RNS Number:2085Z
Filtronic PLC
29 July 2002
For Immediate Release 7:00am 29th July 2002
FILTRONIC PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MAY 2002
'Filtronic much stronger financially and operationally than one year ago';
Product Development and Marketing Alliance with Powerwave Technologies, Inc.
Filtronic plc ("Filtronic"), a leading global designer and manufacturer of
customised microwave electronic subsystems, announces its Final Results for the
year ended 31 May 2002. Its technology and engineering can be applied to
general business sectors in both the commercial and defence areas. Filtronic
has worldwide sites in the UK (North of England, Yorkshire, Midlands, Scotland),
in the US, in Finland, in China and in Australia.
Both major businesses, Wireless Infrastructure and Cellular Handset Products,
increased their contribution to operating profit and again improved their market
share. Wireless Infrastructure is the world's number one independent supplier
of transmit/receive modules for mobile base stations and Cellular Handset
Products is the world's leading manufacturer of antennas for handsets. Lucent,
Motorola and Nokia are among Filtronic's customers.
In his Statement, Professor David Rhodes, Executive Chairman said: "Filtronic is
much stronger than it was one year ago, both financially and operationally.
Filtronic holds the number one independent supplier position in its two major
businesses. Both cash flow and operating margins in those businesses are
strong. Actions have been taken to improve trading performance in our smaller
businesses. The company has and continues to be cash generative. Since 31 May
2001, total debt has been reduced by £37.7m and cash balances increased."
Financial Highlights
• Results in line with May trading update and ahead of market expectations
• Group sales of £280.5m (2001: £297.4m)
• Operating profit before non-cash items up 46% from £12.2m to £17.8m
• Wireless Infrastructure operating profit up 17% from £27.2m to £31.8m
• Handset Products operating profit up 68% from £6.9m to £11.6m
• Strong margins in Wireless Infrastructure and Cellular Handset products
• Maintained final dividend 1.8p (2001: 1.8p), payable 1 November 2002; total
dividend 2.7p per share
• Net cash generated from operations up from £7.5m to £64.2m
• Net debt reduced 33% by £41.2m from £125.9m to £84.7m
• Gearing reduced from 97% to 81%
Operational Highlights
• Global presence in Europe, USA, Asia
• Market shares of 35% and 25%, respectively, in two major businesses
• Leader in transmit/receive module technology and low cost manufacturing
• Strong position in 3G programmes with major customers
• Targeting further increases in market share in both businesses
• 86 million antennas supplied by Cellular handsets, an increase of 21%
• Principal supplier of handset antennas to Nokia
• Strong position in new programmes with Nokia and several new customers
• Closure of Filtronic Solid State, California facility
• Compound semiconductor agreements with M/A-COM and BAE underway
• GaAs Power Amplifier Modules successfully demonstrated to 3 leading OEMs
• Potential new channel to merchant market via Powerwave
Powerwave Alliance
• Product Development and Marketing Alliance with NASDAQ listed Powerwave
Technologies, Inc.
• Agreement to develop integrated transmit receive module and power amplifier
for the 3G market
• Integrated products to comprise Filtronic's transmit/receive filter modules
and Powerwave's power amplifiers
• Future potential agreement to incorporate Filtronic's GaAs power amplifier
modules into joint integrated products and selected future Powerwave products
Outlook
In his Statement, Professor David Rhodes said: "While global market conditions
remain challenging and the short term outlook is unclear, Filtronic will
continue to improve the efficiency of its businesses and reduce its debt when
practical. The development of compound semiconductor based products and
investment in the related technologies will remain the principal technical
focus. The Board believes that this strategy will deliver financial stability,
business growth and shareholder value in the medium to longer term."
