This is why technology firm Filtronic has a stronger balance sheet to develop the business

Leeds-based Filtronic, which is a designer and manufacturer of products for the wireless telecoms and communications markets, has published its half year results for the six months ended November 30 2019.

Over the half year, the company achieved revenue of £7.5m, compared with £8.9m in the same period.

The company said it had successfully disposed of the Telecoms Antenna Operation for an initial consideration of $5.5m, which could potentially increase with a profit share in excess of mutually agreed gross profit targets.

Filtronic said there had been strong demand from its lead OEM (original equipment manufacturer) customer for its Orpheus product and initial demand for the next-generation Morpheus.

Good progress had also been made to onshore production of public safety products to the US. Production is expected to started in the first quarter of 2020.

An expansion programme has been implemented at Sedgefield to increase manufacturing capacity and production volumes of X-Haul and defence transceiver products.

The sale of the loss-making FTAO business to Microdata Telecom Innovation Stockholm AB completed in January.

Commenting on the outlook, Reg Gott, the company's chairman, said: "The sale of the FTAO business enables us to implement an effective operating structure across a more efficient footprint and provides us with a stronger balance sheet to further develop and grow the business.

"The board is committed to revenue growth initiatives and intends to strengthen the sales and marketing organisation and extend engineering capacity across a range of disciplines during the course of this calendar year.

He added: "The recent design wins to develop X-Haul derivatives to major players in the High-Altitude Pseudo-Satellite and 5G mmWave equipment markets were key milestones on our strategic roadmap.

"However, this NRE funded development work will run through the next 16 months meaning revenue will largely not be recognised until FY2021, slightly limiting our progress in H2 (second half0 profit development.

"These new contracts enable us to further extend our engineering capability, know-how and highlight our ability to develop a competitive position across a wider market".

Mr Gott said he was pleased to report a further period of underlying profitable trading.

He added: "The group performed in line with management expectations in the first half of FY2020 with sales of £7.5m . The lower sales revenue was anticipated and resulted from the closing-out of our legacy filter product programmes.

"However, continued growth in sales of our mmWave products, along with further increases in sales of defence applications, partially mitigated the filter reduction and provided an overall stronger sales mix with improved gross margin.

"Despite the reduction in sales, the improved margin mix enabled us to maintain adjusted EBITDA at £0.6m. Adjusted operating profit declined slightly to £0.3m as a consequence of an extensive recruitment and training programme of additional manufacturing and test staff for the increase in mmWave and defence production volumes."

He added: "Rob Smith resigned his position as CEO on 31 October 2019.

"The search for a new CEO is progressing very well and we hope to have the new CEO in post before the end of H2 (the second half of the year).

"In the meantime, and until the new CEO arrives, I will continue to fill the role of executive chairman on a full-time basis and will step back to non-executive chairman after the new CEO is in post."