Interim Results

Filtronic PLC 27 January 2003 27 January 2003 FILTRONIC PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2002 Results ahead of Market expectations Continued cash generation and debt reduction; Increased market share in both major businesses Filtronic plc ('Filtronic'), a leading global designer and manufacturer of customised microwave electronic subsystems, announces its interim results for the six months ended 30 November 2002. Its technology and engineering can be applied to several business sectors in both the commercial and defence areas. Worldwide sites are in the UK (North of England, Yorkshire, Midlands, Scotland), the US, Finland, China and Australia. Both major businesses, Wireless Infrastructure and Cellular Handset Products, produced the majority of sales and all of the operating profits, in a period of uncertainty and decline in the wireless telecommunications market. Wireless Infrastructure increased both its margins and market share, as the world's leading supplier of transmit/receive modules for mobile communications base stations to several of the world's leading OEM's. Cellular Handset Products increased sales, margins and market share as one of the world's leading manufacturers of antennas for handsets. In his Statement, Professor J. David Rhodes CBE, FRS, FREng, Executive Chairman said: 'Filtronic has increased its market share in its two main businesses whilst maintaining strong levels of profitability in those businesses. After continuing to invest in the development of compound semiconductor technology at the Newton Aycliffe facility, Filtronic has generated cash and reduced its level of indebtedness by £34m in the last year.' Financial Highlights * Group sales of £123.9m (2001: £146.0m). * Operating profit before non-cash items of £5.4m (2001: £6.1m). * Pre-tax profit of £50k (2001: Loss of £4.5m) * Loss per share of 1.99p (2001: 8.05p loss) on undiluted basis. * Wireless Infrastructure operating profit of £13.4m (2001: £14.0m). * Cellular Handset Products operating profit up 15.1% to £6.1m (2001: £5.3m). * Maintained dividend of 0.90p (2001: 0.90p), payable 1 April 2003. * Cash generation of £4.9m. * Net gearing reduced from 83% to 73%. Operational Highlights * Wireless Infrastructure: Increased market share, well positioned with major customers. * Volumes of transmit/receive modules during 2002 up on previous year. * Volumes of masthead amplifier units to OEM's more than doubled. * Reduced value of sales but margins increased, profitability maintained. * Cellular Handset Products: 29% increase in volume of antennas sold from 82m to 106 million (26% world market share). * Increased sales levels and profits and improved margins in handset products, driven by recent introduction of new models. * Electronic Warfare: disappointing sales and margins; £40m order backlog; second half profitability. * Compound Semiconductors: Closure of Santa Clara facility, US, October 2002; exceptional provision of £2.7m. Development of compound semiconductor technologies * New GaAs chip sets create worldwide opportunities for E-Scan Radar. * Unique GaAs Power Process for high efficiency power amplifiers for mobile base stations. Outlook In his statement, Professor David Rhodes said: 'During the second half of this financial year, the Board expects that our two main businesses, Wireless Infrastructure and Cellular Handset Products, will continue to produce a strong financial performance and also expects improvement from both the Electronic Warfare and Compound Semiconductors business segments. After continuing to invest in the development of compound semiconductor technology at Newton Aycliffe, Filtronic has generated cash and reduced its level of indebtedness by £34m in the last year. The Board expects that the company will continue to generate cash in the second half of this financial year and that net indebtedness will further reduce. The development of compound semiconductor related high value integrated products will continue to dominate the strategy for growth.' Enquiries: Professor J. David Rhodes, Executive Chairman, Filtronic plc Tel: 020 7786 9600 John Samuel, Finance Director, Filtronic plc Tel: 020 7786 9600 Christopher Schofield, Company Secretary, Filtronic plc Tel: 01274 530 622 Peter Binns, Paul