Business Segmental Analysis
Year Ended 31 May 2002 31 May 2001
£m £m
SALES
Wireless Infrastructure 188.6 207.8
Cellular Handset Products 48.8 42.2
Electronic Warfare 27.0 25.7
Broadband Access 12.5 11.3
Inter Segment (3.9) (0.8)
--------------- ---------------
273.0 286.2
Compound Semiconductors 7.5 11.2
--------------- ---------------
280.5 297.4
========= =========
OPERATING PROFIT BEFORE NON CASH CHARGES
Wireless Infrastructure 31.8 27.2
Cellular Handset Products 11.6 6.9
Electronic Warfare (1.4) (0.4)
Broadband Access (3.0) (2.8)
Central Costs (5.0) (3.8)
--------------- ---------------
34.0 27.1
Compound Semiconductors (16.2) (14.9)
--------------- ---------------
17.8 12.2
========= =========
Enquiries:
Professor J. David Rhodes, Executive Chairman, Filtronic plc Tel: 020 7786 9600 (all week)
John Samuel, Finance Director, Filtronic plc
Professor Christopher Snowden, Director, Filtronic plc Tel: 01274 530 622
Peter Binns, Paul Vann, Paul McManus, Charlotte Barker, Binns & Co Tel: 020 7786 9600
Executive Chairman's Statement
Financial results
Sales for the year ended 31 May 2002 were £280.5m (2001 £297.4m). Operating
profit before goodwill amortisation, exceptional goodwill and tangible fixed
asset impairment and share compensation costs was £17.8m (2001 £12.2m), an
increase of 46% over last financial year.
After charging non-cash items of £30.9m and net interest and financing currency
costs of £12.4m, the loss before tax was £25.5m (2001 £21.2m). After tax this
increased to £29.0m (2001 £22.8m), resulting in a basic loss per share of 39.31p
(2001 31.24p basic loss), which is the same on a diluted basis (2001 31.24p
loss).
The non-cash items can be analysed as follows:
£m
Normal annual goodwill amortisation 5.4
Exceptional goodwill impairment at Sigtek and Filtronic Solid State 16.1
Exceptional tangible fixed asset impairment at Filtronic Solid State 7.9
Share compensation 1.6
Total £30.9
Cash
During the last financial year, the company generated £39.6m of net cash. This
included the fee received from BAE SYSTEMS Avionics Limited ("BAE"), none of
which is included in the Profit and Loss Account. £22.0m was applied in paying
down long term debt, including buying in $29.25m of 10% Senior Notes. The net
increase in cash of £17.9m compares with a cash consumption of £48.5m in 2001.
Dividend
The Board is proposing to maintain the final dividend of 1.8p (2001 1.8p)
payable on 1 November 2002 to shareholders on the register at 16 August 2002.
World market environment
Worldwide demand for the supply of telecommunications products has declined
significantly during the last year with few signs of an imminent upturn. Within
this environment, Filtronic has increased and consolidated its position as the
leading independent supplier of both transmit/receive modules for mobile base
stations and antennas for handsets. Additionally, the company has developed
several new processes including those for high power microwave transistors, the
key technology for the company's high performance power amplifier modules.
Technology hardware demonstrations of these modules have taken place with three
leading Original Equipment Manufacturers ('OEMs'). These have been well
received and further development work for these potential customers is underway,
including the provision of sample modules. The objective remains to become
qualified into 3G WCDMA programmes with one or more of these customers.
Agreement with Powerwave Technologies, Inc.
To provide a potential sales channel through the merchant market, Filtronic has
signed a Product Development and Marketing Alliance Agreement with Powerwave
Technologies, Inc. ("Powerwave"), based in Santa Ana, California. Powerwave,
which is listed on NASDAQ in the USA, is the leading independent supplier of
power amplifiers for mobile communications base stations, with annual sales in
excess of $400m. Powerwave's principal OEM customers include Nortel, Nokia and
Lucent.
This agreement will enable Powerwave's power amplifiers to be integrated with
Filtronic's transmit/receive filter modules to provide an integrated solution
for both OEMs and network operators where appropriate. Following the
demonstration of Filtronic's proprietary gallium arsenide based power amplifier
modules, which Powerwave are currently evaluating, the agreement provides for a
potential future agreement for the inclusion of such modules into the joint
integrated solution and into selected future Powerwave products.
Operations
The segmental analysis of the business is as follows:
Operating profit before goodwill
amortisation and impairment,
Sales tangible fixed asset impairment
and share compensation
Year ended 31 May 2002 2001 2002 2001
£m £m £m £m
Wireless infrastructure 188.6 207.8 31.8 27.2
Cellular handset products 48.8 42.2 11.6 6.9
Electronic warfare 27.0 25.7 (1.4) (0.4)
Broadband access 12.5 11.3 (3.0) (2.8)
Inter segment (3.9) (0.8) - -
Central costs ___- ___- (5.0) (3.8)
Excluding Compound semiconductors 273.0 286.2 34.0 27.1
Compound semiconductors 7.5 11.2 (16.2) (14.9)
280.5 297.4 17.8 12.2
Wireless Infrastructure
Filtronic's Wireless Infrastructure business is the number one independent
supplier of its type in the world with a market share estimated at 35%. During
the last two years, this share has grown, although the overall market has
declined as wireless operators have restricted capital expenditure. Each of
the Wireless Infrastructure operations in the UK, Finland, USA and Australia was
profitable with only China, which is at an early stage of production volumes,
incurring losses. Continued focus on customer support, cost reductions and
operating efficiency has been the key to a further very successful year for
Filtronic's principal business.
Cellular Handset Products
The Cellular Handset Products business has also had an outstanding year, further
increasing its market share as the world's leading manufacturer of handset
antennas. During financial year 2001/02, Filtronic supplied 86m handset
antennas, almost all of which were internal antennas, an increase of 21% over
the previous financial year. This was achieved against a background of lower
world sales for cellular handsets during this period. Demand for ceramic
diplexers for US TDMA mobile handsets continued throughout the last financial
year at a higher level than expected, helping to improve overall operating
margins, however, demand for this product has now reduced. Ceramic diplexer
sales are not expected to increase until volume production of WCDMA handsets
begins.
Electronic Warfare
Sales in the Electronic Warfare business segment have improved slightly on last
year as the European Fighter Aircraft programme has now started in initial
production quantities. This business moved into profitability in the second
half of the financial year and is expected to improve its financial performance
as EFA production volumes increase.
Broadband Access
The Broadband Access business has suffered from very low levels of demand for
its current point to point transceiver products in the second half of the
financial year resulting in continuing losses. Market conditions are such that
major improvements in the trading performance of this business are unlikely in
the next financial year.
Compound Semiconductors
The strategy for the investment in the compound semiconductor facility at Newton
Aycliffe remains unaltered but with an additional range of products. The Supply
and Development Agreement with BAE has resulted in a substantial cash receipt
during the second half of last financial year, although none of this has been
recognised in the profit and loss account this year. Business opportunities for
compound semiconductor products are arising from the strengthening relationship
with BAE. These opportunities have been enhanced by new restrictions on the
export of strategic compound semiconductor products from the USA for military
applications.
The first sales to M/A-COM, Inc., have now been recorded although currently they
are at modest levels. As outlined in my statement on 20 May 2002, the rate of
increase in and the ultimate level of the business with M/A-COM is dependent on
their success in the related end markets, the principal one of which is the
cellular handset market. It is probable that handset switches will now form the
majority of the products to be supplied to M/A-COM.
Presently, it is difficult for any company in this market to have good forward
demand visibility. Moreover, there are four specific switch opportunities,
among several, which, were M/A-COM to be successful in winning the business,
should provide volume wafer throughput for Newton Aycliffe such that the monthly
run rate of wafers being processed would be at an approximate break even level
by May 2003. This was the original objective of the M/A-COM agreement. The
benefit of this potential business would fall initially in the second half of
this financial year. Were M/A-COM not to be successful with these opportunities,
then losses at Newton Aycliffe would not be expected to be materially less than
£1m per month for the rest of the 2002/03 financial year, since most of the
other revenue opportunities will only contribute materially after 31 May 2003.
