1st Aug 2005 07:00
Filtronic PLC01 August 2005 FILTRONIC PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2005 Results in line with market expectations; Group returned to growth; Bank facilities amended and rescheduled; Progress on sale of Handset Products division Filtronic plc ("Filtronic"), a leading global designer and manufacturer ofcustomised microwave electronic subsystems for the wireless telecommunicationsand defence industries, announces its Preliminary Results for the year ended 31May 2005. Worldwide sites are in the UK (North of England, Yorkshire, Midlands,Scotland), USA, Finland, China and Australia. Filtronic is one of the world's leading independent suppliers of transmit/receive modules for base stations and the world's leading manufacturer of mobilehandset antennas. The contribution to sales is: Wireless Infrastructure (64%),Handset Products (19%), Integrated Products (17%). Financial Highlights • Group sales £262.9m (2004: £245.1m) • Operating profit £6.8m (2004: £4.8m) • Pre-tax profit £5.5m (2004: £0.9m) • Basic EPS 7.10p per share (2004: loss per share 2.38p) • Diluted EPS 7.09p (2004: loss per share 2.38p) • Final dividend maintained at 1.80p (2004: 1.80p), payable 1 November 2005, making total dividend 2.70p (2004: 2.70p) • Net gearing reduced from 51% to 41% • Bank facilities amended with Barclays and ABN AMRO and repayment rescheduled over five years Operational Highlights • Wireless Infrastructure: - Dominating market for bases station filters with 28% market share - Supplying production quantities to all major OEMs - Started supply of integrated power amplifiers for base stations • Integrated Products: - High volume semiconductor contract supported by round the clock working at the foundry at Newton Aycliffe - New contract started with ITT for electronic warfare subsystem in US - New point to point microwave links being sold to 3 OEMs • Handset Products: - In period of exclusive negotiations for its disposal • Board appointments: John Roulston as Group CEO on 6 September 2004, Charles Hindson as Group Finance Director on 14 December 2004 and Iain Gibson joined on 21 February 2005 and became CEO of the Integrated Products division on 6 April 2005. • Disposal of sites in Merrimack USA and Brisbane Australia for £6.3m • Capital expenditure of £13.0m (2004 £11.7m) Outlook Professor J. David Rhodes said: "We see continued growth prospects for thegroup. Wireless Infrastructure is experiencing a substantial market recovery andthe strategic efforts undertaken over the past few years in power amplifiers isincreasing our presence in this important market sector. In Integrated Products,we have acquired volume contracts in compound semiconductors for our foundry atNewton Aycliffe, which now requires to meet the ramp up in its production, andstrengthened our defence position in the United States. For the coming year,the group is well positioned for growth, due to strengthening markets in thecommunications sector." Enquiries Filtronic plc:Professor J David Rhodes, Chairman Tel: 01274 530622 / 07850 827280Professor John Roulston, Group Chief Executive Officer Tel: 01274 530622 / 07800 706318Charles Hindson, Group Finance Director Tel: 01274 530622 / 07800 706319 Binns & Co PR Ltd:Peter Binns / Paul McManus Tel: 020 7786 9600 / 07980 541893 Chairman's Statement I am pleased to report that over the year the group has returned to growth, withsales for the year ended 31 May 2005 increased by 7% to £262.9m (2004 £245.1m)and operating profit increased by 42% to £6.8m (2004 £4.8m). The profit beforetax was £5.5m (2004 £0.9m) and the profit after tax was £5.3m (2004 £1.8m loss). The Board is therefore proposing to maintain a final dividend of 1.80p (20041.80p) payable on 1 November 2005 to shareholders on the register at 23September 2005. This year, it has been satisfying to observe the progress made in both theWireless Infrastructure and Integrated Product divisions. WirelessInfrastructure achieved sales growth of 16% and with continuing attention tomanufacturing costs increased operating profit by 68%, year on year. TheIntegrated Products division, where sales grew by 26% (after the exclusion ofthe business sold in December 2003), again continued the trend of reducingoperating losses achieving 26% reduction year on year. In July 2005, the Company arranged an amended bank facility with Barclays andABN AMRO, rescheduling these facilities over a five year term with revisedfinancial covenants. The focus during the main part of the year for the Handset Products division hasbeen its preparation for disposal. I am now pleased to announce that exclusivenegotiations are progressing. The year has also been active for the company in strengthening the Board. Therole of Chairman and Group CEO has been divided. John Roulston joined as GroupCEO on 6 September 2004 and Charles Hindson as Group Finance