Filtronic Regulatory News (FTC)

23 June 2023

Filtronic plc

("Filtronic")

YEAR END TRADING UPDATE, CONTRACT WINS AND NOTICE OF RESULTS

Trading Momentum Maintained, Supply Chain Constraints Easing and Strategic Market Growth

Filtronic plc (AIM: FTC), the designer and manufacturer of products for the aerospace, defence, telecoms infrastructure and critical communications markets, is pleased to provide the following trading update for the financial year ended 31 May 2023 ("FY2023").

Revenue and adjusted EBITDA have been delivered in line with market expectations with positive news that the supply chain issues eased in the final quarter of the financial year. Our opportunity pipeline continues to build, and we are delighted to have won two new contracts post period end, each valued at £0.5m.

Financial highlights

Trading in H2 of the financial year was in line with market expectations for both revenue and adjusted EBITDA. Therefore, subject to audit, the Board expects to report FY2023 revenue of approximately £16.3m (FY2022: £17.1m) and adjusted EBITDA of approximately £1.3m (FY2022: £2.7m). Cash at bank on 31 May 2023 was £2.6m (30 November 2022: £3.0m). Net cash (net of all lease obligations except right of use property leases) at 31 May 2023 was £1.9m (30 November 2022: £2.4m).

Operational highlights

The FY2023 full year results are a testament to the ability of the business to operate with agility and speed during uncertain times. Having experienced component shortages in the year, which constrained revenue generation, we were able to execute a quick ramp of production once supply was restored whilst continuing to scale the business to respond to the opportunities that are emerging for mmWave RF technology.

Of our four core markets, it is the low earth orbit ("LEO") space opportunity that has exceeded our expectations in terms of both the size of the opportunity and the speed of deployment. We are engaged with the leading players in this segment, where there is increasing demand for high bandwidth and high frequency backhaul communications between the satellite and the ground station. We secured our first production order for E-band ground station solid state power amplifiers from a market leader during the second half of the year and have exceeded expectations in terms of both delivery and technical performance. Our RF technology is a potential key enabler in this sector, and we are committed to building the organisation necessary to execute our technology roadmap and continue to engage with the major industry players and relevant government agencies.

Demand for telecommunication infrastructure products increased steadily throughout the year with the opening of the newly licenced Indian market offsetting the abrupt closure of the Russian 5G rollout last year. Our inability to execute orderbook due to component shortages did not diminish the need for innovative new products in the telecommunications market and we announced our new Morpheus X2, Hades X2 and Hercules X2 products within the year, securing advanced production orders for delivery in FY2024 on all three platforms. We continue to look for opportunities adjacent to the primary telecoms infrastructure market and were delighted to receive two new contract wins for products going into private telecommunications networks this month. The contracts valued at £0.5m each are for delivery in 2024 and are the result of many years of collaborative design effort with our customers.

The conflict in Ukraine and increased geopolitical tensions increased the focus on the aerospace and defence market during the trading period and we have continued to make good progress, securing follow-on orders for development programme wins registered in the prior year. Increased business development and marketing activities are also starting to yield positive results with several development contract wins from influential players in the electronic warfare (EW) market. This development roadmap is supported by an opportunity pipeline that continues to build in terms of both quality and value based on the need for a UK sovereign defence supply chain.

Results for the financial year ended 31 May 2023 will be announced on 1 August 2023.

Richard Gibbs, Chief Executive Officer, said:

"Throughout the year our primary markets have remained robust, and we enter the new financial year with a strong order book, a significant number of promising development programmes and opportunity pipeline that has doubled during the course of the last year. Notwithstanding the disruptions caused by shortages of electronic components, we believe that we are continuing to make the right investments in the business to capitalise on the exciting near-term opportunities in our core markets. We have been encouraged by the closing of two new telecoms infrastructure contracts early in our new trading year and will look to build further momentum as the year progresses".

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Note: This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation.