Final Results

RNS Number : 9510Z
Filtronic PLC
28 July 2008
 



        28 July 2008



FILTRONIC PLC


PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2008



Filtronic plc, the wireless communications and electronic defence equipment company, announces its Preliminary results for the year ended 31 May 2008.


Revenue from continuing operations was £54.6m (2007 £38.4m), with an operating profit before exceptional items of £3.9m (2007 operating loss £1.8m). Operating loss after exceptional items was £22.1m (2007 operating profit £5.9m). Discontinued operations recorded a profit of £0.2m (2007 £43.2m). 


Highlights


  • Strong revenue growth from continuing operations £54.6m (2007 £38.4m), driven by Point to Point

  • Operating profit from continuing operations before exceptional items improved to £3.9m (2007 loss £1.8m)

  • Special dividend 120p per share (£89.2m) paid 

  • Year end cash £31.5m (2007 £118.3m)

  • Group substantially reorganised

                             - US defence business sold

                             - Compound Semiconductor business sold

                             - Surplus properties sold

                             - Pension scheme funded and in process of wind up

  • Process for sale of Defence business well advanced



Enquiries


Filtronic plc


John Poulter, Chairman

Tel: 01274 535610

Charles Hindson, Chief Executive

Tel: 01274 535611


Mob: 07800 706319



Parkgreen Communications Ltd

Tel: 020 7933 8780

Paul McManus

Mob: 07980 541893


paul.mcmanus@parkgreenmedia.com

 

 


  Chairman's Statement


The year ended 31 May 2008 produced revenue from continuing operations of £54.6m and operating profit before exceptional items of £3.9m compared with the prior year revenue of £38.4m and £1.8m loss. The group loss for the period was £14.6m after pension settlement compared to £45.0m profit in the prior year. Cash at the year end was £31.5m compared with £118.3m at 31 May 2007 after payment of the £89.2m special dividend. A full breakdown of the year is shown in the financial statements, notes and narratives which follow.


Having detailed the events impacting the performance of Filtronic in my report to shareholders at the half year stage, I shall concentrate in this commentary on the activities of the second half of the year to avoid repetition. It is pleasing to note that the intentions described in the half yearly financial report have been delivered. 


The sale of Filtronic Compound Semiconductors Limited to RF Micro Devices was completed on 29 February 2008. Including the disposal proceeds, this business generated £17.1m of cash during the period from 30 November 2007 to disposal.


On the same day, 29 February 2008, the company paid a top up amount to Paternoster which, along with the proceeds of the liquidation of the defined benefit pension scheme assets, secured the past service liabilities relating to scheme members by means of annuity purchase. Wind up of the scheme continues with an expectation of completion by the end of 2008 and subject to further cash funding of around £1m.


Following Court confirmation of the capital reorganisation approved by shareholders, a special dividend of 120p per share (£89.2m) was paid to shareholders on 30 May 2008. This left the group with a closing cash balance of £31.5m.


Of the two continuing operations, the Point to Point business performed strongly and the UK Defence business showed some improvement over the first half. Point to Point recorded revenue similar to the first half year and produced a very encouraging 79% year on year growth in revenue and 176% growth in operating profit. Point to Point has had a strong start to the year.


Following the exercise referred to in the year-end trading update, several attractive offers have been received for the company's Defence business. Detailed discussions with the preferred bidder are well advanced. As a result, the decision has been taken to streamline the Board and reduce corporate overheads in anticipation of a single focus around the high-growth Point to Point business, under the leadership of Hemant Mardia. It has been agreed that Charles Hindson, the present Chief Executive, and Professor Stephen Burbank and Ian Hardington, both non-executive directors, will step down from the Board at the AGM on 19 September 2008. I should like to record the Board's thanks to the departing directors for their respective and substantial contributions to the past two challenging years of recovery and reorganisation.


In addition to these anticipated Board changes, Stephen Mole was appointed to the Board as Finance Director on 13 June 2008.  


I should like to thank all staff in the business who have had to accommodate the changes in the group over the period.



John Poulter

Chairman

28 July 2008



  Business Review 

Chief Executive's Operating Review


Summary


Once again, the year has been eventful with a number of major changes for the group with the disposal of the Compound Semiconductors and US Defence businesses, and the closure of the defined benefit pension scheme. Point to Point delivered another year of outstanding growth and Defence Electronics produced an unchanged operating profit despite reduced revenues.


