Preliminary Results

24th March 2009





IQE plc

Continued strong growth drives revenues up 21% and underlying
operating profit up sevenfold

IQE plc (AIM: IQE, the "Group"), the leading global supplier of
advanced wafer products and wafer services to the semiconductor
industry, has announced its Preliminary Results for the year ended 31
December 2008.

FINANCIAL HIGHLIGHTS

* Revenues up 21% to £60.5m (2007: £50.1m) despite difficult economic
  conditions
* Continued margin improvement with gross profit* up 43% to £11.8m
  (2007: £8.2m)
* EBITDA* more than doubled to £8.4m (2007: £3.9m)
* Underlying operating profit* up almost sevenfold to £4.0m (2007:
  £0.6m) reflecting strong operational gearing
* Strong conversion of EBITDA into cash generated from operations*,
  up more than fourfold  to £8.5m (2007: £2.0m).
* Positive free cashflow**  of £0.7m (2007: outflow £7.1m)
* Net asset value increased from £23.0m to £30.2m during 2008
* Exceptional charges of £3.9m (2007: £0.4m) incurred for planned
  relocation of manufacturing facility in Singapore (£2.5m) and Group
  streamlining to reduce costs and improve efficiencies.  This
  includes non-cash items of £2.8m.
* Retained profit* of £2.5m (2007: loss £0.4m). After the impact of
  the exceptional items, total retained loss of £1.4m (2007: loss
  £0.9m).
* EPS* at 0.59 pence per share (2007: 0.10 pence loss per share).
  After the impact of the exceptional items a loss per share of 0.32
  pence per share (2007 : 0.20 pence loss per share).

  * before exceptional items
  **  free cash flow represents net cash flow before financing
  activities, interest and exceptional items

BUSINESS HIGHLIGHTS

* Focus on high-growth markets delivers double-digit revenue growth
  for the fourth consecutive year and positions IQE strongly for the
  future.
* Growth principally driven by high speed wireless communications, 3G
  mobile devices, and optical products for fibre optic
  communications, consumer and office sectors. Significant progress
  on new products for clean solar power generation, high-efficiency
  LED lighting, and advanced products for the electronics sector.
* Rapidly developing a leadership position in the emerging solar
  power market, including cutting edge proprietary intellectual
  property. The foundations have been laid which position the Group
  to exploit fully the growth potential of this exciting market.
* Continued strong growth in pre-exceptional operating profitability
  demonstrating powerful, highly operationally geared business model.
* Proactive management to reduce the cost base by rationalising and
  consolidating operations to shape the business well for the current
  economic climate. The benefits of the improved efficiencies  and
  reduced costs are already visible in 2009.
* Completion of investment programme will enable full impact of
  operational gearing in cash generation in 2009.

TRADING OUTLOOK

* Signs that inventory reductions are coming to an end after slow Q1.
  Customer feedback coupled with recent industry news-flow indicate
  that demand should start to pick up in Q2 2009, accelerating
  through the second half of 2009.
* Investment in infrastructure and new product innovation has
  strongly positioned IQE to benefit from the upturn in the
  semiconductor markets.
* Robust long term market growth for Gallium Arsenide (GaAs) based
  products forecast, driven by high speed wireless communications
  (including smartphone devices for 3G and beyond), solar cells for
  renewable, clean energy generation, highly efficient LEDs for solid
  state lighting, and compound semiconductor integration with silicon
  for future generations of integrated circuits.

Dr Drew Nelson, IQE Chief Executive, commenting on the results said:

"Despite the global economic downturn that caused a strong reduction
in demand in the fourth quarter of 2008, IQE achieved record revenues
and underlying operating profit, producing its fourth consecutive
year of substantial double digit growth.

"The Group, which is the clear global market leader in advanced
semiconductor wafer outsourcing, celebrated its twentieth anniversary
during the year and achieved a number of important milestones. These
included the relocation of its Singapore facility on time and within
budget, and the development of an exciting range of new products,
including those focussed on the burgeoning markets for renewable
power generation and ultra high efficiency LED  lighting sources.

