Half Yearly Report

RNS Number : 3158A

Filtronic PLC

31 January 2011

 



                                                                                                                                                                                 

 

 

FILTRONIC PLC

HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 NOVEMBER 2010

Filtronic plc, the designer and manufacturer of microwave electronics products for the wireless telecoms infrastructure market, announces its Half-Yearly Financial Report for the six months ended 30 November 2010 ("H1 2011").

Financial Summary

×       Revenue from continuing operations £7.3m (H1 2010: £9.6m)

×       Operating loss before exceptional items £0.8m (H1 2010: £0.3m profit)

×       Loss before tax from continuing operations £1.2m (H1 2010: £0.1m profit)

×       Cash of £7.3m (H1 2010: £16.3m)

×       £1.9m net cash outflow from operating activities (H1 2010: £1.8m inflow)

Highlights

×       Completion of Isotek acquisition delivers entry to base-station filter market

×       Point to Point ("PTP") revenues ahead of H2 2010 levels

×       PTP shipments to new OEM commenced as planned

×       Isotek has secured major OEM customer for US 4G network rollout

Commenting on the Outlook, Howard Ford, Chairman said:

"Whilst dealing with the potential adverse impact of the acquisition of one of our key customers, Filtronic continues to further its strategy to transform the scale of the business and diversify its customer base, with an expanded range of products, to exploit significant opportunities in the wireless telecoms market presented by 3G/4G rollouts."

Enquiries

Filtronic plc
Howard Ford, Chairman	Tel: [phone]
Hemant Mardia, CEO	Tel: [phone]
Mike Brennan, CFO	Tel: [phone]
Panmure Gordon (UK) Ltd.
Dominic Morley	Tel: [phone]
Walbrook PR Ltd.	Tel: [phone]
Paul McManus	Mob: [phone]
	[e-mail]
Fiona Henson	Mob: [phone]
	[e-mail]

Interim Management Report

For the six months ended 30 November 2010 (H1 2011), the Group generated a pre-tax loss from continuing operations of £1.2m compared with a profit of £0.1m in the prior year period.

Revenue from continuing operations was £7.3m compared with £9.6m for H1 2010 and £6.0m for H2 2010.  Operating loss from continuing operations before exceptional items was £0.8m, splitting £0.7m for the point to point ("PTP") segment and £0.1m for the base station segment.  PTP operating profits for the comparable period were £0.3m followed by a £0.6m loss in H2 2010.

The acquired base station business accounted for £0.3m of the revenue in H1 2011.

Discontinued activities reported a £0.3m loss in full and final settlement of an indemnity claim on the UK and Australian Defence Electronics Business disposal.

An annual dividend of 1p (£0.7m) in respect of 2009/10 was paid to shareholders on 5 November 2010.  In line with our stated policy there is no interim dividend.

Net finance income was £0.1m (H1 2010: £0.1m) being primarily interest earned on cash deposits.

Capital expenditure in the six months was £0.4m compared with £0.5m in the prior period.

Net cash outflow from operating activities was £1.9m including the post acquisition receipt of £1.2m from the exercise of Isotek share options. This asset was acquired with the Isotek business.  Investing activity outflows of £6.3m included the payment of £4.2m of cash consideration in respect of the acquisition of Isotek which was completed on 16 November 2010.  Consideration also included the issue of 18.55 million Filtronic plc ordinary shares.

After a dividend payment of £0.7m, and capital expenditure of £0.4m (H1 2010 £0.5m) the closing cash balance at 30 November 2010 was £7.3m; a decrease of £8.9m in the period.

Business Review and Outlook

Whilst dealing with the potential adverse impact of the acquisition of one of our key PTP customers, Filtronic is continuing to execute its strategy to transform the scale of the business and to diversify its customer base with an expanded range of products to exploit opportunities in the wireless telecom market.

As announced last week, the acquisition by Ceragon Networks Ltd. ("Ceragon") of a major customer, Nera Networks AS ("Nera"), is likely to have an adverse effect on Filtronic's PTP business.  Preliminary discussions with Ceragon have yet to clarify the level of Filtronic's future business, but, we are planning for a significantly lower level of PTP sales to this customer in H2 2011. Following this there is potential for continued sales of a subset of our products to Ceragon particularly in the long haul radio market. In addition there may be scope for further sales to Neratel, which was retained by Eltek AS (Nera's previous owners), and which will continue to sell Nera products in specific geographic territories.