Continuing operations


The segmental analysis of the operating results for continuing operations is as follows:



Revenue

Operating profit/(loss) before exceptional items

Year ended 31 May

2008

2007

2008

2007


£m

£m

£m

£m






Point to Point

40.1

22.3

6.2

2.2

Defence Electronics

14.5

16.1

1.3

1.3

Central Services

-

-

(3.0)

(4.8)

Unallocated pension charge

-

-

(0.6)

(0.5)


-----

-----

-----

-----


54.6

38.4

3.9

(1.8)


-----

-----

-----

-----


Point to Point


The Point to Point business designs and manufactures customised microwave electronic sub assembly components that are integrated by OEMs into point to point (PTP) radios. These radios provide the backhaul links for telecom networks particularly for the mobile basestation market. Customers require a broad radio portfolio in order to provide global coverage of the licensed communication bands. 


Point to Point applies specialised microwave technology and radio expertise to develop custom solutions for each OEM customer. It provides a broad product range of frequency bands underpinned by cost effective designs in order to offer highly competitive volume supply across two product lines - microwave transceiver modules and filters. These products are integrated by the customer into the radio.


The business has developed proprietary semiconductor technology that enables a high level of product integration. These devices have been developed on large scale semiconductor foundries and are manufactured for Point to Point by key semiconductor partners. This provides significant cost advantage compared to the normal level of product integration by reducing the complexity of manufacture of transceiver modules. Point to Point also offers a full portfolio of filters required to channelise the licensed frequency bands in the radio. These products are optimised to meet market needs for high volume supply with short lead times.


Point to Point has invested in a world class automated manufacturing facility co-located with its development teams and offering a unique volume supply capability with the high degree of flexibility demanded by the mobile telecoms market.


Point to Point is the leading merchant supplier of transceivers and diplex filters. Several additional products have been developed and qualified during this financial year. Expansion of its product portfolio and significant volume demand from these customers has enabled Point to Point to increase its revenue 79% compared with last financial year and achieve operating margins of 15% in the year.


  Defence Electronics


The Defence Electronics business supplies complex components, sub-assemblies or major subsystems for use in military communications, radar and sensing equipment. Its customers are typically the prime contractors for defence equipment and its products are used to intercept, identify, analyse, generate and transmit radio frequency, microwave and millimetre wave signals.


Defence Electronics was affected throughout the year by weaker order intake, largely as a result of customers facing delays to major projects. Whilst this reduced the overall sales revenue, efficiencies achieved throughout the year enabled the business to achieve an overall margin improvement. Significant new product advances were made both in the UK and in Australia. 


The UK new product launches led directly to the award of a major contract from Thales for the supply of receiver subsystems for SMART, the radar electronic support measures suite upgrade for the UK submarine fleet. In Australia, a successful demonstration of a new radar concept has assisted the securing of follow on research contracts for stand off security imaging hardware and a UAV Collision Avoidance system.


Revenue was down 10% year on year but operating profit was unchanged at £1.3m.


Discontinued operations


US Defence


Sale of this business was completed in October 2007 producing cash proceeds of £1.4m and a loss of £0.7m.


Compound Semiconductors


Sale of the Compound Semiconductors business was completed in February 2008. Disposal proceeds net of working capital adjustments were £10.3m and, in addition, the business generated a cash flow of £6.8m up to disposal.


Group matters


Central costs before exceptional items again reduced in the year to £3.0m (2007 £4.8m)


The properties at Saltaire and Stewarton were disposed of in the year producing proceeds of £6.1m and a £0.1m loss on disposal.


Capital expenditure


The group's capital expenditure in the year was £2.3m, of which £0.4m was incurred in discontinued operations.


Employees


At 31 May 2008, the group employed 392 people (2007 801)


Pension scheme


Past service liabilities for the defined benefit pension scheme have been secured by purchasing annuities with Paternoster. The scheme is now in the process of being wound up with an anticipated completion by the end of calendar year 2008. There are provisions for £1.0m of liability left on the balance sheet which the company anticipates funding prior to completion of the remaining wind up process. 



