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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
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                                    FORM 20-F

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED MAY 31, 2003

                        Commission file number: 333-10894

                                  FILTRONIC PLC
             (Exact name of registrant as specified in its charter)

                                ENGLAND AND WALES
                 (Jurisdiction of incorporation or organization)

 THE WATERFRONT, SALTS MILL ROAD, SALTAIRE, SHIPLEY, WEST YORKSHIRE BD18 3TT,
                                 UNITED KINGDOM
                    (Address of principal executive offices)
 Securities registered or to be registered pursuant to Section 12(b) of the Act:

                                      NONE
                                (Title of Class)
 Securities registered or to be registered pursuant to Section 12(g) of the Act:

                                      NONE
                                (Title of Class)
 Securities for which there is a reporting obligation pursuant to Section 15(d)
                                  of the Act:

                            10% Senior Notes Due 2005
                                (Title of Class)

     Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report:

                     74,304,443 ordinary shares of 10p each

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by  Section 13 or 15(d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days:

                                 Yes X      No

     Indicate by check mark which  financial  statement  item the registrant has
elected to follow:

                             Item 17     Item 18 X
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                                TABLE OF CONTENTS
                                                                        Page
                                     PART I

Introduction                                                              1
Item 1.   Identity of Directors, Senior Management and Advisers           2
Item 2.   Offer Statistics and Expected Timetable                         2
Item 3.   Key Information                                                 2
              Selected Financial Data                                     2
              Risk Factors                                                4
Item 4.   Information on the Company                                     10
              Introduction                                               10
                  Organization                                           10
                  History                                                10
                  Business Summary                                       11
                  Organizational Structure and Subsidiaries              12
              Description of Business Segments                           13
                  Products                                               13
                  Sales by Business Segment and Geographical Destination 15
                  Customers and Markets                                  15
                  Competition                                            16
                  Capital Expenditures                                   17
              Research and Development                                   18
              Seasonality                                                18
              Raw Materials                                              18
              Sales and Marketing                                        18
              Patents, Licenses, Contracts and Manufacturing Processes   18
              Environmental Matters                                      19
              Properties, Plant and Equipment                            20
Item 5.   Operating and Financial Review and Prospects                   22
              Accounting Principles                                      22
              Critical Accounting Policies                               22
              Operating Results                                          23
              Liquidity and Capital Resources                            30
              Research and Development                                   31
              Outlook                                                    32
Item 6.   Directors, Senior Management and Employees                     34
              Directors                                                  34
              Key Employees                                              35
              Compensation                                               36
              Board Practices                                            36
              Employees and Labor Relations                              37
              Share Ownership                                            37
Item 7.   Major Shareholders and Related Party Transactions              38
              Major Shareholders                                         38
              Related Party Transactions                                 38
Item 8.   Financial Information                                          39
              Consolidated Financial Statements                          39
              Other Financial Information                                39
                  Export Sales                                           39
                  Legal Proceedings                                      39
                  Dividend Policy                                        39
              Significant Changes                                        39


                                       i


<PAGE>

                                                                        Page

Item 9.    The Offer and Listing                                         40
Item 10.   Additional Information                                        40
               Memorandum and Articles of Association                    40
               Material Contracts                                        42
               Exchange Controls                                         42
               Taxation                                                  42
                   Certain US Federal Income Tax Consequences            42
                   Certain UK Tax Considerations                         44
                   Finnish and Australian Tax Laws                       46
               Documents on Display                                      46
Item 11.   Quantitative and Qualitative Disclosures about Market Risk    47
Item 12.   Description of Securities other than Equity Securities        48




                                     PART II

Item 13.   Defaults, Dividend Arrearages and Delinquencies               48
Item 14.   Material Modifications to the Rights of Security Holders and
           Use of Proceeds                                               48
Item 15.   Controls and Procedures                                       48
Item 16A.  Audit Committee Financial Expert                              48
Item 16B.  Code of Ethics                                                48
Item 16C.  Principal Accountant Fees and Services                        48
Item 16D.  Exemptions from the Listing Standards for Audit Committees    48


                                    PART III

Item 17.   Financial Statements                                          49
Item 18.   Financial Statements                                          49
Item 19.   Exhibits                                                      49
Signatures                                                               50


                                       ii


<PAGE>

INTRODUCTION

UK GAAP

     Filtronic plc has prepared its Consolidated  Financial  Statements included
in this  annual  report  in  accordance  with  accounting  principles  generally
accepted in the United Kingdom ("UK GAAP"),  which differ in certain significant
respects  from United  States  generally  accepted  accounting  principles  ("US
GAAP"). For a discussion of the most significant relevant differences between UK
GAAP  and US  GAAP,  see  note 38 of the  Notes  to the  Consolidated  Financial
Statements.

Fiscal Year

     Filtronic plc prepares its financial  statements on the basis of its fiscal
year, which begins on June 1 and ends on May 31. Unless otherwise indicated,when
a fiscal year is referred to in this report,  it is referring to the fiscal year
ending on May 31 of that year.  For example,  a reference to "fiscal 2003" means
the year ended May 31, 2003.

Currency Translation

     Filtronic plc publishes its  financial  statements in pounds  sterling.  In
this annual report, references to "pounds sterling",  "sterling", "GBP", "pence"
or "p" are to the lawful  currency of the United  Kingdom and  references to "US
dollars" or "$" are to the lawful currency of the United States.

     Solely  for  the  reader's   convenience,   this  annual  report   contains
translations  at an assumed rate of $1.6393 = GBP1.00.  This rate represents the
noon buying rate in New York City for cable  transfers in pounds sterling on May
31, 2003, as certified for customs  purposes by the Federal  Reserve Bank of New
York. The convenience  translations do not mean that the pound sterling  amounts
actually  represent the US dollar  amounts  stated or could be converted into US
dollars at the assumed  rate.  The assumed rate also differs from the rates used
in the preparation of the  Consolidated  Financial  Statements as at and for the
fiscal  year ended May 31,  2003.  Further  information  about rates of exchange
between pounds sterling and US dollars appears in "Item 3. Key Information."

Forward-Looking Information

     This  annual  report  contains  certain   forward-looking   statements  and
information relating to Filtronic that are based on beliefs of its management as
well as assumptions  made by and information  currently  available to Filtronic.
When used in this  document,  the  words  "anticipate",  "believe",  "estimate",
"expect", "intend", "plan" and "project" and similar expressions, as they relate
to  Filtronic  or its  management,  are  intended  to  identify  forward-looking
statements.  Such  statements  reflect the current  views of Filtronic  plc with
respect to future  events and are subject to certain  risks,  uncertainties  and
assumptions.  Many  factors  could  cause the  actual  results,  performance  or
achievements  of Filtronic to be materially  different from any future  results,
performance  or   achievements   that  may  be  expressed  or  implied  by  such
forward-looking statements, including, among others, changes in general economic
and business conditions,  changes in currency exchange rates and interest rates,
introduction of competing products by other companies, lack of acceptance of new
products or  services by  Filtronic's  targeted  customers,  changes in business
strategy and various other factors,  both  referenced and not referenced in this
Annual Report.  Should one or more of these risks or uncertainties  materialize,
or should  underlying  assumptions  prove  incorrect,  actual  results  may vary
materially from those  described  herein as  anticipated,  believed,  estimated,
expected,  intended,  planned  or  projected.  Filtronic  plc does not intend or
assume any obligation to update these forward-looking statements.

References

     In this annual  report,  "Filtronic"  refers to Filtronic plc together with
its consolidated subsidiaries, and "Management" refers to the current members of
the Board of Directors of Filtronic plc.

                                       1

<PAGE>


                                     PART 1

ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
          Not applicable.

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE
          Not applicable.

ITEM 3.   KEY INFORMATION

Selected Financial Data

     The selected financial data presented below are for each of the five fiscal
years in the period ended May 31, 2003.  The financial data have been taken from
the Consolidated  Financial  Statements for the relevant  periods.  The selected
financial data have been presented in pounds sterling and are only a summary and
should be read together with the Consolidated Financial Statements.


<TABLE>
<CAPTION>

                                                                          Year ended May 31,
UK GAAP
                                                   ______________________________________________________________

                                                          1999       2000        2001        2002        2003
                                                   ______________ ___________ __________ ___________ ____________
                                                                 (thousands, except per share amounts)
<S>                                                      <C>         <C>         <C>        <C>         <C>
Profit and Loss Account Data:
Sales                                                 GBP187,302  GBP222,294  GBP297,434 GBP280,547  GBP241,268
Operating profit/(loss)                                   21,893       5,063      (9,031)   (13,063)      6,715
Profit/(loss) for the year                                10,776      (7,924)    (22,791)   (29,044)      1,084
Earnings/(loss) per share                                  18.49p     (11.64)p    (31.24)p   (39.31)p      1.46p
Diluted earnings/(loss) per share                          16.85p     (11.64)p    (31.24)p   (39.31)p      1.45p
Weighted average number of shares outstanding             58,294      68,055      72,963     73,882      74,245
Diluted weighted average number of shares                 63,956      68,055      72,963     73,882      74,705
Dividend per share                                          2.70p       2.70p       2.70p      2.70p       2.70p
Dividend per share                                      $ 0.0440    $ 0.0431    $ 0.0384   $ 0.0395    $ 0.0442

                                                                                May 31,
                                                   ______________________________________________________________

                                                          1999       2000        2001        2002        2003
                                                   ______________ ___________ __________ ___________ ____________

                                                                              (thousands)
Balance Sheet Data:
Total assets                                          GBP214,071  GBP310,450  GBP304,609 GBP251,562  GBP223,815
Net assets                                                80,118     145,549     130,487    105,196     109,159
Share capital                                              5,995       7,199       7,365      7,409       7,430

</TABLE>

                                       2

<PAGE>


<TABLE>
<CAPTION>



                                                                          Year ended May 31,
US GAAP                                            ______________________________________________________________

                                                          1999       2000        2001        2002        2003
                                                   ______________ ___________ __________ ___________ ____________

                                                                 (thousands, except per share amounts)
<S>                                                      <C>         <C>         <C>        <C>         <C>
Income Statement Data:
Sales                                                 GBP187,286  GBP217,800  GBP296,309 GBP279,788  GBP238,326
Operating profit/(loss)                                   10,252     (17,112)      2,736    (16,990)     12,056
Net (loss)/income                                         (3,520)    (29,l04)    (11,419)   (33,033)      2,372
(Loss)/earnings per share                                  (6.04)p    (42.77)p    (15.65)p   (44.71)p      3.19p
Diluted (loss)/earnings per share                          (6.04)p    (42.77)p    (15.65)p   (44.71)p      3.18p

Proforma information in respect of non-amortization of goodwill in accordance with SFAS No. 142

Proforma net loss                                           (434)    (25,044)     (8,052)   (30,894)          -
Proforma loss per share                                    (0.74)p    (36.80)p    (11.04)p   (41.82)p         -
Proforma diluted loss per share                            (0.74)p    (36.80)p    (11.04)p   (41.82)p         -

                                                                                May 31,
                                                   ______________________________________________________________

                                                          1999       2000        2001        2002        2003

                                                   ______________ ___________ __________ ___________ ____________

                                                                              (thousands)
Balance Sheet Data:
Total assets                                          GBP224,114  GBP319,853  GBP308,305 GBP253,893  GBP227,346
Net assets                                                88,807     155,554     129,838    103,138     106,359

</TABLE>



Exchange Rate Information

     The table below sets forth, for the periods indicated,  certain information
concerning  the noon buying rate in New York City for cable  transfers in pounds
sterling,  as certified for customs  purposes by the Federal Reserve Bank of New
York.

<TABLE>
<CAPTION>

                                                                      US dollars per pound sterling

Period                                                              High          Low   Period Average (b)  Period End

<C>                                                                <C>           <C>            <C>           <C>
1999(a)                                                            1.7222        1.5920         1.6441        1.6020
2000(a)                                                            1.6765        1.4705         1.5953        1.4968
2001(a)                                                            1.5235        1.3997         1.4567        1.4175
2002(a)                                                            1.4795        1.3730         1.4379        1.4625
2003(a)                                                            1.6484        1.4574         1.5808        1.6393

May 2003                                                           1.6484        1.5930                       1.6393
June 2003                                                          1.6840        1.6278                       1.6529
July 2003                                                          1.6768        1.5867                       1.6090
August 2003                                                        1.6170        1.5728                       1.5773
September 2003                                                     1.6642        1.5732                       1.6620
October 2003                                                       1.7025        1.6598                       1.6956
November 2003 (through November 7)                                 1.6802        1.6693                       1.6693
</TABLE>

-------------

(a)  Years ended May 31, the fiscal years of Filtronic plc.
(b)  The average of the noon buying rates on the last day of each month during
     the period.


                                       3

<PAGE>


Risk Factors

     Prospective  investors  in  Filtronic  plc's 10% Senior Notes Due 2005 (the
"Notes") should consider all of the information in this annual report, including
the following risk factors, before making an investment in the Notes.

     Filtronic has a significant level of debt. At May 31, 2003, Filtronic plc's
total debt was GBP63.2 million ($103.6  million).  This  substantial  debt could
have important consequences. For example:

   - A substantial portion of cash flow from operations will be required to be
     dedicated to debt service and will not be available for other purposes.
   - Filtronic's ability to obtain financing in the future could be limited.
   - Filtronic  may be vulnerable  to extended  economic  downturns and may be
     limited in its ability to make acquisitions,  introduce new technologies or
     exploit business opportunities.
   - Filtronic is subject to financial and  restrictive  covenants  that limit
     its ability to, among other things,  borrow  additional  funds,  dispose of
     assets or pay dividends,  all of which could have a material adverse effect
     on Filtronic.

     Filtronic's  business has been  negatively  impacted by the global economic
recession  that began in the latter part of 2000.  Filtronic's  sales  decreased
from fiscal 2001 to fiscal  2002 and from  fiscal  2002 to fiscal  2003,  and it
incurred sizeable  operating losses in both fiscal 2001 and 2002. The success of
ongoing  changes in fiscal,  monetary and  regulatory  policies  worldwide  will
continue to influence  the severity and the length of this  recession.  If these
policy  actions are not  successful in stimulating  overall  economic  recovery,
Filtronic's  business will  continue to be negatively  impacted as customers buy
fewer of its products.

     The  economic  recession  has  had a  materially  negative  impact  on  the
worldwide  telecommunications  industry  since late 2000 and the world  economic
environment  for  telecommunications  companies has been turbulent and uncertain
for many months.  These  difficult  trading  conditions  have been  addressed in
several statements made by Filtronic's principal original equipment manufacturer
("OEM") customers. The rate at which the telecommunications industry recovers is
critical to Filtronic's  ability to improve its overall  financial  performance.
Continued  decreasing worldwide demand for wireless  telecommunications  systems
could  have a  material  adverse  effect  on  Filtronic's  financial  condition,
including its ability to meet its financial  obligations  both to holders of the
Notes and to other lenders.

     Filtronic plc is a holding company and currently has no significant  assets
other than real estate, cash and cash equivalents, intellectual property and its
direct and indirect investments in its subsidiaries.  Filtronic plc must rely on
dividends and other  advances and transfers of funds from its  subsidiaries  and
earnings  from  its  licensing   arrangements  with  its  subsidiaries  and  its
investments in cash and marketable  securities to provide the funds necessary to
meet its debt service  obligations,  including payment of principal and interest
on the Notes.  The ability of Filtronic  plc's  subsidiaries to pay dividends or
make  other  payments  or  advances  to  Filtronic  plc will  depend  upon their
operating  results  and will be  subject  to  applicable  laws and  restrictions
contained in agreements governing the indebtedness of such subsidiaries.

     The  Notes are  unsecured  obligations  of  Filtronic  plc and the  related
subsidiary  guarantees are unsecured obligations of the subsidiary guarantors of
the  Notes.  The  indenture  governing  the  Notes  (the  "Indenture"),  permits
Filtronic  plc  and  the   subsidiary   guarantors  to  incur  certain   secured
indebtedness.  The  holders  of all  existing  and future  secured  indebtedness
incurred by  Filtronic  will have a claim prior to the holders of the Notes with
respect to any assets  pledged by Filtronic  as security for such  indebtedness.
Upon an  event  of  default  under  any  such  future  secured  indebtedness  of
Filtronic,  the lenders  thereunder would be entitled to foreclose on the assets
of Filtronic pledged as security for the indebtedness  incurred  thereunder.  In
such event,  the assets of  Filtronic  remaining  after  payment of such secured
indebtedness  may be  insufficient  to satisfy the obligations of Filtronic with
respect to the Notes and the subsidiary guarantees.

     Under Finnish law, a subsidiary guarantee given by a Finnish company may be
void and unenforceable if the obligations guaranteed by the Finnish company were
incurred  to acquire  shares,  membership  interest or  partnership  interest in
itself or any other  company  within the same group of  companies  to which such
subsidiary guarantor belongs.  Proceeds from the offering of the Notes were used
to repay all amounts  outstanding  under an interim  credit  facility  which was
incurred to finance,  among other  things,  the  acquisition  of Filtronic LK Oy
(formerly LK Products Oy), a Finnish  company and a subsidiary  guarantor of the
Notes.  There  can be no  assurance  that  the  subsidiary  guarantee  given  by
Filtronic  LK Oy will not be  challenged  on such ground.  Under  Chinese law, a
Chinese  company  may  not  guarantee  the  obligations  of a  foreign  company.
Filtronic's Chinese subsidiary,  Filtronic (Suzhou)  Telecommunication  Products
Co. Limited, has not, therefore,  given a subsidiary guarantee in respect of the
Notes.


                                       4


<PAGE>


     Over the last several  years,  Filtronic has  experienced  rapid growth and
development  and  Management  expects that, in the medium term,  Filtronic  will
experience  further  growth  either  internally  or  through  acquisitions.  The
management of such growth has required  significant  personnel  and  operational
resources and future growth is likely to require similar resources. In addition,
the process of integrating any future  acquisitions  into  Filtronic's  existing
operations  may result in  unforeseen  operating  difficulties  and may  require
significant financial and managerial resources that would otherwise be available
for the ongoing  maintenance,  development or expansion of Filtronic's  existing
operations.  If  Filtronic  is unable to manage  future  growth and  development
successfully,  its  financial  condition  and  results  of  operations  would be
adversely affected.

     A  substantial  part of  Filtronic's  previous  growth  has been in markets
outside the United Kingdom. As Filtronic expands its international operations it
may  become  subject to many of the risks  inherent  in  international  business
activities, including political and foreign currency risks.

     Filtronic's  success is  largely  dependent  on the  personal  efforts  and
abilities  of its senior  management.  The loss of  services  of key  management
personnel,   including  the  Executive  Chairman  and  Chief  Executive  Officer
Professor J. David Rhodes CBE FRS FREng, could have a material adverse effect on
Filtronic.  Filtronic's  continued  success  also  depends  in large part on its
ability to recruit and retain the management and engineering personnel necessary
to its  operations.  Significant  attrition  among its management or engineering
personnel   would  reduce   Filtronic's   ability  to  satisfy  its   customers'
requirements  for  technologically  advanced  products and could  constrain  its
future growth.