Shipments of PTP products to a new OEM customer (secured in January 2010) commenced in H1 as planned and will continue to build up over the coming months. Our E-band Gigabit backhaul programme has progressed to a successful product demonstrator which has validated the unique selling points of our technology and created OEM interest. This programme is on track to deliver revenues in calendar year 2012 in this emerging market sector, which addresses mobile data growth and helps alleviate impending 4G capacity constraints.

Deliveries to Selex have also commenced, as planned, although the client's material availability is delaying our production ramp by a few months until mid 2011.

Overall PTP sales in the second half are therefore likely to be reduced from the £7.1m recorded in H1.

Isotek has made good progress in establishing the company as a key player in the base station market. Production orders have been received from its first major US customer for a 4G network rollout. Initial pilot supply volumes have also been delivered to two European clients for 3G programmes.

Currently many of Isotek's customer projects are at an early stage. This requires a high level of front end investment in development and pre-production costs on a number of parallel programs. This will have a short term impact on overall margins until volume production starts to build up through the second half of calendar 2011.

Against the background of the expanding market opportunities for its products Filtronic continues to focus investment to secure its position on prospective high volume multi year programmes.

Howard Ford, Chairman

Hemant Mardia, CEO

31 January 2011

The Board

The directors that served during the six months ended 30 November 2010 and their respective roles are set out below:

Hemant Mardia (Chief Executive Officer)

Howard Ford (Chairman)

Michael Brennan (Chief Financial Officer)

Graham Meek (Non-executive Director)

Reginald Gott (Non-executive Director)

 

Alan Needle was appointed as an Executive Director on 16 November 2010.

 

Responsibility Statement of the Directors

Responsibility statement of the directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge: 

·      the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union; 

·      the interim management report includes a fair review of the information required by:

(a)  DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and 

(b)  DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board

31 January 2011

Independent Review Report to Filtronic plc

Introduction

 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 November 2010 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in shareholders' equity, the condensed consolidated cash flow statement and the related explanatory notes.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA").  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA. 

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. 

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

 

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor' of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 November 2010 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the DTR of the UK FSA.

David Morritt

For and on behalf of KPMG Audit Plc

Chartered Accountants

Leeds

31 January 2011

Condensed Consolidated Income Statement

For the period ended 30 November 2010

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
		(Unaudited)	(Unaudited)	(Audited)
Continuing operations	note	£000	£000	£000
Revenue		7,339	9,612	15,575
		======	======	======
Operating (loss) / profit before Exceptional Items		(848)	347	(292)
Exceptional Items	6	(416)	(337)	(842)
		----------	----------	----------
Operating (loss) / profit		(1,264)	10	(1,134)
Finance Income		56	82	113
		----------	----------	----------
(Loss) / profit before Taxation		(1,208)	92	(1,021)
Taxation		-	-	-
		----------	----------	----------
(Loss) / profit for the period from continuing operations		(1,208)	92	(1,021)
(Loss) / profit for the period from discontinuing operations	7	(260)	71	-
		----------	----------	----------
(Loss) / profit for the period		(1,468)	163	(1,021)
		======	======	======
Basic (loss) / earnings per share (stated in pence)
Continuing operations	9	(1.30)p	0.12p	(1.37)p
Discontinued operations	9	(0.28)p	0.10p	0.00p
		----------	----------	----------
Basic (loss) / earnings per share	9	(1.58)p	0.22p	(1.37)p
		======	======	======
Diluted (loss) / earnings per share
Continuing operations	9	(1.30)p	0.12p	(1.37)p
Discontinued operations	9	(0.28)p	0.10p	0.00p
		----------	----------	----------
Diluted (loss) / earnings per share	9	(1.58)p	0.22p	(1.37)p
		======	======	======

The loss for the period is attributable to the equity shareholders of the parent company Filtronic plc.

Condensed Consolidated Statement of Comprehensive Income

For the period ended 30 November 2010

	6 months	6 months	Year
	ended	ended	ended
	30 November	30 November	31 May
	2010	2009	2010
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
(Loss) / profit for the period	(1,468)	163	(1,021)
	----------	----------	----------
Currency translation movement arising on consolidation	(7)	-	-
	----------	----------	----------
Other Comprehensive Income	(7)	-	-
	----------	----------	----------
	----------	----------	----------
Total comprehensive income for the period	(1,475)	163	(1,021)
	======	======	======

The total comprehensive income for the period is attributable to the equity shareholders of the parent company Filtronic plc.

