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Calian Reports Second Quarter Results: Highest Quarterly Revenues and Earnings in Company History

(All amounts in this release are in Canadian Dollars)

OTTAWA, ONTARIO -- (Marketwire) -- 05/06/09 -- Calian Technologies Ltd. (TSX: CTY) today released unaudited results for the second quarter ended March 31, 2009. Revenues for the quarter were $60 million, an increase of 26% from the $47 million reported in the same quarter of the previous year. Net earnings were $5.2 million or $0.67 per share basic and diluted, compared to $2.3 million or $0.28 per share basic and diluted in the same quarter of the previous year. For the six-month period ending March 31, 2009, the Company reported revenues of $115 million and net earnings of $8.5 million or $1.09 per share basic and diluted, compared to revenues of $93 million and net earnings of $4.5 million or $0.54 per share basic and diluted in the prior year.

"We once again posted excellent results for the quarter, which traditionally is one of the strongest in the year. Our seasoned management team continues to focus on our core service offerings resulting in strong organic growth and excellent project execution. Overall revenues were up 26% from the same quarter last year, a reflection of significant gains achieved on both divisions. Our SED division, buoyed by exceptional manufacturing throughput coupled with strong engineering project activity, realized revenues that were 46% above the same quarter last year. At the same time, our BTS division realized a revenue increase of 18% over the prior year, reflecting the effects of recent contract wins and increased activity on existing contracts with DND" stated Ray Basler, President and CEO.

"Our BTS division was able to achieve slightly improved gross margins while at the same time keeping operating expenses in check, thereby significantly improving the division's bottom line contribution. Due to extremely high staff utilization levels and solid performance on all projects, SED also substantially improved its operating margins. In addition, downward revisions to estimated costs on a certain fixed price contract coupled with a recovery of investment tax credits from a prior year, further improved SED's contribution to the overall results for the quarter" continued Basler.

"As markets remain unsettled, we are fortunate to have a strong customer base and a healthy backlog, particularly with our government and defence customers. When coupled with management's keen attention to cash flows, we are able to deliver increased dividends to our shareholders while at the same time maintain our share repurchase program. The diversity of our two divisions along with our clean balance sheet provides added confidence in our ability to weather the current economic downturn and face the challenges that lie ahead" stated Basler.

Despite some softness expected in certain sectors for the balance of the year, management continues to expect solid results for the year as a whole. While revenues ultimately realized will be dependent on the extent and timing of future contract awards, revenues for the year are expected to be in the range of $210 million to $225 million and net earnings per share in the range of $1.80 to $2.10 per share.

About Calian

Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. The Business and Technology Services Division augments customer workforces with flexible short and long-term placements, recruitment and outsourcing of engineering, health care professionals and other skilled professionals. The Systems Engineering Division plans, designs and implements solutions for many of the world's space agencies and leading communications satellite manufacturers and operators, as well as providing contract manufacturing services for customers in North America.

DISCLAIMER

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by Calian with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.

                          CALIAN TECHNOLOGIES LTD.
        CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
           (Canadian dollars in thousands, except per share data)
--------------------------------------------------------------------------
                              Three months ended          Six months ended
                                   March 31                   March 31
                                 (unaudited)                (unaudited)
--------------------------------------------------------------------------
                               2009         2008        2009          2008
--------------------------------------------------------------------------
Revenues                    $59,922      $47,413    $115,020       $93,297
Cost of revenues             46,141       38,405      89,691        75,585
--------------------------------------------------------------------------
Gross profit                 13,781        9,008      25,329        17,712
Selling and marketing         1,223        1,250       2,405         2,504
General and administration    3,968        3,205       8,188         6,413
Facilities                      779          812       1,533         1,596
Stock option
 compensation (Note 7)           22           31          69            71
Amortization of equipment       252          265         499           523
Amortization of intangibles      20           78          40           156
Prior years investment
 tax credits (Note 9)          (311)           -        (311)            -
--------------------------------------------------------------------------
Earnings before other
 income and expense,
 interest income
 and income tax expense       7,828        3,367      12,906         6,449
Unrealized gain (loss)
 on fair value of
 conversion options
 of long-term investment
 (Note 5)                         5         (154)       (250)         (262)
Loss on share exchange
 (Note 5)                      (125)           -        (125)            -
Interest income (Note 6)        160          327         397           676
--------------------------------------------------------------------------
Earnings before income
 tax expense                  7,868        3,540      12,928         6,863
--------------------------------------------------------------------------
Income tax expense -
 current                      2,597        1,216       4,283         2,319
Income tax expense -
 future                          70           40         125            80
--------------------------------------------------------------------------
                              2,667        1,256       4,408         2,399
--------------------------------------------------------------------------

NET EARNINGS                  5,201        2,284       8,520         4,464
Retained earnings,
 beginning of period         35,223       32,499      35,148        31,852
Excess of purchase
 price over stated
 capital on repurchase
 of shares (Note 7)          (1,815)        (265)     (3,865)         (799)
Dividend                     (1,159)        (998)     (2,353)       (1,997)
--------------------------------------------------------------------------
Retained earnings, end
 of period                  $37,450      $33,520     $37,450       $33,520
--------------------------------------------------------------------------
Net earnings per share:
 (Note 8)
  Basic                       $0.67        $0.28       $1.09         $0.54
--------------------------------------------------------------------------
  Diluted                     $0.67        $0.28       $1.09         $0.54
--------------------------------------------------------------------------
Weighted average
 number of shares:
 (Note 8)
  Basic                   7,726,110    8,299,025   7,838,997     8,311,161
--------------------------------------------------------------------------
  Diluted                 7,745,254    8,299,025   7,848,933     8,311,161
--------------------------------------------------------------------------



