Final Results

Radstone Technology PLC
14 June 2005


FOR IMMEDIATE RELEASE                                             14 June 2005

                            RADSTONE TECHNOLOGY PLC

                              Preliminary Results

                               "Continued growth"

Radstone Technology, the world's leading independent supplier of
high-performance, embedded computer products for defence and aerospace
applications today announces preliminary results for the year ended 31 March
2005.


Key Points


Turnover up 14% to £49.9m (2004: £43.7m).

Group Profit before tax, goodwill and exceptional items increased 15% to £8.5m
(2004: £7.4m).

Normalised Earnings per share * up 5% to 21.54p (2004: 20.50p). Basic Earnings
per share up from 5.00p to 26.12p

Final dividend of 2.7p per share increasing the total dividend by 20% to 3.6p
(2004: 3.0p).

Order book ended the year at a record level at £86.5m (2004 : £79.3m)

$26.5m multi-year production order from Raytheon

Octec Ltd (acquired in July 2004) has been earnings enhancing.

EMS business showed a substantial improvement in results during the year,
following our reorganisation of the business, with a contribution of 18.7% of 
sales (2004 : 9.8%)

* Calculated after adjusting profit after tax for the effect of goodwill
amortisation and exceptional items.



Jeff Perrin, Chief Executive commenting on the results said:

"The US defence market remains strong and its increasing investment in
technology to achieve a complete network centric battlefield, with armed forces
that are equipped for rapid deployment, will mean that Radstone is well placed
to benefit from our customers' requirements for high performance embedded
computing.

The Group has invested substantially in new facilities, it has developed and
brought to market new products and it has increased its market reach through
targeted acquisitions.  We have continued to deliver improved financial
performance; have a record order book and a healthy balance sheet and so begin
this financial year in a strong position."


For further information:

Radstone Technology                              01327-359444
Jeff Perrin, Chief Executive                     Web: http://www.radstone.co.uk
Kevin Boyd, Group Finance Director

Buchanan Communications                          020 7466 5000
Tim Thompson or Nicola Cronk                     Email : [e-mail]



Chairman's Statement
for the year ended 31 March 2005

I am pleased to report a strong set of results from the Radstone Group.  Group
profit before tax, goodwill and exceptional items recorded its ninth successive
year of improvement, increasing by 15% to £8.5m from £7.4m last year (see
calculation in note 4).

Sales in the Embedded Computing business were adversely affected by the weak US
dollar (explained in detail in the Financial Review).  As a result the 14%
increase in sales to £50m was mainly due to the additional deliveries from Octec
acquired in July 2004 and a full year's contribution from ICS acquired in
September 2003.

Basic earnings per share under FRS14 were 26.12p (2004: 5.00p).  Normalised
earnings per share (see calculation in note 1) increased by 5% to 21.54p (2004:
20.50p).

New orders received during the year to 31 March 2005 totalled £54.4m and the
order book ended the year at a record level at £86.5m, (2004: £79.3m).

Dividend

In light of the underlying performance of the Group and the directors' intention
of creating shareholder value through a progressive dividend policy, your board
is recommending a final dividend of 2.7p per ordinary share, giving a dividend
of 3.6p for the year, which represents an increase of 20% .  This will be paid
on 28 September to shareholders on the register on 9 September 2005.

New Product Development

This was a strong period for new product introductions, ensuring that Radstone
remains at the forefront of its industry.  Over the past year we have continued
to invest significant resources in product development, which reached a record
level of £6.1m (2004: £4.5m) equivalent to 12.2% (2004: 10.3%) of turnover.

Corporate Activity

In July 2004 we completed the acquisition of Octec Ltd based in Bracknell, UK,
for a total consideration of £10.8m.  The consideration payable on completion
was £10.7m and a further £0.1m was paid in May 2005 on achievement of profit
targets for the 12 months to January 2005.  To finance the acquisition,
approximately £6.5m was raised by way of a placing of shares and the balance
from existing banking facilities.  It was especially pleasing to note, that the
enhancement by Octec of our earnings per share, met our short-term expectation
at the time of the acquisition.

I welcome the employees of Octec to the Radstone Group.

