Highlights for third quarter ended 30 September 2001

Revenues in the third quarter 2001 were £2.4 million ($3.6 million), down 69% from third quarter 2000 and down 59% sequentially from second quarter 2001. Fujitsu Denso and NEC became 10% customers, representing 45% and 18% of revenue

respectively with Nortel Networks accounting for 27%. Notwithstanding a decline

in revenues, the bottom line moderately improved.

Restructuring efforts have significantly reduced the company’s expense base,

excluding research and development expenses, by 19% from £8.4 million ($12.4

million) to £6.8 million ($10.0 million) sequentially. The cash burn for the quarter was reduced to £15.5 million ($22.9 million) from £24.3 million ($36.0 million) in the second quarter 2001. The company’s cash position remains strong, with £199.7 million ($295.6 million) at the end of the quarter.

Enhanced management team with appointment of Steve Abely as Chief Financial

Officer and Steve Turley as Chief Commercial Officer, both highly experienced in

their respective areas.

Continued investment in research and development, driven by customer demand

for design-ins and increased optical functionality.

Introduction of 40 Gb/s Optical Channel Monitor with switched input. The company

believes this is the world’s first product combining three levels of optical

functionality on a single silicon chip.

Commenting on the results, Giorgio Anania, President and Chief Executive Officer, said: Notwithstanding the low revenues, which had been fully expected, this quarter has been one of successful execution against our announced strategy. We have completed the top management team, shown we can control our cash burn, continued to invest in R&D to expand our product line and moved forward on design-ins with key customers. With our latest product incorporating three optical functions on a single silicon chip, we believe we are demonstrating the leadership of our technology and we are moving to turn this into revenues going forward when the industry recovers.

Revenue for the quarter ended 30 September 2001 was £2.4 million ($3.6 million), a 59% sequential decline from the £5.8 million ($8.5 million) revenue in the second quarter of 2001 and a 69% decline compared with third quarter 2000. As previously announced, the company completed its long-term contract with Nortel Networks for the Mini-DIL product in the second quarter of 2001. This product represented 69% of second quarter revenue. Nortel Networks still accounted for 27% of revenues in the third quarter, but on the basis of new products. Fujitsu Denso and NEC were over 10% customers for the first time, representing 45% and 18% of revenue respectively.

The net loss for the third quarter 2001 was £13.7 million ($20.2 million) and loss per share was £0.11 ($0.16). The third quarter 2001 loss included £0.8 million ($1.2 million) of separation costs.

Over the last three quarters, the company has taken significant steps to realign its cost structure and spending: reducing headcount by 38%, maintaining tight control on expense and capital spending, and taking impairment charges for fixed assets and its purchase of Measurement Microsystems. As a result, while revenues declined sequentially, from the second to third quarters, the loss excluding onetime charges narrowed from £13.3 million ($19.7 million) to £12.9 million ($19.1 million) and the cash outflow improved from £24.3 million ($36.0 million) to £15.5 million ($22.9 million).

Cash and cash equivalents as of 30 September 2001 were £199.7 million ($295.6

million) compared with £215.2 million ($318.5 million) at 30 June 2001.