Half Yearly Report

RNS Number : 4297W

Filtronic PLC

31 January 2012

 



FILTRONIC PLC

("Filtronic" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2011

Filtronic plc, the designer and manufacturer of microwave electronics products for the wireless telecoms infrastructure market, announces its interim results for the six months ended 30 November 2011 ("H1 2012").

Financial Summary

×       Revenue from continuing operations £10.5m* (H2 2011: £8.2m)

×       Operating loss before amortisation and exceptional items of £1.2m (H2 2011: £4.4m loss) 

×       Cash of £3.9m (31 May 2011: £4.1m)

×       Net cash outflow from operating activities reduced to £0.6m (H2 2011: £2.5m outflow)

*Comparatives are versus H2 2011 as H1 2011 includes only 2 weeks of post acquisition Filtronic Wireless business

Highlights

×       Filtronic Wireless ("Wireless", formerly Isotek) sales grow 66% on H2 2011

×       Wireless target margin improvements delivered

×       Broadband sales maintained and cost reductions realised

×       Broadening of customer base as end-customers begin 4G/LTE network rollouts

Commenting on the Outlook, Howard Ford, Chairman said:

"Filtronic Wireless continues to broaden its range of programmes following successful trials and initial production deliveries, especially to the US market." "Though the precise year end outcome remains sensitive to the timing of network upgrade & roll-out plans  for certain US customers, further progress is anticipated for the Wireless business in the second half. "

"Broadband moves into the second half with extended order coverage for its point-to-point, aerospace and E Band radio products, which should enable this product segment to maintain its revenues even in the face of the ongoing decline in legacy business with Ceragon.

"The Board remains committed to exploiting new opportunities for broadband technology and driving for new programme wins with innovative base station filters and combiners."

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]
Brett Jacobs
Walbrook PR Ltd.	Tel: [phone]
Paul McManus	[e-mail] / Mob: [phone]
Fiona Henson	[e-mail] / Mob: [phone]

Interim Management Report

Revenue from continuing operations for the six months ended 30 November 2011 ("H1 2012") was £10.5m compared with £7.3m for H1 2011 and £8.2m for H2 2011.  This included £5.3m for the broadband business and £5.2m for the base station business.

The operating loss of £1.2m from continuing operations before exceptional items and amortisation (£0.9m loss H1 2011, £4.4m loss H2 2011), split £0.3m for the broadband business, £0.4m for the base station business, and central costs absorbed £0.5m.

In line with our stated policy there is no interim dividend.

Net cash outflow from operating activities was £0.6m compared to £1.9m for H1 2011. Capital expenditure in the six months was £0.4m in line with the £0.4m in the prior period.

After the net inflow of £0.76m from the equity placing in October, the closing cash balance at 30 November 2011 was £3.9m, a decrease of £0.2m in the period.

Broadband Business

Broadband achieved revenues of £5.3m in the first half, compared to £5.1m (H2 2011) and £7.0m (H1 2011) in the previous two six month trading periods.

Sales to Ceragon remained the largest element in the customer mix, and held up well due to good end-user demand for those Ceragon products incorporating Filtronic Broadband sub-systems. However, as previously indicated, we believe that it remains Ceragon's intention to source progressively more of its requirement internally over the coming year.

There was encouraging progress in the strategy of broadening the business's addressable market with other customers. Sales to the largest three of these all grew in H1 2012.

Base Station Business

The base station business (formerly known as Isotek) has been rebranded as Filtronic Wireless. This activity saw revenues grow by 66% in H1 2012 over H2 2011, from £3.1m to £5.2m.

Although the Wireless business remains reliant on a small number of products and early stage programmes, this dependence is starting to reduce as end-customers begin to commit to larger scale roll-outs of their 4G / LTE networks. Meanwhile, our initiatives to reduce manufacturing costs have delivered the targeted improvement in gross margins; and demonstrated a capacity and flexibility to respond to rapid call-off demand from OEM and operator customers.

Business Review and Outlook

Filtronic Wireless continues to broaden its range of programmes following successful trials and initial production deliveries, especially to the US market. Following the cessation of the merger discussions between AT&T and T Mobile, some US mobile operators, faced by the demands from rocketing smart phone and tablet sales on the one hand and scarce radio spectrum on the other, are having to re-evaluate their 4G / LTE network plans.  Though the precise year end outcome remains sensitive to the timing of network upgrade and rollout plans for certain US customers, further progress is anticipated for the Wireless business in the second half.