In our interim report we gave details of the changes that had been negotiated
with the vendors of ICS with respect to their earn-out agreement.  This detailed
that during September 2004, following the successful completion of the
integration of ICS, agreement was reached with Dr. Dipak Roy, the founder and
former shareholder of ICS, that he resign his position as President of ICS.  As
part of the agreement, Radstone paid to the vendors C$7.5m (approximately £3.3m)
in lieu of a payment of C$5.0m (approximately £2.2m) in January 2005 and a
potential payment of up to C$5.0m in January 2006.   ICS continues to perform in
line with expectations at the time of the acquisition.

During January 2005 we purchased through DaqScribe Technology Inc. (our
subsidiary specialising in mechanical test and measurement), the trade and
assets of SavvyCorp for $167k.  SavvyCorp offers a complete high performance,
low cost data acquisition system solution and high bandwidth signal conditioning
modules to measure pressure, temperature and other sensor inputs.

In March 2005 we sold SensorCom Inc., a small system integrator, to its
management team for $1.6m.  SensorCom joined the Radstone Group as part of the
acquisition of ICS Ltd, of which it was a subsidiary, in September 2003.  ICS
had previously acquired SensorCom for $285k in September 2002.  It had become
apparent that strategically our core engineering development and manufacturing
businesses and SensorCom's integration business were not a good fit and
therefore your board made the decision to divest itself of the business.

Facilities

Construction of a new purpose built 75,000 sq. ft. freehold facility within
Towcester was completed on schedule and to budget in early May 2004.  Our own
internal fit-out took a further three weeks and we relocated in early June with
minimal disruption to production.  This modern state-of-the-art facility, with
its increased capacity is a major competitive advantage for the Group.

With the large majority of our business emanating from customers in the United
States, we took the decision to open, in November 2004, an engineering design
centre near Boston, Massachusetts.  This will be home to a team of design and
development engineers in addition to front line customer service and support
staff.  This will complement the existing Radstone sales and support offices
located throughout the USA.  Our vision for the future sees us continuing to
develop our presence still further in North America.

Outlook

The US defence market remains strong and its increasing investment in technology
to achieve a complete network centric battlefield, with armed forces that are
equipped for rapid deployment, will mean that Radstone is well placed to benefit
from our customers' requirements for high performance embedded computing.

The Group has invested substantially in new facilities, it has developed and
brought to market new products and it has increased its market reach through
targeted acquisitions. Radstone has continued to deliver improved financial
performance; it has a record order book and a healthy balance sheet and so
begins this financial year in a strong position.

Operations Review

Embedded Computing

                                    2005          2004
                                    £'000         £'000
Total sales (all external)          41,822        33,181
Gross profit                        23,663        19,602
Contribution (Note 2)               11,435        10,046


In July 2004, Radstone acquired Octec Ltd, a UK company based in Bracknell.  The
company designs and manufactures image processors and video trackers for the
embedded computing market.  Octec's core competency in advanced image processing
and video tracking software and algorithms is highly complementary to Radstone's
computer subsystem expertise.  These are new application areas for Radstone and
are a significant step in our strategy of supplying a wider range of system
solutions to our customers.

Strategically, the test and measurement market is a growth area for us and we
have taken advantage of the opportunity to acquire IP that will further
strengthen our offering, by purchasing the trade and assets of SavvyCorp through
DaqScribe Technology Inc., our subsidiary specialising in this market.

Development of new leading-edge products continues to be a key differentiator
between Radstone and its competitors.  Investment in development amounted to
£6.1m (2004: £4.5m) representing 14.6% (2004: 13.6%) of Embedded Computing
sales.  During the year we introduced fifteen new products; among these was the
G4DSP-XE, the most advanced PowerPC digital signal processing board available.
Also introduced was the Adept-104 from Octec, which is a small form factor board
with very low power consumption, offering unique architecture for image
processing; targeting UAV applications as well as other security and
surveillance applications.  Finally ICS developed its first rugged product, the
ICS PMC-571, a rugged software radio mezzanine transceiver card, which is the
first product in the world to offer wide bandwidth analog to digital and digital
to analog conversion capabilities at software radio frequencies on a rugged PMC
card.

In November 2004 we opened a new engineering design centre near Boston
Massachusetts.  By May 2005 we had announced our first software product from
this facility - Axis.  This is a powerful suite of software tools that allows
system designers to develop complex, highly capable solutions using multiple
processors in order to deliver the processing power required in the most
advanced military applications.  The tools hide the complexities and
difficulties of making multiple processors operate together, to allow our
customer's engineers to concentrate on the solution and thereby reduce
engineering timescales.  This product delivers a powerful competitive advantage
to Radstone.

