Filtronic investors back £1.3m share issue

Shareholders and the senior management of Filtronic, the wireless equipment maker, have backed a £1.3m share issue despite widening losses.

The company made a pre-tax loss for the year to 31 May 2011 of £7m, compared with a £1m loss the previous year. Revenue from continuing operations fell from £15.6m to £15.5m with an operating loss before amortisation and exceptional items of £5.3m (£0.3m).

However, the losses were in line with expectations and the company said it had almost completed a painful transformation to diversify its customer base and exit lower margin business.

Hemant Mardia, chief executive, said it was now well positioned to take advantage of the growth in third- and fourth-generation mobile services. “We were too dependent on a small group of OEM [manufacturing] customers. We have progressed really well down that track. This full year we had three principal products and three end customers. In 2012 full year we will have 13 products for nine end customers.”

It is aiming for £25m revenue and a small loss next year. Turnover was hit this year by Ceragon, an Israeli rival, buying Nera, a Filtronic customer, and switching its own products for Filtronic’s.

The company cut costs by £1.4m a year, including 15 redundancies that will leave headcount at 160 and transferring some work to subcontractors in China.

Filtronic has a £4.1m cash pile and no debt.

Last November the Shipley-based group bought Isotek, a competitor that makes filters allowing for base stations to increase capacity, for £4.2m cash and £6.8m in shares.

The share placing was partly a release of shares from an escrow account to cover a gap in working capital of £530,000 arising from the Isotek acquisition.

Management of Isotek and Filtronic subscribed for more than £440,000 of shares at 22.5p a share. They finished the day at 23.25p, down from 25p.

Mike Brennan, chief financial officer, said: “We have the active support from new and existing shareholders. We were helped by the participation of Filtronic and Isotek management.

Basic loss per share from continuing operations was 7.19p, against 1.37p last time.

It scrapped its annual dividend, which was 1p a share last time.

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