                        CALIAN TECHNOLOGIES LTD.
                      CONSOLIDATED BALANCE SHEETS
                    (Canadian dollars in thousands)
                                                     March 31,   September
                                                          2009    30, 2008
                                                    (unaudited) (unaudited)
--------------------------------------------------------------------------

ASSETS

CURRENT ASSETS
 Cash                                                  $18,444     $27,327
 Accounts receivable                                    43,282      33,304
 Work in process                                         5,115       4,761
 Prepaid expenses and other                                956         701
 Future income taxes                                     1,396       2,060
 Derivative assets (Note 12)                               203         521
--------------------------------------------------------------------------
                                                        69,396      68,674

LONG-TERM INVESTMENT (Note 5)                            2,637       3,165

EQUIPMENT                                                4,950       4,494

INTANGIBLES                                                 40          80

GOODWILL                                                 9,518       9,518
--------------------------------------------------------------------------
                                                       $86,541     $85,931
--------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable and accrued liabilities              $24,717     $20,430
 Unearned contract revenue                               6,631      12,290
 Derivative liabilities (Note 12)                          885       1,606
--------------------------------------------------------------------------
                                                        32,233      34,326
--------------------------------------------------------------------------

COMMITMENT AND CONTINGENCIES (Note 10)

SHAREHOLDERS' EQUITY
 Share capital (Note 7)                                 16,275      16,975
 Contributed surplus (Note 7)                              497         429
 Retained earnings                                      37,450      35,148
 Accumulated other comprehensive income (loss)              86        (947)
--------------------------------------------------------------------------
                                                        54,308      51,605
--------------------------------------------------------------------------
                                                       $86,541     $85,931



                          CALIAN TECHNOLOGIES LTD.
         CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                    (Canadian dollars in thousands)

                            Three months ended        Six months ended
                                  March 31                 March 31
                                (unaudited)              (unaudited)
--------------------------------------------------------------------------
                              2009        2008         2009           2008
--------------------------------------------------------------------------
Net earnings                $5,201      $2,284       $8,520         $4,464
Unrealized gain on
 translating financial
 statements of                  43          61          300             56
 self-sustaining foreign
 operation, net of tax of
 nil (2008- nil)
Unrealized gain (loss) on
 fair value of host
 contract                        4           7         (382)            27
 component of long-term
 investment, net of tax of
 nil(2008 - nil)
Change in deferred gain
 (loss) on derivatives
 designated                  1,518        (815)       1,115         (1,339)
 as cash flow hedges, net
 of tax of $729 and $536
 year to
 date (2008 - $412 and $677
 year to date)
--------------------------------------------------------------------------
Other comprehensive income
 (loss)                      1,565        (747)       1,033         (1,256)
--------------------------------------------------------------------------
Comprehensive income        $6,766      $1,537       $9,553         $3,208
--------------------------------------------------------------------------
--------------------------------------------------------------------------



                          CALIAN TECHNOLOGIES LTD.
   CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
                       (Canadian dollars in thousands)


                                                     March 31,   September
                                                          2009    30, 2008
                                                    (unaudited) (unaudited)
--------------------------------------------------------------------------

Unrealized cumulative loss on translating financial
 statements of self-sustaining foreign operation    $      (94) $     (394)

Unrealized cumulative gain on fair value of host
 contract component of long-term investment                  3         385

Deferred gain (loss) on derivatives designated as
 cash flow hedges                                          177        (938)
--------------------------------------------------------------------------

Accumulated other comprehensive income (loss), end
 of period                                                 $86       $(947)
--------------------------------------------------------------------------
Retained earnings, end of period                        37,450      35,148
--------------------------------------------------------------------------
Accumulated other comprehensive income (loss) and
 retained earnings, end of period                      $37,536     $34,201
--------------------------------------------------------------------------
--------------------------------------------------------------------------



                                CALIAN TECHNOLOGIES LTD.
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Canadian dollars in thousands)


                                      Three months            Six months
                                         March 31               March 31
                                       (unaudited)            (unaudited)
--------------------------------------------------------------------------

                                       2009      2008      2009       2008
--------------------------------------------------------------------------

CASH FLOWS FROM (USED IN)
 OPERATING
ACTIVITIES
Net earnings                         $5,201  $2,284      $8,520      $4,464
Items not affecting cash:
 Interest accreted on host
  contract component of long-term
  investment (Note 6)                  (113)     (102)     (230)      (200)
 Employee stock purchase plan
  compensation expense                    9         9        18         18
 Stock option compensation               22        31        69         71
 Amortization                           272       343       539        679
 Future income tax expense               70        40       125         80
 Unrealized (gain) loss on fair
  value of conversion options
  of long-term investment (Note 5)      (5)      154       250        262
 Loss on share exchange (Note 5)        125         -       125          -
--------------------------------------------------------------------------
                                      5,581     2,759     9,416      5,374

