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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 2004. Worldwide sites are in the UK (North of England, Yorkshire, Midlands, Scotland), USA, Finland, China and Australia. Filtronic is one of the world’s leading independent suppliers of transmit receive modules for mobile base stations and a world leading manufacturer of mobile handset antennas. The contribution to sales is: Wireless Infrastructure (63%), Handset Products (21%), Integrated Products (16%).

Financial Highlights

• Group sales of £130.1m (2003: £123.6m)
• Operating profit of £2.6m (2003: £5.2m).
• Exceptional profit on disposals of property of £2.4m (2003: nil)
• Net interest payable of £2.0m (2003 £2.8m)
• Pre-tax profit of £3.3m (2003: £2.7m)
• Diluted earnings per share of 2.21p (2003: diluted EPS of 1.59p)
• Interim dividend maintained at 0.90p (2003: 0.90p), payable 1 April 2005
• Gearing reduced from 51% to 43%

Operational Highlights

• Wireless Infrastructure: Over 50% of module products now manufactured in China
  • Now supply major OEMs in production quantities and improved market leading position
  • Stable margins at 13% (2003: 13%)
  • Development of integrated power amplifiers and focus on 3G sector
• Handset Products: Maintained market position, supplying c.18% global antennas market for mobile handsets
  • Supply of ‘internal antennas’ to broadening customer base, including Samsung and other ODMs
  • Operating margins improved compared with preceding six months
• Integrated Products: Strong revenue growth of 29% after excluding disposed of activities
  • Increasing demand for catalogue products and more complex higher value Monolithic Microwave Integrated Circuits
  • Operating losses reduced to £5.7m
  • Point to point microwave links now being supplied to two OEMs for use in mobile networks
• Board Appointments: Group Finance Director (14 Dec. 2004), CEO designate Integrated Products (21 Feb. 2005)
• Disposal of sites in Merrimack, USA and Brisbane, Australia for £7.4m on leaseback basis
• Capital expenditure of £7.3m (2003: £5.0m)

Trading Outlook

Professor J. David Rhodes said: ‘We are expecting growth in Wireless Infrastructure to remain in line with the strengthening market in 2.5 and 3G with focus on GSM, EDGE, CDMA and WCDMA products. Power amplifier production should increase by financial year end and a further new product is set for next financial year. Continued growth is also expected from electronic warfare in the US and point to point microwave links. Improved product mix should lead to revenue growth in semi-conductors.’

‘In Handset Products, revenue is expected to remain seasonal. Demand from our key customer’s new models is not expected to start until next financial year. Management focus will remain on achieving efficiency although operating margins may be under pressure.’

‘The Board is continuing with the activities for the disposal of the Handset Products division. However, in light of current market conditions, the Board is not pursuing an IPO at this stage.’

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