Charles Hindson

Chief Executive

28 July 2008

  Consolidated Income Statement

for the year ended 31 May 2008




2008

2007

Continuing operations 

note

£000

£000





Revenue

1,2

54,651

38,434



======

======





Operating profit/(loss) before exceptional items


3,860

(1,853)

Exceptional items

3

(26,029)

7,748



----------

----------

Operating (loss)/profit

1,2

(22,169)

5,895





Loss on sale of property


(115)

(415)

Loss on sale of investments

10

-

(6,518)

Finance income

11

9,110

5,221

Finance costs

12

(1,688)

(3,839)



----------

----------

(Loss)/profit before taxation


(14,862)

344

Taxation


-

1,491



----------

----------

(Loss)/profit for the period from continuing operations


(14,862)

1,835

Profit for the period from discontinued operations

13

247

43,160



----------

----------

(Loss)/profit for the period


(14,615)

44,995



======

======





Basic and diluted (loss)/earnings per share




Continuing operations

27

(20.00)

p

2.46

p

Discontinued operations

27

0.33

p

57.90

p



----------

----------

Basic and diluted (loss)/earnings per share

27

(19.67)

p

60.36 

p



======

======


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




  Consolidated Statement of Recognised Income and Expense

for the year ended 31 May 2008



2008

2007


£000

£000




(Loss)/profit for the period

(14,615)

44,995


----------

----------

Actuarial gain on defined benefit pension scheme

4,964

562

Transfer to income from translation reserve related to business disposal

(453)

61

Currency translation movement arising on consolidation

(6)

47


----------

----------


4,505

670


----------

----------





----------

----------

Total recognised income and expense for the period

(10,110)

45,665


======

======


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






  Consolidated Balance Sheet

at 31 May 2008




2008

2007


note

£000

£000

Non-current assets




Property, plant and equipment


4,045

26,089



----------

----------

Current assets




Inventories


6,245

10,625

Trade and other receivables


12,999

16,268

Cash and cash equivalents


31,451

118,267



----------

----------



50,695

145,160



----------

----------







----------

----------

Total assets


54,740

171,249



----------

----------

Current liabilities




Trade and other payables


12,673

23,944

Provision

28

2,152

-



----------

----------



14,825

23,944



----------

----------

Non-current liabilities




Defined benefit pension


1,002

6,954

Deferred income


-

2,140



----------

----------



1,002

9,094



----------

----------







----------

----------

Total liabilities


15,827

33,038



----------

----------



----------

----------

Net assets


38,913

138,211



======

======

Equity




Share capital


7,432

7,432

Share premium

29

-

139,253

Capital redemption reserve

29

-

58

Translation reserve


201

660

Retained earnings/(accumulated losses)

31

31,280

(9,192)



----------

----------

Total equity


38,913

138,211



======

======


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

 

  Consolidated Cash Flow Statement

for the year ended 31 May 2008

    



2008

2007


note

£000

£000

Cash flows from operating activities








(Loss)/profit for the period


(14,615)

44,995

Gain on sale of discontinued operations


(3,596)

(80,139)

Taxation


-

(860)

Finance costs


1,688

4,078

Finance income


(9,110)

(5,221)

Loss on sale of investments


-

6,518

Loss on sale of property


115

415



----------

----------

Operating loss

33

(25,518)

(30,214)

Defined benefit pension charge/(credit)


27,010

(5,649)

Defined benefit pension contributions paid


(27,701)

(7,695)

Share-based payments


-

567

Goodwill impairment


-

2,653

Property, plant and equipment impairment


6,300

17,511

Depreciation


2,040

8,252

Loss on sale of plant and equipment


87

7,316

Licence fee released to income


(1,751)

(2,335)

Movement in inventories


1

(3,201)

Movement in trade and other receivables


2,079

381

Movement in trade and other payables


(323)

1,719

Movement in provision


1,704

-

Taxation received


-

88



----------

----------

Net cash used in operating activities

33

(16,072)

(10,607)



----------

----------





  Consolidated Cash Flow Statement

for the year ended 31 May 2008




2008

2007


note

£000

£000





Net cash used in operating activities

33

(16,072)

(10,607)



----------

----------

Cash flows from investing activities




Proceeds from sale of property


6,044

2,750

Proceeds from sale of plant and equipment


50

334

Interest received


6,724

2,850

Acquisition of plant and equipment


(2,309)

(16,605)