Change in non-cash working capital
 Accounts receivable                 (5,277)   (1,526)  (10,552)     2,191
 Work in process                        657      (129)     (354)       165
 Prepaid expenses and other              22        82      (254)      (285)
 Accounts payable and accrued
  liabilities                         8,259     2,016     7,213     (2,110)
 Unearned contract revenue           (3,925)       94    (6,779)     4,178
--------------------------------------------------------------------------
                                      5,317     3,296    (1,310)     9,513
--------------------------------------------------------------------------

CASH FLOWS FROM (USED IN)
 FINANCING ACTIVITIES
 Issuance of common shares              283       220       283        220
 Dividend                            (1,159)     (998)   (2,353)    (1,997)
 Repurchase of shares                (2,185)     (320)   (4,848)      (952)
--------------------------------------------------------------------------
                                     (3,061)   (1,098)   (6,918)    (2,729)
--------------------------------------------------------------------------

CASH FLOWS USED IN INVESTING
 ACTIVITIES
 Equipment expenditures                (470)     (298)     (955)      (440)
--------------------------------------------------------------------------
                                       (470)     (298)     (955)      (440)

FOREIGN CURRENCY ADJUSTMENT              43        61       300         56
NET CASH INFLOW (OUTFLOW)             1,829     1,961    (8,883)     6,400
CASH, BEGINNING OF PERIOD            16,615    22,516    27,327     18,077
--------------------------------------------------------------------------
CASH, END OF PERIOD                 $18,444   $24,477   $18,444    $24,477
--------------------------------------------------------------------------
--------------------------------------------------------------------------

CALIAN TECHNOLOGIES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the periods ended March 31, 2009 and 2008

(Canadian dollars in thousands, except per share amounts)

(Unaudited)

1. ACCOUNTING POLICIES

These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. They do not include all of the information and notes required by generally accepted accounting principles for annual financial statements.

These interim consolidated financial statements have been prepared using the same accounting policies used in the preparation of the audited annual consolidated financial statements for the year ended September 30, 2008 with the exception of the application of the accounting policy described in Note 2. These interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements.

2. ADOPTION OF NEW ACCOUNTING POLICY

Effective October 1, 2008 the Company adopted Section 3064, Goodwill and intangible assets, replacing Section 3062, Goodwill and other intangible assets and Section 3450, Research and development costs. It establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. Standards concerning intangible assets specify criteria for recognition of intangible assets. The adoption of this new Section did not have a material impact on the Company's consolidated financial statements.

3. ACCOUNTING ESTIMATES

For the periods ended March 31, 2009 and March 31, 2008, there has been no material change in estimates of amounts reported in prior interim periods or of amounts related to prior fiscal years.

4. SEASONALITY

The Company's revenues and earnings have historically been subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays.

5. LONG-TERM INVESTMENT

On July 11, 2006, the Company invested $3,623 in Med-Emerg International Inc. (Med-Emerg) in the form of convertible preferred shares which included $116 of acquisition costs. On January 20, 2009, Med-Emerg announced that it successfully merged with AIM Health Group Inc. (AIM) in an all-stock transaction. At that time, Calian surrendered its preferred shares in Med-Emerg in exchange for a secured convertible debenture of AIM with a face value of $3,897. The share exchange resulted in a loss on exchange of $125.

The debenture is convertible into 6,831,372 common shares of AIM at the Company's option. AIM is also entitled to cause the debenture to be converted into common shares when in any given 6-month period, trading volumes of AIM common shares exceed 1,089,642 shares and the weighted average share price is at least $0.57. Conversion is limited to 50% of the debenture in any 6-month period. On a fully converted basis, this investment represents a 6% interest based on the current number of common shares outstanding. The debenture is subordinated to secured creditors on January 20, 2009 and any bank indebtedness. The debenture is due to be redeemed in two instalments; $1,000 payable in cash on January 1, 2011 and the remaining $2,897 payable on July 11, 2011 in cash or AIM common shares at the option of AIM based on the then fair market value of the common shares.

Fair value of long-term investment:

----------------------------------------------------------------------
  Long-term investment, at cost                                 $2,517
  Cumulative unrealized gain on conversion options                   5
  Cumulative interest accretion on host contract                   113
  Cumulative unrealized gain on fair value of host
   contract component                                                2
----------------------------------------------------------------------
  Fair value of investment at March 31, 2009                    $2,637
----------------------------------------------------------------------
----------------------------------------------------------------------

The Company's long-term investment is considered a hybrid instrument as it includes rights of conversion to common shares. The conversion options are considered to be embedded derivatives to be separated and valued independent of the underlying host contract.

The conversion options are measured at fair value with changes in fair value recorded in net income. The fair value of the conversion options applies the following data and assumptions to the Black-Scholes option pricing model:

   AIM 30 day weighted average share price                      $0.08
   Risk free interest rate                                       0.90%
   Actual stock price volatility                                   78%
   Expected life of options                                      2.25 years

Under the Black-Scholes model, a one cent increase (decrease) in AIM share price would result in $6 increase (decrease) in the fair value of the conversion options. A 10% increase (decrease) in the volatility of AIM share price would result in $11 increase (decrease) in the fair value of the conversion option. AIM shares are traded on the TSX Venture Exchange and currently trade in limited volume.

Fair value of the host contract component is determined using interest rates in effect at each reporting period. A 1% increase (decrease) to the interest rate would result in $50 decrease (increase) in the fair value of the host contract component. The interest rate used at March 31, 2009 is 19.38 % and represents an approximation of the borrowing rate available for companies with risk profiles similar to AIM based on the current interest rate for junior debt.

