HalfYearly Financial

1
Half-Yearly Financial Report 2008
2
Chairmans review

• Group profitable and cash neutral
• Continuing businesses
• Point to Point Substantial growth in sales,
  profit and margin
• UK Defence Profit improvement on slightly lower
  revenue
• Compound Semiconductors profitable sale for
  12.5m due to complete on 29 February
• US Defence business and surplus property sold
• Pension progress Large liability reduction
  estimated injection 30m
• Initiating capital reorganisation to facilitate
  cash return
• Priorities Conclude pension liability
  elimination cash return maximise value in
  continuing businesses
• H2 outlook More restrained like-for-like growth
  in Point to Point some improvement in
  Defence

3
Overall performance

• Revenue growth 51 vs H1 FY07
• Exceptional items enhanced transfer value
  pension exercise 1.9m including 0.3m fees
• Underlying operating profit for continuing
  businesses of 2.3m
• Closing cash of 117.4m (year end 118.3m)
• Finance income, 3.3m interest on cash

4
Segmental analysis
5
Point to Point

• Modules and filters for backhaul to OEM customers
• 91 revenue growth on H1 FY07
• Some consolidation expected in H2 FY08

6
Defence

• Order cover improving
• Revenue down 5 on H1 FY07
• Margins improved - 8 RoS
• Second half some improvement in trading

H106 H206 H107
H207 H108
7
Group matters

• US Defence business sold October 2007
• initial consideration of 3.4m (gross) received
• up to 1.5m deferred consideration due April 2009
• Surplus properties sold
• Stewarton 0.3m
• Waterfront, Saltaire 5.8m
• The Groups DB pension scheme obligations being
  resolved
• Enhanced TV exercise reduced scheme liabilities
  by 38
• Reduction of IAS19 deficit to 3.3m
• Past service liabilities to be externalised on an
  annuity basis estimated cost 30m
• Interest of 3.3m received on cash deposits

8
Outlook

• Defence
• Progress on order intake
• Some improvement in trading
• Point to Point
• Lower level but substantially ahead compared to
  H2 FY07
• Compound Semiconductors
• Sale for 12.5m due to complete on 29 February
  2008