Broadband moves into the second half with extended order coverage for its point-to-point, aerospace and E Band radio products, which should enable this product segment to maintain its revenues even in the face of the ongoing decline in legacy business with Ceragon.

The Board remains committed to exploiting new opportunities for broadband technology and driving for new programme wins with innovative base station filters and combiners.

Howard Ford, Chairman

Hemant Mardia, CEO

31 January 2012

The Board

The directors that served during the six months ended 30 November 2011 and their respective roles are set out below:

Hemant Mardia (Chief Executive Officer)

Howard Ford (Chairman)

Michael Brennan (Chief Financial Officer)

Alan Needle (Executive Director)

Graham Meek (Non-executive Director)

Reginald Gott (Non-executive Director)

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 2012

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 November 2011 which comprises the condensed consolidated interim income statement, the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim balance sheet, the condensed consolidated interim statement of changes in equity, the condensed consolidated interim 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 1, the

 annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34Interim Financial Reporting as adopted by the EU.

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 2011 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

David Morritt for and on behalf of KPMG Audit Plc

Chartered Accountants

Leeds

31 January 2012

Condensed Consolidated Income Statement

For the period ended 30 November 2011

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2011	2010	2011
		(Unaudited)	(Unaudited)	(Audited)
Continuing operations	note	£000	£000	£000
Revenue		10,513	7,339	15,523
		======	======	======
Operating loss before amortisation and exceptional items		(1,197)	(848)	(5,260)
Amortisation of intangibles		(1,209)	-	(1,209)
Exceptional Items	6	-	(416)	(611)
		----------	----------	----------
Operating loss		(2,406)	(1,264)	(7,080)
Finance Income		11	56	79
		----------	----------	----------
Loss before Taxation		(2,395)	(1,208)	(7,001)
Taxation	7	953	-	326
		----------	----------	----------
Loss for the period from continuing operations		(1,442)	(1,208)	(6,675)
Loss for the period from discontinuing operations	8	-	(260)	(265)
		----------	----------	----------
Loss for the period		(1,442)	(1,468)	(6,940)
		======	======	======
Basic and diluted loss per share (stated in pence)
Continuing operations	9	(1.51)p	(1.30)p	(7.19)p
Discontinued operations	9	-	(0.28)p	(0.29)p
		----------	----------	----------
Basic and diluted loss per share	9	(1.51)p	(1.58)p	(7.48)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 2011

	6 months	6 months	Year
	ended	ended	ended
	30 November	30 November	31 May
	2011	2010	2011
	(Unaudited)	(Unaudited)	(Audited)
	£000	£000	£000
Loss for the period	(1,442)	(1,468)	(6,940)
	----------	----------	----------
Currency translation movement arising on consolidation	(5)	(7)	(32)
	----------	----------	----------
Other Comprehensive Income	(5)	(7)	(32)
	----------	----------	----------
	----------	----------	----------
Total comprehensive income for the period	(1,447)	(1,475)	(6,972)
	======	======	======

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 2011

		30 November	30 November	31 May
		2011	2010	2011
			(Restated)	(Restated)
		(Unaudited)	(Unaudited)	(Audited)
	Note	£000	£000	£000
Non current assets
Goodwill and other intangibles	14	11,700	14,119	12,910
Property, plant and equipment		2,568	2,307	2,485
		----------	----------	----------
		14,268	16,426	15,395
		----------	----------	----------
Current assets
Inventories		1,767	2,603	1,677
Trade and other receivables		6,843	7,820	5,762
Tax receivable		115	115	115
Deferred tax		1,047	420	420
Cash and cash equivalents		3,912	7,335	4,120
		----------	----------	----------
		13,684	18,293	12,095
		----------	----------	----------
		----------	----------	----------
Total assets		27,952	34,719	27,490
		----------	----------	----------
Current liabilities
Trade and other payables		6,942	7,005	5,485
Provision		349	484	437
Deferred tax		653	653	653
Deferred Income		30	13	17
		----------	----------	----------
		7,974	8,155	6,592
		----------	----------	----------
Long term liabilities
Deferred tax		1,633	2,286	1,959
Deferred income		144	113	108
		----------	----------	----------
		1,777	2,399	2,067
		----------	----------	----------
		----------	----------	----------
Total liabilities		9,751	10,554	8,659
		----------	----------	----------
		----------	----------	----------
Net assets		18,201	24,165	18,830
		======	======	======
Equity
Share capital	13	9,659	9,262	9,287
Share premium	13	5,049	4,626	4,683
Translation reserve		(5)	(7)	(32)
Retained earnings		3,498	10,284	4,892
		----------	----------	----------
Total equity		18,201	24,165	18,830
		======	======	======