"IQE's continued growth during 2008 was driven by the increasing
demand for GaAs based components for high speed, feature rich mobile
devices that demand the high levels of performance and functionality
that our products deliver. Whilst all sectors are currently suffering
as a result of the global recession, it is "smartphone" products
which are widely expected to be amongst the first to resume high
growth once confidence returns to world markets.

"Our programme of reducing costs and investing in infrastructure and
new product innovation has strongly positioned IQE to benefit from
the upturn in the semiconductor markets.

"Operational cash generation was strong in 2008 and having completed
our infrastructure investment programme, we expect free cash
generation to improve significantly in 2009.

"Whilst it is anticipated that revenues during the first half of the
year will be adversely affected by the global recession, we are
seeing evidence that growth will resume in H2 2009 and that our
exciting and innovative range of new products to address the global
emphasis on energy efficiency is expected to contribute strongly to
Group revenues in the latter half of 2009."

Contacts:


IQE plc                 [phone]
Drew Nelson
Phil Rasmussen
Chris Meadows

College Hill            [phone]
Adrian Duffield
Carl Franklin

Noble & Company Limited + 44 20 7763 2200
John Llewellyn-Lloyd
Sam Reynolds




Note to Editors

IQE is the leading global supplier of advanced semiconductor wafers
with products that cover a diverse range of applications, supported
by an innovative outsourced foundry services portfolio that allows
the Group to provide a 'one stop shop' for the wafer needs of the
world's leading semiconductor manufacturers.

IQE uses advanced crystal growth technology (epitaxy) to manufacture
and supply bespoke semiconductor wafers ('epi-wafers') to the major
chip manufacturing companies, who then use these wafers to make the
chips which form the key components of virtually all high technology
systems. IQE is unique in being able to supply wafers using all of
the leading crystal growth technology platforms.

IQE's products are found in many leading-edge consumer,
communication, computing and industrial applications, including a
complete range of wafer products for the wireless industry, such as
mobile handsets and wireless infrastructure, Wi-Fi, WiMAX, base
stations, GPS, and satellite communications; optical communications,
optical storage (CD, DVD), laser optical mouse, laser printers &
photocopiers, thermal imagers, leading-edge medical products,
barcode, ultra high brightness LEDs, a variety of advanced silicon
based systems and high efficiency concentrator photovoltaic (CPV)
solar cells.

The manufacturers of these chips are increasingly seeking to
outsource wafer production to specialist foundries such as IQE in
order to reduce overall wafer costs and accelerate time to market.

IQE also provides bespoke R&D services to deliver customised
materials for specific applications and offers specialist technical
staff to manufacture to specification either at its own facilities or
on the customer's own sites. The Group is also able to leverage its
global purchasing volumes to reduce the cost of raw materials. In
this way IQE's outsourced services, provide compelling benefits in
terms of flexibility and predictability of cost, thereby
significantly reducing operating risk.

IQE operates six manufacturing facilities located in Cardiff (two)
and Milton Keynes in the UK; in Bethlehem, Pennsylvania and Somerset,
New Jersey in the USA; and Singapore. The Group also has 11 sales
offices located in major economic centres worldwide.
PRELIMINARY RESULTS 2008

1. OVERVIEW

2008 was a year that demonstrated the resilience and robustness of
IQE's highly operationally geared business model and focus on high
speed mobile products. The Group delivered significant quarter on
quarter revenue growth for the first three quarters of 2008,
performing well ahead of market expectations until the global
recession made a sudden and significant adverse impact during the
final quarter.

Despite the tumultuous market conditions, 2008 represented the
Group's fourth consecutive year of strong growth, resulting in record
revenues, pre-exceptional profitability and positive cash flows
through its focus on high growth markets.

In recent years, handsets have evolved from basic voice communication
tools with business users and consumers expecting much greater
functionality and capability from their handheld devices. Advanced
features such as web browsing, email and streaming video are rapidly
becoming the new standard for mobile handsets. The primary markets
for IQE's products comprise components for use in smartphone and
related wireless devices that utilise advanced high speed RF
communications technologies enabled by IQE's GaAs based wafers.

