Financial Highlights 03 l

Business Overview 04 l

Chairman’s and Chief Executive’s Statement 06 l

Business Review 08 l

Board of Directors 19 l

Corporate Responsibility Review 20 l

Directors’ Report 25 l

Corporate Governance Report e2v technologies plc 29 l Annual Report and Financial Statements 2010

Directors’ Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l Business Overview Who we are 04 l

Chairman’s and Chief Executive’s e2v’s objective is to be a global leader Statement in the design and supply of specialist 06 l components and sub-systems that enable

Business Review the world’s leading systems companies 08 l to deliver innovative solutions for medical & science, aerospace & defence, and Board of Directors commercial & industrial markets. 19 l

Corporate Responsibility Review 20 l

Directors’ Report 25 l

Corporate Governance Report 29 l

Directors’ Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l Financial Highlights e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 233.2 204.6 201.2 03 l 233.2 173.9 204.6 126.2 201.2 173.9 108.7 Business Overview 112.3 105.0 233.2126.2 106.1 Financial Highlights 204.6108.7 204.6 201.2105.0 04 l 112.363.2 173.9106.1 126.2107.0 95.9 96.2 67.8 49.163.2 108.7 Chairman’s and 105.0 l Net debt reduction from £137m to £45m 112.3 107.0 106.1 95.9 96.2 67.8 Chief Executive’s Reported sales £m 200649.1 2007 2008 2009 2010 Statement l Sales down 14%, reflecting anticipated reduced demand; markets now 63.2 107.0 largely stabilised Reported sales £m 2006 2007 200895.9 2009 201096.2 06 l 49.1 67.8 l Run rate costs reduced by £7.5m in the year (14% reduction on an Reported sales £m 2006 2007 2008 2009 2010 Business Review annualised basis) and other within year non-recurring savings of £5.5m Reported sales £m

08 l l Adjusted* operating profit of £15m, down 45% 29.1 27.4 24.7 l Adjusted** earnings per share down 12.41p at 6.67p 29.1 Board of Directors 27.4 24.7 l Cash generated from operations of £40.0m, deployed in debt reduction 15.0 18.6 15.8 15.0 19 l 17.6 29.1 27.4 15.010.7 18.6 15.8 15.0 l Reported loss before taxation of £9.7m after 24.7 17.6 11.4 Corporate 10.5 11.6 10.7 7.1 – Business improvement programme costs and provision – £18.7m 4.3 18.6 15.8 3.6 Responsibility 15.0 15.011.4 10.5 11.6 Review Adjusted* operating profit 2006 200717.67.1 2008 2009 2010 4.3 3.6 – Offset by: (£m as restated) 10.7

20 l Adjusted* operating profit 2006 2007 2008 200911.6 201011.4 10.5 – Fair value gains on financial instruments – £2.6m; and (£m as restated) 7.1 4.3 3.6

Directors’ Report – Profit on sale of Lincoln site – £3.7m Adjusted* operating profit 2006 2007 2008 2009 2010 (£m as restated) 25 l l Equity raise of £52m net completed in December 2009 Adjusted* operating profit £m (as restated) Corporate l Order book at 31 March £161m (2009: £154m) with £132m (2009: £104m) for Governance Report delivery in coming 12 months of which £12.5m is ‘one-off’ 29 l l Consultation on restructuring for Lincoln and Grenoble completed in the year on 19.0 19.1 16.3 timetable. Programme cost reduced from £33m to £26m reflecting additional 19.0 19.1 10.7 16.3 Directors’ customer demand to deliver annual benefits of c.£26m 13.2 12.6 11.4 6.7 Remuneration 10.7 7.8 19.013.2 19.112.6 Report 16.311.4 6.74.7 4.9 5.8 6.5 2010 2009 7.82.9 2.0 32 l 10.7 4.7 13.2 £m Adjusted** £mEPS pence 2006 20074.9 200813.25.8 200912.66.5 2010 2.9 11.4 (£m as restated) 6.72.0 7.8 Sales 201.2 Adjusted**233.2 EPS pence 2006 2007 2008 2009 2010 Five year history 4.7 (£m as restated) 4.9 5.8 6.5 Adjusted* operating profit 15.0 27.4 2.9 2.0 38 l adjusted eps** pence Loss before taxation (9.7) Adjusted**(28.4) EPS pence 2006 2007(as restated2008 )2009 2010 Adjusted** earnings per share 6.67 p (£m19.08 as restated) p Consolidated Loss per share (1.66)p (21.75)p Financial Statements Full year dividend per share - 2.7 p Cash generated from operations 40.0 43.0 39 l Net borrowings 44.8 137.3 137.3 105.2 93.6 94.4 137.3 Company Financial 79.5 80.2 88.0 105.2 Statement 93.6 94.4 79.5 80.2 88.0 44.8 27.2 18.1 137.3 85 l 44.8 105.2 27.2 93.6 94.4 18.1 79.5 80.2 88.0 Net borrowings £m 2006 2007 2008 2009 2010 44.8 Net borrowings £m 27.22006 2007 2008 2009 2010 27.2 18.1 Net borrowings £m

Net borrowings £m 2006 2007 2008 2009 2010

First half k l Second half

* 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. e2v.com 3 Business Overview e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Business Overview 03 l Revenue by division Business Overview 04 l

Chairman’s and Chief Executive’s Electron devices and sub-systems Statement 06 l

Business Review 08 l £65.6m (£83.8m) Board of Directors 19 l

Corporate Imaging Responsibility Review 20 l Directors’ Report £53.8m (£65.2m) 25 l

Corporate Images courtesy of: NASA and BAE Systems Governance Report 29 l

Directors’ Remuneration Report 32 l

Five year history High performance electron Advanced CCD and CMOS 38 l devices and sub-systems for imaging sensors and cameras applications including: for applications including: Consolidated Financial l Radiotherapy cancer treatment machines l Earth observation Statements l Defence electronic countermeasures l Space science and life science imaging 39 l l  systems l Military surveillance Company Financial l Stellar satellite amplifiers l Industrial process control Statement l Digital television transmitters l Advanced data collection 85 l l Industrial laser and welding machines l Dental x-ray systems k l

e2v.com 4 Business Overview e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Business Overview 03 l Revenue by division Business Overview 04 l

Chairman’s and Chief Executive’s Specialist semiconductors Statement 06 l

Business Review 08 l £50.9m (£53.3m) Board of Directors 19 l

Corporate Sensors Responsibility Review 20 l Directors’ Report £30.9m (£30.9m) 25 l

Corporate Images courtesy of: NASA and BAE Systems Governance Report 29 l

Directors’ Remuneration Report 32 l

Five year history Specialist semiconductors, including: A range of professional sensing 38 l l Own design high speed data converters products for applications including: l High reliability microprocessors in partnership l Environmental safety Consolidated with Freescale Semiconductor Financial l Fire, rescue and security thermal imaging Statements l MRAMs in partnership with Everspin l X-ray spectroscopy 39 l l Packaging and test and obsolescence management l Automotive alarm and security systems services for high reliability integrated circuits for aerospace Company Financial & defence programmes l radar and safety and arming devices Statement l Own design sensor data acquisition utilising mixed signal 85 l application specific devices

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e2v.com 5 Chairman’s and Chief Executive’s Statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Chairman’s and Chief Executive’s Statement 03 l

Business Overview 04 l The lower worldwide demand we have Chairman’s and experienced over the last 18 months Chief Executive’s Statement required us to take decisive action to Chris Geoghegan l 06 re-establish the business through this Chairman

Business Review difficult period and reposition it for 08 l the future.

Board of Directors 19 l

Corporate Responsibility Review 20 l Keith Attwood Chief Executive Directors’ Report 25 l

Corporate Over the last 18 months, the business has experienced extremely Overall, the Board expects the restructuring programme to provide the Governance Report challenging trading conditions which required the implementation of potential level of profitability on a broadly flat level of turnover that was aggressive short term cost reduction actions during the first half of previously anticipated at the time of the equity raise. 29 l 2009/10 and an acceleration of the established business improvement The third key step in the overall programme is to return the Group to programme to significantly reduce the fixed cost base of the business. organic growth. In October we indicated a shift in our strategic direction Directors’ The first key step to implementing this plan was to refinance the Group. towards moving up the value chain and increasing the provision of Remuneration This was completed in December 2009 with the positive support of solutions to our customers. In January, we retained OC&C Strategy Report shareholders for a firm placing and rights issue that raised £52m net Consultants to assist us in carrying out our strategic review. (£56m gross) and the Group’s banks in providing a new, 3 year facility 32 l We plan to brief investors on the outcome of this review in July 2010. 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 Five year history reduce net borrowings from £137m to £45m at 31 March 2010. Financial performance l We anticipated lower activity during the year and this has been reflected 38 The second key step is the implementation of the accelerated business in the revenues for the Group being £201m, a decrease of 14% compared improvement programme. In the UK, this includes the transfer of with the previous year. Due to stringent cost management during the Consolidated manufacturing operations from our Lincoln site to our site, year, in a challenging environment that included some two months of Financial along with the establishment of an engineering centre in Lincoln, and industrial disruptions in Grenoble, the Group achieved an adjusted* Statements the integration of business management into the Electron Devices and operating profit of £15.0m (2009: £27.4m), operating loss £6.0m Sub-systems division (EDS). In France, this includes the closure of (2009: loss £19.5m). Given the level of reorganisation taking place in 39 l the CCD wafer fab in Grenoble and significant resizing affecting other the business and amortisation charged for past acquisitions, the Board activities on this site. Further restructuring actions, primarily related considers that the adjusted* operating profit more accurately reflects the Company Financial to the UK programme initiated in 2008/09, were also successfully comparable performance of the underlying business. implemented during the year. Statement The Group reduced its run rate costs by £7.5m in the year (a 14% 85 l We launched appropriate employee consultations for these major reduction on an annualised basis), partly under the business changes in October 2009 which were completed within our planned improvement programme provided for at 31 March 2009 and partly timetable by the end of the financial year. Following this process, the under the accelerated business improvement programme put in place cost of the accelerated programme is anticipated to be £26m reflecting this year. The within year charge for this programme was £18.7m after additional customer demand to deliver annual benefits of c.£26m. brought forward accruals, with further charges of £3.6m expected to Within the year we sold the site in Lincoln and acquired a smaller, arise over the coming two financial years. In addition, within the year modern building for the engineering centre in Lincoln in May 2010. non-recurring costs savings of £5.5m were implemented. k l

* 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. e2v.com 6 Chairman’s and Chief Executive’s Statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 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 03 l demand when this arises. These business improvement programme charges of £18.7m (2009: £6.8m) along with amortisation Business Overview of acquired intangibles of £8.6m (2009: £8.6m), fair value gains on foreign exchange contracts and 04 l 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). Chairman’s and Chief Executive’s Adjusted** earnings per share were 6.67p (2009: 19.08p) and earnings per share amounted to a loss Statement of 1.66p (2009: 21.75p loss). 06 l 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 Business Review reduced to £3.1m (2009: £10.7m) and no dividend was paid in the year, in accordance with the conditions of the banking facilities. 08 l 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 Board of Directors March 2010 of £45m, the balance being provided by the net proceeds of the equity raise of £52.2m. 19 l 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 Corporate is due for delivery in the coming 12 months (2009: £104m). Some £9m of the order book is for Responsibility last time buys on the Grenoble front end wafer fab and some £3.5m is estimated to be additional Review 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 20 l strengthened compared with last year with a lower order gap for the first half of the current financial year than for the prior period. Directors’ Report The Board 25 l The 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 Corporate Kennedy for his 5 years as Chairman, including supporting the Company through its flotation Governance Report in 2004.

29 l Our people This year’s creditable performance was delivered by a huge effort across the organisation in very Directors’ difficult circumstances. The Board recognises and thanks all staff for their dedication, perseverance Remuneration and commitment over the course of a very challenging year, and for the ongoing support as the Report extensive restructuring programme is implemented. 32 l Outlook Our increased underlying order cover for the coming 12 months, compared with the prior year leads Five year history us to consider that our markets have largely stabilised. Our cost base has been reduced, and will 38 l 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) Consolidated should be broadly neutral. Financial Statements 39 l

Company Financial Statement Chris Geoghegan Keith Attwood Chairman Chief Executive 85 l

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e2v.com 7 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Business Review 03 l

Business Overview

04 l Market overview l Specialist semiconductors e2v serves three broad market sectors; aerospace & defence, Including own design high speed data converters, high reliability Chairman’s and medical & science, along with commercial & industrial. microprocessors in partnership with Freescale Semiconductor, Chief Executive’s Our business model is to support specific application segments within Magnetic Random Access Memory (MRAMs) in partnership with Statement these broad market sectors, which require specialised technology Everspin, packaging and test and obsolescence management services for high reliability integrated circuits for aerospace & defence 06 l and process skills over the longer term. We are often a leader in these specific applications. programmes, and own design sensor data acquisition utilising mixed signal application specific devices; Business Review The largest of these market sectors is aerospace & defence, where the e2v addressed market is estimated to be £1.1bn and which accounts for l Sensors 08 l 46% of our sales (2009: 41%), of which defence accounts for 81% A range of professional sensing products for applications including (2009: 85%). We have experienced continued growth in the space sector environmental safety, fire, rescue and security thermal imaging, x-ray Board of Directors with commercial aerospace activity remaining steady although activity spectroscopy, automotive alarm and security systems, microwave has reduced in the global defence market, and in particular we see radar and safety and arming devices. 19 l demand in the defence markets supported by the electron devices and sub-systems division continuing to weaken. Group functions cover: Corporate The second largest sector is commercial & industrial, where the e2v l Global operations with responsibility for all manufacturing and Responsibility addressed market is estimated to be £0.8bn and which accounts for supply chain activity; Review 28% of our sales (2009: 30%). After the substantial decrease in activity l Global sales that manage our customer relationships throughout the we reported last year, demand has stabilised and showed strong 20 l world through a combination of e2v’s own sales and support offices recovery in the fourth quarter in some of these applications. and a network of distribution partners and representatives; and Directors’ Report Medical & science is the smallest sector, where the e2v addressed l Support services including commercial, human resources, market is estimated to be £0.3bn and which accounts for 26% of our IT and finance. 25 l sales (2009: 29%). Medical sub-sectors served by the Group have recovered during the course of the year, although provision of For the coming year, the sensors division has been rationalised with the Corporate Charge Coupled Devices (CCD) product to the dental imaging sector businesses currently based in Lincoln transferred to the EDS division and Governance Report has continued to decline. The scientific sector continued to grow its remaining portfolio of businesses will be reported in the corporate overall, although we lost some market share serving x-ray centre. The strategy to review businesses not core to the Group continues 29 l spectroscopy applications. and the creation of an expanded instrumentation business in safety and security products is also under consideration. Directors’ Business structure Remuneration The Group was organised into four divisions that are supported Report by Group functions: 32 l l Electron devices and sub-systems High performance electron devices and sub-systems for Five year history applications including radiotherapy cancer treatment machines, 38 l defence electronic countermeasures and radar systems, satellite communications amplifiers, digital television transmitters and industrial laser and welding machines; Consolidated Financial l Imaging Statements Advanced CCD and Complementary Metal Oxide Semiconductor 39 l (CMOS) imaging sensors and cameras for applications including earth observation, space science and life science imaging, military surveillance, industrial process control, advanced data collection Company Financial and dental x-ray systems; Statement 85 l

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* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. e2v.com 8 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Financial overview 03 l The 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). Business Overview Revenue and adjusted* operating profit by division was as follows: 04 l Revenue Adjusted* operating profit Chairman’s and 2010 2009 2010 2009 Chief Executive’s £m £m £m £m Statement Electron devices and sub-systems 65.6 83.8 11.5 15.7 06 l Imaging 53.8 65.2 0.5 4.3 Specialist semiconductors 50.9 53.3 6.7 13.1 Sensors 30.9 30.9 (0.4) (1.6) Business Review 201.2 233.2 18.3 31.5 08 l Centre-Corporate (3.3) (4.1) 15.0 27.4 Board of Directors In line with decreased demand in the year across most of the Group’s activities, reported sales 19 l 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 Corporate in the other three main divisions declined. Sales fell in each of the Group’s market sectors: Responsibility aerospace & defence by 3%, medical & science by 22% and commercial & industrial by 20%. By Review 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 20 l 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 Directors’ Report 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 25 l 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 Corporate (2009: 33.9%). The lower volume reduced gross profit due to the reduction in sales being greater Governance Report than the reduction in the relatively fixed operating cost. The anticipated lower volumes resulted l in management taking short term measures to reduce costs in the first half, including a period of 29 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 Directors’ second half the Group carried out consultation on its extensive restructuring programme in France Remuneration and the UK and continued tight management of overhead and R&D spend. Report Expenditure on R&D has decreased to £12.1m (2009: £17.1m). This is due to tighter management, 32 l 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. Five year history Selling and distribution costs decreased by 15.5% to £15.2m (2009: £18.0m) reflecting the 38 l cost saving measures taken including head count reduction and lower marketing and communication spend.

Consolidated Administrative expenses decreased to £40.0m (2009: £63.4m). Administrative expenses include Financial a number of the items added back to adjusted* operating profit of £21.1m (2009: £45.4m) detailed Statements overleaf. The remaining administrative expenses of £19.0m (2009: £18.0m) increased by 5.6% (£1.0m) reflecting a full year of PQ partially offset by cost control measures including a reduction in 39 l head count and short time working. Overall, the Group reduced the head count by 165 people during the year and achieved a reduction Company Financial of £7.5m (a 14% reduction on an annualised basis) in its run rate cost base. Run rate costs include Statement overheads, the costs of holding inventory and warranty. In addition non recurring cost reductions 85 l including short time working and research and development were £5.5m.

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e2v.com 9 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l

Business Overview 04 l

Chairman’s and Chief Executive’s Statement 06 l

Business Review 08 l Adjusted* operating profit The adjusted* operating profit is considered to reflect more accurately the underlying performance of Board of Directors the business and is calculated as follows: 19 l 2010 2009 £000 £000 Corporate Operating loss (6,037) (19,535) Responsibility Included in administrative expenses: Review Amortisation of acquired intangible assets 8,600 8,628 20 l Impairment of acquired intangible assets - 24,579 Impairment of plant and equipment - 2,500 Directors’ Report Business improvement programme expenses 18,682 6,826 25 l Fair value (gains)/losses on foreign exchange contracts (2,489) 2,894 Profit on the sale of the Lincoln site (3,739) - Corporate Included in research and development costs: Governance Report Impairment of acquired intangible assets - 1,548 29 l Adjusted operating profit 15,017 27,440

Directors’ Amortisation of acquired intangibles of £8.6m (2009: £8.6m) reflects the lower amortisation arising Remuneration after the impairment charges made principally in the prior year of £24.6m, offset by a full year’s Report amortisation of QP intangibles of £1.1m. The Group has carried out its annual impairment reviews 32 l and considers that there is no impairment of acquired intangible assets to be recognised this year (2009: £24.6m). Five year history 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. 38 l The Group’s policy is to put in place forward contracts to sell surplus currencies based on its trading Consolidated forecasts, with the level of coverage decreasing over the next 12 months. The mark to market Financial adjustment amounted to a gain of £2.5m (2009: loss of £2.9m) and is described as fair value gains Statements 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. 39 l 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 Company Financial payment of £2.0m to be received by 31 March 2011, following the site being fully vacated. Statement 85 l

Image: used for high energy physics and cancer radiotherapy treatment k l machines with our fast tune magnetron and compact modulators.

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. e2v.com 10 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Key Performance Indicators (KPIs) 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 The Group currently uses a range of financial and non-financial KPIs to 03 l made losses. The standard rate of tax in France is c.34%. Tax losses monitor the business on a monthly basis. The current KPIs are rolling totaling £10m have been carried back to prior periods and are available 12 month sales, rolling 12 month adjusted* operating profit, 12 month Business Overview to be relieved against future tax payments. In the event that future tax order book, rolling 12 month return on sales and rolling 12 month return payments are not sufficient to relieve these amounts over the next five on total assets, which is rolling 12 month adjusted* operating profit 04 l years, this would result in a refund of tax previously paid. Tax losses as a percentage of rolling 12 month total assets. Sales profit and order of £3m arising in France have been carried forward and are available book are covered in detail in this review of the Group and divisional Chairman’s and to be relieved against future taxable profits. £13m of the restructuring performance. Rolling 12 month return on sales was 7.5% (2009: 11.8%) Chief Executive’s provision in France will be deductible as the provision is utilised. In and rolling 12 month return on total assets was 5.7% (2009: 9.9%). Statement respect of research and development tax credits in France, these are Non-financial KPIs are discussed in detail in the Corporate Responsibility received in cash based on the level of qualifying spend regardless of 06 l Review and include employee attendance percentage, the number whether the Group has made taxable profits or losses. of reportable accidents in a year, percentage reduction in our carbon Business Review footprint, Business in the Community (BITC) Environmental Index and Currency customer satisfaction. 08 l The manufacturing operations in the UK, France, US and Switzerland sell through the Group’s global distribution network, and are therefore subject Finance charges to transactional and translational risks, particularly in relation to the US Board of Directors Net finance costs before exceptional items were £5.7m (2009: £7.1m), dollar which accounts for 35% (2009: 38%) of the Group’s sales. Where 19 l a reduction of 20% compared with the prior year. In the first half of the US dollars are forecast to exceed US dollar costs, the surplus US dollars year lower bank base rates more than offset the increased borrowing. are sold under foreign exchange contracts in accordance with the Group’s In the second half the margin paid increased in the third quarter to hedging policy. In the year ended 31 March 2010 US dollars were sold Corporate 475 basis points (bps) reflecting the terms of the new banking facility under exchange contracts at an average rate of $1.76 = £1 (2009: $1.93 = Responsibility and this reduced to 275 bps in the final quarter as a result of the ratio £1). The Euro denominated sales revenue is more than offset by Euro costs. Review of total borrowings to earnings before interest, tax, depreciation and The Group is also subject to translational risks on the retranslation of amortisation as defined in the facility agreement (leverage ratio) falling 20 l its foreign currency denominated borrowings. In the first half the Group to below 2:1 on completion of the equity raise. The reduction of the put in place a forward contract to fix the rate at which it re-denominated leverage ratio was a result of the operating cash generation of £40.6m the Euro denominated debt into Sterling generating a gain of £2.6m. Directors’ Report and the net proceeds of the rights issue of £52.2m. The Group does not currently hedge the retranslation of its US dollar 25 l The Group’s policy is to hedge a minimum of 75% of the interest due on denominated borrowings into Sterling, the presentational currency. its term loans and the Group’s banking agreement requires the Group to Currently 52% of the Group’s borrowings are in US dollar with the Corporate follow this policy. The fair value gain on the interest rate swaps held by remainder in Sterling. the Group amounted to £0.1m (2009: loss of £1.8m). The gain represents Governance Report In the year ended 31 March exchange rates applied were: the fair value of the current interest rate swaps, net of the costs incurred 29 l on cancellation of one of the previous contracts. Average Year End The Group currently has a 3 month GBP LIBOR swap covering £26.3m Directors’ of Sterling term loan fixed at 1.96% and a 3 month US dollar LIBOR swap 2010 2009 2010 2009 Remuneration covering $24.4m of US dollar term loan fixed at 1.38%. The GBP LIBOR US dollar 1.59 1.75 1.51 1.43 Report swap amortises in line with the scheduled term loan repayments. Euro 1.13 1.22 1.12 1.07 32 l 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 Cash flow and net borrowings Five year history 75% of the term loans which secures borrowing rates on the hedged At the 31 March 2010 net borrowings amounted to £44.8m (2009: £137.3m), 38 l amounts at a maximum of 4.7% based on the Group maintaining the leverage ratio below 2:1. a reduction of £92.5m since 31 March 2009 of which 44% was internally generated and 56% from the proceeds of the equity raise. Consolidated Exceptional interest costs include the write off of the unamortised The net cash inflow generated from operations was £40.0m, a decrease Financial debt issue costs relating to the previous banking facility of £0.7m of £3.0m over the year ended 31 March 2009. This has been achieved Statements 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 despite lower levels of profit, due to cash generation from working capital 39 l the expected life of the facility. Exceptional finance income included and cost control measures. The continued focus on reducing inventory £2.6m of exchange gains on re-denomination of borrowings arising on 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. Company Financial the transfer of the Group’s Euro denominated debt into Sterling in the Restricting investment in tangible fixed assets and software reduced Statement summer of 2009. spend to £3.1m (2009: £10.8m), a reduction of 71%, and R&D spend to 85 l Taxation £0.7m (2009: £2.6m), a reduction of 73%. The tax credit for the year is £7.5m (2009: £7.1m). The effective tax rate The equity raise secured £52.2m net of costs and completed in for the year ended 31 March 2010 amounts to 76.7% (2009: 25.0%) December 2009. 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 k l capital gains tax rules which resulted in a lower effective rate on the gain.

e2v.com 11 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l

Business Overview 04 l

Chairman’s and Chief Executive’s Statement 06 l

Business Review 08 l Borrowing facilities The formal consultation period for the restructuring of the Grenoble facility was completed in March 2010 and this has now moved into During the year, the Group agreed new banking facilities which, Board of Directors implementation over the coming year with the closure of the front end at 31 March 2010 rates, total £107.5m and expire in December 2012. CCD wafer fab planned for February 2011. This will result in a number of 19 l These comprise a term loan of $32.5m and £35.0m and three general the products currently part of the imaging division being subject to last purpose facilities of $32.5m, ¤22.0m and £10m respectively. At 31 March time buys including all CCD dental intra and extra-oral products, as well 2010, a total of £72.6m had been drawn on these facilities consisting Corporate as some CCD industrial sensors. Specialist semiconductors is also part of $57m and £35m being the cash generating currencies of the business Responsibility of the restructuring programme in Grenoble, with phased headcount in the year. Review reductions in the areas of the business where volumes have decreased 20 l The term loans are repayable in yearly instalments of £10m on and also reflecting a sharpened focus where the division is investing in 31 December 2010 and 2011 with the balance being repayable on future R&D spend. 31 December 2012. The general purpose facilities are available to the The benefit of the significant cost reductions associated with the Directors’ Report Group in full until 31 December 2012 subject to the terms of the facility headcount reduction and the closure of the Grenoble wafer fab will not and are available for general corporate purposes. 25 l be realised in full until the following year. Interest is payable at 275bps over the interbank rates when the ratio In respect of Lincoln the consultation period was concluded Corporate of consolidated net borrowings to consolidated EBITDA is below 2:1 during February 2010 and the plan is now being progressed to the Governance Report increasing to a maximum of 475bps if the ratio of consolidated net implementation phase. The existing site has been sold for £4.2m with borrowings to consolidated EBITDA is above 3:1. Interest rate swaps are £2.2m received in the financial year and a new property purchased in 29 l in place in accordance with the Group’s hedging policy. Lincoln which will house the microwave engineering centre. The facility is subject to the following key covenants as at 31 March 2010: Directors’ The manufacturing activity of the Lincoln based microwave business is Remuneration being transferred to Chelmsford and a microwave engineering centre will Covenant Actual Report 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 l Consolidated net borrowings/ 32 consolidated EBITDA <3.25 : 1 1.6 : 1 the EDS division where this was previously reported within the sensors division. Detailed plans have been agreed with customers with the Consolidated EBITA/consolidated >2.25 : 1 3.8 : 1 Five year history net interest payable 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 38 l Net operating cash flow/debt service >1.50 : 1 4.0 : 1 headcount and overheads, with phased savings over the 2010/11 financial year with the full impact not being becoming effective until the Consolidated In the coming year, headroom for the net operating cash flow/debt last quarter when the current site in Lincoln will be vacated. Financial service covenant reduces significantly when loan repayments commence In respect of the sensors division, in the first half of the year the long Statements in December 2010. term biosensors R&D activity ceased. From April 2010 the Lincoln based 39 l The banking facility does not permit dividends to be paid until the businesses will be reported in EDS division. The balance of activity that Group’s net cash flow after restructuring costs and debt service has remains in the sensors division will be reported in the corporate centre whilst the portfolio continues to be reviewed. Company Financial been positive for 12 months. Statement The timing of the remaining spend in relation to the restructuring Restructuring programme is approximately £18m in the year ending 31 March 2011 85 l The overall restructuring programme that was announced in October and approximately £6m in the year ending 31 March 2012. 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.

