Growth of continuing operations; Handset Products division sale earn-out of £11m; Foundry met break even objective; Net 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 Preliminary Results for the year ended 31 May 2006. Worldwide sites are in the UK (Yorkshire, County Durham, Midlands and Scotland), USA, Finland, Hungary and China.

Filtronic is the world’s leading independent supplier 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 (78 %), Defence Electronics (14%); Compound Semiconductors (8%).

Financial Highlights

• Revenue from continuing operations of £221.0 m (2005 £212.9m)
• Operating loss from continuing operations of £4.2m (2005 profit £5.6m)
• Gain on sale of property of £0.5m (2005 gain £2.4m)
• Net finance cost of £3.2m (2005 £4.0m)
• Pre-tax loss of £6.7m (2005 profit: £9.5m)
• Gain on sale of discontinued operation £14.1m (2005 £nil)
• Final dividend maintained at 1.80p (2005 1.80p), payable 31 October 2006
• Total dividend 2.70p (2005 2.70p)
• Net debt of £12.7m (2005 £43.4m), with bank borrowing facilities of £35.0m

Operational Highlights

• Wireless Infrastructure:
• Maintaining market leading position supplying all Western OEMs
• Second half year performance suffered unseasonally low demand in Q3 (December 2005, January and February 2006) and Q4 suffered negative impact of Powerwave Technologies, Inc. negotiation announcement
• Market changed fundamentally in recent months with key customer pursuing volume growth strategy.
• Compound Semiconductors:
• Met objective of run rate break even over Q4 FY06
• Market leader for 4-way and above pHEMT mobile phone switches supplying some 20% of overall handset market with around 80% share of addressable market
• Defence Electronics – three large contracts substantially completed in the year
• Handset Products division sold in September 2005 for £45.4m plus earn-out of £11.3m, due in August 2006
• Capital expenditure of £14.4m (2005 £13.0m)

Summary of outlook for the Group

• Continuing upswing in activity for Wireless Infrastructure division with revenue expected to increase by more than 25% compared with the preceding half year for the first half of the current financial year and customer demand supporting growth for second half
• The financing plan for Compound Semiconductors requires less than £15m of additional cash for this financial year, after which the business is targeted to be self-financing
• Agreed change of final salary pension scheme to career average revalued earnings basis
• Board is continuing with the preparation of the shareholder circular for the Wireless Infrastructure transaction with completion of the sale due by 30 September 2006

Enquiries
Filtronic plc:
Professor J David Rhodes, Group Chief Executive - Tel: 01274 530622 / Mob: 07850 827 280
Charles Hindson, Group Finance Director - Tel: 01274 530622 / Mob: 07800 706 319

Parkgreen Communications Ltd:
Paul McManus - Tel: 020 7493 3713 / Mob: 07980 541 893