Leeds-based Filtronic enters into settlement agreement over warranty claim

Chief executive Rob Smith
Chief executive Rob Smith
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Mobile phone technology firm Filtronic has entered into a settlement agreement in respect of a warranty claim.

Bosses at Leeds-based Filtronic said they were happy with the agreement that has been secured with a long-standing customer.

Filtronic said: "As announced on July 3 2019, the company was notified of a performance issue affecting certain Filtronic antenna products shipped in FY2016/17 that were still under warranty.

"The performance issue was diagnosed as a component fault that arose on specific antennas when placed in certain operating and environmental conditions. Filtronic has come to a settlement agreement with the customer to pay US$2.0 million (£1.6 million) in compensation and to upgrade affected antennas and its customer’s stock of antenna units. All unit upgrades have now been completed.

"In order to ensure minimal disruption to Filtronic, the cash settlement will be made in four instalments between the date of signing the agreement and 31 December 2020. The component issue relates only to antennas sold in the FY2016/17 period, and the performance issue is restricted to certain geographic locations. Other than the claim settled in this agreement there are no other warranty claims."

The company expects to release results for the financial year ended May 31 2019 on October 23 2019.

As previously announced, Filtronic has entered into a process to sell its loss-making Telecoms Antenna Operations and it will report these activities as discontinued operations and assets held for sale. The results are expected to show sales from continuing operations of £15.9m and EBITDA of £0.7m.

The statement added: "Order-intake since the year-end has been encouraging with demand for our class-leading, 5G Backhaul transceivers being particularly strong. We have received orders from clients for these transceivers totalling in excess of £10m and expect to ship the vast majority of these orders in FY2020. Longer-term demand for this product range also appears to be good and we have been increasing capacity at our Sedgefield, UK facility to meet demand. Further details on current trading will be provided with our results announcement."

Rob Smith, Filtronic’s CEO commented, “The board is pleased with the outcome of the settlement agreement reached with our longstanding customer. We greatly appreciate the constructive approach taken by our customer to mitigate the cost of the warranty claim and for the helpful payment plan that reduces the cash impact on the business as we ramp output of our 5G Backhaul Transceivers. The customer remains a loyal client of the company and has been continuing to place material orders with Filtronic whilst the warranty discussions have been ongoing”.