McManus, Charlotte Barker, Binns & Co PR Ltd Tel: 020 7786 9600 Executive Chairman's Statement Interim financial results Sales for the six months ended 30 November 2002 were £123.9m (2001 £146.0m) and operating profit before exceptional closure costs, goodwill amortisation and share compensation costs was £5.4m (2001 £6.1m). After charging exceptional closure costs of £2.7m, goodwill amortisation of £1.1m and share compensation costs of £0.2m, operating profit was £1.4m (2001 £2.4m). Financing costs totalled £1.4m (2001 £6.9m), comprising net interest payable of £4.4m, a net currency exchange gain of £2.0m and an exceptional gain on the repayment of debt of £1.0m. The profit before taxation was £50k (2001 £4.5m loss). After taxation charges of £1.5m relating to our Finnish operations, the loss was £1.5m (2001 £5.9m loss). The loss per share is 1.99p (2001 8.05p loss) and these figures are unchanged on a diluted basis. Dividend The Board is maintaining an interim dividend of 0.90p (2001 0.90p) per share payable on 1 April 2003 to shareholders on the register at 28 February 2003. Finance Cash generation in the six months ended 30 November 2002 was £4.9m. Together with cash brought forward at 1 June 2002, this enabled the company to buy in $21.5m of 10% Senior Notes due 1 December 2005 during the period. At 30 November 2002, long term debt totalled £74.9m (2001 £117m), representing £76.6m ($119.2m) of 10% Senior Notes due 1 December 2005, net of £1.7m of deferred debt issue costs. At 30 November 2002, Filtronic had a cash balance of £3.0m and was using £2.4m of its £31m bank overdraft facility. Net gearing was 73% (2001 83%). Operations The segmental analysis of the business is as follows: Operating profit before closure costs goodwill amortisation and Six months ended 30 November Sales impairment, tangible fixed asset impairment and share compensation 2002 2001 2002 2001 £000 £000 £000 £000 Wireless infrastructure 81.5 99.5 13.4 14.0 Cellular handset products 24.3 23.6 6.1 5.3 Electronic warfare 11.0 13.7 (1.8) (2.0) Broadband access 5.9 8.0 (1.4) (1.0) Inter segment (0.7) (2.7) - - Central costs - - (2.5) (2.4) --------------- --------------- --------------- --------------- Excluding Compound 122.0 142.2 13.8 13.9 semiconductors Compound semiconductors 1.9 3.8 (8.4) (7.8) --------------- --------------- --------------- --------------- 123.9 146.0 5.4 6.1 ======== ======== ======== ======== Our major business continues to be the supply of transmit/receive modules for mobile communications base stations where we supply several of the world's leading Original Equipment Manufacturers ('OEM's') and where we are acknowledged as the world's leading independent supplier of such equipment. Throughout 2002 global demand for 2G and 2.5G equipment has been unpredictable and it is estimated that the global market fell by around 20% when compared to 2001. Filtronic has maintained business volumes in these difficult trading conditions by increasing market share and programme position with our major customers. Filtronic supplied approximately 375,000 transmit/receive modules in calendar year 2002, slightly more than the number shipped in 2001. Following the strategy of supplying only OEM's with masthead amplifiers, unit sales of these products increased to 25,000 in 2002 from 10,000 in 2001 with a strong increase towards the end of the calendar year. Although the value of Wireless Infrastructure sales has reduced compared to the same period last year, profitability has been maintained and margins improved by a continuing focus on cost effective designs and overhead reductions. In the Cellular Handset Products business, sales have increased and margins improved. During calendar year 2002, Filtronic supplied 106m handset antennas compared to 82m in 2001, an increase of 29%. This increase has been driven by the introduction of many new models in the second half of the year. Approximately 400m handsets were sold in 2002 giving Filtronic more than a 26% share of the world market for handset antennas. Sales and margins in the Electronic Warfare business have been disappointing. Losses have been incurred, principally because it has taken until the end of the first half of the current financial year for the European Fighter Aircraft programme to progress to volume