These are the first full year results prepared on the basis of International Financial Reporting Standards adopted by the European Union.

Filtronic has again achieved growth for the continuing activities of the group, with revenue for the year ended 31 May 2006 increased by 3.8% to £221.0m (2005 £212.9m). The operating result for continuing operations was a loss of £4.2m (2005 £5.6m profit). The profit for the period was £6.0m (2005 £9.3m).

The Board therefore proposes to maintain a final dividend of 1.80p (2005 1.80p) payable on 31 October 2006 to shareholders on the register on 29 September 2006.

This has been an eventful year for the group. The Handset Products division was sold in September 2005 for £56.7m, including the earn-out. The composition of the Board changed in January 2006 with the resignation of John Roulston as Group Chief Executive. The Board requested David Rhodes to move from Chairman to take on this role so that he would bring his knowledge and experience of the business and staff to put the group on a stable footing. I took on the role of non-executive Chairman on an interim basis whilst the Board seeks my long term successor.

On 5 May 2006 we announced that we had entered into exclusive negotiations with Powerwave Technologies, Inc. (“Powerwave”) for the sale of the major activities within our Wireless Infrastructure division, resulting in the formal agreement of this transaction, which was announced on 12 June 2006. The consideration due is $150m (approximately £81m) cash and 20.7m shares of Powerwave’s common stock, and the shareholder circular for this transaction is in preparation, with completion of the sale due by 30 September 2006.

For the other activities of the group, the highlight for the year has been the GaAs semiconductor fabrication facility at Newton Aycliffe reaching its target of breakeven by the financial year end for the fourth quarter of the financial year. The Defence Electronics activities opened their new manufacturing facility in New Hampshire, USA in September 2005 which provides the base for medium term growth. Also, we are retaining the point to point radio backhaul activity which is showing strong growth.

The cash proceeds from the sale to Powerwave will be used to repay outstanding bank debt and to fund continuing investment in the Newton Aycliffe semiconductor facility, along with other corporate working capital requirements. The net proceeds from the sale of the Powerwave shares are expected to be returned to shareholders as cash, once they are sold.

This year also saw the retirement of Alan Needle from the role of Managing Director of the Wireless Infrastructure division in December 2005. He initiated the commercial application of the defence technology that created the current Wireless Infrastructure activity. As Managing Director, he took the business to flotation in 1994 and, under his leadership, Filtronic became the world’s leading independent supplier of transmit/receive modules for mobile base stations. We thank him for this considerable contribution.

Reginald Gott joined the Board as a non-executive director on 13 July 2006 and brings his extensive background in the machinery, automation and controls segments of the capital goods market across Europe and North America to strengthen the Board.

I also expect that the Board will continue its active search for my long term replacement, who will be responsible for organising the evolution of the management team and completion of the refresh of the members of the Board.

In supporting us through this eventful year, I would like to thank all of our employees for their dedication to the growth of the business as the group continues to evolve and John Roulston for his dedication and contribution. The Board is continuing its drive to have the intrinsic value of the group’s operations recognised in the company’s valuation.

Rhys Williams
Chairman
31 July 2006