Filtronic plc (AIM: FTC), the designer and manufacturer of antennas, filters and mmWave products for the critical communications and wireless telecoms markets, is pleased to provide the following trading update for the financial year ended 31 May 2019.
Trading during the second half of the year was broadly in line with market guidance. The Board therefore expects, subject to audit, to report FY2019 revenue of approximately £20.6m (2018: £24.0m), operating loss of approximately £1.7m (2018: £1.8m operating profit) and loss before interest, taxation, depreciation and amortisation ("LBITDA") of £0.5m (FY2018: £2.5m EBITDA). Net cash at 31 May 2019 was £2.3m (H1 2018; £2.2m).
During the period, sales of 5G E-band backhaul products were very encouraging with strong growth in demand from our lead client with the forward order book and customer forecasts showing further growth in FY2020. Consequently, we are in the process of expanding capacity and capability at our manufacturing facility in Sedgefield by adding new equipment and recruiting additional staff to meet the increased volume requirements.
We continue to make good progress with our clients in public safety and defence and aerospace markets where we are currently seeing several good opportunities with new and existing customers. We are developing new products and capabilities for these markets that we see as important future growth areas.
As previously announced on 12 December 2018, sales of the recently introduced Massive MIMO ("mMIMO") antennas into the telecoms market had been adversely affected by lower demand from our Original Equipment Manufacturer customer than originally forecast. There has been a continued lack of clarity regarding future demand for this product throughout the second half of the year due to the ongoing delays in proposed corporate consolidations of the US Mobile Network Operators.
Furthermore, the Company was recently notified of a performance issue affecting certain antenna products shipped in FY2016/17 that are still under warranty. The full extent of the issue and number of units affected is under review, however, this issue does not extend to our current product range. We are repairing affected products as they are returned, and we are in discussions with the customer on the issue of liability. We will provide further information as the situation becomes clearer.
Notwithstanding the above, we continue to invest and develop new products targeted at the rapidly growing small cell market in the USA and will be launching these in the summer of 2019.
As per the announcement of the half-year results on 29 January 2019, the Board of Filtronic has conducted a strategic review of its telecoms antennas activities and is making progress towards finalising its preferred option. Further announcements will be made in due course.