production. UK export restrictions have also prevented the shipment of products to certain customers. The Broadband Access business has continued to suffer from low levels of demand for millimetre wave transceivers and has incurred further losses as a result. £1.5m of the sales and £2.5m of the operating losses for the Compound Semiconductor business segment arose from our facility at Santa Clara, California. This fabrication facility was closed in October 2002 and a provision of £2.7m for closure costs has been charged as an exceptional item in these results. Newton Aycliffe recorded £0.4m of sales and £5.9m of losses. Development of compound semiconductor technologies The company now has the ability to design and produce complex integrated circuits using three different processes in the facility at Newton Aycliffe. These are the 'Switch Process', 'D-Mode Process' and a unique gallium arsenide ('GaAs') 'Power Process'. The first process is related to the agreement with M/A-COM, Inc., the second to the BAE SYSTEMS Avionics Limited agreement and internal commercial applications, and the third to the internal development of power amplifiers for base stations. Trading outlook Since the end of November demand in the Wireless Infrastructure business has continued at a similar level to that achieved in the first half although industry expectations are that the global market will decline slightly in 2003. Growth in this business remains dependent on both continuing demand for 2G and 2.5G systems and the timing and extent of 3G deployments. Prospects for growth in all 3G systems with our existing products remain strong. In the Cellular Handset Products business, Filtronic is involved in an extensive number of new opportunities for both existing and new customers including innovative handset components incorporating new antenna structures. We remain confident of continuing to increase our market share in an increasing market. The Electronic Warfare business has a forward order book of over £40m. Shipments of products on the European Fighter Aircraft programme are expected to increase substantially in the second half of this financial year and as a result the Electronic Warfare business should be profitable in the second half of the current financial year. The activities of the Broadband Access group have been expanded to cover the substantial opportunities for E-Scan Radars using new GaAs chip sets developed at Newton Aycliffe. These devices are already functioning successfully in the key transmit / receive modules for phased array radars. A new programme is being instigated to bring a complete surveillance radar to the market within two years where its aggressive pricing will create worldwide opportunities. Technical progress continues to be made with respect to the point to point transceiver business but improved financial performance is not expected until the next financial year. The company's most important development programme is in the area of high efficiency power amplifiers for mobile base stations. Engineering resources have been deployed in both the UK and USA, in addition to those at Newton Aycliffe in developing the unique GaAs 'Power Process'. Current units now produce more than 120 watts of power. By using Filtronic's proprietary efficiency enhancing circuits, more than 70% peak efficiency at all 3G frequencies has been achieved. These modules form the basis of both more conventional feed forward linearisation and new digitally predistorted power amplifiers. The company is currently working with several OEM's with the objective of incorporating the new technology, regarded by them as a fundamental change which displaces existing technology. This new technology meets the key requirements of the service providers to reduce both capital expenditure and operational costs. These costs are currently dominated by high levels of energy consumption and unreliable power amplifiers. It has recently become clear that the level of foundry sales deriving from the M/A-COM agreement will be lower than either Filtronic or M/A-COM anticipated. Therefore it is probable that the general exclusive rights granted to M/A-COM as part of the agreement will lapse in November 2003 and negotiations are underway to maximise the opportunity for switch products. Sales of