As the global economy deteriorated, the management took swift and
decisive action to restructure and consolidate some of the operations
in order to reduce costs, increase efficiencies and streamline
processes. This will ensure the business can respond quickly to the
upturn in the wireless sector, particularly in terms of smartphone
products that utilise the advantages of emerging 3G, 4G and LTE
capabilities.

The six operating units that make up IQE's business continued to work
seamlessly together offering customers the most diverse range of
wafer products from its global manufacturing base, to maintain the
Group's unique position as the world's industry leader for advanced
wafer outsourcing.

IQE's investment and diversification in new technologies has also
positioned the business to take advantage of its capabilities for
next generation products such as CPV solar cells and solid state
lighting devices. Both of these technologies are expected to grow
rapidly over the coming months and years as governments worldwide
increase the drive towards ever efficient power generation and usage.

The leadership position that IQE has established in wireless
technologies and the rapidly increasing position in solar power
generation by CPV provide a degree of protection in the current
economic climate.

2. RESULTS

Revenue of £60.5m was significantly higher than 2007 (£50.1m). From
this 21% increase in revenues the business delivered a 43% increase
in gross profit before exceptionals from £8.2m to £11.8m. This
substantial improvement clearly demonstrates the powerful operational
geared business model and the benefit of improved efficiencies.

Selling, General and Administrative expenses ("SG&A") before
exceptionals were £7.8m (2007: £7.6m), in line with the volume growth
in the business.

EBITDA (before exceptional items) for the year was £8.4m (2007:
£3.9m), and operating profit (before exceptional items) was £4.0m
(2007: £0.6m). This strong financial performance against the gloomy
global economic backdrop reflects the strength of IQE's business
model, operational gearing and the management's ability to deliver
against a robust strategy.

Exceptional charges of £3.9m (2007: £0.4m) were incurred in
completing the relocation of the Singapore business to a new state of
the art facility (£2.5m), and the restructuring of the Group's
activities in order  to streamline operations, reduce costs and
improve efficiencies.  Because this includes non-cash items, the
exceptional cash outflow in 2008 was only £1.1m (2007: £0.2m).

Retained profit (before exceptional charges) was £2.5m (2007: loss
£0.4m), representing a milestone performance for the Group and a
profit per share of 0.59 pence per share (2007: 0.10 pence loss per
share). After the impact of the exceptional items, total retained
loss of £1.4m (2007 : loss £0.9m) and a loss per share of 0.32 pence
per share (2007 : 0.20 pence loss per share).

Positive free cashflow**  of £0.7m (2007: outflow £7.1m) was achieved
even after £7.8m investment in capital items,  marking the completion
of the final phase of a major capital programme.

Working capital was carefully managed and increased by only £0.2m on
a £10.4m increase in revenues.  This limited absorption of cash into
working capital has assisted with the strong conversion of operating
profit into a positive cash inflow from operations of £8.5m before
exceptionals (2007: £2.0m).

Capital expenditure was £6.4m (2007: £7.8m). This marks the
completion of the final phase of a significant investment programme.
As a result there will be a much higher conversion of operating cash
flow into free cash flow in 2009 as capital expenditure falls to
maintenance levels of expenditure only.  The Group also invested
£1.5m (2007: £1.4m) in capitalised development expenditure which is
expected to contribute to further revenue growth in 2009 and beyond.

Net debt at December 2008 was £18.1m (2007: £14.2m) and the banking
facilities negotiated in January 2008 underpin a strong financial
position, providing financial resilience in this difficult economic
environment.


3. STRATEGY

IQE's strategy to focus on fast growth, high volume technologies
remains unchanged. During 2008, the Group's major markets were
focussed in particular on high speed wireless communications and
consumer optoelectronics.

During the year, the Group also invested in future technologies such
as advanced solar cells, ultra efficient LEDs and ultra high speed
microprocessor and memory chip materials technology for these fast
growth emerging markets. The global emphasis on green technologies is
expected to rapidly drive demand for some of these new technologies,
particularly CPV solar cells for highly efficient energy generation.