The main objective of Newton Aycliffe remains the production of high quality
compound semiconductor devices for integration into higher added value Filtronic
products. The first major product of this type is the power amplifier gain
block, the development of which continues to progress.
Filtronic Solid State, California
The Board announces the closing of the fabrication facility for compound
semiconductors at Filtronic Solid State, Santa Clara, California. Although the
acquisition of this 3" wafer facility 4 years ago enabled the company to enter
the compound semiconductor market and subsequently develop the Newton Aycliffe
facility, substantial investment would now be required if the Santa Clara
facility were to become a viable operation. £10.4m of the exceptional goodwill
impairment relates to this operation and an exceptional tangible fixed asset
impairment charge of £7.9m has also been applied. Further closure costs
estimated to be £2.5m will be incurred during the financial year ending 31 May
2003. Filtronic Solid State will operate a "fabless" compound semiconductor
business using the manufacturing capability at Newton Aycliffe.
Financing
At 31 May 2002, Filtronic had a cash balance of £9.1m, Filtronic's remaining
debt was $140.75m (£96.2m) of 10% Senior Notes. Additionally, the company
continues to have bank borrowing facilities totalling £31.0m, none of which was
being utilised at the year end. Net gearing was 81%, compared to 97% at 31 May
2001. The directors expect the company to continue to generate cash during
financial year 2002/03.
Outlook
Uncertain short term global market conditions remain for both the Wireless
Infrastructure and Cellular Handset Products businesses. The same underlying
uncertainties affect Broadband Access and the prospects for the M/A-COM products
at Newton Aycliffe. Currently, demand for 2.5G GSM products remains strong,
underpinned by the deployment of these systems in the United States of America.
However, demand for CDMA 2000 transmit/receive modules has recently weakened and
future requirements are uncertain.
Growth in each of the major businesses remains dependent upon the timing and
extent of the roll out of 3G WCDMA systems. Filtronic is exceptionally well
positioned to support customers' needs for base station transmit/receive
modules, tower top amplifiers, handset antennas and ceramic diplexers and high
efficiency compound semiconductor based power amplifier modules for the 3G WCDMA
wireless infrastructure market.
The importance of compound semiconductors to wireless communications will grow
over the next decade in much the same way as silicon did for the electronics
industry in the last 25 years. The high efficiency power amplifier modules are
the first of what will be many leading edge products based on compound
semiconductor technology to be produced at Newton Aycliffe. The marketing
strategy is to support OEMs directly with these modules and the merchant market
through Powerwave. The proprietary design concepts used rely upon the
availability of the high power, high gain field effect transistors, which have
been developed over the last year and can be produced cost effectively.
Shareholder value
At this time last year, I stated that the Board of Filtronic had recognised the
significant loss of shareholder value which had occurred during the 2000/01
financial year. Today, Filtronic is much stronger than it was one year ago,
both financially and operationally. Filtronic holds the number one independent
supplier position in its two major businesses. Both cash flow and operating
margins in those businesses are strong. Actions have been taken to improve
trading performance in our smaller businesses. The company has been and
continues to be cash generative. Since 31 May 2001, total debt has been reduced
by £37.7m from £131.5m to £93.8m and cash balances have increased by £3.5m.
While global market conditions remain challenging and the short term outlook is
unclear, Filtronic will continue to improve the efficiency of its businesses and
reduce its debt when practical. The development of compound semiconductor based
products and investment in the related technologies will remain the principal
technical focus. The Board believes that this strategy will deliver financial
stability, business growth and shareholder value in the medium to longer term.
