs” – The amendment requires borrowing costs attributable to the acquisition or construction of certain assets to be capitalised.


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2010 2009

£000 £000 Revenue 201,247 233,193Finance revenue 2,854 684Total revenue 204,101 233,877


New standards and interpretations not appliedThe International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee (IFRIC) have also issued the following standards and interpretations with an effective date after the date of these financial statements:

Effective for periods commencing after

IFRS 3 Revised IFRS 3 Business Combinations 1 July 2009

IFRS 9 Financial Instruments: Classification and measurement 1 January 2013

IAS 24 Related Party Disclosure (revised) 1 January 2011

IAS 27 Consolidated and Separate Financial Statements (revised January 2008) 1 July 2009

IAS 32 Amendment to IAS 32: Classification of Rights Issues 1 February 2010

IAS 39 Eligible Hedged Items 1 July 2009

Improvements to IFRS (issued April 2009) Various dates

IFRIC 17 Distribution of Non-Cash Assets to Owners 1 July 2009

IFRIC 18 Transfer of Assets from Customers 1 July 2009

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

The Group intends to adopt these standards in the first accounting period after the effective date. 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.

IFRS 3 (revised) will apply to business combinations arising from 1 April 2010. This will require recognition of subsequent changes in the fair value of contingent consideration in the income statement rather than against goodwill. In addition, transaction costs will be required to be recognised immediately in the income statement. Contingent consideration which is assessed as having the characteristics associated with employment benefits would be expensed to the income statement rather than included in the calculation of goodwill. IFRS 3 (revised) is not required to be applied retrospectively.

3. Revenue

An analysis of the Group’s revenue is as follows:


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4. Segment information

In prior periods in accordance with IAS 14, “Segment Reporting”, the Group’s segment information was reported by business segments and geographical segments. IFRS 8, “Operating Segments”, has been adopted with effect from 1 April 2009, for the current financial year (and comparatives for the prior period) which requires operating segments to be identified on the basis of the internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, which in the case of the Group is the Chief Executive, to allocate resources to the segments and to assess their performance.

The Group’s operations comprise four operating divisions in line with the Group’s divisional structure and which is consistent with the primary segments previously reported under IAS 14.

The four reportable segments are:

l Electron devices and sub-systems, high performance electronic devices and sub-systems 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.

l Imaging, 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.

l Specialist semiconductors, including: own design high speed data converters; high reliability microprocessors in partnership with Freescale Semiconductor; MRAMs in partnership with Everspin; packaging and test and obsolescence management services for high reliability integrated circuits for aerospace and defence programmes; and own design sensor data acquisition utilising mixed signal application specific devices.

l Sensors, a range of professional sensing products for applications including: environmental safety; fire, rescue and security thermal imaging; x-ray spectroscopy; automotive alarm and security systems; microwave radar; and safety and arming devices.

In addition to the reportable segments, also reported is: Centre – Corporate, 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.

Information regarding the Group’s operating segments is reported below. Amounts reported for the prior year have been restated to conform to the requirements of IFRS 8.

Segment revenue and results

The following is an analysis of the Group’s revenue and results by reportable segment:

year ended 31 march 2010 £000 £000 £000 £000 £000 £000 Revenue Revenue from external customers 65,559 53,814 50,936 30,938 - 201,247 segment result Adjusted segment profit/(loss) 11,483 516 6,715 (417) - 18,297Corporate costs - - - - (2,625) (2,625)Exchange differences - - - - (655) (655)Adjusted operating profit/(loss) 11,483 516 6,715 (417) (3,280) 15,017Exceptional operating items and acquired intangibles amortisation (364) (13,302) (10,871) 1,076 2,407 (21,054)Operating profit/(loss) 11,119 (12,786) (4,156) 659 (873) (6,037)Net finance costs (3,683)loss before tax (9,720)Tax credit 7,454loss for the period (2,266)

Total operations

Centre – Corporatesensors

specialist semi-

conductorsimaging

Electron devices and

sub-systems


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Restated year ended 31 march 2010 £000 £000 £000 £000 £000 £000

Revenue

Revenue from external customers 78,781 53,814 50,936 17,716 - 201,247

segment result

Adjusted segment profit/(loss) 11,198 516 6,715 (132) - 18,297Unallocated expenses - - - - (2,625) (2,625)Exchange differences - - - - (655) (655)Adjusted operating profit/(loss) 11,198 516 6,715 (132) (3,280) 15,017Exceptional operating items and acquired intangibles amortisation 1,546 (13,302) (10,871) (834) 2,407 (21,054)Operating profit/(loss) 12,744 (12,786) (4,156) (966) (873) (6,037)Net finance costs (3,683)loss before tax (9,720)Tax credit 7,454loss for the period (2,266)

Total operations

Centre – CorporateAll other

specialist semi-

conductorsimaging


sub-systems

Year ended 31 March 2009 £000 £000 £000 £000 £000 £000

Revenue


Segment result

Adjusted segment profit/(loss) 15,686 4,292 13,074 (1,596) - 31,456

Corporate costs - - - - (2,349) (2,349)

Exchange differences - - - - (1,667) (1,667)

Adjusted operating profit/(loss) 15,686 4,292 13,074 (1,596) (4,016) 27,440

Exceptional operating items and acquired intangibles amortisation (2,358) (23,681) (15,217) (2,825) (2,894) (46,975)

Operating profit/(loss) 13,328 (19,389) (2,143) (4,421) (6,910) (19,535)

Net finance costs (8,870)

Loss before tax (28,405)

Tax credit 7,106

Loss for the period (21,299)

Total operations

Centre – CorporateSensors

Specialist semi-

conductorsImaging


sub-systems


Since the year end and in conjunction with the transfer of work from the 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 that were previously considered as sensors have been realigned to the electron devices and sub-systems segment. Sensors is no longer a reportable segment and the remaining products are noted below as ‘All other’. The following is an analysis of the Group’s revenue and results for the years ended 31 March 2010 and 31 March 2009 on the basis of the 2011 reportable segments.

The restated analysis is as follows:

4. Segment information (continued)


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Restated Year ended 31 March 2009 £000 £000 £000 £000 £000 £000

Revenue


Segment result

Adjusted segment profit/(loss) 15,312 4,292 13,074 (1,222) - 31,456

Corporate costs - - - - (2,349) (2,349)

Exchange differences - - - - (1,667) (1,667)

Adjusted operating profit/(loss) 15,312 4,292 13,074 (1,222) (4,016) 27,440

Exceptional operating items and acquired intangibles amortisation (2,769) (23,681) (15,217) (2,414) (2,894) (46,975)

Operating profit/(loss) 12,543 (19,389) (2,143) (3,636) (6,910) (19,535)

Net finance costs (8,870)

Loss before tax (28,405)

Tax credit 7,106

Loss for the period (21,299)

year ended 31 march 2010 £000 £000 £000 £000 £000 £000

Assets and liabilities

Intangible assets 589 334 80,681 9,516 12,941 104,061Property, plant and equipment 4,591 10,082 6,384 2,566 7,743 31,366Other segment assets 10,624 9,555 9,038 8,264 - 37,481Centre – Corporate assets

- Trade and other receivables - - - - 49,194 49,194 - Income tax receivable - - - - 5,155 5,155 - Deferred income tax asset - - - - 10,197 10,197 - Cash at bank and in hand - - - - 27,811 27,811Total assets 15,804 19,971 96,103 20,346 113,041 265,265Segment liabilities (3,647) (18,489) (7,189) (2,555) - (31,880)Centre – Corporate liabilities

- Borrowings - - - - (69,471) (69,471) - Trade and other payables - - - - (43,787) (43,787) - Other financial liabilities - - - - (1,646) (1,646) - Income tax payable - - - - (5,619) (5,619) - Provisions & benefits - - - - (739) (739) - Deferred income tax liabilities - - - - (8,498) (8,498)Net assets/(liabilities) 12,157 1,482 88,914 17,791 (16,719) 103,625Other segment information

Capital expenditure:

Property, plant and equipment 318 502 539 654 694 2,707 Software - - - - 372 372 Product development 329 253 - 111 - 693Depreciation 1,423 2,113 2,003 1,120 3,590 10,249Amortisation 603 173 7,964 1,175 2,092 12,007Warranty provision – net of arising and released in the year 1,509 1,385 117 399 - 3,410

Total operations

Centre - CorporateAll other

Specialist semi-

conductorsImaging


sub-systems



Segment assets and liabilities and other segment informationThe following is an analysis of the Group’s assets, liabilities and other information by reportable segment:

Total operations

Centre – Corporatesensors

specialist semi-

conductorsimaging


sub-systems


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Year ended 31 March 2009 £000 £000 £000 £000 £000 £000

Assets and liabilities

Intangible assets 866 253 92,815 10,570 14,695 119,199

Property, plant and equipment 6,312 15,574 8,275 3,392 6,698 40,251

Other segment assets 14,243 11,840 10,403 5,947 - 42,433

Centre – Corporate assets

- Trade and other receivables - - - - 61,109 61,109

- Income tax receivable - - - - 2,498 2,498

- Deferred income tax asset - - - - 5,860 5,860

- Cash at bank and in hand - - - - 6,373 6,373

Total assets 21,421 27,667 111,493 19,909 97,233 277,723

Segment liabilities (4,025) (4,658) (2,118) (409) - (11,210)

Centre – Corporate liabilities

- Borrowings - - - - (142,572) (142,572)

- Trade and other payables - - - - (50,506) (50,506)

- Other financial liabilities - - - - (5,115) (5,115)

- Income tax payable - - - - (139) (139)

- Provisions & benefits - - - - (773) (773)

- Deferred income tax liabilities - - - - (13,729) (13,729)

Net assets/(liabilities) 17,396 23,009 109,375 19,500 (115,601) 53,679

Other segment information

Capital expenditure:

Property, plant and equipment 1,305 3,508 1,361 653 2,394 9,221

Software - - - - 1,531 1,531

Product development 482 1,295 379 456 - 2,612

Depreciation 2,383 3,935 1,674 1,237 975 10,204

Amortisation 790 1,878 6,691 1,405 1,910 12,674

Impairment 360 19,930 6,994 1,343 - 28,627

Warranty provision – net of arising and released in the year 3,242 2,491 445 280 - 6,458


Total operations

Centre - CorporateSensors

Specialist semi-

conductorsImaging


sub-systems


The Group is organised such that Centre-Corporate is responsible for the management of operations (including production, supply chain and IT) and sales (including credit control). Assets and liabilities associated with these activities are designated against Centre-Corporate in the above analysis. Centre-Corporate recharges the segments for the provision of these services. Centre-Corporate is also responsible for the Group’s treasury function.