In order to provide customers with the most competitive outsource
wafer service globally, IQE has established a unique set of
advantages, including:

*          offering a complete range of products covering all major
  applications;
*          offering  global multi-site production capabilities in the
  primary manufacturing platforms to allow efficient capacity
  planning and for disaster scenario contingency;
*          maintaining a broad contact base with access to all the
  key global markets;
*          delivering benefits from economies of scale including
  purchasing power and research and development efficiencies;
*          promoting the sharing of best practices and innovation to
  deliver improved operating and cost efficiencies; and
*          providing surge capacity to meet the expected growth in
  demand in the mobile device sector and other high volume activities
This strategy has delivered tangible results in the current
generation of wireless products that have dominated IQE's output
during 2008 and will continue to deliver on current and next
generation products. In addition, IQE is also able to leverage its
large manufacturing capacity in order to deliver tangible benefits to
customers.
4. PRODUCTS AND MARKETS

IQE's product roadmap and strategy continues to be driven by four key
market dynamics, all of which have fast growth, high volume
prospects:

High Speed Wireless Communications

*          Despite the global economic downturn, it is clear that the
  adoption of high speed mobile communications will continue to grow
  albeit more slowly in the short term. Users' expectations and
  experience of broadband speeds along with the convenience of
  wireless and mobile connectivity will ensure that 3G, 4G, WiFi,
  WiMAX, WiBree, GPS and other wireless technologies will continue to
  grow even during a downturn, and are likely to experience highly
  accelerated growth as the recession comes to an end.

IQE's products are absolutely critical in the drive to 3G and beyond,
along with the need for backward compatibility and the speed and
power to accommodate features such as high resolution imaging, video,
high speed wireless data access, VoIP and satellite navigation. Each
high speed communication device now contains multiple numbers of GaAs
components compared with earlier generations, creating a powerful
demand driver for GaAs components and wafers which far outstrips the
growth of the overall communications market.

Optoelectronic Products

*          Semiconductor lasers are the key enabling technology
  behind a vast array of industrial, office and consumer products
  including HD DVD, optical communications, laser mouse and laser
  projection. IQE's products offer the unique properties that are
  employed in semiconductor laser technologies. In particular, laser
  projection is considered one of the most exciting applications of
  this technology, providing the ability to project clear, bright
  images and videos from a small handheld device such as a handset.

Energy Efficient Solar and Lighting Products

*          There has never before been a greater impetus to develop
  clean, efficient and sustainable energy sources (solar cells), and
  highly efficient light sources (LEDs) in order to reduce the impact
  on global warming through climate change, reliance on fossil fuels
  and provide a much cleaner environment.  IQE's products play a
  critical role in both highly efficient energy generation and highly
  efficient lighting devices. IQE's development work on world record
  efficiencies for solar energy generation is widely recognised and
  the Group expects to begin volume production of products for CPV
  solar cells during the latter half of 2009.

Advanced Electronics

*          Advanced semiconductor wafers provide the way forward for
  more powerful microprocessors and higher speed, ultra high density
  memories. New materials solutions based on silicon substrates
  including the incorporation of Germanium and compound
  semiconductors directly onto silicon substrates provides mainstream
  semiconductor manufacturers with a way of maintaining Moore's law
  as current silicon based geometries reach some significant physical
  barriers and fundamental scaling roadblocks. IQE has established
  powerful positions in both these technologies, working with some of
  the biggest names in the industry and has recently been granted a
  joint patent with Intel for the production of III-V materials on
  silicon substrates.

Each of these markets has very powerful growth potential, and
although wireless has been and will continue to be a core driver, IQE
has developed a diverse range of powerful new products and
technologies which it will be bringing to market during H2 2009 and
beyond.



5. OPERATIONAL UPDATE

In order to maintain its world leading position in a fast moving,
global environment, the Group adopted a philosophy of continual
improvement across all its operations to ensure production
efficiencies are optimised and to allow its inherent large scale
manufacturing capacity to be leveraged effectively to offer its
customers' multi-site, multi-platform manufacturing solutions.

