Filtronic in pension talks as it plans cash return to shareholders

FILTRONIC is in talks to close its pension scheme as it looks to continue its transformation into a profitable group for the future.

Today it unveiled half-year results for the six months to November 30 which showed it had stayed in profit by only £900,000 compared to £75.8m last year.

The group has changed dramatically in the last two years having sold the bulk of its wireless infrastructure in 2006 to Powerwave Technologies of the United States in a deal worth £184m in cash and shares.

It is planning to return cash to shareholders later this year.

At the end of last year it completed the sale of its loss-making compound semconductors business US-based RF Micro Devices for £12.5m.

The Shipley-based telecoms components companysold the Newton Aycliffe business in a deal which allows it to concentrate on its core operations.

It was thought that Filtronic would have to give the business away as it made headline losses including exceptional items of £29m in the year to May 31 and underlying losses of £1.5m.

The disposal saw Filtronic retain the pension liabilities and it is now in talks with trustees about closing the pension fund after it changes the funding of past service liabilities to an external annuity basis at an additional cost of £30m.

Filtronic is now focused on its point to point wireless communications and electronic defence equipment businesses.

It has retained much of the cash from disposals – around £117m – and chairman John Poulter said: “In the second half year, the conclusion of the pension scheme discussions, return of cash and maximising shareholder value in the continuing businesses remain priorities.”

He said it will pay a special dividend later this year.

Mr Poulter said that the defence business had made progress and while the point-to-point business had seen “exceptional” growth in the first six months of the financial year, it was expected to trade at a lower level in the second half – “although substantially ahead of the equivalent period in the prior year”, he added.

There is no interim dividend.