Filtronic chief leaving as revenues improve

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MOBILE technology group Filtronic reported booming annual sales as chief executive Hemant Mardia revealed he is leaving the business for a new challenge.

Dr Mardia, who has been with the Shipley-based group for 28 years, is leaving in September and will be replaced by executive director Alan Needle, who rejoined the business in 2010 when it bought Leeds wireless firm Isotek.

“I’m leaving the company in good shape,” said Dr Mardia, who has been with the group through its expansion and subsequent contraction.

“I feel it’s a good time to seek some other challenges.”

He said his next job will be in telecoms, with a particular focus on the west coast of the United States, but declined to elaborate further.

Filtronic said revenues surged 68 per cent to £26.1m in the year to the end of May. It reported pre-tax losses of £1.6m, but a significant improvement on the £7m losses a year earlier. Underlying operating profits were £0.8m, compared with £5.3m losses in 2011.

Dr Mardia, 50, joined Filtronic in 1984 as a student under founder Professor David Rhodes and was awarded a doctorate in electronic engineering from Leeds University. He became managing director of Filtronic Broadband in 1996, and joined the board as an executive director in October 2007. In September 2008 he became chief executive.

“In 28 years I’ve not had a two-week period of holiday,” said Dr Mardia. “It’s definitely time to do a few other things. There are certain goals I’ve achieved.

“Being a CEO of a public company has been my biggest challenge. It’s been a great experience.

“In September 2008, that was two weeks from (the collapse of) Lehman Brothers. It’s been a challenge from the moment I started but what I’m really pleased about is being able to lead a really great team, have some fantastic customers, and great support from investors.

“The proudest achievement is to leave that legacy in Filtronic. It has such a good reputation for innovation.”

Mr Needle originally joined Filtronic in 1986 and started its wireless infrastructure business, only leaving IN 2006 when Filtronic sold the bulk of the wireless business to Powerwave Technologies in the United States in a £184m cash and shares deal.

He returned in November 2010 when Filtronic bought Isotek for £10.7m in cash and shares.

“It wasn’t difficult to persuade me to take up this role,” he said. “It was offered to me many years ago in Filtronic.

“I will do a strategic review because everybody does a strategic review when they take over. But I’ve signed up to the strategy that we’ve developed.”

Chairman Howard Ford said Dr Mardia’s leadership has been “outstanding”, and he leaves the company in capable hands.

“Change is never ideal but if you have to make it we are making it in the best way possible,” he said. “Alan has been part of everything the company has been doing.”

Mr Needle’s main goal will be regrowing its wireless infrastructure business, and he said he hopes to poach former Filtronic staff in the US.

The group targets the growing need for upgrades to mobile phone infrastructure, as surging use of data-hungry smart phones and tablet PCs piles pressure on over-stretched networks. Its wireless arm helps operators upgrade base stations from 2G (generation) and 3G to 4G, but allows them to use existing infrastructure and delay when they have to put

in completely new kit. The division targets a $500m market.

“The spend is coming, particularly in the US,” said Mr Needle. “We have good contacts in the US.

“Sprint have got the funding and are rolling out their LTE (long-term evolution). The next company to go is T-Mobile. They need to invest because if they don’t they’re going to fall further behind operators in the US.”

Wireless sales hit £13.1m in the year, and sales of £7.9m in its second half were more than double the same period a year earlier. Eighty per cent of its sales were to the US, and the division reported profits of £0.7m for the year.

Revenues in its broadband arm grew seven per cent to £13m, and it turned a £2.5m loss to a £0.6m profit. The division has been developing an E-band radio to deliver high data rate mobile services in dense urban areas, supported by a grant from Yorkshire Forward. However, the group said sales will build “progressively”.

Filtronic is also moving its Shipley office to bigger premises at Leeds Bradford Airport.

George O’Connor, analyst at house broker Panmure Gordon, said it was a “fitting swan song for a well-regarded CEO”. He upgraded Filtronic’s target price from 39p to 48p. The shares closed down 1.5p at 31.25p.

“While we are disappointed by the news of the CEO departure, Mr Mardia leaves the business in very good shape.” he said. “It is the most undervalued LTE investment play on London Stock Exchange.”