A key strength in IQE's offering is the ability to supply a diverse
range of products from multiple manufacturing sites. A great deal of
effort has been put into aligning products and processes across its
six global facilities in Europe, Asia and the USA in order to provide
customers with identical products from various locations. This is a
proposition that is unique to IQE and has been made possible through
IQE's global engineering teams who help bring together best practice
from each of the global manufacturing facilities.

As part of the programme to align products and processes across all
manufacturing facilities, a number of tools have been successfully
transferred between sites to balance capacity and loading, thereby
optimising production efficiencies.

The Group has also been proactive in engaging with customers on major
quality improvement programmes. Such initiatives have been
demonstrated to help its customers gain distinct competitive
advantages and consequently increase their market share and the
subsequent higher demand for IQE's products.

The Group has also successfully secured and delivered on a number of
key research and development contracts that help ensure IQE's
position with leading edge technologies and embeds IQE materials in
next generation devices. New contracts to help IQE maintain its lead
in these areas are continually being awarded.

Towards the end of 2008, the Group proactively cut costs in order to
prepare for the challenging market conditions ahead, whilst
maintaining its ability to rapidly respond to increased demand as
customers require.  This has resulted in some short time working
arrangements, temporary pay reductions, and restructuring of specific
operations to further improve effectiveness. This restructuring
resulted in exceptional costs of £1.4m, of which the majority relates
to non-cash items from asset write downs.

Additionally, the successful relocation of the Singapore facility to
a state-of-the-art clean room complex which was completed in November
2008 on time and within expectations of cost.


6. TRADING OUTLOOK

Inventory destocking in Q4 2008 continued into Q1 2009 right across
the semiconductor supply chain although some pickup in demand is
expected in the second quarter. Customers are expected to be cautious
about building up inventory. As a consequence, IQE's management feel
it prudent to anticipate a decline in first-half revenues compared
with the second half of 2008.

However, the Group already sees indications that the markets will
begin to gain strength during the second quarter as inventories
stabilise and customer pulls return to actual consumption levels.

Expectations are that the wireless market, particularly the
smartphone segment, will resume growth during the second half of the
year driven by the significant roll out of  3G and other high speed
wireless applications. Furthermore, products such as CPV solar cells
are expected to generate meaningful revenues during the second half
of the year, together with initial revenues from the introduction of
additional products developed over the past couple of years.

The key focus for 2009 will remain on the wireless mobile
communications and optoelectronic products. However, advanced solar
cells markets and a number of other key high growth and high volume
opportunities being rapidly developed across the Group will
increasingly play a role in the Group's core activities.

The Board remains confident about the Group's ability to increase
revenue, profitability and cash generation over the coming years.

Dr Drew Nelson, CEO, IQE plc



PRELIMINARY RESULTS
FOR YEAR ENDED 31
DECEMBER 2008


                                         6 months 12 months 12 months
                            6 months to        to        to        to
CONSOLIDATED INCOME                        31 Dec    31 Dec    31 Dec
STATEMENT                   31 Dec 2008      2007      2008      2007

(All figures £000s)    Note   Unaudited Unaudited Unaudited   Audited


Revenue                 2        30,307    26,385    60,485    50,065

Cost of sales
(including exceptional
items)                         (25,729)  (22,031)  (51,898)  (41,838)


Gross profit                      4,578     4,354     8,587     8,227
Gross profit before
exceptional items                 6,518     4,354    11,755     8,227
Exceptional items       3       (1,940)         -   (3,168)         -

Selling, general and
administrative
expenses (including
exceptional items)              (4,520)   (4,243)   (8,518)   (8,053)


Operating profit        2            58       111        69       174
Operating profit
before exceptional
items                   2         2,421       550     4,000       613
Exceptional items       3       (2,363)     (439)   (3,931)     (439)

Finance income                        6        53        26        58
Finance costs                     (740)     (523)   (1,480)   (1,094)