Image: CCD imaging device used on NASA’s Solar Dynamics Observatory to examine k l the evolution of solar activity and refine our understanding of space weather.

e2v.com 12 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Electron devices and sub-systems 03 l Operations Business Overview Our 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 04 l commercial & industrial markets. The applications include radiotherapy cancer treatment machines, defence electronic countermeasures, radar systems, satellite communications amplifiers and digital Chairman’s and television transmitters. Chief Executive’s Statement Financials 06 l With reduced activity across all of its sectors sales in electron devices and sub-systems decreased by 21.7% to £65.6m (2009: £83.7m).

Business Review 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 08 l 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 Board of Directors the impact of multi-year radiotherapy orders which continue to run their term and decline in defence 19 l 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). Corporate Responsibility Markets Review Medical & science l 20 The 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 Directors’ Report radiotherapy market which is driven by the increasing improvement in cancer detection an l ageing population and the desire for more accurately targeted treatment. Our Original Equipment 25 Manufacture (OEM) customers are the most significant route to market and these include Tomotherapy, Elekta, Varian and . Key drivers for the market include new equipment Corporate demand that was affected by the reduced level of investment in hospital facilities, whereas the Case Study Governance Report underlying demand for spares is primarily driven by the installed base. Spares represent High Power RF systems c.65% of sales. 29 l The e2v Centre for Industrial Microwave Within the medical market, the division supplies magnetrons, , modulators and services Processing (e2v CIMP) was formed Directors’ mainly to the large OEMs but also to end users through distribution. The division is the world’s through a partnership between Remuneration largest manufacturer of pulse magnetrons and a world leader in magnetron technology. The researchers in the National Centre for Report division’s modulator systems are specifically designed for use in linear accelerators, the kind used Industrial Processing at the University of in radiotherapy machines. When combined with the division’s magnetron, this sub-system provides Nottingham’s Faculty of Engineering, 32 l a reliable, accurate, high energy, pulsed microwave source for electron acceleration. and e2v. During the year e2v entered into a unique support agreement with Tomotherapy, for an initial term of The centre is a focus for the Five year history three years. Under the agreement, Tomotherapy pays e2v a monthly fee per installed equipment to commercialisation of innovative 38 l cover the purchase, repair and replacement of magnetrons. technologies that will harness the benefits of microwave processing for e2v sales into radiotherapy applications were flat overall but adjusting for stock movements, use in a wide range of bulk material reflected the overall trend of modest underlying growth. In the first half there was lower demand for Consolidated processing industries. Financial both new systems, due to lack of credit facilities for end-users and due to destocking amongst the Statements OEMs, whereas second half volumes showed an improving trend for new build equipment and a This year we have taken two strategically return to run rate demand for spares. important orders for our High Power 39 l RF business. The first being with the The recently prototyped high power magnetron is designed specifically for the medical and University of Nottingham for a microwave industrial linear accelerator markets and provides an alternative to klystrons in high average and generator in connection to a bulk material Company Financial peak power applications. When combined with the modulator in development, it provides a smaller, processing project co-funded by the East Statement more flexible footprint than conventional approaches. The focus for the division’s ongoing R&D Midlands Development Agency under an programme for the medical market is the development of a sub-system incorporating this high 85 l ongoing technology framework grant, power, tunable S-Band magnetron and the next generation modulator. and the second with an international Sales in the science market are usually for high power switching applications and were buoyed by company for proof of concept. the delivery of large quantities of hydrogen thyratrons to the prestigious Spring8 science facility in Japan – one of Japan’s top infrastructure projects. k l

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. e2v.com 13 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Aerospace & defence 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 Established long term relationships with industry leading defence 03 l were down 6%, reflecting destocking and a reduction in the number primes are based on the division’s ability to design and manufacture of new vessels built. Cargo screening activity was muted with a shift specialised high-reliability components and sub-systems. The market Business Overview in security focus from cargo to passenger screening. Other industrial is driven by the availability of governmental funding including urgent markets were dampened by the general economic environment, but operational requirements for current conflicts, the changing threats 04 l stabilised in the second half, with signs of recovery in both sales and to military assets and by political pressure to reduce casualties have enquiries in the last quarter. an impact on demand. Technology for some applications, like radar, Chairman’s and is shifting from tube to solid state, whilst new applications are also In the commercial & industrial sector the focus of the R&D effort is Chief Executive’s emerging for vacuum tube technology. on high power RF applications, where we have engaged with a Statement number of international companies involved in materials processing. The division provides magnetrons, coupled-cavity Travelling Wave Tubes In collaboration with the University of Nottingham, we are addressing 06 l (TWTs), helix TWTs and modulators as well as design and development a number of opportunities presented by the availability of reliable, services. Key customers are the system level OEMs, including BAE high power RF energy to improve fundamental process characteristics. Business Review Systems, Selex, Raytheon and Thales. For some applications e2v also Orders have been received for complete generator and applicator contracts directly with the end users or governmental laboratories sub-system prototypes. 08 l and their technology groups. A gradual shift to sub-systems fits with market opportunity as OEM customers implement increased buy vs. Board of Directors make decisions. Product mix is being changed by end-user desire to Imaging extend the life of existing military assets – where e2v has significant 19 l legacy business. e2v’s non-International Traffic in Arms Regulation Operations (ITAR) technology is a key advantage versus US competitors, in our Our imaging division, which is based in Chelmsford, UK and Grenoble, international markets. Corporate France, supports advanced CCD and CMOS based imaging sensors and, Responsibility The division’s products and services are used in a range of Electronic at product level, cameras for a range of medical & science, aerospace Review Counter Measures (ECM) and Radio Frequency (RF) radar applications. & defence and commercial & industrial markets including high end 20 l Typical applications in ECM include TWTs and complete RF sub-systems. applications in spectroscopy and scientific imaging, sensors and focal There were lower levels of demand for new RF sub-systems in the year, plane arrays for and earth observation, dental x-ray but new orders for maintenance and upgrade of the installed base were radiography, Optical Coherence Tomography (OCT), machine vision Directors’ Report secured. The contract for supply of TWTs for towed decoys on the US and Automated Data Collection Systems (ADCS). The division currently 25 l Navy’s Superhornets moved into the low rate initial production phase. operates CCD fabs in Chelmsford and Grenoble. As part of the previously Other significant contracts included sub-systems for the Seawolf missile announced restructuring, the CCD wafer fab in Grenoble is scheduled to programme in service support contract. close in February 2011. Corporate Governance Report The UK Ministry of Defence (MOD) continues to contract directly with Financials e2v for novel solutions, providing funding for the development of new Sales in imaging decreased by 18% to £53.8m (2009: £65.2m). 29 l technologies, including high power microwave sources. Several new contract wins have been obtained, for development projects with the The division’s adjusted* operating profit before taxation was £0.5m Directors’ potential for future volume supply into new applications. (2009: £4.3m), a reduction of 88%. This was due to dramatically lower Remuneration volumes in the dental market, offset by a reduction in R&D achieved by a While the second half saw a significant upturn in bid activity, sales Report re-phasing of some programmes and reductions in third party spend. activity continued to weaken reflecting delays in order placement and the 32 l continued decline in traditional radar business, falling 11% year on year. The order book at 31 March 2010 was £47m (2009: £40m), the main drivers were; Last Time Buy (LTB) orders for CCD dental products, R&D programmes are focusing on the further development of RF strong demand from OCT, and a ramp-up demand for CMOS sensors Five year history sub-systems, along with other customer-funded programmes. for automatic data collection. The LTB orders will be non-recurring and 38 l reflect the decision to close the front end fab in Grenoble. The orders Commercial & industrial relating to space activities were £23m (2009: £25m), down 7%. The Commercial & industrial markets served include broadcast orders due for delivery in FY2011 were £43m (2009: £33m), up 31% and Consolidated communications, radar for commercial shipping, harbours and aircraft include £9m of LTB orders and c.£1.5m of overdue orders resulting from Financial and industrial applications including RF processing, induction and the industrial disruption in Grenoble in the last quarter. Statements dielectric welding, lasers and cargo screening. The broadcast market 39 l has been affected adversely by the switch from analogue to digital TV Markets but helped by the growth in satellite communications. Commercial radar Medical & science markets are driven by regulation for commercial shipping and have been Company Financial affected by fewer launches and lower shipping activity. Other sectors The dental x-ray radiography market is a long established market, in Statement were also impacted by the general economic environment and lower which we have been a major vendor since the beginning. The market is 85 l industrial output and investment. Overall sales fell 26% year on year. driven by the ageing population increasing demand for healthcare, a drive to digital technologies to lower patient exposure to radiation and The key products are triodes and tetrodes and gridded tubes for industrial early detection of problems. applications, klystrons, Inductive Output Tubes (IOTs) for digital and analogue Ultra High Frequency (UHF) TV transmitters, satcom amplifiers e2v provides dental equipment manufacturers with custom design CCD for outdoor broadcast, high power linear accelerator (LINAC) magnetrons and CMOS dental image sensors that drive electronics for intra-oral for cargo screening and RF generator systems for industrial materials and extra-oral devices. The route to market is through OEMs including processing. There are diverse routes to market through major OEMs Planmeca, Palodex, Cyber Medical who provide the equipment to the for new systems and then through distributors and service partners to end users through their distribution networks. k l supply end-user spares. OEM customers include Garmin, Honeywell and The demand for dental CCD sensors has continued to fall, especially for Huettinger while Alphatron is a key distribution partner. intra-oral applications, as CMOS solutions become available with more

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. e2v.com 14 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 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 03 l 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 Business Overview 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 04 l 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. Chairman’s and OCT applied to ophthalmology is a relatively new market, started in 1996 but which grew strongly Chief Executive’s in the following years when Spectral-Domain (SD) OCT was introduced. e2v supplies the line scan Statement camera used in most SD-OCT engines on the market, the main customers include Optovue. The 06 l 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 Business Review have slowed down this year due to global economic downturn. 08 l 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 Board of Directors 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. 19 l Aerospace & defence Corporate The division is a world leading supplier of high sensitivity image sensors to the global space sector. Responsibility The sector requires high reliability products for ground and space astronomy, space science, Review environmental observation and land observation. 20 l 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. Directors’ Report 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 25 l strong continuing growth in demand. e2v provides mostly CCD sensors into this market sourced from the fabs in Chelmsford and Corporate Grenoble. However, e2v has started to demonstrate the feasibility and performance advantage Governance Report Case Study of CMOS in some applications including ocean imaging and hyperspectral imaging. The route Hubble upgrade 29 l 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 In May 2009, NASA’s Hubble Space space agencies, including NASA, ESA, CNES, JAXA and CSA, with whom our R&D programmes and Directors’ Telescope was successfully upgraded with roadmaps are discussed to support future requirements. Remuneration e2v imaging sensors. The team at e2v Report Revenues in the space sector have grown by 30.5% in the year driven by major programmes for has been working closely with NASA over earth land observation (including the first phase of the CSO strategic programme that will be the many years to develop high performance 32 l successor of Helios France programme) and for the space science sector (including the final phase of sensors that were integrated into a new the programme, for ESA). camera system for the telescope. The high Five year history profile project was successful, with the Commercial & industrial revitalised Hubble returning wonderful 38 l images and proving the telescope to be There are a wide variety of industries that have a requirement for our middle to high end more powerful than it has ever been. specification machine vision sensors and cameras including raw material production (paper, glass Consolidated and metal), food sorting and electronic and semiconductor process inspection. The products form Financial part of larger industrial equipment and therefore significantly influenced by the cycles of investment Statements in new capacity and replacement cycles in manufacturing plants, driven by demand in the general 39 l 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. Company Financial Statement 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 85 l 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 k l 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. e2v.com 15 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Specialist semiconductors 03 l Operations Business Overview Our specialist semiconductors division, which is based in Grenoble, France and Santa Clara, US provides data converters, microprocessors, assembly and test services, military spec high 04 l reliability legacy components, sensor signal conditioning Application Specific Integrated Circuits (ASICs) and Application Specific StandardP roducts (ASSPs) for aerospace & defence Chairman’s and and commercial & industrial markets, and operates Qualified Manufacturers List (QML) certified Chief Executive’s semiconductor manufacturing facilities at both locations. Statement Financials 06 l Sales in specialist semiconductors decreased moderately by 4.5% to £50.9m (2009: £53.3m), which reflects the inclusion of PQ Semiconductor, Inc. (QP) for the full year although overall existing Business Review markets declined and sales were down 24% excluding the contribution from QP. 08 l 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 PQ ’s activity, Board of Directors compared to 6 months last year. 19 l 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 Corporate due for delivery in FY2011 were £26m (2009: £17m), up 49%, and include c.£2.0m of overdue orders Responsibility resulting from the industrial disruption in Grenoble in the last quarter. Review Markets 20 l Aerospace & defence The market demands high spec, high reliability components. There is demand for improved Directors’ Report performance and connectivity for embedded computers, increased bandwidth and higher resolution 25 l 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 Corporate new and legacy systems and programmes are supported. Governance Report Case Study Obsolescence mitigation e2v designs high speed data converters, which are used in leading edge signal conversion applications 29 l such as wide-band satellite receivers, wireless LAN and RF infrastructures used in military and aerospace In March 2010 e2v’s specialist applications. e2v offers market leading package and screening options; making high reliability Directors’ semiconductor division demonstrated semiconductors available to aerospace & defence platforms via OEMs and distribution channels. its long experience in obsolescence Remuneration Sales for the data converters product group were down 17% over last year. The R&D investment in Report mitigation through an agreement with Freescale Semiconductor to extend the data converters is to continue to provide the highest performance analogue to digital converters 32 l life of 68K-series microprocessors for available in the market targeted at aerospace & defence platforms. military, aerospace, commercial & In partnership with Freescale Semiconductor, e2v offers a range of high reliability microprocessors Five year history industrial markets. 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 38 l e2v will continue manufacture for all markets, following discontinuance down 24% over the prior year, due to lower demand and the industrial dispute in our Grenoble plant. of these popular products by e2v’s chip assembly and test business provides an outsourcing option to customers that want Consolidated Freescale Semiconductor. to move away from in-house testing, due to the efficiencies they can gain by focusing on pure Financial manufacturing. e2v has seen an increase in this business of 34% over last year within the aerospace Statements This arrangement is based on e2v’s long term experience in extending the market. Medium term customer demand has increased the visibility of this activity and justified 39 l availability of strategic semiconductors retention of staff that were originally planned to be included in the Grenoble site rationalisation. used in the aerospace & defence The focus of development for the microprocessors is development of the existing products Company Financial markets. These Freescale products will as well as new high reliability offerings based on Freescale Semiconductor’s PowerPC™ Statement remain available from e2v for the next based microprocessor. 10 years, or longer. 85 l 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 k l available) for which there is ongoing product demand and new product design in order to expand its product offerings.

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. e2v.com 16 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 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 03 l programme for 68K-series microprocessors and additional services secured for a minimum of 10 years under an obsolescence mitigation programme. Business Overview Commercial & industrial 04 l The 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 Chairman’s and climate control applications. Demand in these markets has declined. Chief Executive’s Statement 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 06 l 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 Business Review are down 50% on the prior year, and, as part of the reorganisation, support will be maintained for products developed for existing customers. 08 l

Board of Directors Sensors 19 l Our 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 Corporate businesses sell into the range of the Group’s markets, across the medical & science, aerospace Responsibility & defence and commercial & industrial sectors. From April 2010 the sensors division has been Review reorganised with the businesses currently based in Lincoln reporting as part of the EDS division. 20 l The remaining businesses will be reported in the corporate centre whilst the portfolio continues to be reviewed.

Directors’ Report Financials 25 l 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 Corporate sales growth of 15% whilst the sales for the Lincoln based businesses declined by 14%. Governance Report The division’s adjusted* operating loss was £0.4m (2009: loss £1.6m), an improvement of 74%. In Case Study Argus fire fighting cameras 29 l 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 This year saw e2v celebrating 2 important growth in the MiCS automotive business and improved profitability in the thermal imaging business contracts for Argus thermal imaging Directors’ through increased revenue and purchase price reductions in materials. Remuneration cameras. The first, with London Fire Brigade Report The order book at 31 March 2010 was £17m (2009: £18m), excluding the Lincoln business the order in the UK, came following a lengthy and book was £4m (2009: £5m) reflecting a shift in the scientific instruments business where customers challenging series of comparative tests, 32 l are buying in a 6 month rather than 12 month cycle. The orders due for delivery in FY2011 were £14m where the Argus4 came out on top and the (2009: £14m), and excluding the Lincoln businesses such orders were £3m (2009: £4m). second was with the Royal Australian Navy. Five year history The Australian order, worth over half Portfolio 38 l a million pounds, confirms Argus4’s Lincoln based businesses dominance in the naval market. In addition The Lincoln microwave business supplies electronic sub-systems, modules and components for to this continued service with the Australian Consolidated defence, airborne radar, and communications systems, medical and automotive markets. In line and UK Navies, Argus thermal imaging Financial with the overall economy, the commercial sector was challenging during the year, though there are cameras serve the Swedish, Indian and Statements signs of recovery in commercial radar sales. The defence sector was affected by programme phasing Pakistan Navies, the US Coastguard, and 39 l on several key platforms such as Eurofighter Typhoon. thousands of fire and police departments all over the world. The high speed electronics business also based in Lincoln has been developing and manufacturing Company Financial Exploding Foil Initiators (EFIs) and Electronic Safety and Arming Units (ESAU). These products are Statement 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 85 l 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.

Automotive The 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. k l

e2v.com 17 Business Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Thermal imaging 03 l The 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 Business Overview expansion of the routes to market in key emerging territories, the successful delivery of substantial 04 l orders to customers such as the London Fire Brigade and a new product launch. Scientific instruments Chairman’s and Chief Executive’s The scientific instrument business specialises in the manufacture of high specification x-ray detectors Statement 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 06 l 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 Business Review 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. 08 l Case Study Gas sensors Launch of the e2v CEI Board of Directors As an independent supplier of a range of quality gas sensors to OEMs, the division focuses on In November 2009 over 80 top level product reliability and support via specialist engineers. The significant order from China in the prior 19 l representatives from the academic year did not recur with the result that sales are down 37% from the prior year, exacerbated by poor and business communities gathered market conditions in the US. However, there were some positive indications of improving demand Corporate at The Open University’s campus to during the later part of the year. Responsibility celebrate the opening of the e2v Centre Review for Electronic Imaging (e2v CEI). The e2v CEI is a collaboration between The Open Group functions 20 l University and e2v and is dedicated to the research and development of advanced The divisions are supported by an international sales organisation, group operations and support services including commercial, human resources, IT and finance. Directors’ Report technologies for electronic image sensing and provides knowledge exchange 25 l between the UK technology industry and Sales the academic world. The sales function has sales offices in 5 locations and supports the divisions through managing Corporate customer relationships and the global network of distributors and representatives. The sales activity Governance Report 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 29 l remunerated on individual sales targets.