Director on 14December 2004. Iain Gibson joined on 21 February 2005 and became CEO of theIntegrated Products division on 6 April 2005. During the coming year, the Board intends to appoint new non-executive directorsand has engaged external advisors to assist with the appointments. I am,though, gratified that current non-executive directors are willing to offerthemselves for re-election at the annual general meeting until their successorsare appointed and, for this interim period, to bring their independent advice tothe company's affairs. Looking to the coming year, we see continued growth prospects for the group.Wireless Infrastructure is experiencing a substantial market recovery and thestrategic efforts undertaken over the past few years in power amplifiers areincreasing our presence in this important market sector. In IntegratedProducts, we have acquired volume contracts in compound semiconductors for ourfoundry at Newton Aycliffe, which now requires to meet the ramp up in itsproduction, and strengthened our defence position in the United States through acontract for supply of sub-systems for upgrade of widely deployed airborneelectronic countermeasures equipment. I would also like to thank all of our employees across our different operationsthroughout the world for their continued dedication and contribution to thebusiness, reflecting in particular on the difficult changes that have take placein reducing manufacturing at the Shipley site in the UK. For the coming year,the group is well positioned for growth, due to strengthening markets in thecommunications sector. Professor J David Rhodes CBE FRS FREngChairman1 August 2005 Group CEO's Operating Review Summary My first year with Filtronic plc has been one of growth and consolidation withinthe group, supported by returning markets. Wireless Infrastructure has shown sustained above market growth for itsfilter-based transmit-receive modules and made further progress in establishingitself as a force in the base-station power amplifier market, a strategicobjective in which we have invested. The inherent technical and manufacturingstrengths in the division continue to serve it in maintaining margins, combatingprice pressure with design innovation and opening new product opportunitiesthrough increased integration of base-station functions. Integrated Products has continued to make progress on semiconductor processtechnology and merchant market offerings from its compound semiconductor foundryat Newton Aycliffe while reducing losses and preparing for the start of highvolume manufacture of switches for mobile handsets in the coming financial year.Sales in the merchant arena have been slow leading us to review our salesapproach to this market. The volume switch market, which has taken longer thanforecast to mature, is showing strength. The division has relocated its businesses at Merrimack and Natick in the US intoa larger facility at Hudson, New Hampshire, from which it is servicing a majornew defence contract with ITT. The improved facilities will allow us to bidcompetitively for larger contracts, consistent with the strategy of developingbusiness opportunities we perceive in the large US defence market. At the annual general meeting in September 2004, the Chairman announced theBoard's decision to dispose of the Handset Products division, preferably bymeans of an IPO on the Finnish stock exchange. Preparations were put in hand toachieve this, but by January it was clear that the market conditions haddeteriorated to the point where the contemplated IPO would not realiseappropriate value. The decision was announced in January that the company wouldseek a buyer for the business and in June we informed the market that we enteredinto detailed negotiations. These exclusive negotiations are progressing. The segmental analysis of the operating results is as follows: Sales Operating profit Year ended 31 May 2005 *2004 2005 *2004 £m £m £m £m Wireless Infrastructure 168.4 145.2 18.1 10.7Handset Products 50.0 60.2 3.6 11.2Integrated Products 43.6 38.4 (9.9) (13.4)Central Services 3.6 3.9 (5.0) (3.7)Inter segment (2.7) (2.6) - - 262.9 245.1 6.8 4.8 * The results for the year ended 31 May 2004 have been restated using therevised accounting policy described in note 2 to the financial statements. Theaverage rate of exchange for the year is now used to translate the results ofthe overseas subsidiaries. Wireless Infrastructure This business segment under the leadership of Alan Needle, divisional CEO,dominates the independent global market in filter-based components andsub-systems for cellular base-stations and is using its established positionwith OEMs (Original Equipment Manufacturers) to expand into the adjacent productarea of power amplifiers. The market has been under continual price pressurewhich has forced investment in global low-cost manufacturing from