Two strategic alliances were announced during the year.  The first with Ultra
Electronics Datel, involves collaboration in the development of flight
certifiable board support packages for our single board computers in accordance
with DO-178B, the de facto standard in certifying all new aviation software.
This strengthens further Radstone's position in the growing avionics market.
The second alliance is with Parker Hannifin and involves collaboration on the
development of a range of rugged, liquid-cooled solutions for sub-systems that
feature higher power levels from faster processors and thus require increased
heat dissipation.  The first product to be developed under this alliance was
released to the market in January 2005.

Sales for the Embedded Computing business included £4.8m attributable to Octec
Ltd.

The continuing weakness of the US dollar, the unit's main trading currency,
affected organic growth as reported in sterling.  In constant dollars and
excluding Octec, Embedded Computing sales grew by £6.5m, equivalent to 19.6%.

Sales were more heavily weighted towards the second half of the year than in
previous years.  This was due to the component supply and production issues,
highlighted at the time of our interim results announcement and subsequently
resolved during quarters 3 and 4.  Excluding Octec, 70% of shipments occurred in
the second half of the year, compared with 58% in 2004.

In our main US market, deliveries of £29.0m represented 58% of Group sales
compared with 53% in 2004.  Major US programme deliveries were MLRS (Harris
Corporation), Firefinder (Northrop Grumman), ATFLIR (Raytheon Systems), ADCAP
(Raytheon Systems) and Abrams Tank CEEP (General Dynamics).

Gross profit increased to £23.7m compared with £19.6m last year (+20.9%), due
mainly to the additional gross profit from Octec of £3.0m.  The reduction in
gross profit margin from 59.0% to 56.7% was due to the effect of the weak US
dollar and our hedging instruments.  In constant dollar terms the margin would
have been similar to the previous year.

Contribution decreased to 27.3% of sales (2004: 30.3%), due to the effect of the
US dollar and our hedging instruments.

Electronic Manufacturing Services (EMS)

                                    2005          2004
                                    £'000         £'000
Total sales                         8,800         11,327
Sales to Embedded Computing         (735)         (787)
External sales                      8,065         10,540
Gross profit                        1,873         1,392
Contribution (Note 2)               1,644         1,114


Following on from the reorganisation of our EMS business in November 2003 we now
have a more efficient and tightly focused unit, targeting customers that require
small to medium batch sizes of complex electronic assemblies.  This has resulted
in a substantial improvement in results during the year, returning a
contribution of 18.7% of sales compared with 9.8% in 2004.

The majority of the activity in the year was for commercial customers involved
in industrial control, test & measurement, civil surveillance, electronic
displays and electronics for motor sports.  Current high levels of quotation and
enquiry activity from defence system integrators would indicate that for the
current year 2006, they will represent a greater proportion of third party sales
than the 7% achieved in 2005.

As part of the reorganisation in 2003-04 mentioned earlier, we made the decision
to target only high added value contracts that met strict criteria with respect
to low volume high complexity assemblies which had the effect of reducing third
party sales by £2.4m to £8.1m this year.  Together with the cost savings
introduced this increased the gross profit by £0.5m, so that the gross profit
margin on sales rose substantially from 12.3% to 21.3%.

During the year our EMS business achieved the accreditation ISO 14001, thereby
demonstrating their commitment to achieving best standards for environmental
management.

Orders

The order book at 31 March 2005 totalled a record £86.5m, an increase of 9% in
sterling terms from the £79.3m achieved in 2004.

New orders booked totalled £54.4m in 2005, compared with £58.9m in 2004.  Octec
contributed £4.8m to this total in 2005.

UK orders for the Group totalled £18.3m, below last year by £12.5m due to the
receipt in 2003-04 of a £14m multi-year production contract.  No major UK
multi-year production contract was received in 2004-05.

Orders from mainland Europe of £4.6m and the Far East of £1.3m, increased by £3m
and £0.4m respectively compared to last year.

Radstone in the USA had another excellent year for new orders received, with
bookings of $69.1m.  This included a multi-year production order from Raytheon
for $26.7m on a torpedo upgrade programme that was in addition to $5.5m received
in the first half of the year on the same programme.   The previous year's US
order intake was $55.1m and included the largest single order to-date for $41m
on a multi-year production programme for delivery over seven years.