Directors’ Operations Remuneration The Group operations function is responsible for the main manufacturing sites in Chelmsford, Report Grenoble, Santa Clara and Lincoln, as well as the smaller sites in the UK and Switzerland. Group l operations are also responsible for supply chain and procurement and has a dedicated purchasing 32 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 Five year history cost of materials used in production which has generated material savings against the prior year l costs of £1.9m. The inventory reduction programme has seen inventory reduce by £5.9m (14%). This 38 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 Consolidated with the result that the average time to deal with customer returns has decreased by 63 days since Financial September 2009. Operations are responsible for maintaining the manufacturing facilities whilst Statements controlling spend on tangible assets and made a significant contribution to the reduction in capital spend in this financial year. 39 l Support services Company Financial Support services include commercial, human resources, IT and finance. These costs are allocated Statement to the divisions. The central costs of £2.6m (2009: £2.3m) are the costs relating to e2v technologies 85 l 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.

k l

e2v.com 18 Board of Directors e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Board of Directors 03 l

Business Overview 04 l

Chairman’s and Chief Executive’s Statement 06 l

Business Review Chris Geoghegan Keith Attwood Charles Hindson Chairman Chief Executive Group Finance Director 08 l Chris joined the e2v Board as Chairman in Keith has over 25 years, of commercial Charles joined the e2v Board in May 2009. October 2009. Prior to this Chris was a group management experience, gained in Charles’ last role was Chief Executive, and Board of Directors executive director of BAE Systems plc from telecommunications, avionics and electronic prior to that Group Finance Director, of 19 l 2002 until 2007 and a past president of the components. He has held a range of senior Filtronic plc, a UK listed specialist electronics Society of British Aerospace Companies. positions within UK industrial companies, manufacturing group. Previously, he was He has over 30 years of experience in the including Operations Director (GEC-Marconi Finance Director at Eutelstat S.A. and held Corporate aerospace industry having spent most Avionics Ltd) and Project Director (GPT Ltd), various positions with the BT Group, British Responsibility of his career in the commercial aircraft prior to joining the Group as Managing Gas plc, Price Waterhouse and 3i plc. Review sector and was appointed one of three Director in 1998. Keith led the MBO of e2v 20 l chief operating officers of BAE Systems plc. from Marconi plc in 2002 and floated the Chris was a key player in the growth and Company on the London Stock Exchange in establishment of as Managing Director July 2004. He is past Chair and Vice Chairman Directors’ Report of the Airbus Company and a member of of the CBI East of England Regional Council. 25 l the executive board of Airbus Industrie. He also has substantial experience in the military aerospace sector, having been Corporate responsible for BAE Systems’ European Governance Report Defence joint ventures and its Defence 29 l Electronics companies. He is currently the Chairman of Hampson Industries plc and senior independent director of Directors’ Kier Group plc, Volex plc and SIG plc. Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements Anthony Reading MBE Jonathan Brooks Ian Godden 39 l Senior Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Anthony was appointed to the Board in 2004. Jonathan is a non-executive director of Ian, after being UK Managing Partner and Company Financial He was an executive director of Tomkins plc Aveva Group plc, an LSE-listed engineering European Board Member of Booz Allen and Statement and Chairman and Chief Executive of Tomkins IT software provider to the plant, power and Hamilton, and UK Managing Partner of Roland 85 l Corporation, USA, for 11 years, until the end of marine industries and Xyratex Limited, a Berger Strategy Consultants, started up a 2003. He is currently a non-executive director NASDAQ-listed provider of enterprise class successful consultancy serving industrial and of Laird plc and Taylor Wimpey plc, and data storage sub-systems and network technology companies which he subsequently previously a non-executive director of George technology. He is also Chairman of Picochip sold in the late 1990s. Ian is now Chairman Wimpey plc and Spectris plc. Inc., a venture capital-backed company of ADS and its subsidiary, Farnborough developing wireless processors. Between International. Ian is also President and CEO of 1995 and 2002, he was Chief Financial Officer Glenmore Energy (USA), non-executive director and a Director of ARM Holdings plc. Jonathan of KBC Advanced Technologies, and a non- was appointed to the Board in 2004. executive director of Bristow Group Inc. He was k l appointed to the Board in 2003.

e2v.com 19 Corporate Responsibility Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Corporate Responsibility Review 03 l

Business Overview 04 l At e2v we strongly believe that Investors Employees Chairman’s and we should consider the interests e2v promotes two-way e2v recognises the importance Chief Executive’s communication with current of people to its ongoing success. Statement of the global community when and potential investors. Its competitiveness in the market is dependent on employing the 06 l conducting our business, ensuring right people with the right skills in the business. Business Review that we function in an ethical and 08 l responsible way at all times. This involves considering the impact Board of Directors of our activities on society and the Our policy is to: Our policy is to: 19 l l Ensure timely delivery of l Comply with all legislation information in line with relating to employee environment at large, as well acting regulatory requirements. relations in the countries Corporate responsibly towards our customers, l P rovide information in paper in which we operate. Responsibility format whilst promoting l Maintain an equal Review suppliers, employees, shareholders the electronic provision of opportunities policy in 20 l information via our line with, and going and communities. investor relations website. beyond, regulations. l Make an additional annual l Comply with, and where Directors’ Report presentation to investors possible exceed, health & 25 l We redefined our policies and analysts. safety regulations. l Retain a financial PR l Maintain a learning and framework for Corporate consultancy to ensure all and development Corporate communication is timely, programme for employees. Governance Report Responsibility in 2009 and believe appropriate and in accordance l Facilitate and encourage 29 l that they have provided us with a with best practice. two-way communication at e2v, including a secure ‘whistle-blowing’ process Directors’ solid base, which we have both and annual employee survey. Remuneration Report consolidated and used to develop l Maintain and benchmark a remuneration policy ensuring 32 l our approach, ensuring that we go e2v offers competitive work further than just complying with packages. Five year history l Create a great working statutory requirements. environment at e2v where 38 l people want to work. l Encourage all employees Consolidated to live the company’s Financial 4 key values. Statements 39 l

Company Financial Statement 85 l

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e2v.com 20 Corporate Responsibility Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l

Business Overview 04 l Community Environment Supply Chain Chairman’s and e2v operates in the heart of local e2v continues to focus on e2v works to build Chief Executive’s communities. The business is minimising any adverse impact long-term relationships with Statement also an integral part of those on the environment stemming its suppliers and customers, communities across all e2v from both the activities of the encouraging ethical and 06 l locations. As a consequence e2v company and its employees. environmental considerations recognises the responsibility that in all its dealings. comes with this position. Business Review 08 l

Board of Directors Our policy is to: Our policy is to: Our policy is to: 19 l l Make a positive contribution l Maintain operational and l Assess all potential suppliers and show consideration to our management systems to against an ethical and neighbours and the community facilitate compliance with environmental questionnaire Corporate in which we operate. environmental legislation. prior to being added to our Responsibility l Support local organisations l Encourage all persons supplier lists. Review through charitable giving. working on behalf of the l Communicate and treat our 20 l l Promote an open two- Group, through training suppliers/customers with way dialogue with local and communications to fairness and courtesy as communities and stakeholders. take personal responsibility dictated by our internal values. Directors’ Report to minimise their adverse l Work with all of our customers l Support local schools and impact on the environment 25 l learning institutions through and suppliers regarding and to contribute towards environmental initiatives, training and organisations meeting group objectives such as STEM TEAM Essex encouraging them to help Corporate and targets. (formerly SETpoint). us to jointly reduce the Governance Report l Encourage environmentally environment impact of sound design practices at all our work. 29 l stages of product life cycles. l Work in partnership with l Seek all practical ways to our suppliers to enhance the Directors’ reduce emissions to land, quality and performance of Remuneration sea, air and water through the items they supply. Report responsible management of l Work in partnership with our our business processes. 32 l customers to develop and l Manage energy usage and improve both e2v’s products greenhouse gas emissions and the systems in which our Five year history for efficiency and minimal products are incorporated. waste, through appropriate 38 l investment in process controls and continuous Consolidated improvement plans. Financial l Use best available Statements techniques to minimise waste by preventing, reducing, 39 l re-using or recovering (inc. recycling) waste material. Company Financial Statement 85 l

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e2v.com 21 Corporate Responsibility Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Investors 03 l l 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.

Business Overview l The Group continues to consider timely and accurate communications with analysts and investors as a priority. 04 l 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 Chairman’s and processes include the Annual General Meeting, (where shareholders have an opportunity to Chief Executive’s question the Board), interim and full year results presentations, interim trading updates and Statement Regulatory News Statements, as appropriate. In addition, the Group responds to individual requests 06 l for information. Communication channels to investors continue to include the delivery of paper based Business Review 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 08 l Rights Issue documentation, interim and annual reports were posted.

Board of Directors Employees 19 l l 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. Corporate Responsibility l Attendance levels averaged 97% during 2010 across the Group (2009: 97%). Review e2v’s core values are a cornerstone to attracting and retaining the right people to maintain the 20 l 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:

Directors’ Report l Integrity 25 l l Connectivity l Innovation Corporate Governance Report Case Study l Raising the bar Apprentice of the year 29 l A further tranche (the sixth) of the Company’s share save scheme was issued in the period. e2v’s Apprentice Awards Evening is Our Smart Thinking Award & Recognition Scheme (STARS) is an important means by which we Directors’ an important event in our calendar. recognise employees who go the extra mile, with instant and quarterly awards available to celebrate Remuneration It recognises the broad value of the achievements of both individuals and teams. Report apprentices to companies like e2v, helping us bring through highly motivated We are also committed to developing all of our people and have a comprehensive, innovative 32 l young people with knowledge and and high quality learning and development programme in place, including a ‘learning theatre’ experience relevant to our specialised 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- Five year history business, whilst also allowing us to celebrate individual excellence. blowing culture and where our policies meet, and often exceed, legal requirements. 38 l The most prestigious award of the evening Eleven of e2v’s Chelmsford employees have been awarded the ‘Young Enterprise Essex Volunteer – the “Apprentice of the Year” award – Award’ by Young Enterprise East of England (YEEE) for their work with local schools, acting as Consolidated went to third-year apprentice Chris Hill, Business Advisors for the YEEE Company Programme, where teams from the schools learn the Financial pictured here with Apprentice Manager, essential elements of setting up and running a small business. Statements Bob Randall. Awards were also presented e2v also continues to support STEM TEAM Essex (Science, Technology, Engineering and Mathematics 39 l to those apprentices who have this year Network), a UK wide organisation, sponsored by the Department of Business Enterprise and completed their Foundation Modern Regulatory Reform. e2v has around 20 ambassadors who facilitate at Group events and go out into Apprenticeships and Full Framework schools and colleges to work with young people, raising interest and awareness of careers in these Company Financial Advanced Modern Apprenticeships. subjects and developing a pipeline of motivated and capable people into science, technology and Statement maths-related careers. 85 l

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e2v.com 22 Corporate Responsibility Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Occupational health 03 l There were 13 (2009: 8) reportable accidents across the Group in 2010 and 111 (2009: 136) non-reportable accidents. Business Overview 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 04 l 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 Chairman’s and workforce to be adequately screened an occupational health service is available for employees in Chief Executive’s addition to first aid facilities. Employees can be referred to specific specialists at company expense Statement 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 06 l access to qualified counsellors and lawyers. Effectiveness of the provision is measured by absence patterns and ill health/occupational disease reporting. Business Review During the period e2v specifically monitored ‘Swine Flu’ infections through a global action team. 08 l Infection rates were relatively low and managed through normal absence processes. Health & safety Board of Directors e2v has made significant improvements in the management of Health & Safety and proactively 19 l 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 Corporate impacts that may affect employees, contractors and the wider public. The e2v Group aims to gain Responsibility OHSAS 18001 certification by the end of 2010. In relation to our processes and activities, reportable Review injuries remain below the national average. There were no reportable diseases or work related ill health throughout 2009. 20 l 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 Directors’ Report and work are excluded). In the UK, reportable accidents are based on the requirements of the 25 l Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (RIDDOR), in other countries, local regulations are used.

Corporate Community Governance Report Case Study l e2v supports nine core global charitable organisations associated with its major facilities and Dyspraxie mais fantastique 29 l made 35 separate donations in matched support of employee fundraising activities. e2v’s charities committee offers support to l e2v continues to support the whoosh! Learning Centre, based at our headquarters in Chelmsford  employees raising money for charities close Directors’ and run in partnership with Essex County Council (ECC) and the Learning and Skills Council. whoosh! to their heart. Remuneration is open to both e2v employees and all members of the local community and has 1700 members. Report This year we were able to support 35 l e2v supports the e2v foundation, a charitable investment fund, run by Essex Community  individual requests from our employees, 32 l Foundation (ECF). which included sponsoring a meeting l e2v is engaged with and strives to play an active part in the communities in which our people for Dyspraxie mais fantastique through Five year history live and work. our Grenoble facility, where a greater 38 l understanding of the condition l Our charity committee has maintained its global reach supporting charities local to our global was promoted by putting people in facilities, both encouraging and supporting voluntary activity and fundraising by employees. the position of children suffering from Consolidated e2v employees have been engaged in a number of fundraising events: including raising £6,000 dyspraxia to help them understand the Financial by growing moustaches for the Movember campaign for prostate cancer research, £1,000 for difficulties of this condition. Statements Macmillan’s Cancer Care nurses and more than £6,500 for the core charities through many and In addition an event was held at our 39 l various fundraising events. In addition e2v donated £5,800 in matched funding, where employees Grenoble site to collect food, toys, ship with had raised money for their chosen charities. Secours Populaire an organisation dedicated Company Financial Although no additional funds were added to the e2v foundation this year, the total foundation value to help families in need of support. Statement 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. 85 l 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. k l

e2v.com 23 Corporate Responsibility Review e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l

Business Overview 04 l

Chairman’s and Chief Executive’s Statement 06 l

Business Review 08 l Environment Supply chain Board of Directors l e2v is a member of Business In The Community (BITC) and completed l Group inventories was £35.5 million (2009: £42.4million) after our submission to the BITC Environmental Index in 2010, achieving a absorbing the impact of exchange rate variances. 19 l gold (94%) award. l A framework has been developed for a new Supplier Accreditation l As part of this submission e2v calculates its carbon footprint across all Scheme, for production suppliers, based on cost, quality, service and Corporate global sites. Local targets are set and combined into an overall Group health, safety & environmental criteria. It will go live in 2011. Responsibility target and performance measure. e2v reduced its carbon footprint Review by 15.4% in the year to 31 December 2009 when compared to 2008, At e2v we aim to build long term partnership based relationships at against a target of a 3% reduction. every point in our supply chain, from material supply, through delivery, 20 l to ongoing service and support for our customers; maintaining a focus l e2v’s Bright Green programme is a global initiative focussing on the on the quality, safety and availability of our products and services whilst Directors’ Report continuous improvement of our systems and processes to manage supporting ethical and environmentally sensitive business practices. and minimise our impact on the environment. 25 l The global procurement team has been developing our procurement e2v has, since 1997, incorporated the requirements of ISO14001 into its strategy, specifically in the areas of: Environmental Management System at both Chelmsford and Lincoln Corporate sites. Environmental Management Systems are in place at all other e2v Commodity management strategy Governance Report sites and our updated plan is to gain ISO14001 certification at all of our We have a continuously evolving global sourcing strategy that 29 l sites by 2012. maximises commercial competitiveness whilst minimising supply chain e2v recognises the impact that human activity has on climate change vulnerabilities. The global procurement team continues to drive the Directors’ and remains committed to reducing our footprint and in following consolidation of spend through chosen strategic suppliers, ongoing Remuneration guidance and regulations regarding greenhouse gas emissions and formal negotiation process including global spend aggregation, savings Report managing and reducing our impact our operations have upon roadmap, and commodity specific strategies. the environment. 32 l Supplier relationship management e2v uses the BITC Environmental Index to benchmark our Environmental We are rationalising and managing our supplier base through the use Management System against other substantial UK organisations. Five year history and continuous development of best in class supplier relationship In 2009 e2v shadowed the index, scoring 53%. In 2010 a target of management and negotiation techniques. This includes the l achieving a bronze (70%) award was set. In fact e2v was awarded gold 38 benchmarking of current suppliers to assess areas of focus (94%) and commended by Amita Vaux of BITC commenting, “I am not and opportunity. aware of another organisation that has made such a substantial jump Consolidated in their performance. I give credit to e2v for the methodology that they Financial Supplier accreditation schemes have used, which we will commend to other organisations”. This will be Statements expanded upon in the coming year to include measurement against the A Supplier Accreditation Scheme framework has been developed for l full BITC Corporate Responsibility (CR) Index. production suppliers, based on cost, quality, service and health, safety & 39 environmental criteria. There will be annually evolving scorecard criteria Although e2v achieved a 15.4% reduction in our carbon footprint and weighting to reflect e2v’s ongoing business requirements whilst Company Financial against a target 3% reduction, it should be recognised that a significant accelerating focus, exploring synergies/opportunities to the mutual Statement contribution to this reduction came as a result of the economy rather advantage and benefit of both parties. than purely efficiencies in working practices. 85 l Suppliers will be given one of four classifications and will be heavily A decision has been made not to use carbon offsetting within e2v. Any encouraged and coached to progress through the hierarchy. The scheme changes will therefore be from the direct effect of e2v’s activities. 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, k l Gigabit Ethernet and automatic test equipment.

e2v.com 24 Directors’ Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Directors’ Report 03 l

Business Overview 04 l The Directors present their annual report and the audited financial Principal risks and uncertainties statements for the year ended 31 March 2010. The Group’s consolidated As noted in the Corporate Governance Report, the Board has adopted financial statements have been prepared in accordance with Chairman’s and processes to identify, evaluate and manage the significant risks faced International Financial Reporting Standards (IFRS) as adopted by the Chief Executive’s by the Group. The more significant risks and uncertainties faced by the European Union. The Company financial statements have been prepared Statement Group are set out as follows. in accordance with UK Generally Accepted Accounting Practice (UK GAAP). 06 l Global political and economic conditions Principal activity Demand for the Group’s products and services are a factor of wider The Group’s principal activity is the design and supply of specialist Business Review economic conditions. During an economic slowdown it is possible that components and sub-systems into niche sectors within the medical & demand for certain products and services provided by the Group may 08 l science, aerospace & defence and the commercial & industrial markets. reduce. Furthermore the Group’s products are supplied for use into As discussed in the Business Review, the Group is organised into industries which are dependent on and subject to, government policies, business divisions which are supported by a number of Group functions. Board of Directors national and international political considerations and budgetary 19 l The Group has manufacturing operations in the UK, France, USA and constraints which are outside the control of the Group. These risks are Switzerland and sales and distribution operations in the UK, USA, mitigated to a degree by the diverse nature of the Group’s products Germany, France and Hong Kong, as well as an established global and its expanding geographical spread. Furthermore the current Corporate network of agents and distributors covering the Americas, Europe, economic climate may increase the risk that parties with whom the Responsibility Middle East, Africa, Far East and Australia. Group trades, both customers and suppliers, become unable to meet Review their commitments to the Group. The Group seeks to manage this risk by 20 l Review of business and future developments performing credit checks and taking third party comfort, including letters of credit, where appropriate. A review of the year’s operations, including the Group’s key performance Directors’ Report indicators, along with the outlook for the coming year, is contained in the Chairman’s and Chief Executive’s Statement, Business Review and Financial risks 25 l Corporate Responsibility Review. The Group is exposed to foreign currency and interest rate risks. Functional currency transactional risk arises when operating Corporate Results and dividends subsidiaries enter into transactions denominated in currencies other than their functional currencies. This risk is managed by hedging Governance Report The loss before taxation amounted to £9,720,000 (2009: £28,405,000). significant exposures, usually by means of forward exchange contracts. The loss attributable to ordinary shareholders amounted to £2,266,000 l Translational exposure arises on the translation of overseas earnings, 29 (2009: £21,299,000). investments and relevant borrowings into sterling for consolidated Directors’ As detailed in Note 12, no dividends have been paid during the year reporting purposes. Net asset translational risk is mitigated, in part, by Remuneration (2009: £4,913,000). The Directors do not recommend the payment of a foreign currency borrowings. The Group does not hedge translational Report final dividend (2009: £nil). exposure arising from profit and loss items. Due to the Group’s long term debt obligations, an exposure exists to movements in interest rates, 32 l Directors and officers which is managed by the use of hedging arrangements. Furthermore Profiles of all Directors at the date of this report are set out on page 17. the loan facilities entered into by the Group include a number of Five year history The current members of the Board are detailed on page 17. Chris financial and non-financial covenants. Breach of these covenants would Geoghegan was appointed Non-Executive Chairman with effect from constitute events of default under such facilities which might result in 38 l 1 October 2009 following George Kennedy’s retirement on the same day these borrowings becoming immediately repayable. The need to remain from the Board. As previously reported, Mike Hannant stepped down in compliance with these covenants could restrict flexibility in the Consolidated from the Board of Directors on 28 May 2009 following a transition period management of the Group and may limit the Group’s ability to pursue Financial with Charles Hindson who was appointed Group Finance Director with certain business opportunities. Credit risk to financial institutions is Statements effect from 5 May 2009. limited by restricting the range of counterparties to those with high credit ratings. Liquidity risk is managed by monitoring forecast and 39 l Sally Weatherall resigned as Company Secretary on 23 September 2009 actual cash flows and ensuring that sufficient committed facilities are in when Charlotte Parmenter was appointed to the position. place to meet possible downside scenarios. Company Financial The beneficial and non-beneficial interests, including family interests, of Restructuring programmes Statement the Directors in the share capital of the Company and details of Directors’ share options are detailed in the Directors’ Remuneration Report. In response to the current global economic downturn, tougher trading 85 l conditions and their material impact on the Group’s businesses and Directors’ indemnity insurance operating expenses, the Group has instigated various cost reduction and restructuring initiatives which affect the Group’s operations primarily The Company has indemnified the Directors of the Company and all its in France and in the UK. The Group’s expectations of the financial costs subsidiaries against liability in respect of proceedings brought by third and benefits of these initiatives are based on certain assumptions parties, subject to the conditions set out in the Companies Act 2006. reflecting the completed consultations and variables regarding, among Such qualifying third party indemnity provision was in force during the other things, future market conditions in relation to the Group’s principal year and is still in place as at the date of this report. businesses. These variables may be subject to matters outside the k l control of the Group which may delay implementation or make these

e2v.com 25 Directors’ Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights initiatives more costly or result in them not returning the anticipated cost Environmental and regulatory savings. Furthermore, these programmes have reduced staff morale and The Group is subject to numerous laws and regulations both in the 03 l the disruption to production has resulted in increased overdue deliveries United Kingdom and internationally, which regulate health and safety, to customers. The Group is seeking to minimise these risks through employment, environmental, taxation, exports and other operating Business Overview planned transition arrangements and increased levels of employee and items. Failure to comply with such legislation and regulations may customer engagement. 04 l harm the business or the Group’s reputation. The Group draws upon the experience of relevant employees and outside advisors in order Markets and customers to ensure compliance with the various requirements. Additional Chairman’s and The Group can be subject to variations in profitability attributable to environmental legislation may increase operating costs that the Group Chief Executive’s individual product lines and markets as a result of the timing and quantum mitigates, where possible, through improved efficiencies. Unforeseen Statement of orders, the introduction of new product lines and the applicable changes in legislation can have an adverse impact on operations. 06 l legislative and regulatory framework. Specifically, the Group operates in a multiple number of diverse yet specialist markets supplying a small Property, plant and equipment number of dominant customers in these markets. As a result, the Group Land and buildings at the Group’s facility in Grenoble were acquired at Business Review has specific sector dependencies which are influenced by changes in fair value in July 2006 and have not subsequently been revalued. The the sourcing policy of these customers which may result from changes in 08 l Group’s site at Lincoln in the UK was sold during the period, for a price customer policy and re-positioning within the value chain. of £4.2 million resulting in an exceptional gain of £3,739,000 (See note Board of Directors 5). Although there have been no formal valuations carried out for the Competition including advancement in technology remainder of the Group’s land and buildings, the Directors believe the 19 l The Group’s business is the design and manufacture of highly technical market value to be in excess of book values. and specialised products requiring input from skilled personnel. There can be no assurance that any of the Group’s products will achieve The Group acquired a new site within the Lincoln area in May 2010 Corporate the required specification or deliver to the customer’s expectations to house principally the engineering centre of the e2v microwave Responsibility and products are continually at risk of being superseded as a result electronics business. Review of improvements in alternative technologies that provide the same or 20 l comparable functionality. Thus the Group may incur significant liabilities Research and development for warranty claims, defects of its products or product recalls. The The Group continues to commit significant resources to existing product future success of the Group also depends upon the Group’s ability to enhancement as well as the introduction of new products for established Directors’ Report retain and develop the skilled personnel. The Group seeks to minimise and emerging markets. Resource is also invested in a number of 25 l these risks through managed and focussed research and development collaborative relationships with key universities to achieve leverage, programmes, specification certainty, clear contractual arrangements and knowledge exchange and access to and training of talented young appropriate staff remuneration and incentive arrangements. scientists and engineers. This is achieved through various mechanisms Corporate including a number of Knowledge Transfer Partnerships. Customers fund Governance Report Production and supply directly a proportion of expenditure on product enhancement and new 29 l Across the Group there are a number of strategic partnerships, which in product development whilst the amount funded by the Group amounted the event of cessation of these relationships or an interruption on the to £12,072,000 (2009: £17,133,000). Directors’ supply of these products could result in a disruption to the business. Remuneration The Group also relies on external suppliers for specialist materials and Takeover directive Report sub-assemblies, supply of foundry, packaging and test services, placing Pursuant to s992 of the Companies Act 2006, which implements the orders for small quantities of highly specialised products. In periods EU Takeovers Directive, the Company is required to disclose certain 32 l of high demand for these services, the Group may experience delays information. Such disclosures, which are not covered elsewhere in this in the supply as suppliers prioritise customers with volume orders. Annual Report, include the following: Five year history Certain components are sourced from overseas. Events outside of the l The Company’s Articles of Association (Articles) give power to Group’s control could result in delayed deliveries of these products. the Board to appoint directors, but require directors to submit 38 l Events could also disrupt the Group’s manufacturing capabilities at their themselves for election at the first Annual General Meeting following various locations. Irrespective of the adequacy of insurance coverage, their appointment and for re-election where they have been a director Consolidated this could cause delays in production and loss of sales and customers. at each of the preceding two Annual General Meetings and were not Financial A range of hazardous materials is used at the manufacturing sites. appointed or re-appointed by the Company at, or since either such Statements Failure to provide a safe work environment for its employees could have meeting. The Articles may be amended by special resolution of the a number of negative outcomes, including: fines and penalties, loss shareholders and are available to view on the Company’s website. 39 l of key customers and reputational damage. The Group is committed to maintaining a safe place of work and has in place quality and safety l The Board of Directors is responsible for the management of the Company Financial processes. Failure to protect the Group’s intellectual property, principally business of the Company and may exercise all the powers of the Statement confidential know-how, could result in a loss of sales. The Group Company subject to the provisions of the relevant statutes, the mitigates this risk by the use of operational and management systems, Company’s Memorandum of Association and the Articles. The Articles 85 l including a requirement that suppliers, customers and employees contain specific provisions and restrictions regarding the Company’s adhere to confidentiality obligations with respect to the treatment and power to borrow money. Powers relating to the issuing and buying disclosure of such know-how. Furthermore, patent protection is back of shares are also included in the Articles and such authorities are used to protect certain products and manufacturing processes renewed by shareholders each year at the Annual General Meeting. from competition. k l