Sale of discontinued operations


7,413

105,252

Proceeds from sale of investments


-

53,391



----------

----------

Net cash from investing activities

33

17,922

147,972



----------

----------

Cash flows from financing activities




Bank revolving credit repaid


-

(18,000)

Bank loan renewal fee paid


-

(508)

Interest paid


-

(575)

Shares issued


-

87

Shares bought back


-

(1,137)

Dividends paid


(89,188)

(1,348)



----------

----------

Net cash used in financing activities

33

(89,188)

(21,481)



----------

----------





(Decrease)/increase in cash and cash equivalents


(87,338)

115,884

Currency exchange loss on sale of discontinued operations


-

(2,784)

Currency exchange movement


522

(126)

Opening cash and cash equivalents


118,267

5,293



----------

----------

Closing cash and cash equivalents


31,451

118,267



======

======



  Notes to the Preliminary Financial Information

for the year ended 31 May 2008


1    Business segment analysis continuing operations


2008

2007


£000

£000

Revenue



Point to Point

40,133

22,364

Defence Electronics 

14,518

16,070


----------

----------


54,651

38,434


======

======

Operating (loss)/profit



Point to Point

6,157

2,234

Defence Electronics

1,338

1,125

Central Services

(3,328)

(5,208)

Unallocated pension (charge)/credit

(26,336)

7,744


----------

----------

Operating profit

(22,169)

5,895

Loss on sale of property

(115)

(415)

Loss on sale of investments

-

(6,518)

Finance income

9,110

5,221

Finance costs

(1,688)

(3,839)


----------

----------

(Loss)/profit before taxation

(14,862)

344

Taxation

-

1,491


----------

----------

(Loss)/profit for the period from continuing operations

(14,862)

1,835


======

======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


2    Geographical origin segment analysis continuing operations


2008

2007


£000

£000

Revenue



United Kingdom

53,701

37,815

Australia

950

619


----------

----------


54,651

38,434


----------

----------




Operating (loss)/profit



United Kingdom

(22,400)

5,721

Australia

231

174


----------

----------

Operating (loss)/profit

(22,169)

5,895

Loss on sale of property

(115)

(415)

Loss on sale of investments

-

(6,518)

Finance income

9,110

5,221

Finance costs

(1,688)

(3,839)


----------

----------

(Loss)/profit before taxation

(14,862)

344

Taxation

-

1,491


----------

----------

(Loss)/profit for the period from continuing operations

(14,862)

1,835


======

======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


3    Exceptional items continuing operations

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



2008

2007


note

£000

£000





Redundancy costs

4

-

389

Share-based payments

5

-

178

Enhanced pension transfer value offer costs

6

311

-

Pension settlement charge

7

24,868

-

Pension past service cost

8

850

-

Pension past service credit

9

-

(8,315)



----------

----------



26,029

(7,748)



======

======


4    Redundancy costs continuing operations


2008

2007


£000

£000




Defence Electronics

-

158

Central Services

-

231


----------

----------


-

389


======

======


5    Share-based payments continuing operations


2008

2007


£000

£000

Share option expense:



Central Services

-

178


======

======


All outstanding share options vested on the completion of the sale of the Wireless Infrastructure business on 16 October 2006. Consequently all the remaining share-based payment cost was charged in the year ended 31 May 2007.


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


6    Enhanced pension transfer value offer costs continuing operations


2008

2007


£000

£000




Enhanced pension transfer value offer costs:



Central Services

311

-


======

======


Professional fees were incurred in connection with the enhanced pension transfer value offer made during the period 1 June 2007 to 31 January 2008.


7    Pension settlement charge continuing operations


2008

2007


£000

£000




Enhanced transfer values

3,206

-

Fully funding past service liabilities with annuities

21,662

-


----------

----------


24,868

-


======

======


A pension settlement charge of £3,206,000 resulted from the settlement of the enhanced transfer values paid out during the period 1 June 2007 to 31 January 2008. The company paid £6,027,000 of additional contributions to the pension scheme to fund the settlement of the enhanced transfer values.


A pension settlement charge of £21,662,000 resulted from the settlement of past service liabilities with annuities at 29 February 2008. Pension benefits ceased accruing from 29 February 2008, and the defined benefits scheme is in the process of being closed. The company paid £21,000,000 of additional contributions to the pension scheme to fund the settlement of past service liabilities with annuities.