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2010 2009

£000 £000

Revenue by destination

United Kingdom 41,654 44,409

North America 67,002 79,953

Europe 66,700 83,639

Asia Pacific 24,202 22,150

Rest of the world 1,689 3,042

201,247 233,193

2010 2009

£000 £000

Non-current assets (excluding taxes)

United Kingdom 33,780 40,652

North America 38,795 43,052

Europe 62,825 75,683

Asia Pacific 27 63

135,427 159,450

2010 2009

£000 £000





Profit on the sale of Lincoln site (3,739) -


21,054 46,975

Amortisation of acquired intangibles was £8,600,000 (2009: £8,628,000) and is analysed in note 14.

After periods of consultations, business improvement programmes have commenced at the Group’s Grenoble and Lincoln sites. Costs of the programmes are principally redundancy and associated costs (see note 8), plant decommission costs and receivable provisions. These costs are offset by the credit resulting from the curtailment of the termination allowance and long service award plans (see note 29).

On 31 March 2010, the Group agreed the sale of its Lincoln site. During the remainder of the 2010 calendar year, the Group will continue to occupy the site, under licence, as work is transferred to Chelmsford or to the new engineering design centre in Lincoln or is outsourced.

The Group, in part, hedges its exposure to foreign currency risks through the use of forward exchange contracts. The changes in the fair value of the instruments are recorded as exceptional items in the income statement. Fluctuations in the exchange rates have resulted in net fair value gains of £2,489,000 (2009: losses £2,894,000).

During the previous financial year impairments were recorded against acquired intangible assets in relation to QP Semiconductor, Inc. the French imaging business unit, Dynex microwave alarms and Siemens high power satcom units (see note 14). An impairment charge was also recorded against tangible fixed assets in the imaging business (see note 13).

5. Exceptional operating items and acquired intangibles amortisation


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


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2010 2009

£000 £000

Research and development expenditure expensed 10,757 13,414

Amortisation of capitalised development expenditure 1,315 2,171

Impairment of capitalised development expenditure (note 14) - 1,548

Total research and development expense 12,072 17,133

Included in cost of sales:

Depreciation of property, plant and equipment 9,641 9,666

Included in distribution and administrative expenses:

Depreciation of property, plant and equipment 608 538

Amortisation of software 2,092 1,875


Impairment of plant, equipment and acquired intangible assets - 27,079

Total depreciation, amortisation and impairment expense 20,941 47,786

Foreign currency (gains)/losses arising from fair value adjustments (2,489) 2,894

Other net foreign currency losses 655 1,667

Total net foreign currency (gains)/losses (1,834) 4,561

Government grants receivable (1,773) (1,707)

increase in provision for impairment of trade receivables recognised in administrative expenses 830 722

Costs of inventories recognised as an expense 128,261 137,974

Including: Write-down of inventories to net realisable value 1,152 2,921

Reversals of impairments in inventories* (1,156) (251)

minimum lease payments recognised as an operating lease expense 1,424 923

6. Loss for the year

Loss from continuing operations is stated after charging/(crediting):

*The reversal of impairments arose as a result of changes in demand for products.

7. Auditor’s remuneration

2010 2009

£000 £000

Audit of the company financial statements 206 315

Statutory audit fees of subsidiary undertakings 179 233

Local non-statutory audit services in relation to subsidiary undertakings 13 46

Other services 386 535

Total other fees paid to auditors 578 814

During 2010, £386,000 of the other services fees relate to the work required by the reporting accountant on the Group’s firm placing and rights issue. These fees have been included in share issue costs which have been allocated against the merger reserve.

In the prior year, of the other services of £535,000, £519,000 related to transaction advisory costs in connection with the acquisition of QP Semiconductor, Inc. These fees were included in the cost of acquisition of QP Semiconductor, Inc.


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8. Staff costs and Directors’ remuneration

The average monthly number of employees (including Directors) during the year was made up as follows:

2010 2009

No. No.

Manufacturing 1,195 1,215

Administration 471 499

1,666 1,714

Their aggregate remuneration comprised:

2010 2009

£000 £000

Ongoing remuneration costs

Wages and salaries 59,688 58,295

Social security costs 12,303 12,885

Share based payment charges (see note 28) 356 625

Defined contribution pension costs (see note 29) 1,310 1,575

Termination allowance and long service awards costs (see note 29) 346 (15)

74,003 73,365

Exceptional remuneration costs

Termination payments 15,287 4,632

Share based payment charges (see note 28) 66 -

Termination allowance and long service awards curtailment gains (see note 29) (1,165) -

14,188 4,632

Total remuneration 88,191 77,997

Details of Directors’ remuneration for the year are provided in the Directors’ Remuneration Report in the Annual Report.


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£000 £000 £000 £000 £000 £000

Bank loan interest 4,626 - 4,626 7,323 - 7,323

Other interest 210 - 210 - - -

Interest on defined benefit liabilities (see note 29) 189 - 189 - - -

Amortisation of debt issue costs 793 719 1,512 412 - 412

Total interest expense for financial liabilities not at fair value through the income statement 5,818 719 6,537 7,735 - 7,735

Fair value adjustments to interest rate swaps - - - - 1,819 1,819

Total finance costs 5,818 719 6,537 7,735 1,819 9,554

Bank interest receivable 160 - 160 684 - 684

Fair value adjustments to interest rate swaps - 90 90 - - -

Realised exchange gains on re-denomination of Euro borrowings - 2,604 2,604 - - -

Total finance revenue 160 2,694 2,854 684 - 684

2009

Total

2009

Exceptional items

2009Before

exceptional items

2010

Total

2010

Exceptional items

2010Before

exceptional items


9. Finance costs and revenue

For the year ended 31 March 2010, the Group has elected to record interest cost arising on defined benefit liabilities as finance costs. Previously it had been recorded as an administrative cost.

In completing the new bank facility in December 2009, unamortised debt issue costs of £719,000 related to the prior facility were written off and have been treated as an exceptional item.

The Group, in part, hedges its exposure to interest rate risks through the use of interest rate swap agreements. The changes in the fair value of the instruments are recorded as exceptional items in the income statement. During the year ended 31 March 2010, fluctuations in the interest rates have resulted in net fair value gains of £90,000 (2009: losses £1,819,000).

In June and September 2009, the Group repaid its Euro denominated debt and utilised forward exchange contracts to fix the rate at which it would purchase the required Euros. Net exceptional gains of £2,604,000 were recorded on these contracts.

10. Income tax

Major components of income tax expense for the years ended 31 March 2010 and 2009 are:

2010 2009

£000 £000

Consolidated income statement

Current income tax

Current income tax charge – UK corporation tax 3,558 2,603

Current income tax credit – foreign tax (2,614) (571)

Current income tax charge 944 2,032

Adjustments in respect of current income tax of previous years 1,005 (1,882)

Total current income tax 1,949 150

Deferred income tax

Relating to origination and reversal of temporary differences (8,298) (8,143)

Adjustment in respect of the abolition of Industrial Buildings Allowances - 983

Adjustments in respect of deferred income tax of previous years (1,105) (96)

Total deferred income tax (9,403) (7,256)

income tax credit reported in the consolidated income statement (7,454) (7,106)


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10. Income tax (continued)

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

2010 2009

£000 £000

deferred tax

Relating to cash flow hedges - (22)

Relating to actuarial losses on post-employment benefits (118) -

income tax credit recognised directly in other comprehensive income (118) (22)

2010 2009

£000 £000

deferred tax

Change in estimated excess tax deductions related to share based payments recognised directly in equity (14) 37

In addition to the amount charged to the income statement and other comprehensive income, the following amounts related to tax have been recognised directly in equity:

2010 2009

£000 £000

Accounting loss before income tax (9,720) (28,405)

At UK statutory income tax rate of 28% (2009: 28%) (2,722) (7,954)

Permanent differences 32 420

Permanent difference in relation to goodwill impairment - 5,003

Permanent difference in relation to profit on the sale of Lincoln site (904) -

Tax relief on research and development – current year (2,332) (3,457)

Tax relief on research and development – prior year - (866)

Impact of higher taxes on overseas earnings (1,428) (123)

Impact of abolition of Industrial Buildings Allowances - 983

Adjustments in respect of current income tax of previous years 1,005 (1,016)

Adjustments in respect of deferred income tax of previous years (1,105) (96)

Total tax credit reported in the income statement (7,454) (7,106)

A reconciliation of income tax expense applicable to the accounting loss before income tax at the statutory income tax rate to income tax expense at the Group’s effective income tax rate for the years ended 31 March 2010 and 2009 is as follows:


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11. Earnings per share

Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. The denominators for the purposes of calculating both basic and diluted earnings per share have been adjusted to reflect the rights issue in December 2009.

Diluted earnings per share amounts are calculated by dividing the net loss for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year adjusted for the effects of dilutive options. As a result of the loss for the year, the share options are anti-dilutive and hence 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 year on year.

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

2010 2009

£000 £000

Loss for the year (2,266) (21,299)





Profit on the sale of Lincoln site (3,739) -

Write-off of debt issue costs 719 -

Fair value (gains)/losses on financial instruments (2,579) 4,713

Realised exchange gains on re-denomination of Euro borrowings (2,604) -

Impact of abolition of Industrial Buildings Allowances - 983

Tax impact of the above (7,700) (9,793)

Adjusted profit attributable to ordinary shareholders 9,113 18,685

2010 2009

No.000 No.000

Weighted average number of ordinary shares

For basic earnings per share 136,698 97,906

Effect of dilution:

Share options 319 142

for diluted earnings per share 137,017 98,048

No further shares have been issued since the reporting date and before the completion of these financial statements as a result of exercises under share option schemes (2009: nil shares issued). The weighted average number of ordinary shares excludes shares held by the Employee Benefit Trust.

12. Dividends paid and proposed

2010 2009

£000 £000

declared and paid during the year

Equity dividends on ordinary shares:

Final dividend for 2008: 5.25p (2007: 4.75p) - 3,234

Dividend for 2009: 2.70p (2008: 2.45p) - 1,679

- 4,913

The Employee Benefit Trust has waived its right to receive dividends.

Based on the terms of the Group’s banking facility, the Board has not proposed a final dividend (2009: £nil).