Filtronic andits competitors. The value of this transition is nearly exhausted shiftingemphasis towards superior product design and technology insertion throughoutproduct life, areas where Wireless Infrastructure can differentiate itself andachieve competitive advantage. The wide design competence of the division allows economies to be gained throughintegration of functions, typical opportunities arriving through embeddeddigital processing for signal conditioning and for computer interface tobase-station software. By maintaining in-house expertise and capacity inferrites, ceramics and digital processing to complement its filter technology,the product offerings can be optimised for performance and value. In the case of power amplifiers, the company's compound semiconductor facilityholds the transistor technology for providing performance levels beyond thereach of standard market components. There is a growing appreciation of theneed for higher performance amplifiers as new data transmission formats arerequired in 3G WCDMA networks and as network loading increases spectraloccupancy. We see this as creating an additional growth impetus to our poweramplifier business. The business has capitalised on the ongoing improvements in the overall marketworldwide, with the filter-based transmit-receive modules growing sales 15% overthe year, which we consider outperformed the overall expansion of the marketestimated to be in the range of 12% to 14%. The market continues to be dynamic,with more OEMs sourcing supply from the sector and discontinuing in-houseproduction. During the year we consolidated our position by supplyingproduction quantities to all the major OEMs thereby providing the platform forrevenue growth in the coming year. We estimate that we currently hold 28% ofour addressable market in filter-based product while our efforts in poweramplifiers give us longer-term potential to achieve similar penetration in thisarea, particularly if the performance emphasis we predict comes to pass. Deliveries of integrated power amplifiers incorporating fully digital interfacesfor signal and control commenced at the end of the first half of the financialyear. This sophisticated product integrates a full transmit and receive radiofunction with a multi-carrier power amplifier. Variants of the product are indevelopment to cover additional frequency bands and higher powers. During the year, we continued to consolidate production activities in China,resulting in the closure of filter manufacture in the UK, although finalassembly for the integrated power amplifiers has been retained. The transferhas been carried out with limited additional capital expenditure, contributingto profitability and continuing cash generation. Integrated Products I am very pleased to welcome Iain Gibson, who joined the division in Februaryfrom SELEX Sensors and Airborne Systems (SELEX SAS), formerly BAE SYSTEMSAvionics and became its CEO in April. Iain brings a wealth of general andcommercial management experience from the defence sector which will continue toimprove the operational performance of this technologically and product diversebusiness. This division engages activities covering the semiconductor and defence andsecurity sectors and point to point microwave links. Sales in the year grew 26%(2004 £34.5m to 2005 £43.6m) after excluding the contribution of the electronicwarfare business of Filtronic Solid State, which was sold in December 2003. Thesequential growth rate in sales comparing half-year on half-year during thefinancial year was 14% and the comparative half year growth for the second halfof the financial year compared with the same period last financial year was 20%.Operating loss for the financial year was reduced by £3.5m to £9.9m, split£5.7m in the first half and £4.2m in the second. This was achieved while addingstaff and upgrading facilities to accommodate high volume output at NewtonAycliffe to service demands from our strategic customer, R.F. Micro Devices(RFMD). At the end of the financial year the foundry moved intoround-the-clock, seven-day week production for the first time. The semiconductor foundry at Newton Aycliffe has now established itself as aleading source for six-inch gallium arsenide wafers using the pHEMT process. InApril 2005, it started to supply wafers in volume to RFMD for use in front-endmodules for mobile handsets, a world market in excess of 750 million units peryear and growing at 7%. The defence activities have benefited from the start of production supply ofsub-systems to ITT in the US and continuing production supply to Elettronica ofItaly and EADS of Germany of sub-system assemblies for the Eurofighter DefensiveAids system. The Eurofighter production will reduce to low level in the comingyear as a major portion of our work fell outside UK national work-share andwill, as a result of the delays