     Upon a change of  control,  Filtronic  plc is  required to make an offer to
purchase  the Notes at a purchase  price equal to 101% of the  principal  amount
thereof, together with accrued and unpaid interest and certain other amounts, if
any, to the date of purchase. There can be no assurance that Filtronic will have
available funds sufficient to purchase the Notes upon a change of control, which
could result in an event of default under the Indenture. In addition, any change
of control,  and any repurchase of the Notes required under the Indenture upon a
change of control,  could  constitute  an event of default  under  other  senior
indebtedness,  with the result that the obligations of the borrowers  thereunder
could be declared due and payable by the lenders.

     In  addition,  the  change  of  control  provisions  may not be  waived  by
Filtronic's  Board of Directors or the trustee under the  Indenture  without the
consent of holders of at least a majority in principal amount of the Notes. As a
result,   the  change  of  control  provisions  of  the  Notes  may  in  certain
circumstances  discourage or make more difficult a sale or takeover of Filtronic
and, thus, the removal of incumbent management.

     Filtronic  markets  its  products  in  large  part  to OEM  customers  that
integrate  Filtronic's  products  into  their own  end-use  products.  These OEM
customers  operate in highly  competitive  markets.  As a result,  Filtronic  is
subject to the risk that the price of, or demand for, the products sold by these
OEM customers  will decline,  which could result in a decline in the price of or
demand for  Filtronic's  products,  which in turn could have a material  adverse
effect on Filtronic's  business,  financial condition and results of operations.
In addition,  because the OEMs are Filtronic's  primary customers,  Filtronic is
subject  to the risk that the  ultimate  consumers  of the OEMs'  products  will
discontinue using those products for reasons unrelated to the quality,  or price
of, or demand for, Filtronic's  products.  Furthermore,  Filtronic is subject to
the risk  that its OEM  customers  may  elect to  manufacture  their  own  radio
frequency  ("RF")  subsystems  and  components  rather than  purchase  them from
outside sources like Filtronic.

                                       5

<PAGE>


     Filtronic  relies upon a small number of major  customers for a significant
amount of revenues and the loss of any one of these customers,  or a significant
loss,  reduction or  rescheduling of orders from any of these  customers,  would
have a  material  adverse  effect on its  business,  results of  operations  and
financial  condition.  See "Item 4.  Information on the Company - Description of
Business  Segments - Customers and Markets".  Filtronic's  dependence on a small
number of major customers exposes the company to numerous risks, including:

  -  slowdowns  or delays in  deployment  of  wireless  networks  that reduce
     customer demand;

  -  changes in customer forecasts and demand; and

  -  customers  leveraging  their buying power to change the terms of pricing,
     payment and product delivery schedules.

     OEM customers are impacted by their current view of wireless infrastructure
deployments.  Orders for Filtronic's products could be significantly reduced due
to any  delays of such  deployments.  A number of  factors  may cause  delays in
wireless infrastructure deployments, including the following factors:

  -  economic or political problems in the wireless operator's operating region;

  -  delays in government approvals required for system deployment;

  -  higher than anticipated network infrastructure costs;

  -  technical  delays in the development of new wireless  protocols,  such as
     third generation ("3G") systems; and

  -  reduced subscriber demand for wireless services.

     In addition,  from time to time, OEMs may purchase  products from Filtronic
in large  quantities over a short period of time, which may cause demand for the
products to change rapidly. Due to these and other uncertainties associated with
wireless infrastructure  deployments and OEMs' purchasing strategies,  Filtronic
may  experience  significant   fluctuations  in  demand  from  customers.   Such
fluctuations  could cause a  significant  increase in demand  which could exceed
production  capacity and could negatively  impact the company's  ability to meet
customers' demands as well as potentially impact product quality. Alternatively,
such  fluctuations  could cause a significant  reduction in revenues which could
have a material adverse effect on results of operations and financial condition.
Filtronic  cannot  guarantee  that a major  customer  will not reduce,  delay or
eliminate  purchases from Filtronic,  which could have a material adverse effect
on Filtronic's business, results of operations and financial condition.

     Sales to  customers  are  usually  made under  purchase  orders  with short
delivery  requirements.  While Filtronic  receives periodic order forecasts from
major  customers,  such  customers  generally have no obligation to purchase the
forecasted  amounts and may cancel orders,  change delivery  schedules or change
the  mix  of  products   ordered  with  minimal  notice.   Order  deferrals  and
cancellations  by  customers,  declining  average sales prices and delays in the
introduction  of new products  have in the past  adversely  affected  results of
operations.  Filtronic  cannot  guarantee that results of operations will not be
similarly  adversely affected in the future. If customers purchase less than the
forecasted  amounts or cancel or delay existing  purchase orders,  Filtronic may
have higher  levels of inventory  that face a greater risk of  obsolescence  and
excess  production  staff. If customers desire to purchase products in excess of
the  forecasted  amounts  Filtronic  may lack  the  inventory  or  manufacturing
capacity to fulfil their orders.  Either situation could have a material adverse
effect upon the business,  financial  condition  and results of  operations  and
future business with such customers.

     Filtronic's  operating  results  have varied from period to period due to a
number of factors, including:

     -  variations  in the timing,  cancellation,  or  rescheduling  of customer
        orders and shipments;

     -  delays in qualification by customers of new products;

     -  cancellations  or  reductions  of customer  orders and  shipments due to
        economic slowdowns in the customers' operating regions;

     -  cancellations  or  rescheduling  of customer orders and shipments due to
        excess inventory levels caused by changes in demand or deployment
        schedules at the customer; and

     -  competitive  factors,  including  pricing,  availability  and demand for
        competing products.

                                       6

<PAGE>


     Due to these and other factors, past results may not be reliable indicators
of Filtronic's future performance.

          The expansion of wireless communications services depends on developed
     countries  continuing  to allow  deployment of new networks and upgrades to
     existing  networks,  and on less  developed  countries  deploying  wireless
     communications   networks.   Filtronic's  performance  could  be  adversely
     affected by any of the following risks:

     - refusal of local governments or foreign  countries to allow  construction
       of new wireless communications systems;

     - termination or postponement by local  governments or foreign countries of
       existing construction of wireless communications systems;

     - imposition of  moratoriums by local  governments or foreign  countries on
       building new base stations for existing wireless communications  systems;
       and

     - foreign  governments  choosing  not to  deploy  wireless   communications
       systems because of environmental  concerns,  political  unrest,  economic
       downturns, favorable prices for  other communications services or  delays
       in implementing wireless communications systems.

     Filtronic operates in markets that are highly  competitive.  The industries
in which it operates are characterized by rapid  technological  advances.  These
advances,  if not met by  Filtronic,  could  adversely  affect  its  competitive
position and results of operations.  Filtronic's ability to compete successfully
in its markets will depend on its ability to design, develop, manufacture, test,
market and supply new products  and  enhancements  to existing  products for its
customers. Failure to identify new opportunities or to develop new products in a
timely  or  cost-effective   manner  may  have  a  material  adverse  effect  on
Filtronic's business.

     Filtronic's   products   compete  on  the  basis  of  the   following   key
characteristics:

     -   performance;

     -   functionality;

     -   reliability;

     -   pricing;

     -   quality;

     -   designs that can be efficiently manufactured in large volumes;

     -   time-to-market delivery capabilities; and

     -   compliance with industry standards.

     If Filtronic is unable to maintain  competitiveness  in these areas,  there
could be a material  adverse  effect on its business,  financial  conditions and
results of operations.

     Filtronic's  future  success  is  dependent  in part  upon its  proprietary
technology  and  trade  secrets,   including   manufacturing  and  technological
expertise.  Other parties may develop  technologies that are similar or superior
to Filtronic's technology, duplicate Filtronic's technology or design around the
patents and other intellectual  property owned by Filtronic.  Although Filtronic
takes steps to protect its proprietary technology and trade secrets, these steps
may not be sufficient to prevent misappropriation of its technology.

     Filtronic is exposed and, as it expands its operations in overseas markets,
will be increasingly  exposed to fluctuations in foreign  currencies because its
revenues,  costs, assets and liabilities are denominated in multiple currencies.
Filtronic's financial condition and results of operations, which are reported in
pounds  sterling,  may be  affected  by  fluctuations  in the value of the other
currencies in which Filtronic transacts  business,  in particular the US dollar,
the euro,  the  Australian  dollar and the  Chinese  yuan.  Changes in  currency
exchange rates could have a material  adverse  effect on Filtronic's  ability to
compete with  manufacturers  that have a cost or pricing  advantage arising from
their doing  business in  favourable  currencies.  In  addition,  exchange  rate
fluctuations may have a material  adverse effect on Filtronic's  ability to make
principal and interest payments on its indebtedness when due.

                                       7

<PAGE>


     The  United  Kingdom  is not a  signatory  to the  treaty  on the  European
Economic and Monetary  Union.  On January 1, 2002,  the euro was  introduced  in
certain  participating  countries in Europe,  including Finland,  and became the
exclusive  currency in these  countries  on July 1, 2002.  As a result,  some of
Filtronic's  transactions  with certain  customers,  suppliers and employees are
made in euro. To date Filtronic has not suffered any material  financial  impact
as a result of the  introduction  of the euro. The  introduction of the euro may
increase  the  volatility  of pounds  sterling  exchange  rates or result in the
future  appreciation  of pounds  sterling,  both of which  would  make  imported
products more price competitive in the United Kingdom and exported products less
competitive.  It remains  unclear on what terms the United  Kingdom may become a
signatory to the treaty.

     Filtronic is subject to laws,  regulations  and  ordinances  throughout the
world that govern  activities or operations that may have adverse  environmental
effects,  such as discharges to air and water and handling and disposal of solid
and hazardous  wastes.  In many  jurisdictions,  these laws are complex,  change
frequently and have tended to become more  stringent over time.  There can be no
assurance  that violation of such laws have not occurred or will not occur or be
identified  or that  such laws will not  change in the  future in a manner  that
could materially and adversely affect Filtronic.

     As at May 31, 2003,  Filtronic had invested GBP49.3 million ($80.8 million)
in its  compound  semiconductor  facility  at Newton  Aycliffe,  England for the
manufacture  of  compound  semiconductors.  The costs of  operating  the  Newton
Aycliffe  facility are  substantial  and to date Filtronic has not generated any
significant  revenues from it. On December 3, 2001,  Filtronic announced that it
had entered into an agreement with M/A-Com,  Inc.  ("M/A-Com") for the supply of
compound  semiconductors for certain commercial markets. In addition,  Filtronic
announced  at the same time that it had entered into a separate  agreement  with
BAe  SYSTEMS  Avionics  Limited  ("BAe")  with  regard to the supply of compound
semiconductors  and related products for the defence market. As at May 31, 2003,
Filtronic had not recorded any sales as a result of these agreements, although a
license fee of GBP10.0  million ($14.6 million) was received from BAe during the
year ended May 31, 2002. This fee is repayable under certain circumstances which
are  summarised  in the  Notes  to the  Financial  Statements.  The fee has been
accounted for as deferred income and is being  recognised in the profit and loss
account in equal  monthly  amounts from May 1, 2003 until  December 31, 2015. On
January 27, 2003 Filtronic  announced that it had become clear that the level of
sales deriving from the M/A-Com  agreement  would be lower than  anticipated and
that it was probable  that the general  exclusive  rights  granted to M/A-Com as
part of the agreement would lapse in November 2003.

     No significant  sales revenues are now expected from the M/A-Com  agreement
however the  consequent  business  deriving from the BAe agreement is considered
vital to the financial results of the Newton Aycliffe  facility.  That agreement
does  not  contain  any  binding  obligation  upon BAe to  place  business  with
Filtronic.

     On September 22, 2003,  Filtronic  announced that it had been selected by a
new OEM customer to supply  initial  quantities of an integrated RF head unit to
be installed in 3G WCDMA base stations.  Production  quantities are not expected
to commence  until the second half of calendar  year 2004 and there is as yet no
obligation on the new OEM customer to place business with  Filtronic.  The units
contain  power  amplifiers,  which  incorporate  the unique high power  compound
semiconductor transistors manufactured at the Newton Aycliffe facility.

     A failure to generate  significant  revenues from the BAe agreement or from
the new OEM customer  referred to in the announcement made on September 22, 2003
or from the Newton Aycliffe  facility  generally  could have a material  adverse
effect on Filtronic's business and financial condition.

     Filtronic  manufactures and markets its products  worldwide through several
foreign  subsidiaries  and  independent  agents.  Its worldwide  operations  are
subject  to  the  risks  normally  associated  with  international   operations,
including the risks of:

     -   adverse local economic, political or social conditions;

     -   changes in export or import laws;

     -   restrictions on currency exchanges; and

     -   the modification or introduction of governmental policies or tax laws
         with potentially adverse effects.

                                       8

<PAGE>


     The  September  11,  2001  terrorist  attacks  created  many  economic  and
political  uncertainties  that have severely  impacted the global  economy.  The
long-term effects of these events and the associated financial market conditions
may create an economic environment which could have a material adverse effect on
Filtronic's business and financial condition.  Additionally,  Filtronic has, and
certain of  Filtronic's  major  customers  and its  customers'  customers  have,
substantial operations in the United States.  Filtronic is unable to estimate or
predict what impact any future  terrorist  attack on the United  States,  or any
other  country,  may have on the  results  of its  operations  or its  financial
condition.

     Filtronic  has not  experienced  any direct  impact  from the Severe  Acute
Respiratory  Syndrome  ("SARS") epidemic which has infected large parts of Asia,
including  China,  Hong Kong and  Singapore.  Filtronic has taken steps to limit
employees'  travel  to these  areas  and has  also  implemented  certain  health
precautions in our facility in China.  While the disease currently appears to be
under control,  any future breakout of SARS could negatively impact  Filtronic's
ability to  conduct  business  in Asia and this  would  have a material  adverse
effect on Filtronic's business and financial condition.

                                       9


<PAGE>


ITEM 4. INFORMATION ON THE COMPANY

Introduction

Organization

     Filtronic  plc is a public  limited  company  organized  under  the laws of
England and Wales.  On January 25, 1994,  it was  incorporated  with  registered
number 2891064 under the name YPCS 28 plc. On July 13, 1994, it changed its name
to Filtronic  Comtek plc and on March 2, 1998,  it changed its name to Filtronic
plc. Filtronic plc's registered office is located at The Waterfront,  Salts Mill
Road, Saltaire,  Shipley,  West Yorkshire BD18 3TT, England,  telephone +44 1274
530622.  Its agent for US federal  securities law purposes is Filtronic  Comtek,
Inc., 31901 Comtek Lane, Salisbury, MD 21804-1788, USA.

History

    Filtronic has operated in the field of microwave electronics since 1977.

     On October 24,  1994,  Filtronic  plc had its initial  public  offering and
listing on the London Stock Exchange.

     On January 26, 1998, Filtronic plc acquired effective control of the parent
companies of Filtronic  Components  Limited and Filtronic  Cable  Communications
Limited.

     On June 25, 1998, Filtronic acquired Sage Laboratories, Inc., a US-based RF
equipment manufacturer serving the US electronic warfare market.

     On September 18, 1998,  Filtronic acquired LK Products Oy (now Filtronic LK
Oy), a Finland based designer and  manufacturer  of RF products  principally for
use in cellular  handsets.  On the same date,  Filtronic  raised GBP23.5 million
through a placing and open offer of ordinary  shares to assist in the funding of
the acquisition.

     On October 5, 1998, Filtronic acquired from Litton Industries,  Inc. all of
the business and certain assets of its Solid State division (now Filtronic Solid
State),  a US based designer and manufacturer of RF  semiconductors,  components
and subsystems for wireless infrastructure and electronic warfare applications.

     On December 21, 1998,  Filtronic  plc issued  $170.0  million of 10% Senior
Notes  repayable  December 1, 2005 to  refinance  previous  acquisitions  and to
provide funds for general corporate purposes.

     On  September  1,  1999,  Filtronic  acquired a  semiconductor  fabrication
facility at Newton Aycliffe,  County Durham, UK formerly operated by Fujitsu for
GBP13.6 million.

     On October 13, 1999, Filtronic plc raised GBP71.7 million through a 1-for-6
rights issue in order to fund the capital investment at the Newton Aycliffe site
and the  development of new facilities for the manufacture of ceramic filters in
Finland and to provide additional liquidity for general corporate purposes.

     On August 29, 2000,  Filtronic acquired Sigtek, Inc. (now Filtronic Sigtek,
Inc.  ("Filtronic  Sigtek")).  The initial  consideration for the acquisition of
Sigtek,  Inc. was 267,427  newly  issued  Filtronic  plc shares.  Subject to the
satisfaction of certain  conditions up to 873,474  further  Filtronic plc shares
may be issued to the former shareholders and employees of Sigtek, Inc.

                                       10

<PAGE>




Business Summary

     Filtronic  plc is the ultimate  parent  company of the  Filtronic  group of
companies.  All of  Filtronic  plc's  subsidiary  companies  are  wholly  owned.
Filtronic  designs and  manufactures  a range of RF components and subsystems in
the following five business segments:

     -   Wireless Infrastructure;

     -   Cellular Handset Products;

     -   Electronic Warfare;

     -   Broadband Access; and

     -   Compound Semiconductors.

     Filtronic is active in Europe,  North America and the Asia Pacific  region.
In fiscal  2003,  approximately  41% of sales were  generated  from  Filtronic's
operations in the United Kingdom,  22% in the United States, 27% in Finland,  2%
in Australia and 8% in China.

     Filtronic's  sales were GBP241.3 million ($395.56  million) in fiscal 2003,
GBP280.5  million ($410.2  million) in fiscal 2002 and GBP297.4  million ($421.6
million) in fiscal 2001.

     Filtronic's   aggregate  capital  expenditures  for  property,   plant  and
equipment were GBP8.2 million ($13.4  million) in fiscal 2003,  GBP11.4  million
($16.7  million) in fiscal 2002 and GBP36.8  million  ($52.2  million) in fiscal
2001. The United  Kingdom  accounted for 39%, the United States 7%, Finland 25%,
Australia 0% and China 29% of Filtronic's capital expenditures in fiscal 2003.

     At May 31,  2003,  Filtronic  plc had  74,304,443  shares  outstanding  and
approximately 6,000 shareholders. Its ordinary shares are listed on the Official
List of the United Kingdom Financial Services Authority and traded on the London
Stock Exchange.

                                       11

<PAGE>




Organizational Structure and Subsidiaries

     Filtronic plc is the holding company of the Filtronic  group. The following
table sets forth all the subsidiaries  owned directly or indirectly by Filtronic
plc at May 31, 2003.