Professor J D Rhodes CBE FRS FREng
Executive Chairman and CEO
29 July 2002
Consolidated Profit and Loss Account
for the year ended 31 May 2002
Excluding
Compound Compound
semi-conductors semi-conductors
2002 2002 2002
£000 £000 £000
note
Sales 1, 2 273,066 7,481 280,547
========= ========= =========
Operating profit/(loss) before goodwill
amortisation and impairment, tangible fixed asset
impairment and share compensation 1, 2 34,029 (16,196) 17,833
Goodwill amortisation (3,880) (1,472) (5,352)
Exceptional goodwill impairment 3 (5,658) (10,378) (16,036)
Exceptional fixed asset impairment 4 - (7,938) (7,938)
Share compensation 5 (1,570) - (1,570)
--------------- --------------- ---------------
Operating profit/(loss) 1, 2 22,921 (35,984) (13,063)
--------------- --------------- ---------------
Net interest payable 6 (12,638)
Net financing currency exchange gain 7 165
---------------
(12,473)
---------------
Loss on ordinary activities before taxation (25,536)
Taxation on loss on ordinary activities 8 (3,508)
---------------
Loss on ordinary activities after taxation (29,044)
Dividends (1,999)
---------------
Deficit for the year (31,043)
=========
Adjusted earnings per share
Basic 9 2.28p
Diluted 9 2.25p
Loss per share
Basic 9 (39.31)p
Diluted 9 (39.31)p
Dividend per share 2.70p
Consolidated Profit and Loss Account
for the year ended 31 May 2001
Excluding
Compound Compound
semi-conductors semi-conductors
2001 2001 2001
£000 £000 £000
note
Sales 1, 2 286,201 11,233 297,434
========= ========= =========
Operating profit/(loss) before goodwill
amortisation and impairment, tangible fixed asset
impairment and share compensation 1, 2 27,154 (14,930) 12,224
Goodwill amortisation (3,368) (1,516) (4,884)
Exceptional goodwill impairment 3 - (14,078) (14,078)
Exceptional tangible fixed asset impairment 4 - - -
Share compensation 5 (2,293) - (2,293)
--------------- --------------- ---------------
Operating profit/(loss) 1, 2 21,493 (30,524) (9,031)
--------------- --------------- ---------------
Net interest payable 6 (12,531)
Net financing currency exchange gain 7 335
---------------
(12,196)
---------------
Loss on ordinary activities before taxation (21,227)
Taxation on loss on ordinary activities 8 (1,564)
---------------
Loss on ordinary activities after taxation (22,791)
Dividends (1,994)
---------------
Deficit for the year (24,785)
=========
Adjusted earnings per share
Basic 9 (2.56)p
Diluted 9 (2.56)p
Loss per share
Basic 9 (31.24)p
Diluted 9 (31.24)p
Dividend per share 2.70p
Statement of Total Recognised Gains and Losses
for the year ended 31 May 2002
2002 2001
£000 £000
Loss on ordinary activities after taxation (29,044) (22,791)
Currency exchange movement arising on consolidation 1,422 3,047
Currency exchange movement on loan 2,496 (5,932)
--------------- ---------------
Total recognised gains and losses (25,126) (25,676)
========= =========
Consolidated Balance Sheet
at 31 May 2002
2002 2001
£000 £000
Fixed assets
Intangible assets 34,720 54,673
Tangible assets 108,589 126,302
--------------- ---------------
143,309 180,975
--------------- ---------------
Current assets
Stocks 43,735 51,274
Debtors 55,435 66,771
Cash 9,083 5,589
--------------- ---------------
108,253 123,634
Creditors: amounts falling due within one year 39,774 55,524
--------------- ---------------
Net current assets 68,479 68,110
--------------- ---------------
Total assets less current liabilities 211,788 249,085
Creditors: amounts falling due after one year 93,769 117,083
Provision for deferred tax 408 -
Deferred income 12,415 1,515
--------------- ---------------
Net assets 105,196 130,487
========= =========
Capital and reserves