to the second tranche, be subsumed into Italyand Germany. This leaves the US defence and security market as the bestopportunity for our continuing growth in the short term. Consequently, we haverelocated our businesses in the US to support growth and, in June 2005, broughtFiltronic Sigtek into the Integrated Products segment where we intend to focuson acquiring external business, while formerly it has mainly supported in-houseprojects. These moves in the US were accompanied by a managementreorganisation, simplifying the reporting structures and creating a singlemanagement team to lead all our US activities. Filtronic Broadband provides point-to-point microwave link transceivers to OEMcustomers. During the year the customer base was expanded on the basis of newqualified product which entered production in November 2004 using our galliumarsenide integrated circuits. This product is selling to three OEMs inexpanding volumes and a further design iteration awaiting qualification usesmore complex multi-function integrated circuits further reducing componentcount. The point-to-point radio market is exhibiting strong growth and ourcustomers are well positioned to benefit. Our technology in this market isrecognised to be superior and we confidently expect an increasing market share. Handset Products This division is a market leader in the provision of internal antennas formobile handsets, with a market share of about 18%. Sales declined 17% year onyear reflecting lower than anticipated levels of activity in the second half ofthe financial year with reduced levels of activity with the division's principalcustomer. Antenna volumes in the financial year were 104 million units (2004121 million units), of which over 50% were manufactured in China. The operatingmargin reflected this reduced level of activity and with the impact of the fixednature of depreciation on automated lines in Finland, operating margins for theyear reduced to 11% before goodwill amortisation, 7% after goodwillamortisation. Central Research and Development Central Research and Development effort has continued on integrated poweramplifiers leading to a solution of the problem of digitally compensating forthe distortion products of the gallium arsenide multi-carrier base-stationamplifier. This solution lies in the semiconductor technology used and iscompatible with existing digital-predistortion processors. This breakthroughhas led to increased effort on low-cost packaging to achieve an attractivehigh-performance module price. Strategic projects include WiMAX basestation hardware and software and WiMAXmobile transceiver modules. In the defence sector, effort was expended on a digital integrated frequencymeasurement module to succeed our very successful product range now inproduction and on a demonstration "man-pack" ESM receiver which is beingevaluated by potential customers. Finance The business has been financed by bank facilities during the year, and althoughcovenants were breached, the group's lending banks continued support. Thesebreaches of covenants resulted in additional finance charges in the year ofapproximately £0.5m. The capital repayments of £6m due in the year were met. After the year end, the bank facilities were amended through new arrangementswith Barclays and ABN AMRO, and they now provide term facilities over the nextfive years with no capital repayment due in the financial year ending 31 May2006. The banks have also reconfirmed the overdraft of £9m until end of July2006. The recognition as revenue of the outstanding deferred licence fee from BAESYSTEMS (now SELEX SAS) was changed with effect from 1 June 2004 to be equallyspread over the remaining period to 1 May 2008 for which the Filtronic group isliable to provide supply of product. This has increased the annual revenuerecognition from £0.8m to £2.3m. Capital expenditure Capital expenditure in the year was limited to £13.0m (2004 £11.7m), reflectingadditional capacity for Wireless Infrastructure in China and its preparation forproduction of integrated power amplifiers, funding of replacement capacitywithin Handset Products, and ongoing plant requirements for defence contractsand high volume compound semiconductor demand in Integrated Products. Employees At the end of the financial year the group employed 3,863 people, an increase of273 (8%) since May 2004. The principal changes were that China increasedemployees by 555 people, whilst UK employment reduced by 406 people. Outlook Wireless Infrastructure foresees continued overall market growth, estimated tobe approximately 8% to 10%, with potential to gain modest increase in its marketshare in filter-based products as a result of the new OEM customers securedduring the year. It expects to maintain historic margins through continuing lowcost manufacturing, before transfer of central research and development costs.Further