6. INTEREST INCOME

Interest income is comprised of the following amounts:

-----------------------------------------------------------------------
                                          Three months       Six months
                                        ended March 31   ended March 31
                                         2009    2008     2009     2008
-----------------------------------------------------------------------
Interest earned on cash balances          $47    $225     $167     $476
Accreted interest on host contract
 component of long-term investment        113     102      230      200
-----------------------------------------------------------------------
Interest income                          $160    $327     $397     $676
-----------------------------------------------------------------------

7. SHARE CAPITAL

Share repurchase

During the quarter ending (and six-month period ending) March 31, 2009, the Company acquired 174,700 (467,300) of its outstanding common shares at an average price of $12.48 ($10.35) per share for a total of $2,185 ($4,848) including related expenses, through normal course issuer bids in place during the period. During the quarter ending (and six-month period ending) March 31, 2008 the Company acquired 26,100 (73,300) of its outstanding common shares at an average price of $12.23 ($12.95) per share for a total of $320 ($952) including related expenses, through normal course issuer bids in place during the period. The excess of the purchase price over the stated capital of the shares has been charged to retained earnings.

Stock options

The Company has an established stock option plan, which provides that the Board of Directors may grant stock options to eligible directors and employees. Under the plan, eligible directors and employees are granted the right to purchase shares of common stock at a price established by the Board of Directors on the date the options are granted but in no circumstances below fair market value of the shares at the date of grant. A total of 500,000 common shares have been authorized for issuance under the plan, of which 250,000 have been issued at March 31, 2009.

During the six-month period ending March 31, 2009 the Company granted 85,000 options to directors and officers at an average price of $9.05 per share with 24,200 options vesting immediately and 60,800 options vesting over a period of two years. The options expire on November 12, 2013. The weighted average fair value of options granted during the six months ended March 31, 2009 was $0.96 per option. At March 31, 2009 there were 250,000 options outstanding.

During the quarter ended and six-month period ended March 31, 2009, under the fair value based method, stock-option compensation expense within general and administrative costs of $22 and $69 was recorded related to stock options compared to $31 and $71 recorded in the quarter ended and six-month period ended March 31, 2008. The offsetting credit was applied to contributed surplus.

The compensation costs related to the issuance of options during the six-month period ended March 31, 2009 were calculated using the Black-Scholes option pricing model using the following assumptions:

      Risk free interest rate                            2.3%
      Expected dividend yield                            7.2%
      Stock price volatility                            26.7%
      Expected life of options                          3.47 years

8. NET EARNINGS PER SHARE

The diluted weighted average number of shares has been calculated as follows:

--------------------------------------------------------------------------
                                       Three months             Six months
                                     ended March 31         ended March 31
                                    2009       2008        2009       2008
--------------------------------------------------------------------------
Weighted average number of
 shares - basic                7,726,110  8,299,025   7,838,997  8,311,161
Addition to reflect the
 dilutive effect of employee
 stock options                    19,144         -        9,936          -
--------------------------------------------------------------------------
Weighted average number of
 shares - diluted              7,745,254  8,299,025   7,848,933  8,311,161
--------------------------------------------------------------------------

Options that are anti-dilutive because the exercise price was greater than the average market price of the common shares are not included in the computation of diluted earnings per share. For the quarter ending (and six-month period ending) March 31, 2009, 230,855 (240,064) options were excluded from the above computation of diluted weighted average number of common shares because they were anti-dilutive. For the periods ending March 31, 2008, 165,000 options were excluded from the above computation of diluted weighted average number of shares.

9. PRIOR YEARS INVESTMENT TAX CREDITS

During the second quarter of 2009, the Company received an assessment from the Canada Revenue Agency regarding the Company's re-filing of its 2006 scientific research and experimental development (R&D) claim allowing additional R&D costs to be claimed. As a result the Company received a refund of $311 of investment tax credits related to its 2006 R&D activities.

10. COMMITMENT AND CONTINGENCIES

During the year 2000, the Company entered into a 10-year lease for an office building in the Ottawa area expiring in April 2010. The Company currently has an agreement with a sub-tenant to lease a significant portion of the space for a period extending to the end of the lease period. The Company is required to assume the remaining portion of the costs associated with this facility. Unless the sub-lessee defaults on future payments, it is expected that the current provision of $485 will be sufficient to cover the Company's share of the costs. The lease payments including operating costs relating to the excess space amount to approximately $984 per year.

In the normal course of business, the Company is party to employee related claims. The potential outcomes related to existing matters faced by the Company are not determinable at this time. The Company intends to defend these actions, and management believes that the resolution of these matters will not have a material adverse effect on the Company's financial condition.

11. SEGMENTED INFORMATION

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, regarding how to allocate resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company operates in two reportable segments described below, defined by their primary type of service offering, namely Systems Engineering and Business and Technology Services.

- Systems Engineering involves planning, designing and implementing solutions that meet a customer's specific business and technical needs, primarily in the satellite communications sector.

- Business and Technology Services involves both short and long-term placements of personnel to augment customers' workforces (Staffing) as well as the long-term management of projects, facilities and customer business processes (Outsourcing).

The Company evaluates performance and allocates resources based on earnings before interest and income taxes. The accounting policies of the segments are the same as those described in the significant accounting policies note in the audited annual consolidated financial statements.