e2v.com 26 Directors’ Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights l Certain agreements of the Group take effect, alter or terminate upon Disabled employees and employee involvement a change of control of the Group following a takeover, including The Group endeavours to provide equality of opportunity in recruiting, 03 l its bank loan agreements and company share plans and certain training, promoting and career development to all, irrespective of race, commercial trading contracts. ethnicity, religion, sexual orientation, gender or age. The Group gives Business Overview l There are no restrictions on the transfer of securities, restrictions on full consideration to applications for employment from a person with 04 l voting rights and agreements between shareholders. 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. Chairman’s and Share capital Chief Executive’s Details of the issued share capital, together with movements in the Where existing employees become disabled it is the Group’s policy, Statement Company’s issued share capital are given in note 25. wherever practicable, to provide workplace adjustments to ensure continuing employment under normal terms and conditions, and to The Company launched a firm placing and rights issue in October 2009 06 l provide training and career development and promotion opportunities, which upon completion in November and December 2009 resulted in wherever appropriate. the issue of 152,283,353 new ordinary shares of 5p. As a consequence of Business Review this and subsequent exercises under SAYE schemes the total number of A review of employee involvement is given in the Corporate 08 l issued ordinary shares in the Company, as at the latest practicable date Responsibility Review. prior to the publication of this report, is 214,854,056, with a nominal value of £10,742,000. Going concern Board of Directors The Company has one class of ordinary share which carry no right to As highlighted in the 2009 Annual Report and Financial Statements, 19 l fixed income. Each share carries the right to one vote at general the Board was working with finance providers and was reviewing a meetings of the Company. range of options for a more long term capital structure for the business. Corporate Considerable progress has been made during the year ended 31 March There are no specific restrictions on the size of a holding nor on the Responsibility 2010 and the Group has reduced net borrowings (excluding capitalised transfer of shares, which are both governed by the general provisions Review borrowing costs) from £137,290,000 at 31 March 2009 to £44,817,000 at of the Articles of Association and prevailing legislation. The Directors 31 March 2010. This has been achieved through the following: 20 l 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 l Raising £55,839,000 gross of equity in December 2009 through a firm voting rights. placing and rights issue, which was used to reduce borrowings; Directors’ Report l The announcement in October 2009 of an extensive acceleration of its 25 l Creditor payment policy business improvement programme, involving a restructuring for which The Group does not have a standard or code of conduct which deals formal consultations have now been completed, and which are being Corporate specifically with the payment of suppliers; however whenever the Group implemented progressively over the period to June 2011; Governance Report 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 l Securing a new banking facility, on 29 October 2009, which runs 29 l payment terms agreed with the individual supplier. The Group’s average to 31 December 2012, that became effective on 31 December 2009. creditor payment period at 31 March 2010 was 76 days (2009: 59 days). Under this agreement the Group continues to be subject to covenant undertakings that require operating performance to meet certain Directors’ financial covenants; and Remuneration Charitable and political donations Report Details of charitable donations are given in the Corporate Responsibility l Other actions including the reduction of costs, the restriction of Review. No donations were made to any political parties. capital expenditure, the close control of working capital and the 32 l conversion of debt denominated in Euros to Sterling. Interests in voting shares As discussed in the outlook section of the Chairman’s and Chief Five year history At 27 May 2010 the Company had been notified of the following interests Executive’s Statement, the Group’s markets appear to have largely 38 l of 3% or more in the Company’s ordinary shares. 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 Percentage No. of ordinary likely initiatives to return to growth with higher levels of expenditure Consolidated of ordinary shares of for research and development and capital expenditure for regular Financial share capital 5p each equipment replacement and new product introduction than in 2009/10. Statements Aberforth Partners 21.23 45,617,522 l The Group’s banking facilities include quarterly covenants that the banks 39 SVG Advisers 9.93 21,334,148 set across a wide ranging suite of measures that provide the Group with AXA Investment Managers 9.02 19,378,316 reduced headroom at certain times during the life of the facility. Company Financial Aviva Investors 6.78 14,571,898 Statement The Directors of the Group have prepared detailed profit and cash flow Legal and General forecasts through to 30 September 2011. In preparing these plans, the 85 l Investment Management 6.44 13,827,490 Directors have considered the risks to the activities in the business including those arising from the focus on meeting customers’ needs and Hermes Pensions Management 5.55 11,931,099 the implementation of the major restructuring programme. 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 k l

e2v.com 27 Directors’ Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Taking into account the level of the order book at 31 March 2010 Provision of information to the auditors (£161 million), the reduced likelihood of industrial disruption to the Having made enquiries of fellow Directors and of the Company’s auditors, 03 l business, having completed the formal consultation process with staff, each of the Directors at the date of approval of this report confirms that: and the internal oversight of development expenditure, including capital Business Overview expenditure, the Directors consider that the Group will remain within its l To the best of his knowledge and belief, there is no information (that is covenant requirements for the forecast period, and therefore, the Directors information needed by the Group’s auditors in connection with 04 l believe that it is appropriate to prepare the financial statements on a going preparing their report) of which the Company’s auditors are concern basis. unaware; and Chairman’s and l The Director has taken all the steps that he ought to have taken as a Chief Executive’s Directors’ statement of responsibilities Director to make himself aware of any relevant audit information and to Statement The Directors are responsible for preparing the Annual Report and establish that the Company’s auditors are aware of that information. 06 l Financial Statements in accordance with law and regulations. Company law requires the Directors to prepare financial statements for Auditors Business Review each year. Under the provisions of this law, the Directors have prepared A resolution to reappoint Ernst & Young LLP as auditors will be put to the the Group financial statements in accordance with International Financial members at the Annual General Meeting. 08 l Reporting Standards (IFRS) as adopted by the European Union and the Company financial statements in accordance with United Kingdom (UK) Board of Directors Accounting Standards and applicable law. 19 l In preparing those financial statements, the Directors are required to: By order of the Board l Select suitable accounting policies and then apply them consistently; Corporate l Make judgements and estimates that are reasonable and prudent; Responsibility Review l State that the Group financial statements have complied with IFRS as adopted by the European Union, subject to any material departures 20 l being disclosed and explained; and

l Charlotte Parmenter Directors’ Report State for the Company financial statements whether the applicable UK Accounting Standards have been followed, subject to any material Secretary 25 l departures being disclosed and explained. The Directors confirm that they have complied with the above 4 June 2010 Corporate requirements in preparing the financial statements. Governance Report e2v technologies plc The Directors are responsible for keeping proper accounting records Company No: 4439718 29 l which disclose with reasonable accuracy at any time the financial Registered office: 106 Waterhouse Lane, Chelmsford CM1 2QU position of the Group and enable them to ensure that the Group financial Directors’ statements comply with Companies Act 2006 and Article 4 of the IAS Remuneration Regulation. They are also responsible for safeguarding the assets of Report the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 32 l 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 Five year history Directors are responsible for the maintenance and integrity of the annual 38 l 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 Consolidated may be different. Financial Statements Responsibility statements under the Disclosure 39 l and Transparency Rules Each of the Directors, as at the date of this report, confirms to the best of Company Financial his knowledge that: Statement l The financial statements give a true and fair view of the assets, 85 l 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. k l

e2v.com 28 Corporate Governance Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Corporate Governance Report 03 l

Business Overview 04 l e2v technologies plc recognises the importance of, and is committed The Board’s responsibilities are discharged by way of monthly Board to, high standards of corporate governance and as such the Board reviews (except in August and December) and other Board meetings, Chairman’s and acknowledges its contribution to achieving management accountability, as required to approve matters beyond the authority limits of the Chief Chief Executive’s improving risk management and creating shareholder value. This Executive. In addition there is attendance at meetings of the Committees Statement statement explains how the Group has applied the main and supporting of the Board as well as attendance at regular business division and principles of corporate governance and describes the Group’s compliance function reviews when senior members of executive management, who 06 l with the provisions set out in Section 1 of the Combined Code on Corporate are not Board members, attend. Matters beyond the authority limits of the Governance published by the Financial Reporting Council in June 2008. Chief Executive include, for example, the approval of customer quotes over Business Review the approved financial limit set by the Board, certain activities relating to Statement by the Directors on compliance with mergers and acquisitions as well as approval of the annual budget. 08 l the Combined Code Conflicts of interest The Group has complied with the provisions set out in Section 1 of the Board of Directors Combined Code throughout the year. In line with the Companies Act 2006, the Company has established a robust procedure requiring Directors to seek appropriate authorisation l 19 The Board of Directors prior to entering into any outside business interests. Actual or potential conflicts of interest are reviewed by the Board. The Group is headed up by an effective Board which currently comprises Corporate the Chairman, Chief Executive, Group Finance Director and three Non- Responsibility Board meetings and attendance Executive Directors. Anthony Reading is the Senior Independent Director Review and Chairman of the Remuneration Committee. Jonathan Brooks, the In addition to the committee meetings noted above, there were 17 general 20 l Chairman of the Audit Committee, is the member of that Committee who board meetings during the year. All committee and board meetings were is deemed to have recent and relevant financial experience. The Chairman quorate. The Board also convened ad-hoc meetings during the year to was considered to be independent upon appointment and all of the deal with specific business requirements. The full details of all board and Directors’ Report Non-Executive Directors are considered by the Board to be independent. committee meetings and attendances is shown in the following table: 25 l Their biographies above demonstrate sufficient experience to bring independent judgement to the Board and the success of the Group. Audit Remuneration Nomination Board Committee Committee Committee Corporate The Articles of Association require that Directors retire in the third calendar Governance Report year following the year in which they were elected or re-elected. Any Number of meetings 17 6 7 5 Director appointed by the Board is required to submit themselves for 29 l re-election at the next Annual General Meeting after appointment. Chris Geoghegan, Chairman, will therefore be submitting himself for election at C Geoghegan (1) 8 - 3 - Directors’ the Annual General Meeting. In addition Ian Godden will retire by rotation G Kennedy (2) 8 - 2 4 Remuneration at this Annual General Meeting and submits himself for re-election. Report K Attwood 17 - - 5 Role of the Board members C Hindson (3) 15 - - - 32 l The Non-Executive Directors’ primary responsibilities are to: M Hannant (4) 3 - - -

Five year history l Ensure the principles of Corporate Governance are applied; A Reading 16 6 7 5 J Brooks (5) 16 6 7 2 38 l l Approve the strategy for the business; I Godden 14 3 - - l Ensure the strategy is being implemented; and Consolidated (1) Appointed on 1 October 2009. l P rovide independent advice on the implementation of the strategy and Financial (2) Resigned on 1 October 2009. other day to day matters where their experience is relevant. Statements (3) Appointed on 5 May 2009. The Executive Directors’ primary responsibilities, together with members (4) Resigned on 28 May 2009. 39 l of the senior management team are to: (5) Appointed to the Nomination Committee during the period and following appointment attended all meetings. Company Financial l Formulate the strategy of the business and obtain Board approval; and Statement l Implement the approved strategy subject to agreed levels of authority. 85 l 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 k l to the Board and financial and operational objectives are attained.

e2v.com 29 Corporate Governance Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Principal board committees l Reviewing all share incentive plans, the related performance targets and all awards made under the schemes; 03 l The Board has established the following committees whose individual terms of reference have been reviewed during the year. l Determining the individual remuneration packages of senior management within the agreed policy as well as contractual Business Overview Audit Committee arrangements, including pension provisions; 04 l The Committee is chaired by Jonathan Brooks and has met six times l Determining the procedure for vetting, authorising and during the year. Other members of the Committee are Anthony Reading re-imbursement of claims for expenses for all directors; and Chairman’s and and Ian Godden. The Chairman, Chief Executive and Group Finance Chief Executive’s Director attend Audit Committee meetings by invitation and the audit l Establishing selection criteria, terms of reference and selection and Statement partner attended four meetings during the period. At meetings reviewing employment of remuneration consultants. the interim and full year results the Non-Executive Directors exercise their Full details of Directors’ remuneration and policies applied by the Board 06 l right for discussions with the audit partner where no Executive Directors are set out in the Directors’ Remuneration Report in the Annual Report. are present. The terms of reference of the Audit Committee include:

Business Review l Keeping under review the effectiveness of the financial reporting Nomination Committee 08 l and internal control policies and procedures for the identification, The Committee is chaired by Chris Geoghegan. The other members of assessment and reporting of risks; the Committee are Keith Attwood, Anthony Reading and Jonathan Brooks who was appointed to the Committee during the year. The Committee Board of Directors l Reviewing the arrangements for what is commonly known as ‘whistle blowing’; has met five times during the year. The terms of reference of the 19 l Committee include: l Considering the requirements for establishing an Internal Audit function; l Regular review of the structure, size and composition of the Board; Corporate l Formal, rigorous and transparent procedures for new appointments Responsibility l Making recommendations to the Board in relation to the appointment Review and re-appointment of the external auditors as well as overseeing the to the Board; selection process of any new audit appointment; 20 l l The formal selection and nominations for Board approval of any new Board appointments; and l Keeping under review the relationship with the external auditors including assessments of independence and objectivity as well as Directors’ Report l Provision of recommendations to the Board regarding fee levels and terms of engagement; succession, re-appointment and membership of the Audit and l Remuneration Committees. 25 l Reviewing the findings of the audit with the external auditors; and During the year specialist recruitment consultants advised on candidates Corporate l Reviewing the consistency of accounting policies on a year to year basis and across the Group. for the role of Group Finance Director and Chairman based on a profile Governance Report and detailed job description provided by the Group. All short listed 29 l The Audit Committee monitors fees paid to the auditors for non-audit candidates were interviewed individually by the Directors before a final work. During the year £399,000 of non-audit work fees were paid. The selection was made and a recommendation made to the Board. Company engages other independent firms of accountants to perform Directors’ tax consulting and other consulting work. The Committee has monitored Induction and training Remuneration the level of non-audit services provided by the external auditor with a Any new Directors will receive induction upon their appointment to the Report view to ensuring objectivity, independence and cost effectiveness. Board covering the activities of the Group and its key business and 32 l The Board continues to review the key risks to the business through financial risks, the terms of reference of the Board and its Committees the Group’s risk management process, managed by the Group and the latest financial information of the Group. Ongoing training is provided as necessary. Directors may consult with the Company Five year history Finance Director. Secretary at any time on matters related to their role on the Board. All 38 l Remuneration Committee Directors have access to independent professional advice at the Group’s expense where they judge it necessary to discharge their duties, with The Committee is chaired by Anthony Reading and has met seven requests for such advice being authorised by the Chairman or the Consolidated times during the year. Other members of the Committee are Jonathan Company Secretary. Financial Brooks and Chris Geoghegan. The Chief Executive and senior human Statements resources manager within the Group attend all meetings (but the Chief Executive is not involved in deciding his own remuneration). The Group Performance evaluation of the Board 39 l Finance Director attends when requested. The terms of reference of the The Chairman and Company Secretary undertook a performance Committee include: evaluation of the Board which required an assessment, by each Company Financial individual director, of the performance of the Board and its Committees l Agreeing with the Board the framework or broad policy for the Statement  by way of an anonymous questionnaire and ratings process. The results remuneration of the Executive Directors and other members of of this assessment were reviewed by the Board and there were no areas 85 l executive management, as well as reviewing the appropriateness and of concern. The Senior Independent Non-Executive Director also led a relevance of the policy; performance review of the Chairman, which required an assessment, by l Determining targets for any performance related pay schemes and each Director, of the performance of the Chairman. This assessment was approving total annual payments under the schemes; reviewed by the Board and there were no areas of concern. k l

e2v.com 30 Corporate Governance Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Communication with shareholders distributed both internally and externally in a timely manner. A review of the consolidation and financial statements is completed by management The Annual Report and Financial Statements and the Interim Report 03 l to ensure that the financial position and results of the Group are provide investors with a half yearly balanced view of the Group’s appropriately reflected. All financial information published by the Group activities and performance. The interim results were distributed to all Business Overview is subject to the approval of the Audit Committee. shareholders in October 2009. Investors are also welcome to attend the 04 l Annual General Meeting. Apart from the Annual General Meeting, the Investment appraisal: All capital expenditure and research and principal form of communication with private investors is the Company’s development projects require detailed written proposals and go through web site which is updated regularly with Company information. strict authorisation processes. All acquisitions are subject to Board Chairman’s and approval and commercial, legal and financial due diligence is carried out Chief Executive’s The Chairman is available to institutional investors and the principal if a business is to be acquired. Statement contact points are the Chief Executive and Group Finance Director. The Senior Independent Non-Executive Director, Anthony Reading, is also Throughout the Group there are clear lines of delegated authority 06 l available to whom investors may address any concerns they may have. covering the full range of financial commitments. A schedule of Presentations are given to individual institutions, or on a Group basis if delegated authority for the Board to the Chief Executive is agreed Business Review preferred, following the announcement of interim and full year results. annually and items requiring Board approval are either agreed at Site tours and ad-hoc meetings are also arranged where requested. monthly board meetings, or at intervening meetings specifically 08 l arranged for the purpose. Control environment and internal controls Board of Directors At the monthly board meetings, the Non-Executive Directors review the The Directors acknowledge that they are responsible for the Group’s reports presented to them by the Chief Executive and Group Finance 19 l system of internal control and for reviewing its effectiveness. The system Director, which include a review of the financial results. This review is designed to manage rather than eliminate the risk of failure to achieve compares current year to previous year and the annual operating plan as the Group’s strategic objectives, and can only provide reasonable and well as a current year forecast and order book levels. Corporate not absolute assurance against material misstatement of loss. Responsibility At the current time the Board are of the opinion that a formal internal Review An ongoing process, in accordance with the guidance of the Turnbull audit function is not considered necessary due to the structure and Committee on internal control, has been established for identifying, 20 l size of the Group, widespread executive involvement in the day to evaluating and managing the significant risks faced by the Group. This day business and the levels of review undertaken by the executive process has been in place throughout the year under review and up to management and reported to the Board. Directors’ Report the date of approval of the financial statements. The Board regularly reviews the process. A formal ‘whistle blowing’ policy is operated and is included in the 25 l Group’s employee handbook. In addition the Board considers the significance of environmental, social and governance matters relevant to the business of the Group as part Corporate of its regular risk assessment procedures and Board constitution as Governance Report detailed in the Governance Report and in this section. On behalf of the Board 29 l The Group’s key risk management processes and system of internal control procedures include the following: Directors’ Management structure: The Group has adopted procedures for the Remuneration delegation of authority and authorisation levels, segregation of duties Report and other control procedures. Appointments to the most senior 32 l management positions within the Group require Board approval. Share capital structure: Information about the share capital structure of Jonathan Brooks Five year history the Company is discussed in the Directors’ Report and in note 25. Chairman of the Audit Committee 38 l Identification and evaluation of business risks: The major financial, commercial, legal, regulatory and operating risks within the Group 4 June 2010 are identified through a range of review meetings at the relevant Consolidated management level. Senior management are also involved in the Financial preparation of an annual risk assessment report which is reviewed by Statements the Board. l 39 Information and financial reporting systems: The Group’s comprehensive planning and financial reporting procedures include detailed operational Company Financial budgets for the year ahead and a three year rolling business plan, Statement both of which are approved by the Board. Performance is monitored l on a regular basis through monthly reporting and regular forecast 85 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 k l

e2v.com 31 Directors’ Remuneration Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Directors’ Remuneration Report 03 l

Business Overview 04 l Remuneration Committee The individual components of the remuneration arrangements offered are: The Remuneration Committee is responsible for recommending to the Basic salary and/or fees Chairman’s and Board the framework and broad policy for the remuneration of the Chief Chief Executive’s Executive, the Group Finance Director, and such other members of the Basic salary for each Executive Director is determined taking account Statement executive management as it is requested to consider. The remuneration of the individual’s performance and responsibilities and comparable of the Chairman and Non-Executive Directors is a matter reserved for the market rates. More particularly, the Committee reviews benchmark data 06 l Executive Directors. provided by independent remuneration consultants sourced from two groups of companies as follows: (i) a group comprising broadly similar Business Review Members of the Committee are appointed by the Board and their terms sized companies from the electronic & electrical equipment, aerospace & of reference are available on the Company’s website. Anthony Reading defence and technology hardware & equipment sectors and (ii) a group 08 l currently chairs the Committee, which meets at least twice a year, and comprising companies from all sectors (excluding financial companies) its other members are Chris Geoghegan and Jonathan Brooks. George of a broadly similar size in terms of market capitalisation, turnover and Board of Directors Kennedy was a member of the Committee prior to his resignation. The international scope. The most recently conducted review showed that Board considers that all members of the Committee are independent the base salaries payable to the Executive Directors in the year ended 19 l directors. Chris Geoghegan is a member of the Committee because the 31 March 2010 were below the median. Basic salary is reviewed Board considers it essential that the Chairman be involved in setting annually and is the only element of remuneration that is pensionable. remuneration policy (although he is not party to any discussion directly Corporate Notwithstanding the below median salary positioning, Executive Director relating to his own remuneration). The Chief Executive is given notice of Responsibility salaries were reviewed on 24 March 2010 and no increases were proposed all meetings and has the right to attend them, and is consulted on the Review for the year ended 31 March 2011 (which follows no increase in the prior remuneration of other executives. However, the Chief Executive does not year). Therefore, the salaries of the Executive Directors for the forthcoming 20 l take part in discussions that relate directly to his own remuneration. year will be: Keith Attwood –£253,000, Charles Hindson – £200,000. During the year all Board members volunteered to receive reduced levels In addition, the Chairman of the Remuneration Committee regularly of compensation during June, July and August 2009. This reduction Directors’ Report consults with senior members of the Group’s HR function (who also equated to an annual reduction of 6.2% and reflected the difficult attend certain committee meetings) to ensure that due account is taken l economic conditions faced by the Group at that time and similar cost 25 of pay and conditions elsewhere in the Group when the remuneration reduction initiatives volunteered by a number of operating businesses. policy of the Executive Directors is determined. Corporate Fees for the Chairman and Non-Executive Directors are determined The Committee has no formally appointed advisers on remuneration Governance Report taking account of the individual’s responsibilities including chairing policy. However during the year it has sought advice from Hewitt New committees of the Board, time required to devote to the role, and l Bridge Street who provided services to the Company in connection with 29 comparable market rates. the operation of the Company’s remuneration arrangements. Hewitt New Directors’ Bridge Street provide no other services to the Company. Benefits Remuneration Remuneration policy Benefits comprise the provision of a company car or car allowance and Report The overall policy applied for the year ended 31 March 2010 and that health insurance. Non-Executive Directors do not receive any benefits. 32 l will apply for the year ending 31 March 2011 is to ensure that Executive Directors are fairly and competitively remunerated and incentivised in Pensions Five year history a manner consistent with the Group’s strategic objectives. The current The Group operates a defined contribution, HM Revenue and Customs remuneration packages combine basic salary, benefits and pension approved, pension scheme and also makes contributions into individual 38 l contributions together with a performance-related annual bonus personal pension arrangements where these are required. The Company and share incentive awards. The Committee believes that the overall makes contributions of 15% of basic salary to the relevant pension Consolidated packages offered to Executive Directors should provide the right balance schemes in respect of Executive Directors. Executive Directors are Financial of fixed and performance-related pay and be appropriate for the size, entitled to enhance this through salary sacrifice arrangements and Statements scale and geographic scope of the organisation as well as be competitive additional voluntary contributions subject to HM Revenue and Customs relative to other companies within its sector. limits. Non-Executive Directors’ fees are non-pensionable. 39 l In line with the Association of British Insurers’ Guidelines on Responsible Investment Disclosure the Remuneration Committee will ensure that Company Financial the incentive structure for Executive Directors and senior management Statement will not raise Environmental, Social or Governance (ESG) risks. More 85 l 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. k l

e2v.com 32 Directors’ Remuneration Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l