<TABLE>
<CAPTION>

                                        Country of incorporation  Percentage
       Name of company                       or registration        owned                Activity
      _________________                 ________________________  __________             ________
<S>                                                <C>               <C>                   <C>
Owned directly by Filtronic plc
Filtronic Comtek (UK) Limited                England & Wales        100%           Design and manufacture of
                                                                                    microwave products
Filtronic Compound                           England & Wales        100%           Design and manufacture of
 Semiconductors Limited                                                             compound semiconductors
Filtronic Microtek Limited                   England & Wales        100%           Manufacture of microwave
 products
Filtronic Broadband Limited                  England & Wales        100%           Design and manufacture of
 microwave products
Filtronic Cable Communications Limited       England & Wales        100%           Design and manufacture of
                                                                                    microwave products
Filtronic Components Limited                 England & Wales        100%           Design and manufacture of
                                                                                    microwave products
Filtronic Properties Limited                 England & Wales        100%           Property company
Filtronic QUEST Trustees Limited             England & Wales        100%           Qualifying Employee Share Ownership Trust trustee
company
Filtronic Executive Share Option
 Trustees Limited                            England & Wales        100%           Dormant company
Filtronic (Overseas Holdings) Limited        England & Wales        100%           Holding company
Filtronic Sigtek, Inc.                       USA                    100%           Design and manufacture of
                                                                                    digital signal processing
                                                                                    products

Owned by subsidiaries
Filtronic LK Oy                              Finland                100%           Design and manufacture of
                                                                                    microwave products
Filtronic Pty Limited                        Australia              100%           Design and manufacture of
                                                                                    microwave products
Filtronic (Suzhou) Telecommunication
 Products Co Limited                         China                  100%           Manufacture of microwave
                                                                                    products
Filtronic (Japan) K.K.                       Japan                  100%           Representative office
Filtronic Holdings, Inc.                     USA                    100%           Holding company
Filtronic Comtek, Inc.                       USA                    100%           Design and manufacture of
                                                                                    microwave products
Filtronic Comtek (Barbados), Limited         Barbados               100%           US foreign sales corporation
Solid State-Filtronic, Inc.                  USA                    100%           Design and manufacture of
                                                                                    microwave products and
                                                                                    compound semiconductors
Sage Laboratories, Inc.                      USA                    100%           Design and manufacture of
                                                                                    microwave products
Sage Laboratories Active Microwave, Inc.     USA                    100%           Design and manufacture of
                                                                                    microwave products
Sage Laboratories Investment Corporation     USA                    100%           Investment company
</TABLE>

                                       12


<PAGE>

Description of Business Segments

Products

Wireless Infrastructure

     Filtronic's  wireless  infrastructure  products  are  designed to identify,
remove interference from, amplify and combine RF signals for onward transmission
to a cellular handset,  base station or wireline  network.  The continuing trend
towards smaller, lighter,  high-performance systems causes Filtronic's customers
increasingly to require Filtronic to design and produce  innovative,  integrated
products.  Integrated products typically combine filter,  isolator and amplifier
functions  together with fault diagnostic  systems into a single subsystem.  Set
out below is a summary of Filtronic's principal wireless infrastructure products
and a brief description of their functions:

     - Transmit filters.  Transmit filters remove out-of-band noise from signals
       before  these  signals  are  passed to the base  station  antenna  for
       transmission.

     - Receive filters. Receive filters filter incoming signals from the antenna
       so that only the desired RF signal is passed into the receive  amplifiers
       of the base station with minimal distortion.

     - Diplexers. Diplexers integrate the functions of transmit and receive
       filters using a common antenna.

     - Multiplexers. Multiplexers combine multiple signals on both the transmit
       and receive channels in order to make efficient use of a single antenna.

     - Wideband combiners. Wideband combiners combine a number of transmit
       signals on pre-set frequencies for input first into a transmit filter and
       then to a single antenna for transmission.

     - Autotune combiners. Autotune combiners, using microprocessors,
       automatically tune each channel of the combiner to the frequency of the
       transmit signal to allow the connection of multiple transmissions to a
       single antenna.

     - Low-noise amplifiers. Low-noise amplifiers increase the signal power
       without creating out-of-band noise in the system.

     - VSWR monitors. VSWR monitors measure the voltage standing wave ratio of a
       microwave signal and are used to determine whether or not the connection
       from the base station to the antenna is operating efficiently.

     - Repeaters. Repeaters increase the range of base stations by receiving,
       amplifying and retransmitting a signal.

     - Ferrite products. Ferrite products, such as isolators and circulators,
       take advantage of their magnetic properties to minimize the signal
       distortion where multiple transmitters are being used.

     - Modular subsystems. Modular subsystems comprise a number of separate
       components such as those described above, which function independently,
       but are cabled together to form a connected subsystem.

     - Integrated subsystems. Integrated subsystems are similar to modular
       subsystems but the components are fully integrated to comprise a single
       unit.

Cellular Handset Products

     Filtronic's  principal  cellular  handset products are antennas and filters
used in handsets to receive,  transmit and filter RF signals. These products are
designed  to meet  the  performance,  efficiency  and size  requirements  of the
cellular  handset  market.  Filtronic is capable of designing and  manufacturing
products which are compatible with analog,  digital, dual or triple band or dual
or triple mode handsets.  Filtronic's antenna products include a range of fixed,
retractable and internal antennas.  Filtronic designs and manufactures  antennas
for both 2G/2.5G and 3G handsets.  Filtronic's  filter products  include ceramic
diplexers which utilize the high dielectric material properties of ceramics.

                                       13

<PAGE>

Electronic Warfare

     Filtronic  produces RF components and  subsystems  and  high-speed  digital
interfaces  used in radar and other  electronic  warfare  systems  which protect
aircraft,  ships  and  land-based   installations.   Filtronic's  products  have
applications    in   both    electronic-support    measures    and    electronic
counter-measures.  Filtronic's products include broadband and narrowband filters
and  multiplexers  used in  electronic  warfare  systems  which  sense,  locate,
identify  and  clarify RF signals  and jam hostile  signals.  Filtronic's  other
products include broadband and narrowband  amplifiers,  which increase the power
of  the  desired  signal  above  other  signals,  and  frequency  and  amplitude
measurement  systems which are used for  identification  and  classification  of
signals.  These  products are required to perform at a very high standard due to
the demanding environments in which they operate.

     Filtronic's  broadband  technology enables its products to identify signals
from a wide range of sources,  thereby  maximizing signal  detection.  Filtronic
also utilizes phased array technology which enables  electronic  warfare systems
to detect the source of a signal with greater accuracy.

Broadband Access

     Filtronic's broadband access products comprise wireless,  cable and digital
signal processing products.

     Filtronic's  current  wireless  products  include  transceivers and filters
operating at  frequencies  between 7 GHz and 38 GHz which are used primarily for
signal  "backhauling"  within  or  between  wireless   communication   networks.
Filtronic   has   also   developed   products   which   have   applications   in
point-to-multipoint distribution wireless communication systems.

     Filtronic's  cable  products  provide  high-capacity,   broadband,  two-way
amplification and filtering functions for cable television systems.  Filtronic's
cable  products  include  two-way  broadband  amplifiers,   which  are  used  to
facilitate two-way data transfer upconverted, which allow digital video and data
signals to be transmitted across a wireline network.

     Filtronic's digital signal processing products and capabilities are applied
to a range of  commercial  and  military  applications  to  facilitate  software
control over the processing of radio signals.

Compound Semiconductors

     Filtronic  designs and manufactures  compound  semiconductors  for wireless
infrastructure,  cellular  handset and electronic  warfare  applications.  These
devices  include  monolithic  microwave  integrated  circuits  based on  gallium
arsenide  pseudomorphic  high electron  mobility  transistors  which are used in
current  generations,  and are  expected  to be used in future  generations,  of
microwave and millimeter wave systems for both commercial and electronic warfare
applications.

     Filtronic's  facilities  in  Newton  Aycliffe  have  been  commissioned  to
manufacture  switches,  low noise  amplifiers  and power  amplifier  devices for
cellular handset  applications  and power amplifier  devices for use in wireless
communication  system base stations.  A range of devices and processes for other
commercial and military applications is under development.

                                       14


<PAGE>

Sales by Business Segment and Geographical Destination

     The  following  tables  set  forth  the sales by  business  segment  and by
geographical destination for the three fiscal years 2001, 2002 and 2003.


<TABLE>
<CAPTION>
                                                                                      Year ended May 31,
                                                                               ________________________________

                                                                                 2001        2002        2003
                                                                               _________  _________  __________

                                                                                          (thousands)
<S>                                                                              <C>        <C>         <C>
Sales by business segment
Wireless Infrastructure                                                       GBP207,777 GBP188,589  GBP151,715
Cellular Handset Products                                                         42,174     48,845      51,242
Electronic Warfare                                                                25,728     26,977      25,721
Broadband Access                                                                  11,273     12,544      10,796
Compound Semiconductors                                                           11,233      7,481       3,452
Inter-segment sales                                                                 (751)    (3,889)     (1,658)

                                                                              GBP297,434 GBP280,547  GBP241,268



                                                                                      Year ended May 31,
                                                                               ________________________________

                                                                                 2001        2002        2003
                                                                                _________  _________  __________

                                                                                          (thousands)
Sales by geographical destination
United Kingdom                                                                GBP 43,313 GBP 14,108  GBP 12,875
Europe                                                                            78,274    112,976     131,800
North America                                                                    128,168     84,800      48,180
Asia Pacific                                                                      47,679     68,663      48,413

                                                                              GBP297,434 GBP280,547  GBP241,268
</TABLE>


Customers and Markets

     Filtronic   designs  and  manufactures  a  broad  range  of  customised  RF
components  and  subsystems  and  compound   semiconductors   used  in  wireless
communication infrastructure equipment, cellular handsets and electronic warfare
systems. In addition, Filtronic has developed applications for its technology in
wireless  communication markets such as cable television and high-speed internet
access systems.  Filtronic's products receive,  filter,  amplify and transmit RF
signals.

     Filtronic's  wireless  infrastructure  products are for  application in any
wireless  communication  network  regardless  of  modulation  system  and at any
frequency. Filtronic's cellular handset products receive, filter and transmit RF
signals and are compatible with analog,  digital,  dual and triple band and dual
and triple mode handsets.

     Filtronic's  electronic  warfare  products  are  used in  radar  and  other
electronic   warfare  systems  that  protect  aircraft,   ships  and  land-based
installations  and  applications  in both  electronic  support  measures such as
detecting,   locating,   identifying  and  clarifying   signals  and  electronic
counter-measures  such as jamming hostile signals.  Filtronic's broadband access
cable  products  provide high capacity,  broadband,  two-way  amplification  and
filtering functions for cable television systems infrastructure.

     Filtronic's  principal  customers  include  many  of  the  world's  leading
wireless  infrastructure  OEMs,  cellular  handset  OEMs and  prominent  defense
contractors.   Additionally,   Filtronic   sells  its   products   to   wireless
communication  service  providers  and cable  television  system  operators  and
suppliers.

Wireless Infrastructure

     Filtronic's  principal customers in the wireless  infrastructure market are
Lucent, Motorola and Nokia, three of the largest OEMs in this industry. Ericsson
is the only  remaining  significant  OEM to continue  to design and  manufacture
substantially  all  of  its  own  wireless   infrastructure  RF  components  and
subsystems.  In fiscal  2003,  Nokia  represented  64% of  Filtronic's  sales of
Wireless Infrastructure products, with Lucent representing 16% and Motorola 11%.

                                       15

<PAGE>


Cellular Handset Products

     Filtronic's  principal  customer in the cellular handset products market is
Nokia.  During  fiscal 2003,  Nokia  accounted for 94% of  Filtronic's  Cellular
Handset Products sales.

Electronic Warfare

     Filtronic's  principal  customers in the electronic warfare market are BAe,
Bharat  Electronics,  Elettronica,  Raytheon and Thales.  During fiscal 2003, no
single  customer  represented  more than 10% of Filtronic's  Electronic  Warfare
sales.

Broadband Access

     Filtronic's Broadband Access business comprises high frequency transceivers
and filters for the wireless  point-to-point  market,  digital signal processing
products and products aimed at the cable  telecommunications  market. The market
for Filtronic's wireless point-to-point products has suffered from low levels of
demand  for the  last  three  fiscal  years.  Wireless  point-to-point  products
represented 52% of Broadband Access sales in fiscal 2003. In fiscal 2003, 49% of
Filtronic's  sales of Broadband Access products were to Nokia.  Filtronic Sigtek
has sales of digital  signal  processing  products to a range of OEM  customers,
none of whom  individually  represented  a  significant  proportion of Broadband
Access  sales.  In fiscal 2003,  30% of Broadband  Access sales were to Harmonic
Lightwave for cable products.

Compound Semiconductors

     Filtronic's  principal  customer in the  compound  semiconductor  market is
Richardson,  which accounted for 23% of Filtronic's Compound Semiconductor sales
during  fiscal 2003.  Filtronic  closed its compound  semiconductor  fabrication
facility at Santa Clara, California,  which is part of Filtronic Solid State, in
October 2002, with certain  production being  transferred to the Newton Aycliffe
facility.  Other  products  are  intended  to be  manufactured  in the future at
Filtronic's  Newton  Aycliffe  facility  to  satisfy  Filtronic's  own  internal
requirements.  Additionally,  products are expected to be supplied to BAe,  with
whom Filtronic has a non-binding  supply  agreement,  and to an OEM customer who
has selected  Filtronic to supply  integrated RF head units containing  compound
semiconductor transistors.

Competition

Wireless Infrastructure

     The market  for  Filtronic's  wireless  infrastructure  products  is highly
competitive and is characterized by rapid  technological  change and new product
development.   Management   believes  that   competition   within  the  wireless
infrastructure  market is driven  primarily by the ability to design and deliver
high-performance,  customized  products in volume,  in a timely  manner and at a
competitive  price.  Filtronic  faces  competition  in  this  market  from a few
independent  suppliers,  some of which are US  public  companies.  In  addition,
Filtronic competes with several smaller independent  suppliers that tend to have
limited product offerings and production  capabilities.  Furthermore,  the OEMs'
in-house  manufacturing  departments are also competitors.  Ericsson is the only
remaining  significant  OEM that has a policy  of  designing  and  manufacturing
substantially all of its RF products in-house.

Cellular Handset Products

     The market for  cellular  handset  filters is  dominated  by several  large
Japanese and US high-volume manufacturers. Filtronic's Cellular Handset Products
business  continues to focus its  resources on certain niche  opportunities  for
ceramic  filters.  Filtronic  has the RF design and  engineering  expertise  and
volume manufacturing capabilities to address such opportunities.

     In the market for cellular handset antennas,  competitors comprise a number
of  businesses  based in Sweden,  Israel,  the Far East and the  United  States.
Management believes that it is well positioned to address this market because of
its design  capabilities,  its automated  manufacturing  processes and its close
relationship with its principal customer. See " - Customers and Markets" above.


                                       16

<PAGE>

Electronic Warfare

     Filtronic  believes that success  within the  electronic  warfare market is
dependent on the  development of new  technologies  and product  applications to
achieve the  high-performance  standard  required  for the  critical and complex
functions of this industry's end-use products.  Most of Filtronic's  competitors
in  the  electronic   warfare  market  are   independent   microwave   equipment
manufacturers based in the United States which have integration capabilities.

Broadband Access

     Filtronic's  competitors in the cable market are  principally  the in-house
engineering  departments of the OEMs operating in this market.  The  competition
for Filtronic's wireless  point-to-point products comes principally from a small
number of US  manufacturers.  In  Filtronic  Sigtek's  area of  business,  which
applies  digital  signal  processing to the cable modem test and software  radio
markets, the major competitors are United States based specialist digital signal
processing  companies  or the  relevant  departments  of large  electronic  test
equipment OEMs.

Compound Semiconductors

     Competition  in the compound  semiconductor  area comes from  manufacturers
operating principally in Japan and the United States.

Capital Expenditures

     The capital  expenditures of Filtronic's five business segments for each of
the last three fiscal years are shown below:

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                               ________________________________

                                                                                 2001        2002        2003
                                                                                _________  _________  __________

                                                                                          (thousands)
<S>                                                                               <C>         <C>         <C>
Wireless Infrastructure                                                       GBP 10,782  GBP 4,857   GBP 1,757
Cellular Handset Products                                                          7,800      1,938       3,365
Electronic Warfare                                                                 1,810      2,352       1,201
Broadband Access                                                                   1,862        918         325
Compound Semiconductors                                                           14,207      1,249       1,463

</TABLE>


Wireless Infrastructure

     The Wireless  Infrastructure  business had GBP1.8 million ($3.0 million) of
capital  expenditures  in fiscal 2003,  GBP4.9  million ($7.2 million) in fiscal
2002 and GBP10.8  million ($15.3 million) in fiscal 2001. The principal areas of
investment  in fiscal 2003 were the  purchase  of  production  equipment  in the
United Kingdom, Finland and China.

Cellular Handset Products

     The Cellular Handset Products business had GBP3.4 million ($5.6 million) of
capital  expenditures  in fiscal 2003,  GBP1.9  million ($2.8 million) in fiscal
2002 and GBP7.8  million  ($11.1  million) in fiscal  2001.  Principal  areas of
investment in fiscal 2003 were the purchase of new  manufacturing  equipment for
handset antennas in Kempele, Finland and in Suzhou, China.

Electronic Warfare

     The  Electronic  Warfare  business  had GBP1.2  million  ($2.0  million) of
capital  expenditures  in fiscal 2003,  GBP2.4  million ($3.5 million) in fiscal
2002 and GBP1.8  million ($2.6  million) in fiscal 2001.  The principal  area of
investment  in fiscal  2003 was to expand the  manufacturing  line for  products
associated with the European Fighter Aircraft programme.

                                       17


<PAGE>

Broadband Access

     The Broadband  Access  business had capital  expenditures of GBP0.3 million
($0.5 million) in fiscal 2003,  GBP0.9 million ($1.3 million) in fiscal 2002 and
GBP1.9  million ($2.7  million) in fiscal 2001. The principal area of investment
in  fiscal  2003  was  the  purchase  of   equipment   to  establish   automated
manufacturing capabilities in the UK.

Compound Semiconductors

     The Compound  Semiconductors  business had GBP1.5 million ($2.5 million) of
capital  expenditures  in fiscal 2003,  GBP1.2  million ($1.8 million) in fiscal
2002 and GBP14.2  million ($20.1  million) in fiscal 2001. The principal area of
investment  in fiscal 2003 was to add  further  production  equipment  at Newton
Aycliffe.

Research and Development

     Filtronic places considerable emphasis on research and development which is
predominantly   market-led  and   non-speculative.   Filtronic's   research  and
development  personnel  comprises  over  500  employees.  Filtronic  intends  to
maintain  and  enhance  its  engineering  capability  by  continuing  to  invest
significant  resources in the research and development of microwave  engineering
applied  specifically  to the  requirements of the markets in which it operates.
Substantially   all  of  Filtronic's   research  and  development   efforts  are
customer-oriented  and  originate  as part of a  specific  programme.  Filtronic
maintains a database  that compiles the RF design and  engineering  expertise of
all of its business  lines into a centralized  location which can be accessed by
all of its engineers.  Filtronic  minimizes  research and  development  costs by
capitalizing  on research and development for one application in the development
of other products for other customers and other markets.