merchant compound semiconductors arising from the fabless operation at Santa Clara are expected to improve slightly in the second half of the financial year. These products will be manufactured at Newton Aycliffe. Together with the impact of the cost reductions at Santa Clara, this should reduce losses in the Compound Semiconductor business in the second half of the current financial year. Auditors Following a review by the Audit Committee, KPMG Audit Plc have been appointed as auditors. The Board would like to thank Ernst & Young LLP for their services during the last eight years. Summary During a period of uncertainty and decline in the wireless telecommunications market, Filtronic has increased its market share in its two main businesses, whilst maintaining strong levels of profitability in those businesses. During the second half of this financial year, the Board expects that these businesses will continue to produce a strong financial performance and also expects improvement from both the Electronic Warfare and Compound Semiconductors business segments. After continuing to invest in the development of compound semiconductor technology at Newton Aycliffe, Filtronic has generated cash and reduced its level of indebtedness by £34m in the last year. The Board expects that the company will continue to generate cash in the second half of this financial year and that net indebtedness will further reduce. The development of compound semiconductor related high value integrated products will continue to dominate the strategy for growth. Professor J D Rhodes CBE FRS FREng Executive Chairman 27 January 2003 Consolidated Profit and Loss Account Unaudited 6 months Ended 30 November 2002 Excluding Compound Compound Semiconductors Semiconductors note £000 £000 £000 Sales 1, 2 121,957 1,912 123,869 -------------- -------------- -------------- Operating profit/(loss) before 1, 2 13,810 (8,362) 5,448 closure costs, goodwill amortisation and impairment, tangible fixed asset impairment and share compensation Exceptional closure costs 4 - (2,719) (2,719) Goodwill amortisation (1,063) - (1,063) Exceptional goodwill impairment - - - Exceptional tangible fixed asset - - - impairment Share compensation (218) - (218) -------------- -------------- -------------- Operating profit/(loss) 1, 2 12,529 (11,081) 1,448 -------------- -------------- -------------- Net interest payable (4,451) Net financing currency exchange 2,027 gain/(loss) Exceptional gain on repayment of 1,026 debt -------------- (1,398) -------------- Profit/(loss) on ordinary 50 activities before taxation Taxation (1,525) -------------- Loss on ordinary activities (1,475) after taxation Dividends (669) -------------- Deficit for the period (2,144) -------------- Adjusted (loss)/earnings per share Basic 3 (0.71)p Diluted 3 (0.71)p Loss per share Basic 3 (1.99)p Diluted 3 (1.99)p Dividend per share 0.90p Consolidated Profit and Loss Account Unaudited 6 months Ended 30 November 2001 Excluding Compound Compound Semiconductors Semiconductors note £000 £000 £000 Sales 1, 2 142,196 3,792 145,988 -------------- -------------- -------------- Operating profit/(loss) before closure 1, 2 13,922 (7,850) 6,072 costs, goodwill amortisation and impairment, tangible fixed asset impairment and share compensation Exceptional closure costs - - - Goodwill amortisation (1,930) (740) (2,670) Exceptional goodwill impairment - - - Exceptional tangible fixed asset - - - impairment Share compensation (1,033) - (1,033) -------------- -------------- -------------- Operating profit/(loss) 1, 2 10,959 (8,590) 2,369 -------------- -------------- -------------- Net interest payable (6,656) Net financing currency exchange (236) gain/(loss) Exceptional gain on repayment of debt - -------------- (6,892) -------------- Profit/(loss) on ordinary activities (4,523) before taxation Taxation (1,414) -------------- Loss on ordinary activities after (5,937) taxation Dividends (666) -------------- Deficit for the period (6,603) -------------- Adjusted (loss)/earnings per share Basic 3 (2.71)p Diluted 3 (2.71)p Loss per share Basic 3 (8.05)p Diluted 3 (8.05)p Dividend per share 0.90p Consolidated Profit and Loss Account Audited Year Ended 31 May 2002 Excluding Compound Compound Semiconductors Semiconductors note £000 £000 £000 Sales 1, 2 273,066 