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£000 £000 £000 £000 £000

Cost

At 1 April 2008 11,530 53,764 4,628 1,159 71,081

Additions 631 7,715 875 - 9,221

Acquisition of subsidiary 428 524 36 - 988

Disposals (13) (294) (141) - (448)

Reclassifications between categories - 283 7 (290) -

Exchange adjustment 1,607 3,452 338 - 5,397

At 1 April 2009 14,183 65,444 5,743 869 86,239

Additions 58 1,410 71 1,168 2,707

Disposals (559) (4,792) (316) - (5,667)

Reclassifications between categories 88 1,797 134 (2,041) (22)

Exchange adjustment (614) (2,618) (225) 33 (3,424)

At 31 march 2010 13,156 61,241 5,407 29 79,833

depreciation

At 1 April 2008 2,074 25,789 3,027 - 30,890

Provided during the year 1,224 8,116 864 - 10,204

Impairment during the year - 2,500 - - 2,500

Disposals - (122) (126) - (248)

Exchange adjustment 527 1,965 150 - 2,642

At 1 April 2009 3,825 38,248 3,915 - 45,988

Provided during the year 1,378 8,082 789 - 10,249

Disposals (508) (4,251) (310) - (5,069)

Reclassifications between categories 58 (74) 5 - (11)

Exchange adjustment (236) (2,321) (133) - (2,690)

At 31 march 2010 4,517 39,684 4,266 - 48,467

Carrying amount

At 31 March 2008 9,456 27,975 1,601 1,159 40,191

At 31 March 2009 10,358 27,196 1,828 869 40,251

At 31 march 2010 8,639 21,557 1,141 29 31,366

Total

Assetsunder

construction

Office equipment, fixtures and

fittings

Plantand

equipment

land and

buildings

13. Property, plant and equipment

A review of the overall imaging business in the year ended 31 March 2009 identified plant and equipment, where the fair value was considered to be £nil, resulting in an impairment charge of £2,500,000.


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£000 £000 £000 £000 £000 £000

Cost

At 1 April 2008 15,674 11,160 10,839 24,427 58,416 120,516

Additions - 2,612 1,531 - - 4,143

Acquisition of subsidiary 2,238 - - 13,205 26,027 41,470

Exchange adjustment 2,837 976 62 6,413 12,804 23,092

At 1 April 2009 20,749 14,748 12,432 44,045 97,247 189,221

Additions - 693 372 - 490 1,555

Disposals - - (267) - - (267)

Reclassifications between categories - - 22 - - 22

Exchange adjustment (736) (232) (130) (2,041) (3,776) (6,915)

At 31 march 2010 20,013 15,209 12,429 42,004 93,961 183,616

Amortisation

At 1 April 2008 3,836 6,599 5,554 11,490 - 27,479

Charge in year 2,478 2,399 1,875 5,922 - 12,674

Impairment loss 4,478 2,158 - 320 19,171 26,127

Exchange adjustment 804 429 17 2,492 - 3,742

At 1 April 2009 11,596 11,585 7,446 20,224 19,171 70,022

Charge in year 1,773 1,446 2,092 6,696 - 12,007

Disposals - - (253) - - (253)

Reclassifications between categories - - 11 - - 11

Exchange adjustment (399) (123) (97) (760) (853) (2,232)

At 31 march 2010 12,970 12,908 9,199 26,160 18,318 79,555

Carrying amount

At 31 March 2008 11,838 4,561 5,285 12,937 58,416 93,037

At 31 March 2009 9,153 3,163 4,986 23,821 78,076 119,199

At 31 march 2010 7,043 2,301 3,230 15,844 75,643 104,061

TotalGoodwill

Customer relationships

and agreementssoftware

developmentcosts

Patents, trademarks

and technology


14. Intangible assets

The amortisation of acquired intangible assets presented in note 5 as an exceptional item relates to amortisation of intangibles acquired through business combinations as follows:

2010 2009

£000 £000

Patents, trademarks and technology 1,773 2,478

Development costs 131 228

Customer relationships and agreements 6,696 5,922

8,600 8,628

During the 2009 financial year, the economic downturn in the last quarter of that year and the ongoing impact resulted in write downs of the acquired intangible assets with respect to the imaging business in Grenoble, which served primarily the industrial and medical markets, of £17,430,000 (comprising: patents, trademarks and technology £4,478,000; development costs £2,158,000; customer relationships and agreements £320,000; and goodwill £10,474,000). Provisions were also made during the 2009 financial year against goodwill with regard to the QP Semiconductor, Inc. business acquired in October 2008 of £6,994,000 and goodwill of £1,703,000 was also written off, with regard to acquisitions made before the Group was listed, as the associated products were within approximately five years of their commercially exploitable term.

Goodwill is not amortised but is annually tested for impairment (see note 15). All other assets have finite lives.

Impairment losses on development costs are included within research and development costs in the income statement.


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£000 £000 £000 £000 £000 £000 £000 £000 £000

Cost

At 1 April 2008 359 9,709 1,344 2,002 8,955 32,503 3,544 - 58,416

Additions in year - - - - - - - 26,027 26,027

Exchange adjustment - - - - 1,519 5,514 761 5,010 12,804

At 1 April 2009 359 9,709 1,344 2,002 10,474 38,017 4,305 31,037 97,247

Additions in year - - - - - - - 490 490

Exchange adjustment - - - - (461) (1,674) 63 (1,704) (3,776)

At 31 march 2010 359 9,709 1,344 2,002 10,013 36,343 4,368 29,823 93,961

impairment

At 1 April 2008 - - - - - - - - -

Impairment loss in year 359 - 1,344 - 10,474 - - 6,994 19,171

At 1 April 2009 359 - 1,344 - 10,474 - - 6,994 19,171

Exchange adjustment - - - - (461) - - (392) (853)

At 31 march 2010 359 - 1,344 - 10,013 - - 6,602 18,318

Carrying amount

At 31 March 2008 359 9,709 1,344 2,002 8,955 32,503 3,544 - 58,416

At 31 March 2009 - 9,709 - 2,002 - 38,017 4,305 24,043 78,076

At 31 march 2010 - 9,709 - 2,002 - 36,343 4,368 23,221 75,643

15. Impairment testing of goodwill

Goodwill acquired through business combinations has been allocated to individual cash-generating units for impairment testing as detailed below:

e2v semi-conductors

sAs - imaging

e2v scientific

instruments

dynex microwave

alarmse2v

technologies

siemens high

power satcom

e2v semiconductors

sAs - specialist

semiconductors miCs

qP semi-conductor Total

The goodwill associated with the Dynex and Siemens products was written off in full in the year ended 31 March 2009 as these products were within approximately five years of their commercially exploitable term. Goodwill associated with the e2v Semiconductors SAS – Imaging cash generating unit was also written off in full in the year ended 31 March 2009 due to its loss making status.

The recoverable amount of the goodwill for all cash-generating units has been determined based on a value in use calculation. To calculate this, cash flow projections are based on financial budgets and forecasts approved by the Board covering a four-year period (2009: five-year period). The discount rate applied to cash flow projections is 15% (2009: 15%).

Key assumptions used in valuations The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

Operating margins – the basis used to determine the value assigned to the budgeted operating margins is the average margin achieved in the year immediately before the budgeted year, adjusted for any expected changes due to current restructuring programmes, sales mix or efficiency improvements.

Discount rates – discount rates reflect the management’s estimate of the return on capital employed required in every cash generating unit. This is the benchmark used by management to assess operating performance and to evaluate future capital investment proposals. Whilst LIBOR rates are lower than 12 months earlier the Group’s new banking facility is subject to higher margins than the previous arrangements; hence a 15% (2009: 15%) discount rate is still considered appropriate for the purpose of impairment reviews as it is consistent with the rates used in all investment appraisals. It is considered that the weighted average cost of capital for the cash generating unit concerned would not be materially different.

Growth rates – have been considered separately for every cash generating unit and are based on financial budgets and forecasts for the next four years. After four years, growth rates of between 2.5% and 3.0% (2009: after five years between 1.0% and 3.0%) have been used.

Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

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15. Impairment testing of goodwill (continued)

Considering the sensitivity levels on the various cash generating units:

Both e2v technologies and e2v Scientific Instruments have sufficient headroom not to be at risk of creating impairment on the usual range of sensitivity tests.

e2v Semiconductors SAS – Imaging

Whilst the cash generating unit remained loss making in the current year, a strategic and operational review has now been completed for this cash generating unit based in Grenoble. The result of this review has been the announcement of the business improvement programme as discussed in note 5. In the year ended 31 March 2009, goodwill and intangible assets (including capitalised research and development costs) of ¤18,727,000 (£17,430,000) were written off.

e2v Semiconductors SAS – Specialist semiconductors

This cash generating unit is also based in Grenoble and its operating margins will benefit from the business improvement programme being implemented at this site. Headroom for goodwill based on the current forecast is ¤6.7 million (£6.0 million) (2009: ¤18.3 million). Sensitivity levels on these calculations indicate impairment would need to be considered if:

l revenue reduced by 10% (2009: 20%); or

l projected medium term operating margin reduced by 12% (2009: 30%); or

l discount rate of 16.5% or higher had been selected (2009: 18.25%); or

l long term growth rate reduced to 0.5% from the assumed rate of 2.5% (2009: no impairment at a nil growth rate, 1% long term growth rate assumption).

MICS

This cash generating unit continues to operate in line with the long term expectations as identified as part of a detailed review of the business last year and the unit’s newly introduced products are currently showing signs of gaining traction in the market. The headroom over goodwill from the impairment test is CHF 3.5 million (£2.2 million) (2009: CHF 4.7 million). Sensitivity levels on these calculations indicate an impairment would need to be considered if:

l revenue reduced by 25% (2009:15%); or

l projected medium term operating margin reduced by 13% (2009: 30%); or

l discount rate of 16.5% or higher had been selected (2009: 18.5%); or

l long term growth rate reduced to 1.0% from the assumed rate of 3.0% (2009: no impairment at a nil growth rate, 3% long term growth rate assumption).

QP Semiconductor

At 31 March 2009, due to the decline in market conditions and reductions in demand from a major customer, this cash generating unit was not performing in line with expectations at the time of acquisition (October 2008) and an impairment charge of $10,000,000 was recorded. A strategic review of the business has been conducted during the year and enhanced medium term prospects have been identified such that the headroom over goodwill has been identified to be of the order of $31 million. Sensitivity levels on these calculations indicate an impairment would need to be considered if:

l revenue reduced by 30% (2009: 5%); or

l operating margin reduced by 30% (2009: 5%); or

l discount rate of 21% or higher had been selected (2009: 16%); or

l at a long term growth rate of 0% no impairment would be recorded (2009: long term growth rate reduced to 1.5% from the assumed rate of 2.5%).


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16. Business combinations

No business combinations have been completed during the current year.