Seasonality

     Filtronic's sales do not generally  fluctuate due to seasonality.  However,
due to the holiday  season and the desire of OEM  customers to reduce  inventory
levels  prior to the end of the  calendar  year,  December  has tended to be the
lowest sales month each year for Filtronic.

Raw Materials

     Filtronic's  products  require  certain raw  materials,  such as silver and
aluminum,  together with certain electronic components.  Filtronic sources these
and other  items from a variety of external  suppliers  with whom it believes it
has built  close  relationships.  Filtronic  has not  experienced,  and does not
anticipate that it will experience,  any delays in the supply or availability of
these materials and components and, as a result, it is not Filtronic's  practice
to enter into long-term contracts with suppliers.

Sales and Marketing

     Filtronic uses an integrated  sales and marketing  approach which, for each
program in which it participates,  involves customer  interaction at each of the
design,  engineering  and sales  stages.  Filtronic  has sales  personnel in the
United Kingdom, the United States,  Finland, China, Japan and Australia covering
their local  territories.  Filtronic also uses sales  representatives or agents,
particularly  in the  Electronic  Warfare and Compound  Semiconductors  business
segments.

Patents, Licenses, Contracts and Manufacturing Processes

     Management believes that Filtronic's research,  development and engineering
skills,  as well as its scientific and technical  expertise,  are of significant
importance  to  Filtronic's  business.  By  virtue  of  the  provisions  of  the
agreements  which it enters into with its  customers,  executive  Directors  and
employees,  Filtronic  retains the intellectual  property rights in all designs,
inventions,   programs,  discoveries  or  improvements  made  by  Filtronic.  In
addition,  Filtronic  owns various  patents on RF  technology.  Filtronic is not
dependent  on  any  license  from  a  third  party  or on any  patent  or  other
technology.

                                       18

<PAGE>

     Filtronic is not dependent on any particular  contract with a supplier.  In
each of its business  segments,  Filtronic has entered into purchase  agreements
with customers that govern the terms upon which Filtronic  supplies  products to
those  customers.  These  agreements are  cancellable at the  convenience of the
customer  and impose  only very  limited  minimum  purchase  obligations  on the
relevant customer.

Environmental Matters

     Filtronic's   assembly,   manufacturing   and  other   operations   in  the
jurisdictions  in which it  operates  are  subject to a number of  environmental
regulatory  requirements  that impose  restrictions  on airborne and  waterborne
emissions  and  discharges  of  pollutants,  the handling of hazardous and toxic
gases and materials and the disposal of waste. Such land regulations include the
Environmental  Protection  Act in the United  Kingdom and the Clean Air Act, the
Clean Water Act and the  Resource  Conservation  and  Recovery Act in the United
States. In the United States,  state laws parallel and in some cases impose more
stringent requirements than federal law particularly with regard to fire safety,
chemical  handling  and  building  regulations.  Similar  regulations  apply  to
Filtronic's  operations  in  Australia  and  Finland.   Increasing  governmental
regulation and enforcement in China is likely.

     The  cost  of  complying  with  these   regulations   can  be  significant,
particularly  in the  Compound  Semiconductors  business  segment,  and in  this
business segment Filtronic expects to incur significant compliance costs.

     Estimates  of future  costs of such  environmental  regulatory  matters are
imprecise due to numerous uncertainties, including the enactment of new laws and
regulations and the development and application of new  technologies.  Filtronic
budgets for these matters when these costs can be reasonably estimated.

                                       19

<PAGE>


Properties, Plants and Equipment

     Filtronic  operates  out of 17 principal  facilities.  The table below sets
forth certain details of Filtronic's facilities:

<TABLE>
<CAPTION>

                                            Operating subsidiaries occupying
Location                 Ownership          and business segment(s)            Description of facility
___________________      _____________      ________________________________   ____________________________________
<S>                       <C>                      <C>                               <C>
Shipley,                 Owned              Filtronic Comtek(UK) -             Design, manufacturing and silver-
England, UK                                 Wireless Infrastructure            plating facility  and administrative
                                                                               office

Stewarton,               Owned              Filtronic Comtek(UK) -             Machining facility
Scotland, UK                                Wireless Infrastructure

Wolverhampton,           Owned              Filtronic Comtek(UK) -             Design and manufacturing facility
England, UK                                 Wireless Infrastructure

East Kilbride,           Owned              Filtronic Comtek (UK) -            Design and manufacturing facility
Scotland, UK                                Wireless Infrastructure

Shipley,                 Leased             Filtronic Broadband -              Design and manufacturing facility
England, UK                                 Broadband Access

Shipley,                 Owned              Filtronic Components -             Design and manufacturing facility
England, UK                                 Electronic Warfare

Milton Keynes,           Leased             Filtronic Components -             Design and manufacturing facility
England, UK                                 Electronic Warfare

Newton Aycliffe,         Owned              Filtronic Compound                 Design and manufacturing facility
England, UK                                 Semiconductors-
                                            Compound Semiconductors
                                            Filtronic Components-
                                            Electronic Warfare-
                                            Filtronic Broadband-
                                            Broadband Access

Kempele, Finland         Owned              Filtronic LK -                     Design and manufacturing facility
                                            Wireless Infrastructure and
                                            Cellular Handset Products

Brisbane,                Owned              Filtronic Comtek -                 Design and manufacturing facility
Queensland, Australia                       Wireless Infrastructure

Suzhou, China            Leased             Filtronic Suzhou -                 Manufacturing and silver-plating
                                            Wireless Infrastructure and        facility
                                            Cellular Handset Products

Salisbury,               Owned              Filtronic Comtek -                 Design and manufacturing facility
Maryland, USA                               Wireless Infrastructure

Merrimack,               Owned              Filtronic Comtek -                 Design and manufacturing facility
New Hampshire, USA                          Wireless Infrastructure
                                            Sage Laboratories -
                                            Electronic Warfare

Chicago, Illinois, USA   Leased             Filtronic Comtek -                 Design facility
                                            Wireless Infrastructure

</TABLE>

                                       20

<PAGE>


<TABLE>
<CAPTION>
                                            Operating subsidiaries occupying
Location                 Ownership          and business segment(s)            Description of facility

___________________      _____________      ________________________________   ____________________________________
<S>                       <C>                      <C>                               <C>
Columbia,                Leased             Filtronic Sigtek -                 Design and manufacturing facility
Maryland, USA                               Broadband Access

Natick,                  Owned              Sage Laboratories -                Design and manufacturing facility
Massachusetts, USA                          Electronic Warfare

Santa Clara,             Leased             Filtronic Solid State-             Design and manufacturing facility
California, USA                             Compound Semiconductors and
                                            Electronic Warfare

</TABLE>

     The  properties  listed  above  contain  plant and  equipment  suited for a
variety of uses including manufacturing,  research and development, engineering,
design and administration. The specialist plant and equipment deployed at Newton
Aycliffe,  United Kingdom, is particularly  significant for Filtronic's compound
semiconductor operations.

     In addition to the principal  properties listed above,  Filtronic owns a 13
acre site in Shipley,  United  Kingdom,  which could  accommodate  up to 320,000
square  feet of  manufacturing  and  office  space  in the  future.  In  certain
locations  Filtronic  also  leases  small  properties  that are used as offices,
warehouses or short-term housing for visiting staff.

                                       21

<PAGE>



     ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Accounting Principles

     Filtronic's  financial  statements are prepared in accordance with UK GAAP,
which  differ from US GAAP in a number of  significant  respects as described in
note 38 of the Notes to the  Financial  Statements.  The  principal  differences
relate to the treatment of foreign currency  translations,  pension costs, stock
compensation and goodwill amortization.

Critical Accounting Policies

     The  preparation  of  the  consolidated   financial   statements   requires
Filtronic's  management to make  estimates and use  judgements  which affect the
reported  amounts of assets,  liabilities,  income and  expenditure  and related
disclosures.   These  estimates  and  judgements  are  reviewed  by  Filtronic's
management on an ongoing basis to determine their  appropriateness  in the light
of changing  business  circumstances.  Such  estimates and  judgements  apply to
warranty  provisions,  cost to  complete  provisions,  obsolescence  of  stocks,
recoverability  of  debts,  intangible  fixed  assets,  tangible  fixed  assets,
pensions,  contingent  liabilities,  contractual  commitments and other business
transactions.  Filtronic's  management  bases its estimates and judgements  upon
previous  business  experience,   internally  and  externally  generated  market
information and advice from a range of internal and external sources. Management
can give no  assurances  that future  outcomes  and results will not differ from
expectations based upon the estimates and judgements used.

     Management  believes  that the  following  are the more  critical  areas of
estimate and judgement  used in the  application  of accounting  policies  which
affect   Filtronic's   financial   condition  and  results  of  its  operations.
Filtronic's  principal accounting policies are set out in note 1 of the Notes to
Financial  Statements and the following commentary should be read in conjunction
with those accounting policies.

Intangible fixed assets and tangible fixed assets

     In  accordance  with  Financial   Reporting  Standard  No.11,   Filtronic's
management  conducts a periodic  review of the carrying  value of its intangible
and tangible fixed assets where there are  indications  that there may have been
an  impairment  to the  carrying  value of such assets.  Indications  of such an
impairment  include the incurrence of losses, the indication of future losses or
management  decisions to dispose of certain assets or terminate certain business
activities.

     As at May 31, 2002,  Management carried out such a review which resulted in
a GBP16.0  million  write down of  intangible  fixed  assets and a write down of
GBP7.9 million  against  tangible fixed assets.  As at May 31, 2003,  management
carried out another such review which resulted in no write down of intangible or
tangible  fixed  assets.  The  principal  method used by Management to determine
carrying value was to project and then discount forecast cash flows arising from
these assets.  If these future cash flows were to be less than  forecast,  their
timing  to be later  than  forecast  or were  different  assumptions  to be made
regarding  discount  rates used in the  calculation  of the net present value of
those  forecast cash flows,  then the carrying  value of intangible and tangible
fixed assets may have to be written down further.

Stocks

     Filtronic  makes  provisions  against  the  value of  stocks  to allow  for
estimated  obsolescence or unsaleable items.  These provisions are calculated to
write down the value of stocks to their net realisable value where such value is
determined to be lower than cost. If net realisable values were to be even lower
or if market  conditions occur such that other stocks were to become obsolete or
unsaleable, then additional provisions for obsolescence would be required.

                                       22

<PAGE>


Cost to complete provisions

     Where  Filtronic  is liable  to  complete  customer  contracts  over  time,
estimates  are  prepared  to compare  the  forecast  revenues  arising  from the
contract with the estimated costs of engineering,  manufacturing  and delivering
the related  products to the customer.  Where such costs are determined to be in
excess  of  the  forecast  revenues,   provisions  are  made  to  recognise  the
anticipated  future  losses as soon as such losses are expected to be sustained.
If future  costs  were to exceed  estimates,  then  additional  losses  would be
incurred and provisions may need to be increased.

Operating Results

Overview

     Filtronic conducts its operations through the following five business
     segments:
     - Wireless Infrastructure;
     - Cellular Handset Products;
     - Electronic Warfare;
     - Broadband Access; and
     - Compound Semiconductors.

     Additionally,  certain research and  development,  management and corporate
costs are  classified as Central.  These costs are not allocated to the business
segments.

     During the fiscal year ended May 31, 2001,  Filtronic acquired Sigtek, Inc.
(now Filtronic  Sigtek,  Inc.). This acquisition is part of the Broadband Access
business segment and brought digital signal processing  capability to Filtronic.
Filtronic's  operating  results for the year ended May 31, 2001 include 275 days
of Filtronic Sigtek's operating results.

                                       23

<PAGE>


<TABLE>
<CAPTION>

Extracts from the Consolidated Profit and Loss Accounts
                                                                                      Year ended May 31,
                                                                             __________________________________

                                                                                 2001        2002        2003
                                                                             ___________  _________   _________
<S>                                                                                <C>        <C>         <C>
                                                                            (thousands, except per share amounts)
Sales                                                                         GBP297,434 GBP280,547  GBP241,268
                                                                             ___________  _________   _________
Costs
(Increase)/decrease in stocks of finished goods and
  work in progress                                                                (7,410)     6,437       2,877
Raw materials and consumables                                                    138,520    108,776     101,233
Staff costs - excluding share compensation                                        89,751     84,807      70,136
Staff costs - share compensation                                                   2,293      1,570         146
Depreciation                                                                      16,759     20,433      19,322
Exceptional tangible fixed asset impairment                                            -      7,938           -
Goodwill amortization                                                              4,884      5,352       2,348
Exceptional goodwill impairment                                                   14,078     16,036           -
Other operating charges                                                           47,590     42,261      38,491
                                                                             ___________  _________   _________
                                                                                 306,465    293,610     234,553
                                                                             ___________  _________   _________
Operating (loss)/profit                                                           (9,031)   (13,063)      6,715
Net interest payable                                                             (12,531)   (12,638)     (7,995)
Net financing currency exchange gain                                                 335        165       4,236
Exceptional net gain on repayment of debt                                              -          -         881
                                                                             ___________  _________   _________
(Loss)/profit on ordinary activities before taxation                             (21,227)   (25,536)      3,837
Taxation on (loss)/profit on ordinary activities                                  (1,564)    (3,508)     (2,753)
                                                                             ___________  _________   _________
(Loss)/profit for the year                                                       (22,791)   (29,044)      1,084
Dividends                                                                         (1,994)    (1,999)     (2,006)
                                                                             ___________  _________   _________
Deficit for the year                                                          GBP(24,785)GBP(31,043)   GBP (922)
                                                                             =========== ==========   =========
(Loss)/earnings per share
  Basic                                                                           (31.24)p   (39.31)p      1.46p
  Diluted                                                                         (31.24)p   (39.31)p      1.45p
                                                                             =========== ==========   =========
Weighted average numbers of shares outstanding
  Basic                                                                           72,963     73,882      74,245
  Diluted                                                                         72,963     73,882      74,705
                                                                             =========== ==========   =========

Extracts from the Business Segment Analysis
                                                                                      Year ended May 31,
                                                                             __________________________________

                                                                                 2001        2002        2003
                                                                             ___________  _________   _________

                                                                                          (thousands)
Sales
Wireless infrastructure                                                       GBP207,777 GBP188,589  GBP151,715
Cellular handset products                                                         42,174     48,845      51,242
Electronic warfare                                                                25,728     26,977      25,721
Broadband access                                                                  11,273     12,544      10,796
Compound semiconductors                                                           11,233      7,481       3,452
Inter-segment                                                                       (751)    (3,889)     (1,658)
                                                                             ___________  _________   _________
                                                                              GBP297,434 GBP280,547  GBP241,268
                                                                             =========== ==========   =========

Operating profit/(loss)
Wireless infrastructure                                                       GBP 27,212 GBP 31,777  GBP 20,962
Cellular handset products                                                          5,211      9,678      10,834
Electronic warfare                                                                  (698)    (1,583)       (713)
Broadband access                                                                  (6,407)   (11,999)     (2,984)
Compound semiconductors                                                          (30,524)   (35,984)    (16,449)
Central costs                                                                     (3,825)    (4,952)     (4,935)
                                                                             ___________  _________   _________
                                                                             GBP  (9,031)GBP(13,063)  GBP 6,715
                                                                             =========== ==========   =========

</TABLE>
                                       24

<PAGE>




Fiscal 2003 compared with fiscal 2002

Filtronic Group

     Sales  decreased  by 14.0% from  GBP280.5  million to GBP241.3  million,  a
decrease of GBP39.2  million.  This  decrease was  primarily  attributable  to a
GBP36.9  million  decrease  in sales  in the  Wireless  Infrastructure  business
segment.  Decreases  in sales  were also  recorded  in the  Electronic  Warfare,
Broadband  Access  and  Compound  Semiconductor  business  segments  which  were
partially  offset by a GBP2.4 million  increase in sales in the Cellular Handset
Products business segment.

     Operating  profit  increased by GBP19.8  million from an operating  loss of
GBP13.1 million to an operating  profit of GBP6.7 million.  This  improvement in
operating  profit was  primarily  due to a reduction  in  operating  loss in the
Compound  Semiconductors business segment of GBP19.6 million.  Additionally,  in
the Broadband  Access business  segment,  the operating loss decreased by GBP9.0
million from GBP12.0 million to GBP3.0 million. Operating loss also decreased by
GBP0.9 million in the Electronic  Warfare business  segment.  These decreases in
operating  loss were partially  offset by a decrease in operating  profit in the
Wireless  Infrastructure  business segment of GBP10.8 million.  Operating profit
increased by GBP1.1 million in the Cellular Handset Products business segment.

     Research and  development  costs decreased by 11.8% from GBP32.1 million to
GBP28.3  million.  As a  percentage  of sales,  research and  development  costs
increased to 11.7% from 11.5%. The increase in research and development costs as
a  percentage   of  sales  was   primarily  due  to  the  decrease  in  Wireless
Infrastructure sales.

     Raw materials and  consumables  decreased by 7.0% from GBP108.8  million to
GBP101.2  million.  This  decrease  was  primarily  due to  decreased  levels of
activity  in the  Wireless  Infrastructure  business  segment  as  sales  levels
decreased.

     Staff costs decreased by 18.6% from GBP86.4 million to GBP70.3 million.  As
a percentage of sales,  staff costs  decreased from 30.8% to 29.1%.  By way of a
programme  of  redundancies  and  by  not  replacing   certain  staff  who  left
employment,  the monthly  average number of people  employed  decreased by 12.8%
from 3,318 in fiscal 2002 to 2,893 in fiscal  2003.  The staff  reductions  were
made  primarily to align  employee  numbers better to reductions in sales in the
Wireless Infrastructure business.  Additionally, share compensation costs, which
are included in staff costs,  decreased by GBP1.4 million from GBP1.6 million in
fiscal 2002 to GBP0.2 million in fiscal 2003.  This decrease was due to a number
of staff losing their  entitlement  to share  compensation  as a consequence  of
leaving employment.

     Depreciation  decreased  by 5.4% from  GBP20.4  million to GBP19.3  million
primarily as a result of lower charges in all of the business segments in fiscal
2003 following low levels of capital expenditure in fiscal 2002.

     A charge of GBP1.8 million for exceptional closure costs was made in fiscal
2003 as a result of the decision to close the compound semiconductor fabrication
facility at Filtronic Solid State.

     Exceptional  tangible fixed asset impairment  decreased from GBP7.9 million
in fiscal 2002 to GBPnil in fiscal 2003.  The  exceptional  tangible fixed asset
impairment  of GBP7.9  million in fiscal 2002 was  attributable  to the decision
made in fiscal 2002 to close the  compound  semiconductor  facility at Filtronic
Solid State in October 2002.