8    Pension past service cost


2008

2007


£000

£000




Pension past service cost

850

-


======

======


The past service cost was the cost of providing for the equalisation of retirement ages for male and female members of pension schemes that were transferred into the defined benefit pension scheme in 1994 and 1998.


9    Pension past service credit continuing operations


2008

2007


£000

£000




Pension past service credit

-

(8,315)


======

======


In August 2006 the defined benefits pension scheme was changed from a final salary basis to a career average revalued earnings basis. This resulted in a past service credit due to a reduction in the past service pension liabilities. The company paid £5,600,000 of additional contributions to the pension scheme in connection with the change in the benefits basis.





  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


10    Loss on sale of investments continuing operations


2008

2007


£000

£000




Proceeds from sale of Powerwave shares

-

53,391

Value of Powerwave shares consideration at completion of the sale of



Wireless Infrastructure business

-

(59,909)


----------

----------


-

(6,518)


======

======


On 16 October 2006 the company received 17,700,000 shares in Powerwave Technologies, Inc. common stock, as part of the consideration for the sale of the Wireless Infrastructure business. All the shares were sold in the six months ended 31 May 2007.


11    Finance income continuing operations


2008

2007


£000

£000




Interest income

6,724

2,850

Expected return on pension scheme assets

1,985

2,371

Currency exchange gains

401

-


----------

----------


9,110

5,221


======

======


12    Finance costs continuing operations


2008

2007


£000

£000




Interest expense

-

575

Bank loan renewal fee

-

508

Interest on pension scheme liabilities

1,688

2,646

Currency exchange losses

-

110


----------

----------


1,688

3,839


======

======







  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


13    Profit for the period from discontinued operations



2008

2007

Discontinued operations

note

£000

£000





Revenue

14, 15

29,775

96,521



======

======

Operating profit/(loss) before exceptional items


3,126

(5,767)

Exceptional items

16

(6,475)

(30,342)



----------

----------

Operating loss

14, 15

(3,349)

(36,109)

Finance costs

22

-

(239)



----------

----------

Loss before taxation


(3,349)

(36,348)

Taxation


-

(631)



----------

----------

Loss after taxation


(3,349)

(36,979)

Gain on sale of discontinued operations

23

3,596

80,139



----------

----------

Profit for the period from discontinued operations


247

43,160



======

======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


14    Business segment analysis discontinued operations


2008

2007


£000

£000

Revenue



Wireless Infrastructure

-

58,039

Defence Electronics

2,462

8,159

Compound Semiconductors

27,313

30,323


----------

----------


29,775

96,521


======

======

Operating loss



Wireless Infrastructure

-

(2,554)

Defence Electronics

(1,016)

(4,556)

Compound Semiconductors

(2,333)

(28,999)


----------

----------

Operating loss

(3,349)

(36,109)

Finance costs

-

(239)


----------

----------

Loss before taxation

(3,349)

(36,348)

Taxation

-

(631)


----------

----------

Loss after taxation

(3,349)

(36,979)

Gain on sale of discontinued operations

3,596

80,139


----------

----------

Profit for the period from discontinued operations

247

43,160


======

======


The operating loss is stated after crediting the release of deferred income as follows:


Compound Semiconductors licence fee

1,751

2,335


======

======



  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


15    Geographical origin segment analysis discontinued operations


2008

2007


£000

£000

Revenue



United Kingdom

27,313

54,493

Finland

-

8,654

Hungary

-

7,427

United States of America

2,462

22,975

China

-

22,720

Inter segment

-

(19,748)


----------

----------


29,775

96,521


======

======

Operating (loss)/profit



United Kingdom

(2,333)

(33,330)

Finland

-

(1,201)

Hungary

-

2,206

United States of America

(1,016)

(3,818)

China

-

34


----------

----------

Operating loss

(3,349)

(36,109)

Finance costs

-

(239)


----------

----------

Loss before taxation

(3,349)

(36,348)

Taxation

-

(631)


----------

----------

Loss after taxation

(3,349)

(36,979)

Gain on sale of discontinued operations

3,596

80,139


----------

----------

Profit for the period from discontinued operations

247

43,160


======

======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


16    Exceptional items discontinued operations

Operating loss is stated after charging exceptional items as follows:



2008

2007


note

£000

£000





Compound Semiconductors assets impairment

17

6,300

20,111

Loss on disposal of plant and equipment

18

-

7,057

Goodwill impairment

19

-

2,653

Redundancy costs

20

175

132

Share-based payments

21

-

389



----------

----------



6,475

30,342



======

======


17    Compound Semiconductors assets impairment discontinued operations


2008

2007


£000

£000




Property, plant and equipment impairment

6,300

17,511

Inventory impairment

-

2,600


----------

----------


6,300

20,111


======

======


Following an impairment review at 31 May 2007, the plant and equipment and inventory at the Compound Semiconductors facility was impaired. The impairment resulted from the reduction in the scale of the business, due to the decision of the principal customer to in-source its switch production from September 2007.


Following a further impairment review at 30 November 2007 the property at the Compound Semiconductors facility was impaired.  


18    Loss on disposal of plant and equipment discontinued operations



2008

2007



£000

£000





Loss on disposal of plant and equipment


-

7,057



======

======


The loss on disposal of plant and equipment at the Compound Semiconductors facility was incurred as a result of the curtailment of the expansion plan at the facility.




  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


19    Goodwill impairment discontinued operations



2008

2007



£000

£000





Goodwill impairment


-

2,653



======

======


Following an impairment review at 30 November 2006 the goodwill related to Sage Laboratories, Inc. was impaired. Sage Laboratories, Inc. was located in the United States of America and formed part of the Defence Electronics division.


20    Redundancy costs discontinued operations



2008

2007



£000

£000





Compound Semiconductors


175

132



======

======


21    Share-based payments discontinued operations


2008

2007


£000

£000

Share options expense:



Wireless Infrastructure

-

234

Compound Semiconductors

-

155


----------

----------


-

389


======

======


All outstanding share options vested on the completion of the sale of the Wireless Infrastructure business on 16 October 2006. Consequently all the remaining share-based payment cost was charged in the period.


22    Finance costs discontinued operations


2008

2007


£000

£000




Currency exchange losses

-

239


======

======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


23    Gain on sale of discontinued operations



2008

2007


note

£000

£000

Gain/(loss) on sale of:




Wireless Infrastructure business

24

2,805

80,139

Defence Electronics business

25

(667)

-

Compound Semiconductors business

26

1,458

-



----------

----------



3,596

80,139



======

======


24    Gain on sale of the Wireless Infrastructure business


2008


£000



Additional consideration

2,675

Adjustment to sale costs

130


----------


2,805


======


The Wireless Infrastructure business was sold on 16 October 2006. The sale was analysed in the financial statements for the year ended 31 May 2007. Additional cash consideration of £2,675,000 was received in the year ended 31 May 2008, which had not been recognised in the year ended 31 May 2007. An adjustment was made for sale costs overprovided of £130,000 in the year ended 31 May 2007.


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


25    Loss on sale of the Defence Electronics business

The Defence Electronics business of Sage Laboratories, Inc. in the United States of America was sold on 12 October 2007. The initial consideration was $3,556,000 and a further $1,000,000 of deferred consideration is due in January 2009. Also there may be a further $500,000 of contingent consideration due in January 2009, depending on the revenue performance of the business, which has not yet been recognised. The sale is analysed as follows.


2008


£000

Consideration and costs


Initial consideration

1,712

Deferred consideration

481

Sale costs

(692)

Currency translation adjustment

453


----------


1,954


======

Assets and liabilities sold


Property, plant and equipment

1,130

Inventories

1,240

Trade and other receivables

803

Trade and other payables

(552)


----------

Net assets sold

2,621

Loss on sale of the Defence Electronics business

(667)


----------


1,954


======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


26    Gain on sale of the Compound Semiconductors business

On 29 February 2008 the Compound Semiconductors business was sold. The sale is analysed as follows.