Acquisition of QP Semiconductor, Inc.On 10 October 2008, e2v Holdings Inc. acquired 100% of the voting shares of QP Semiconductor, Inc. (QP), an unlisted company based in North America, specialising in the manufacture and distribution of specialist semiconductor components and sub-systems. Additional consideration of £490,000 became due during the year ended 31 March 2010 on the realisation of certain tax assets and consequently goodwill has increased by this amount. Agreement has now been reached with the former owners with regard to the net worth and earn out calculations.

The fair value of the identifiable assets and liabilities of QP as at the date of acquisition was:

Book value £000 £000

Property, plant and equipment 988 988

Intangible assets 15,443 -

Deferred income tax asset 782 782

Income tax recoverable 245 245

Inventories 3,261 3,261

Trade debtors 1,127 1,127

Other debtors 163 163

Cash and cash equivalents 5,265 5,265

27,274 11,831

Trade payables (135) (135)

Other creditors (498) (498)

Provisions (156) (156)

Deferred income tax liability (6,188) -

(6,977) (789)

Fair value of net assets 20,297 11,042

Goodwill arising on acquisition 26,517

Total consideration 46,814

fair value recognised on

acquisition

Included in the £26,517,000 of goodwill recognised above were certain intangible assets that cannot be individually separated and reliably measured from the acquiree due to their nature. These items include the anticipated growth in market share, expected value of synergies and an assembled workforce.From the date of acquisition, QP contributed £3.1 million profit to the loss before tax and net finance costs of the Group for the year ended 31 March 2009. Had the acquisition occurred on the first day of that year, the consolidated loss from continuing operations before tax and net finance costs of the Group would have been £15,619,000 and the revenue from continuing operations would have been £240,451,000.

2010 2009

£000 £000

Cash paid 490 43,421

Costs associated with the acquisition - 2,903

Total consideration 490 46,324

The cash outflow on acquisition is as follows:

2010 2009

£000 £000

Net cash acquired with the subsidiary - 5,265

Cash paid (490) (46,324)

Net cash outflow (490) (41,059)


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17. Inventories


2010 2009

£000 £000

Raw materials and consumables 17,351 18,027

Work-in-progress 10,465 12,117

Finished goods 7,665 12,289

Total inventories at lower of cost and net realisable value 35,481 42,433

18. Trade and other receivables (current)

2010 2009

£000 £000

Trade receivables 41,246 51,163

Other debtors 8,358 7,531

Prepayments and accrued income 1,590 2,415

51,194 61,109

Trade receivables are non-interest bearing and are generally on 30 or 60 day terms and are shown net of provision for impairment. 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 customers. As at 31 March 2010 trade receivables with a value of £1,254,000 (2009: £1,230,000) were impaired and provided for due to poor payment history, insolvency of the debtor or their age profile. The movements on the provision for impairment of receivables were as follows:

2010 2009

£000 £000

Provision at 1 April 1,230 692

Amounts written off (201) (172)

Unused amounts reversed (572) (40)

Provisions created in the year 830 722

Foreign exchange on retranslation (33) 28

Provision at 31 march 1,254 1,230

2010 2009 2010 2009 £000 £000 £000 £000

0-30 days overdue 2,072 1,954 11 5

31-60 days overdue 690 1,566 3 3

61-90 days overdue 230 459 11 67

91-120 days overdue - 90 52 181

120+ days overdue 924 1,109 1,177 974

Total 3,916 5,178 1,254 1,230

impaired trade receivables

Trade receivables past due but not

impaired

The credit quality of the receivables which are neither past due nor impaired is assessed on an ongoing basis and as at the balance sheet date, the risk of impairment was not considered significant.

The Directors consider the carrying amount of trade and other receivables is approximately equal to their fair value.


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2010 2009

£000 £000

Cash at bank and in hand 22,011 6,373

Short term deposits 5,800 -

27,811 6,373

19. Cash

Cash at bank 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 book value of cash also represents its fair value.

20. Trade and other payables

2010 2009

£000 £000

Trade payables 24,593 24,229

Taxation and social security costs 3,470 2,908

Payments received on account 3,218 2,061

Other payables 578 504

Accruals and deferred income 15,146 22,693

Employment and post-employment benefits - 172

47,005 52,567

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Trade payables and other payables are non-interest bearing and are normally settled on 60-day terms or within 6 months, respectively. Interest payable is settled monthly, quarterly or half-yearly throughout the year depending upon the draw down periods of the term loans and revolving credit facilities.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

The Group signed a new banking facility effective 31 December 2009. At 31 March 2010 exchange rates, the total facility is £107,486,000 and comprises: £56,455,000 of term loans (denominated in Sterling and US dollars); and a revolving credit facility of £51,031,000 (denominated in Sterling, US dollars and Euros). The facility expires on 31 December 2012. Repayments of £10,000,000 against the term loan facility are scheduled annually on 31 December, commencing on 31 December 2010. In conjunction with the sale of the Lincoln property, the Group is required to repay £1,525,000 on 30 June 2010. 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 therefore treated as non-current.

As at 31 March 2010, £16,173,000 (2009: £86,822,000) was drawn down under the revolving credit facility and £56,455,000 (2009: £56,841,000) was drawn down as term loans. As at 31 March 2010, unamortised debt issue costs were £3,157,000 (2009: £1,091,000). During the year, issue costs of £3,608,000 (2009: £184,000) were incurred in conjunction with arranging the new facility, which are being amortised over the expected life of the debt.

21. Borrowings

2010 2009

£000 £000

Current

Bank debt - 9,750

Non-current

Bank debt 69,471 132,822

69,471 142,572


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21. Borrowings (continued)

The term loan facility can be drawn down for periods of three or six months, at which point the interest rate is set for the draw down period. The revolving credit facility is repaid and re-drawn at periodic intervals ranging from one to six months, with the interest rate set at each draw down date. Interest is set by reference to LIBOR plus a margin. The margin is determined based on the level of the reported leverage covenant (defined as net borrowings: earnings before interest, tax, depreciation and amortisation).

At 31 March 2010, the Group had available £34,858,000 (2009: £31,714,000) of un-drawn committed borrowing facilities in respect of which all conditions precedent had been met.

The bank loans are secured by a floating charge over the net assets of the Group.

22. Other financial liabilities

2010 2009

£000 £000

Current

Interest rate swap 708 904

Forward currency contracts 807 3,296

1,515 4,200

Non-current

Interest rate swap 131 915

Further details of the derivative financial instruments are included in note 32.

23. Provisions

£000 £000 £000 £000 £000

At 1 April 2009 647 323 - 5,597 6,567

Transferred from accruals - - 3,778 - 3,778

Arising during the year - 200 18,625 5,006 23,831

Utilised - (40) (1,558) (3,895) (5,493)

Released during the year (139) (73) - (1,596) (1,808)

Exchange adjustment (28) - (208) (77) (313)

At 31 march 2010 480 410 20,637 5,035 26,562

Current 2010 480 212 14,807 5,035 20,534

Non-current 2010 - 198 5,830 - 6,028

480 410 20,637 5,035 26,562

Current 2009 647 323 - 5,597 6,567

Non-current 2009 - - - - -

647 323 - 5,597 6,567

TotalProduct

warranty

Business improvement

programmeEnvironmental

Onerous project losses

The effect of the time value of money is not material and therefore the above provisions are not discounted.

Onerous project lossesA provision is recognised for expected losses on projects in progress at the balance sheet date. It is expected that the losses will be incurred in the next financial year.

EnvironmentalA provision is recognised for expected environmental costs relating to UK manufacturing operations. It is expected that these costs will be incurred within two years of the balance sheet date.


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23. Provisions (continued)

Business improvement programmeA provision is recognised for expected termination and other costs relating to head count reduction at the Group’s Grenoble facility and the closure of the existing Lincoln facility. At Grenoble, the CCD wafer fab will be closing in February 2011, after the completion of the last-time build programmes, and completion of the operational restructuring is expected to be achieved by June 2011. Due to the structure of the payments under the restructuring programme, payments associated with the programme are expected to be incurred over the period to March 2012. It is expected that the costs of the Lincoln programme will be incurred within 10 months of the balance sheet date.

Product warrantyA provision is recognised for expected warranty claims on products sold that are within their warranty period at the end of the year. The warranty period can be date based or hours usage based. It is expected that these costs will be incurred in the next financial year. Assumptions used to calculate the provision for warranties were based on relevant sales levels and current information available about warranty claims.

24. Deferred tax

The movements on deferred tax liabilities and (assets) during the year are as follows:

Total

£000

At 1 April 2009 7,869

Credited to income statement (9,403)

Credited to other comprehensive income (118)

Credited direct to equity (14)

Exchange adjustment (33)

At 31 march 2010 (1,699)

Deferred income tax balances relate to the following:

2010 2009

£000 £000

deferred income tax liabilities

Accelerated depreciation for tax purposes 599 1,833

Fair value of intangible assets 8,500 11,310

Fair value of land and buildings 757 586

Gross deferred income tax liabilities 9,856 13,729

deferred income tax assets

Employment benefits 323 160

Revaluation of financial instruments 461 1,433

Share based payment charges 99 50

Deferred tax allowances on provisions and accruals 9,368 4,217

Losses carried forward 1,304 -

Gross deferred income tax assets 11,555 5,860

Net deferred income tax (asset)/liability (1,699) 7,869

Deferred tax asset (10,197) (5,860)

Deferred tax liability 8,498 13,729

(1,699) 7,869

There are no income tax consequences attaching to the payment of dividends by e2v technologies plc to the shareholders of the Company.


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24. Deferred tax (continued)

Management have reviewed the situation for those jurisdictions where deferred assets arise and have determined, based on current forecasts prepared by management, that these assets can be recovered through future taxable profits within a reasonable time horizon.

As at 31 March 2010, the aggregate amount of undistributed earnings of overseas subsidiaries for which deferred tax liabilities have not been recognised is approximately £66 million (2009: £56 million). No liability has been recognised in respect of these differences because the Group is in the position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. It is likely that the majority of the overseas earnings would qualify for the UK dividend exemption.

As at 31 March 2010, the Group has unused tax losses arising in Switzerland of £8 million (2009: £10 million) available for offset against future profits. No deferred tax asset has been recognised in respect of these losses. They expire between 2011 and 2016.