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 2011

		6 months	6 months	Year ended
		ended	ended	ended
		30 November	30 November	31 May
		2011	2010	2011
		(Unaudited)	(Unaudited)	(Audited)
	note	£000	£000	£000
Equity at the start of period		18,830	19,885	19,885
Total comprehensive income for the period		(1,447)	(1,475)	(6,972)
New shares issued (net of issue costs)	13	738	6,456	6,538
Share-based payments		80	42	122
Dividends	10	-	(743)	(743)
		----------	----------	----------
Equity at the end of period		18,201	24,165	18,830
		======	======	======

Condensed Consolidated Cash Flow Statement

For the period ended 30 November 2011

		6 months	6 months	Year
		ended	ended	Ended
		30 November	30 November	31 May
		2011	2010	2011
		(Unaudited)	(Unaudited)	(Audited)
	note	£000	£000	£000
Cash flows from operating activities
Loss for the period		(1,442)	(1,468)	(6,940)
Loss on sale of discontinued operations		-	260	265
Taxation		(953)	-	(326)
Finance income		(11)	(56)	(79)
		----------	----------	----------
Operating loss	11	(2,406)	(1,264)	(7,080)
Share based payments		80	42	122
Loss on disposal of plant and equipment		(5)	-	-
Depreciation		331	233	523
Amortisation of intangibles		1,209	-	1,209
Movement in inventories		(90)	(450)	476
Movement in trade and other receivables		(1,080)	(2,803)	(724)
Settlement of option premia debt acquired with Isotek		-	1,194	1,194
Movement in trade and other payables		1,457	1,398	178
Movement in provision		(88)	(222)	(269)
Change in deferred income including government grants		50	-	-
		----------	----------	----------
Net cash used in operating activities	11	(542)	(1,872)	(4,371)
		----------	----------	----------
Cash flows from investing activities
Interest received		11	56	79
Acquisition of plant and equipment		(417)	(436)	(925)
Proceeds on sale of assets		8	-	19
Acquisition of subsidiary, net of cash acquired		-	(4,162)	(4,162)
Share issue costs		-	(316)	(325)
Acquired loan repaid		-	(1,400)	(1,400)
Sale of discontinued operations		-	(30)	(265)
		----------	----------	----------
Net cash used in investing activities		(398)	(6,288)	(6,979)
		----------	----------	----------
Cash flows from financing activities
Share placing, net of issue costs	13	737	-	-
Dividends paid		-	(743)	(743)
		----------	----------	----------
Net cash used in financing activities	11	737	(743)	(743)
		----------	----------	----------
Movement in cash and cash equivalents		(203)	(8,903)	(12,093)
Currency exchange movements		(5)	(7)	(32)
Opening cash and cash equivalents		4,120	16,245	16,245
		----------	----------	----------
Closing cash and cash equivalents		3,912	7,335	4,120
		======	======	======

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 2011, 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 2011 was approved by the Board on 31 January 2012.

The condensed consolidated financial statements for the six months ended 30 November 2011 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 2011 have not been audited.

The half-yearly financial report for the six months ended 30 November 2011 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 2011, which includes annual financial statements for the year ended 31 May 2011.

The financial information for the year ended 31 May 2011 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.

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 2011 included in the annual report 2011.  Those annual financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

The balance sheet at 31 May 2011 and November 2010 has been restated to reflect hindsight adjustments on acquisitions made in that financial year affecting deferred tax and intangibles/goodwill.

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. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 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      Risks and uncertainties

--Introduction

Filtronic supplies microwave and base station filter products for the wireless telecommunications market. The business is in a fast-changing sector with a small number of sophisticated customers, demanding performance standards and international competition, all of which pose risks to the business.

Market

We supply a niche range of products to a small number of large OEM customers for both the Broadband and Basestation filter businesses as well as an as yet small number of network operators in the Basestation business. The loss of any of these customers, including Ceragon Networks, or any material reduction in orders from any such customers may have a material adverse effect upon Filtronic's financial condition. With the rapid evolution of product technology and other corporate decisions the size of our addressable market may be affected. We may also fail to forecast market movements correctly so missing opportunities or wrongly predicting product longevity.