Order intake for the EMS business, which is all UK based declined by £1.9m as
the unit, in line with its current strategy, targeted only those customers that
require small to medium batch sizes of complex electronic assemblies.

Financial Review

Overview

Analysis of this year's result is complicated by the weakening of the US dollar,
which moved from an average exchange rate of 1.71 in the prior year to 1.85. As
approximately 79% of the Embedded Computing division's sales in the year were in
US dollars, the weakness in the dollar has had considerable impact on the year's
results.  The effect on profit before tax for the year is estimated to be £1.9m.

Group sales of £49.9m comprised £41.8m from the Embedded Computing division and
£8.1m from EMS.  Embedded Computing benefited from sales of £4.8m from Octec
Limited, which was acquired in July, but suffered a reduction of £2.7m in
constant dollar terms due to the fall in the US dollar.  In EMS, which has very
little dollar exposure, turnover was down 23%, which was anticipated, due to the
effects of the restructuring carried out in the previous year which focused the
division on low volume high complexity work.

Reported gross margins in Embedded Computing fell to 56.7% from 59.0%.
Stripping the effects of hedging out of both years, margins in constant dollars
were up slightly reflecting the positive contribution of Octec which produced a
gross margin of 64.4% in its nine months with the Group.

Within the EMS business gross margins improved from 12.3% to 21.3% as a result
of the efficiencies gained from the closure of the Hawarden operation, the
consolidation of the two businesses on the one site at Milton Keynes and a more
targeted product mix of high added value contracts.

In absolute terms, Group gross profits increased by £4.5m to £25.5m.
Expenditure on development, sales, marketing and administration increased by
£2.8m with the result that operating profit (before goodwill amortisation of
£1.4m) increased by £1.7m to £9.5m, a 22% improvement.  This represented an
operating profit margin before goodwill of 19.1% of sales, compared to 17.8%
last year.  In constant dollar terms the operating profit margin would have been
23% representing growth of 48%.

EBITDA (see note to the consolidated cash flow statement) at £11.6m was 20.4%
above last year.  The first half of the year generated £0.8m and the second half
£10.8m; compared with £2.3m and £7.3m respectively.

Exceptional items in the year relate to the profit on the sale of the Group's
Water Lane site and the profit on disposal of SensorCom Inc.  The disposal of
the Water Lane site which took place in July 2004 generated a profit of £2.3m.

SensorCom joined the Radstone Group as part of the acquisition of ICS Limited,
of which it was a subsidiary, in September 2003. Based in Annapolis, Maryland,
the company is a small systems integrator with a different focus from the other
elements of Radstone's embedded computing division and therefore the Board of
Radstone decided to divest the business to its current management team.  ICS
acquired SensorCom for $0.3m in September 2002 and it has been sold for $1.6
million.  Net assets, at disposal, after the payment of a $0.4m dividend to the
Group, were approximately $0.1m.  The disposal generated an exceptional profit
before tax of £0.6m.  In the year to 31 March 2005, SensorCom contributed £0.2m
to the profit before tax of the Group.

Interest charges have grown by £0.6m to £1.0m due to the increased borrowing
used to finance the construction of the new facility in Towcester and the
acquisitions of ICS and Octec.

The tax charge of £2.4m represents 23.4% of the pre-tax profit compared to 57.4%
in 2004.  This improved percentage reflects the exceptional gain on the sale of
the Water Lane facility which was not subject to tax.  Before exceptionals and
goodwill the tax rate was 25.3% in 2005 and 27.6% in 2004.

The basic earnings per share (FRS14) of 26.12p were boosted by the exceptional
profits in the year whereas last year's at 5.00p were depressed by the
exceptional closure costs of the Hawarden facility in that year.  The normalised
earnings per share (see calculation in note 1) were 21.54p, a 5.1% increase
compared to last year.  Adjusted for the decline in the dollar, the normalised
earnings per share would have been 26.4p, a 29% increase.

Cash flow

Cash flow from operating activities was £8.3m compared to £9.1m last year.

After deducting net interest and tax payments of £0.9m and £2.1m respectively
and capital expenditure (excluding construction of the new property) of £2.4m,
free cash flow amounted to £2.9m.  From the free cash flow a dividend of £1.0m
was paid and final payments of £2.3m on the construction of the new building.
Cash received from the sale of the Water Lane site was £3.9m resulting in a cash
inflow of £3.5m before acquisitions and financing.