2010 2010

No. £000

Ordinary shares issued and fully paid

At 1 April 2008 62,217,416 3,111

Issued for cash on exercise of share options 352,177 17

At 31 March 2009 62,569,593 3,128

Shares issued – share placing November 2009 31,428,571 1,571

Shares issued – rights issue December 2009 120,854,782 6,043

Issued for cash on exercise of share options 1,110 -

At 31 march 2010 214,854,056 10,742

2010 2010

No. £000

Own shares

At 1 April 2008 626,239 6

Issued during the year in respect of LTIP awards (107,383) (1)

At 31 March 2009 518,856 5

Rights acquired during the year 268,877 -

At 31 march 2010 787,733 5

25. Called up share capital

The market value of the own shares at 31 March 2010 was £311,000 (2009: £214,000). See notes 26 and 28.

31,428,571 new ordinary shares of 5p each were placed with institutions at a price of 70 pence per share on 22 November 2009. 120,854,782 new ordinary shares of 5p each were issued under a rights issue with existing shareholders on 6 December 2009. The gross proceeds of these issues were £55,839,000 and issue costs of £3,646,000 have been incurred (some of which had been accrued but not paid at 31 March 2010) resulting in net proceeds of £52,193,000. The firm placing and rights issue were enacted via the use of a new subsidiary Eberry Limited, registered in Jersey; in each transaction RBS Hoare Govett subscribed for greater than 10% of the ordinary shares and 100% of 3 classes of preference shares in the subsidiary, which was subsequently exchanged for an allotment of the newly issued ordinary shares in the Company.

The Company increased the issued share capital during the year due to the exercise of options under share option schemes. Total proceeds from shares issued under exercise of share options amounts to £400 (2009: £681,558).

Under the terms of the Group’s various share option schemes, the following options to subscribe for ordinary shares are outstanding. Options under the plans were adjusted in December 2009 as a result of the placing and rights issue. The adjustment was made using a standard HM Revenue and Customs formula, to negate the dilutionary impact of the capital raising events. The option price, except for those schemes which had lapsed prior to the date of adjustment, and options outstanding at 31 March 2010 stated below are the adjusted positions after the amendment for the capital raising events.


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25. Called up share capital (continued)

Option price 2010 2009 date of Grant pence Exercise period No. No.

long Term incentive Plan

31 July 2006 - From 31 August 2009 - 179,200

10 January 2007 - From 10 January 2010 - 15,000

16 July 2007 - From 14 July 2010 318,997 204,475

15 July 2008 - From 15 July 2011 567,676 373,650

1 October 2008 - From 1 October 2011 - 20,400

16 April 2009 - From 16 April 2012 63,296 -

5 May 2009 - From 5 April 2012 105,626 -

24 June 2009 - From 24 June 2012 742,423 -

Executive share Option Plan

1 August 2005 215.50 3 August 2008 to 30 June 2009 - 140,000

12 January 2007 250.56 1 February to 31 December 2010 71,199 52,500

20 December 2007 160.51 1 January to 31 December 2011 287,960 211,000

sharesave scheme

1 September 2005 194.30 1 September 2008 to 28 February 2009 - 2,925

9 February 2007 222.12 1 April to 30 September 2010 69,255 105,408

11 January 2008 142.18 1 March to 31 August 2011 142,458 423,357

4 February 2009 142.18 1 March to 31 August 2012 37,168 159,698

14 August 2009 36.02 1 November 2012 to 30 April 2013 3,975,687 -

6,381,745 1,887,613

For further details of the Group’s share option schemes see note 28.

26. Reserves

Nature and purpose of reserves

Merger reserveAs discussed above, both the placing and the rights issue were affected through a structure which resulted in the excess of the net proceeds over the nominal value of the share capital being recognised within a merger reserve, which the Directors believe is currently distributable.

Other reservesOther reserves consist of the capital redemption reserve, own shares reserve and hedge reserve. The capital redemption reserve is used to record reserve transfers required on the redemption of shares whilst the own share reserve records movements in shares held by the Employee Benefit Trust (EBT). The balance on the capital redemption reserve at 31 March 2010 was £274,000 (2009: £274,000). The balance on the own shares reserve at 31 March 2010 was £(5,000) (2009: £(5,000)). The hedge reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge. The balance at 1 April 2008 was £58,000 which was subsequently released during the year ended 31 March 2009. These reserves are not distributable.

Foreign currency translation reserveThe foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the net investments hedged in these subsidiaries.


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27. Commitments and contingencies

Operating lease commitments – Group as lesseeThe Group has entered into commercial leases on certain properties, motor vehicles and items of machinery where it is not in the best interest of the Group to purchase these assets. 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 as at 31 March are as follows:

2010 2009

£000 £000

No later than one year 1,471 1,192

After one year but not more than five years 2,947 2,388

4,418 3,580

Capital commitmentsAt 31 March 2010, the Group has commitments of £727,000 (2009: £2,035,000) principally relating to the acquisition of new plant and equipment.

Contingent liabilitiesIn the ordinary course of business, the Group may issue performance and advance payment guarantees to third parties. As at 31 March 2010, guarantees of £3,790,000 (2009: £3,601,000) 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.

28. Equity settled share based payments

The Group operates four share based award schemes as follows:

Long Term Incentive Plan (LTIP)Awards under this scheme vest on the third anniversary of the date of the award subject to performance targets being met. Targets relate to Total Shareholders’ Return (TSR) relative to the TSR of a specified list of peer group companies. In addition, no award will vest (irrespective of the Group’s relative TSR performance) unless an adjusted earnings per share (EPS) growth “underpin” of Retail Price Index (RPI) plus 2% over the three year performance period has been satisfied (unless the Remuneration Committee considers, in exceptional circumstances, that it would be inappropriate to apply this underpin). All awards under this scheme have a £nil exercise price and have no end date by which they must be exercised. The following table provides details of awards made under this scheme:

2010 2009

No. No.

Outstanding at the beginning of the year 792,725 709,525

Granted in the year 647,350 422,700

Awards exercised during the year - (107,383)

Awards lapsed during the year (341,049) (232,117)

Adjustment for rights issue 698,992 -

Outstanding at the end of the year 1,798,018 792,725

Weighted average share price on date of exercise of options n/a 259.00p

Shares in relation to the LTIP will initially be issued from those currently held by the EBT. The EBT owns 787,733 ordinary shares (2009: 518,856) in e2v technologies plc. These shares are recorded in the balance sheet as own shares at a cost of £5,000 (2009: £5,000). Dividends on the shares owned by the trust, the purchase of which was funded by an interest-free loan to the trust from e2v technologies plc, are waived. There were no options exercisable at the balance sheet date (2009: nil).


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28. Equity settled share based payments (continued)

Executive Share Option Plan (ExSOP) The Group has an ExSOP for the granting of non-transferable options to certain employees. Options granted under the plan vest on the first day on which they become exercisable which is typically three years after the grant date. The overall life of the options is under four years. The vesting period for the ExSOP is finite allowing eligible employees to exercise the option in a fixed period, once conditions are met. These options are settled in equity once exercised. The options may not be exercised unless, over the vesting period, the adjusted EPS has increased by a fixed percentage above the RPI as detailed below.

For a period of three years, commencing with the financial year in which the option is granted, the increase in EPS must be more than the increase in RPI as follows:

Tier 1 Tier 2 Tier 3

EPS exceeds RPI by 15% 20% 40% 100%

EPS exceeds RPI by 20% 50% 100%

EPS exceeds RPI by 25% 100%

The EPS is adjusted EPS, calculated on a consistent basis over the three year period, and excludes amortisation of acquired intangibles, business improvement programme costs and other items determined to be of a non-recurring nature. The percentages in the above table are the percentages of the option that will vest should the performance criteria be achieved. The table below details the number of options granted under each tier of the plan.

The following table illustrates the number, weighted average remaining contractual life and the weighted average exercise prices (WAEP) of share options for the ExSOP.

No. WAEP No. WAEP

Outstanding at the beginning of the year 403,500 258.08p 680,000 241.44p

Exercised during the year - n/a (165,000) 201.68p

Lapsed during the year (180,575) 224.34p (111,500) 236.12p

Granted during the year - n/a - -

Adjustment for rights issue 136,234 n/a - -

Outstanding at the end of the year 359,159 178.36p 403,500 258.08p

Exercisable at the end of the year 79,110 241.56p 140,000 215.50p

Weighted average share price on date of exercise of options n/a 260.30p

Weighted average remaining contractual life 19 months 21 months

2010 2010 2009 2009

Share Incentive Plan (SIP) No awards have been made to date under this scheme.

Sharesave Scheme (SAYE) The Group operates an HM Revenue and Customs approved Sharesave Scheme, all UK employees (including Executive Directors) can apply to join the scheme.


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2010 2010 2009 2009

No. WAEP No. WAEP

Outstanding at the beginning of the year 691,388 244.16p 935,277 234.51p

Exercised during the year (1,110) 36.02p (187,177) 186.34p

Lapsed during the year (654,507) 198.98p (220,576) 238.07p

Granted during the year 2,595,296 57.00p 163,864 225.00p

Adjustment for rights issue 1,593,501 n/a - -

Outstanding at the end of the year 4,224,568 43.58p 691,388 244.16p

Exercisable at the end of the year - n/a 2,925 194.30p

Weighted average share price on date of exercise of options 39.50p 260.70p

Weighted average remaining contractual life 30 months 29 months

The fair value of all share option plans is estimated as at the date of grant using the binomial model. The following table gives the assumptions made. No subsequent amendments have been made to assumptions estimated at the date of grant.

lTiP

Awards granted 15 July 2008 3.1% 38.0% 4.8% 3 years 143.2p

Awards granted 1 October 2008 3.1% 39.8% 4.0% 3 years 158.6p

Awards granted 16 April 2009 4.0% 51.7% 2.08% 3 years 57.6p

Awards granted 5 may 2009 4.0% 57.6% 1.98% 3 years 77.7p

Awards granted 24 June 2009 4.0% 61.5% 2.06% 3 years 35.2p

sAyE

Awards granted 4 February 2009 10.4% 62.4% 2.20% 3.25 years 6.4p

Awards granted 14 August 2009 4.0% 60.2% 2.23% 3.25 years 14.6p

fair value of option

pence

Expected life of option

years

Risk free interest rate

%

Expected volatility

%

dividend yield

%

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value.

29. Pensions, other post-employment and other employment benefits

Defined contribution plansThe Group has defined contribution plans in the UK and North America, covering substantially all of its employees, which require contributions to be made to a separately administered fund. The Group contributes to state schemes for European activities. Such schemes are defined contribution schemes and there is no Group exposure to any scheme liabilities. Contributions of £155,000 were outstanding at the end of the financial year and have been included in other creditors.