growth is expected in integrated power amplifiers. Following marketdemand, we are supplying Silicon LDMOS power amplifiers for specific customerrequirements complementing the high performance gallium arsenide amplifiers. A further lower cost manufacturing site will be established during the year inHungary, initially to provide additional capacity for filter production and toreduce dependence on China as a sole low-cost manufacturing base. The divisionwill also cease operations in Australia. Integrated Products is planning rapid turnover growth through the challengingramp up of volume semiconductor production for RFMD and supply to additionalvolume customers. Filtronic Broadband is moving to volume radio production fromthe new business gained in the year ending 31 May 2005. This is beneficial insales and profit to the division and also further increases foundry loading.Growth in defence revenues in the US will be offset by run-down of Eurofighterproduction in the UK towards the end of the year. Overall, the division isexpected to reach run rate breakeven in the year ending 31 May 2006, this beingdependent on achieving production targets for the foundry. Handset Products should see a strong recovery in revenue in the financial yearas projects acquired and product qualified over the past nine months reachproduction ramp-up. The longer term outlook is supported by efforts in ceramicantennas for cellular and non-cellular applications and extruded metalstructures for integrated assemblies. John Roulston FREng FIEE CEngGroup CEO1 August 2005 Consolidated Profit and Loss Accountfor the year ended 31 May 2005 Restated 2005 2004 note £000 £000 Sales 3, 4 262,865 245,076 Operating profit 3, 4 6,779 4,804 Exceptional profit on disposal of tangible fixed assets 5 2,356 - Exceptional profit on disposal of business 6 - 4,842 Net interest payable and similar charges 7 (4,104) (5,550) Currency exchange gains/(losses) 8 522 (644) Exceptional loss on repayment of debt 9 - (2,498) (3,582) (8,692) Profit on ordinary activities before taxation 5,553 954 Taxation on profit on ordinary activities 10 (241) (2,730) Profit/(loss) on ordinary activities after taxation 5,312 (1,776) Dividends 11 (2,021) (2,015) Retained profit/(deficit) for the year 3,291 (3,791) Earnings/(loss) per share Basic 12 7.10p (2.38)p Diluted 12 7.09p (2.38)p Dividend per share 11 2.70p 2.70p All the results relate to continuing operations. Consolidated Balance Sheetfor the year ended 31 May 2005 2005 2004 £000 £000Fixed assets Intangible assets 29,195 30,902 Tangible assets 79,793 86,300 108,988 117,202 Current assets Stocks 34,802 36,618 Debtors 67,924 54,480 Deferred tax asset 2,309 - Cash at bank and in hand 6,563 2,070 111,598 93,168 Creditors: amounts falling due within one year 70,417 51,767 Net current assets 41,181 41,401 Total assets less current liabilities 150,169 158,603 Creditors: amounts falling due after one year 33,000 44,000 Provision for deferred tax 661 582 Deferred income 10,730 12,908 Net assets 105,778 101,113 Capital and reserves Called up share capital 7,484 7,465 Share premium account 139,172 137,641 Shares to be issued - 2,255 Revaluation reserve 106 106 Other reserve 5,584 2,020 Profit and loss account (46,568) (48,374) Equity shareholders' funds 105,778 101,113 Consolidated Cash Flow Statementfor the year ended 31 May 2005 Restated 2005 2004 note £000 £000 Net cash flow from operating activities A 19,595 16,951 Returns on investment and servicing of financeInterest received 85 95Interest paid (4,189) (4,852)Bank loan arrangement fee paid - (500)Premium paid on repayment of debt - (1,517)Net cash flow from returns on investment and servicing of (4,104) (6,774)financeTax paid (1,846) (2,811) Capital expenditurePurchase of tangible fixed assets (12,963) (11,718)Sale of tangible fixed assets 1,555 305Exceptional sale of tangible fixed assets (note 5) 6,349 -Government grants received 1,000 1,297Government grants repaid (150) -Net cash flow from capital expenditure (4,209) (10,116) Disposals (note 6)Cash consideration received - 6,970Disposal costs paid - (471)Net cash flow from disposals - 6,499 Equity dividends paid (2,018) (2,008) Net cash flow before financing 7,418 1,741 Financing Issue of shares - 275Loans taken out - 60,000Loans repaid (6,000) (66,947)Net cash flow from financing (6,000) (6,672) Increase/(decrease) in cash B 1,418 (4,931) Notes to the Consolidated Cash Flow Statementfor the year ended 31 May 2005 A Reconciliation of operating profit to net cash flow from operating activities Restated 2005 2004 £000 £000 Operating profit 6,779 4,804 Goodwill amortisation 2,222 2,256 Share compensation 43 232 Depreciation 14,572 17,542 Profit on disposal of tangible fixed assets (235) (44) Licence fee released (2,335) (789) Government grants released (693) (743) Movement in stocks 2,107 (4,901) Movement in debtors (13,249) (7,541) Movement in creditors 10,384 6,135 Net cash flow from operating activities 19,595 16,951 B Reconciliation of net cash flow to movement in net debt Restated 2005 2004 £000 £000 Increase/(decrease) in cash 1,418 (4,931) Cash flow from debt 6,000 6,947 Change in net debt from cash flows 7,418 2,016 Non-cash movement - (1,274) Currency exchange movement 486 3,379 Movement in net debt 7,904 4,121 Opening net debt (51,299) (55,420) Closing net debt (43,395) (51,299) C Analysis of movement in net debt At Currency At 1 June Cash exchange 31 May 2004 flow movement 2005 £000 £000 £000 £000 Cash at bank and in hand 2,070 4,007 486 6,563 Bank overdraft (3,369) (2,589) - (5,958)Net (overdraft)/cash (1,299) 1,418 486 605 Loans due within one year (6,000) (5,000) - (11,000)Loans due after one year (44,000) 11,000 - (33,000)Loans (50,000) 6,000 - (44,000) Net debt (51,299) 7,418 486 (43,395) Consolidated Statement of Total Recognised Gains and Lossesfor the year ended 31 May 2005 Restated 2005 2004 £000 £000 Profit/(loss) on ordinary activities after taxation 5,312 (1,776) Currency exchange movement arising on consolidation 1,331 (9,011) Currency exchange movement on loan - 4,249 Total recognised gains and losses for the year 6,643 (6,538) Consolidated Reconciliation of Shareholders' Fundsfor the year ended 31 May 2005 Restated 2005 2004 £000 £000 Profit/(loss) on ordinary activities after taxation 5,312 (1,776) Dividends (2,021) (2,015) Profit retained/(deficit) for the year 3,291 (3,791) Currency exchange movement arising on consolidation 1,331 (9,011) Currency exchange movement on loan - 4,249 Issue of shares 2,298 2,573 Shares to be issued - shares issued (2,298) (2,298) Shares to be issued - share compensation 43 232 Movement in shareholders' funds 4,665 (8,046) Opening shareholders' funds 101,113 109,159 Closing shareholders' funds 105,778 101,113 Notes 1 Basis of preparation The financial information set out here in does not constitute the company'sstatutory accounts for the years ended 31 May 2005 or 31 May 2004. Statutoryaccounts for 2004 have been delivered to the Registrar of Companies, and thosefor 2005 will be delivered following the company's annual general meeting. Theauditors have reported on those accounts; their reports were unqualified and didnot contain statements under section 237 (2) or (3) of the Companies Act 1985. Financial position and market conditions The group is currently experiencing increases in demand across its operatingdivisions from both existing and new customers in the Wireless Infrastructure,arising from new product allocations from the principal customer in the HandsetProducts division and from the active ramp up of volume semiconductors supplywithin the Integrated Products division, as discussed in the Group CEO'sOperating Review. Global markets, particular the technology and telecoms sector, continue toexperience a high degree of volatility. It remains difficult to predict totalvolumes and timing with certainty. Securing lower costs of production, throughgreater output from the group's Chinese facilities and commencement ofactivities in Hungary and other cost reduction programmes remain importantareas. In addition, the foundry at Newton Aycliffe is required to operatesuccessfully to meet the substantial increases in the volume of semiconductorwafers it is expected to produce to meet current and ongoing customer demand.This is critical to ensuring its expected contribution to the group. The Board has built all of these circumstances into their working capitalforecasts and has modelled various business scenarios, including both retentionand disposal of the Handset Products division. The Board has recognised theuncertainties referred to above and taken into account the support received fromthe banks providing the rescheduled debt facilities, including the renewal ofthe group's overdraft facility of £9,000,000 until 31 July 2006. Thus the Board has concluded, based on these scenarios, that the group's fundingremains adequate and therefore that it is appropriate for the financialstatements to be prepared on a going concern basis. Notes 2 Change of accounting policy The accounting policy for the translation of the profit and loss accounts andcash flow statements of overseas subsidiaries has been changed. Under theprevious policy, the profit and loss accounts and cash flow statements of theoverseas subsidiaries were translated at the rate of exchange ruling at thebalance sheet date. From 1 June 2004 the profit and loss accounts and cash flowstatements of the overseas subsidiaries are translated at the average rate ofexchange for the year. The balance sheets of the overseas subsidiaries continueto be translated at the rate of exchange ruling at the balance sheet date. Thedirectors consider that the revised accounting policy provides a fairer view ofthe group's