Condensed Consolidated Balance Sheet

At 30 November 2010

		30 November	30 November	31 May
		2010	2009	2010
		(Unaudited)	(Unaudited)	(Audited)
	Note	£000	£000	£000
Non current assets
Goodwill and other intangibles	13	11,555	-	-
Property, Plant and Equipment		2,307	2,066	1,998
		----------	----------	----------
		13,862	2,066	1,998
		----------	----------	----------
Current assets
Inventories		2,603	2,952	1,998
Trade and other receivables		7,820	4,271	3,361
Tax Receivable		115	-	-
Cash and cash equivalents		7,335	16,270	16,245
		----------	----------	----------
		17,873	23,493	21,604
		----------	----------	----------
		----------	----------	----------
Total assets		31,735	25,559	23,602
		----------	----------	----------
Current liabilities
Trade and other payables		6,960	3,309	2,886
Provision		484	1,137	706
Deferred Income		13	-	17
		----------	----------	----------
		7,457	4,446	3,609
		----------	----------	----------
Long term liabilities
Deferred income		113	89	108
		----------	----------	----------
		113	89	108
		----------	----------	----------
		----------	----------	----------
Total liabilities		7,570	4,535	3,717
		----------	----------	----------
		----------	----------	----------
Net assets		24,165	21,024	19,885
		======	======	======
Equity
Share Capital	14	9,262	7,432	7,432
Share Premium	14	4,626	-	-
Translation Reserve		(7)	-	-
Retained Earnings		10,284	13,592	12,453
		----------	----------	----------
Total equity		24,165	21,024	19,885
		======	======	======

The total equity is attributable to the equity shareholders of the parent company Filtronic plc.

Condensed Consolidated Statement of Changes in Equity

For the period ended 30 November 2010

		6 months	6 months	Year ended
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
		(Unaudited)	(Unaudited)	(Audited)
	note	£000	£000	£000
Equity at the start of period		19,885	21,576	21,576
Total comprehensive income for the period		(1,475)	163	(1,021)
New shares issued (net of issue costs)	14	6,456	-	-
Share-based payments		42	28	73
Dividends	10	(743)	(743)	(743)
		----------	----------	----------
Equity at the end of period		24,165	21,024	19,885
		======	======	======

Condensed Consolidated Cash Flow Statement

For the period ended 30 November 2010

		6 months	6 months	Year
		ended	ended	Ended
		30 November	30 November	31 May
		2010	2009	2010
		(Unaudited)	(Unaudited)	(Audited)
	note	£000	£000	£000
Cash flows from operating activities
(Loss) / profit for the period		(1,468)	163	(1,021)
Loss / (gain) on sale of discontinued operations		260	(71)	-
Finance income		(56)	(82)	(113)
		----------	----------	----------
Operating (loss) / profit	11	(1,264)	10	(1,134)
Share based payments		42	28	73
Loss on disposal of plant and equipment		-	-	35
Depreciation		233	391	601
Movement in inventories		(450)	1,579	2,533
Movement in trade and other receivables		(2,803)	508	1,418
Settlement of option premia debt acquired with Isotek		1,194	-	-
Movement in trade and other payables		1,398	(526)	(1,117)
Movement in provision		(222)	(177)	(608)
Change in deferred income including government grants		-	-	125
		----------	----------	----------
Net cash (used in) / from operating activities	11	(1,872)	1,813	1,926
		----------	----------	----------
Cash flows from investing activities
Interest received		56	82	113
Acquisition of plant and equipment		(436)	(461)	(639)
Acquisition of subsidiary, net of cash acquired	13	(4,162)	-	-
Share issue costs	14	(316)	-	-
Acquired loan repaid		(1,400)	-	-
Sale of discontinued operations		(30)	(642)	(635)
		----------	----------	----------
Net cash used in investing activities	11	(6,288)	(1,021)	(1,161)
		----------	----------	----------
Cash flows from financing activities
Dividends paid		(743)	(743)	(743)
		----------	----------	----------
Net cash used in financing activities	11	(743)	(743)	(743)
		----------	----------	----------
Movement in cash and cash equivalents		(8,903)	49	22
Currency exchange movements		(7)	3	5
Opening cash and cash equivalents		16,245	16,218	16,218
		----------	----------	----------
Closing cash and cash equivalents		7,335	16,270	16,245
		======	======	======

Notes to the Condensed Financial Statements

1    Company information

Filtronic plc is a company registered and domiciled in the United Kingdom, and is listed on the London Stock Exchange. The company's registered number is 2891064.  The address of the company's registered office is Filtronic plc, Unit 2 Acorn Park, Charlestown , Shipley, West Yorkshire, BD17 7SW.