Other post-employment and other employment benefitsIn addition to the state pension scheme, the French overseas subsidiary based in Grenoble has arrangements where there are obligations to provide termination allowances and benefits called ‘Medailles du Travail’ – long service awards. These are unfunded arrangements and the liability has been calculated at 31 March 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. Actuarial gains and losses are recognised in full in the period in which they arise. For the termination allowance they are recorded in other comprehensive income whereas for the long service award the actuarial gains and losses are recorded in the income statement.

28. Equity settled share based payments (continued)

The following table illustrates the number, weighted average remaining contractual life and the WAEP of share options for the SAYE.


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29. Pensions, other post-employment and other employment benefits (continued)

Other post-employment and other employment benefits (continued)The main assumptions used in determining the liabilities of the arrangements include the discount rate for discounting scheme liabilities, the expected rate of salary inflation, staff turnover rates and future mortality in service assumptions. For each of these assumptions, there is a range of possible values. Relatively small changes in some of these variables can have a significant impact on the level of the total obligation.

As at 31 March 2010, a non-current liability of £2,839,000 has been recognised with respect to the termination allowance and long service award. As at 31 March 2009 a non-current and a current liability of £3,355,000 and £172,000, respectively, have been recognised.

The current portion of the liability represents management’s best estimate of the contributions expected to be paid in the next financial year.

The table below details the combined present value of the termination allowance and long service awards plan obligations and experience adjustments recognised.

2010 2009 2008 2007 31 July 2006

£000 £000 £000 £000 £000

Present value of plan’s obligations 2,839 3,527 3,206 2,792 3,019

Experience (losses)/gains recognised in the period (114) (336) (108) 226

(1) Date of acquisition

The total (income)/expense recognised in the income statement comprises a credit to administrative expenses of £819,000 (2009: credit £15,000) and interest expense of £189,000 (2009: £nil).

2010 2009 2010 2009 2010 2009

£000 £000 £000 £000 £000 £000

Service cost 62 59 142 140 204 199

Interest on defined benefit liabilities 55 56 134 144 189 200

Actuarial gains and losses 142 - - - 142 -

Curtailment (324) (107) (841) (307) (1,165) (414)

Total (income)/expense (65) 8 (565) (23) (630) (15)

long service awardTermination allowance Total

The actuarial gains and losses relating to the long service award are recorded in the income statement whilst those relating to the termination allowance are recorded in other comprehensive income. The actuarial loss recognised for the current and prior year can be analysed as follows:

2010 2009 2010 2009 2010 2009

£000 £000 £000 £000 £000 £000

Demographic changes 51 16 71 (88) 122 (72)

Staff turnover 12 5 18 7 30 12

Salary increases (29) 9 (87) 109 (116) 118

Discount rate 119 5 253 61 372 66

Beginning work life age - (23) - (184) - (207)

Difference between the benefits paid (11) (12) 90 290 79 278

142 - 345 195 487 195


(1)


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2010 2009 2010 2009 2010 2009

£000 £000 £000 £000 £000 £000

Opening defined benefit obligation 1,060 934 2,467 2,272 3,527 3,206

Exchange rate movement (47) 173 (112) 333 (159) 506

Service cost 62 59 142 140 204 199

Interest expense 55 56 134 144 189 200

Benefits paid (72) (55) (172) (310) (244) (365)

Impact of business improvement programme (324) (107) (841) (307) (1,165) (414)

Actuarial loss 142 - 345 195 487 195

Closing defined benefit obligation 876 1,060 1,963 2,467 2,839 3,527


29. Pensions, other post-employment and other employment benefits (continued)

The cumulative amount of actuarial gains and losses recognised since 1 August 2006 in the consolidated statement of comprehensive income and expense is £23,000 (2009: £368,000).

Changes in the present value of the defined benefit obligation are given below:

2010 2009

£000 £000

Retirement age 64 years 64 years

Discount rate 4.59% 5.75%

Salary increases – administration 2.54% 3.55%

Salary increases – operators 3.12% 3.12%

Salary increases – engineers 3.19% 3.65%

Staff turnover rates – administration 1.85% 1.65%

Staff turnover rates – operators 1.20% 1.30%

Staff turnover rates – engineers 2.50% 3.50%

The actuarial valuation takes account of estimated mortality rates up to the date of retirement. The mortality rates are based on the French mortality tables TF 2000-2002 (women) and TH 2000-2002 (men). No account is taken of post retirement mortality rates as there is no liability after the date of retirement.

The valuation assumptions used to estimate the defined benefit obligation are:


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30. Related party disclosures

Compensation of key management personnel of the Group Key management comprises the Board of Directors. Further details of their remuneration can be found in the Directors’ Remuneration Report.

2010 2009

£000 £000

Short term employee benefits (including social security) 1,008 720

Compensation for loss of office (including social security) 186 -

Defined contribution pension costs 65 62

Share based payments 59 209

Total compensation paid to key management personnel 1,318 991

No Director had any material interest in any contract connected with the Group’s business during the year or at the end of the year.

31. Financial risk management objectives and policies

The Group’s principal financial instruments, other than derivatives, comprise bank loans and cash. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.

The Group also enters into derivative transactions, principally interest rate swaps and forward currency contracts. The purpose is to manage the interest rate and currency risks arising from the Group’s operations and its sources of finance.

It is, and has been throughout the year 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, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. The Group also monitors the market price risk arising from all financial instruments. The magnitude of this risk that has arisen over the year is discussed in note 32. The Group’s accounting policies in relation to derivatives are set out in note 2.

Interest rate risk The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s long term debt obligations.

The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debt. To manage this mix in a cost-efficient manner, the Group enters into interest rate swaps, in which the Group agrees to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. At 31 March 2010, after taking into account the effect of interest rate swaps, approximately 99% (2009: 37%) of the Group’s borrowings were at a fixed rate of interest. In May 2010, one of the interest rate swaps was cancelled. If this instrument had been cancelled at the year end date, approximately 65% of the Group’s borrowings were at a fixed rate of interest.

Based on the borrowings and interest rate swaps outstanding at the end of the year and assuming constant exchange rates, it is estimated that an increase of 1% in interest rates on the Group’s borrowings would increase the annual interest payable by £nil (2009: £0.9m). Taking into account the cancellation of the interest rate swap in May 2010, a 1% increase in interest rates would increase annual interest payable by £0.2m. The impact of an increase in interest rates on bank deposits is estimated to be less than £0.1m (2009: less than £0.1m).

Foreign currency risk The Group has operations in the United States, Europe, Canada and Hong Kong. As a result the Group’s balance sheet can be affected significantly by movements in the US dollar and Euro exchange rates. The Group does not currently hedge this exposure, other than by using foreign currency borrowings to finance overseas investments.

The Group also has transactional currency exposures. Such exposure arises from sales by an operating unit in currencies other than the unit’s functional currency. Approximately 79% (2009: 81%) of the Group’s sales are outside of the UK and a significant proportion of these sales are not Sterling and therefore subject to foreign exchange. The Group also incurs operational costs in both US dollars and Euros. The Group manages its transactional currency exposures centrally by using forward currency contracts to minimise the net currency exposures. It is the Group’s policy to enter into forward exchange contracts to cover specific foreign currency receipts and payments within the next 12 months on a reducing proportion basis.

The following table demonstrates the Group’s sensitivity to a reasonably possible strengthening in the US dollar and a weakening of the Euro exchange rates in relation to Sterling with all other variables held constant. The obverse movements would be of the same magnitude. The sensitivity analysis includes only outstanding foreign currency denominated monetary items at the balance sheet date. The sensitivity excludes external loans as exchange gains and losses on retranslation do not impact profit before taxation.


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31. Financial risk management objectives and policies (continued)

Change in us$/Euro rate impact on loss before tax £000

2010 – us$ 20% strengthening in us$ (2,890)

2010 – Euro 20% weakening in Euro (2,580)

2009 – US$ 20% weakening in US$ 3,627

2009 – Euro 20% weakening in Euro (744)

The impact on loss before tax in respect of US dollar sensitivity includes a loss of £4,472,000 (2009: gain £2,954,000) in relation to the estimated impact on the valuation of forward foreign currency exchange contracts. The impact on loss before tax in respect of the Euro sensitivity includes a loss of £949,000 (2009: £nil) in relation to the estimated impact on the valuation of forward foreign currency exchange contracts.

The impact of translating the net assets of foreign operations into Sterling is excluded from the sensitivity analysis. The Group has no foreign currency exposure with regard to transactions accounted for directly within equity.

The Group’s net borrowings are subject to currency risk due to cash and bank borrowings held in foreign currencies. The analysis of net borrowings by currency is shown in the table below:

2010 £000

denominated in Euro ¤5,674,000 1.12 5,049

denominated in us dollar $ (47,055,000) 1.52 (31,063)

denominated in sterling £ (18,965,000) 1.00 (18,965)

Other currencies 162

(44,817)

year end exchange rate

2009

£000

Denominated in Euro ¤ (93,150,000) 1.07 (86,704)

Denominated in US dollar $ (61,154,000) 1.43 (42,826)

Denominated in Sterling or other currencies £ (7,760,000) (7,760)

(137,290)

Year end exchange rate

Credit risk The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.

With respect to credit risk arising from financial assets of the Group, which comprise trade and other receivables and cash, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. There are no significant concentrations of credit risk within the Group.

Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and finance lease contracts. The Group’s policy is to use funds in excess of the ongoing operating requirements to make early repayments against the bank borrowings on an annual basis.

The Group’s objective is to maintain a positive cash balance at a level adequate for daily operations while retaining the option to use revolving credit facilities for short term flexibility as necessary.


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31. Financial risk management objectives and policies (continued)

The table below summarises the maturity profile of the Group’s non-derivative financial liabilities at 31 March 2010 and 2009 based on contractual undiscounted payments.

£000 £000 £000 £000 £000

31 march 2010

Interest bearing loans and borrowings (see note 21) 69,471 72,628 11,525 10,000 51,103

Interest payable on loans and borrowings 1,265 8,413 4,516 2,336 1,561

Trade and other payables 45,740 45,740 45,740 - -

116,476 126,781 61,781 12,336 52,664

31 March 2009

Interest bearing loans and borrowings (see note 21) 142,572 143,663 10,222 11,926 121,515

Interest payable on loans and borrowings 17 8,792 3,923 3,831 1,038

Trade and other payables 50,335 50,335 49,892 443 -

192,924 202,790 64,037 16,200 122,553

2-3 years1-2 yearsWithin 1 yearContractualcash flows

Carrying amount

The carrying value of interest bearing loans and borrowings is after a deduction for unamortised debt issue costs of £3,157,000 (2009: £1,091,000). Interest payable on loans and borrowings is calculated on an undiscounted basis at borrowing rates applicable at the end of the year and only takes into account scheduled repayments on the term loan.