     Goodwill  amortisation  decreased by 57.4% following the impairment charges
made in fiscal  2002 which  materially  reduced  the  balance of  goodwill to be
amortised.

     Exceptional  goodwill  impairment  decreased from GBP16.0 million in fiscal
2002 to GBPnil in fiscal 2003. The  exceptional  goodwill  impairment of GBP16.0
million  in fiscal  2002  comprised  GBP10.4  million,  representing  all of the
remaining  goodwill  attributable  to the  compound  semiconductor  business  at
Filtronic Solid State being written off, and GBP5.7 million, representing all of
the remaining goodwill attributable to Filtronic Sigtek being written off.

     Other operating  charges  decreased by 9.0% from GBP42.3 million to GBP38.5
million as a result of the overall decrease in sales and numbers of employees.

     Net  interest  payable  decreased  from GBP12.6  million to GBP8.0  million
primarily as a result of the  repurchase  of Notes during fiscal 2002 and fiscal
2003.

                                       25

<PAGE>

     Net  financing  currency  exchange  gain  increased by GBP4.0  million from
GBP0.2  million to GBP4.2  million.  This gain arose due to an  approximate  12%
decrease in the exchange  rate of the US dollar to pounds  sterling as at 31 May
2003 compared to 31 May 2002.  Applying the lower  exchange rate to that portion
of the Notes which is not hedged against overseas assets gave rise to this gain.

     An exceptional net gain on repayment of debt of GBP0.9 million was recorded
in fiscal  2003  compared to GBPnil in fiscal  2002.  This gain arose due to the
company repurchasing Notes during fiscal 2003 at less than par value.

     Taxation on profit on ordinary activities  decreased from GBP3.5 million to
GBP2.8  million,  primarily  as a result of lower  levels of taxable  profits in
Finland.

     As a  result  of  the  above,  Filtronic  recorded  a  profit  on  ordinary
activities  after taxation for fiscal 2003 of GBP1.1 million  compared to a loss
of GBP29.0  million in fiscal  2002.  Filtronic  reported  earnings per share of
1.46p for fiscal  2003  compared  to a loss of 39.31p for fiscal  2002.  Diluted
earnings  per share were 1.45p for fiscal  2003  compared to a loss per share of
39.31p in fiscal 2002.

     Dividends remained  unchanged at GBP2.0 million.  The value of the dividend
per share remained constant at 2.70p.

Wireless Infrastructure

     Sales in the Wireless  Infrastructure  business segment  decreased by 19.6%
from GBP188.6 million to GBP151.7 million,  a decrease of GBP36.9 million.  This
decrease was  primarily  due to a decrease in sales in the United States of CDMA
products.  In addition,  sales in the UK of GSM 900 and PCN 1800  products  also
decreased.  Sales in Australia  decreased by GBP9.5  million,  primarily  due to
weaker demand for CDMA and WCDMA  products  from China and Japan,  respectively.
Sales in Finland remained broadly similar to fiscal 2002 levels. These decreases
in sales were  partially  offset by an increase in sales in China as a result of
increased demand for GSM products.

     Operating  profit  decreased  by 34.0%  from  GBP31.8  million  to  GBP20.9
million,  a decrease  of GBP10.9  million.  Operating  profit  decreased  in all
geographical areas except China, primarily as a result of lower levels of sales.
An  operating  loss of GBP2.0  million was incurred in Australia in fiscal 2003,
compared to an operating  profit of GBP0.8 million in fiscal 2002 as a result of
the decrease in sales there.

Cellular Handset Products

     Sales in the Cellular Handset Products  business segment  increased by 4.9%
from GBP48.8 million to GBP51.2  million,  an increase of GBP2.4  million.  This
increase was due to increased demand for handset antennas.  Management  believes
that  Filtronic's  share of antenna sales in the world handset  market grew from
approximately 21% in fiscal 2002 to approximately 26% in fiscal 2003. Operations
in China  accounted for GBP13.7  million of the sales in this  business  segment
with the remaining GBP37.5 million being derived from Finland.

     Operating profit increased by 11.3% from GBP9.7 million to GBP10.8 million,
an increase of GBP1.1 million,  primarily as a result of the increased levels of
sales.

Electronic Warfare

     Sales decreased by GBP1.3 million from GBP27.0 million to GBP25.7  million,
a decrease of 4.8%.  Sales in the United States decreased by GBP2.5 million from
GBP16.2  million to GBP13.7  million.  This decrease was partially  offset by an
increase  of GBP1.6  million  in sales in the  United  Kingdom.  The  Australian
operation, which contributed GBP0.4 million of sales in fiscal 2002, was sold to
local management for a nominal sum in March 2002.

     Operating  loss  decreased by GBP0.9  million from GBP1.6 million to GBP0.7
million.  The  decrease  in  operating  loss was  primarily  attributable  to an
increase in operating  profit of GBP0.8 million in the United States as a result
of improved margins and reductions in costs.  This decrease was partially offset
by an increase in operating  loss in the United Kingdom as a result of increased
costs.

                                       26

<PAGE>

Broadband Access

     Sales decreased by GBP1.7 million from GBP12.5 million to GBP10.8  million,
a decrease of 13.6%.  This  decrease was  primarily due to lower demand for high
frequency transceivers and filters for the point-to-point market.

     Operating loss  decreased by GBP9.0 million from GBP12.0  million to GBP3.0
million. The decrease in operating loss was primarily attributable to a decrease
in  exceptional  goodwill  impairment  of GBP5.7  million,  a decrease  in share
compensation  expense of GBP1.5 million and a decrease in goodwill  amortisation
of GBP1.7 million.

Compound Semiconductors

     Sales decreased by GBP4.0 million from GBP7.5 million to GBP3.5 million,  a
decrease  of 53.3%.  This  decrease  was  primarily  due to a lack of demand for
products  addressing  the  opto-electronic  market,  together with the impact of
closing the fabrication facility at Filtronic Solid State in October 2002.

     Operating loss decreased by GBP19.6 million from GBP36.0 million to GBP16.4
million. The decrease in operating loss was primarily attributable to a decrease
of GBP10.4 million in exceptional  goodwill  impairment and a decrease of GBP7.9
million in exceptional  fixed asset  impairment.  The  fabrication  facility for
compound semiconductors at Filtronic Solid State closed in October 2002. Closure
costs amounting to GBP1.8 million were incurred in fiscal 2003.

Central Costs

     Central costs were GBP4.9 million in fiscal 2003 compared to GBP5.0 million
in fiscal 2002.

                                       27

<PAGE>


Fiscal 2002 compared with fiscal 2001

Filtronic Group

     Sales  decreased  by 5.7% from  GBP297.4  million to  GBP280.5  million,  a
decrease of GBP16.9  million.  This  decrease was  primarily  attributable  to a
GBP19.2  million  decrease  in sales  in the  Wireless  Infrastructure  business
segment, which was partially offset by an increase of GBP6.2 million in sales in
the Cellular Handset Products business segment.

     Operating  loss  increased by GBP4.1 million from GBP9.0 million to GBP13.1
million.  Losses in the Compound  Semiconductors  business segment  increased by
GBP5.5  million.  The  operating  loss of the Compound  Semiconductors  business
segment included an exceptional tangible fixed asset impairment charge of GBP7.9
million. Additionally,  this business segment sustained a charge for exceptional
goodwill  impairment  of GBP10.4  million in fiscal  2002,  a decrease of GBP3.7
million compared to a GBP14.1 million charge for exceptional goodwill impairment
sustained in fiscal 2001.  Losses in the  Electronic  Warfare  business  segment
increased by GBP0.9 million and Central Costs increased by GBP1.2  million.  The
Broadband  Access  business  segment's  operating  losses  increased  by  GBP5.6
million.  This was primarily due to an exceptional goodwill impairment charge of
GBP5.7 million.  These increased  operating  losses were partially  offset by an
increase  of  GBP4.6   million  in  the   operating   profits  of  the  Wireless
Infrastructure  business  segment  and an  increase  of  GBP4.5  million  in the
operating profits of the Cellular Handset Products business segment.

     Research and  development  costs  increased by 0.5% from GBP32.0 million to
GBP32.1  million.  As a  percentage  of sales,  research and  development  costs
increased to 11.5% from 10.8%. The increase in research and development costs as
a  percentage   of  sales  was   primarily  due  to  the  decrease  in  Wireless
Infrastructure sales.

     Raw materials and consumables  decreased by 21.5% from GBP138.5  million to
GBP108.8  million.  This  decrease  was  primarily  due to  decreased  levels of
activity  in the  Wireless  Infrastructure  business  segment  as  sales  levels
reduced.

     Staff costs decreased by 6.2% from GBP92.0 million to GBP86.4 million. As a
percentage  of sales,  staff costs  decreased  from 30.9% to 30.8%.  By way of a
programme of redundancies and by not replacing certain staff who left employment
the monthly average number of people  employed  decreased by 11.0% from 3,729 in
fiscal 2001 to 3,318 in fiscal 2002. The staff reductions were made primarily to
align   employee   numbers  better  to  reductions  in  sales  in  the  Wireless
Infrastructure business.

     Depreciation  increased  by 21.9% from GBP16.8  million to GBP20.4  million
primarily  as a result of increased  charges in all of the business  segments in
fiscal 2002 following high levels of capital expenditure in the previous year.

     A charge of GBP7.9 million for exceptional  tangible fixed asset impairment
was made in  fiscal  2002 as a result  of the  decision  to close  the  compound
semiconductor fabrication facility at Filtronic Solid State.

     Goodwill amortization increased by 9.6% primarily as a result of the impact
of currency exchange movements on the calculation of goodwill amortization.

     Exceptional  goodwill  impairment  increased by GBP1.9 million from GBP14.1
million  to GBP16.0  million.  In fiscal  2002,  all of the  remaining  goodwill
attributable to the compound semiconductor business at Filtronic Solid State was
written off,  following the decision to close the  fabrication  facility  there.
This amounted to GBP10.4 million.  Additionally,  all of the remaining  goodwill
attributable to Filtronic Sigtek was written off, following a review of forecast
cash  flows  expected  to arise  from that  business.  This  amounted  to GBP5.7
million.

     Other operating  charges decreased by 11.2% from GBP47.6 million to GBP42.3
million as a result of the overall reduction in sales and numbers of employees.

     Net interest  payable  increased  from GBP12.5  million to GBP12.6  million
primarily as a result of the impact of the write off of debt issue costs arising
on the  repurchase  of Notes during  fiscal  2002.  The increase in net interest
payable was also due to a decrease in interest receivable from GBP1.0 million to
GBP0.4  million  which was in turn due to a decrease  in bank  deposit  interest
rates and a decrease in the average amounts of cash balances  maintained  during
fiscal 2002.

                                       28

<PAGE>

     Taxation on profit on ordinary activities  increased from GBP1.6 million to
GBP3.5  million,  primarily as a result of higher  levels of taxable  profits in
Finland.

     As a result of the above,  Filtronic  incurred  a loss for  fiscal  2002 of
GBP29.0  million  compared  to  GBP22.8  million  in fiscal  2001.  Due to these
increased losses and to an increase in the number of shares in issue,  Filtronic
reported a loss per share of 39.31p for fiscal 2002 compared to a loss of 31.24p
for fiscal 2001.  The amounts of loss per share are the same if  calculated on a
diluted basis.

     Dividends remained  unchanged at GBP2.0 million.  The value of the dividend
per share remained constant at 2.70p.

Wireless Infrastructure

     Sales in the Wireless  Infrastructure  business  segment  decreased by 9.2%
from GBP207.8 million to GBP188.6 million,  a decrease of GBP19.2 million.  This
decrease was  primarily  due to a decrease in sales in the United States of TDMA
and CDMA products of GBP18.6  million.  In addition,  sales in the UK of GSM 900
and PCN 1800 products decreased by GBP5.7 million.  Sales in Australia decreased
by GBP2.5  million,  primarily due to weaker demand for CDMA and WCDMA  products
from China and Japan, respectively.  In China, sales decreased by GBP2.9 million
due to weaker demand for GSM products.  These decreases were partially offset by
an  increase  in sales in Finland of  GBP10.5  million as a result of  increased
demand for GSM and WCDMA products.

     Operating  profit  increased  by 16.8%  from  GBP27.2  million  to  GBP31.8
million, an increase of GBP4.6 million.  Increases in operating profit in the UK
and  Finland  were  partially  offset by  decreases  in the  United  States  and
Australia.  Only the operation in China incurred  losses,  which were lower than
those  incurred in fiscal 2001.  In general,  operating  profit  improved due to
better manufacturing efficiencies and cost reductions, partially offset by lower
selling prices.

Cellular Handset Products

     Sales in the Cellular Handset Products  business segment increased by 15.8%
from GBP42.2 million to GBP48.8  million,  an increase of GBP6.6  million.  This
increase was primarily due to increased demand for handset antennas.  Demand for
ceramic filters for handsets  remained  broadly constant in both fiscal 2001 and
2002.  Management  believes that Filtronic's share of antenna sales in the world
handset market grew from  approximately  18% in fiscal 2001 to approximately 21%
in fiscal 2002.  Operations in China contributed  GBP8.8 million of the sales in
this  business  segment with the  remaining  GBP40.0  million being derived from
Finland.

     Operating  profit  increased  from  GBP5.2  million to GBP9.7  million,  an
increase of GBP4.5  million,  primarily as a result of the  increased  levels of
sales but also because of the lower costs of manufacturing in China.

Electronic Warfare

     Sales increased by GBP1.3 million from GBP25.7 million to GBP27.0  million.
Sales in the United States  increased by GBP2.8 million from GBP13.4  million to
GBP16.2 million.  This increase was partially offset by an aggregate decrease of
GBP1.8  million in sales in the United  Kingdom and  Australia.  The  Australian
operation, which contributed GBP0.4 million of sales in fiscal 2002, was sold to
local management for a nominal sum in March 2002.

     Operating  loss  increased by GBP0.9  million from GBP0.7 million to GBP1.6
million.  This loss was primarily  caused by an increase in losses in the United
Kingdom as a result of increased costs and decreased levels of sales.

Broadband Access

     Sales increased by GBP1.2 million from GBP11.3 million to GBP12.5  million,
an increase of 11.3%.  This  increase was  primarily  due to increased  sales at
Filtronic  Sigtek.  The increase in sales of Filtronic Sigtek was due in part to
the inclusion of a full year of Filtronic Sigtek's sales in fiscal 2002 compared
to only 275 days of sales in fiscal 2001.

     Operating  loss  increased by GBP5.6 million from GBP6.4 million to GBP12.0
million.  The losses included  exceptional goodwill impairment of GBP5.7 million
and share  compensation  expense  of  GBP1.6  million,  both of which  relate to
Filtronic Sigtek.

                                       29


<PAGE>

Compound Semiconductors

     Sales  decreased by GBP3.7 million from GBP11.2  million to GBP7.5 million.
All of these sales occurred at Filtronic Solid State. The decrease was primarily
due to a lack of demand for products addressing the opto-electronic market.

     Operating loss increased by GBP5.5 million from GBP30.5  million to GBP36.0
million.  Operating  losses  included  GBP10.4  million of exceptional  goodwill
impairment  and GBP7.9 million of exceptional  fixed asset  impairment,  both of
which relate to Filtronic  Solid State.  On July 26, 2002, it was announced that
the fabrication  facility for compound  semiconductors  at Filtronic Solid State
was to close in October  2002.  Further  closure  costs which are  estimated  at
GBP2.5  million will be incurred  during  fiscal  2003.  The  operating  loss of
GBP36.0  million  included  GBP12.2  million  relating  to the  Newton  Aycliffe
compound semiconductor operation.

Central Costs

     Central costs increased by 29.5% from GBP3.8 million to GBP5.0 million,  an
increase of GBP1.2 million.  This was primarily due to increased  administration
costs of the Filtronic  group and to the recruitment of a number of research and
engineering  staff whose costs were not directly  attributable to any one of the
five business segments.

Liquidity and Capital Resources

Fiscal 2003 compared with fiscal 2002 and fiscal 2001

     In fiscal  2003,  fiscal 2002 and fiscal  2001,  Filtronic  utilized  funds
generated by operating  activities and, in fiscal 2002 and fiscal 2001, from the
issue  of  shares,   to  finance  working  capital,   capital   expenditure  and
acquisitions.  During fiscal 2002 and fiscal 2001,  Filtronic  issued new shares
for cash in the aggregate amount of GBP2.1 million.  At May 31, 2003,  Filtronic
had cash balances of GBP6.5 million,  compared to GBP9.1 million at May 31, 2002
and GBP5.6 million at May 31, 2001.  Borrowings  totalled GBP63.2 million at May
31, 2003,  compared to GBP96.2  million at May 31, 2002 and GBP135.3  million at
May 31,  2001.  In addition,  Filtronic  has a GBP31.0  million  bank  overdraft
facility,  all of which was  undrawn  at May 31,  2003.  On July 1,  2003,  this
overdraft facility was renewed and it is due for review again in June 2004.

     In fiscal  2003,  fiscal  2002 and fiscal  2001,  cash flow from  operating
activities  totalled  GBP38.5  million,  GBP64.2  million  and  GBP7.5  million,
respectively,  after expensing all research and development costs and accounting
for all movements in working  capital.  In fiscal 2003, cash flow from operating
activities  decreased by GBP25.7 million  compared to fiscal 2002. This decrease
was  primarily  due to the decrease in sales from fiscal 2002 to fiscal 2003, to
the  decrease in licence fee income and to the decrease in cash  generated  from
working  capital.  Cash flow from  operating  activities  increased  by  GBP56.7
million from fiscal 2001 to fiscal 2002,  which was primarily  attributable to a
cash inflow of GBP15.9 million in fiscal 2002 arising from a decrease in working
capital  compared to a cash  outflow of GBP21.2  million in fiscal 2001  arising
from an increase in working capital.

     Net cash  outflows  from  returns on  investment  and  servicing of finance
totalled GBP7.4 million, GBP11.3 million and GBP11.7 million,  respectively, for
fiscal 2003,  fiscal 2002 and fiscal 2001.  In each of these fiscal  years,  the
principal outflow was interest paid in relation to the Senior Notes.

     Net  capital  expenditure  in fiscal  2003,  fiscal  2002 and  fiscal  2001
totalled GBP5.5 million,  GBP9.0 million and GBP40.3  million  respectively.  In
fiscal 2003 and 2002, capital expenditure was substantially lower than in fiscal
2001 as the major  investment  programmes  in the  Compound  Semiconductors  and
Cellular  Handset  Products  businesses were completed in fiscal 2001. In fiscal
2001,  the  principal  components  of the net capital  expenditure  were GBP14.2
million in relation to the  Compound  Semiconductors  business  segment,  GBP8.4
million in Finland  which was  primarily  attributable  to the Cellular  Handset
Products business,  GBP6.6 million for the Wireless  Infrastructure  business in
the UK, the United States and in Australia and GBP2.4  million in China.  GBP1.8
million  was  spent  in the  Electronic  Warfare  business,  GBP1.9  million  in
Broadband Access and GBP1.6 million in Central.


