INTELEK plc

TRADING UPDATE

The Directors of Intelek are pleased to issue the following trading update for the financial year ended 31 March 2009.

Despite the difficult economic conditions, we expect to report Group underlying profits in line with expectations for 2008/09 and well ahead of last year.

• In Satellite communications, sales have exceeded last year, with Government/military programmes offsetting the global softening of demand for commercial telecoms. The fundamental drivers of Satellite communications remain exciting:  progression towards HDTV, increased use of the internet, strong demand from the defence sector and the spread of mobile/cellular telephony in developing countries.

• In March 2009, we launched a new range of high-power solid state amplifiers, with power levels exceeding products currently available elsewhere in the world, and modems equipped with the latest bandwidth-saving technology.

• In Aerospace, we won further business on the world’s largest military jet programme, the Joint Strike Fighter, and benefited from increased sales from our core customer base where we have long standing relationships.

• In Microwave components, Labtech continued its transformation to a defence and air traffic control components business, replacing former telecommunications sales with new orders from Government equipment manufacturers, including £2.3 million for phased array radar systems of which £1.2 million was shipped during the year.

In the final quarter of 2008/09 a number of substantial Government and defence orders have been won.  In the last two months of the financial year these included: 

-        At Paradise Datacom, £1.8 million for amplifiers on two programmes, one as part of a large replacement programme, and the other for an international communications network.

-        At Labtech Microwave, £0.8 million to supply and assemble phased array radar circuits for a European defence programme.

-        At CML, £0.3 million for the Joint Strike Fighter programme, bringing the cumulative order intake for JSF in 2008/09 to £0.7 million.

Undoubtedly, there is considerable uncertainty in the commercial marketplace although Government funded programmes, which are particularly important to Paradise Datacom and Labtech, remain resilient. Our Aerospace division, CML, is likely to be affected by the well documented issues in the corporate jet market.  Based on the latest information, we expect CML’s sales in the commercial area to decline in 2009/10 but to see growth in defence related sales.  We will also be investing in our composites capability to support the overall growth of composites within aerospace.  The combination of these factors will, however, impact CMLs profitability in the short term.

We are encouraged that our strategy across the Group to target Government sectors is proving to be successful.  Major defence opportunities across the Group are increasing and, in addition, we will benefit from continuing cost management programmes and initiatives throughout the year. Taking all matters into consideration, the Board expects that Group earnings in 2009/10 will be at a similar level to 2008/09 with a greater emphasis on our core business, Paradise Datacom.