Called up share capital 7,409 7,365
Share premium account 134,151 132,932
Shares to be issued 6,682 7,616
Revaluation reserve 106 106
Profit and loss account (43,152) (17,532)
--------------- ---------------
Equity shareholders' funds 105,196 130,487
========= =========
Consolidated Cash Flow Statement
for the year ended 31 May 2002
2002 2001
note £000 £000
Net cash flow from operating activities A 64,218 7,522
--------------- ---------------
Returns on investment and servicing of finance
Interest received 358 1,031
Interest paid (11,629) (12,716)
Interest element of finance lease payments - (4)
--------------- ---------------
Net cash flow from returns on investment and servicing of finance (11,271) (11,689)
--------------- ---------------
Tax paid (2,345) (3,091)
--------------- ---------------
Capital expenditure
Purchase of tangible fixed assets (11,369) (40,982)
Sale of tangible fixed assets 1,312 171
Government grants received 1,034 480
--------------- ---------------
Net cash flow from capital expenditure (9,023) (40,331)
--------------- ---------------
Acquisitions
Acquisition costs - (118)
Cash acquired with subsidiary - 14
--------------- ---------------
Net cash flow from acquisitions - (104)
--------------- ---------------
Equity dividends paid (1,992) (1,964)
--------------- ---------------
Net cash flow before financing 39,587 (49,657)
--------------- ---------------
Financing
Issue of shares 264 1,844
Capital element of finance lease payments - (147)
Loans repaid (21,982) (567)
--------------- ---------------
Net cash flow from financing (21,718) 1,130
--------------- ---------------
Increase/(decrease) in cash B 17,869 (48,527)
========= =========
Notes to the Consolidated Cash Flow Statement
for the year ended 31 May 2002
A Reconciliation of operating loss to net cash flow from operating activities
2002 2001
£000 £000
Operating loss (13,063) (9,031)
Goodwill amortisation 5,352 4,884
Exceptional goodwill impairment 16,036 14,078
Share compensation 1,570 2,293
Depreciation 20,433 16,759
Exceptional tangible fixed asset impairment 7,938 -
Loss/(profit) on disposal of tangible fixed assets 191 (70)
Deferred licence fee income received 10,000 -
Government grants released (134) (167)
Movement in stocks 7,445 (10,642)
Movement in debtors 12,115 (4,307)
Movement in creditors (3,665) (6,275)
--------------- ---------------
Net cash flow from operating activities 64,218 7,522
========= =========
B Reconciliation of net cash flow to movement in net debt
2002 2001
£000 £000
Increase/(decrease) in cash 17,869 (48,527)
Cash flow from debt 21,982 567
Cash flow from finance leases - 147
--------------- ---------------
Change in net debt from cash flows 39,851 (47,813)
Loans acquired with subsidiary - (300)
Non-cash movement (1,367) (842)
Currency exchange movement 2,754 (5,662)
--------------- ---------------
Movement in net debt 41,238 (54,617)
Opening net debt (125,924) (71,307)
--------------- ---------------
Closing net debt (84,686) (125,924)
========= =========
Notes to the Consolidated Cash Flow Statement
for the year ended 31 May 2002
C Analysis of movement in net debt
At Currency At 31 May
1 June Cash Non-cash exchange 2002
2001 flow movement movement £000
£000 £000 £000 £000
Cash 5,589 9,083
Overdraft (14,202) -
------------ -----------
Net (overdraft)/cash (8,613) 17,869 - (173) 9,083
------------ -----------
Loans due within one year (228) -
Loans due after one year (117,083) (93,769)
------------ -----------
Loans (117,311) 21,982 (1,367) 2,927 (93,769)
------------ --------- ------------ ------------ -----------
Net debt (125,924) 39,851 (1,367) 2,754 (84,686)
======= ===== ====== ===== ======