Business Overview 04 l Performance related annual bonus Service contracts An annual bonus is payable to Executive Directors subject to the attainment In line with best practice it is the policy of the Committee to offer Chairman’s and of specific targets which are based on Group performance. The normal Executive Directors service agreements with notice periods not Chief Executive’s maximum bonus opportunity is 100% of salary. Non-Executive Directors exceeding twelve months. Current appointments are subject to rolling Statement are not entitled to a bonus. As previously reported, the Remuneration service agreements that can be terminated by twelve months’ notice Committee reserves the right, in exceptional circumstances, to amend as detailed below. Termination payments, based on basic salary and 06 l the targets during the year if it feels that changes, in such factors as the benefits only, are limited to contractual notice periods. Chris Geoghegan, marketplace or the Group’s strategy, have resulted in the existing targets no Anthony Reading and Jonathan Brooks do not have service contracts Business Review longer providing an appropriate incentive to the individual. The Committee but have letters of appointment with the Group. No notice is required to believed that it was appropriate for the Earnings Per Share (EPS) targets set terminate their appointment. The services of Ian Godden are provided 08 l at the start of the 2009/10 financial year to be replaced mid year by a set of under a consultancy agreement with Godden Associates Ltd under the challenging adjusted* operating profit targets that were considered by the same terms as the letters of appointment for the Chairman and other Board of Directors Remuneration Committee as no less challenging, given the circumstances Non-Executive Directors. A summary of the Directors’ service contracts faced by the Group at the time of the adjustment, than the original EPS and letters of appointment is listed below: 19 l 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 Contract Notice Unexpired Corporate timing of this adjustment, there was a pro rata reduction in the size of the date period Term(1) Responsibility bonus opportunity to 50% of basic salary. A similar treatment was made to K Attwood 21 July 2004 12 months 13 months Review all other management bonus schemes and arrangements during the year. C Hindson 5 May 2009 12 months 25 months 20 l Share incentives C Geoghegan 1 October 2009 1 month 2 months The Group’s policy is to align the interests of employees with those A Reading 25 June 2004 None 25 months Directors’ Report of shareholders. To achieve this, the Remuneration Committee has J Brooks 2 August 2004 None 13 months established the following schemes: 25 l Former Directors l Long Term Incentive Plan M Hannant 21 July 2004 12 months Resigned Corporate 28 May 2009 l Executive Share Option Plan Governance Report G Kennedy 25 July 2004 None Resigned l Share Incentive Plan 29 l 1 October 2009 l Share Save Scheme Directors’ The Committee is currently reviewing the operation of the Group’s share Consultancy Notice Unexpired (1) Remuneration incentive arrangements, with such review also incorporating a consultation Agreement Date period Term Report with the Company’s major shareholders, to ensure that they remain effective, fully reflect the Group’s circumstances and take due account of l I Godden 23 January 2005 None 2 months 32 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 (1) Term remaining until Director’s retirement by rotation. Five year history that are made following the conclusion of this review. Executive Directors are permitted, with the agreement of the Board, 38 l to accept outside appointments provided that such appointments do not conflict with their duties as directors of the Company. Whether any Consolidated fees payable in respect of such outside appointments are retained by Financial the Executive Director or remitted to the Company is determined on a Statements case-by-case basis. No Executive Director held any such appointment in the year ended 31 March 2010. 39 l

Company Financial Statement 85 l

k l

* Adjusted operating profit is before amortisation of acquired intangibles and operating exceptional items. e2v.com 33 Directors’ Remuneration Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Mike Hannant resigned from his role as Group Finance Director on Performance graph 5 May 2009 and as a Company Director on 28 May 2009; his The graph below shows the change in the Total Shareholder Return (TSR) 03 l employment terminated on the 30 June 2009 and he received total (with dividends re-invested) for the period since flotation to emoluments of £208,305 during the year; £28,762 whilst a Director, 31 March 2010 of a holding of a £100 investment in the Group’s shares Business Overview £14,381 whilst an employee, and £165,162 for payment in lieu of notice against the corresponding change in a hypothetical holding of shares which was paid in 11 monthly instalments from July 2009. He has been in the FTSE Electronics & Electrical Equipment sector. This sector was 04 l succeeded by Charles Hindson who commenced employment as the new chosen as it represents the equity market index in which the Company Group Finance Director on 5 May 2009. Subsequent to the termination is a constituent member. Chairman’s and of his employment Mike Hannant provided services to the Group on an Chief Executive’s interim consultancy basis to assist with the preparation of the required 200 Statement documentation for the equity and debt transactions. Fees for this work totalled £99,735 in the year ended 31 March 2010. 180 06 l George Kennedy resigned as Chairman of the Board on 1 October 2009 160 and has been succeeded by Chris Geoghegan who took position on Business Review 1 October 2009. 140 08 l 120 Shareholding guidelines 100 Board of Directors Under the Company’s shareholding guidelines, which are operated to further align the interests of the Executive Directors and shareholders, 80 19 l Executive Directors will be expected to build up and retain shares equal in value to at least twice their respective basic salaries. Where Executive 60 Directors hold shares above these levels then, with the prior approval of Corporate 40 Responsibility the Chairman, they may undertake sales of these excess shares and this Review will not be viewed adversely. 20 20 l Employee Benefit Trust (EBT) 0 The Company established the EBT in 2004 as a discretionary employee 31 Mar 05 31 Mar 06 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10 Directors’ Report benefit trust, in which all employees of the Group are potentially e2v FTSE All share electronics and electrical equipment sector l beneficiaries. The Trustee is Lloyds TSB Offshore Trustee Limited, 25 a professional offshore trustee. The main purpose of the EBT is to operate the Long Term Incentive Plan (LTIP) and share option schemes Corporate following recommendations from the Remuneration Committee or Board. Governance Report 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, 29 l and as at 31 March 2010 the percentage was 0.37% (2009: 0.83%).

Directors’ Directors’ interests Remuneration The beneficial interests of the Directors in the ordinary share capital of Report the Company as at 31 March 2010 are set out in the table below, together 32 l with the beneficial interests at the end of the previous financial year.

At 31 March 2010 At 31 March 2009 Five year history Ordinary 5p shares Ordinary 5p shares 38 l K Attwood 2,976,664 1,375,643 C Hindson 1,460,000 - Consolidated C Geoghegan 203,512 - Financial Statements A Reading 55,661 24,352 I Godden 100,034 43,765 39 l J Brooks 33,142 14,500

Company Financial Statement There were no changes to the above interests between the year end and the date of this report. The increase in Directors’ holdings arose 85 l 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. k l

e2v.com 34 Directors’ Remuneration Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Information subject to audit 03 l Long Term Incentive Plan (LTIP) Business Overview 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 04 l 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 Chairman’s and companies. 25% of an award will vest for median performance and an award will only vest in full if Chief Executive’s the Group’s TSR performance would place it in the top 20% compared to the peer group, with Statement 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 06 l (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). Business Review 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 08 l participated in the LTIP during the year.

Board of Directors Awards held Granted in Lapsed in Adjustment for Awards held Date from which l at 1 April 2009 the year the year rights issue at 31 March 2010 exercisable 19 Grant date

Corporate Responsibility K Attwood Review 31.07.2006 69,700 - (69,700) - - 31.08.2009 20 l 16.07.2007 63,250 - - 36,838 100,088 14.07.2010 15.07.2008 99,850 - - 58,154 158,004 15.07.2011 Directors’ Report 24.06.2009 - 126,000 - 73,384 199,384 24.06.2012 25 l C Hindson 05.05.2009 - 66,750 - 38,876 105,626 05.05.2012 Corporate 24.06.2009 - 100,000 - 58,242 158,242 24.06.2012 Governance Report Former Director 29 l M Hannant 31.07.2006 37,700 - (37,700) - - 31.08.2009 Directors’ 16.07.2007 39,875 - - 23,223 63,098 14.07.2010 Remuneration 15.07.2008 62,950 - - 36,663 99,613 15.07.2011 Report

32 l 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, Five year history 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. 38 l 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 Consolidated (2009: 41 pence) and the range during the year was 36.25 to 110 pence. Financial Statements The peer group for 2009 and 2008 awards comprises the following companies: 39 l l Bodycote International l Invensys l Severfield-Rowen l Castings l Laird l Spectris Company Financial l Charter l Meggitt l Spirax-Sarco Engineering Statement l Chemring Group l Melrose l Tomkins 85 l l Chloride Group l Morgan Crucible Company l TT Electronics l Cookson Group l Oxford Instruments l Ultra Electronics Holdings l Domino Printing Sciences l PV Crystalox Solar l UMECO l Fenner l Qinetiq Group l Vitec Group l Halma l Raymarine l VT Group l Hampson Industries l Renishaw l Weir Group l Hill & Smith Holdings l Rotork l Xaar l IMI l Senior k l

e2v.com 35 Directors’ Remuneration Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights For awards granted prior to 2008, the peer group comprised the following companies: 03 l l Abacus Group l Laird l Amstrad plc (until 8 October 2007) l NXT Business Overview l Chemring Group l Oxford Instruments l Chloride Group l Renishaw l 04 l Dialight l Spectris (formerly The Roxboro Group plc) l TT Electronics Chairman’s and l Domino Printing Sciences l Ultra Electronics Holdings Chief Executive’s l Halma Statement

06 l The LTIP awards granted in 2006 lapsed during the year as the minimum level of TSR performance was not achieved over the vesting period. Business Review Executive Share Option Plan (ExSOP) 08 l 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 Board of Directors 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 19 l 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). Corporate The Committee has no present intention of making grants under this plan to Executive Directors Responsibility in the forthcoming year. Review Share Incentive Plan (SIP) 20 l 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: Directors’ Report l Free shares, which are ordinary shares which may be allocated to an employee by the Company; 25 l l P artnership shares, which are ordinary shares which an employee may purchase out of their pre-tax earnings; and Corporate Governance Report l Matching shares, which are ordinary shares which may be allocated to an employee following the purchase of partnership shares. 29 l No awards have been made to any employees under this plan as at 31 March 2010. Directors’ Remuneration Sharesave Scheme (SAYE) Report 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 32 l and former Director participated in the scheme during the year.

Five year history Awards held Granted in Lapsed in Adjustment for Awards held Date from which Exercise price Grant date the year the year rights issue at 31 March 2010 exercisable (pence) 38 l at 1 April 2009

Consolidated K Attwood Financial 11.01.2008 4,266 - (4,266) - - 01.03.2011 225.00 Statements 14.08.2009 - 15,921 - 9,272 25,193 01.11.2012 36.02 39 l C Hindson 14.08.2009 - 15,921 - 9,272 25,193 01.11.2012 36.02 Company Financial Former Director Statement M Hannant 85 l 11.01.2008 4,266 - (1,066) 2,484 5,684 01.03.2011 225.00

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. k l

e2v.com 36 Directors’ Remuneration Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Directors’ remuneration 03 l The remuneration of Directors who served during the year was as follows:

Salary and/ Performance Car allowance/ Payment in lieu 2010 2009 Business Overview or fees related bonuses benefits in kind of notice Total Total 04 l £000 £000 £000 £000 £000 £000 K Attwood 237 127 26 - 390 266 Chairman’s and C Hindson (1) 169 100 12 - 281 - Chief Executive’s C Geoghegan (2) 60 - - - 60 - Statement A Reading 34 - - - 34 36 06 l I Godden 31 - - - 31 33 J Brooks 34 - - - 34 36 Business Review Former Directors 08 l M Hannant (3), (4) 26 - 2 165 193 172 G Kennedy (5) 42 - - - 42 95 Board of Directors Total 633 227 40 165 1,065 638 19 l (1) From date of appointment on 5 May 2009. (2) From date of appointment on 1 October 2009. Corporate (3) For period to 28 May 2009, date of resignation as Company Director. Responsibility (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. Review 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, 20 l 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. Directors’ Report 25 l 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 Corporate this programme with the effect being to reduce annual base salary by 6.2%. Governance Report 29 l Directors’ pension benefits The following pension contributions were made by the Company, either to the Company’s defined Directors’ contribution scheme or to personal pension arrangements on behalf of the Executive Directors: Remuneration Report 2010 2009 £000 £000 32 l K Attwood 36 38 C Hindson 25 - Five year history Former Director 38 l M Hannant 4 24 Total 65 62 Consolidated Financial Statements Approval This report was approved by the Remuneration Committee and has been approved subsequently by 39 l the Board of Directors. On behalf of the Board Company Financial Statement 85 l

Anthony Reading Chairman of the Remuneration Committee

4 June 2010 k l

37 e2v.com 37 Five year history e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Five year history 03 l

Business Overview 2010 2009 2008 2007 2006 04 l £000 £000 £000 £000 £000

Chairman’s and Revenue Chief Executive’s Electron devices and sub-systems 65,559 83,739 75,776 69,639 62,118 Statement Imaging 53,814 65,224 60,578 53,096 27,326 06 l Specialist semiconductors 50,936 53,323 39,826 28,044 - Sensors 30,938 30,907 28,427 23,146 22,832 Business Review Total revenue 201,247 233,193 204,607 173,925 112,276 08 l Adjusted(1) operating profit 15,017 27,440 29,092 24,653 14,953 Board of Directors Amortisation of acquired intangible assets (8,600) (8,628) (7,310) (6,047) (369) Impairment of acquired intangible assets - (26,127) - - - 19 l Impairment of plant and equipment - (2,500) - - - Business improvement programme costs (18,682) (6,826) (1,996) - (819) Corporate Profit on sale of Lincoln site 3,739 - - - - Responsibility Review Fair value gains/(losses) on foreign exchange contracts 2,489 (2,894) (357) - - Acquisition and integration costs - - - (1,055) - 20 l (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) Directors’ Report (Loss)/profit before tax (9,720) (28,405) 13,747 13,716 11,916 25 l 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 Corporate Governance Report Basic (loss)/earnings per share(2) (1.66)p (21.75)p 12.23 p 10.40 p 9.36 p 29 l Adjusted(3) basic earnings per share(2) 6.67 p 19.08 p 19.03 p 16.31 p 10.68 p

Directors’ Interim dividend paid - 2.70 p 2.45 p 2.20 p 2.00 p Remuneration Final dividend proposed - - 5.25 p 4.75 p 4.25 p Report 32 l 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 Five year history 38 l 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. Consolidated Financial (2) Earnings per shares have been updated to take account of the rights issue during the year ended 31 March 2010. Statements (3) Adjusted earnings is (loss)/profit for the year before amortisation of acquired intangibles and all exceptional items less tax impacts where applicable. 39 l

Company Financial Statement 85 l

k l

e2v.com 38 e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l

Business Overview 04 l Consolidated Chairman’s and Chief Executive’s Statement 06 l

Business Review 08 l Financial

Board of Directors 19 l

Corporate Responsibility Review Statements 20 l

Directors’ Report 25 l Consolidated income statement 40 Corporate Consolidated statement of comprehensive income 41 Governance Report Consolidated statement of financial position 42 29 l Consolidated statement of cash flows 43 Directors’ Consolidated statement of changes in equity 44 Remuneration Report Notes to the financial statements 45 32 l Independent Auditor’s Report 84

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l

e2v.com 39 Consolidated income statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Consolidated income statement 03 l Year ended 31 March 2010

Business Overview 2010 2009 04 l Before Exceptional Before Exceptional exceptional items & exceptional items & Chairman’s and items & acquired items & acquired Chief Executive’s acquired intangibles acquired intangibles Statement intangibles amortisation intangibles amortisation amortisation (notes 5 and 9) Total amortisation (notes 5 and 9) Total 06 l Notes £000 £000 £000 £000 £000 £000

Business Review Revenue 3 201,247 - 201,247 233,193 - 233,193 08 l Cost of sales (139,999) - (139,999) (154,223) - (154,223)

Board of Directors Gross profit 61,248 - 61,248 78,970 - 78,970 19 l Research and development costs 6 (12,072) - (12,072) (15,585) (1,548) (17,133) Corporate Selling and distribution costs (15,187) - (15,187) (17,973) - (17,973) Responsibility Review Administrative expenses (18,972) (21,054) (40,026) (17,972) (45,427) (63,399) 20 l Operating profit/(loss) 15,017 (21,054) (6,037) 27,440 (46,975) (19,535)

Directors’ Report Finance costs 9 (5,818) (719) (6,537) (7,735) (1,819) (9,554) 25 l 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) Corporate Governance Report Income tax (expense)/credit 10 (246) 7,700 7,454 (1,704) 8,810 7,106 29 l Profit/(loss) for the year 9,113 (11,379) (2,266) 18,685 (39,984) (21,299) Directors’ Remuneration Attributable to: Report Equity holders of the Company 9,113 (11,379) (2,266) 18,685 (39,984) (21,299) 32 l

Five year history Earnings/(loss) per share 38 l 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 Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l

e2v.com 40 Consolidated statement of comprehensive income e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Consolidated statement of comprehensive income 03 l Year ended 31 March 2010

Business Overview 2010 2009 04 l Notes £000 £000

Chairman’s and Losses on cash flow hedges - (80) Chief Executive’s Statement Deferred tax on losses on cash flow hedges - 22 06 l Exchange differences on retranslation of foreign operations (719) 6,519 Exchange differences on net investment hedges 529 (2,094) Business Review Actuarial losses on post-employment benefits 29 (345) (195) 08 l Deferred tax on losses on post-employment benefits 118 - Other comprehensive income and expense for the year (417) 4,172 Board of Directors Loss for the year (2,266) (21,299) l 19 Total comprehensive income and expense for the year (2,683) (17,127)

Corporate Responsibility Attributable to: Review Equity holders of the Company (2,683) (17,127) 20 l

Directors’ Report 25 l

Corporate Governance Report 29 l

Directors’ Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l

e2v.com 41 Consolidated statement of financial position e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Consolidated statement of financial position 03 l As at 31 March 2010 2010 2009 Notes £000 £000 Business Overview AssETs l 04 Non-current assets Property, plant and equipment 13 31,366 40,251 Chairman’s and Chief Executive’s Intangible assets 14 104,061 119,199 Statement Income tax receivable 3,129 - 06 l Deferred income tax asset 24 10,197 5,860 148,753 165,310 Business Review Current assets 08 l Inventories 17 35,481 42,433

Board of Directors Trade and other receivables 18 51,194 61,109 Income tax receivable 2,026 2,498 19 l Cash at bank and in hand 19 27,811 6,373 Total current assets 116,512 112,413 Corporate Responsibility TOTAl AssETs 265,265 277,723 Review 20 l liABiliTiEs Current liabilities Directors’ Report Borrowings 21 - (9,750) 25 l Trade and other payables 20 (47,005) (52,567) Other financial liabilities 22 (1,515) (4,200) Corporate Income tax payable (5,619) (139) Governance Report Provisions 23 (20,534) (6,567) 29 l Total current liabilities (74,673) (73,223) Net current assets 41,839 39,190 Directors’ Remuneration Non-current liabilities Report Borrowings 21 (69,471) (132,822) 32 l Other financial liabilities 22 (131) (915) Provisions 23 (6,028) - Five year history Employment and post-employment benefits 29 (2,839) (3,355) 38 l Deferred income tax liabilities 24 (8,498) (13,729) Total non-current liabilities (86,967) (150,821) Consolidated NET AssETs 103,625 53,679 Financial Statements CAPiTAl ANd REsERvEs 39 l Called up share capital 25 10,742 3,128 Share premium 41,780 41,780 Company Financial Merger reserve 26 44,579 - Statement Other reserves 26 269 269 85 l 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: k l K Attwood C hindson Chief Executive Group finance director e2v.com 42 Consolidated statement of cash flows e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Consolidated statement of cash flows 03 l Year ended 31 March 2010 2010 2009 Notes £000 £000 Business Overview Cash flows from operating activities 04 l Loss before tax (9,720) (28,405) Net finance costs 3,683 8,870 Chairman’s and Chief Executive’s Operating loss (6,037) (19,535) Statement 06 l Adjustments to reconcile to net cash inflows from operating activities: Depreciation of property, plant and equipment 10,249 10,204 Business Review Impairment of plant and equipment - 2,500 08 l Amortisation of intangible assets 12,007 12,674 Impairment of intangible assets - 26,127

Board of Directors Profit on sale of property, plant and equipment (3,609) - Fair value (gains)/losses on foreign exchange contracts (2,489) 2,894 19 l Share based payment charges 422 625 Decrease in inventories 5,854 8,173 Corporate Responsibility Decrease in trade and other receivables 9,959 1,735 Review Decrease in trade and other payables (1,827) (3,224) 20 l Increase in provisions 15,472 875 Cash generated from operations 40,001 43,048 Directors’ Report Income taxes received/(paid) 632 (1,297) 25 l Net cash flows from operating activities 40,633 41,751

Corporate Cash flows from investing activities Governance Report Proceeds from sale of property, plant and equipment 2,188 201 29 l Interest received 160 684 Purchase of property, plant and equipment (2,707) (9,221) Directors’ Purchase of software (372) (1,531) Remuneration Expenditure on product development (693) (2,612) Report Acquisition of subsidiary, net of cash acquired 16 (490) (41,059) 32 l Net cash flows used in investing activities (1,914) (53,538)

Five year history Cash flows from financing activities 38 l Interest paid (3,590) (7,338) Net proceeds from issue of shares 53,375 681 Consolidated Dividends paid to equity shareholders of the parent - (4,913) Financial Payment of finance lease obligations - (13) Statements Proceeds from borrowings - 38,152 39 l Realised exchange gains on re-denomination of Euro borrowings 2,604 - Payment of cancellation fee on interest rate swap (890) - Company Financial Repayment of borrowings (65,175) (15,451) Statement Transaction costs of new bank loans raised (3,608) (184) 85 l 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 k l

e2v.com 43 Consolidated statement of changes in equity e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Consolidated statement of changes in equity 03 l Year ended 31 March 2010

Business Overview foreign Called currency 04 l up share share merger Other translation Retained Total capital premium reserve reserves reserve earnings equity Chairman’s and £000 £000 £000 £000 £000 £000 £000 Chief Executive’s Statement At 1 April 2008 3,111 41,116 - 326 983 28,914 74,450 06 l Other comprehensive income - - - (58) 4,425 (195) 4,172 Business Review Loss for the year - - - - - (21,299) (21,299) Total comprehensive income - - - (58) 4,425 (21,494) (17,127) 08 l Issue of shares 17 664 - - - - 681 Board of Directors Issue of shares by EBT on exercise of options - - - 1 - (1) - 19 l Share based payment - - - - - 625 625 Deferred tax on share based payments - - - - - (37) (37) Equity dividends - - - - - (4,913) (4,913) Corporate Responsibility At 31 March 2009 3,128 41,780 - 269 5,408 3,094 53,679 Review Other comprehensive income - - - - (190) (227) (417) 20 l Loss for the year - - - - - (2,266) (2,266) Total comprehensive income - - - - (190) (2,493) (2,683) Directors’ Report 25 l Issue of shares 7,614 - 48,225 - - - 55,839 Issue costs - - (3,646) - - - (3,646) Share based payment - - - - - 422 422 Corporate Governance Report Deferred tax on share based payments - - - - - 14 14 At 31 march 2010 10,742 41,780 44,579 269 5,218 1,037 103,625 29 l As at 31 March 2010, other reserves includes: capital redemption reserve, £274,000; and own shares reserve, £(5,000), both of which remain unchanged Directors’ from the previous year end. Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l

e2v.com 44 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Notes to the financial statements 03 l

Business Overview 04 l 1. Authorisation of financial statements and statement of compliance with IFRS

Chairman’s and e2v technologies plc (Company) is a public limited company incorporated and domiciled in the United Kingdom under the Companies Act 2006. Chief Executive’s 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 Statement of the Group’s operation and its principal activities are set out in the Business Review. 06 l 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).

Business Review 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. 08 l The financial statements were approved for issue by the Board on 4 June 2010. Board of Directors The principal accounting policies adopted by the Group are set out below. 19 l

Corporate 2. Summary of significant accounting policies Responsibility Review Basis of accounting 20 l The 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. Directors’ Report l The financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments. The principal accounting 25 policies set out below have been applied consistently to all periods presented in these financial statements.

Corporate Going concern Governance Report Following the firm placing and rights issue, the securing of a new banking facility and the progressive implementation of the accelerated restructuring plan, 29 l 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. Directors’ Remuneration Report Basis of consolidation The consolidated financial statements incorporate the financial statements of e2v technologies plc and entities controlled by the Company (its subsidiaries) 32 l 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. Five year history 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 38 l 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. Consolidated Financial 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 Statements 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 39 l 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”, Company Financial which are recognised and measured at fair value less costs to sell. Statement 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 85 l 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. k l

e2v.com 45 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Summary of significant accounting policies (continued) 03 l Foreign currency translation

Business Overview 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 04 l 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) Chairman’s and 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 Chief Executive’s 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 Statement 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 06 l 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 Business Review 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 08 l 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. Board of Directors Income and expense items are translated at the average exchange rate for the period, unless exchange rates fluctuate significantly during the period, in 19 l 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. Corporate Responsibility 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 Review the rate of exchange ruling at the balance sheet date.