Manufacturing

In most of the products, production is demand led and customers may vary their requirements from the business at short notice, which also impacts inventory management. Customers in these businesses expect consistent high quality product and reducing prices, hence we depend on control of our operating environment, including management of security of supply in our supply chain, and the provision of correctly designed technological solutions including the achievement of target cost reduction plans. Non-performance in these areas risks a diminished market position.

All our products are provided to customers after detailed qualification testing. However, this may not test all aspects of the product's design and manufacturing process or may not ensure that the product is viewed as fit for purpose in its intended use. Identification of these types of problem after release of product to customers creates the risk of being required to rectify such product defects. Historically such work has not had a substantial impact on the financial performance of the business, although a major defect, leading to a field recall, could do so in future.

The Broadband business operates a leased manufacturing location, located within the facility of our major semiconductor supplier. The Basestation business relies for the manufacture of its products on a large Chinese turnkey manufacturer that provides favourable supply and financing terms. The loss of this supplier or a material change to supply terms could have a material adverse effect on the Group.

Technology

Our product competitiveness is strongly influenced by technology choices at product concept stage and throughout execution of design to product launch. For products in the production cycle, technology insertion is often required as a means of achieving price reductions, which underpin sales. The market is time sensitive and opportunities may be lost if the technology we develop is not appropriate or ready for exploitation to match market demand, so having an adverse effect on business performance.

Our ability to remain competitive in terms of technology and product design is also underpinned by retaining key staff, the loss of whom could seriously impact the rate of introduction of new products and technologies.

Financial management

A large proportion of sales is denominated in US dollars with the cost base substantially in sterling, which may therefore create margin risks that may not be recoverable through price changes. This risk is mitigated to some extent by purchasing some input materials in US dollars.

We have sold four divisions of the group in the past seven years. We have provided warranties in support of these transactions, covering areas including product liability for an initial period and usually environment risks on freehold property and tax risks for longer specified periods. We have received claims on the sale of the Wireless Infrastructure and Defence Electronics business, some of which have been settled or rejected, and may receive claims in future related to these current and future commitments.

5     Segmental Analysis

Operating Segments

IFRS 8 requires consideration of the chief operating decision maker ('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 interim reporting information and management structures within the group. The group has three customers representing individually over 10% each and in aggregate over 60% of revenue.

The group operates within two trading business segments

·      The design and manufacture of transceiver modules and filters for backhaul microwave linking of base stations used in wireless telecommunication networks (Broadband).

·      The design of radio frequency conditioning product for base stations used in wireless telecommunication networks (Basestation now 'Wireless').

The group also contains a central services segment that provides support to the trading businesses.

	6 months	6 months	Year
	ended	ended	ended
	30 November	30 November	31 May
	2011	2010	2011
	£000	£000	£000
Revenue
Broadband	5,329	7,075	12,136
Base Station ('Wireless')	5,184	264	3,387
	----------	----------	----------
	10,513	7,339	15,523
	======	======	======
Operating profit before amortisation
Broadband	(338)	(746)	(2,584)
Base Station ('Wireless')	(419)	(102)	(1,976)
Central Services	(440)	(416)	(1,311)
	----------	----------	----------
Operating loss before amortisation	(1,197)	(1,264)	(5,871)
Amortisation	(1,209)	-	(1,209)
	----------	----------	----------
Operating loss	(2,406)	(1,264)	(7,080)
Taxation	953	-	326
Finance income	11	56	79
	----------	----------	----------
Loss after taxation	(1,442)	(1,208)	(6,675)
	======	======	======

Revenue by Destination

	6 months	6 months	Year
	ended	ended	ended
	30 November	30 November	31 May
	2011	2010	2011
	£000	£000	£000
Revenue
United Kingdom	1,295	392	838
Europe	5,096	6,391	11,256
Americas	1,913	98	620
Rest of the world	2,209	458	2,809
	----------	----------	----------
	10,513	7,339	15,523
	======	======	======

6    Exceptional items

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

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2011	2010	2011
		£000	£000	£000
Business acquisition related costs		-	701	694
Vendor contribution towards acquisition costs		-	(300)	(300)
Integration costs relating to acquisition		-	15	75
Redundancy / other costs		-	-	142
		----------	----------	----------
		-	416	611
		======	======	======

7    Taxation

The tax credit reported relates to the release of a deferred tax liability, and the recognition of certain deferred tax assets.