The £10.6m paid for Octec, net of cash acquired and costs, was financed by £6.2m
from the proceeds of a placing of shares and the balance from cash resources and
shares issued to vendors.

The acquisition of the intellectual property of Savvy Corp cost £0.1m, while the
net cash effect of the disposal of SensorCom was an inflow of £0.8m

In our interim report we gave details of the changes that had been negotiated
with the vendors of ICS with respect to their earn-out agreement.  This resulted
in a payment to the vendors of CAN$7.5m (£3.3m) during the year in lieu of a
payment of CAN$5.0m in January 2005 and a potential payment of up to CAN$5.0m in
January 2006.

A net repayment of loans totalling £1.7m left the Group with net debt of £16.6m
at year end, compared with net debt of £19.5m at the half year and net debt of
£12.7m at the same time last year.

Investment

A further £2.3m was spent in completing the new facility in Towcester.
Underlying capital expenditure (excluding the new building) was a net £2.4m
compared with £1.7m in 2004 and reflects the increased size of the Group post
the ICS and Octec acquisitions.

Company funded development expenditure grew to £6.1m (2004: £4.5m), representing
14.6% of sales for the Embedded Computing business (2004: 13.6%).  Consistent
with the Group's established policy, all product development was charged
directly to the profit and loss account.

Liquidity

Net debt of £16.6m equates to gearing of 36% compared to 48% at the half year
and 39% at the end of the prior year. Current and quick ratios were 2.2 and 1.5
respectively, compared to 2.3 and 1.7 last year.  Interest was covered 9.2 times
compared to 19.8 times last year.  The total dividend for the year is covered
6.7 times (4.4 times excluding exceptionals) compared to 1.5 times last year
(5.5 times excluding exceptionals).

The Group seeks to reduce financial risk and to ensure sufficient liquidity is
available to meet foreseeable needs.  Our policy is to maintain a balance
between continuity of funding and flexibility through the cost-effective use of
borrowings with a range of maturities.

Performance

Normalised earnings per share, (see calculation in note 1), which is indicative
of underlying performance, grew by 5.1% to 21.54p (2004: 20.50p).  In constant
dollar terms these would have been 26.4p.

The return (being operating profit before goodwill - see note to the cash flow
statement) on average capital employed fell from 23.2% to 17.6%.  Return (being
profit after tax excluding exceptional items) on opening equity of 15.2% was
below last year's 20.8%.  Both of these falls are due in the main to the effect
of the dollar on the year and to a lesser extent the capitalised goodwill on
recent acquisitions.

Treasury

With a substantial percentage of revenue in United States dollars, hedging
foreign exchange fluctuations against this currency is recognised by the
directors as a key responsibility.  While this exposure is naturally hedged by
purchases of components in US dollars and the local costs of our US operations,
there still remains a net exposure to be hedged. In the year, the net exposure
was approximately $40m which was protected from the dollar's weakness to some
extent by the prudent use of various financial instruments.  The hedged rate
achieved was approximately £1:US$1.7 compared to a sales weighted rate of £1:
US$1.87.

At 31 March 2004 there were £0.8m of unrealised net gains on forward foreign
currency contracts and options (2004: £1.8m of net gains) covering US dollars.
None of these was recognised at the balance sheet date.  All unrealised net
gains are expected to be dealt with in the profit and loss accounts for the
periods ending 31 March 2006 and 31 March 2007.

Since unrealised gains or losses are calculated by marking to market forward
foreign currency contracts and options, which are used to calculate foreign
currency prices for our products, the off-set for these unrealised amounts is
the sales which will result from the physical delivery of these products.

Translation exposure arising on the consolidation of the Group's US and Canadian
assets is hedged by use of US and Canadian dollar loans in the UK parent
company.  The net effect of these are taken directly to reserves as allowed
under SSAP20, ensuring that only trading transaction gains and losses on foreign
exchange are represented in the profit and loss account.

The interest rate exposure on the US dollar, Canadian dollar and sterling loans
are managed by a number of interest rate swaps.

International Financial Reporting Standards

Radstone Technology PLC will be required to adopt International Financial
Reporting Standards (IFRS) when preparing its group accounts for the year ended
31 March 2006.

The applicable standards have been identified and procedures reviewed to ensure
that the relevant data is being captured to allow us to report under the new
standards in our interim report for the year ending 31 March 2006.