Copies of the company's annual report and half-yearly financial report are available from the company's registered office or the company's website at www.filtronic.co.uk.

2      Basis of preparation

The directors have reviewed the projected cash flow and other relevant information and have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason the directors continue to adopt the going concern basis in preparing the half-yearly financial report.

The half-yearly financial report, including the condensed consolidated financial statements for the six months ended 30 November 2010, has been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority and the requirements of IAS 34 'Interim Financial Reporting' as adopted by the European Union.

The half-yearly financial report for the six months ended 30 November 2010 was approved by the Board on 31 January 2011.

The condensed consolidated financial statements for the six months ended 30 November 2010 consolidate the financial statements of the company and all of its subsidiaries (together referred to as the 'Group'). Transactions between group companies, which are related parties, have been eliminated upon consolidation and therefore do not require disclosure.

The condensed consolidated financial statements for the six months ended 30 November 2010 have not been audited.

The half-yearly financial report for the six months ended 30 November 2010 does not constitute financial statements, and does not include all of the information and disclosures required for annual financial statements.  The half-yearly report should be read in conjunction with the annual report 2010, which includes annual financial statements for the year ended 31 May 2010.

The financial information for the year ended 31 May 2010 has been extracted from the annual financial statements included in the annual report 2010, which has been filed with the Registrar of Companies.  The report of the auditors on those financial statements was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Except as described below, the accounting policies applied by the Group in these condensed consolidated financial statements are consistent with those set out in the annual financial statements for the year ended 31 May 2010 included in the annual report 2010.  Those annual financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

Business combinations IFRS 3 (revised) Business combinations and consequential amendments to IAS 27 Consolidated and separate financial statements, IAS 28 Investments in associates and IAS 31 Interests in joint ventures, are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.

During the period, the Group has made one acquisition as set out in note 13, and the requirements of these standards have been applied in accounting for this transaction. The Group's accounting policy under the new standards is set out below.

The acquisition method of accounting is used to account for business combinations by the Group.  The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.

The risks and uncertainties faced by the group have extended from the point to point sector to include an exposure to the base station market following the acquisition of Isotek. Whilst this acquisition is expected to significantly extend the Group's customer base over time, the Group currently remains dependent upon a small number of key customers. The recent announcement of the acquisition of one such customer, Nera Networks AS by Ceragon Networks Ltd lead to the Company warning of a potentially significant reduction in sales, the extent and timing of which remain uncertain.

3    Accounting estimates and judgements

The preparation of the financial statements requires the use of accounting estimates and judgements, that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The accounting estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of the future, that are believed to be reasonable under the circumstances. Actual results may differ from the expected results. The accounting estimates and judgements that have a significant effect on the financial statements are considered below.

Goodwill impairment

Goodwill and other intangibles are tested for impairment by reference to the expected cash generated by the business unit. This is deemed to be the best approximation of value, but is subject to the same uncertainties as the cash flow forecast being used.

Deferred tax asset

The recognition of the deferred tax assets relating to tax losses carried forward depends on forecasts of the future taxable profits of the members of the Group. These forecasts require the use of estimates and judgements about the future performance of the respective subsidiaries.

Capitalisation of development costs

Development costs incurred on projects requiring product qualification tests to satisfy customer specifications are generally expensed as incurred, reflecting the technical risks associated with meeting the resultant product qualification test.

Other certain research and development costs are likely to meet the definition of enhancement type costs, as they do not substantially improve the product, and therefore do not meet the definition of development costs to be capitalised.

This process is to be continually reviewed to ascertain whether any development costs meet the criteria for capitalisation.  This requires various judgements by management as to whether the various criteria have been met.

4     Operating Segments

The group determines and presents operating segments based on the information that internally is provided to the chief executive officer ('CEO') of the group, who is the group's chief operating decision maker ('CODM').

