finnCap Research Company Notes - 18 October 2019

Oct 18, 2019 / News

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Sector: Technology & Telecoms

Filtronic (FTC) : Corp

Warranty issue settled and FY 2019 results out


Key data                              

Share price (p)                  7.8

Target price (p)                10.5

Market cap (£m)                              16.2

Enterprise value (£m)                    13.9


Filtronic has announced it has entered into a settlement agreement in respect of the warranty claim that arose in FY 2019. In July, management revealed it had been notified of a performance issue affecting certain antennas in certain conditions, which had been shipped in FY 2016/17 and were still under warranty. Filtronic has agreed with the customer to pay £1.6m cash contribution and has upgraded affected antennas and its customer’s stock of antenna units. To minimise the impact, the payment will be made in four instalments to Dec 2020. The issue only relates to antennas sold in the FY 2016/17 period and is restricted to certain geographies. With this claim now settled, the FY 2019 results will be issued next week, although headlines are supplied. The Antenna operation is in the process of sale and will be accounted for as a discontinued business making forecasts incomparable. With the exceptional one-off programme in the previous year and a strategic withdrawal of OEM filters, FY 2019 sales fell 26% to £15.9m delivering adj. EBITDA of £0.7m. The outlook is bright, with encouraging order intake on 5G Backhaul transceivers and much increased production capacity.


Lorne Daniel

020 7220 0545


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