Reconciliation of Shareholders' Funds
for the year ended 31 May 2002
2002 2001
£000 £000
Loss on ordinary activities after taxation (29,044) (22,791)
Dividends (1,999) (1,994)
--------------- ---------------
Deficit for the year (31,043) (24,785)
Contribution to QUEST (461) -
Currency exchange movement arising on consolidation 1,422 3,047
Currency exchange movement on loan 2,496 (5,932)
Issue of shares 3,229 4,992
Shares to be issued - shares issued (2,504) -
Shares to be issued - acquisition contingent consideration - 5,323
Shares to be issued - share compensation 1,570 2,293
--------------- ---------------
Movement in shareholders' funds (25,291) (15,062)
Opening shareholders' funds 130,487 145,549
--------------- ---------------
Closing shareholders' funds 105,196 130,487
========= =========
Notes to the Financial Statements
for the year ended 31 May 2002
1 Geographical segment analysis by origin
2002 2001
£000 £000
Sales
United Kingdom 108,951 114,030
Finland 68,936 54,223
United States of America 98,871 118,946
Australia 14,962 17,774
China 12,857 12,448
Inter segment (24,030) (19,987)
--------------- ---------------
280,547 297,434
========= =========
Operating profit/(loss) before goodwill amortisation and
impairment, tangible fixed asset impairment and share
compensation
United Kingdom 2,862 1,961
Finland 12,316 3,915
United States of America 2,482 6,209
Australia 793 2,315
China 4,332 1,649
Central costs (4,952) (3,825)
--------------- ---------------
17,833 12,224
========= =========
Operating profit/(loss)
United Kingdom 2,862 1,961
Finland 10,424 2,147
United States of America (26,522) (13,278)
Australia 793 2,315
China 4,332 1,649
Central costs (4,952) (3,825)
--------------- ---------------
(13,063) (9,031)
========= =========
The operating loss in the United States of America is after charging
£16,036,000 (2001 £14,078,000) of exceptional goodwill impairment and
£7,938,000 (2001 £nil) of exceptional tangible fixed asset impairment.
Notes to the Financial Statements
for the year ended 31 May 2002
2 Business segment analysis
2002 2001
£000 £000
Sales
Wireless infrastructure 188,589 207,777
Cellular handset products 48,845 42,174
Electronic warfare 26,977 25,728
Broadband access 12,544 11,273
Inter segment (3,889) (751)
--------------- ---------------
Excluding compound semiconductors 273,066 286,201
Compound semiconductors 7,481 11,233
--------------- ---------------
280,547 297,434
========= =========
Operating profit/(loss) before goodwill amortisation and
impairment, tangible fixed asset impairment and share compensation
Wireless infrastructure 31,777 27,212
Cellular handset products 11,570 6,979
Electronic warfare (1,336) (443)
Broadband access (3,030) (2,769)
Central costs (4,952) (3,825)
--------------- ---------------
Excluding compound semiconductors 34,029 27,154
Compound semiconductors (16,196) (14,930)
--------------- ---------------
17,833 12,224
========= =========
Operating profit/(loss)
Wireless infrastructure 31,777 27,212
Cellular handset products 9,678 5,211
Electronic warfare (1,583) (698)
Broadband access (11,999) (6,407)
Central costs (4,952) (3,825)
--------------- ---------------
Excluding compound semiconductors 22,921 21,493
Compound semiconductors (35,984) (30,524)
--------------- ---------------
(13,063) (9,031)
========= =========
The operating loss of compound semiconductors is stated after charging
£10,378,000 (2001 £14,078,000) of exceptional goodwill impairment and
£7,938,000 (2001 £nil) of exceptional tangible fixed asset impairment. The
operating loss of broadband access is stated after charging £5,658,000
(2001 £nil) of exceptional goodwill impairment.