The deferred tax liability relates to the intangible assets arising upon acquisition of the wireless business. The original liability was £2,938,000 and £326,000 is being released each half year in line with the amortisation of the intangible asset.

The deferred tax assets relate to the recognition of tax losses in the Wireless business. Where such losses relate to the pre-acquisition period this has reduced goodwill. A deferred tax asset of £627,000 relating to post acquisition losses has been recognised in the primary statements.

Where the directors believe that other temporary differences will not reverse in the future, no recognition of the relevant deferred tax assets has been made.

8    Loss for the period from discontinued operations

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2011	2010	2011
Discontinued operations	note	£000	£000	£000
Revenue		-	-	-
		======	======	======
Operating loss		-	-	-
		----------	----------	----------
Loss before taxation		-	-	-
Taxation		-	-	-
		----------	----------	----------
Loss after taxation			-	-
Loss on sale of discontinued operations		-	(260)	(265)
		----------	----------	----------
Loss for the period from discontinued operations		-	(260)	(265)
		======	======	======

The defence electronics business was sold on 15 August 2008

9    Basic and diluted loss per share

		6 months	6 months	Year
		ended	ended	ended
		30 November	30 November	31 May
		2011	2010	2011
		£000	£000	£000
Loss for the period
Continuing operations		(1,442)	(1,208)	(6,675)
Discontinued operations		-	(260)	(265)
		----------	----------	----------
Loss for the period		(1,442)	(1,468)	(6,940)
		======	======	======
		000	000	000
Basic and diluted weighted average number of shares		95,323	92,873	92,873
		======	======	======
Basic and diluted loss per share
Continuing operations		(1.51)p	(1.30)p	(7.19)p
Discontinued operations		-	(0.28)p	(0.29)p
		----------	----------	----------
Basic and diluted loss per share		(1.51)p	(1.58)p	(7.48)p
		======	======	======

There was no difference in the weighted average number of shares used for the calculation of basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive.

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
		2011	2010	2011
	Per share	£000	£000	£000
Annual dividend year ended 31 May 2011	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
		2011	20010	2011
	note	£000	£000	£000
Operating loss
Continuing operations		(2,406)	(1,264)	(7,080)
		======	======	======
Net cash used in operating activities
Continuing operations		(542)	(1,872)	(4,371)
		======	======	======
Net cash used in investing activities
Continuing operations		(398)	(6,258)	(6,714)
Discontinued operations	12	-	(30)	(265)
		----------	----------	----------
		(398)	(6,288)	(6,979)
		======	======	======
Net cash used in financing activities
Continuing operations		737	(743)	(743)
		======	======	======

12  Net cash used in discontinued operations

	6 months	6 months	Year
	ended	ended	ended
	30 November	30 November	31 May
	2011	2010	2011
	£000	£000	£000
Indemnity relating to defence business	-	(30)	(265)
	----------	----------	----------
	-	(30)	(265)
	======	======	======

13    Share Capital and Share Premium

On 2 August 2011 the Group issued 3.7m shares of nominal value 10p as part of a share placing to raise funds of £0.7m. These shares were issued at 22.5p reflecting the market value of the shares.

14    Acquisition Accounting

On 16 November 2010 Filtronic acquired the share capital of Isotek (Holdings) Limited ("Isotek"). At 30 November 2010 and at 31 May 2011 the fair value of the acquired assets, liabilities, intangibles and goodwill were determined on a provisional basis pending finalisation of acquisition related adjustments.

Following this finalisation the intangibles and goodwill for the prior periods have been restated to the figures below.

	Deferred Tax Liability	Deferred Tax Asset	Intangibles	Goodwill	Intangibles / Goodwill
Reported 30 Nov 2010	-	-	-	-	11,555
Hindsight adjustments	(2,939)	420	10,884	3,235	45
	----------	----------	----------	----------	----------
Restated 30 Nov 2010	(2,939)	420	10,884	3,235	-
	======	======	======	======	======
Reported 31 May 2011	(2,939)	-	10,884	3,655	-
Hindsight adjustments	-	420	-	-	-
Intangible amortisation	-	-	(1,209)	-	-
Tax impact of amortisation	327
	----------	----------	----------	----------	----------
Restated 31 May 2011	(2,612)	420	9,675	3,235	-
	======	======	======	======	======

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 URSBRUNAAOAR