20 l 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 Directors’ Report accumulated depreciation and any impairment in value. 25 l 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 Corporate commences when the assets are available for use. Governance Report Freehold land is not depreciated and is held at historical cost. 29 l 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: Directors’ Freehold buildings 25 to 50 years Remuneration Report Leasehold improvements over the remaining lease term 32 l Plant and equipment 3 to 10 years Office equipment, fixtures and fittings 3 to 10 years Five year history The carrying values are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such 38 l 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 Consolidated 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 Financial 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 Statements unit to which the asset belongs. Impairment losses are recognised in the income statement in the administrative expenses line item. 39 l 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. Company Financial Statement Goodwill 85 l 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 k l 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.

e2v.com 46 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Summary of significant accounting policies (continued) 03 l Goodwill (continued)

Business Overview 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. 04 l 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 Chairman’s and reinstated and will not be included in determining any subsequent profit or loss on disposal. Chief Executive’s Statement Intangible assets – research and development costs 06 l 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 Business Review 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 08 l 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 Board of Directors 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. 19 l 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. Corporate Responsibility Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying Review amount of the asset and are recognised in the income statement when the asset is derecognised.

20 l 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 Directors’ Report 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 25 l 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:

Corporate Patents, trademarks and technology administrative expenses Governance Report Customer relationships and agreements administrative expenses Software cost of sales and administrative expenses 29 l 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- Directors’ generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Remuneration Report 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 32 l 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 Five year history Customer relationships and agreements 4 to 10 years 38 l Software 2 to 7 years

Consolidated Inventories Financial Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those Statements 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. 39 l 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. Company Financial Statement Trade and other receivables 85 l Trade 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. k l

e2v.com 47 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Summary of significant accounting policies (continued) 03 l Interest-bearing loans and borrowings

Business Overview 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 04 l 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 Chairman’s and appropriate, a shorter period, to the net carrying amount on initial recognition. Chief Executive’s 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 Statement is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an 06 l 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 Business Review at least twelve months after the balance sheet date. 08 l Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial Board of Directors 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. 19 l All other borrowing costs are recognised in the income statement using the effective interest method. Corporate Responsibility Provisions Review Provisions 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. 20 l 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. Directors’ Report 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 25 l 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 Corporate 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 Governance Report measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both 29 l 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 Directors’ relevant products, at the Directors’ best estimate of the expenditure required to settle the Group’s obligation. Remuneration Report 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 32 l received under it.

Five year history 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 38 l 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. Consolidated The Group operates an unfunded defined benefit plan in France providing termination payments (post-employment benefit) to employees upon retirement Financial and long service awards paid when the employee reaches certain lengths of service (other employment benefit). The cost of providing benefits is Statements 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 39 l 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 Company Financial which the settlement or curtailment occurs. Statement l 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 85 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. k l

e2v.com 48 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Summary of significant accounting policies (continued) 03 l Share based payment transactions

Business Overview 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 04 l 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 Chairman’s and of the Company (market conditions). Chief Executive’s The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions Statement are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). The cumulative expense recognised 06 l 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.

Business Review 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. 08 l 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. Board of Directors 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 19 l 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. Corporate The dilution effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (see note 11). Responsibility Review Leases 20 l Leases 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. Directors’ Report 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 25 l 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.

Corporate In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of Governance Report 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. 29 l Revenue Directors’ Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the Remuneration normal course of business, net of discounts, VAT and other sales-related taxes. Report Sale of goods 32 l Revenue from the sale of standard products is recognised when all the following conditions are satisfied:

Five year history l the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; 38 l 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; Consolidated l it is probable that the economic benefits associated with the transaction will flow to the entity; and Financial Statements l the costs incurred or to be incurred in respect of the transaction can be measured reliably. 39 l 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 Company Financial the completion of a physical proportion of the work, dependent upon the nature of the underlying project. Revenues derived from variations on projects are Statement 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. 85 l 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. k l

e2v.com 49 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Summary of significant accounting policies (continued) 03 l Government grants

Business Overview 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 04 l 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. Chairman’s and Chief Executive’s Taxation Statement The tax expense represents the sum of the tax currently payable and deferred tax.

06 l 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 Business Review 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. 08 l Deferred tax Board of Directors Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial 19 l 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 Corporate temporary differences arise from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and Responsibility liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Review Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the 20 l 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 Directors’ Report profits will be available to allow all or part of the asset to be recovered. 25 l 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 Corporate comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity, respectively. Governance Report 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 29 l 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 hedging Directors’ Remuneration The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including foreign Report exchange forward contracts and interest rate swaps. Further details of derivative financial instruments are disclosed in note 32. 32 l 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 Five year history hedge relationship. The Group designates certain derivatives as either hedges or the fair value of recognised assets or liabilities or firm commitments (fair 38 l 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.

Consolidated No derivative financial instruments have been designated as a fair value or cash flow hedge during the current or prior financial year. Financial 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. Statements 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 39 l 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 Company Financial hedge. To the extent that the hedge is effective, changes in the fair value of the hedging instrument are recognised in other comprehensive income. Statement Classification of shares as debt or equity 85 l When 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. k l

e2v.com 50 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Summary of significant accounting policies (continued) 03 l Critical accounting judgements and key sources of estimation uncertainty

Business Overview In 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 04 l 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 Chairman’s and 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. Chief Executive’s Statement 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 06 l 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 Business Review 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). 08 l Adjusted profit measures Board of Directors In 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 19 l 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 Corporate Responsibility (b) the effect of exceptional items and intangibles amortisation. Review i. Exceptional items are material items of income and expense which, because of the nature and infrequency of the events giving rise to 20 l 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 Directors’ Report 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; 25 l 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 Corporate acquisition activity on intangible assets. Governance Report Further analysis of exceptional operating and finance items are provided in notes 5 and 9, respectively. 29 l New standards and interpretations applied during the year Directors’ In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these Remuneration financial statements. Report Amendments to IFRS 7, “Financial Instruments: Disclosures” – The amendments to IFRS 7 expand the disclosures required in respect of fair value 32 l 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. Five year history IFRS 8, “Operating Segments” – Requires disclosure of information about the Group’s operating segments and replaces the requirements to determine 38 l 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. Consolidated Financial IAS 1, “Presentation of Financial Statements (revised)” – Introduced the ‘Consolidated statement of comprehensive income’ which presents all items of Statements 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 39 l 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’. Company Financial In addition to the above, the following standards and interpretations have been adopted in these financial statements and have not had a material impact Statement on the Group’s financial statements in the period of initial application. 85 l 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. k l

e2v.com 51 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Summary of significant accounting policies (continued) 03 l New standards and interpretations not applied

Business Overview The 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: 04 l

Effective for periods Chairman’s and commencing after

Chief Executive’s Statement IFRS 3 Revised IFRS 3 Business Combinations 1 July 2009 06 l IFRS 9 Financial Instruments: Classification and measurement 1 January 2013 IAS 24 Related Party Disclosure (revised) 1 January 2011 Business Review 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 08 l IAS 39 Eligible Hedged Items 1 July 2009 Improvements to IFRS (issued April 2009) Various dates Board of Directors IFRIC 17 Distribution of Non-Cash Assets to Owners 1 July 2009 19 l IFRIC 18 Transfer of Assets from Customers 1 July 2009 IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010 Corporate Responsibility 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 Review standards and interpretations will have a material impact on the Group’s financial statements in the period of initial application. 20 l 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 Directors’ Report 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. 25 l

Corporate 3. Revenue Governance Report 29 l An analysis of the Group’s revenue is as follows:

Directors’ 2010 2009 Remuneration £000 £000 Report 32 l Revenue 201,247 233,193 Finance revenue 2,854 684 Total revenue 204,101 233,877 Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 52 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 4. Segment information l 03 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) Business Overview 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 04 l 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 Chairman’s and previously reported under IAS 14. Chief Executive’s The four reportable segments are: Statement l Electron devices and sub-systems, high performance electronic devices and sub-systems for applications including: radiotherapy cancer treatment 06 l machines; defence electronic countermeasures and radar systems; satellite communication amplifiers; digital television transmitters; and industrial laser and welding machines. Business Review l Imaging, advanced CCD and Complimentary Metal Oxide Semiconductor imaging sensors and cameras for applications including: earth observation; 08 l 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 Board of Directors 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. 19 l 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. Corporate Responsibility In addition to the reportable segments, also reported is: Centre – Corporate, costs directly associated with the management of the Group’s public quotation Review and other related costs arising for the corporate management of the Group along with financing related activities. 20 l 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. Directors’ Report Segment revenue and results 25 l The following is an analysis of the Group’s revenue and results by reportable segment:

Corporate Electron specialist Governance Report devices and semi- Centre – Total sub-systems imaging conductors sensors Corporate operations 29 l year ended 31 march 2010 £000 £000 £000 £000 £000 £000

Directors’ Revenue Remuneration Revenue from external customers 65,559 53,814 50,936 30,938 - 201,247 Report

32 l segment result Adjusted segment profit/(loss) 11,483 516 6,715 (417) - 18,297 Five year history Corporate costs - - - - (2,625) (2,625) 38 l Exchange differences - - - - (655) (655) Adjusted operating profit/(loss) 11,483 516 6,715 (417) (3,280) 15,017 Exceptional operating items and acquired Consolidated intangibles amortisation (364) (13,302) (10,871) 1,076 2,407 (21,054) Financial Operating profit/(loss) 11,119 (12,786) (4,156) 659 (873) (6,037) Statements Net finance costs (3,683) 39 l loss before tax (9,720) Tax credit 7,454 Company Financial loss for the period (2,266) Statement 85 l

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e2v.com 53 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 4. Segment information (continued) 03 l Electron Specialist devices and semi- Centre – Total Business Overview sub-systems Imaging conductors Sensors Corporate operations 04 l Year ended 31 March 2009 £000 £000 £000 £000 £000 £000

Chairman’s and Revenue Chief Executive’s Revenue from external customers 83,739 65,224 53,323 30,907 - 233,193 Statement 06 l Segment result Adjusted segment profit/(loss) 15,686 4,292 13,074 (1,596) - 31,456 Corporate costs - - - - (2,349) (2,349) Business Review Exchange differences - - - - (1,667) (1,667) 08 l Adjusted operating profit/(loss) 15,686 4,292 13,074 (1,596) (4,016) 27,440 Exceptional operating items and acquired Board of Directors intangibles amortisation (2,358) (23,681) (15,217) (2,825) (2,894) (46,975) 19 l 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) Corporate Responsibility Tax credit 7,106 Review Loss for the period (21,299) 20 l 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 Directors’ Report 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 25 l 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: Corporate Governance Report Electron specialist devices and semi- Centre – Total 29 l sub-systems imaging conductors All other Corporate operations Restated year ended 31 march 2010 £000 £000 £000 £000 £000 £000 Directors’ Remuneration Revenue Report Revenue from external customers 78,781 53,814 50,936 17,716 - 201,247 32 l segment result Five year history Adjusted segment profit/(loss) 11,198 516 6,715 (132) - 18,297 38 l Unallocated expenses - - - - (2,625) (2,625) Exchange differences - - - - (655) (655) Adjusted operating profit/(loss) 11,198 516 6,715 (132) (3,280) 15,017 Consolidated Financial Exceptional operating items and acquired Statements 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) 39 l Net finance costs (3,683) loss before tax (9,720) Company Financial Tax credit 7,454 Statement loss for the period (2,266) 85 l

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e2v.com 54 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 4. Segment information (continued) l 03 Electron Specialist devices and semi- Centre - Total Business Overview sub-systems Imaging conductors All other Corporate operations Restated Year ended 31 March 2009 £000 £000 £000 £000 £000 £000 l 04 Revenue Chairman’s and Revenue from external customers 99,222 65,224 53,323 15,424 - 233,193 Chief Executive’s Statement Segment result 06 l Adjusted segment profit/(loss) 15,312 4,292 13,074 (1,222) - 31,456 Corporate costs - - - - (2,349) (2,349) Business Review Exchange differences - - - - (1,667) (1,667) 08 l Adjusted operating profit/(loss) 15,312 4,292 13,074 (1,222) (4,016) 27,440 Exceptional operating items and acquired Board of Directors 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) 19 l Net finance costs (8,870) Loss before tax (28,405) Corporate Tax credit 7,106 Responsibility Loss for the period (21,299) Review 20 l Segment assets and liabilities and other segment information The following is an analysis of the Group’s assets, liabilities and other information by reportable segment: Directors’ Report Electron specialist 25 l devices and semi- Centre – Total sub-systems imaging conductors sensors Corporate operations Corporate year ended 31 march 2010 £000 £000 £000 £000 £000 £000 Governance Report 29 l Assets and liabilities Intangible assets 589 334 80,681 9,516 12,941 104,061 Directors’ Property, plant and equipment 4,591 10,082 6,384 2,566 7,743 31,366 Remuneration Other segment assets 10,624 9,555 9,038 8,264 - 37,481 Report Centre – Corporate assets 32 l - Trade and other receivables - - - - 49,194 49,194 - Income tax receivable - - - - 5,155 5,155 - Deferred income tax asset - - - - 10,197 10,197 Five year history - Cash at bank and in hand - - - - 27,811 27,811 38 l Total assets 15,804 19,971 96,103 20,346 113,041 265,265 Segment liabilities (3,647) (18,489) (7,189) (2,555) - (31,880) Consolidated Centre – Corporate liabilities Financial - Borrowings - - - - (69,471) (69,471) Statements - Trade and other payables - - - - (43,787) (43,787) 39 l - Other financial liabilities - - - - (1,646) (1,646) - Income tax payable - - - - (5,619) (5,619) Company Financial - Provisions & benefits - - - - (739) (739) Statement - Deferred income tax liabilities - - - - (8,498) (8,498) 85 l Net assets/(liabilities) 12,157 1,482 88,914 17,791 (16,719) 103,625 Other segment information Capital expenditure: Property, plant and equipment 318 502 539 654 694 2,707 Software - - - - 372 372 Product development 329 253 - 111 - 693 Depreciation 1,423 2,113 2,003 1,120 3,590 10,249 k l Amortisation 603 173 7,964 1,175 2,092 12,007 Warranty provision – net of arising and released in the year 1,509 1,385 117 399 - 3,410

e2v.com 55 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 4. Segment information (continued) 03 l Electron Specialist devices and semi- Centre - Total Business Overview sub-systems Imaging conductors Sensors Corporate operations 04 l Year ended 31 March 2009 £000 £000 £000 £000 £000 £000

Chairman’s and Assets and liabilities Chief Executive’s Intangible assets 866 253 92,815 10,570 14,695 119,199 Statement Property, plant and equipment 6,312 15,574 8,275 3,392 6,698 40,251 06 l Other segment assets 14,243 11,840 10,403 5,947 - 42,433 Centre – Corporate assets Business Review - Trade and other receivables - - - - 61,109 61,109 - Income tax receivable - - - - 2,498 2,498 08 l - Deferred income tax asset - - - - 5,860 5,860 - Cash at bank and in hand - - - - 6,373 6,373 Board of Directors Total assets 21,421 27,667 111,493 19,909 97,233 277,723 19 l Segment liabilities (4,025) (4,658) (2,118) (409) - (11,210) Centre – Corporate liabilities Corporate - Borrowings - - - - (142,572) (142,572) Responsibility - Trade and other payables - - - - (50,506) (50,506) Review - Other financial liabilities - - - - (5,115) (5,115) 20 l - Income tax payable - - - - (139) (139) - Provisions & benefits - - - - (773) (773) Directors’ Report - Deferred income tax liabilities - - - - (13,729) (13,729) Net assets/(liabilities) 17,396 23,009 109,375 19,500 (115,601) 53,679 l 25 Other segment information Capital expenditure: Corporate Property, plant and equipment 1,305 3,508 1,361 653 2,394 9,221 Governance Report Software - - - - 1,531 1,531 29 l Product development 482 1,295 379 456 - 2,612 Depreciation 2,383 3,935 1,674 1,237 975 10,204 Directors’ Amortisation 790 1,878 6,691 1,405 1,910 12,674 Remuneration Impairment 360 19,930 6,994 1,343 - 28,627 Report Warranty provision – net of arising and released in the year 3,242 2,491 445 280 - 6,458 32 l The Group is organised such that Centre-Corporate is responsible for the management of operations (including production, supply chain and IT) and sales (including Five year history 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. 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 56 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 4. Segment information (continued) 03 l Geographical information

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

04 l 2010 2009 £000 £000 Chairman’s and Chief Executive’s Revenue by destination Statement United Kingdom 41,654 44,409 06 l North America 67,002 79,953 Europe 66,700 83,639 Business Review Asia Pacific 24,202 22,150 08 l Rest of the world 1,689 3,042 201,247 233,193

Board of Directors 19 l 2010 2009 Corporate £000 £000 Responsibility Review Non-current assets (excluding taxes) 20 l United Kingdom 33,780 40,652 North America 38,795 43,052 Directors’ Report Europe 62,825 75,683 25 l Asia Pacific 27 63 135,427 159,450 Corporate Governance Report

29 l 5. Exceptional operating items and acquired intangibles amortisation

Directors’ 2010 2009 Remuneration £000 £000 Report

32 l Amortisation of acquired intangible assets 8,600 8,628 Impairment of acquired intangible assets - 26,127 Five year history Impairment of plant and equipment - 2,500 38 l Business improvement programme expenses 18,682 6,826 Profit on the sale of Lincoln site (3,739) - Consolidated Fair value (gains)/losses on foreign exchange contracts (2,489) 2,894 Financial 21,054 46,975 Statements

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

Company Financial After periods of consultations, business improvement programmes have commenced at the Group’s Grenoble and Lincoln sites. Costs of the programmes are Statement 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). 85 l 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 k l imaging business (see note 13).

e2v.com 57 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 6. Loss for the year l 03 Loss from continuing operations is stated after charging/(crediting):

Business Overview 2010 2009 04 l £000 £000

Chairman’s and Research and development expenditure expensed 10,757 13,414 Chief Executive’s Amortisation of capitalised development expenditure 1,315 2,171 Statement Impairment of capitalised development expenditure (note 14) - 1,548 06 l Total research and development expense 12,072 17,133

Included in cost of sales: Business Review Depreciation of property, plant and equipment 9,641 9,666 08 l Included in distribution and administrative expenses: Depreciation of property, plant and equipment 608 538 Board of Directors Amortisation of software 2,092 1,875 19 l Amortisation of acquired intangible assets 8,600 8,628 Impairment of plant, equipment and acquired intangible assets - 27,079 Corporate Total depreciation, amortisation and impairment expense 20,941 47,786 Responsibility Review Foreign currency (gains)/losses arising from fair value adjustments (2,489) 2,894 20 l Other net foreign currency losses 655 1,667 Total net foreign currency (gains)/losses (1,834) 4,561 Directors’ Report Government grants receivable (1,773) (1,707) 25 l increase in provision for impairment of trade receivables recognised in administrative expenses 830 722 Corporate Governance Report Costs of inventories recognised as an expense 128,261 137,974 29 l Including: Write-down of inventories to net realisable value 1,152 2,921 Reversals of impairments in inventories* (1,156) (251) Directors’ Remuneration minimum lease payments recognised as an operating lease expense 1,424 923 Report

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

Five year history 38 l 7. Auditor’s remuneration

Consolidated 2010 2009 Financial £000 £000 Statements

39 l Audit of the company financial statements 206 315

Company Financial Statement Statutory audit fees of subsidiary undertakings 179 233 Local non-statutory audit services in relation to subsidiary undertakings 13 46 85 l 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. k l These fees were included in the cost of acquisition of QP Semiconductor, Inc.

e2v.com 58 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 8. Staff costs and Directors’ remuneration 03 l The average monthly number of employees (including Directors) during the year was made up as follows: Business Overview 2010 2009 No. No. 04 l

Manufacturing 1,195 1,215 Chairman’s and Chief Executive’s Administration 471 499 Statement 1,666 1,714 06 l Their aggregate remuneration comprised:

Business Review 2010 2009 08 l £000 £000

Board of Directors Ongoing remuneration costs 19 l Wages and salaries 59,688 58,295 Social security costs 12,303 12,885 Corporate Share based payment charges (see note 28) 356 625 Responsibility Defined contribution pension costs (see note 29) 1,310 1,575 Review Termination allowance and long service awards costs (see note 29) 346 (15) 20 l 74,003 73,365

Directors’ Report Exceptional remuneration costs 25 l Termination payments 15,287 4,632 Share based payment charges (see note 28) 66 - Corporate Termination allowance and long service awards curtailment gains (see note 29) (1,165) - Governance Report 14,188 4,632 29 l Total remuneration 88,191 77,997 Directors’ Remuneration Report Details of Directors’ remuneration for the year are provided in the Directors’ Remuneration Report in the Annual Report. 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 59 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 9. Finance costs and revenue 03 l 2010 2010 2010 2009 2009 2009 Before Before Business Overview exceptional Exceptional exceptional Exceptional items items Total items items Total 04 l £000 £000 £000 £000 £000 £000 Bank loan interest 4,626 - 4,626 7,323 - 7,323 Chairman’s and Other interest 210 - 210 - - - Chief Executive’s Statement Interest on defined benefit liabilities (see note 29) 189 - 189 - - - Amortisation of debt issue costs 793 719 1,512 412 - 412 l 06 Total interest expense for financial liabilities not at fair value through the income statement 5,818 719 6,537 7,735 - 7,735 Business Review Fair value adjustments to interest rate swaps - - - - 1,819 1,819 08 l Total finance costs 5,818 719 6,537 7,735 1,819 9,554

Board of Directors Bank interest receivable 160 - 160 684 - 684 Fair value adjustments to interest rate swaps - 90 90 - - - 19 l Realised exchange gains on re-denomination of Euro borrowings - 2,604 2,604 - - - Corporate Total finance revenue 160 2,694 2,854 684 - 684 Responsibility Review 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 20 l 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 Directors’ Report as an exceptional item. 25 l 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 Corporate of £90,000 (2009: losses £1,819,000). Governance Report 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 29 l required Euros. Net exceptional gains of £2,604,000 were recorded on these contracts.