7,481 280,547 -------------- -------------- -------------- Operating profit/(loss) before closure 1, 2 34,029 (16,196) 17,833 costs, goodwill amortisation and impairment, tangible fixed asset impairment and share compensation Exceptional closure costs - - - Goodwill amortisation (3,880) (1,472) (5,352) Exceptional goodwill impairment (5,658) (10,378) (16,036) Exceptional tangible fixed asset - (7,938) (7,938) impairment Share compensation (1,570) - (1,570) -------------- -------------- -------------- Operating profit/(loss) 1, 2 22,921 (35,984) (13,063) -------------- -------------- -------------- Net interest payable (12,638) Net financing currency exchange 165 gain/(loss) Exceptional gain on repayment of debt - -------------- (12,473) -------------- Profit/(loss) on ordinary activities (25,536) before taxation Taxation (3,508) -------------- Loss on ordinary activities after (29,044) taxation Dividends (1,999) -------------- Deficit for the period (31,043) -------------- Adjusted (loss)/earnings per share Basic 3 2.28p Diluted 3 2.25p Loss per share Basic 3 (39.31)p Diluted 3 (39.31)p Dividend per share 2.70p Consolidated Balance Sheet Unaudited Unaudited Audited 30 November 30 November 31 May 2002 2001 2002 £000 £000 £000 Fixed assets Intangible assets 33,459 53,021 34,720 Tangible assets 101,493 121,716 108,589 -------------- -------------- -------------- 134,952 174,737 143,309 -------------- -------------- -------------- Current assets Stocks 36,443 42,789 43,735 Debtors 58,257 69,082 55,435 Cash 3,026 11,176 9,083 -------------- -------------- -------------- 97,726 123,047 108,253 -------------- -------------- -------------- Creditors: amounts falling due within one year Borrowings 2,429 139 - Other creditors 40,670 41,652 39,774 -------------- -------------- -------------- 43,099 41,791 39,774 -------------- -------------- -------------- Net current assets 54,627 81,256 68,479 -------------- -------------- -------------- Total assets less current liabilities 189,579 255,993 211,788 Creditors: amounts falling due after one year Borrowings 74,874 116,994 93,769 Provision for deferred tax 409 - 408 Deferred income 12,337 11,480 12,415 -------------- -------------- -------------- Net assets 101,959 127,519 105,196 -------------- -------------- -------------- Capital and reserves Called up share capital 7,430 7,388 7,409 Share premium account 135,851 133,478 134,151 Shares to be issued 4,392 6,145 6,682 Revaluation reserve 106 106 106 Profit and loss account (45,820) (19,598) (43,152) -------------- -------------- -------------- Equity shareholders' funds 101,959 127,519 105,196 -------------- -------------- -------------- Statement of Total Recognised Gains and Losses Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 £000 £000 £000 Loss on ordinary activities after taxation (1,475) (5,937) (29,044) Currency exchange movement arising on consolidation (4,283) 2,224 1,422 Currency exchange movement on loan 2,972 347 2,496 -------------- -------------- -------------- Total recognised gains and losses (2,786) (3,366) (25,126) -------------- -------------- -------------- Reconciliation of Shareholders' Funds Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 £000 £000 £000 Loss on ordinary activities after taxation (1,475) (5,937) (29,044) Dividends (669) (666) (1,999) -------------- -------------- -------------- Deficit for the period (2,144) (6,603) (31,043) Contribution to QUEST - - (461) Currency exchange movement arising on consolidation (4,283) 2,224 1,422 Currency exchange movement on loan 2,972 347 2,496 Issue of shares 2,508 2,535 3,229 Shares to be issued - shares issued (2,508) (2,504) (2,504) - share compensation 218 1,033 1,570 -------------- -------------- -------------- Movement in shareholders' funds (3,237) (2,968) (25,291) Opening shareholders' funds 105,196 130,487 130,487 -------------- -------------- -------------- Closing shareholders' funds 101,959 127,519 105,196 -------------- -------------- -------------- Consolidated Cash Flow Statement Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 note £000 £000 £000 Net cash flow from operating activities A 16,413 33,744 64,218 -------------- -------------- -------------- Returns on investment and servicing of finance Net interest paid (4,133) (6,235) (11,271) -------------- -------------- -------------- Tax paid (2,598) (961) (2,345) -------------- -------------- -------------- Capital expenditure Purchase of tangible fixed assets (4,382) (5,550) (11,369) Sale of tangible fixed assets 851 486 1,312 Government grants received 37 - 1,034 -------------- -------------- -------------- Net cash flow from capital expenditure (3,494) (5,064) (9,023) -------------- -------------- -------------- Equity dividends paid (1,333) (1,326) (1,992) -------------- -------------- -------------- -------------- -------------- -------------- Net cash flow before financing 4,855 20,158 39,587 -------------- -------------- -------------- Financing Issue of shares - 31 264 Loans repaid (12,473) (132) (21,982) -------------- -------------- -------------- Net cash flow from financing (12,473) (101) (21,718) -------------- -------------- -------------- (Decrease)/increase in cash B (7,618) 20,057 17,869 -------------- -------------- -------------- Notes to the Consolidated Cash Flow Statement A Reconciliation of operating profit/(loss) to net cash flow from operating activities Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 £000 £000 £000 Operating profit/(loss) 1,448 2,369 (13,063) Goodwill amortisation 1,063 2,670 5,352 Exceptional goodwill impairment - - 16,036 Share compensation 218 1,033 1,570 Depreciation 9,088 10,493 20,433 Exceptional tangible fixed asset impairment - - 7,938 (Profit)/loss on sale of tangible fixed assets (246) 167 191 Deferred licence fee income received - - 10,000 Government grants released (115) (35) (134) Movement in stocks 6,309 8,734 7,445 Movement in debtors (4,038) 8,203 12,115 Movement in creditors 2,686 110 (3,665) -------------- -------------- -------------- Net cash flow from operating activities 16,413 33,744 64,218 -------------- -------------- -------------- B Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 £000 £000 £000 (Decrease)/increase in cash (7,618) 20,057 17,869 Cash flow from debt 12,473 132 21,982 -------------- -------------- -------------- Change in net debt resulting from cash flows 4,855 20,189 39,851 Non-cash movement 708 (421) (1,367) Currency exchange movement 4,846 199 2,754 -------------- -------------- -------------- Movement in net debt in the period 10,409 19,967 41,238 Opening net debt (84,686) (125,924) (125,924) -------------- -------------- -------------- Closing net debt (74,277) (105,957) (84,686) -------------- -------------- -------------- Notes to the Interim Financial Information 1 Geographical origin segment analysis Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 £000 £000 £000 Sales United Kingdom 53,214 59,576 108,951 Finland 32,051 32,433 68,936 United States of America 30,746 50,201 98,871 Australia 3,632 7,221 14,962 China 10,035 6,264 12,857 Inter segment (5,809) (9,707) (24,030) -------------- -------------- -------------- 123,869 145,988 280,547 -------------- -------------- -------------- Operating profit/(loss) before closure costs, goodwill amortisation and impairment, tangible fixed asset impairment and share compensation United Kingdom 533 730 2,862 Finland 5,228 4,891 12,316 United States of America (91) 244 2,482 Australia (734) 588 793 China 3,045 2,015 4,332 Central costs (2,533) (2,396) (4,952) -------------- -------------- -------------- 5,448 6,072 17,833 -------------- -------------- -------------- Operating profit/(loss) United Kingdom 533 730 2,862 Finland 4,281 3,961 10,424 United States of America (3,144) (2,529) (26,522) Australia (734) 588 793 China 3,045 2,015 4,332 Central costs (2,533) (2,396) (4,952) -------------- -------------- -------------- 1,448 2,369 (13,063) -------------- -------------- -------------- Notes to the Interim Financial Information 2 Business segment analysis Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 £000 £000 £000 Sales Wireless infrastructure 81,454 99,541 188,589 Cellular handset products 24,324 23,632 48,845 Electronic warfare 11,014 13,745 26,977 Broadband access 5,888 7,997 12,544 Inter segment (723) (2,719) (3,889) -------------- -------------- -------------- Excluding compound semiconductors 121,957 142,196 273,066 Compound semiconductors 1,912 3,792 7,481 -------------- -------------- -------------- 123,869 145,988 280,547 -------------- -------------- -------------- Operating