IFRS 8 requires consideration of the CODM within the Group. In line with the Group's internal reporting framework and management structure the key strategic and operating decisions are made by the CEO, who reviews internal monthly management reports, budget and forecast information as part of this. Accordingly, the CEO is deemed to be the CODM. Operating segments have then been identified based on the reporting information and management structures within the Group.

Business Segments

In the period the Group acquired the entire share capital of Isotek (Holdings) Limited.  Prior to this the Group operated within one business segment involving the design and manufacture of transceiver modules and filters for backhaul microwave linking of base stations used in wireless telecommunication networks (point to point).  Subsequent to the acquisition the enlarged Group is also involved in the design of radio frequency conditioning product for base stations used in wireless telecommunication networks (base station). Accordingly the Group now operates within two business segments.

Geographical segments

Prior to the acquisition of Isotek (Holdings) Limited the entire business was located in the United Kingdom which represented one geographic segment (by origin). During the six months ended 30 November 2010, as a result of the acquisition, the Group had operations in the United States of America (USA). Accordingly the Group now has two separate geographic segments.  The USA operations are not considered significant to require separate disclosure in the condensed consolidated financial statements for the six months ended 30 November 2010.

5    Business segment analysis

	6 months	6 months	Year
	ended	ended	ended
	30 November	30 November	31 May
	2010	2009	2010
	£000	£000	£000
Revenue
Point to Point	7,075	9,612	15,575
Base Station	264	-	-
	----------	----------	----------
	7,339	9,612	15,575
	======	======	======
Operating (loss) / profit
Point to Point	(746)	347	(292)
Base Station	(102)	-	-
Exceptional items relating to business acquisition	(416)	-	(320)
Other exceptional items	-	(337)	(522)
	----------	----------	----------
Operating (loss) / profit	(1,264)	10	(1,134)
Finance income	56	82	113
	----------	----------	----------
(Loss) / profit before taxation	(1,208)	92	(1,021)
Taxation	-	-	-
	----------	----------	----------
(Loss) / profit for the period from continuing operations	(1,208)	92	(1,021)
	======	======	======

6    Exceptional items

Operating (loss) / profit is stated after charging / (crediting) exceptional items as follows:

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
		£000	£000	£000
Directors resignation costs		-	146	146
Pension scheme closure costs		-	116	116
Business acquisition related costs		701	-	320
Vendor contribution towards acquisition costs		(300)	-	-
Integration costs relating to acquisition		15	-	-
Redundancy / other costs		-	75	260
		----------	----------	----------
		416	337	842
		======	======	======

7    (Loss) / profit for the period from discontinued operations

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
Discontinued operations	note	£000	£000	£000
Revenue		-	-	-
		======	======	======
Operating loss		-	-	-
		----------	----------	----------
Loss before taxation		-	-	-
Taxation		-	-	-
		----------	----------	----------
Loss after taxation			-	-
(Loss) / gain on sale of discontinued operations	8	(260)	71	-
		----------	----------	----------
(Loss) / profit for the period from discontinued operations		(260)	71	-
		======	======	======

8    (Loss) / gain on sale of discontinued operations

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
	note	£000	£000	£000
(Loss) / gain on sale:
UK and Australian Wireless Infrastructure business		-	(7)	-
UK and Australian Defence Electronics business		(260)	78	-
		----------	----------	----------
		(260)	71	-
		======	======	======

9    Basic and diluted (loss) / earnings per share

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
		£000	£000	£000
(Loss) / profit for the period
Continuing operations		(1,208)	92	(1,021)
Discontinued operations		(260)	71	-
		----------	----------	----------
(Loss) / profit for the period		(1,468)	163	(1,021)
		======	======	======
		000	000	000
Basic weighted average number of shares		92,873	74,323	74,323
Dilution effect of share options		83	74	41
Dilution effect of share awards		283	-	153
		----------	----------	----------
Diluted weighted average number of shares		93,239	74,397	74,517
		======	======	======
Basic (loss) / earnings per share
Continuing operations		(1.30)p	0.12p	(1.37)p
Discontinued operations		(0.28)p	0.10p	-p
		----------	----------	----------
Basic (loss) / earnings per share		(1.58)p	0.22p	(1.37)p
		======	======	======
Diluted (loss) / earnings per share
Continuing operations		(1.30)p	0.12p	(1.37)p
Discontinued operations		(0.28)p	0.10p	-p
		----------	----------	----------
Diluted (loss) / earnings per share		(1.58)p	0.22p	(1.37)p
		======	======	======