Directors’ Remuneration 10. Income tax Report Major components of income tax expense for the years ended 31 March 2010 and 2009 are: 32 l 2010 2009 Five year history £000 £000 38 l Consolidated income statement Consolidated Current income tax Financial Statements Current income tax charge – UK corporation tax 3,558 2,603 Current income tax credit – foreign tax (2,614) (571) 39 l Current income tax charge 944 2,032

Company Financial Adjustments in respect of current income tax of previous years 1,005 (1,882) Statement Total current income tax 1,949 150 85 l 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) k l income tax credit reported in the consolidated income statement (7,454) (7,106)

e2v.com 60 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 10. Income tax (continued) 03 l In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

Business Overview 2010 2009 04 l £000 £000

Chairman’s and deferred tax Chief Executive’s Statement Relating to cash flow hedges - (22) Relating to actuarial losses on post-employment benefits (118) - 06 l income tax credit recognised directly in other comprehensive income (118) (22)

Business Review In addition to the amount charged to the income statement and other comprehensive income, the following amounts related to tax have been recognised directly 08 l in equity: 2010 2009 Board of Directors £000 £000 19 l deferred tax Corporate Change in estimated excess tax deductions related to share based payments recognised directly in equity (14) 37 Responsibility Review 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 20 l effective income tax rate for the years ended 31 March 2010 and 2009 is as follows:

Directors’ Report 2010 2009 £000 £000 25 l

Accounting loss before income tax (9,720) (28,405) Corporate Governance Report At UK statutory income tax rate of 28% (2009: 28%) (2,722) (7,954) 29 l Permanent differences 32 420

Directors’ Permanent difference in relation to goodwill impairment - 5,003 Remuneration Permanent difference in relation to profit on the sale of Lincoln site (904) - Report Tax relief on research and development – current year (2,332) (3,457) 32 l Tax relief on research and development – prior year - (866) Impact of higher taxes on overseas earnings (1,428) (123) Five year history Impact of abolition of Industrial Buildings Allowances - 983 38 l 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) Consolidated Total tax credit reported in the income statement (7,454) (7,106) Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 61 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 11. Earnings per share l 03 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 Business Overview have been adjusted to reflect the rights issue in December 2009. 04 l 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 Chairman’s and anti-dilutive and hence have not been taken into account for the purposes of calculating diluted basic earnings per share. Chief Executive’s Adjusted earnings per share is considered to more appropriately reflect the underlying performance of the business year on year. Statement The following reflects the income and share data used in the basic and diluted earnings per share computations: 06 l 2010 2009 Business Review £000 £000 08 l Loss for the year (2,266) (21,299) Board of Directors Amortisation of acquired intangible assets 8,600 8,628 19 l Impairment of acquired intangible assets - 26,127 Impairment of plant and equipment - 2,500 Corporate Business improvement programme expenses 18,682 6,826 Responsibility Profit on the sale of Lincoln site (3,739) - Review Write-off of debt issue costs 719 - 20 l Fair value (gains)/losses on financial instruments (2,579) 4,713 Realised exchange gains on re-denomination of Euro borrowings (2,604) - Directors’ Report Impact of abolition of Industrial Buildings Allowances - 983 25 l Tax impact of the above (7,700) (9,793)

Adjusted profit attributable to ordinary shareholders 9,113 18,685 Corporate Governance Report 2010 2009 29 l No.000 No.000

Directors’ Weighted average number of ordinary shares Remuneration For basic earnings per share 136,698 97,906 Report Effect of dilution: 32 l Share options 319 142 for diluted earnings per share 137,017 98,048 Five year history

38 l 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. Consolidated Financial Statements 12. Dividends paid and proposed 39 l 2010 2009 £000 £000 Company Financial Statement declared and paid during the year 85 l 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. k l Based on the terms of the Group’s banking facility, the Board has not proposed a final dividend (2009: £nil).

e2v.com 62 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 13. Property, plant and equipment 03 l Office land Plant equipment, Assets and Business Overview and fixtures and under equipment construction buildings fittings Total 04 l £000 £000 £000 £000 £000

Chairman’s and Cost Chief Executive’s At 1 April 2008 11,530 53,764 4,628 1,159 71,081 Statement Additions 631 7,715 875 - 9,221 06 l Acquisition of subsidiary 428 524 36 - 988 Disposals (13) (294) (141) - (448) Business Review Reclassifications between categories - 283 7 (290) - 08 l Exchange adjustment 1,607 3,452 338 - 5,397 At 1 April 2009 14,183 65,444 5,743 869 86,239 Board of Directors Additions 58 1,410 71 1,168 2,707 19 l Disposals (559) (4,792) (316) - (5,667) Reclassifications between categories 88 1,797 134 (2,041) (22) Corporate Exchange adjustment (614) (2,618) (225) 33 (3,424) Responsibility At 31 march 2010 13,156 61,241 5,407 29 79,833 Review 20 l depreciation At 1 April 2008 2,074 25,789 3,027 - 30,890 Directors’ Report Provided during the year 1,224 8,116 864 - 10,204 Impairment during the year - 2,500 - - 2,500 25 l Disposals - (122) (126) - (248) Exchange adjustment 527 1,965 150 - 2,642 Corporate At 1 April 2009 3,825 38,248 3,915 - 45,988 Governance Report Provided during the year 1,378 8,082 789 - 10,249 29 l Disposals (508) (4,251) (310) - (5,069) Reclassifications between categories 58 (74) 5 - (11) Directors’ Exchange adjustment (236) (2,321) (133) - (2,690) Remuneration At 31 march 2010 4,517 39,684 4,266 - 48,467 Report

32 l Carrying amount At 31 March 2008 9,456 27,975 1,601 1,159 40,191 Five year history At 31 March 2009 10,358 27,196 1,828 869 40,251 38 l At 31 march 2010 8,639 21,557 1,141 29 31,366

Consolidated 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, Financial resulting in an impairment charge of £2,500,000. Statements 39 l

Company Financial Statement 85 l

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e2v.com 63 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 14. Intangible assets 03 l Patents, Customer trademarks relationships Business Overview and development and technology costs 04 l software agreements Goodwill Total £000 £000 £000 £000 £000 £000

Chairman’s and Chief Executive’s Cost Statement At 1 April 2008 15,674 11,160 10,839 24,427 58,416 120,516 06 l Additions - 2,612 1,531 - - 4,143 Acquisition of subsidiary 2,238 - - 13,205 26,027 41,470

Business Review 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 08 l Additions - 693 372 - 490 1,555 Disposals - - (267) - - (267) Board of Directors Reclassifications between categories - - 22 - - 22 19 l 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 Corporate Responsibility Amortisation Review At 1 April 2008 3,836 6,599 5,554 11,490 - 27,479 20 l Charge in year 2,478 2,399 1,875 5,922 - 12,674 Impairment loss 4,478 2,158 - 320 19,171 26,127 Directors’ Report Exchange adjustment 804 429 17 2,492 - 3,742 25 l 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 Corporate Disposals - - (253) - - (253) Governance Report Reclassifications between categories - - 11 - - 11 29 l 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

Directors’ Remuneration Carrying amount Report At 31 March 2008 11,838 4,561 5,285 12,937 58,416 93,037 32 l 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

Five year history The amortisation of acquired intangible assets presented in note 5 as an exceptional item relates to amortisation of intangibles acquired through business 38 l combinations as follows:

Consolidated 2010 2009 Financial £000 £000 Statements

39 l Patents, trademarks and technology 1,773 2,478 Development costs 131 228 Company Financial Customer relationships and agreements 6,696 5,922 Statement 8,600 8,628 85 l 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. k l 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. e2v.com 64 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 15. Impairment testing of goodwill l 03 Goodwill acquired through business combinations has been allocated to individual cash-generating units for impairment testing as detailed below:

Business Overview e2v semi- conductors 04 l siemens e2v semi- sAs - high dynex e2v conductors specialist power e2v microwave scientific sAs - semi- qP semi- Chairman’s and satcom miCs technologies alarms instruments imaging conductors conductor Total Chief Executive’s £000 £000 £000 £000 £000 £000 £000 £000 £000 Statement

06 l Cost At 1 April 2008 359 9,709 1,344 2,002 8,955 32,503 3,544 - 58,416 Business Review Additions in year ------26,027 26,027 08 l 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 Board of Directors Additions in year ------490 490 Exchange adjustment - - - - (461) (1,674) 63 (1,704) (3,776) 19 l At 31 march 2010 359 9,709 1,344 2,002 10,013 36,343 4,368 29,823 93,961

Corporate Responsibility impairment Review At 1 April 2008 ------20 l 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) Directors’ Report At 31 march 2010 359 - 1,344 - 10,013 - - 6,602 18,318 25 l Carrying amount Corporate At 31 March 2008 359 9,709 1,344 2,002 8,955 32,503 3,544 - 58,416 Governance Report At 31 March 2009 - 9,709 - 2,002 - 38,017 4,305 24,043 78,076 29 l At 31 march 2010 - 9,709 - 2,002 - 36,343 4,368 23,221 75,643

Directors’ 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 Remuneration approximately five years of their commercially exploitable term. Goodwill associated with the e2v Semiconductors SAS – Imaging cash generating unit was Report also written off in full in the year ended 31 March 2009 due to its loss making status. 32 l 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 Five year history applied to cash flow projections is 15% (2009: 15%). 38 l 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: Consolidated Financial Operating margins – the basis used to determine the value assigned to the budgeted operating margins is the average margin achieved in the year Statements immediately before the budgeted year, adjusted for any expected changes due to current restructuring programmes, sales mix or efficiency improvements.

39 l 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 Company Financial 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 Statement 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. 85 l 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. k l

e2v.com 65 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 15. Impairment testing of goodwill (continued) l 03 Considering the sensitivity levels on the various cash generating units:

Business Overview 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. 04 l 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 Chairman’s and 31 March 2009, goodwill and intangible assets (including capitalised research and development costs) of ¤18,727,000 (£17,430,000) were written off. Chief Executive’s Statement e2v Semiconductors SAS – Specialist semiconductors 06 l 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 Business Review indicate impairment would need to be considered if: 08 l l revenue reduced by 10% (2009: 20%); or l projected medium term operating margin reduced by 12% (2009: 30%); or Board of Directors l discount rate of 16.5% or higher had been selected (2009: 18.25%); or

19 l 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).

Corporate MICS Responsibility 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 Review 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: 20 l l revenue reduced by 25% (2009:15%); or

Directors’ Report l projected medium term operating margin reduced by 13% (2009: 30%); or

25 l 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). Corporate Governance Report QP Semiconductor 29 l 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 Directors’ to be of the order of $31 million. Sensitivity levels on these calculations indicate an impairment would need to be considered if: Remuneration Report l revenue reduced by 30% (2009: 5%); or 32 l l operating margin reduced by 30% (2009: 5%); or l discount rate of 21% or higher had been selected (2009: 16%); or Five year history 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%). 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l

e2v.com 66 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 16. Business combinations l 03 No business combinations have been completed during the current year.

Business Overview Acquisition of QP Semiconductor, Inc. 04 l 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 Chairman’s and now been reached with the former owners with regard to the net worth and earn out calculations. Chief Executive’s Statement The fair value of the identifiable assets and liabilities of QP as at the date of acquisition was:

fair value 06 l recognised on acquisition Book value Business Review £000 £000 08 l Property, plant and equipment 988 988 Board of Directors Intangible assets 15,443 - 19 l Deferred income tax asset 782 782 Income tax recoverable 245 245 Corporate Inventories 3,261 3,261 Responsibility Trade debtors 1,127 1,127 Review Other debtors 163 163 20 l Cash and cash equivalents 5,265 5,265 27,274 11,831 Directors’ Report 25 l Trade payables (135) (135) Other creditors (498) (498) Corporate Provisions (156) (156) Governance Report Deferred income tax liability (6,188) - 29 l (6,977) (789)

Directors’ Fair value of net assets 20,297 11,042 Remuneration Goodwill arising on acquisition 26,517 Report Total consideration 46,814 l 32 2010 2009 Five year history £000 £000 38 l Cash paid 490 43,421 Consolidated Costs associated with the acquisition - 2,903 Financial Statements Total consideration 490 46,324 39 l The cash outflow on acquisition is as follows: Company Financial 2010 2009 Statement £000 £000 85 l Net cash acquired with the subsidiary - 5,265 Cash paid (490) (46,324) Net cash outflow (490) (41,059)

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. k l 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. e2v.com 67 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 17. Inventories 03 l 2010 2009 Business Overview £000 £000

04 l Raw materials and consumables 17,351 18,027

Chairman’s and Work-in-progress 10,465 12,117 Chief Executive’s Finished goods 7,665 12,289 Statement Total inventories at lower of cost and net realisable value 35,481 42,433 06 l

Business Review 18. Trade and other receivables (current)

08 l 2010 2009

Board of Directors £000 £000

19 l Trade receivables 41,246 51,163 Other debtors 8,358 7,531 Corporate Responsibility Prepayments and accrued income 1,590 2,415 Review 51,194 61,109 20 l 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 Directors’ Report 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 25 l the debtor or their age profile. The movements on the provision for impairment of receivables were as follows:

Corporate 2010 2009 Governance Report £000 £000 29 l Provision at 1 April 1,230 692 Directors’ Amounts written off (201) (172) Remuneration Unused amounts reversed (572) (40) Report Provisions created in the year 830 722 32 l Foreign exchange on retranslation (33) 28 Provision at 31 march 1,254 1,230 Five year history

38 l Trade receivables past due but not impaired trade impaired receivables Consolidated Financial 2010 2009 2010 2009 Statements £000 £000 £000 £000 39 l 0-30 days overdue 2,072 1,954 11 5 Company Financial 31-60 days overdue 690 1,566 3 3 Statement 61-90 days overdue 230 459 11 67 85 l 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

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. k l The Directors consider the carrying amount of trade and other receivables is approximately equal to their fair value.

e2v.com 68 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 19. Cash 03 l 2010 2009 Business Overview £000 £000

04 l Cash at bank and in hand 22,011 6,373

Chairman’s and Short term deposits 5,800 - Chief Executive’s 27,811 6,373 Statement 06 l 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. Business Review 08 l 20. Trade and other payables Board of Directors 19 l 2010 2009 £000 £000 Corporate Responsibility Trade payables 24,593 24,229 Review Taxation and social security costs 3,470 2,908 20 l Payments received on account 3,218 2,061 Other payables 578 504 Directors’ Report Accruals and deferred income 15,146 22,693 25 l Employment and post-employment benefits - 172 47,005 52,567 Corporate Governance Report Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Trade payables and other payables are 29 l 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. Directors’ The Directors consider that the carrying amount of trade payables approximates to their fair value. Remuneration Report 32 l 21. Borrowings

Five year history 2010 2009 38 l £000 £000

Consolidated Current Financial Bank debt - 9,750 Statements 39 l Non-current Bank debt 69,471 132,822 Company Financial 69,471 142,572 Statement 85 l 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 k l £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.

e2v.com 69 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 21. Borrowings (continued) l 03 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 Business Overview 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 04 l 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 Chairman’s and precedent had been met. Chief Executive’s The bank loans are secured by a floating charge over the net assets of the Group. Statement 06 l 22. Other financial liabilities 2009 Business Review 2010 £000 £000 08 l

Current Board of Directors Interest rate swap 708 904 l 19 Forward currency contracts 807 3,296 1,515 4,200 Corporate Responsibility Review Non-current 20 l Interest rate swap 131 915

Directors’ Report Further details of the derivative financial instruments are included in note 32. 25 l 23. Provisions Corporate Onerous Business Governance Report project improvement Product losses Environmental programme warranty Total 29 l £000 £000 £000 £000 £000

Directors’ Remuneration At 1 April 2009 647 323 - 5,597 6,567 Report Transferred from accruals - - 3,778 - 3,778 Arising during the year - 200 18,625 5,006 23,831 32 l Utilised - (40) (1,558) (3,895) (5,493) Released during the year (139) (73) - (1,596) (1,808) Five year history Exchange adjustment (28) - (208) (77) (313) 38 l At 31 march 2010 480 410 20,637 5,035 26,562

Consolidated Current 2010 480 212 14,807 5,035 20,534 Financial Non-current 2010 - 198 5,830 - 6,028 Statements 480 410 20,637 5,035 26,562 39 l Current 2009 647 323 - 5,597 6,567 Company Financial Non-current 2009 - - - - - Statement 647 323 - 5,597 6,567 85 l The effect of the time value of money is not material and therefore the above provisions are not discounted.

Onerous project losses A 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.

Environmental k l A 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. e2v.com 70 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 23. Provisions (continued) 03 l Business improvement programme

Business Overview A 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 04 l 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 Chairman’s and will be incurred within 10 months of the balance sheet date. Chief Executive’s Statement Product warranty A 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 06 l 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. Business Review 08 l 24. Deferred tax Board of Directors The movements on deferred tax liabilities and (assets) during the year are as follows:

19 l Total £000 Corporate Responsibility Review At 1 April 2009 7,869 20 l Credited to income statement (9,403) Credited to other comprehensive income (118) Directors’ Report Credited direct to equity (14) 25 l Exchange adjustment (33) At 31 march 2010 (1,699)

Corporate

Governance Report Deferred income tax balances relate to the following: 2010 2009 29 l £000 £000

Directors’ deferred income tax liabilities Remuneration Report Accelerated depreciation for tax purposes 599 1,833 32 l Fair value of intangible assets 8,500 11,310 Fair value of land and buildings 757 586 Five year history Gross deferred income tax liabilities 9,856 13,729 38 l deferred income tax assets Employment benefits 323 160 Consolidated Financial Revaluation of financial instruments 461 1,433 Statements Share based payment charges 99 50 39 l Deferred tax allowances on provisions and accruals 9,368 4,217 Losses carried forward 1,304 - Company Financial Gross deferred income tax assets 11,555 5,860 Statement

85 l 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 k l There are no income tax consequences attaching to the payment of dividends by e2v technologies plc to the shareholders of the Company.

e2v.com 71 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 24. Deferred tax (continued) l 03 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. Business Overview As at 31 March 2010, the aggregate amount of undistributed earnings of overseas subsidiaries for which deferred tax liabilities have not been recognised 04 l 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 Chairman’s and that the majority of the overseas earnings would qualify for the UK dividend exemption. Chief Executive’s 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. Statement No deferred tax asset has been recognised in respect of these losses. They expire between 2011 and 2016. 06 l

Business Review 25. Called up share capital

08 l 2010 2010 No. £000 Board of Directors 19 l Ordinary shares issued and fully paid At 1 April 2008 62,217,416 3,111 Corporate Issued for cash on exercise of share options 352,177 17 Responsibility Review At 31 March 2009 62,569,593 3,128 Shares issued – share placing November 2009 31,428,571 1,571 20 l Shares issued – rights issue December 2009 120,854,782 6,043 Issued for cash on exercise of share options 1,110 - Directors’ Report At 31 march 2010 214,854,056 10,742 25 l 2010 2010 Corporate No. £000 Governance Report

29 l Own shares At 1 April 2008 626,239 6 Directors’ Remuneration Issued during the year in respect of LTIP awards (107,383) (1) Report At 31 March 2009 518,856 5 32 l Rights acquired during the year 268,877 - At 31 march 2010 787,733 5 Five year history 38 l 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 Consolidated 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 Financial £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 Statements 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 39 l 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.

Company Financial The Company increased the issued share capital during the year due to the exercise of options under share option schemes. Total proceeds from shares Statement issued under exercise of share options amounts to £400 (2009: £681,558). 85 l 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. k l

e2v.com 72 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 25. Called up share capital (continued) 03 l Option price 2010 2009 d ate of Grant pence Exercise period No. No. Business Overview

04 l long Term incentive Plan 31 July 2006 - From 31 August 2009 - 179,200 Chairman’s and 10 January 2007 - From 10 January 2010 - 15,000 Chief Executive’s 16 July 2007 - From 14 July 2010 318,997 204,475 Statement 15 July 2008 - From 15 July 2011 567,676 373,650 06 l 1 October 2008 - From 1 October 2011 - 20,400 16 April 2009 - From 16 April 2012 63,296 - Business Review 5 May 2009 - From 5 April 2012 105,626 - 08 l 24 June 2009 - From 24 June 2012 742,423 -

Board of Directors Executive share Option Plan 19 l 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 Corporate 20 December 2007 160.51 1 January to 31 December 2011 287,960 211,000 Responsibility Review sharesave scheme 20 l 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 Directors’ Report 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 25 l 14 August 2009 36.02 1 November 2012 to 30 April 2013 3,975,687 -

Corporate 6,381,745 1,887,613 Governance Report

29 l For further details of the Group’s share option schemes see note 28.

Directors’ Remuneration Report 26. Reserves 32 l Nature and purpose of reserves

Five year history Merger reserve 38 l As 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.

Consolidated Other reserves Financial Other reserves consist of the capital redemption reserve, own shares reserve and hedge reserve. The capital redemption reserve is used to record reserve Statements transfers required on the redemption of shares whilst the own share reserve records movements in shares held by the Employee Benefit Trust (EBT). 39 l 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 Company Financial not distributable. Statement 85 l Foreign currency translation reserve The 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. k l

e2v.com 73 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 27. Commitments and contingencies 03 l Operating lease commitments – Group as lessee

Business Overview The 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 04 l into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 31 March are as follows: Chairman’s and Chief Executive’s 2010 2009 Statement £000 £000 06 l No later than one year 1,471 1,192 Business Review After one year but not more than five years 2,947 2,388 08 l 4,418 3,580

Board of Directors Capital commitments 19 l At 31 March 2010, the Group has commitments of £727,000 (2009: £2,035,000) principally relating to the acquisition of new plant and equipment.

Corporate Contingent liabilities Responsibility In the ordinary course of business, the Group may issue performance and advance payment guarantees to third parties. As at 31 March 2010, guarantees Review 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 20 l material and consequently no provision is recorded.

Directors’ Report 28. Equity settled share based payments 25 l The Group operates four share based award schemes as follows: Corporate Governance Report 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’ 29 l 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 Directors’ (unless the Remuneration Committee considers, in exceptional circumstances, that it would be inappropriate to apply this underpin). All awards under this Remuneration 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: Report 32 l 2010 2009 No. No. Five year history Outstanding at the beginning of the year 792,725 709,525 38 l Granted in the year 647,350 422,700

Consolidated Awards exercised during the year - (107,383) Financial Awards lapsed during the year (341,049) (232,117) Statements Adjustment for rights issue 698,992 - 39 l Outstanding at the end of the year 1,798,018 792,725

Company Financial Weighted average share price on date of exercise of options n/a 259.00p Statement 85 l 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). k l

e2v.com 74 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 28. Equity settled share based payments (continued) 03 l Executive Share Option Plan (ExSOP)

Business Overview 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 04 l 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.

Chairman’s and 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 Chief Executive’s RPI as follows: Statement 06 l Tier 1 Tier 2 Tier 3

Business Review EPS exceeds RPI by 15% 20% 40% 100% 08 l EPS exceeds RPI by 20% 50% 100% EPS exceeds RPI by 25% 100% Board of Directors The EPS is adjusted EPS, calculated on a consistent basis over the three year period, and excludes amortisation of acquired intangibles, business 19 l 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. Corporate Responsibility The following table illustrates the number, weighted average remaining contractual life and the weighted average exercise prices (WAEP) of share options Review for the ExSOP.

20 l 2010 2010 2009 2009 No. WAEP No. WAEP Directors’ Report

25 l 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 Corporate Lapsed during the year (180,575) 224.34p (111,500) 236.12p Governance Report Granted during the year - n/a - - 29 l Adjustment for rights issue 136,234 n/a - - Outstanding at the end of the year 359,159 178.36p 403,500 258.08p Directors’

Remuneration Report Exercisable at the end of the year 79,110 241.56p 140,000 215.50p 32 l Weighted average share price on date of exercise of options n/a 260.30p Weighted average remaining contractual life 19 months 21 months Five year history Share Incentive Plan (SIP) 38 l No awards have been made to date under this scheme.

Consolidated Sharesave Scheme (SAYE) Financial The Group operates an HM Revenue and Customs approved Sharesave Scheme, all UK employees (including Executive Directors) can apply to join Statements the scheme. 39 l

Company Financial Statement 85 l

k l

e2v.com 75 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 28. Equity settled share based payments (continued) l 03 The following table illustrates the number, weighted average remaining contractual life and the WAEP of share options for the SAYE.

Business Overview 2010 2010 2009 2009 04 l No. WAEP No. WAEP

Chairman’s and Outstanding at the beginning of the year 691,388 244.16p 935,277 234.51p Chief Executive’s Statement Exercised during the year (1,110) 36.02p (187,177) 186.34p Lapsed during the year (654,507) 198.98p (220,576) 238.07p 06 l Granted during the year 2,595,296 57.00p 163,864 225.00p Adjustment for rights issue 1,593,501 n/a - - Business Review Outstanding at the end of the year 4,224,568 43.58p 691,388 244.16p 08 l

Exercisable at the end of the year - n/a 2,925 194.30p Board of Directors Weighted average share price on date of exercise of options 39.50p 260.70p l 19 Weighted average remaining contractual life 30 months 29 months

Corporate 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. Responsibility No subsequent amendments have been made to assumptions estimated at the date of grant. Review 20 l dividend Expected Risk free Expected life fair value yield volatility interest rate of option of option Directors’ Report % % % years pence 25 l lTiP Awards granted 15 July 2008 3.1% 38.0% 4.8% 3 years 143.2p Corporate Governance Report 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 29 l 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 Directors’

Remuneration Report sAyE Awards granted 4 February 2009 10.4% 62.4% 2.20% 3.25 years 6.4p 32 l Awards granted 14 August 2009 4.0% 60.2% 2.23% 3.25 years 14.6p

Five year history 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 38 l 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. Consolidated Financial Statements 29. Pensions, other post-employment and other employment benefits 39 l Defined contribution plans Company Financial The Group has defined contribution plans in the UK and North America, covering substantially all of its employees, which require contributions to be made Statement to a separately administered fund. The Group contributes to state schemes for European activities. Such schemes are defined contribution schemes and 85 l 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 benefits In 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 k l losses are recorded in the income statement.

e2v.com 76 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 29. Pensions, other post-employment and other employment benefits (continued) 03 l 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 Business Overview 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. 04 l 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 Chairman’s and 31 March 2009 a non-current and a current liability of £3,355,000 and £172,000, respectively, have been recognised. Chief Executive’s The current portion of the liability represents management’s best estimate of the contributions expected to be paid in the next financial year. Statement l The table below details the combined present value of the termination allowance and long service awards plan obligations and experience 06 adjustments recognised.