Three months ended March 31, 2009
------------------------------------------------------------------------
------------------------------------------------------------------------
                                      Business and
                              Systems   Technology
                          Engineering     Services   Corporate     Total
------------------------------------------------------------------------
------------------------------------------------------------------------
Revenues                      $20,982      $38,940          $-   $59,922
Earnings before other
 income and expense,
 interest income and
 income tax expense             5,951        2,666        (789)    7,828
Unrealized gain on fair
 value of conversion
 options of long-term
 investment (Note 5)                                                   5
Loss on share exchange
 (Note 5)                                                           (125)
Interest income (Note 6)                                             160
Income tax expense                                                 2,667
------------------------------------------------------------------------
Net earnings                                                    $  5,201
------------------------------------------------------------------------
------------------------------------------------------------------------

Total assets other than
 cash and goodwill            $24,605      $33,782        $192   $58,579
Goodwill                            -        9,518           -     9,518
Cash                                -            -      18,444    18,444
------------------------------------------------------------------------
Total assets                  $24,605      $43,300     $18,636   $86,541
------------------------------------------------------------------------
------------------------------------------------------------------------


Three months ended March 31, 2008
------------------------------------------------------------------------
------------------------------------------------------------------------
                                        Business and
                                Systems   Technology
                            Engineering     Services Corporate     Total
------------------------------------------------------------------------
------------------------------------------------------------------------
Revenues                        $14,403      $33,010        $-   $47,413
Earnings before other
 expense, interest income
 and income tax expense           2,396        1,580      (609)    3,367
Unrealized loss on fair
 value of conversion
 options of long-term
 investment (Note 5)                                                (154)
Interest income (Note 6)                                             327
Income tax expense                                                 1,256
------------------------------------------------------------------------

Net earnings                                                      $2,284
------------------------------------------------------------------------
------------------------------------------------------------------------

September 30, 2008
------------------------------------------------------------------------
------------------------------------------------------------------------
                                        Business and
                                Systems   Technology
                            Engineering     Services Corporate     Total
------------------------------------------------------------------------
------------------------------------------------------------------------
Total assets other than
 cash and goodwill              $16,813      $32,196       $77   $49,086
Goodwill                              -        9,518         -     9,518
Cash                                  -            -    27,327    27,327
------------------------------------------------------------------------
------------------------------------------------------------------------
Total assets                    $16,813      $41,714   $27,404   $85,931
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended March 31, 2009
------------------------------------------------------------------------
------------------------------------------------------------------------
                                      Business and
                              Systems   Technology
                          Engineering     Services Corporate       Total
------------------------------------------------------------------------
------------------------------------------------------------------------
Revenues                      $40,684      $74,336        $-    $115,020
Earnings before other
 expense, interest income
 and income tax expense         9,561        4,816    (1,471)     12,906
Unrealized loss on fair
 value of conversion
 options of long-term
 investment (Note 5)                                                (250)
Loss on share exchange
 (Note 5)                                                           (125)
Interest income (Note 6)                                             397
Income tax expense                                                 4,408
------------------------------------------------------------------------
Net earnings                                                      $8,520
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended March 31, 2008
------------------------------------------------------------------------
------------------------------------------------------------------------
                                       Business and
                               Systems   Technology
                           Engineering     Services Corporate      Total
------------------------------------------------------------------------
------------------------------------------------------------------------
Revenues                       $28,534      $64,763        $-    $93,297
Earnings before other
 expense, interest income
 and income tax expense          4,023        3,596    (1,170)     6,449
Unrealized loss on fair
 value of conversion
 options of long-term
 investment (Note 5)                                                (262)
Interest income                                                      676
Income tax expense                                                 2,399
------------------------------------------------------------------------
Net earnings                                                      $4,464
------------------------------------------------------------------------
------------------------------------------------------------------------

12. HEDGING

Foreign currency risk related to contracts

The Company is exposed to foreign currency fluctuations on its cash balance, accounts receivable, accounts payable and future cash flows related to contracts denominated in a foreign currency. Future cash flows will be realized over the life of the contracts. The Company utilizes derivative financial instruments, principally in the form of forward exchange contracts, in the management of its foreign currency exposures. The Company's objective is to manage and control exposures and secure the Company's profitability on existing contracts and therefore, the Company's policy is to hedge 100% of its foreign currency exposure. The Company does not utilize derivative financial instruments for trading or speculative purposes. The Company applies hedge accounting when appropriate documentation and effectiveness criteria are met.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives to specific firm contractually related commitments on projects.

The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Hedge ineffectiveness is insignificant.

The forward foreign exchange contracts primarily require the Company to purchase or sell certain foreign currencies with or for Canadian dollars at contractual rates. At March 31, 2009, the Company had the following forward foreign exchange contracts:

---------------------------------------------------------------------------
                                               Equivalent        Fair Value
Type          Notional Currency    Maturity  Cdn. Dollars    March 31, 2009
---------------------------------------------------------------------------
BUY              8,531      USD  April 2009        10,559              $201
BUY                  4     EURO  April 2009             7                 -
BUY                 65      GBP  April 2009           115                 2
---------------------------------------------------------------------------
Derivative
 assets                                                                $203
---------------------------------------------------------------------------

---------------------------------------------------------------------------
SELL            35,430      USD  April 2009        43,854              $834
SELL             1,907     EURO  April 2009         3,144                51
---------------------------------------------------------------------------
Derivative
 liabilities                                                           $885
---------------------------------------------------------------------------

A 10% strengthening (weakening) of the Canadian dollar against the following currency at March 31, 2009 would have increased (decreased) other comprehensive income by the amounts shown below.