results as a significant proportion of the group's operations areoverseas. The results for the year ended 31 May 2004 have been restated using the revisedaccounting policy. There is no change to the consolidated balance sheet at 31May 2004. The effect of the change in accounting policy on the results for theyear ended 31 May 2004 is as follows: As previously Prior year reported adjustment Restated 2004 2004 2004 £000 £000 £000 Sales 237,203 7,873 245,076 Operating profit 3,707 1,097 4,804 (Loss)/profit on ordinary activities before (409) 1,363 954taxation Loss on ordinary activities after taxation (3,007) 1,231 (1,776) Currency exchange movement arising on (7,780) (1,231) (9,011)consolidation Notes 3 Geographical origin segment analysis Restated 2005 2004 £000 £000 Sales United Kingdom 106,447 92,486 Finland 54,434 63,479 United States of America 65,880 52,523 Australia 4,300 4,982 China 86,988 50,887 Inter segment (55,184) (19,281) 262,865 245,076 Operating profit United Kingdom (23,082) (15,896) Finland (1,841) 2,216 United States of America 9,356 2,963 Australia (2,329) (1,418) China 24,675 16,939 6,779 4,804 Operating profit is after charging goodwill amortisation: Finland 2,028 2,046 United States of America 194 210 2,222 2,256 Notes 4 Business segment analysis Restated 2005 2004 £00 £000 Sales Wireless Infrastructure 168,425 145,219 Handset Products 49,974 60,154 Integrated Products 43,593 38,450 Central Services 3,575 3,857 Inter segment (2,702) (2,604) 262,865 245,076 Operating profit Wireless Infrastructure 18,062 10,753 Handset Products 3,589 11,180 Integrated Products (9,857) (13,392) Central Services (5,015) (3,737) 6,779 4,804 Operating profit is after charging goodwill amortisation: Handset Products 2,028 2,046 Integrated Products 194 210 2,222 2,256 Notes 5 Exceptional profit on disposal of tangible fixed assets During the year two freehold properties were sold: 2005 2004 £000 £000 Disposal proceeds 6,349 - Cost 4,821 - Depreciation (828) - Net book value 3,993 - Exceptional profit on disposal of tangible fixed assets 2,356 - 6,349 - 6 Exceptional profit on disposal of business On 31 December 2003 the electronic warfare business of Filtronic Solid State was sold. The disposal is analysed as follows: 2005 Restated £000 2004 £000 Consideration Cash - 6,970 Disposal costs - (471) - 6,499 Net assets disposed Tangible fixed assets - 864 Stocks - 535 Debtors - 677 Creditors - (419) - 1,657 Exceptional profit on disposal of business - 4,842 - 6,499 The electronic warfare business of Filtronic Solid State was located in the United States of America and formed part of the Integrated Products business segment. For the seven months up to its disposal on 31 December 2003 the disposed business had sales of £3,891,000 resulting in an operating loss of £36,000. Notes 7 Net interest payable and similar charges 2005 2004 £000 £000 Interest receivable Interest on bank deposits 85 95 Interest payable and similar charges Interest on bank borrowings (4,189) (1,233) Interest on other loans - (3,619) Bank loan arrangement fee - (500) Debt issues costs - amortisation - (293) (4,189) (5,645) Net interest payable and similar charges (4,104) (5,550) 8 Currency exchange gains/(losses) Restated 2005 2004 £000 £000 Currency exchange gains/(losses) 522 (2,664) Currency exchange gain on loan - 2,020 522 (644) 9 Exceptional loss on repayment of debt 2005 2004 £000 £000 Premium paid on repayment of debt - (1,517) Debt issue costs written off on repayment of debt - (981) - (2,498) Notes 10 Taxation on profit on ordinary activities Restated 2005 2004 £000 £000 Current tax United Kingdom 11 27 Overseas 2,424 2,820 2,435 2,847 Deferred tax Overseas origination and reversal of timing differences (2,194) (117) 241 2,730 The current tax charge for the year arises primarily from the group's operations in China and Finland, where taxable profits cannot be relieved by losses available in other jurisdictions. The deferred tax credit arises from the group's operations in the United States of America, where a proportion of deferred tax assets relating to tax losses carried forward have been recognised. The exceptional items had no effect on the taxation charge. 11 Dividends 2005 per 2004 2005 2004 share per £000 £000 share Interim dividend - paid 0.90p 0.90p 674 671 Final dividend - proposed 1.80p 1.80p 1,347 1,344 2.70p 2.70p 2,021 2,015 12 Earnings/(loss) per share Restated 2005 2004 £000 £000 Profit/(loss) on ordinary activities after taxation 5,312 (1,776) 000 000 Weighted average number of shares in issue 74,797 74,508 Dilution effect of share options 84 - Dilution effect of contingently issuable shares 45 - Diluted weighted average number of shares 74,926 74,508 Basic earnings/(loss) per share 7.10p (2.38)p Diluted earnings/(loss) per share 7.09p (2.38)p This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Filtronic