The maturity analysis of provisions and derivative financial liabilities are detailed in notes 23 and 32, respectively.

Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern whilst maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s capital comprises shareholders’ funds as detailed in notes 25 and 26 and net borrowings as detailed above and in note 21. The Group manages its capital structure through maintaining close relationships with its bankers who provide the majority of funds used for operational requirements.

During the year, the Group completed a bank refinancing exercise, details of the resulting facility are disclosed in note 21 and also completed a firm placing and rights issue with net proceeds of £52,193,000. Further details are disclosed in note 25. The purpose of the equity raising was to enable the repayment of a proportion of the Group’s bank debt. The Group is required to maintain covenant ratios in respect of: net debt to earnings before interest, tax, depreciation and amortisation; net interest costs to earnings before interest, tax and amortisation; and operating cash flow to debt servicing costs. There is also a limit on the annual level of capital expenditure. The Group has met its covenant ratios for the year ended 31 March 2010.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.


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32. Financial instruments

Fair values Set out below is a comparison by category of carrying amounts and fair values of the Group’s financial instruments that are carried in the financial statements.

The carrying value of interest bearing loans and borrowings is after a deduction for debt issue costs of £3,157,000 (2009: £1,091,000).

Fair value hierarchyIn accordance with IFRS 7, the Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in making measurements of fair value. The fair value hierarchy has the following levels:

Level 1 quoted prices (unadjusted) in active markets for identifiable assets or liabilities;

Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices); and

Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of interest rate swap contracts and forward currency contracts are calculated by management based on external valuations received from the Group’s bankers and are based on future interest yields and forward exchange rates, respectively. The fair value measurement basis of the instruments is categorised within Level 2. The carrying amount of the other financial instruments of the Group, i.e. short term trade receivables, payables and provisions that are not included in the above table, is a reasonable approximation of fair value.

Currency – forward exchange contracts The Group holds several forward exchange contracts designated to reduce the transactional exchange risk of US dollar denominated sales to customers. The terms of these contracts are as follows:

2010 2009 2010 2009

£000 £000 £000 £000

financial assets

loans and receivables

Cash 27,811 6,373 27,811 6,373

financial liabilities

interest bearing loans and borrowings

Floating rate borrowings 69,471 142,572 72,628 137,639

held for trading at fair value through profit or loss

Forward currency contracts 807 3,296 807 3,296

Interest rate swaps 839 1,819 839 1,819

Carrying amount fair value

maturing within 1 year

Total currency value of contracts Average exchange rate £000

31 march 2010

us$17,850,000 us$ : £1.6227 11,000

us$8,600,000 us$ : ¤1.3641 5,610

31 March 2009

US$31,646,549 US$ : £1.685 18,777


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Notional amount maturity secured rate variable rate

31 march 2010

£26,250,000 31 december 2011 1.955% 3 month GBP liBOR

us$24,400,000 31 december 2011 1.38% 3 month usd liBOR

¤24,710,063 12 July 2011 3.31% - 5.00% 6 month EuR Euribor

31 March 2009

¤27,455,625 12 July 2011 3.88% 6 month EUR Euribor

¤30,201,188 12 July 2011 3.31% - 5.00% 6 month EUR Euribor

32. Financial instruments (continued)

Interest rate swaps The Group has interest rate swap agreements in place in relation to its term loan whereby it pays a fixed or secured rate of interest and receives a variable rate equal to the notional amount.

The Euro interest swap contract, which was subject to a capped rate, has been cancelled in May 2010 for a cancellation fee of ¤675,000.

The US dollar and Sterling swap contracts are effective from 1 July 2010. Furthermore the Sterling swap contract is amortising with the principal reducing to £18,750,000 with effect from 31 December 2010. Based on exchange rates and interest rates on the balance sheet date the Group’s liability under the interest rate swap arrangements on an undiscounted basis is a payment of £130,000 on a quarterly basis through to 31 December 2010 and £105,000 through to 31 December 2011 for the unexpired term of the loan. The Group’s equivalent liability at 31 March 2009, was half yearly payments of £452,000, through to the expiration of the loan agreement.

Hedging activities – net investment hedgesAs at 31 March 2009, bank loans on the balance sheet date included a loan of ¤15,503,000, which had been designated as a hedge of the net investment in e2v technologies SAS. This loan was being used to hedge the Group’s exposure to foreign exchange risk on this investment. Gains or losses on the retranslation of this borrowing were transferred to equity to offset any gains or losses on translation of the net investment in this subsidiary undertaking. This loan was repaid in the first quarter of the 2010 financial year.


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Independent Auditor’s Report

We have audited the group financial statements of e2v technologies plc for the year ended 31 March 2010 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows and the Consolidated Statement of Changes in Equity and the related notes 1 to 32. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor’s 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 auditorsAs explained more fully in the Statement of Directors’ Responsibilities set out in the Directors’ Report, the Directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the Group financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on financial statementsIn our opinion the group financial statements:l give a true and fair view of the state of the group’s affairs as at 31 March 2010 and of its loss for the year then ended;l have been properly prepared in accordance with IFRSs as adopted by the European Union; andl have been prepared in accordance with the requirements of Companies Act 2006 and Article 4 of the IAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006In our opinion:l the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the group

financial statements; andl the information given in the Corporate Governance Statement with respect to internal control and risk management systems in relation to

financial reporting processes and about share capital structures is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:l certain disclosures of Directors’ remuneration specified by law are not made; orl we have not received all the information and explanations we require for our audit; orl a Corporate Governance Statement has not been prepared by the Company.

Under the Listing Rules we are required to review:l the Directors’ statement in relation to going concern; andl the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the June 2008 Combined Code

specified for our review.

Other matterWe have reported separately on the parent company financial statements of e2v technologies plc for the year ended 31 March 2010 and on the Directors’ Remuneration Report that is described as having been audited.

Peter Bateson (Senior statutory auditor)for and on behalf of Ernst & Young LLP, Statutory Auditor, Cambridge

4 June 2010

Independent Auditor’s Report e2v technologies plc Annual Report and Financial Statements 2010

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CompanyFinancial Statement

Company balance sheet 86

Notes to the financial statement 87

Independent Auditor’s Report 94

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Company balance sheet As at 31 March 2010 2010 2009 Notes £000 £000

fixed assetsTangible assets 2 - 2Investments 3 120,281 53,758 120,281 53,760 Current assets Debtors 4 19,000 24,391Cash at bank and in hand 600 11 19,600 24,402 Creditors: amounts falling due within one year 5 (3,573) (1,137)Net current assets 16,027 23,265 Total assets less current liabilities 136,308 77,025

Creditors: amounts falling due after more than one year 6 (31,974) (23,354)Net assets 104,334 53,671 Capital and reserves Called up share capital 8 10,742 3,128Share premium account 9 41,780 41,780Merger reserve 9 44,579 -Capital redemption reserve 9 274 274Own shares reserve 9 (5) (5)Retained earnings 9 6,964 8,494Equity shareholders’ funds 10 104,334 53,671

Approved by the Board of Directors on 4 June 2010.

Company balance sheet

K Attwood Chief Executive

C hindsonGroup finance director


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Notes to the financial statement

1. Accounting policies

Basis of preparationThe separate financial statements of e2v technologies plc (Company) are presented as required by Companies Act 2006 (Act) and were approved for issue by the Board of Directors on 4 June 2010. They have been prepared on the historical cost basis, with the exception of financial instruments as described below, and in accordance with applicable United Kingdom Generally Accepted Accounting Practices (UK GAAP).

As permitted under section 408 of the Act the Company has elected not to present its own profit and loss account for the year. The loss dealt with in the financial statements of the parent company is disclosed in note 9.

The Company has taken exemption from the requirement to prepare a cash flow statement under the terms of FRS 1 (revised) “Cash Flow Statements”.

The Company has taken advantage of the exemption in paragraph 2D of FRS 29 “Financial Instruments: Disclosures” and has not disclosed information required by the Standard as the consolidated financial statements, in which the Company is included, provide equivalent disclosures for the Group under IFRS 7 “Financial Instruments: Disclosures”.

The Company has taken advantage of the exemption available under FRS 8 “Related Party Disclosures” and not disclosed related party transactions with wholly owned subsidiary undertakings.

The principal accounting policies adopted are set out below and have been applied consistently in the current and prior financial year.

Going concernFollowing the firm placing and rights issue, the securing of a new banking facility and the progressive implementation of the accelerated restructuring plan, the Directors have concluded, based on the current cash flow and profit projections to 30 September 2011, that it is appropriate to prepare the financial statements on a going concern basis, as detailed in the Directors’ Report. These financial statements have therefore been prepared on a going concern basis which assumes that the Company will be able to meet its liabilities as they fall due for the foreseeable future.

Foreign currenciesThe presentation and functional currency of the Company is Sterling. Transactions denominated in foreign currencies are recorded at the rate of exchange ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Currency translation differences are recognised in the profit and loss account.

Tangible assets Motor vehicles are stated at cost less accumulated depreciation and any impairment in value. Depreciation is provided so as to write off the cost of the asset on a straight-line basis over the estimated useful life of three years. The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Investments

Investments in subsidiaries are held at historical cost less provision for impairment. The carrying values of investments are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Taxation

Current tax is provided at amounts expected to be paid (or recovered) using the tax rate and laws that have been enacted or substantively enacted by the balance sheet date. 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 tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary.

A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

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 substantively enacted at the balance sheet date.

Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

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1. Accounting policies (continued)

PensionsThe Company contributes to personal pension arrangements for its employees. The pension cost is the amount of contributions payable in the year. Differences between contributions payable in the year and contributions paid are shown either as accruals or prepayments in the balance sheet.

Share based paymentsEmployees (including Directors) of the Company receive remuneration in the form of share based transactions, whereby employees render services in exchange for shares or rights over shares (equity settled transactions). The cost of equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model, further details of which are given in note 28 to the consolidated financial statements. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company (market conditions).

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date reflects the extent to which the vesting period has expired and management’s best estimate of the number of awards that will ultimately vest.

The financial effect of awards by the Company of options over its equity shares to employees of subsidiary undertakings are recognised by the Company in its individual financial statements with the Company recording an increase in its investment in subsidiaries and a credit to equity.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had invested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. If a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new shares are treated as if they were a modification of the original award.

Dividend incomeDividend income from subsidiary undertakings is recognised at the point the dividend has been declared. Dividends declared after the balance sheet date are not recognised in the profit and loss account.