profit/(loss) before closure costs, goodwill amortisation and impairment, tangible fixed asset impairment and share compensation Wireless infrastructure 13,443 14,003 31,777 Cellular handset products 6,120 5,303 11,570 Electronic warfare (1,848) (1,998) (1,336) Broadband access (1,372) (990) (3,030) Central costs (2,533) (2,396) (4,952) -------------- -------------- -------------- Excluding compound semiconductors 13,810 13,922 34,029 Compound semiconductors (8,362) (7,850) (16,196) -------------- -------------- -------------- 5,448 6,072 17,833 -------------- -------------- -------------- Operating profit/(loss) Wireless infrastructure 13,443 14,003 31,777 Cellular handset products 5,173 4,373 9,678 Electronic warfare (1,964) (2,123) (1,583) Broadband access (1,590) (2,898) (11,999) Central costs (2,533) (2,396) (4,952) -------------- -------------- -------------- Excluding compound semiconductors 12,529 10,959 22,921 Compound semiconductors (11,081) (8,590) (35,984) -------------- -------------- -------------- 1,448 2,369 (13,063) -------------- -------------- -------------- Notes to the Interim Financial Information 3 Loss per share Unaudited Unaudited Audited 6 months 6 months Year Ended Ended Ended 30 November 30 November 31 May 2002 2001 2002 Adjusted basic (loss)/earnings per share (0.71)p (2.71)p 2.28p Effect of adjusted items net of taxation (1.28)p (5.34)p (41.59)p -------------- -------------- -------------- Basic loss per share (1.99)p (8.05)p (39.31)p -------------- -------------- -------------- Adjusted diluted (loss)/earnings per share (0.71)p (2.71)p 2.25p Effect of adjusted items net of taxation (1.28)p (5.34)p (41.56)p -------------- -------------- -------------- Diluted loss per share (1.99)p (8.05)p (39.31)p -------------- -------------- -------------- £000 £000 £000 Adjusted (loss)/profit (528) (1,998) 1,687 Exceptional closure costs (2,719) - - Goodwill amortisation (1,063) (2,670) (5,352) Exceptional goodwill impairment - - (16,036) Exceptional fixed asset impairment - - (7,938) Share compensation (218) (1,033) (1,570) Net financing currency exchange gain/(loss) 2,027 (236) 165 Exceptional gain on repayment of debt 1,026 - - -------------- -------------- -------------- Loss on ordinary activities after taxation (1,475) (5,937) (29,044) -------------- -------------- -------------- Weighted average number of shares 74,186,415 73,760,593 73,881,832 Dilution effect of share options - - 243,482 Dilution effect of contingently issuable shares - - 708,543 -------------- -------------- -------------- Diluted weighted average number of shares 74,186,415 73,760,593 74,833,857 -------------- -------------- -------------- 4 Exceptional closure costs Exceptional closure costs of £2,719,000 relate to the closure of the compound semiconductors fabrication facility at Filtronic Solid State, Santa Clara, California. 5 Interim financial information The accounting policies adopted in preparing this interim financial information are consistent with those set out on pages 22 and 23 of the Filtronic plc Annual Report 2002. The interim financial information contained in this report does not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31 May 2002 are extracted from the Financial Statements included in the Filtronic plc Annual Report 2002 dated 29 July 2002. Those Financial Statements, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies in England and Wales. Copies of this Interim Report are available from the registered office of the company: Filtronic plc The Waterfront Salts Mill Road Saltaire Shipley West Yorkshire BD18 3TT Tel: +44 1274 530 622 Fax: +44 1274 531 561 www.filtronic.com Independent Review Report to Filtronic plc Introduction We have been instructed by the company to review the financial information consisting of the profit and loss account, balance sheet, statement of total recognised gains and losses, reconciliation of shareholders funds, cash flow statement and notes and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reasons for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 November 2002. KPMG Audit Plc Chartered Accountants Leeds 27 January 2003 This information is provided by RNS The company news service from the London Stock Exchange

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