10  Dividends

The dividends recognised in equity, which were paid and proposed during the period were as follows:

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
	Per share	£000	£000	£000
Annual dividend year ended 31 May 2009	1.00p	-	743	743
Annual dividend year ended 31 May 2010	1.00p	743	-	-
		----------	----------	----------
		743	743	743
		======	======	======

11  Note to the condensed consolidated cash flow statement

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2010	2009	2010
	note	£000	£000	£000
Operating (loss) / profit
Continuing operations		(1,264)	10	(1,134)
		======	======	======
Net cash (used in) / from operating activities
Continuing operations		(1,872)	1,813	1,926
		======	======	======
Net cash used in investing activities
Continuing operations		(6,258)	(379)	(526)
Discontinued operations	12	(30)	(642)	(635)
		----------	----------	----------
		(6,288)	(1,021)	(1,161)
		======	======	======
Net cash used in financing activities
Continuing operations		(743)	(743)	(743)
		======	======	======

12  Net cash used in discontinued operations

	6 months	6 months	Year
	ended	ended	ended
	30 November	30 November	31 May
	2010	2009	2010
	£000	£000	£000
Indemnity relating to defence business	(30)	-	-
Legal cost of Wireless Infrastructure sale	-	(7)	-
Tax paid	-	(635)	(635)
	----------	----------	----------
	(30)	(642)	(635)
	======	======	======

13  Acquisition in period

On 16 November 2010 Filtronic acquired the share capital of Isotek (Holdings) Limited ("Isotek").  Isotek employs approximately 41 staff predominantly in the United Kingdom and in the United States, and develops and markets leading edge telecoms products for a range of wireless infrastructure telecoms applications.

The consideration is made up of:

	£000
Share consideration (18,550,000) at completion date market value	6,864
Cash consideration	4,230
	----------
Total consideration for Isotek	11,094
Estimated working capital adjustment to consideration	(506)
	----------
Estimated final consideration for Isotek	10,588
	======

The Offer to Isotek shareholders included an adjustment to consideration based on the level of working capital and net cash on the date of acquisition.  For this purpose Completion accounts will be prepared by 11 February, after which the vendors have 30 days to consider and/or challenge the adjustment.  The estimate above is based upon the working capital data included in the Isotek companies opening balance sheets used to prepare these interim accounts but cannot be final until the working capital adjustment is agreed.

Intangibles and fair value adjustments have been necessarily calculated on a provisional basis and, as with the working capital adjustment, are expected to be finalised for the Group Financial Statements for the year to 31 May 2011.  The provisional fair value of net assets / (liabilities) acquired was as follows:

	Book value	Fair value	Fair value
	Pre acquisition	adjustments	of net assets
	£000	£000	£000
Tangible fixed assets	105	-	105
Current assets	2,573	(20)	2,553
Current liabilities	(3,585)	(40)	(3,625)
	----------	----------	----------
	(907)	(60)	(967)
Provisional goodwill and other intangibles arising on acquisition			11,555
			----------
Total consideration (as above)			10,588
Non cash consideration (shares issued and provisional working capital adjustment)			(6,358)
Cash (acquired)			(68)
			----------
Net cash outflow			4,162
			======

14    Share Capital and Share Premium

On 16 November 2010 the Group issued 18.3m shares of nominal value 10p in part consideration for the entire share capital of Isotek Holdings Limited.  These shares were issued at a premium of 27p reflecting the market value of the shares at the date of acquisition net of issue costs of £316k.  A further 0.3m shares in relation to the acquisition were not issued at 30 November 2010 and the related deferred consideration of £0.1m is included within trade and other payables within the half-yearly financial report.

15    Forward looking statements

Certain statements in this half-yearly financial report are forward-looking. Where the half-yearly financial report includes forward-looking statements, these are made by the Directors in good faith based on the information available to them at the time of their approval of this report. Such statements are based on current expectations and are subject to a number of risks and uncertainties, including both economic and business risk factors that could cause actual events or results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable law, regulation or accounting standard, the Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

 

END

 

 

IR URUKRANAAORR