--------------------------------------------------------------
                                                      March 31,
                                                          2009
--------------------------------------------------------------
USD                                                     $3,393
EURO                                                       320
GBP                                                        (11)
--------------------------------------------------------------
                                                        $3,703
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Management Discussion and Analysis - March 31, 2009:

(Canadian dollars in thousands, except per share data)

RESULTS OF OPERATIONS

Revenues:

For the second quarter of 2009, revenues were $59,922 compared to $47,413 reported in the second quarter of 2008 representing a 26% increase over the prior year. For the six-month period ending March 31, 2009 revenues were $115,020 compared to $93,297 for 2008.

Systems Engineering's (SED) revenues were $20,982 in the quarter and $40,684 on a year-to-date basis representing an increase of 46% and 43% from the $14,403 and $28,534 recorded last year. During the second quarter of 2009, SED experienced continued strength in all of its markets with the manufacturing group contributing significantly to the revenue increase. With high levels of activity on contracts signed in late fiscal 2008, SED continues to experience high rates of utilization and non-labour throughput. In addition, SED recognized revenues of approximately $1,300 in the second quarter of 2009 related to technical risks retired on a certain contract nearing completion. Due to the project nature of its business, the SED division is susceptible to significant variation in volumes of activity from period to period.

Business and Technology Services (BTS) revenues were $38,940 in the quarter and $74,336 on a year-to-date basis representing an increase of 18% and 15% from the $33,010 and $64,763 for the same period last year. This improvement is attributed to the expanded scope of work on renewals of existing contracts as well as recent contract wins for new services.

Management expects that the marketplace in 2009 will continue to be very competitive. While the second quarter was exceptional for SED, certain large contracts are nearing completion and market visibility is reduced. Accordingly, a reduction of revenues is anticipated for the last half of the year. The continued strength in the level of services required from federal government contracts in hand provides optimism for the BTS division for the balance of the year. At this time, it is also expected that services will continue to be provided to Nortel until the conclusion of their restructuring under creditor protection.

While the Company estimates its backlog remaining to be earned in 2009 at $93 million, the timing of future contract wins and the revenue profile of existing contracts will have an impact in revenues ultimately realized. In addition, the current economic uncertainty could also impact the timing and magnitude of future opportunities. Overall, management is expecting a respectable increase from the level of business achieved in the second half of 2008.

Gross margin:

Gross margin was 23.0% in the second quarter of 2009, compared to the 19.0% reported in the second quarter a year ago. On a year-to-date basis the Company reported margins of 22.0% compared to 19.0% for the same period last year. The consolidated gross margin for 2009 was positively impacted by the increase in realized margins at the SED division.

Gross margin in Systems Engineering was 34.1% this quarter compared to 25.6% in the second quarter of 2008 and was 30.5% for the six-month period ending March 31, 2009 compared to 23.3% for the same period last year. The growing level of manufacturing business, which offers excellent staff utilization and economies of scale, coupled with excellent progress on our satellite communication projects, positively impacted the margin percentage. In addition, the retired technical risks related to a certain contract nearing completion positively impacted the year to date margins by 1.6%.

Gross margin in Business and Technology Services was 17.0% compared to the 16.1% reported in the second quarter of 2008 and 17.4% for the six-month period compared to 17.1% for the same period last year. The completion of a low margin contract in the prior year and the additional costs attributed to the Easter Holidays falling into March 2008 were the primary reasons for the increased margin in the second quarter compared to the prior year. Otherwise, BTS gross margin is in line with the prior year.

Because of the significant difference in gross margin between each of the two divisions, the overall gross margin of the Company is dependent on the relative level of revenue generated from each division. The highly competitive environment faced by SED and BTS coupled with the volatility of the Canadian dollar are expected to keep margins under pressure. For the first six months of the year, the realized margins were positively impacted by several non-recurring items. For the balance of the year, management believes that realized margins will return to levels commensurate with the Company's typical mix of business.

Operating expenses:

Selling and marketing, general and administration and facilities totalled $5,970 or 10.0% of revenues in the second quarter of 2009 compared to $5,267 or 11.1% of revenues reported in the second quarter of 2008. For the six-month period ending March 31, 2009 operating expenses totalled $12,126 compared to $10,513 in 2008 and include an allowance for doubtful accounts of $894 set up against the Nortel accounts receivable. As a result of the Company's continuous cost control activities, expenditure increases were kept at a level commensurate with the support requirements of our operations. Looking ahead, management believes that the Company has the capacity for an increased level of business without significantly affecting operating costs.

Prior Years Investment Tax Credits

During this second quarter of 2009 the Company recorded additional investment tax credits (ITC) of $311 with respect to its re-filing of its fiscal year 2006 R&D claims. The company does not have any other R&D claims outstanding.

Interest income:

Interest income for the second quarter of 2009 was $160 compared to $327 in 2008. For the six-month period ending March 31, 2009, interest income was $397 compared to $676 in 2008. The decrease in interest income is attributable to a decrease in interest rates and a decrease in average cash balances compared to the prior year.