                                       30

<PAGE>

     As a result of the above,  net cash  inflow  before  financing  was GBP19.5
million in fiscal 2003  compared to an inflow of GBP39.6  million in fiscal 2002
and an outflow of GBP49.7 million in fiscal 2001. The outflow in fiscal 2001 was
financed by the  raising of GBP1.8  million  from the issue of new shares,  by a
reduction in cash of GBP33.9 million and by an increase in borrowings of GBP20.7
million.  In fiscal 2002,  Filtronic  applied GBP22.0 million of its cash inflow
before  financing to repaying  loans,  including  $29.3 million of the Notes and
GBP1.4 million of other loans. In fiscal 2003, Filtronic applied GBP22.1 million
of its cash inflow before financing to repaying $37.2 million of the Notes. Cash
flow after financing was a cash outflow of GBP2.6 million in fiscal 2003, a cash
inflow of GBP17.9  million in fiscal 2002, and a cash outflow of GBP48.5 million
in fiscal 2001.

     Filtronic plc's Board of Directors is authorized until the date of the next
Annual General  Meeting of shareholders to issue new ordinary shares for cash up
to an aggregate  amount equal to the lesser of one third of the nominal value of
the issued  ordinary  share  capital of Filtronic plc as at July 28, 2003 or the
authorized  but unissued  share  capital of Filtronic  plc.  This  authority was
granted at the Annual General Meeting held on September 26, 2003.

     At May 31, 2003  Filtronic was committed to capital  expenditure  of GBP3.6
million which was  contracted  for but not provided in the financial  statements
for the year ended May 31, 2003.

     The Board of Directors of Filtronic plc believe that,  based on Filtronic's
current  levels  of  operations  and  anticipated  growth,  its cash  flow  from
operations,  together with undrawn bank facilities, will be adequate to meet its
anticipated  requirements for working capital, capital expenditures and interest
payments for the foreseeable future.

     In August 2003 Filtronic  purchased  $13,540,000 of its 10% Senior Notes in
the market.  These Senior Notes were  cancelled  leaving  $90,033,000  of Senior
Notes outstanding.

     On October  30,  2003  Filtronic  gave  notice to holders of its 10% Senior
Notes that it would redeem  $16,033,000  of the Senior Notes on December 1, 2003
at a  redemption  price  of  $1,025  per  $1,000  principal  amount.  After  the
redemption there will be $74,000,000 of Senior Notes outstanding.

     The Board of Directors of Filtronic plc are currently  considering  options
to refinance the  outstanding  Senior Notes,  and are confident  that the Senior
Notes will be repurchased or redeemed before their due date of December 1, 2005.

Research and Development

     For the years ended May 31, 2003, 2002 and 2001,  Filtronic's  research and
development  expenditure  totalled GBP28.3 million,  GBP32.1 million and GBP32.0
million, respectively. This represented 11.7%, 11.4% and 10.8%, respectively, of
sales  in  those  fiscal  years.  Filtronic  charges  all  of its  research  and
development expenditure to the profit and loss account as it is incurred.

     Most research and development costs are borne within the business segments;
however,  the cost of a central team of engineers is borne within Central costs.
This  central  team  includes   Filtronic's   Director  of  Engineering  and  is
responsible  for  the  coordination  of  research  and  development   activities
throughout  Filtronic  together with the development of generic products and the
maintenance of Filtronic's intellectual property.

     All of Filtronic's research and development is carried out at its own risk.

     Research and development  costs comprise the employment  costs of staff and
the cost of materials  consumed in the research and development  activities.  No
general overhead is attributed to these activities.

                                       31

<PAGE>



Outlook

     Worldwide demand for mobile  infrastructure  products  continued to decline
during fiscal 2003 with few signs of an imminent upturn.  Independent  forecasts
indicate  a further  decline  in the  range of 10% to 20% in this  market in the
calendar  year  2003.   Notwithstanding  these  challenging  market  conditions,
Filtronic  has  continued to  consolidate  its  position as the world's  leading
independent  supplier of  transmit/receive  modules  for mobile  base  stations.
Despite pricing pressures and difficult markets, Management remains confident in
the medium and long term  opportunities  offered by the wireless  communications
markets,  including 3G, for both Filtronic's existing and new products including
high performance power amplifiers.

     Filtronic is one of the world's  leading  manufacturers  of mobile  handset
antennas and supplies over 25% of the world demand.  The world market for mobile
handsets is independently  forecast to show growth in calendar 2003.  Management
expects  Filtronic to maintain its market  position in this business  segment in
fiscal 2004.

     The Electronic Warfare business is characterised by long development cycles
and requires  demanding  technical  performance.  Filtronic  has now entered the
production phase for several qualified products on a number of major programmes,
which Management expects to provide sustainable, profitable growth over a number
of years.

     On September 26, 2003,  Filtronic  announced that after three months of the
current fiscal year, trading was ahead of internal budgets. Sales in the largest
business segment,  Wireless  Infrastructure,  and operating profit in the second
largest business segment,  Cellular Handset Products,  were strong in that three
month period.  Filtronic  also  announced  that the outlook  indicated  that the
improved  trading  climate was likely to continue for the rest of the first half
of fiscal 2004.

     Considerable   market   pressure   exists  to  develop  and  produce   more
sophisticated  and cost  effective  solutions  in the mobile  telecommunications
industry.  For the last three  fiscal  years,  Filtronic's  major  research  and
development effort has been aimed specifically at 3G base station equipment.  At
the  heart of the new  products  which  Filtronic  has been  developing  are the
compound semiconductor  transistors  manufactured at Newton Aycliffe,  which are
embedded in  proprietary  circuits  to provide  high power (360 watts peak) very
efficiently.  Following  the  successful  demonstration  of this  technology  to
several OEMs,  customer  specific 3G power amplifier  requirements are now being
addressed using internally developed advanced digital linearisation  techniques.
These  customer  specific  sample  units have been  delivered to four major OEMs
since May 31, 2003.  Other market demands have led Filtronic to develop a larger
range of compound  semiconductor  products at Newton  Aycliffe with an increased
urgency to introduce  multifunction  MMICs for both the  commercial  and defence
sectors.  Management  believes that the developments at Newton Aycliffe position
Filtronic to take  advantage of a wide range of compound  semiconductor  related
market opportunities as they arise.

     On September 22, 2003,  Filtronic  announced that it had been selected by a
new OEM customer to supply initial  quantities of an integrated  radio frequency
head unit for 3G WCDMA base stations.  The units contain power  amplifiers which
incorporate  the  unique,  high  power,   compound   semiconductor   transistors
manufactured  in the  fabrication  facility at Newton  Aycliffe.  The units also
contain the up/down converters and the high-speed digital baseband interface and
processing  capability.  This is a new  product  for  Filtronic.  This  business
represents  Filtronic's first customer for this class of product and establishes
the company's presence in a growth market. Management does not expect production
quantities to commence until the second half of calendar year 2004 and currently
there is no  obligation  on this OEM customer to place  business for  production
quantities  with  Filtronic.  Overall,  the  range  of  products  and  processes
throughout  Filtronic,  particularly  at Newton  Aycliffe,  has been expanded to
provide the platform for growth.

     Overall,  Management  expects  the  Wireless  Infrastructure  and  Cellular
Handset Products  business  segments at least to maintain their market position.
In  addition,  the  Electronic  Warfare  business  segment  is now  growing  and
profitable.  The  range  of  products  and  processes,  particularly  at  Newton
Aycliffe, has been expanded to provide a platform for growth.

     Management expects that Filtronic will continue to generate cash and reduce
indebtedness during fiscal 2004.

                                       32


<PAGE>


Forward-Looking Information

     This  Annual  Report and  Operating  and  Financial  Review  and  Prospects
contains  certain   forward-looking   statements  and  information  relating  to
Filtronic  that are based on beliefs of its  management  as well as  assumptions
made by and  information  currently  available to  Filtronic.  When used in this
document, the words "anticipate",  "believe",  "estimate",  "expect",  "intend",
"plan" and "project" and similar expressions, as they relate to Filtronic or its
management, are intended to identify forward-looking statements. Such statements
reflect the current  views of Filtronic  with  respect to future  events and are
subject to certain  risks,  uncertainties  and  assumptions.  Many factors could
cause the  actual  results,  performance  or  achievements  of  Filtronic  to be
materially  different from any future results,  performance or achievements that
may be expressed or implied by such forward-looking statements, including, among
others, changes in general economic and business conditions, changes in currency
exchange rates and interest rates,  introduction of competing  products by other
companies,  lack of  acceptance  of new  products  or  services  by  Filtronic's
targeted customers, changes in business strategy and various other factors, both
referenced and not referenced in this Annual Report. Should one or more of these
risks or  uncertainties  materialize,  or should  underlying  assumptions  prove
incorrect,  actual results may vary materially  from those  described  herein as
anticipated,  believed,  estimated,  expected,  intended,  planned or projected.
Filtronic  plc  does not  intend  or  assume  any  obligation  to  update  these
forward-looking statements.

                                       33

<PAGE>


ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors

     Set forth  below are the  current  members of the Board of  Directors  (the
"Directors") of Filtronic plc and their respective ages and positions.

<TABLE>
<CAPTION>

Name                                            Age     Current Position(s)
____                                            ___     ________________________
<S>                                             <C>     <C>
Professor J. David Rhodes                       60      Director, Executive Chairman and Chief Executive
                                                          Officer
Professor Christopher M. Snowden                47      Director and Chief Executive Officer of
                                                          Compound Semiconductors
Alan R. Needle                                  48      Managing Director
Dr. Christopher I. Mobbs                        41      Director of Engineering
John Samuel                                     47      Director and Finance Director
Christopher E. Schofield                        41      Director and Company Secretary
Rhys J. Williams                                69      Non-executive Director
Richard J. B. Blake                             67      Non-executive Director
Professor Stephen B. Burbank                    56      Non-executive Director
Ian J. Hardington                               39      Non-executive Director
Graham E. Meek                                  56      Non-executive Director
</TABLE>

     Set  forth  below  is  certain  information  for  each of  Filtronic  plc's
Directors.

     Professor  J David  Rhodes  CBE FRS FREng BSc PhD DSc DEng  (Hon) DSc (Hon)
FIEE FIEEE has been Executive Chairman since founding Filtronic in 1977 and also
serves as Chief  Executive  Officer.  Professor  Rhodes has been a professor  of
electronic and electrical  engineering at Leeds  University since 1975 and is an
internationally  recognised  figure in the field of circuit theory and microwave
engineering.  He has written over one hundred  technical papers and books on the
subject and has received several  international  awards.  In the 1992 New Year's
Honours  List he was made an  Officer,  Order  of the  British  Empire,  for his
contribution  to science and  technology  and in 1993 he was elected a Fellow of
the Royal Society.  In 1998,  Professor Rhodes was awarded the Mountbatten Medal
by the Institution of Electronic  Engineers for his outstanding  contribution to
the field of  electronics.  In the 2000 New  Year's  Honours  List he was made a
Commander,  Order of the British  Empire,  for his  contribution to engineering,
research and industry.  In 2003, Professor Rhodes was awarded the Prince Phillip
Medal by the Royal Academy of Engineering.  Professor  Rhodes is a non-executive
director of Polar Capital Technology Trust PLC.

     Professor  Christopher  Snowden  FREng BSc MSc PhD CEng FIEE FIEEE is Chief
Executive Officer,  Compound  Semiconductors  having been a Director since 1998.
Prior to joining Filtronic in 1998, Professor Snowden was the head of the School
of Electronic and Electrical Engineering at Leeds University.

     Alan  Needle has been  Managing  Director  since 2001.  He has  operational
responsibility   for  all  of  the   business   segments   except  for  Compound
Semiconductors.  Previously  he  was  the  Managing  Director  of  the  Wireless
Infrastructure  business.  Prior to joining Filtronic in 1986, Mr. Needle worked
in the  microwave  engineering  department  of EEV  Limited.  In 1989 he started
Filtronic's  commercial  division  which became  Filtronic  Comtek (UK) Ltd. Mr.
Needle was a Director of Filtronic plc from 1994 to 1997.

     Dr.  Christopher  Mobbs BSc PhD MIEE MIEEE has been Director of Engineering
since 2001.  He has served as Chief  Technical  Officer  since 1997.  Dr.  Mobbs
joined  Filtronic as an engineer after graduating from Leeds University in 1982.
He  obtained  his PhD in  electronic  engineering  in  1986  while  working  for
Filtronic.  He has been responsible for the development of many of the subsystem
products  currently used in the Wireless  Infrastructure  and Electronic Warfare
businesses. Dr. Mobbs was a Director of Filtronic plc from 1994 to 1997.

     John Samuel has been Finance Director since 1994. Mr. Samuel qualified as a
chartered  accountant  with  Deloitte  Haskins & Sells in 1981.  He joined Baker
Tilly,  Chartered  Accountants,  in 1984 and was taken into partnership in 1986,
prior to joining Filtronic in 1991.

                                       34

<PAGE>


     Christopher  Schofield  has  been  Company  Secretary  since  1995  and  an
executive  Director since 1998. Prior to joining Filtronic in 1995, he practised
as a solicitor with Last Suddards,  with Dibb Lupton  Broomhead and with Ralph C
Yablon,  Temple-Milnes  & Carr,  specializing in company and commercial law. Mr.
Schofield is currently a partner in Schofield Sweeney.

     Rhys Williams serves as the senior  non-executive  Director.  He has been a
non-executive  Director and Chairman of the  Remuneration  Committee since 1994.
Mr.  Williams was an executive  Director of GEC from 1985 to 1991.  He currently
serves  as  non-executive   Chairman  of  Radstone   Technology  plc  and  as  a
non-executive director of Acal plc and Comunica Holdings plc.

     Richard  Blake has been a  non-executive  Director  since 1994 and has been
Chairman of the Audit  Committee  since 1995.  Mr.  Blake was a partner in Baker
Tilly from 1964  until his  retirement  in 1993.  Mr.  Blake is a  non-executive
Director of YooMedia plc.

     Professor  Stephen  Burbank has been a  non-executive  Director since 1994.
Professor Burbank is currently the David Berger Professor for the Administration
of Justice  at the  University  of  Pennsylvania  and is the author of  numerous
publications on the judiciary and civil procedure in the United States.  He is a
director  of the  American  Academy  of  Political  and Social  Science  and the
American Judicature Society.

     Ian Hardington has been a non-executive Director since 1999. Mr. Hardington
is a principal with Mansfield  Partners,  Inc., a US based  investment  advisory
firm. Previously, he served as a Managing Director of European Leveraged Finance
at UBS Warburg,  a Managing  Director of S G Cowen Securities  Corporation and a
Managing Director of NationsBank Capital Markets, Inc.

     Graham Meek has been a non-executive Director since 1999. Until 2002 he was
a Director of Beeson Gregory  Limited and previously was a Director of Smith New
Court plc and of Wood  Mackenzie  & Co. He is a  non-executive  director  of ICM
Computer Group plc.

Key Employees

     In addition to the Directors  listed  above,  the following are certain key
members of Filtronic's senior management:

     Geoffrey  Fletcher is  Managing  Director  of the  Wireless  Infrastructure
business.  Previously  he was President of Filtronic  Comtek,  Inc. and prior to
that General Manager of Filtronic Comtek (UK) Ltd. He joined Filtronic in 1996.

     Veli  Torvinen is the Managing  Director of the Cellular  Handset  Products
business and has been President of Filtronic LK Oy since 1998.  Prior to joining
Filtronic LK Oy in 1994, Mr. Torvinen  served as a manufacturing  engineer for a
Finnish steel company, Rautaruukki Oy.

     Dr.  Hemant  Mardia  BSc PhD  CEng  MIEE  MSCTE  is  Managing  Director  of
Filtronic's Broadband Access business segment, and has been Managing Director of
Filtronic  Broadband Ltd.  since 1996. He joined  Filtronic in 1984 and gained a
doctorate  in the field of digital  signal  processing  whilst  working  for the
company. Prior to joining Filtronic, he worked at Plessey Communications Ltd.

     Thomas Parker is the Managing  Director of the Electronic  Warfare business
and  President  of  Solid   State-Filtronic,   Inc..   Prior  to  joining  Solid
State-Filtronic,  Inc.  in 1993,  Mr.  Parker  worked at  Westinghouse  Electric
Corporation  and at Omni  Spectra,  Inc.  Between 1989 and 1993,  Mr. Parker was
President and General Manager of Filcom Microwave,  Inc., a former joint venture
owned by M/A-Com and Filtronic Components Ltd.

                                       35

<PAGE>



Compensation

     The  Remuneration  Committee of the Board of Directors  (the  "Remuneration
Committee"),  consisting of the five  non-executive  Directors,  determines  the
compensation for the executive Directors, key employees and certain other senior
executives.   The  Board  of  Directors   determines  the  compensation  of  the
non-executive  Directors.  Non-executive  Directors  are not entitled to pension
benefits.

     The following table shows total  compensation for the Directors and certain
key employees, including pension contributions, for the year ended May 31, 2003:

<TABLE>
<CAPTION>
                                                                                                          Total
                                                                                                     Emoluments
                                                                                                      Including
                                                            Salary        Pension        Other          Pension
                                                            or Fees    Contributions   Benefits   Contributions
                                                        ____________   _____________ __________  ______________
<S>                                                          <C>           <C>           <C>            <C>
Executive Directors:
Prof. J. David Rhodes                                   GBP  183,021   GBP 18,302    GBP 23,419    GBP  224,742
Prof. Christopher Snowden                                    146,417       14,642        12,824         173,883
Alan Needle                                                  156,875       15,688        16,270         188,833
Dr. Christopher Mobbs                                        133,824       13,071         6,053         152,948
John Samuel                                                  146,417       14,273         8,751         169,441
Christopher Schofield                                         93,003       11,504        11,406         115,913
Non-executive Directors:
Rhys Williams                                                 24,000            -             -          24,000
Richard Blake                                                 24,000            -             -          24,000
Prof. Stephen Burbank                                         24,000            -             -          24,000
Ian Hardington                                                24,000            -             -          24,000
Graham Meek                                                   24,000            -             -          24,000
Key employees(a) in aggregate:                               476,497       22,274        36,046         534,817
                                                        ____________   _____________ __________  ______________
                                                        GBP1,456,054   GBP109,754    GBP114,769    GBP1,680,577
                                                        ============   ============= ==========  ==============

</TABLE>

     Other  benefits  incorporate  all  assessable  tax  benefits  arising  from
employment by Filtronic  and relate mainly to the provision of a fully  expensed
company car and private medical insurance.

     For details of the  Directors'  interests in share  options,  see " - Share
Ownership" below.

_________________

(a)  Geoffrey Fletcher, Veli Torvinen, Dr. Hemant Mardia and Thomas Parker.