Consolidated Profit & Loss Account
for the year ended 31 March 2005

                                                    Notes    Continuing   Acquisition         2005       2004
                                                                  £'000         £'000        £'000      £'000

Turnover                                                         45,093         4,794       49,887     43,721

Cost of sales                                                  (22,595)       (1,756)     (24,351)   (22,727)

Gross profit                                                     22,498         3,088       25,536     20,994

Administration costs
Administration                                                  (3,539)             -      (3,539)    (3,391)
Development                                                     (4,824)       (1,282)      (6,106)    (4,525)
Goodwill                                                          (994)         (366)      (1,360)      (806)
Total administration costs                                      (9,357)       (1,648)     (11,005)    (8,722)

Distribution costs - sales and marketing                        (5,837)         (514)      (6,351)    (5,309)

Operating profit                                                  7,304           876        8,180      6,963
Exceptional gain on disposal
  of freehold land and buildings                                                             2,271          -
Exceptional gain on disposal of
  subsidiary undertaking                                                                       641          -
Exceptional cost on closure
  of operation                                                                                   -    (3,508)
Net interest payable                                                                       (1,035)      (393)

Profit on ordinary activities before taxation                                               10,057      3,062

Taxation                                                                                   (2,355)    (1,759)

Profit for the financial year                                                                7,702      1,303

Dividends                                                                                  (1,142)      (842)

Retained profit for the year                                                                 6,560        461


Basic earnings per share                                1                                   26.12p      5.00p
Normalised earnings per share                           1                                   21.54p     20.50p
Diluted earnings per share                              1                                   25.97p      4.97p


Statement of total recognised gains and losses
                                                                                             £'000      £'000

Profit for the financial year                                                                7,702      1,303
Exchange rate adjustment                                                                       505      (461)
Total gains recognised relating to the year                                                  8,207        842


There is no material difference between the profit reported above and that
calculated on the historical cost basis.

All results arise from continuing operations.


Balance Sheets
at 31 March 2005

                                                                      Group                   Company
                                                     Notes            2005        2004       2005       2004
                                                                     £'000       £'000      £'000      £'000
Fixed assets
Goodwill                                                            28,662      20,613          -          -
Intangible assets                                                       46          76         42         76
Total intangible assets                                             28,708      20,689         42         76
Tangible assets                                                     16,843      15,350     10,950     10,337
Investments                                                              -           -     38,651     26,492
                                                                    45,551      36,039     49,643     36,905

Current assets
Stocks                                                              11,219       9,266          -          -
Debtors falling due after
 more than one year                                                    423           -        151        151
Debtors                                                             17,451      13,870      5,063      6,158
Cash at bank and in hand                                             4,304       9,150     10,774     17,096
                                                                    33,397      32,286     15,988     23,405

Creditors: amounts falling due
 within one year
Bank and other borrowings                                            3,759       2,733      2,703      1,400
Other creditors                                                     11,366      11,112      3,756      4,681
                                                                    15,125      13,845      6,459      6,081
Net current assets                                                  18,272      18,441      9,529     17,324
Total assets less current liabilities                               63,823      54,480     59,172     54,229

Creditors: amounts falling due after
 more than one year
Bank and other borrowings                                           17,099      19,134     16,475     18,051
Other creditors                                                          -       2,066          -      2,066
                                                                    17,099      21,200     16,475     20,117

Provisions for liabilities and charges                                 252         366        561      6,221
Net assets                                                          46,472      32,914     42,136     27,891

Capital and reserves
Called up share capital                                              3,787       3,503      3,787      3,503
Share premium account                                               25,099      19,962     25,059     19,962
Revaluation reserve                                                      -         218          -        218
Merger reserve                                                       1,388         199      1,388        199
Profit and loss account                                             16,669       9,386     12,333      4,363
Own shares                                                           (431)       (354)      (431)      (354)
Equity shareholders' funds                               3          46,472      32,914     42,136     27,891



Consolidated Cash Flow Statement
for the year ended 31 March 2005

                                                                                 2005                2004
                                                                                £'000               £'000
Operating activities
Net cash inflow from operating activities                                       8,338               9,056

Returns on investments and
  servicing of finance
Interest received                                                                 160                 160
Interest paid                                                                   (987)               (447)
Interest paid on finance leases                                                  (57)                (83)
                                                                                (884)               (370)

