Filtronic PLC – Half-year Report

Filtronic PLC – Half-year Report

Filtronic plc (AIM: FTC), the designer and manufacturer of antennas, filters and mmWave products for the wireless telecoms infrastructure and adjacent markets, announces its half year results for the six months ended 30 November 2018.

Financial Summary

  • Revenue of £10.4m (H1 2018: £12.8m)
  • Impairment of capitalised development costs of £0.5m (H1 2018: £nil)
  • Operating loss of £0.9m (H1 2018: profit of £0.9m)
  • LBITDA* of £0.1m (H1 2018: EBITDA of £1.2m)
  • Net cash of £2.2m (31 May 2018: £3.8m)
  • Net cash outflow from operating activities £0.9m (H1 2018: £0.5m inflow)

* LBITDA/EBITDA is (loss)/earnings before interest, taxation, depreciation and amortisation

Highlights

  • A third major multi-year defence contract valued between £3.0m and £5.7m, was received to provide state-of-the-art microwave modules for use in defence radar systems.
  • Continued growth of mmWave Orpheus transceiver sales to a major Original Equipment Manufacturer (“OEM”).
  • Distributor with key relationships into Tier 1 Mobile Network Operators appointed for the North American operator market to sell a range of Filtronic developed antennas.
  • Massive MIMO (“mMIMO”) antennas sales launch into a major global OEM customer.

Commenting on the outlook, Reg Gott, Chairman, said:

“Our focus on high margin products and the strategic decision to target critical communications markets has been a key component of our strategy to mitigate the revenue volatility of network roll-outs in the telecoms market. This focus has provided us with a significant level of baseline business and improved visibility of future revenues, along with further opportunities to grow our product offering and customer base.

The news received in December from our mMIMO launch client that the end-customer was putting its roll-out programme on hold and thus significantly reducing its forecast demand until further notice, was a significant set-back to our growth plans. However, our client has confirmed that the programme is not cancelled and they will continue to sell and market our mMIMO products into the market. Notwithstanding this setback, we believe the outlook for the antenna market remains positive, with continued industry investment in network developments for 4G densification and 5G roll-outs.

Subsequent to the December notice we have received a follow-on order for the balancing requirement of mMIMO for H2 which underpins our confidence in the sales outlook for the remainder of the year and this, combined with our solid platform of long-term business within critical communications, means we expect trading in H2 to be broadly similar to H1.

We require a little time to fully evaluate the ongoing status of the mMIMO programme, bring the new distribution arrangement up to speed and complete a review of our options for the antenna business but, in the meantime, we are comfortable with our current cash position and cash flow outlook.”

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