Board Practices

     The  Board of  Directors  comprises  six  executive  and five  independent,
non-executive  Directors.  The  Board  of  Directors  considers  that  it  is so
constituted  so as to bring  both  independence  and an  appropriate  balance of
experience   in  judging   matters  of  strategy,   operational   and  financial
performance,  resources,  investor  relations,  internal  control and  corporate
governance. Rhys Williams acts as the senior non-executive Director.

     The Board of Directors has established an Audit  Committee,  a Remuneration
Committee and a Nominations  Committee.  The Audit and  Remuneration  Committees
comprise all of the non-executive Directors. The Nominations Committee comprises
all of the non-executive  Directors and is chaired by Professor J. David Rhodes.
Each of these  committees  operates  under  terms of  reference  which have been
established by the Board of Directors.

     The  Audit  Committee  meets  at least  three  times a year to  review  the
adequacy of  Filtronic's  system of internal  control,  accounting  policies and
financial reporting. The Finance Director and the auditors attend these meetings
with all other Directors being invited to attend.  Further,  the Audit Committee
meets with the auditors  without any executive  Directors being present at least
once  during the year.  The Audit  Committee  requires  the  auditors  to report
specifically on any non-audit assignments which they have undertaken.  This work
is primarily  assistance with United States income tax compliance.  The auditors
do not carry out any consulting work for Filtronic.

     The  Remuneration  Committee's  responsibilities  include ensuring that the
remuneration  and service  contract terms of the executive  Directors and senior
management are appropriate. The Remuneration Committee determines the allocation
of all executive share options.

                                       36

<PAGE>


     The Nominations Committee's duties are confined to the approval, support or
otherwise of  appointments,  re-appointments  and  termination  of employment or
engagement of Directors of the company.

     All of the executive  Directors have rolling service  contracts under which
the notice period for  termination  by either party is six months.  There are no
specific  compensation  commitments  for early  termination.  The  non-executive
Directors  have rolling  agreements  for services with  Filtronic plc. These are
terminable by Filtronic plc or the non-executive  Directors, as the case may be,
on three months notice and are reviewed annually by the Board of Directors.

Employees and Labor Relations

     The  average  number  of  employees,   including  executive  Directors,  of
Filtronic for each of the last three fiscal years by country was:

<TABLE>
<CAPTION>

                                                                                       Year ended May  31,
                                                                                _______________________________
                                                                                    2001       2002        2003
                                                                                ________      _____       _____
<S>                                                                                 <C>         <C>         <C>

United Kingdom                                                                     1,494      1,409       1,282
Finland                                                                            1,006        841         557
United States                                                                        886        649         520
Australia                                                                            210        216         131
China                                                                                133        202         402
Japan                                                                                  -          1           1
                                                                                ________      _____       _____
                                                                                   3,729      3,318       2,893
                                                                                ========      =====       =====
</TABLE>

     The  decrease in the number of  employees in fiscal 2002 and fiscal 2003 is
attributable to a programme of redundancies and not replacing  certain staff who
left  employment  during fiscal 2002 and fiscal 2003.  These measures were taken
primarily  to  align  employee  numbers  better  to  reductions  in sales in the
Wireless  Infrastructure  business segment. Most of Filtronic's employees in the
United Kingdom,  the United States or Australia are not members of trade unions.
Most  employees  in Finland  and China are  members of trade  unions.  Filtronic
considers its relationships with its employees to be good.

Share Ownership

     As of  November  3,  2003,  the  Directors  owned  in  aggregate  5,477,481
Filtronic plc ordinary shares,  representing  7.3% of all outstanding  Filtronic
plc shares.  The following  table sets out their  individual  shareholdings  and
outstanding options over Filtronic plc ordinary shares.

<TABLE>
<CAPTION>

                                             Shares beneficially                  Option exercise      Option expiry
                                                   owned              Options            price               date

                                             ___________________     ________     _______________    _______________
<S>                                                         <C>           <C>                 <C>                <C>
Director:
Prof. J. David Rhodes                                  4,230,001            -
Prof. Christopher Snowden                                      -      240,000                383p    October 5, 2008
Alan Needle                                              257,202            -
Dr. Christopher Mobbs                                    295,617            -
John Samuel                                              450,459            -
Christopher Schofield                                      7,193       60,000                459p    August 7, 2008
Rhys Williams                                            102,609            -
Richard Blake                                              8,500            -
Prof. Stephen Burbank                                        900            -
Ian Hardington                                                 -            -
Graham Meek                                              125,000            -
                                             ___________________     ________
                                                       5,477,481      300,000
                                             ===================     ========
</TABLE>


     Filtronic  operates  executive and savings  related share option schemes in
the United Kingdom, the United States, Australia,  China and Finland under which
management  and  employees  may acquire  Filtronic  plc ordinary  shares.  These
schemes  are in  respect  of  fully  paid  ordinary  shares  of 10p each and are
available in the case of Filtronic's executive schemes to all eligible employees
who are invited by the  Remuneration  Committee of Filtronic plc to  participate
and in the case of  Filtronic's  savings  related  share  option  schemes to all
eligible  employees.  Certain of these  schemes have been approved by the United
Kingdom  Inland  Revenue,  enabling  participants  to claim certain tax reliefs.
Filtronic's  policy is to grant options under the executive  schemes at the time
of an eligible employee's recruitment or promotion.

     See also note 30 of the Notes to the Financial Statements.

                                       37

<PAGE>

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

     Filtronic plc's share capital consists of one class of ordinary shares with
a nominal value of 10p each. Each ordinary share carries the same voting rights.
The following table sets forth certain  information as of November 3, 2003, with
respect to all  shareholders  known by  Filtronic  plc to be owners of more than
3.0% of  Filtronic  plc's  ordinary  shares  (based on  information  received by
Filtronic  plc pursuant to  shareholder  notification  obligations  under United
Kingdom law and applicable regulations).

<TABLE>
<CAPTION>


                                                                            Number of Ordinary    Percent of
     Name of Beneficial Owner                                                  Shares Owned          Class
     ________________________                                               __________________   ___________
<S>                                                                                  <C>              <C>

     Prudential plc                                                             10,127,694           13.6%
     Fidelity International Limited                                              9,032,783           12.1%
     Professor J. David Rhodes(a)                                                4,230,001            5.7%
     Legal and General Investment Management Limited                             2,231,828            3.0%
     ________________

</TABLE>

     (a)  Includes 1,969,016 shares owned by his wife.

     As of November 3, 2003, Filtronic plc had 5,773 shareholders, 110 of whom
were US holders.

Related Party Transactions

     The following related party transactions occurred during fiscal 2003 and
were all on an arm's length basis.

     Filtronic plc and certain of its UK subsidiaries incurred professional
charges, totalling GBP45,864, with Schofield Sweeney, a law firm in which
Christopher Schofield is a partner.

     Filtronic Components Limited sublet premises to Techceram Limited, a
company in which Professor J. David Rhodes and his family have an ownership
interest. Rents charged amounted to GBP9,625. As of May 31, 2003, GBP7,021 was
outstanding.

     Filtronic plc incurred costs of GBP20,477 for the rental of an executive
box and the provision of refreshments with Bradford City A.F.C. (1983) Limited,
a company of which Professor J. David Rhodes is a director.

     Filtronic Components Limited earned royalties of GBP7,692 from Photarc
Surveys Limited, a company in which John Samuel has an ownership interest. As
of May 31, 2003, GBP657 was outstanding.


                                       38

<PAGE>

ITEM 8. FINANCIAL INFORMATION

Consolidated Financial Statements

     See "Item 18 - Financial Statements" and pages F-1 through F-60.

Other Financial Information

Export Sales

     For the year ended May 31, 2003 export sales were approximately
GBP120 million or 50% of total sales.

Legal Proceedings

     Filtronic is not currently, and has not in the recent past been a party to
any legal or any arbitration proceedings, nor is it aware of any such
proceedings being pending or contemplated, that could have a material effect on
its financial position or profitability. Filtronic may from time to time become
a party to various legal proceedings arising in the ordinary course of business.

Dividend Policy

     Final  dividends are proposed by the Board of Directors for approval at the
Annual General Meeting of Filtronic plc (the "Annual General  Meeting") which is
usually  convened  during  September  of each year.  In  addition,  the Board of
Directors of Filtronic plc is  authorised  to declare such interim  dividends as
are appropriate by reference to the profits of Filtronic plc which are available
for  distribution.  Holders of  Filtronic  plc  ordinary  shares on the relevant
record date are entitled to receive the dividend,  less any amounts  required to
be withheld on account of taxes or other  governmental  charges.  Cash dividends
payable to holders of ordinary  shares will be  distributed by Capita IRG plc as
paying agent.

     Filtronic plc expects to continue to pay dividends on its ordinary  shares,
although  there can be no assurance as to the  particular  amounts that would be
paid  from year to year.  The  payment  of future  dividends  will  depend  upon
Filtronic's  earnings,  financial condition  (including its cash needs),  future
earnings  prospects  and other  factors.  See "Item 5 - Operating  and Financial
Review and Prospects."

Significant Changes

     No significant change has occurred since the date of the annual financial
statements included in this report.


                                       39

<PAGE>

ITEM 9. THE OFFER AND LISTING

     The Filtronic  plc 10% Senior Notes due 2005 were listed on the  Luxembourg
Stock  Exchange in December 1998.  However,  Filtronic does not believe that the
Luxembourg  Stock  Exchange  is the  principal  trading  market  for the  Notes.
Currently,  the Notes are not listed on any securities exchange or quoted on any
automated inter-dealer quotation system in the United States.

ITEM 10. ADDITIONAL INFORMATION

Memorandum and Articles of Association

Organization and Register

     Filtronic plc is a public limited company organized under the laws of
England and Wales. Its registration number is 2891064.

     Filtronic  plc's  issued  share  capital  consists of one class of ordinary
shares with a nominal value of 10p each.  Record holders of ordinary  shares are
registered in Filtronic plc's share register. The share register is administered
on behalf of Filtronic plc by Capita IRG plc as transfer agent and registrar.

Objects and Purposes

     Filtronic plc's memorandum of association (the "Memorandum of Association")
states that its objects are to carry on business as a general commercial company
and as a holding company.

Directors

     Under   Filtronic   plc's  articles  of   association   (the  "Articles  of
Association"),  a Director is required to disclose any personal  interest he has
in any matter under  consideration at a Board meeting,  and may not vote on that
matter,  save where his  interest is only by virtue of his  interests in shares,
debentures or other securities of Filtronic plc.

     The  Remuneration  Committee  determines the  remuneration of the executive
Directors.  The  Directors  determine  the  remuneration  of  the  non-executive
Directors.

     The Directors  have the power under the Memorandum of Association to borrow
money  on  Filtronic's  behalf,  provided  that  the  aggregate  amount  of  all
outstanding  borrowings  may not,  without the previous  sanction of an ordinary
resolution,  exceed an amount  equal to three  times  Filtronic  plc's  adjusted
capital and reserves.

     The Directors are not required to retire when they reach a certain age, but
are subject to retirement by rotation,  whereby at each Annual  General  Meeting
one third of the Directors  subject to retirement by rotation,  and any Director
who was a Director at the two preceding Annual General Meetings,  must retire. A
Director retiring by rotation may stand for re-election.

     The  appointment  of a person as a Director is not subject to a requirement
that he or she hold shares in Filtronic plc.

Ordinary Shares

     Certain  significant  provisions  under  English  law and the  Articles  of
Association  affecting  Filtronic  plc's  ordinary  shares may be  summarized as
follows:

     Redemption. The share capital may be reduced by a resolution approved by
75% of the shareholders.

     Liquidation.  If  Filtronic  plc  were to be  liquidated,  any  liquidation
proceeds  remaining after all of its liabilities  were paid would be distributed
to its shareholders in proportion to their share holdings.

     Rights to share in  profits.  The only rights to share in  Filtronic  plc's
profits are dividend and bonus issue rights.

     Sinking fund  provisions.  The Articles of  Association  contain no sinking
fund provisions.

                                       40
<PAGE>

     Liability  to further  capital  calls.  Shareholders  have no  liability to
capital calls beyond the value of their shares.

     Provisions  discriminating  against any existing or  prospective  holder of
ordinary shares as a result of such shareholder  owning a substantial  number of
shares. There are no such provisions.

     Variation  of rights.  Any  variation  of the rights  attached to Filtronic
plc's shares must be approved by at least 75% of the shareholders.

Dividends

     Dividends  are  declared  once  a  year  at  the  Annual  General  Meeting.
Shareholders  on the share register on the relevant  record date are entitled to
receive  the  dividend,  in  proportion  to their  percentage  ownership  of the
outstanding share capital.  In addition,  the Articles of Association  authorise
the Directors to declare such interim  dividends as appear to it to be justified
by the profits of Filtronic plc available for distribution.

     All unclaimed dividends,  interest or other sums payable may be invested or
otherwise  made use of by the  Directors  for the benefit of Filtronic plc until
claimed.  All  dividends  unclaimed  for a period of 12 years after  having been
declared are forfeited.

Voting Rights

     Each ordinary share represents one vote. Cumulative voting is not permitted
under  English  law.  English law requires  that the  following  matters,  among
others,  be approved by the affirmative vote of 75% of the issued shares present
at the shareholders' meeting at which the matter is proposed:

     -   changing the company name;
     -   altering its capital structure;
     -   capital reductions;
     -   changing or amending the rights of shareholders;
     -   permitting the company to issue new shares for cash without applying
         the share owners' preemptive rights;
     -   changing the objects and purposes provision in the Memorandum of
         Association;
     -   amending the Articles of Association;
     -   dissolution.

     All  other  proposals  relating  to  the  ordinary  course  of a  company's
business,  such as the election of directors and transactions,  such as mergers,
acquisitions  and  dispositions,  can be approved by the  affirmative  vote of a
majority of the issued shares present at the shareholders'  meeting at which the
matter is proposed.

Shareholder Meetings

     Under English law, an extraordinary  general meeting of shareholders may be
called by (i) the Directors;  or (ii) shareholders holding at least one-tenth of
the paid-up capital of the company carrying voting rights.

     Under the current  Articles of  Association,  proxies of  shareholders  are
entitled to attend and, on a poll, vote at  shareholders'  meetings but not on a
show of hands.  Proxies of shareholders are not, however,  currently entitled to
speak at shareholders' meetings.

Change in Control

     There are no provisions in the Articles of  Association  that would have an
effect of delaying, deferring or preventing a change in control of Filtronic plc
with respect to a merger, acquisition or corporate restructuring.

                                       41

<PAGE>

Disclosure of Shareholdings

     The Companies Act 1985 of Great Britain,  provides that anyone who acquires
a material interest or becomes aware that he has acquired a material interest in
3% or more of any class of shares of a public  company's  issued  share  capital
carrying rights to vote at general share owner meetings must notify that company
in writing of his interest within two days. Thereafter, any increase or decrease
in his  holding  must be notified in writing to the  company,  again  within two
days.

Material Contracts

     No material  contracts,  other than contracts  entered into in the ordinary
course of business,  have been entered into by Filtronic plc or its subsidiaries
within the two years immediately preceding the date of this document.

Exchange Controls

     There are no governmental laws, decrees or other legislation of England and
Wales  that  restrict  the import or export of  capital,  or the  remittance  of
dividends,  interest  or  other  payments  to  holders  of the  Notes  that  are
non-resident of England and Wales.

Taxation

Certain US Federal Income Tax Consequences

     The following  summary of the principal US federal income tax  consequences
of the  ownership  and  disposition  of the  Notes  applies  only to a holder or
beneficial owner of a Note who:

     - is a US holder (as defined below), and

     - (i)  received  the Notes in the  Exchange  Offer  for  notes  that it had
            purchased in the initial Note offering (the  "Offering")  or
            subsequently  at a price equal to the initial  issue price,  which
            (for the Offering) was an amount equal to the  principal  amount of
            the notes or (ii) had  purchased the Notes at price equal to their
            initial  purchase price  subsequent to the Exchange  Offer. The
            term  "holder"  refers to  persons  or  entities  who  acquire a
            beneficial ownership interest in the Notes through the book entry
            systems of the Depository Trust Company ("DTC"), Clearstream
            Banking AG ("Clearstream, Luxembourg") and/or Morgan Guaranty Trust
            Company of New York,  Brussels office,  as operator of the
            Euroclear  system  ("Euroclear").  This  summary  deals  only with
            Notes held as capital assets and does not deal with special tax
            situations such as:

         - dealers in securities or currencies or traders in securities that
           elect to market such securities;
         - banks and life insurance companies;
         - tax exempt organizations and individual retirement and other
           tax-deferred accounts;
         - persons holding Notes as a hedge against currency risk;
         - persons holding Notes as part of straddle, "synthetic security" or
           other integrated financial transaction, including a "conversion
           transaction"; or
         - US holders (as defined below) whose functional currency is not the
           US dollar.

     This  summary  is based on US  federal  income  tax law,  including  the US
Internal Revenue Code of 1986, as amended (the "Code"), US Treasury regulations,
rulings,  administrative pronouncements and judicial decisions, all as in effect
on the date of this report.  Subsequent  developments  in US federal  income tax
law, which may be applied retroactively,  could have a material effect on the US
federal income tax consequences of the ownership and disposition of the Notes as
set forth in this summary.  Prospective  investors  should consult their own tax
advisors  about how US federal  income tax law or any other laws,  including the
effect of any state or local tax laws or the laws of any jurisdiction other than
the United States, will apply to their particular situation.

                                       42
<PAGE>

Definition of a US holder

     A holder is a US holder of a Note if it is a US person. A person is a "US
     person" if:

     - it is a citizen or resident of the US;
     - it is a corporation or other business entity created or organized under
       the laws of the US or of any state (unless, in the case of a
       partnership, future US Treasury regulations otherwise provide);
     - it is an estate, the income of which is subject to US federal income
       taxation regardless of the source of that income; or
     - it is (i) a trust and (a) a US court is able to exercise primary
       supervision over the trust's administration and (b) one or more US
       persons has the authority to control all of the trust's substantial
       decisions or (ii) a trust that has an election in effect to be treated
       as a US person under US federal income taxation.

Payments of Interest

     Payments of interest on a Note will be taxed as ordinary interest income.
In addition:

     - if the cash method of accounting is used for tax purposes, interest on
       the Note will be taxed at the time it is paid; and
     - if the accrual method of accounting is used for tax purposes, interest
       on the Note will be taxed at the time it accrues.

     For US foreign tax credit limitation  purposes,  interest paid by Filtronic
generally will constitute  foreign source "passive income" (or, if a holder is a
"financial services entity" as defined in regulations under the Code, "financial
services income").

Sale, Redemption on other Disposition of a Note

     Generally,  a holder's tax basis in a Note is its cost. However, a holder's
tax basis in a Note  received in the Exchange  Offer will be the same as the tax
basis in the Note exchanged.

