Filtronic plc (AIM: FTC) reported revenue of £55.5m for the year ended 31 May 2026 on 4 August 2026, against £56.3m the year before, with a £3.5m charge to revenue for its SpaceX share warrant agreement and a weaker US dollar accounting for the difference. Adjusted EBITDA fell to £11.3m from £17.0m and operating profit to £4.0m from £13.4m.
What the accounts show
Profit fell considerably further than revenue. Profit before taxation was £3.8m against £13.4m, profit for the year £4.6m against £14.0m, and basic earnings per share 2.07p against 6.42p, with diluted earnings per share at 1.78p against 6.05p. Cash generated from operating activities was £11.8m against £13.8m, cash at bank £12.9m against £14.5m, and net cash £7.3m against £10.8m, or £10.8m against £12.3m when right of use property leases are excluded.
The revenue movement is largely a presentational one. Under IFRS 15 the SpaceX share warrants are treated as non-cash variable consideration payable to a customer, so the charge is deducted from revenue rather than shown as a cost. That charge was £3.5m in FY2026 against £1.3m in FY2025, reducing revenue by £2.2m year on year, and the weaker dollar took a further £2.0m off the value of dollar-denominated sales. Excluding both, Filtronic reported underlying organic sales growth of 6 percent to £59.7m.
The cost side is where the change is real. Operating costs rose 19 percent to £25.1m from £21.0m. Salary-related costs, which the company puts at 74 percent of total operating costs, rose 28 percent, an increase of £4.1 million, as headcount grew to 236 from 186, including manufacturing headcount of 109 against 89. Research and development costs before capitalisation and amortisation of development costs were £9.3m against £6.7m.
Customers and contracts
Revenue from the largest customer fell to 68 percent of the total from 83 percent. That happened alongside, not instead of, a deeper relationship with the same customer: the year included the expansion of the SpaceX relationship for next-generation gallium nitride E-band technology at $62.5m, which Filtronic describes as its largest single order to date.
The other wins point outward. The company secured an $8.0m, or £6.0m, contract with a US-based customer in March 2026 for high-performance amplifier systems, followed on 23 June 2026 by a second contract with the same customer worth approximately $0.5m, or £0.4m, for an initial development phase on a high-frequency module, with revenue expected in FY2027. It also announced a €7.0m agreement with a European space customer and a £13.4m contract with a European defence prime.
By market, space revenue fell 12 percent despite a volume increase, which the company attributes to the currency movement, the £3.5m warrant charge and a planned pricing strategy, while noting Airbus and Viasat among new customers. Aerospace and defence revenue grew 135 percent, largely on a contract to supply airborne radar systems. Critical communications revenue rose 28 percent on the rollout of a new platform for P25 networks, which the company expects to replace rather than add to its legacy combiner product.
Filtronic also completed its move into a self-funded headquarters and manufacturing site at Sedgefield, which it says can support revenues in excess of £200m per annum.
Guidance for the year ahead
The outlook statement is specific about what the order book covers. Filtronic said it entered FY2027 with an order book providing approximately 90 percent coverage of current market expectations for FY2027 revenue, that the year is expected to be weighted to the second half as supply transitions from gallium arsenide to gallium nitride production, and that the board remains confident of delivering FY2027 in line with market expectations.
That guidance was foreshadowed in the trading update of 23 June 2026, when the company said it expected to report revenue of at least £55.5m and adjusted EBITDA of at least £11.1m, with cash at bank of £13.4m. It described revenue as in line with market expectations and adjusted EBITDA as slightly ahead. The audited figures came in at £55.5m and £11.3m.
Analysis: flat revenue against a step up in operating spend
The headline revenue movement is smaller than the movement beneath it. Revenue fell by less than a million pounds, and the company shows that stripping the warrant charge and the currency effect leaves organic growth of 6 percent. What actually changed is the relationship between revenue and profit: on roughly flat sales, adjusted EBITDA fell from £17.0m to £11.3m and operating profit from £13.4m to £4.0m. Operating costs of £25.1m against £21.0m explain most of that, and the company presents the increase as deliberate, with headcount rising by 50 people and R&D spend before capitalisation up to £9.3m from £6.7m.
The warrant charge deserves separating from the currency effect, because they behave differently. A dollar move can reverse. The warrant charge is a contractual cost of the customer relationship, recognised against revenue under IFRS 15, and it more than doubled from £1.3m to £3.5m. If that relationship grows, so does the deduction, which means reported revenue and commercial success can diverge further rather than converge. Anyone tracking the top line needs the warrant charge disclosed each period to read it.
Customer concentration has genuinely improved, from 83 percent to 68 percent, but the arithmetic behind the improvement is worth noting: it came from adding aerospace and defence revenue at 135 percent growth while space revenue fell 12 percent, not from the largest customer shrinking. The $62.5m E-band order signed in the same year points the other way. Both statements are true at once, and the FY2027 figure will show which force is stronger.
The Sedgefield facility sets up the operational question. A plant scaled for revenues in excess of £200m per annum against actual revenue of £55.5m carries fixed costs that fall on this year’s profit and would gear returns sharply if volumes arrive. That is why the second-half weighting of FY2027 matters more than it usually would: the transition from gallium arsenide to gallium nitride production concentrates delivery risk into the back half of a year whose order book is already 90 percent covered against market expectations.
The sector backdrop offers a check on how much of this is company-specific. UK Space Agency research covering the 2022/23 financial year put total UK space industry income at £18.6bn, down 8.9 percent in real terms, with space manufacturing income down 9 percent and satellite communications income down 16 percent, while direct employment rose to 55,550 full-time equivalents. Against a segment that had been contracting, Filtronic’s flat revenue and 135 percent growth in aerospace and defence read as a shift in where its work comes from. The items to follow are the FY2027 interim statement, given the stated second-half weighting, the size of the next warrant charge, and whether the largest-customer share continues to fall.