Financial liabilities and equityFinancial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Bank borrowingsInterest bearing bank loans are recorded at the proceeds received, net of direct issue costs. After initial recognition, interest bearing bank loans are subsequently measured at amortised cost using the effective interest method.

A financial liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability.

Derivative financial instrumentsThe Company uses derivative financial instruments to reduce exposure to interest rate movements. The Company does not hold or issue derivative financial instruments for speculative purposes. Derivative financial instruments have been recognised as assets and liabilities measured at their fair values at the balance sheet date. Changes in the fair values have been recognised in the hedge reserve to the extent that they qualify for hedge accounting. Gains and losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken to the profit and loss account.

Equity instrumentsEquity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Own sharesShares in the Company held by the Employee Benefit Trust are stated at cost and are presented in the balance sheet as a deduction from equity.


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motor vehicles £000

Cost At 1 April 2009 and 31 march 2010 12 Accumulated depreciation At 1 April 2009 10Provided during the year 2At 31 march 2010 12 Net book value At 31 March 2009 2At 31 march 2010 -

Equity interests in subsidiary undertakings

£000

Cost At 1 April 2009 65,656Additions 66,523At 31 march 2010 132,179 impairment At 1 April 2009 and 31 march 2010 11,898 Net book value At 31 March 2009 53,758At 31 march 2010 120,281

Additions relate to additional share capital subscribed for in e2v technologies SAS (£66,217,000) and share option awards to employees of subsidiary undertakings (£306,000).

2. Tangible assets

3. Investments


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2010 2009 £000 £000

Amounts due within one year Amounts receivable from subsidiary undertakings 18,643 24,320Other debtors 91 33Prepayments and accrued income 87 38 18,821 24,391Amounts due after more than one year Deferred tax asset (see note 7) 179 - 19,000 24,391

4. Debtors

3. Investments (continued)

Name of undertaking Country of incorporation Principal activity

e2v technologies (UK) Limited England & Wales Electronic component manufacturere2v technologies Canada Limited(1) Canada Sales & distributione2v technologies GmbH(1) Germany Sales & distributione2v Limited England & Wales Sales & distributione2v scientific instruments Limited England & Wales Electronic component manufacturere2v technologies SAS France Holding companye2v semiconductors SAS(2) France Electrical component manufacturere2v SAS(2) France Sales & distributione2v Holdings Inc. USA Holding companye2v Inc.(3) USA Sales & distributionQP Semiconductor Inc.(3) USA Electronic component manufacturere2v technologies overseas (holdings) Limited England & Wales Holding companye2v Asia Pacific Limited(4) Hong Kong Sales & distributionMiCS Microchemical Systems SA(4) Switzerland Electronic component manufacturere2v microsensors SA(4) Switzerland Electronic component manufacturer

(1) held through e2v technologies (UK) Limited.(2) held through e2v technologies SAS.(3) held through e2v Holdings Inc. (4) held through e2v technologies overseas (holdings) Limited.

Interests in Group undertakingsThe Company has investments in the following subsidiary undertakings that principally affect the profits or net assets of the Group. Shares are held directly by the Company, except where noted below. The Company has control over 100% of the ordinary share capital in respect of each of its subsidiary undertakings. To avoid a statement of excessive length, details of investments which are not significant have been omitted.


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2010 2009

£000 £000

Trade creditors 1,574 474Amounts payable to subsidiary undertakings 67 50Other taxation and social security costs 156 127Other creditors – pension contributions 15 -Accruals and deferred income 1,605 486Interest rate swaps 156 - 3,573 1,137

2010 2009

£000 £000

Bank loans 31,843 23,354Interest rate swaps 131 - 31,974 23,354

Details of banking facilities available and the maturity of the debt are provided in note 21 to the consolidated financial statements. The bank loans are secured by a floating charge over the net assets of the Group.

Interest rate swapsInterest rate swaps are recorded in the balance sheet at fair value and mature as follows:

£000

At 1 April 2009 -Credited to profit and loss account 165Credited to statement of total recognised gains and losses 14At 31 march 2010 179

Deferred tax is comprised as follows:

2010 2009

£000 £000

After more than one year and less than two years 131 -Due within one year 156 - 287 -

2010 2009

£000 £000

Other timing differences 179 -

The Company is part of a UK tax group and management has determined that based on the current forecast prepared the deferred tax assets are recoverable against future taxable profits of that Group and a valuation allowance is not required.

5. Creditors: amounts falling due within one year

6. Creditors: amounts falling due after more than one year

7. Deferred tax asset


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Ordinary shares issued and fully paid No. £000

At 1 April 2009 62,569,593 3,128Shares issued – share placing November 2009 31,428,571 1,571Shares issued – rights issue December 2009 120,854,782 6,043Employee share option schemes – options exercised 1,110 -At 31 march 2010 214,854,056 10,742

Details of the share placing, rights issue and share options exercised in the year are given in note 25 to the consolidated financial statements. Details of movements in shares in the Employee Benefit Trust are also given in note 25 to the consolidated financial statements.

The information as disclosed in the Group’s consolidated financial statements under IFRS 2, “Share based payment”, is comparable with the UK GAAP requirement disclosure requirements as required by FRS 20, “Share based payment”, therefore please refer to note 28 to the consolidated financial statements for further information regarding the Company’s equity-settled share based payment arrangements. All Long Term Incentive Plan (LTIP) awards detailed in that note relate to employees of the Company. The following Sharesave scheme (SAYE) and Executive Share Option Plan (ExSOP) awards, number and weighted average exercise price (WAEP) relate to employees of the Company.

20102010

8. Called up share capital

2010 2010 2009 2009

sAyE No. WAEP No. WAEP

Outstanding at the beginning of the year 24,663 225.00p 29,750 224.93pEmployee transfer 2,048 225.00p - -Exercised during the year - - (5,732) 165.30pLapsed during the year (25,995) 189.48p (2,688) 351.50pGranted during the year 89,157 57.00p 3,333 225.00pAdjustment for rights issue 56,891 n/a - -Outstanding at the end of the year 146,764 40.13p 24,663 225.00p Exercisable at the end of the year - n/a - n/aWeighted average share price at date of exercise of options nil 272.75pWeighted average remaining contractual life 30 months 30 months 2010 2010

ExsOP No. WAEP

Employee transfer 12,000 273.58pLapsed during the year (5,000) 215.50pAdjustment for rights issue 4,076 n/aOutstanding at the end of the year 11,076 199.10p Exercisable at the end of the year - n/aWeighted average share price at date of exercise of options nilWeighted average remaining contractual life 9 months


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11. Commitments and contingent liabilities

The Company has no contracts for future expenditure which have not been provided for (2009: £nil).

The Company acts as a guarantor on the Group’s borrowing facilities. Loans of £37,628,000 (2009: £119,833,000) were drawn by subsidiary undertakings at the balance sheet date.

12. Directors’ remunerationDetails of Directors’ remuneration, pension benefits and share option awards are included in the Directors’ Remuneration Report.

13. Auditor’s remunerationThe auditor’s remuneration for the audit of the Company is disclosed in note 7 to the consolidated financial statements. Fees paid to the auditors for non-audit services to the Company are not required to be disclosed in the Company’s financial statements because consolidated financial statements are prepared which disclose such fees on a consolidated basis.

9. Reserves

£000 £000 £000 £000 £000 £000

At 1 April 2009 41,780 - 274 (5) 8,494 50,543Loss for the year - - - - (1,973) (1,973)Shares issued - 44,579 - - - 44,579Share based payments - - - - 123 123Deferred tax on share based payments - - - - 14 14Share options issued to employees of subsidiary undertakings - - - - 306 306At 31 march 2010 41,780 44,579 274 (5) 6,964 93,592

The merger reserve has been created during the year in conjunction with the firm placing and rights issue, see note 26 to the consolidated financial statements for further details. The Directors believe that this reserve is distributable. The reserve for own shares arises in connection with the Company’s Employee Benefit Trust, a discretionary trust established to facilitate the operation of the Company’s LTIP for senior management. See note 26 to the consolidated financial statements for further details.

TotalRetained earnings

Capital redemption

Own shares

merger reserve

share premium

2010 2009

£000 £000 Loss for the year (1,973) (4,514)Dividends paid on equity shares - (4,913)New shares issued 52,193 681Share based payments (including deferred tax) 137 341Share options issued to employees of subsidiary undertakings 306 284Net increase in/(deduction from) shareholders’ funds 50,663 (8,121)Opening shareholders’ funds 53,671 61,792Closing shareholders’ funds 104,334 53,671

For details on dividends paid during the prior year please refer to note 12 to the consolidated financial statements.

10. Reconciliation of movements in shareholders’ funds


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We have audited the parent company financial statements of e2v technologies plc for the year ended 31 March 2010 which comprise the Company balance sheet and the related notes 1 to 13. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor’s 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 auditorsAs explained more fully in the Statement of Directors’ Responsibilities as included in the Directors’ Report, the Directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the parent company financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on financial statementsIn our opinion the parent company financial statements:

l give a true and fair view of the state of the company’s affairs as at 31 March 2010;

l have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

l have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006In our opinion:

l the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

l the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the parent company financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

l adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

l the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or

l certain disclosures of Directors’ remuneration specified by law are not made; or

l we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the group financial statements of e2v technologies plc for the year ended 31 March 2010.

Peter Bateson (Senior statutory auditor)for and on behalf of Ernst & Young LLP, Statutory Auditor Cambridge

4 June 2010


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General information

DirectorsC Geoghegan (Chairman)

K Attwood (Chief Executive)

C Hindson

A Reading

J Brooks

I Godden

Company SecretaryC parmenter

Registered Office106 Waterhouse Lane Chelmsford Essex CM1 2QU

SolicitorsMacfarlanes LLP 20 Cursitor Street London EC4A 1LT

Birkett Long Ocean House Waterloo Lane Chelmsford Essex CM1 1BD

BankersBarclays Bank plc 1 Churchill place London E14 5Hp

Lloyds TSB Bank plc 10 Gresham Street London EC2V 7AE

HSBC Bank plc 8 Canada Square London E14 5HQ

The Royal Bank of Scotland plc 250 Bishopsgate London EC2M 4AA

AuditorsErnst & Young LLP Compass House 80 Newmarket Road Cambridge CB5 8DZ

RegistrarsEquiniti The Causeway Worthing West Sussex BN99 6DA



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Designed by Focus Integrated M

arketing Comm

unications | ww

w.focusintegrated.co.uk

e2v technologies plc 106 Waterhouse Lane Chelmsford Essex CM1 2QU England

T +44 (0)1245 493 493 F +44 (0)1245 492 492

Investor relations enquiries to: [email protected]

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