Notes to the Financial Statements
for the year ended 31 May 2002
3 Exceptional goodwill impairment
2002 2001
£000 £000
Exceptional goodwill impairment 16,036 14,078
========= =========
£10,378,000 (2001 £14,078,000) of the exceptional goodwill impairment arose in
respect of the compound semiconductor operation at Filtronic Solid State and
£5,658,000 (2001 £nil) in respect of Filtronic Sigtek, Inc., which forms part of
the broadband access business segment.
4 Exceptional tangible fixed asset impairment
2002 2001
£000 £000
Exceptional tangible fixed asset impairment 7,938 -
========= =========
The exceptional tangible fixed asset impairment arose in respect of the compound
semiconductor operation at Filtronic Solid State.
5 Share compensation
2002 2001
£000 £000
Share compensation 1,570 2,293
========= =========
As a result of the acquisition of Filtronic Sigtek, Inc. on 22 August 2000, a
maximum cumulative charge of £4,958,000, comprising the issue of a maximum of
421,226 ordinary shares of 10p each in Filtronic plc, could arise over the four
year period following the acquisition. This share compensation is contingent on
Filtronic Sigtek, Inc. maintaining the number and quality of its engineers over
that period. The cumulative charge at 31 May 2002 was £3,863,000
(2001 £2,293,000).
Notes to the Financial Statements
for the year ended 31 May 2002
6 Net interest payable
2002 2001
£000 £000
Interest receivable
Interest on bank deposits 358 1,031
--------------- ---------------
Interest payable
Interest on bank borrowings 460 603
Interest on other loans 11,169 12,113
Finance lease interest - 4
Debt issue costs - amortisation 824 842
Debt issue costs - loss on repayment of debt 543 -
--------------- ---------------
12,996 13,562
--------------- ---------------
Net interest payable 12,638 12,531
========= =========
7 Net financing currency exchange gain
2002 2001
£000 £000
Currency exchange (loss)/gain on cash balances (224) 335
Currency exchange gain on loan 389 -
--------------- ---------------
165 335
========= =========
8 Taxation on loss on ordinary activities
2002 2001
£000 £000
Current tax
United Kingdom 162 130
Overseas 2,938 1,434
--------------- ---------------
3,100 1,564
--------------- ---------------
Deferred tax
Overseas origination and reversal of timing differences 408 -
--------------- ---------------
3,508 1,564
========= =========
The United Kingdom current tax charge arises from taxes paid overseas on income
paid to the United Kingdom which cannot be fully relieved against United Kingdom
taxes. The overseas tax charge for the year arises primarily from the group's
operations in Finland where taxable profits cannot be relieved by losses
available in the United Kingdom and the United States of America.
Notes to the Financial Statements
for the year ended 31 May 2002
9 Loss per share
2002 2001
Adjusted basic earnings per share 2.28p (2.56)p
Effect of adjusted items net of taxation (41.59)p (28.68)p
--------------- ---------------
Basic loss per share (39.31)p (31.24)p
========= =========
Adjusted diluted earnings per share 2.25p (2.56)p
Effect of adjusted items net of taxation (41.56)p (28.68)p
--------------- ---------------
Diluted loss per share (39.31)p (31.24)p
========= =========
£000 £000
Adjusted profit/(loss) 1,687 (1,871)
Goodwill amortisation (5,352) (4,884)
Exceptional goodwill impairment (16,036) (14,078)
Exceptional tangible fixed asset impairment (7,938) -
Share compensation (1,570) (2,293)
Net financing currency exchange gain 165 335
--------------- ---------------
Loss on ordinary activities after taxation (29,044) (22,791)
========= =========
Weighted average number of shares in issue 73,881,832 72,962,735
Dilution effect of share options 243,482 -
Dilution effect of contingently issuable shares 708,543 -
--------------- ---------------
Diluted weighted average number of shares 74,833,857 72,962,735
========= =========
The adjusted loss per share figures have been provided in order that the effects
of the adjusted items on reported earnings per share can be fully appreciated.
This information is provided by RNS
The company news service from the London Stock Exchange