Business Review 2010 2009 2008 2007 31 July 2006(1) 08 l £000 £000 £000 £000 £000

Board of Directors Present value of plan’s obligations 2,839 3,527 3,206 2,792 3,019 19 l Experience (losses)/gains recognised in the period (114) (336) (108) 226 Corporate (1) Date of acquisition Responsibility Review 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). 20 l Termination Directors’ Report long service award allowance Total 25 l 2010 2009 2010 2009 2010 2009 £000 £000 £000 £000 £000 £000 Corporate Governance Report Service cost 62 59 142 140 204 199 29 l Interest on defined benefit liabilities 55 56 134 144 189 200 Actuarial gains and losses 142 - - - 142 - Directors’ Curtailment (324) (107) (841) (307) (1,165) (414) Remuneration Total (income)/expense (65) 8 (565) (23) (630) (15) Report 32 l 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:

Five year history Termination long service award Total 38 l allowance 2010 2009 2010 2009 2010 2009 Consolidated £000 £000 £000 £000 £000 £000 Financial Statements Demographic changes 51 16 71 (88) 122 (72) 39 l Staff turnover 12 5 18 7 30 12 Salary increases (29) 9 (87) 109 (116) 118 Company Financial Discount rate 119 5 253 61 372 66 Statement Beginning work life age - (23) - (184) - (207) 85 l Difference between the benefits paid (11) (12) 90 290 79 278 142 - 345 195 487 195

k l

e2v.com 77 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 29. Pensions, other post-employment and other employment benefits (continued) 03 l 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). Business Overview Changes in the present value of the defined benefit obligation are given below: 04 l Termination Chairman’s and long service award allowance Total Chief Executive’s 2010 2009 2010 2009 2010 2009 Statement £000 £000 £000 £000 £000 £000 06 l Opening defined benefit obligation 1,060 934 2,467 2,272 3,527 3,206 Business Review Exchange rate movement (47) 173 (112) 333 (159) 506 08 l Service cost 62 59 142 140 204 199 Interest expense 55 56 134 144 189 200 Board of Directors Benefits paid (72) (55) (172) (310) (244) (365) Impact of business improvement programme (324) (107) (841) (307) (1,165) (414) 19 l Actuarial loss 142 - 345 195 487 195 Closing defined benefit obligation 876 1,060 1,963 2,467 2,839 3,527 Corporate Responsibility

Review The valuation assumptions used to estimate the defined benefit obligation are:

20 l 2010 2009 £000 £000 Directors’ Report

25 l Retirement age 64 years 64 years Discount rate 4.59% 5.75% Corporate Salary increases – administration 2.54% 3.55% Governance Report Salary increases – operators 3.12% 3.12% 29 l Salary increases – engineers 3.19% 3.65% Staff turnover rates – administration 1.85% 1.65% Directors’ Remuneration Staff turnover rates – operators 1.20% 1.30% Report Staff turnover rates – engineers 2.50% 3.50% 32 l 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. Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 78 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 30. Related party disclosures 03 l Compensation of key management personnel of the Group

Business Overview Key management comprises the Board of Directors. Further details of their remuneration can be found in the Directors’ Remuneration Report.

04 l 2010 2009 £000 £000 Chairman’s and Chief Executive’s Statement Short term employee benefits (including social security) 1,008 720 06 l Compensation for loss of office (including social security) 186 - Defined contribution pension costs 65 62 Business Review Share based payments 59 209 08 l Total compensation paid to key management personnel 1,318 991

Board of Directors 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. 19 l

Corporate 31. Financial risk management objectives and policies Responsibility Review 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 20 l 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 Directors’ Report rate and currency risks arising from the Group’s operations and its sources of finance. 25 l 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 Corporate 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 Governance Report 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 29 l set out in note 2. Interest rate risk Directors’ Remuneration The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s long term debt obligations. Report 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 32 l 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 Five year history instrument had been cancelled at the year end date, approximately 65% of the Group’s borrowings were at a fixed rate of interest. 38 l 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 Consolidated 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 Financial rates on bank deposits is estimated to be less than £0.1m (2009: less than £0.1m). Statements Foreign currency risk l 39 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 Company Financial to finance overseas investments. Statement The Group also has transactional currency exposures. Such exposure arises from sales by an operating unit in currencies other than the unit’s functional 85 l 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 k l gains and losses on retranslation do not impact profit before taxation.

e2v.com 79 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 31. Financial risk management objectives and policies (continued)

03 l Change in us$/Euro rate impact on loss before tax £000 Business Overview

04 l 2010 – us$ 20% strengthening in us$ (2,890) 2010 – Euro 20% weakening in Euro (2,580) Chairman’s and 2009 – US$ 20% weakening in US$ 3,627 Chief Executive’s Statement 2009 – Euro 20% weakening in Euro (744) 06 l 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 Business Review (2009: £nil) in relation to the estimated impact on the valuation of forward foreign currency exchange contracts. 08 l 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. Board of Directors 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 19 l currency is shown in the table below:

year end 2010 Corporate exchange rate £000 Responsibility Review denominated in Euro ¤5,674,000 1.12 5,049 20 l denominated in us dollar $ (47,055,000) 1.52 (31,063) denominated in sterling £ (18,965,000) 1.00 (18,965) Directors’ Report Other currencies 162 25 l (44,817)

Corporate 2009 Governance Report Year end exchange rate £000 29 l Denominated in Euro ¤ (93,150,000) 1.07 (86,704) Directors’ Remuneration Denominated in US dollar $ (61,154,000) 1.43 (42,826) Report Denominated in Sterling or other currencies £ (7,760,000) (7,760) 32 l (137,290)

Five year history Credit risk l 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 38 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. Consolidated Financial 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 Statements 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. 39 l Liquidity risk Company Financial 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 Statement 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. 85 l 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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e2v.com 80 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 31. Financial risk management objectives and policies (continued) l 03 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. Business Overview 04 l Carrying Contractual amount cash flows Within 1 year 1-2 years 2-3 years £000 £000 £000 £000 £000 Chairman’s and Chief Executive’s Statement 31 march 2010 Interest bearing loans and borrowings (see note 21) 69,471 72,628 11,525 10,000 51,103 06 l 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 - - Business Review 116,476 126,781 61,781 12,336 52,664 08 l 31 March 2009 Board of Directors Interest bearing loans and borrowings (see note 21) 142,572 143,663 10,222 11,926 121,515 19 l 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 - Corporate 192,924 202,790 64,037 16,200 122,553 Responsibility Review 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 20 l 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.

Directors’ Report The maturity analysis of provisions and derivative financial liabilities are detailed in notes 23 and 32, respectively. 25 l 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 Corporate 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 Governance Report 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. 29 l 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 Directors’ 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 Remuneration 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 Report 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. 32 l Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 81 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 32. Financial instruments 03 l Fair values

Business Overview 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.

04 l Carrying amount f air value 2010 2009 2010 2009 Chairman’s and £000 £000 £000 £000 Chief Executive’s Statement 06 l financial assets loans and receivables Business Review Cash 27,811 6,373 27,811 6,373

08 l financial liabilities

Board of Directors interest bearing loans and borrowings Floating rate borrowings 69,471 142,572 72,628 137,639 19 l held for trading at fair value through profit or loss

Corporate Forward currency contracts 807 3,296 807 3,296 Responsibility Interest rate swaps 839 1,819 839 1,819 Review 20 l 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 hierarchy Directors’ Report In accordance with IFRS 7, the Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in making 25 l 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; Corporate 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 Governance Report (i.e. derived from prices); and l 29 Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Directors’ The fair value of interest rate swap contracts and forward currency contracts are calculated by management based on external valuations received from the Remuneration Group’s bankers and are based on future interest yields and forward exchange rates, respectively. The fair value measurement basis of the instruments is Report 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. 32 l Currency – forward exchange contracts Five year history 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: 38 l maturing within 1 year Consolidated Total currency value of contracts Average exchange rate £000 Financial Statements 31 march 2010 39 l us$17,850,000 us$ : £1.6227 11,000 us$8,600,000 us$ : ¤1.3641 5,610 Company Financial Statement 31 March 2009 85 l US$31,646,549 US$ : £1.685 18,777

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e2v.com 82 Notes to the financial statements e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 32. Financial instruments (continued) 03 l Interest rate swaps Business Overview 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. 04 l Notional amount maturity secured rate variable rate Chairman’s and Chief Executive’s Statement 31 march 2010 £26,250,000 31 december 2011 1.955% 3 month GBP liBOR 06 l 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 Business Review

l 08 31 March 2009 ¤27,455,625 12 July 2011 3.88% 6 month EUR Euribor Board of Directors ¤30,201,188 12 July 2011 3.31% - 5.00% 6 month EUR Euribor 19 l 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. Corporate Responsibility 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 Review £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 20 l 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. Directors’ Report Hedging activities – net investment hedges 25 l As 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 Corporate 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 Governance Report quarter of the 2010 financial year. 29 l

Directors’ Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 83 Independent Auditor’s Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Independent Auditor’s Report 03 l

Business Overview 04 l 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 Chairman’s and 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 Chief Executive’s preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Statement 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 06 l 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. Business Review Respective responsibilities of Directors and auditors 08 l As 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 Board of Directors accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices 19 l Board’s Ethical Standards for Auditors. Scope of the audit of the Group financial statements Corporate An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the Responsibility financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting Review policies are appropriate to the group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant 20 l accounting estimates made by the Directors; and the overall presentation of the financial statements. Opinion on financial statements Directors’ Report In our opinion the group financial statements: 25 l 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; and Corporate l have been prepared in accordance with the requirements of Companies Act 2006 and Article 4 of the IAS Regulation. Governance Report Opinion on other matters prescribed by the Companies Act 2006 29 l In 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 Directors’ financial statements; and Remuneration l the information given in the Corporate Governance Statement with respect to internal control and risk management systems in relation to Report financial reporting processes and about share capital structures is consistent with the financial statements.

32 l Matters on which we are required to report by exception We have nothing to report in respect of the following: Five year history Under the Companies Act 2006 we are required to report to you if, in our opinion: 38 l 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; or l a Corporate Governance Statement has not been prepared by the Company. Consolidated Financial Under the Listing Rules we are required to review: Statements l the Directors’ statement in relation to going concern; and l the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the June 2008 Combined Code 39 l specified for our review.

Company Financial Other matter Statement We have reported separately on the parent company financial statements of e2v technologies plc for the year ended 31 March 2010 and on the Directors’ 85 l 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 k l 4 June 2010

e2v.com 84 Financial Highlights 03 l

Business Overview 04 l Company Chairman’s and Chief Executive’s Statement 06 l

Business Review 08 l Financial

Board of Directors 19 l

Corporate Responsibility Review Statement 20 l

Directors’ Report 25 l Company balance sheet 86 Corporate Notes to the financial statement 87 Governance Report Independent Auditor’s Report 94 29 l

Directors’ Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 85 Company balance sheet e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Company balance sheet 03 l As at 31 March 2010

Business Overview 2010 2009 04 l Notes £000 £000 fixed assets Chairman’s and Tangible assets 2 - 2 Chief Executive’s Investments 3 120,281 53,758 Statement 120,281 53,760 06 l Current assets Debtors 4 19,000 24,391 Business Review Cash at bank and in hand 600 11 08 l 19,600 24,402

Board of Directors Creditors: amounts falling due within one year 5 (3,573) (1,137) Net current assets 16,027 23,265 19 l Total assets less current liabilities 136,308 77,025 Corporate Responsibility Creditors: amounts falling due after more than one year 6 (31,974) (23,354) Review Net assets 104,334 53,671 20 l Capital and reserves Called up share capital 8 10,742 3,128 Directors’ Report Share premium account 9 41,780 41,780 25 l Merger reserve 9 44,579 - Capital redemption reserve 9 274 274 Corporate Own shares reserve 9 (5) (5) Governance Report Retained earnings 9 6,964 8,494 29 l Equity shareholders’ funds 10 104,334 53,671

Approved by the Board of Directors on 4 June 2010. Directors’ Remuneration Report 32 l

Five year history K Attwood C hindson 38 l Chief Executive Group finance director

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 86 Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Notes to the financial statement 03 l

Business Overview 1. Accounting policies 04 l Basis of preparation Chairman’s and The separate financial statements of e2v technologies plc (Company) are presented as required by Companies Act 2006 (Act) and were approved for issue Chief Executive’s 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 Statement below, and in accordance with applicable United Kingdom Generally Accepted Accounting Practices (UK GAAP). 06 l 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. Business Review The Company has taken exemption from the requirement to prepare a cash flow statement under the terms of FRS 1 (revised) “Cash Flow Statements”. 08 l 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 Board of Directors IFRS 7 “Financial Instruments: Disclosures”. 19 l 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.

Corporate The principal accounting policies adopted are set out below and have been applied consistently in the current and prior financial year. Responsibility Review Going concern 20 l Following 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 Directors’ Report basis which assumes that the Company will be able to meet its liabilities as they fall due for the foreseeable future. 25 l Foreign currencies The presentation and functional currency of the Company is Sterling. Transactions denominated in foreign currencies are recorded at the rate of exchange Corporate 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 Governance Report exchange prevailing at that date. Currency translation differences are recognised in the profit and loss account. 29 l Tangible assets Directors’ 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 Remuneration 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 Report in circumstances indicate the carrying value may not be recoverable. l 32 Investments Investments in subsidiaries are held at historical cost less provision for impairment. The carrying values of investments are reviewed for impairment when Five year history events or changes in circumstances indicate the carrying value may not be recoverable. 38 l Taxation Consolidated 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 Financial 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 Statements 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 39 l 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 Company Financial been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary. Statement 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 85 l 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. k l

e2v.com 87 Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 1. Accounting policies (continued) 03 l Pensions Business Overview The 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. 04 l Share based payments Chairman’s and Employees (including Directors) of the Company receive remuneration in the form of share based transactions, whereby employees render services in Chief Executive’s exchange for shares or rights over shares (equity settled transactions). The cost of equity settled transactions with employees is measured by reference to Statement 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 l given in note 28 to the consolidated financial statements. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than 06 conditions linked to the price of the shares of the Company (market conditions).

Business Review 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 08 l 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. Board of Directors 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 19 l 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 Corporate as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. Responsibility 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 Review 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. 20 l 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 Directors’ Report cancelled and new shares are treated as if they were a modification of the original award.

25 l Dividend income Dividend income from subsidiary undertakings is recognised at the point the dividend has been declared. Dividends declared after the balance sheet date Corporate are not recognised in the profit and loss account. Governance Report 29 l Financial liabilities and equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is Directors’ any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Remuneration Report Bank borrowings 32 l Interest 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.

Five year history 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 38 l modification is treated as a derecognition of the original liability and the recognition of a new liability.

Consolidated Derivative financial instruments Financial The Company uses derivative financial instruments to reduce exposure to interest rate movements. The Company does not hold or issue derivative financial Statements instruments for speculative purposes. Derivative financial instruments have been recognised as assets and liabilities measured at their fair values at the l 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 39 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.

Company Financial Equity instruments Statement Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 85 l Own shares Shares 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. k l

e2v.com 88 Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 2. Tangible assets 03 l motor vehicles £000 Business Overview Cost 04 l At 1 April 2009 and 31 march 2010 12

Chairman’s and Accumulated depreciation Chief Executive’s At 1 April 2009 10 Statement Provided during the year 2 06 l At 31 march 2010 12

Business Review Net book value At 31 March 2009 2 08 l At 31 march 2010 -

Board of Directors 19 l 3. Investments Equity interests in Corporate subsidiary undertakings Responsibility £000 Review

20 l Cost At 1 April 2009 65,656 Directors’ Report Additions 66,523 25 l At 31 march 2010 132,179

impairment Corporate At 1 April 2009 and 31 march 2010 11,898 Governance Report

29 l Net book value At 31 March 2009 53,758 Directors’ At 31 march 2010 120,281 Remuneration Report 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). 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

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e2v.com 89 Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 3. Investments (continued) 03 l Interests in Group undertakings Business Overview The 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 04 l undertakings. To avoid a statement of excessive length, details of investments which are not significant have been omitted.

Chairman’s and Name of undertaking Country of incorporation Principal activity Chief Executive’s Statement e2v technologies (UK) Limited England & Wales Electronic component manufacturer (1) 06 l e2v technologies Canada Limited Canada Sales & distribution e2v technologies GmbH(1) Germany Sales & distribution e2v Limited England & Wales Sales & distribution Business Review e2v scientific instruments Limited England & Wales Electronic component manufacturer 08 l e2v technologies SAS France Holding company e2v semiconductors SAS(2) France Electrical component manufacturer Board of Directors e2v SAS(2) France Sales & distribution 19 l e2v Holdings Inc. USA Holding company e2v Inc.(3) USA Sales & distribution QP Semiconductor Inc.(3) USA Electronic component manufacturer Corporate Responsibility e2v technologies overseas (holdings) Limited England & Wales Holding company (4) Review e2v Asia Pacific Limited Hong Kong Sales & distribution MiCS Microchemical Systems SA(4) Switzerland Electronic component manufacturer 20 l e2v microsensors SA(4) Switzerland Electronic component manufacturer

Directors’ Report (1) held through e2v technologies (UK) Limited. 25 l (2) held through e2v technologies SAS. (3) held through e2v Holdings Inc. (4) held through e2v technologies overseas (holdings) Limited. Corporate Governance Report 29 l 4. Debtors

Directors’ 2010 2009 Remuneration £000 £000 Report 32 l Amounts due within one year Amounts receivable from subsidiary undertakings 18,643 24,320 Five year history Other debtors 91 33 Prepayments and accrued income 87 38 38 l 18,821 24,391 Amounts due after more than one year Consolidated Deferred tax asset (see note 7) 179 - Financial 19,000 24,391 Statements 39 l

Company Financial Statement 85 l

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e2v.com 90 Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 5. Creditors: amounts falling due within one year 03 l 2010 2009 Business Overview £000 £000 04 l Trade creditors 1,574 474 Amounts payable to subsidiary undertakings 67 50 Chairman’s and Other taxation and social security costs 156 127 Chief Executive’s Statement Other creditors – pension contributions 15 - Accruals and deferred income 1,605 486 06 l Interest rate swaps 156 - 3,573 1,137 Business Review 08 l 6. Creditors: amounts falling due after more than one year Board of Directors 2010 2009 19 l £000 £000

Corporate Responsibility Bank loans 31,843 23,354 Review Interest rate swaps 131 - 31,974 23,354 20 l 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 Directors’ Report secured by a floating charge over the net assets of the Group. 25 l Interest rate swaps Interest rate swaps are recorded in the balance sheet at fair value and mature as follows: Corporate Governance Report 2010 2009 l 29 £000 £000

Directors’ After more than one year and less than two years 131 - Remuneration Report Due within one year 156 - 287 - 32 l

Five year history 7. Deferred tax asset 38 l £000 Consolidated Financial At 1 April 2009 - Statements Credited to profit and loss account 165 39 l Credited to statement of total recognised gains and losses 14 At 31 march 2010 179 Company Financial Statement Deferred tax is comprised as follows:

85 l 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. k l

e2v.com 91 Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 8. Called up share capital 03 l 2010 2010 Business Overview Ordinary shares issued and fully paid No. £000

04 l At 1 April 2009 62,569,593 3,128 Shares issued – share placing November 2009 31,428,571 1,571 Chairman’s and Shares issued – rights issue December 2009 120,854,782 6,043 Chief Executive’s Employee share option schemes – options exercised 1,110 - Statement At 31 march 2010 214,854,056 10,742 06 l 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 Business Review movements in shares in the Employee Benefit Trust are also given in note 25 to the consolidated financial statements. 08 l 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 Board of Directors detailed in that note relate to employees of the Company. The following Sharesave scheme (SAYE) and Executive Share Option Plan (ExSOP) awards, number 19 l and weighted average exercise price (WAEP) relate to employees of the Company.

2010 2010 2009 2009 Corporate Responsibility sAyE No. WAEP No. WAEP Review Outstanding at the beginning of the year 24,663 225.00p 29,750 224.93p l 20 Employee transfer 2,048 225.00p - - Exercised during the year - - (5,732) 165.30p Directors’ Report Lapsed during the year (25,995) 189.48p (2,688) 351.50p 25 l Granted during the year 89,157 57.00p 3,333 225.00p Adjustment for rights issue 56,891 n/a - - Corporate Outstanding at the end of the year 146,764 40.13p 24,663 225.00p Governance Report Exercisable at the end of the year - n/a - n/a 29 l Weighted average share price at date of exercise of options nil 272.75p Weighted average remaining contractual life 30 months 30 months Directors’

Remuneration 2010 2010 Report ExsOP No. WAEP 32 l Employee transfer 12,000 273.58p Five year history Lapsed during the year (5,000) 215.50p 38 l Adjustment for rights issue 4,076 n/a Outstanding at the end of the year 11,076 199.10p Consolidated Financial Exercisable at the end of the year - n/a Statements Weighted average share price at date of exercise of options nil 39 l Weighted average remaining contractual life 9 months

Company Financial Statement 85 l

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e2v.com 92 Notes to the financial statement e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 9. Reserves 03 l share merger Capital Own Retained premium reserve redemption shares earnings Total Business Overview £000 £000 £000 £000 £000 £000 04 l At 1 April 2009 41,780 - 274 (5) 8,494 50,543 Chairman’s and Loss for the year - - - - (1,973) (1,973) Chief Executive’s Shares issued - 44,579 - - - 44,579 Statement Share based payments - - - - 123 123 06 l Deferred tax on share based payments - - - - 14 14 Share options issued to employees of subsidiary undertakings - - - - 306 306 Business Review At 31 march 2010 41,780 44,579 274 (5) 6,964 93,592

08 l 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 Board of Directors 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. 19 l

Corporate 10. Reconciliation of movements in shareholders’ funds Responsibility Review 2010 2009 20 l £000 £000

Directors’ Report Loss for the year (1,973) (4,514) 25 l Dividends paid on equity shares - (4,913) New shares issued 52,193 681 Corporate Share based payments (including deferred tax) 137 341 Governance Report Share options issued to employees of subsidiary undertakings 306 284 29 l Net increase in/(deduction from) shareholders’ funds 50,663 (8,121) Opening shareholders’ funds 53,671 61,792 Directors’ Closing shareholders’ funds 104,334 53,671 Remuneration Report For details on dividends paid during the prior year please refer to note 12 to the consolidated financial statements. 32 l

Five year history 11. Commitments and contingent liabilities 38 l 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 Consolidated at the balance sheet date. Financial Statements 39 l 12. Directors’ remuneration Details of Directors’ remuneration, pension benefits and share option awards are included in the Directors’ Remuneration Report. Company Financial Statement 85 l 13. Auditor’s remuneration The 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. k l

e2v.com 93 Independent Auditor’s Report e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights Independent Auditor’s Report 03 l

Business Overview 04 l 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 Chairman’s and Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Chief Executive’s 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 Statement 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 l 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 06 as a body, for our audit work, for this report, or for the opinions we have formed.

Business Review Respective responsibilities of Directors and auditors 08 l As 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 Board of Directors the Auditing Practices Board’s Ethical Standards for Auditors. 19 l Scope of the audit of the parent company financial statements Corporate An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the Responsibility financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting Review 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. 20 l Opinion on financial statements Directors’ Report In our opinion the parent company financial statements: 25 l 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 Corporate l have been prepared in accordance with the requirements of the Companies Act 2006. Governance Report 29 l Opinion on other matters prescribed by the Companies Act 2006 In our opinion: Directors’ l the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and Remuneration Report 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. 32 l Matters on which we are required to report by exception Five year history We 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:

38 l 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

Consolidated l the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting Financial records and returns; or Statements l certain disclosures of Directors’ remuneration specified by law are not made; or 39 l l we have not received all the information and explanations we require for our audit.

Company Financial Other matter Statement We have reported separately on the group financial statements of e2v technologies plc for the year ended 31 March 2010. 85 l

Peter Bateson (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor k l Cambridge 4 June 2010

e2v.com 94 e2v technologies plc Annual Report and Financial Statements 2010

Financial Highlights 03 l Business Overview General information 04 l

Chairman’s and Directors Bankers Chief Executive’s C Geoghegan (Chairman) Barclays Bank plc Statement K Attwood (Chief Executive) 1 Churchill Place London E14 5HP 06 l C Hindson A Reading Lloyds TSB Bank plc Business Review 10 Gresham Street J Brooks London EC2V 7AE 08 l I Godden HSBC Bank plc 8 Canada Square Board of Directors Company Secretary London E14 5HQ C Parmenter 19 l The Royal Bank of Scotland plc 250 Bishopsgate Corporate Registered Office London EC2M 4AA Responsibility 106 Waterhouse Lane Review Chelmsford Auditors Essex CM1 2QU 20 l Ernst & Young LLP Compass House Solicitors Directors’ Report 80 Newmarket Road Macfarlanes LLP Cambridge CB5 8DZ 25 l 20 Cursitor Street London EC4A 1LT Registrars Corporate Birkett Long Equiniti Governance Report Ocean House The Causeway 29 l Waterloo Lane Worthing Chelmsford West Sussex BN99 6DA Essex CM1 1BD Directors’ Remuneration Report 32 l

Five year history 38 l

Consolidated Financial Statements 39 l

Company Financial Statement 85 l

k l Designed by Focus Integrated Marketing Communications | www.focusintegrated.co.uk

+44 (0)1245 493 493 493 +44 (0)1245 492 492 +44 (0)1245

e2v.com e2v technologies plc technologies e2v Lane Waterhouse 106 Chelmsford CM1 2QUEssex England T F to: enquiries relations Investor [email protected]

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k l 85 Statement Company Financial Financial Company Statements 39 Financial Financial Consolidated Consolidated 38 Five year history year Five Report 32 Remuneration Remuneration Directors’ Directors’ 29 Governance Report Governance Corporate Corporate 25 Directors’ Report Directors’ Review 20 Responsibility Responsibility Corporate Corporate 19 Board of Directors of Board 08 Review Business Statement 06 Chief Executive’s Executive’s Chief Chairman’s and and Chairman’s Business Overview Business 04 Financial Highlights Financial 03