Loss attributable to
equity shareholders               (676)     (359)   (1,385)     (862)



Pre exceptional
earnings pence per
share                   4          0.29      0.02      0.59    (0.10)
Basic Loss Pence per
Ordinary 1p Share       4        (0.16)    (0.08)    (0.32)    (0.20)
Diluted Loss Pence per
Ordinary 1p Share       4        (0.16)    (0.08)    (0.32)    (0.20)



EBITDA (Earnings before interest,
taxes, depreciation, amortisation
and exceptionals) is calculated
as follows:


Loss attributable to
equity shareholders               (676)     (359)   (1,385)     (862)
Share based payments                450       372       884       571
Exceptional items                 2,363       439     3,931       439
Net finance costs                   734       470     1,454     1,036
Depreciation of
tangible fixed assets             1,694     1,289     3,076     2,400
Amortisation of
intangible fixed
assets                              242       183       447       307

EBITDA                            4,807     2,394     8,407     3,891





CONSOLIDATED
STATEMENT OF                                                12 months
RECOGNISED             6 months to 6 months to 12 months to        to
                                                               31 Dec
INCOME AND EXPENSE     31 Dec 2008 31 Dec 2007  31 Dec 2008      2007

(All figures £000s)      Unaudited   Unaudited    Unaudited   Audited


Loss for the period          (676)       (359)      (1,385)     (862)
Currency translation
differences on
foreign currency net
investments                  7,482       (510)        7,723     (743)

Total recognised
income / (expense)           6,806       (869)        6,338   (1,605)






                                             As At       As At
CONSOLIDATED BALANCE SHEET             31 Dec 2008 31 Dec 2007

(All figures £000s)           Note       Unaudited     Audited


Non-current assets :
Intangible assets                           14,675      12,110
Tangible assets                             25,626      17,243

Total non-current assets                    40,301      29,353


Current assets :
Inventories                                 11,262       7,643
Trade and other receivables                 11,671      10,599
Cash and cash equivalents                        -          11

Total current assets                        22,933      18,253


Total assets                                63,234      47,606


Current liabilities :
Borrowings                     7           (8,090)     (5,911)
Trade and other payables                  (14,798)    (10,354)

Total current liabilities                 (22,888)    (16,265)


Non-current liabilities :
Borrowings                     7          (10,045)     (8,259)
Deferred income                               (83)       (122)

Total non-current liabilities             (10,128)     (8,381)


Total liabilities                         (33,016)    (24,646)


Net assets                                  30,218      22,960


Shareholders' equity :
Ordinary shares                              4,333       4,310
Share premium                  9                87     172,183
Other reserves                               7,342     (1,092)
Profit and loss account        9            18,456   (152,441)
Total shareholders' equity     5            30,218      22,960








                                                                   12
                                 6 months  6 months 12 months  months
                                       to        to        to      to
CONSOLIDATED CASH FLOW             31 Dec    31 Dec    31 Dec  31 Dec
STATEMENT                            2008      2007      2008    2007

(All figures £000s)        Note Unaudited Unaudited Unaudited Audited


Cash flows from operating
activities :
Cash inflow from
operations                  6       4,703     1,435     7,461   1,828
Cash inflow from
operations
before exceptional items            5,161     1,650     8,526   2,043
Exceptional items           3       (458)     (215)   (1,065)   (215)

Interest received                       6        53        26      58
Interest paid                     (1,056)     (335)   (1,531)   (763)

Net cash inflow from
operating activities                3,653     1,153     5,956   1,123


Cash flows from investing
activities :
Development expenditure             (734)     (642)   (1,520) (1,372)
Investment in other
intangible fixed assets              (34)      (20)     (134)    (20)
Purchase of tangible fixed
assets                            (3,756)   (3,840)   (6,361) (7,814)
Proceeds from sale of
tangible fixed assets                 179        97       179      97

Net cash used in investing
activities                        (4,345)   (4,405)   (7,836) (9,109)


