30 January 2006
Interim Results For The Six Months Ended 30 November 2005

Underlying performance of continuing operations broadly in line with market expectations; Handset Products division sale completed on 8 September for £45m; Foundry’s growth meeting plans; Group debt reduced; Dividend maintained

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Filtronic plc (“Filtronic”), a leading global designer and manufacturer of customised microwave electronic subsystems for the wireless telecommunications and defence industries, announces its Interim Results for the six months ended 30 November 2005. Worldwide sites are in the UK (North of England, Yorkshire, Midlands, Scotland), USA, Finland, China and Hungary.

Filtronic is one of the world’s leading independent suppliers of transmit/receive modules for base stations and a leading manufacturer of semiconductor switches for mobile handsets. The contribution to sales for continuing operations is: Wireless Infrastructure (80%), Defence Electronics (13%); Compound Semiconductors (7%).

Financial Highlights

• Revenue from continuing operations of £110.8m (2004: £103.2m)
• Operating loss from continuing operations before non recurring items of £0.4m (2004 loss: £1.3m)
• Operating loss from continuing operations of £2.9m (2004 loss: £1.3m)
• Loss on disposal of property of £0.4m (2004 gain: £2.4m)
• Net interest expense of £1.1m (2004: £2.0m)
• Pre-tax loss of £5.6m (2004 profit: £3.5m)
• Gain on disposal of discontinued operation £2.9m (2004: £nil)
• Diluted loss per share of 5.66p (2004: diluted EPS of 2.45p)
• Interim dividend maintained at 0.90p (2004: 0.90p), payable 31 March 2006
• Net debt of £12.0m (2004: £44.0m), with working capital facilities of £20.0m

Operational Highlights

• Wireless Infrastructure :
• Maintaining market share in stable market for transmit / receive filters
• Volume production of integrated power amplifier achieved
• Sector now includes backhaul radio products
• Operations in Australia closed with non recurring cost of £0.6m
• Defence Electronics
• US operations integrated as Filtronic Signal Solutions with move to new facilities in New Hampshire, £1.5m inventory write down
• Site in US sold for £1.4m
• Compound Semiconductors :
• Performance in line with revenue plan with established demand whilst operational challenges remain
• West coast sales office closed with non recurring cost of £0.4m
• Handset Products division sale completed on 8 September for £45m
• Capital expenditure of £6.8m (2004: £7.3m)

Outlook

Professor J. David Rhodes said: “Wireless Infrastructure is experiencing a flat market in the second half of the financial year with operating margins for the core transmit / receive filters at over 10%. Revenue growth awaits some delayed contracts and new OEM platforms moving into production.

Our market driven approach to Power Amplifiers is gaining traction and will be a growth mechanism in the coming financial year. New products in remote radio heads for 3G and WiMAX, some of which are at the prototype stage, will give growth in 2007.

In Defence Electronics, consolidation in the US is positioning the business favourably with old and new customers. Completion of large contracts will reduce revenue in the next financial year, with the lead time to production on sizeable new opportunities being 12 to 18 months.

In Compound Semiconductors, the loading of the foundry is increasing, with more customers expected. The foundry ramp up supports Compound Semiconductors reaching run rate breakeven at the end of this financial year. Additional capital expenditure of £4m is being undertaken to increase foundry capacity from 17,500 to nearly 27,000 wafers a year during the coming period.

The net cash flow for the coming half year is expected to be neutral after the additional capital expenditure committed for the foundry, without the benefit of £4m collected from overdue debtors in December 2005. The contingent consideration arising from the sale of the Handset Products division is expected to be around €10m (£7m) and is due to be received in August 2006.”

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