Taxation
UK Corporation tax paid                                                       (1,261)             (1,673)
Overseas tax paid                                                               (875)             (1,222)
                                                                              (2,136)             (2,895)

Capital expenditure and financial investment
Purchase of tangible fixed assets                                             (4,701)            (10,470)
Proceeds from disposal of tangible fixed assets                                 3,908                  10
Purchase of intangible fixed assets                                               (5)                (55)
                                                                                (798)            (10,515)

Acquisitions and disposals
Purchase of subsidiary undertaking                                           (12,501)            (18,503)
Net cash acquired with subsidiary                                               1,979               1,706
Deferred consideration on purchase of
  subsidiary undertaking                                                      (3,254)                   -
Purchase of trade and assets                                                     (92)                   -
Disposal of subsidiary undertaking                                                832                   -
Net cash disposed of with subsidiary                                            (251)                   -
Costs of terminating subsidiary activity                                            -               (125)
                                                                             (13,315)            (16,922)

Equity dividends paid                                                           (954)               (689)

Net cash (outflow)/inflow before financing                                    (9,749)            (22,335)

Financing
Issue of ordinary share capital                                                 6,170              10,593
Purchase of own shares                                                          (152)               (230)
Proceeds from disposal of own shares                                               75                 220
                                                                                6,093              10,583
New loans                                                                       1,118              18,289
Repayment of loans                                                            (2,013)               (556)
Repayment of loan notes                                                         (480)               (281)
Repayment of principal under finance leases                                     (289)               (490)
                                                                              (1,664)              16,962
                                                                                4,429              27,545
(Decrease)/increase in cash                                                   (5,320)               5,210



Note to the Consolidated Cash Flow Statement

Reconciliation of operating profit to net cash
inflow from operating activities

Operating profit                                                                8,180                6,963
Amortisation of goodwill                                                        1,360                  806

Operating profit before goodwill                                                9,540                7,769
Amortisation of intangible fixed assets                                            40                   36
Depreciation of tangible fixed assets                                           1,972                1,792

Ebitda                                                                         11,552                9,597
Loss/(profit) on disposal of tangible fixed assets                                  4                  (2)
(Increase)/decrease in stocks                                                 (1,576)                  962
(Increase)/decrease in debtors                                                (3,132)                1,017
Increase/(decrease) in creditors                                                1,490              (2,518)

Net cash inflow from operating activities                                       8,338                9,056


Notes:

1 Earnings per share

                                                                                 2005                 2004
                                                                                pence                pence
                                                                            per share            per share

Basic earnings per share                                                        26.12                 5.00

Normalised earnings per share                                                   21.54                20.50

Diluted earnings per share                                                      25.97                 4.97


The calculation of basic and diluted earnings per share is based on the profit
for the year after tax of £7,702,000 (2004: £1,303,000).   Normalised earnings
per share is calculated after adjusting profit after tax for the effect of
goodwill amortisation and exceptional items and in the directors' opinion is
more indicative of underlying performance.  The reconciliation of basic to
normalised earnings per share is as follows:

                                                                                2005                  2004
                                                                               pence                 pence
                                                                           per share             per share

Basic earnings per share                                                       26.12                  5.00
Goodwill written off                                                            4.61                  3.10
Exceptional gain on disposal of freehold land and buildings                   (7.91)                     -
Exceptional gain on disposal of subsidiary undertaking                        (1.28)                     -
Exceptional cost on closure of operation                                           -                 12.40

Normalised earnings per share                                                  21.54                 20.50


The weighted average number of shares in issue during the year used in the
calculation of earnings per share is as per the following table:

                                                                                2005                  2004
                                                                                '000                  '000

Weighted average for year - basic and
  normalised earnings per share                                               29,488                26,041
Calculation of shares under option per FRS14                                     170                   202
Weighted average for year - diluted earnings per share                        29,658                26,243



2 Segmental information

The analysis by geographical area of destination of the Group's turnover, all of
which relates to continuing operations, is set out below:


                                                                                2005                  2004
                                                                               £'000                 £'000

United Kingdom                                                                10,931                12,975
Rest of Europe                                                                 6,399                 4,881
USA                                                                           28,960                23,336
Rest of World                                                                  3,597                 2,529
                                                                              49,887                43,721


Class of business

The Group operates in two classes of business being Embedded Computing and
Electronic Manufacturing Services.   An analysis of the trading performance and
net assets of each class of business is detailed below.

