29 January 2007
Interim Results For The Six Months Ended 30 November 2006

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Filtronic plc (“Filtronic”), a leading designer and manufacturer of customised microwave electronic subsystems and components for the wireless telecommunications and defence industries, announces its Interim Results for the six months ended 30 November 2006

Financial Highlights

• Revenue for continuing operations up 24% to £35.8m (2005: £28.9m)
• Operating loss for continuing operations before non-recurring items reduced to £4.2m (2005: £6.6m)
• Operating loss for continuing operations reduced to £5.9m (2005: £8.6m)
• Profit for discontinued operations of £82.6m mainly arising from sale of the Wireless Infrastructure business
• Profit for the period of £75.8m (2005: loss of £4.2m)
• Cash of £64.0m (2005: net debt of £12.0m)
• Holding 17.7m Powerwave Technologies Inc shares, valued at £57.6m at 30 November 2006
• Return of cash of £10m proposed for end of March 2007

Operational Highlights

• Compound Semiconductors has had a year of growth, reducing losses before non-recurring items, although it now expects demand to be lower than previously anticipated.  As a consequence, the previously announced capital expenditure programme has been reduced to align with this demand and will not exceed £10m.
• Point to Point has achieved a step change in sales and has moved into profitability with 10% operating margin in the current period, so is well positioned to exploit a growing market.
• UK Defence has achieved solid underlying growth for its ongoing products and should be capable of double digit operating margins going forward.
• US Defence remains loss-making and the Board will complete its plans for an exit by the end of the financial year.
• Central R&D discontinued, and central costs reduced by £1m a year, with surplus property earmarked for disposal.
• First return of cash of £10m announced today uses the mechanism of the B Share scheme.  This should allow shareholders to receive cash as either an income or a capital receipt.  This return reflects the current level of the company’s distributable reserves.
• The Board expects to announce a further return of cash no earlier than October 2007, reflecting the expiry of the principal warranty obligations given to Powerwave, once agreement has been reached on funding for the group’s pension scheme and completion of the necessary approvals from shareholders and the court. 
• 7.4m shares in Powerwave Technologies Inc, received as part of the consideration for the sale of the Wireless Infrastructure business in October 2006, have been sold since 30 November 2006, realising £24.2m

Filtronic Chairman, John Poulter, said:

“Following the completion of the Wireless Infrastructure disposal, progress has been made in reducing the losses in the continuing group and in taking actions to achieve the goal of a profitable and cash-positive performance. However, much remains to be done, and the second half outlook is still for the group to be loss-making.

The delay in making a more substantial return of cash to shareholders is an unfortunate consequence of the company’s current level of distributable reserves. However, the Board reaffirms the intentions expressed in the EGM circular.”

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