2008


£000

Consideration and costs


Gross consideration

12,500

Adjustment for working capital

(1,832)


----------

Net consideration

10,668

Sale costs

(395)


----------


10,273


======

Assets and liabilities sold


Property, plant and equipment

8,533

Inventories

3,083

Trade and other receivables

926

Cash and equivalents

3

Trade and other payables

(3,341)

Deferred income

(389)


----------

Net assets sold

8,815

Gain on sale of the Compound Semiconductors business

1,458


----------


10,273


======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


27    Basic and diluted (loss)/earnings per share


2008

2007


£000

£000

(Loss)/profit for the period



Continuing operations

(14,862)

1,835

Discontinued operations

247

43,160


----------

----------

(Loss)/profit for the period

(14,615)

44,995


======

======





000

000




Basic and diluted weighted average number of shares

74,323

74,543


======

======

Basic and diluted (loss)/earnings per share




Continuing operations


(20.00)

p

2.46

p

Discontinued operations


0.33

p

57.90

p



----------

----------

Basic and diluted (loss)/earnings per share


(19.67)

p

60.36 

p



======

======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


28    Provision


2008

2007


£000

£000

Warranty provision



Opening balance

-

-

Transfer from accruals

448

-

Charge for the year

1,704

-


----------

----------

Closing balance

2,152

-


======

======


29    Reserves


Share

premium

Capital redemption reserve


£000

£000




At 31 May 2007

139,253

58

Transfer to accumulated losses

(139,253)

(58)


----------

----------

At 31 May 2008

-

-


======

======

 

The share premium and capital redemption reserve were cancelled by special resolutions passed at the general meeting held on 28 March 2008. The capital reduction was confirmed by the High Court of England and Wales on 18 April 2008. The capital reduction became effective on 21 April 2008 when the Court Order was registered with the Registrar of Companies.


30    Dividends

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



2008

2007


Per share

£000

£000





Final dividend year ended 31 May 2006

1.80p

-

1,348

Special interim dividend year ended 31 May 2008

120.00p

89,188

-



----------

----------



89,188

1,348



======

======

  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


31    Retained earnings/(accumulated losses)


£000



At 1 June 2006

(59,214)

Profit for the period

44,995

Actuarial gain on defined benefit pension scheme

562

Share-based payments

567

Transfer from other reserve

6,383

Dividends

(1,348)

Shares bought back

(1,137)


----------

At 31 May 2007

(9,192)

Loss for the period

(14,615)

Actuarial gain on defined benefit pension scheme

4,964

Transfer from share premium

139,253

Transfer from capital redemption reserve

58

Dividends

(89,188)


----------

At 31 May 2008

31,280


======


32    Reconciliation of movements in total equity


2008

2007


£000

£000




Opening total equity

138,211

94,377

Total recognised income and expense for the period

(10,110)

45,665

Share-based payments

-

567

Dividends

(89,188)

(1,348)

Shares issued

-

87

Shares bought back

-

(1,137)


----------

----------

Closing total equity

38,913

138,211


======

======



  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


33    Note to the consolidated cash flow statement



2008

2007


note

£000

£000

Operating loss




Continuing operations


(22,169)

5,895

Discontinued operations


(3,349)

(36,109)



----------

----------



(25,518)

(30,214)



======

======

Net cash used in operating activities




Continuing operations


(22,354)

(7,144)

Discontinued operations


6,282

(3,463)



----------

----------



(16,072)

(10,607)



======

======

Net cash from investing activities




Continuing operations


10,843

58,097

Discontinued operations


(334)

(15,377)

Sale of discontinued operations

34

7,413

105,252



----------

----------



17,922

147,972



======

======

Net cash used in financing activities




Continuing operations


(89,188)

(21,481)



======

======


34    Net cash from sale of discontinued operations



2008

2007



£000

£000





Consideration received


14,964

110,622

Sale costs paid


(1,801)

(5,370)

Product liability costs paid


(5,750)

-



----------

----------



7,413

105,252



======

======


  Notes to the Preliminary Financial Information 

for the year ended 31 May 2008


These preliminary results have been prepared on the basis of the accounting policies which are to be set out in Filtronic plc's annual report and financial statements for the year ended 31 May 2008.


EU Law (IAS Regulation EC1606/2002) requires that the consolidated financial statements of the group for the year ended 31 May 2008 be prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted for use in the EU ('adopted IFRSs').


The financial information set out above does not constitute the company's statutory financial statements for the years ended 31 May 2008 or 2007 but is derived from those financial statements. Statutory financial statements for 2007 have been delivered to the registrar of companies, and those for 2008 will be delivered in due course. The auditors have reported on those financial statements; their report 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 237(2) or (3) of the Companies Act 1985.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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