Trading Update and Notice of Results

Filtronic plc

Trading Update and Notice of Results

Filtronic plc (AIM: FTC), the designer and manufacturer of microwave electronics products for the wireless telecoms infrastructure market and adjacent markets, issues the following trading update for the 12-month period to 31 May 2016.

Revenue for the financial year was £13.6m (2015: £17.5m) due to a strong sequential second half performance with six-month revenue of £9.1m (2016 H1: £4.5m).

The Group had net debt at the year-end of £0.3m (2015: net cash £0.7m) and we are pleased to confirm that Barclays Bank plc has agreed on a temporary increase of our invoice discounting facility from £2.0m to £4.0m to support our current working capital requirements as our revenues grow. In addition, the Group has an invoice discounting facility in the US with Faunus Group International Inc of $3.5m. The Board believes that these facilities will be sufficient to finance the period of sales revenue growth that we are currently experiencing.

Wireless

Sales revenue in our Wireless business was £9.0m for the year (2015: £10.3m) with £7.0m (2015: £6.4m) coming in the second half. We were pleased to announce a succession of orders for integrated ultra-wide band antennas over the last six months. Production of these antennas ramped through the period and during May we started to commission a second production line at our manufacturing partner's factory. Initial production margins for this product were low but have significantly improved as we have overcome start-up yield and volume ramp issues.

We enter the new financial year with good order coverage, as a substantial proportion of the recently announced order wins are still to be fulfilled. An encouraging demand forecast for these products indicates that the good momentum achieved over the past six months should be maintained.

Broadband

Our Broadband business achieved sales revenue of £4.6m in the year (2015: £7.2m) as sales of legacy products continued to fall whilst the market adoption of E-band transceivers for wireless backhaul to replace these revenues has been slower than anticipated. However, the impact of the reduced sales on operating profit has been largely mitigated by cost saving measures, implemented in the previous financial year and improvements in product margins delivered during the year under review.

We are pleased to report that sales of our latest transceiver product, Orpheus, are now growing and from launch in November 2015 to 31 May 2016 we shipped over 1,500 pieces to our lead customer, from whom we have order coverage until October 2016. Interest from other potential customers is also increasing. We have received orders from eight clients, totalling over 150 units for evaluation in applications that range from telecoms backhaul to aerospace.

Notice of Results

The results for the financial year ended 31 May 2016 will be announced on 2 August 2016.

Rob Smith, CEO of Filtronic, commented: "The prospects for both integrated ultra-wide band antennas and E-band transceivers continue to be encouraging and the growing pipeline of enquiries represents a considerable opportunity for the business to continue its recovery toward delivering sustainable growth".

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