Cash flows from financing
activities :
Issues of ordinary share
capital                               101        26       208     154
Loans and leases
(repaid)/received                 (1,983)       952     1,755   2,750

Net cash (used
in)/generated from
financing activities              (1,882)       978     1,963   2,904


Net (decrease)/increase in
cash and cash equivalents         (2,574)   (2,274)        83 (5,082)

Cash and cash equivalents
at the beginning of the
period                              1,646     1,263   (1,011)   4,071


Cash and cash equivalents
at the end of the period    7       (928)   (1,011)     (928) (1,011)




NOTES TO THE PRELIMINARY RESULTS


1 BASIS OF PREPARATION


These unaudited  preliminary results  have  been prepared  under  the
historical cost  convention  and  in  accordance  with  International
Financial Reporting  Standards ("IFRS")  as adopted  by the  European
Union and interpretations in issue at 31 December 2008.

The preliminary results were approved  by the Board of Directors  and
the Audit Committee on 20 March 2009.  The preliminary results do not
constitute statutory accounts within the meaning of the Companies Act
1985 and have not been  audited.  Comparative figures in the  results
for the year  ended 31 December  2007 have been  taken from the  2007
audited annual accounts.

The preliminary results will be announced to all shareholders on  the
London Stock Exchange and  published on the  Group's website on  24th
March 2009. Copies will  be available to members  of the public  upon
application to the Finance Director at Pascal Close, Cardiff CF3 0LW.



                                            12 months to 12 months to
2 SEGMENTAL INFORMATION                      31 Dec 2008  31 Dec 2007

  (All figures £000s)                          Unaudited      Audited


  Revenue by business segment :
  Wireless                                        48,490       38,088
  Optoelectronics                                 10,169        9,212
  Electronics                                      1,826        2,765

  Total revenue                                   60,485       50,065


  Operating proft/(loss) by business
  segment before exceptional items :
  Wireless                                         7,356        4,022
  Optoelectronics                                (1,999)      (2,840)
  Electronics                                    (1,357)        (569)

  Total operating profit before
  exceptional items                                4,000          613


  Operating proft/(loss) by business
  segment :
  Wireless                                         4,381        3,583
  Optoelectronics                                (2,645)      (2,840)
  Electronics                                    (1,667)        (569)

  Total operating profit                              69          174







                                   12 months to 12 months to
3 EXCEPTIONAL ITEMS                 31 Dec 2008  31 Dec 2007

  (All figures £000s)                 Unaudited      Audited


  Exceptional items comprise :
  Relocation costs                        2,486          439
  Group restructuring costs               1,445            -


                                                         439
  Exceptional items                       3,931          439




The relocation costs  of £2,486,000 (2007:  £439,000) relates to  the
one-off costs incurred in relocating the Singapore operation to a new
state-of-the-art facility.  The relocation was completed in  November
2008. The cash outflow in the year was £990,000 (2007: £215,000).

During the fourth quarter, the Group restructured its activities and
operations to reduce its operating costs.  This involved a 16%
reduction in headcount in addition to a streamlining of certain
manufacturing activities.  As a result the Group incurred an
exceptional charge of £1,445,000 (2007: nil), the majority of which
was a non-cash charge relating to the write down of assets. The cash
outflow in the year was £75,000 (2007: nil). It is evident from the
current financial performance of the Group that this restructuring is
delivering a marked improvement in operating efficiency, which
realigns the Group's costs base with current activity levels.



4 LOSS PER SHARE    6 months to 6 months to 12 months to 12 months to
                    31 Dec 2008 31 Dec 2007  31 Dec 2008  31 Dec 2007

                      Unaudited   Unaudited    Unaudited      Audited

  Loss for the
  period £ 000s           (676)       (359)      (1,385)        (862)



  Weighted average
  number of
  ordinary shares   432,907,152 430,840,183  432,207,766  430,601,406


  Pre exceptional
  earnings pence
  per share                0.29        0.02         0.59       (0.10)
  Basic loss pence
  per share              (0.16)      (0.08)       (0.32)       (0.20)
  Diluted loss
  pence per share        (0.16)      (0.08)       (0.32)       (0.20)



Basic loss per share is calculated by dividing the loss  attributable
to ordinary shareholders by the  weighted average number of  ordinary
shares during the period.   Diluted loss per  share is calculated  by
adjusting the weighted average number of ordinary shares in issue  on
the assumption  of  conversion  of all  dilutive  potential  ordinary
shares.

IAS 33 requires the presentation of diluted Loss Pence per Share when
a company could be  called upon to issue  shares that would  decrease
net profit or increase net loss per share. For a loss-making  company
with outstanding  share options,  net loss  per share  would only  be
decreased  by  the  exercise  of  options,  hence  options  are   not
considered to be dilutive.



5 STATEMENT OF CHANGES 6 months to 6 months to 12 months to 12 months
  IN                                                               to
  SHAREHOLDERS' EQUITY 31 Dec 2008 31 Dec 2007  31 Dec 2008    31 Dec
                                                                 2007

  (All figures £000s)    Unaudited   Unaudited    Unaudited   Audited


  At the beginning of
  the period                23,033      23,430       22,960    23,840

  Loss attributable to
  equity shareholders        (676)       (359)      (1,385)     (862)
  Share option costs
  credited to reserves         313         373          747       571
  Shares issued net of
  issue costs                   66          26          173       154
  Net exchange
  differences offset
  in reserves                7,482       (510)        7,723     (743)

  At the end of the
  period                    30,218      22,960       30,218    22,960






                            6 months to 6 months to 12 months      12
                                                           to  months
                                                                   to
6 CASH GENERATED FROM       31 Dec 2008 31 Dec 2007    31 Dec  31 Dec
  OPERATIONS                                             2008    2007

  (All figures £000s)         Unaudited   Unaudited Unaudited Audited


  Operating profit                   58         111        69     174

  Depreciation of tangible
  assets                          1,694       1,289     3,076   2,400
  Amortisation of
  intangible assets                 242         183       447     307
  Loss/(gain) on sale of
  tangible assets                     6         (5)         6     (5)
  Government grants
  released                         (20)        (19)      (39)    (39)
  Non cash exceptional
  costs - impairment of
  development costs                 521           -       521       -
  Non cash exceptional
  costs - other costs             1,384         224     2,345     224
  Non cash share based
  payments                          450         372       884     571

  Cash inflow from
  operations before changes
  in working capital              4,335       2,155     7,309   3,632

  (Increase)/decrease in
  inventories                     (240)         451   (1,426)     937
  Decrease/(increase) in
  trade and other
  receivables                     3,553     (2,058)     1,618 (4,118)
  (Decrease)/increase in
  trade and other payables      (2,945)         887      (40)   1,377

  Cash inflow  generated
  from operations                 4,703       1,435     7,461   1,828





                                               As At       As At
7 ANALYSIS OF NET DEBT                   31 Dec 2008 31 Dec 2007

  (All figures £000s)                      Unaudited     Audited



  Overdraft                                    (928)     (1,022)
  Highly liquid investments                        -          11

  Total cash and cash equivalents              (928)     (1,011)


  Loans due after one year                   (9,961)     (8,170)
  Loans due within one year                  (7,098)     (4,843)
  Finance leases due after one year             (84)        (89)
  Finance leases due within one year            (64)        (46)

  Total borrowings                          (17,207)    (13,148)


  Net debt                                  (18,135)    (14,159)







8 CONTINGENT LIABILITY


The Group received a  claim in 2005 for  approximately £1 million  in
respect of  national insurance  contributions  in relation  to  share
options that  were issued  in  1999. HM  Revenue &  Customs  formally
cancelled the claim on 10 October 2008.



9 CAPITAL REDUCTION


During the year the  Group took action  to eliminate the  accumulated
deficit in  its  profit  and  loss  reserve.  This  was  achieved  by
obtaining a court order, permitting the Group to eliminate the  share
premium as at 30  June 2008 and  transfer its value  at this date  of
£172,280,655 to the profit and loss reserve.

---END OF MESSAGE---




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