Turnover

                                      Embedded           Electronic Manufacturing
                                      Computing                  Services                   Total
                                   2005         2004              2005        2004        2005        2004
                                     £'000         £'000         £'000       £'000       £'000       £'000

Total sales                         41,822        33,181         8,800      11,327      50,622      44,508
Inter-segment sales                      -             -         (735)       (787)       (735)       (787)

External sales                      41,822        33,181         8,065      10,540      49,887      43,721

Cost of sales                     (18,159)      (13,579)       (6,192)    ( 9,148)    (24,351)    (22,727)

Gross profit                        23,663        19,602         1,873       1,392      25,536      20,994
Operating costs
 (excluding goodwill
 and central overheads)           (12,228)       (9,556)         (229)       (278)    (12,457)     (9,834)
Contribution                        11,435        10,046         1,644       1,114      13,079      11,160

Administration cost -
 goodwill                          (1,360)         (620)             -       (186)     (1,360)       (806)
Exceptional item                       641             -             -     (3,508)         641     (3,508)
                                    10,716         9,426         1,644     (2,580)      12,360       6,846
Administration cost -
 central overhead                                                                      (3,539)     (3,391)
Exceptional item -
  central                                                                                2,271           -
Net interest payable                                                                   (1,035)       (393)

Profit before taxation                                                                  10,057       3,062

Segmental net assets/
  (liabilities)                     21,151        13,781       (2,619)       3,063      18,532      16,844

Central net assets                                                                      45,378      29,719
Current and deferred
 taxation                                                                              (1,413)       (931)
Net obligations under
 finance leases                                                                          (665)       (931)
Loan notes (net)                                                                           291       (736)
Cash, bank loans and
 overdrafts                                                                           (15,651)    (11,051)
Net assets                                                                              46,472      32,914


Central overheads have not been allocated between the classes of business as to
do so would be impracticable and misleading.

Geographical segment

In the directors' opinion, the disclosure of segmental information for turnover,
profit before taxation and net assets by origin, would be seriously prejudicial
to the interests of the Group. As a consequence, this information in its
entirety has not been disclosed as permitted by SSAP25.


3 Reconciliation of movements in consolidated shareholders' funds

                                                                                    2005               2004
                                                                                   £'000              £'000

Profit for the financial year                                                      7,702              1,303
Dividends paid and proposed                                                      (1,142)              (842)
Exchange rate adjustment                                                             505              (461)
New share capital subscribed                                                       6,208             11,348
Costs of acquisition of subsidiary undertaking                                     (105)              (384)
Merger reserve arising on acquisition of subsidiary company                          467                199
Purchase of own shares                                                             (152)              (230)
Disposal of own shares                                                                75                220

Net movement in shareholders' funds                                               13,558             11,153
Opening shareholders' funds                                                       32,914             21,761
Closing shareholders' funds                                                       46,472             32,914


4. Normalised Profit Before Tax
                                                                                    2005               2004
                                                                                   £'000              £'000

Profit on ordinary activities before taxation                                     10,057              3,062
Goodwill                                                                           1,359                806
Exceptional items                                                                (2,912)              3,508

Group profit before tax, goodwill & exceptional items                              8,504              7,376


5. The comparative figures for the year to 31 March 2004 do not constitute full
accounts within the meaning of Section 240 of the Companies Act 1985.  Full
accounts for that period, which received an unqualified audit report and did not
contain a statement under Section 237(2) or Section 237(3) of the Companies Act
1985, have been delivered to the Registrar of Companies.  The financial
information set out in the preliminary statement of results for the year ended
31 March 2005 does not constitute statutory accounts within Section 240 of the
Companies Act 1985.  The Group's statutory accounts for the year ended 31 March
2005 have not yet been filed with the Registrar of Companies.  The Company's
auditors have issued an unqualified report on those financial statements.  Their
report contains no statement under Section 237(2) or Section 237(3) of the
Companies Act 1985.


6.  Copies of the 2005 Report and Accounts will be sent to shareholders in due
course.  Further copies will be available from the registered office of Radstone
Technology PLC, Tove Valley Business Park, Towcester, Northants NN12 6PF.


                      This information is provided by RNS
            The company news service from the London Stock Exchange      FR PKNKNOBKDPAD