Unrealized loss on fair value of conversion options of long-term investment:

The Company recorded a gain of $5 for the quarter and a loss of $250 on a year-to-date basis compared to a loss of $154 and $262 for 2008 relating to the fair value of conversion options of long-term investment. The reported unrealized gain or loss is a reflection of the movement in quoted market prices of AIM Health Group Inc. (AIM) shares.

Loss on share exchange:

On January 20, 2009, Med-Emerg announced that it successfully merged with AIM in an all-stock transaction. At that time, Calian surrendered its preferred shares in Med-Emerg in exchange for a secured convertible debenture of AIM with a face value of $3,897. The share exchange resulted in a loss on exchange of $125.

Income taxes:

The provision for income taxes for the second quarter of 2009 was $2,667 or 33.9% of earnings before tax compared to $1,256 in 2008 or 35.5% of earnings before tax. On a year-to-date basis, the provision for income taxes was $4,408 or 34.1% of earnings before tax compared to $2,399 in 2008 or 35.0% of earnings before tax. As a result of changes in prescribed federal and provincial tax rates, the effective tax rate for 2009, prior to considering the impact of non-taxable transactions, is expected to be approximately 33%.

Net earnings:

As a result of the foregoing, in the second quarter of 2009 the Company recorded net earnings of $5,201 or $0.67 per share basic and diluted, compared to $2,284 or $0.28 per share basic and diluted in the same quarter of the prior year. For the six-month period ending March 31, 2009 the Company reported net earnings of $8,520 or $1.09 per share basic and diluted compared to $4,464 or $0.54 per share basic and diluted in the same period of the prior year.

BACKLOG

The Company's backlog at March 31, 2009 was $1,108 million with terms extending to fiscal 2014. This compares to $940 million reported at the end of September 2008. Contracted Backlog represents maximum potential revenues remaining to be earned on signed contracts, whereas Option Renewals represent customers' options to further extend existing contracts under similar terms and conditions.

Most fee for service contracts provide the customer with the ability to adjust the timing and level of effort throughout the contract life and as such the amount actually realized could be materially different from the original contract value. The following table represents management's best estimate of the backlog realization for 2009, 2010 and beyond based on management's current visibility into customers' existing requirements.

Management's estimate of the realizable portion (current utilization rates and known customer requirements) is less than the total value of signed contracts and related options by approximately $413 million. The majority of this amount relates to the health services support contract. Based on existing requirements, the customer for the health services support contract does not foresee a significant increase in spending in future years. Should additional requirements for the Company's services under these contracts not materialize; the excess will not be realized. The Company's policy is to reduce the reported contractual backlog once it receives official confirmation from the customer that indicates the utilization of the full contract value will not materialize.

                                          Estimated  Excess over
                                         realizable    estimated
(dollars in      Fiscal  Fiscal  Beyond  portion of   realizable
 millions)        2009    2010    2010      Backlog      portion   TOTAL
------------------------------------------------------------------------
Contracted
 Backlog           $92     $74     $87         $253         $194    $447
Option
 Renewals           $1     $39    $402         $442         $219    $661
------------------------------------------------------------------------
TOTAL              $93    $113    $489         $695         $413  $1,108
------------------------------------------------------------------------
------------------------------------------------------------------------

Business and
                   $71    $100    $469         $640         $413  $1,053
Technology
 Services
Systems
 Engineering       $22     $13     $20          $55           $-     $55
------------------------------------------------------------------------
TOTAL              $93    $113    $489         $695         $413  $1,108
------------------------------------------------------------------------
------------------------------------------------------------------------

FINANCIAL CONDITION AND CASHFLOWS:

Operating activities

Cash outflows from operating activities for the six-month period ending March 31, 2009 were $1,310 compared to cash inflows of $9,513 in 2008. Working capital elements changed in line with the ebbs and flows of the business. Specifically accounts receivable and accounts payable increased from September 2008 mainly as a result of an increase in business and the achievement of several milestones late in the quarter. The market for the Systems Engineering Division is characterized by long-term contracts with billings tied to milestones achieved, which often results in significant working capital requirements. Conversely, given the nature of this business, it is sometimes possible to negotiate advance payments on contracts. Such advance payments give rise to unearned revenue that will be realized as revenue over the course of the contract. As at March 31, 2009, the Company's total unearned revenue amounted to $6,631. This compares to $12,290 at September 30, 2008.

Financing activities:

During the six-month period ending March 31, 2009, the Company paid a dividend of $0.30 per share compared to 2008 when the Company paid $0.24 per share. The Company intends to continue with its quarterly dividend policy for the foreseeable future.

During the six-month period ending March 31, 2009, the Company repurchased 467,300 common shares through its normal course issuer bid at an average price of $10.35 compared to the previous year when the Company repurchased 73,300 shares at an average price of $12.95.

Capital resources

At March 31, 2009 the Company had a short-term credit facility of $10,000 with a Canadian chartered bank that bears interest at prime and is secured by assets of the Company against which no amounts were drawn. Management believes that Calian has sufficient cash resources to continue to finance its working capital requirements and pay a quarterly dividend.

ADOPTION OF NEW ACCOUNTING RULES AND IMPACT ON 2008 FINANCIAL RESULTS

Effective October 1, 2008 the Company adopted Section 3064, Goodwill and intangible assets, replacing Section 3062, Goodwill and other intangible assets and Section 3450, Research and development costs. It establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. Standards concerning intangible assets specify criteria for recognition of intangible assets. The adoption of this new Section does not have a material impact on the Company's consolidated financial statements.

SELECTED QUARTERLY FINANCIAL DATA

             Q2/09    Q1/09   Q4/08   Q3/08   Q2/08   Q1/08   Q4/07   Q3/07

Revenues   $59,922  $55,098 $48,904 $50,964 $47,413 $45,884 $45,715 $48,226
Net
 earnings   $5,201   $3,319  $2,715  $3,330  $2,284  $2,180  $2,136  $2,501

Net
 earnings
 per share
  Basic      $0.67    $0.42   $0.33   $0.40   $0.28   $0.26   $0.26   $0.30
  Diluted    $0.67    $0.42   $0.33   $0.40   $0.28   $0.26   $0.26   $0.30

SEASONALITY

The Company's operations are subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays. Typically the Company's first and last quarter will be negatively impacted as a result of the Christmas season and summer vacation period. During these periods, the Company can only invoice for work performed and is also required to pay for statutory holidays. This results in reduced levels of revenues and in a drop in gross margins. This seasonality may not be apparent in the overall results of the Company depending on the impact of the realized sales mix of its various projects.

OUTLOOK

Management believes the Company is well positioned for long-term sustained growth. The Company operates in markets that will continue to require the services that the Company offers. To further assure itself of a stable source of revenues, the Company will focus on increasing the percentage of its revenues derived from recurring business while pursuing new business in adjacent markets. Potential acquisitions, focused on adding complementary businesses to the Company's mix, could also be a possible source of growth.

The Systems Engineering Division had been working within a somewhat improved satellite sector for the last two years and, consistent with any project related business, demand for its products and services can be somewhat erratic. While management believes that new systems adopting the latest technologies will be required by commercial customers to maintain and improve their long-term service offerings, the current market turmoil is expected to have a near-term dampening effect on revenues as startups are constrained by financing availability and larger established players restrict capital expenditures to preserve cash resources. Management remains confident that systems such as MSTAR will continue to be in demand in the security and surveillance market although it cannot predict the timing and extent of future orders. The continued volatility of the Canadian dollar will impact the Systems Engineering Division's competitiveness when bidding against foreign competition on projects denominated in foreign currencies.

The Business and Technology Services Division's services are adaptable to many different markets. Currently, its strength lies in providing program management and delivery services to the Department of National Defence. Management believes that this department and many others within the federal government will continue to require more support services from private enterprises to supplement their current workforce. Although the division can experience delays and spending constraints from time to time within certain federal government departments, management believes that the types of service the division offers will continue to be attractive to government agencies going forward. The recent contract renewals and signing of new contracts has provided added confidence that the division's growth trend will continue.

The current economic uncertainty will undoubtedly present substantial challenges to all governments and businesses. While not immune to the current economic downturn, management believes that the company's strong backlog and customer base coupled with the diversification of its two divisions will provide reduced susceptibility relative to other entities.

GUIDANCE

Despite some softness expected in certain sectors for the last half of the year, management continues to expect growth for fiscal 2009, although the extent will depend on the timing and magnitude of various contract awards. Accordingly, based on the current outlook, consolidated revenues for 2009 are expected to be in the range of $210 million to $225 million and net earnings per share in the range of $1.80 to $2.10 .

INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Canadian Accounting Standards Board has recently confirmed that Canadian publicly accountable enterprises will be required to report under International Financial Reporting Standards (IFRS) as replacement guidance for the Canadian generally accepted accounting principles (Canadian GAAP). IFRS uses a conceptual framework similar to current Canadian GAAP, but there are significant differences in recognition, measurement and disclosures. The changeover will occur no later than fiscal year beginning January 1, 2011. The Company expects to issue its first financial statement in accordance with IFRS effective with its three-month period ending December 31, 2011.

In order to prepare for the conversion to IFRS, the Company has developed an IFRS changeover plan. This plan addresses key elements of the Company's conversion to IFRS including:

Accounting policy changes and financial reporting requirements; Education and training requirements; Information technology and data systems impacts; Internal control over financial reporting; Impacts on business activities

The plan highlights the need to identify key accounting policy changes as the first step in the conversion process. Once these changes have been identified, other elements of the plan will be addressed. In order to facilitate this identification process, the plan provides for early and on-going education and training to be provided to selected employees involved in the transition.

The Company is currently in the process of assessing the differences between IFRS and the Corporation's current accounting policies, as well as the alternatives available on adoption. Changes in accounting policies are likely. These changes may have an impact on the Company's consolidated financial statements; however it is too early in the Company's changeover process to provide quantification of those effects.

We have also established a formal governance structure for the conversion to IFRS. The initiative is lead by the Chief Financial Officer who reports regularly to the Chief Executive Officer. The plan and progress are also reviewed quarterly by the Audit Committee of our Board of Directors.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

During the most recent interim quarter ending March 31, 2009, there have been no changes in the design of the Company's internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

FORWARD-LOOKING STATEMENT

Certain information included in this management discussion and analysis is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by the Company with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.

The foregoing discussion and analysis should be read in conjunction with the financial statements for the first quarter of 2009, and with the Management Discussion and Analysis in the 2008 annual report, including the section on risks and opportunities.

Date: May 6, 2009

Contacts:
Calian Technologies Ltd.
Ray Basler
President and Chief Executive Officer
306-931-3425

Calian Technologies Ltd.
Jacqueline Gauthier
Chief Financial Officer
613-599-8600
[email protected] / www.calian.com

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