     Capital gain or loss will be recognized  when a Note is sold,  exchanged or
otherwise  disposed  of, or is  redeemed  or  retired,  equal to the  difference
between:

     - the amount realized on the sale, exchange, redemption, retirement or
       other disposition (less any amount attributable to accrued interest,
       which will be taxable as such); and
     - the tax basis in the Note.

     A holder's  gain or loss will be long-term  capital gain or loss if, at the
time of the sale,  payment or other  disposition,  such holder had held the Note
for more than one  year.  Under  current  law,  if a holder  is a  non-corporate
taxpayer (including an individual),  its net long-term capital gain is generally
taxed at a lower  United  States  federal  income  tax  rate  than is an item of
ordinary income.  The  deductibility of capital losses,  however,  is subject to
limitations.

     For US foreign tax credit  limitation  purposes,  any gain  recognized on a
sale,  redemption or other  disposition of a Note will  generally  constitute US
source  income,  while  any  loss  recognized  on a sale,  redemption  or  other
disposition of a Note will generally be allocated against (and be deducted from)
US source income.

US Information Reporting and Backup Withholding

     If a holder does not provide a correct taxpayer  identification  number and
other  information,  or does not  comply  with  certain  other  requirements  or
otherwise  fails to establish an exemption (such as its status as a corporation,
bank, securities clearing organization or other financial institution that holds
customers' securities in the ordinary course of its trade or business),  certain
payments of principal  and  interest on a Note and the  proceeds  from the sale,
exchange,  redemption  or other  disposition  of a Note before  maturity  may be
subject to  information  reporting  to the US  Internal  Revenue  Service and to
possible backup  withholding.  Final US Treasury  regulations that are effective
for payments made after December 31, 2000,  generally  expand the  circumstances
under which  information  reporting  and backup  withholding  will be  required.
Holders should consult their own tax advisors  regarding the application to them
of these  information  reporting  and backup  withholding  rules,  including the
application of the final US Treasury regulations.

                                       43
<PAGE>

     If a holder  provides the US Internal  Revenue Service with the information
it requires,  it will receive a refund or a credit against its US federal income
tax  liability  for any  amounts  withheld  from its  payments  under the backup
withholding rules.

     The US federal  income tax discussion set forth above may not be applicable
to your particular  situation.  Prospective  investors  should consult their tax
advisors  with  respect to the tax  consequences  to them of the  ownership  and
disposition of the Notes,  including the tax  consequences  under state,  local,
foreign and other tax laws and the possible  effects of changes in US federal or
other tax laws.

Certain UK Tax Considerations

     The following is a general summary of the principal UK tax  consequences of
the purchase,  ownership and disposal of the Notes.  It does not purport to be a
comprehensive  description of all the tax considerations that may be relevant to
a prospective holder of the Notes.

     The statements regarding UK tax laws and practices set out below, including
the statements regarding the UK/US double taxation convention relating to income
and capital  gains (the "Tax  Treaty"),  are based on those laws in force and as
applied in  practice  as at the date of this  report and are  subject to changes
therein (possibly with retrospective effect).

     This  summary  relates only to the position of persons who are the absolute
beneficial  owners of Notes and does not  necessarily  apply where the income is
deemed for tax purposes to be the income of any other person.  This summary does
not  address  the tax  consequences  to  investors  that do not  hold  Notes  as
investments or special classes of investor such as dealers in securities.

     References below to "Qualifying  Companies" are to companies  subject to UK
corporation  tax,  other than  authorized  unit trusts.  References to "Relevant
Noteholders" are to holders of Notes who are individuals,  trustees or companies
not subject to UK corporation tax.

     For the purposes of the  following  discussion,  a US holder means a person
who is the beneficial  owner of Notes who is resident in the US and not resident
in the UK, for the purposes of the Tax Treaty.

     Prospective  investors  are advised to consult their tax advisors as to the
UK or other tax  consequences  of the  purchase,  ownership  or  disposal of the
Notes, including the effect of any local tax laws.

Payments of Interest; Deduction of Tax at Source

     If the Notes remain  listed on a  recognized  stock  exchange,  payments of
interest on the Notes may be made without  withholding  or  deduction  for or on
account of UK income tax regardless of whether the payment is made by or through
a paying agent outside the UK and  regardless of the identity of the  beneficial
owner of the Notes. A UK person who acts as a collecting  agent does not have to
make a withholding on account of UK income tax from any payment of interest.

     UK paying agents and collecting agents, including banks acting as such, are
required to provide certain  information to the UK Inland Revenue about interest
paid,  credited or received on the Notes without a  withholding  or deduction on
account of UK income tax. The  information to be provided  includes the name and
address  of the  beneficial  owner of the  interest.  The UK Inland  Revenue  is
entitled to routinely exchange the information  obtained with tax authorities in
countries with which the UKhas exchange of information arrangements.

                                       44
<PAGE>

Direct Assessment of Income Tax and Recovery of Income Tax Withheld

     Interest on the Notes has a UK source and  accordingly may be chargeable to
UK tax by direct assessment.  Where the interest is paid without  withholding or
deduction,  the interest  will not be assessed to UK tax in the hands of holders
who are not resident in the UK for tax purposes, except where such persons carry
on  a  trade,   profession  or  vocation  in  the  UK  through  a  UK  permanent
establishment  in connection with which the interest is received or to which the
Notes are  attributable,  in which case  (subject  to  exemptions  for  interest
received by certain  categories  of agent) tax may be levied on the UK permanent
establishment.

     Holders  should  note  that the  provisions  of the  Indenture  related  to
withholding  taxes  would not apply if the UK  Inland  Revenue  sought to assess
directly the person entitled to the relevant interest to UK tax.

Proposed European Union Directive on the Taxation of Savings Income

     On June 3, 2003,  the  European  Union  Council  of  Economic  and  Finance
Ministers  (ECOFIN) agreed to adopt a new proposed  Directive on the Taxation of
Savings Income.  The proposed Directive would only affect interest payments made
by paying agents  established  in one European  Union member state to beneficial
owners who are individuals resident in another European Union member state.

     This  Directive  would  require  European  Union member  states to exchange
information  relating to the  beneficial  owner of an interest  payment with the
member state in which that beneficial owner is resident.  This information would
be provided  in the first  instance  by the paying  agent and would  include the
identity and residence of the beneficial  owner.  Transitional  provisions would
operate during an initial  period  starting on January 1, 2005 during which only
Austria,   Belgium  and  Luxembourg  would  exercise  an  option  to  operate  a
withholding  tax  system  (at a rate of 15% for the  first  three  years  of the
transitional  period,  20% for the next three years and 35% for the remainder of
it) on interest payments. Under these transitional provisions,  the paying agent
would levy the withholding tax.

     The scope of the Directive  would cover  interest from debt claims of every
kind, including income from international bonds. The European Council approved a
draft of the Directive on December 13, 2001.  The proposed  Directive,  which is
intended  to apply  to  interest  payments  made on or after  January  1,  2005,
provided that equivalent  measures have been adopted by that date by certain key
third countries (but with new customer  documentation  rules to take effect from
January 1,  2004),  is not yet final and may be  subject  to  further  amendment
and/or clarification.

     The European  Commission is in discussions  with  Switzerland and other key
third  countries  to  promote  the  adoption  of  equivalent  measures  in those
countries.

Taxation of Returns

     Qualifying  Companies  will be subject to tax as income on all interest and
any other profits and gains in respect of the Notes, broadly, in accordance with
their "authorized" accounting treatment,  which should generally correspond with
their  statutory  accounting  treatment.  Such treatment will normally extend to
profits and gains in pounds  sterling terms  attributable to fluctuations in the
pound sterling/US dollar exchange rate.

Relevant Noteholders

     Relevant  Noteholders  who are  resident  for tax purposes in the UK or who
carry on a trade in the UK through a permanent establishment by or for which the
Notes are held will generally be liable for UK tax on the amount of any interest
received in respect of the Notes.

Taxation of Capital Gains

     A US holder who is not resident or ordinarily  resident for tax purposes in
the United  Kingdom  will not  normally  be liable  for UK tax on capital  gains
realized on the disposal of its Notes unless, at the time of the disposal,  such
US holder  carries on a trade,  which for this purpose  includes a profession or
vocation, in the United Kingdom through a permanent establishment and such Notes
are,  or have been,  used,  held or  acquired  for the  purposes  of such trade,
permanent establishment.

                                       45
<PAGE>

     A profit on disposal, including redemption, of a Note will be subject to UK
capital gains tax if the relevant holder is resident or ordinarily  resident for
tax  purposes  in the UK or carries on a trade,  profession  or  vocation in the
UKthrough a permanent  establishment and the Note is, or has been, used, held or
acquired for the purposes of such trade or permanent establishment.

     It should be noted that in calculating  the amount of any profit arising on
a disposal of a Note for UK tax purposes,  pound sterling values are compared at
acquisition  and disposal.  Accordingly,  a taxable profit may arise on disposal
even where the US dollar  proceeds are less than,  or equal to, the amount in US
dollars paid to acquire the Note.

Accrued Income Scheme

     A transfer of a Note by a Relevant Noteholder other than a company may give
rise to a charge to tax on income in respect of an amount representing  interest
on the Note which has accrued since the preceding  interest  payment date if the
Relevant  Noteholder is resident or ordinarily  resident for tax purposes in the
UK or carries on a trade in the UK through a  permanent  establishment  and such
Note is, or has been,  used,  held or acquired for the purposes of such trade or
permanent establishment.

Stamp Duty

     No UK stamp duty or stamp duty  reserve tax will be payable on the issue or
transfer of the Notes or on their redemption.

Finnish and Australian Tax Laws

     In the  event  that  Filtronic  LK Oy or  Filtronic  Pty  Ltd  assumes  the
obligations  of  Filtronic  plc in  accordance  with its  respective  subsidiary
guarantees   under  the  Indenture,   then  Finnish  and  Australian  tax  laws,
respectively,  will apply to dealings in the Notes,  including  with  respect to
withholding  tax on payments of  principal  and  interest on the Notes.  Such an
assumption of obligations is not imminent.

Documents on Display

     Filtronic  is subject to the  information  requirements  of the  Securities
Exchange  Act of 1934,  as  amended.  In  accordance  with  these  requirements,
Filtronic  files reports and other  information  with the SEC. These  materials,
including this annual report and exhibits  thereto,  may be inspected and copied
at the SEC's public  reference rooms in Washington,  D.C. Please call the SEC at
1-800-SEC-0330 for further information on the reference rooms.


                                       46

<PAGE>

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currencies

     Filtronic plc's reporting currency is the pound sterling.

     Filtronic has operations in the United Kingdom, the United States, Finland,
Australia  and China.  The  functional  currencies  of  Filtronic  are the pound
sterling, United States dollar, euro, Australian dollar and Chinese yuan.

Currency Exchange Rate Risk Management

     Filtronic's policy is not to hedge against  transactions which occur in any
of the  functional  currencies of  Filtronic's  operations.  Sales and purchases
which occur in other currencies are hedged by forward foreign exchange contracts
or similar  instruments where such transactions are material.  Filtronic held no
derivative financial  instruments at May 31, 2003.  Filtronic's policy is, where
practical, to hold surplus cash in United States dollars.

Financial Instruments Exchange Rate Sensitivity
<TABLE>
<CAPTION>

                                                                  May 31, 2003
                               ______________________________________________________________________________________
                                                         Expected maturity date May 31,
                               ______________________________________________________________________________________
                                  2004        2005        2006         2007        2008     Thereafter       Total
                               _______      ______     _________    ___________   _____    ___________     __________
                                                                    (thousands)
<S>                                <C>         <C>           <C>            <C>     <C>            <C>            <C>
Liabilities
Long term fixed rate
US dollar debt                        -          -     GBP63,216             -        -              -     GBP63,216
Average interest rate                 -          -          10.0%            -        -              -          10.0%

</TABLE>


     The long term United States  dollar debt in the table above was  translated
into sterling at $1.6384 per GBP1.00 at May 31, 2003.

     The table below shows the sensitivity to a 10% change in the exchange rate,
of the  amounts to be repaid and the annual  interest  payments on the long term
United States dollar debt as at May 31, 2003, when translated into sterling.

<TABLE>
<CAPTION>


                                                                                    Exchange rate US$ per GBP
                                                                            ______________________________________
                                                                                1.6384      1.4746          1.8022
                                                                            __________    __________     _________
                                                                                          (thousands)
<S>                                                                                <C>           <C>           <C>
Long term fixed rate US dollar debt                                          GBP63,216     GBP70,238     GBP57,470
Annual interest payments                                                         6,322         7,024         5,747

</TABLE>


Effects of Currency Translation

     The  financial  statements of the non-UK  operations  are  translated  into
sterling for inclusion in the consolidated  financial statements at the exchange
rates on the last day of the fiscal year as permitted by UK GAAP.

     The  exchange  rates at May 31, 2003 used to  translate  the results of the
non-UK operations for the year ended May 31, 2003 were as follows.

<TABLE>
<CAPTION>


                                                                                    May 31, 2003
                                                               ______________________________________________________
                                                                                 Functional currency
                                                               ______________________________________________________
                                                                 United States                Australian    Chinese
                                                                    dollars          Euro       dollars      yuan
                                                               _______________     _______   ___________   __________
<S>                                                                        <C>         <C>           <C>          <C>
Sterling exchange rate                                                  1.6384      1.3930       2.5141     13.5603

</TABLE>


                                       47
<PAGE>

     The table below shows an analysis  by  functional  currency of  Filtronic's
sales and profit for the year ended May 31, 2003.

<TABLE>
<CAPTION>


                                                                  Year ended May 31, 2003
                                          __________________________________________________________________________________
                                                                    Functional currency
                                          __________________________________________________________________________________
                                                        United States                 Australian    Chinese
                                            Sterling       dollars       Euro           dollars      yuan          Total
                                          ___________  ______________  ____________   __________  ___________   ____________
                                                                              (thousands)
<S>                                               <C>            <C>           <C>          <C>           <C>           <C>
Sales                                       GBP 99,188    GBP 53,585    GBP 64,246     GBP 5,081   GBP 19,168    GBP241,268
(Loss)/profit                                   (6,128)         (340)        3,331        (2,523)       6,744         1,084

</TABLE>

     The table below shows the  sensitivity of Filtronic's  sales and profit for
the year ended May 31,  2003 to a 10% change in the  exchange  rates of sterling
with the functional currencies.

<TABLE>
<CAPTION>

                                                                                    Year ended May 31, 2003
                                                                         __________________________________________________
                                                                              Sterling         Sterling         Sterling
                                                                           at May 31, 2003         10%              10%
                                                                           exchange rates      depreciation   appreciation
                                                                          __________________  ______________ ______________
                                                                                                (thousands)
<S>                                                                                <C>              <C>             <C>
Sales                                                                          GBP241,268        GBP257,055    GBP228,352
Profit                                                                              1,084             1,885         428


</TABLE>

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable.

                                   PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

     None.

ITEM 15. CONTROLS AND PROCEDURES

     Disclosure  controls  and  procedures  are  defined by the  Securities  and
Exchange  Commission as those controls and other procedures that are designed to
ensure that  information  required to be disclosed by an issuer in reports filed
or  submitted  by it under  the  Securities  Exchange  Act of 1934 is  recorded,
processed,  summarised  and reported  within the time  periods  specified in the
Securities  and Exchange  Commission's  rules and forms.  Filtronic  plc's Chief
Executive  Officer and Chief  Financial  Officer have evaluated  Filtronic plc's
disclosure  controls and  procedures as of the end of the period covered by this
Annual Report on Form 20-F and have determined that such disclosure controls and
procedures are effective.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

     Not applicable.

ITEM 16B. CODE OF ETHICS

     Not applicable.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Not applicable.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

     Not applicable.


                                       48

<PAGE>

                                    PART III


ITEM 17. FINANCIAL STATEMENTS

     Not applicable.


ITEM 18. FINANCIAL STATEMENTS

     The following  consolidated  financial  statements and related  independent
auditors'   reports   are   filed   as  part  of  this   annual   report:

<TABLE>
<CAPTION>

                                                                                                           Page
                                                                                                           ____
<S>                                                                                                         <C>

Independent Auditors' Report                                                                                F-2
Report of Independent Auditors                                                                              F-3
Independent Auditors' Report                                                                                F-4
Audited Financial Statements
  Consolidated Profit and Loss Accounts for the years ended May 31, 2001, 2002 and 2003                     F-5
  Consolidated Statements of Total Recognized Gains and Losses for the years ended May 31,
  2001, 2002 and 2003                                                                                       F-6
  Consolidated Balance Sheets at May 31, 2002 and 2003                                                      F-7
  Consolidated Cash Flow Statements for the years ended May 31, 2001, 2002 and 2003                         F-8
  Consolidated Statements of Movements in Shareholders' Funds for the years ended May 31,
  2001, 2002 and 2003                                                                                       F-9
  Notes to the Financial Statements                                                                        F-11
</TABLE>


ITEM 19. EXHIBITS

Exhibit Number
______________

1.1    Certificate of Incorporation, Certificates of Incorporation on Change of
       Name and Memorandum and Articles of Association of Filtronic plc.(a)

1.2    Memorandum and Articles of Association of Filtronic plc, as amended.(c)

2.1    Indenture, dated as of December 21, 1998 among Filtronic plc, the
       Subsidiary Guarantors named therein and The Bank of New York
       as Trustee.(a)

2.2    Registration Rights Agreement, dated as of December 21, 1998 among
       Filtronic plc, the Subsidiary Guarantors named therein and
       the Initial Purchasers named therein.(a)

4.1    Filtronic plc Executive Share Option Scheme (1997) Rules, as amended.(b)

4.2    Filtronic plc Unapproved Executive Share Option Scheme Rules, as amended.
       (b)

8.1    Significant subsidiaries as of the end of the period covered by this
       report: See "Organizational Structure and Subsidiaries" in "Item 4.
       Information on the Company."

12.1   Certifications of Chief Executive Officer and Chief Financial Officer
       pursuant to Rules 13a-14(a) or 15d-14(a) of the Exchange Act.

13.1   Certifications of Chief Executive Officer and Chief Financial Officer
       pursuant to Rules 13a-14(b) or 15d-14(b) and Section 1350 of Chapter 63
       of Title 18 of the United States Code.

_________
(a)    Incorporated by reference from Registration Statement on Form F-4 filed
       on September 27, 1999.
(b)    Incorporated by reference from Annual Report on Form 20-F filed on
       November 30, 2000.
(c)    Incorporated by reference from Annual Report on Form 20-F filed on
       November 19, 2001


                                       49
<PAGE>


                                   SIGNATURES

     The registrant  hereby  certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized  the  undersigned
to sign this annual report on its behalf.

                                            FILTRONIC PLC

                                            By: /s/  Christopher E Schofield
                                            ________________________________

                                            Christopher E Schofield
                                            Executive Director

Date: November 28, 2003

                                       50


<PAGE>

                                  FILTRONIC plc
                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                           Page
                                                                                                          _____
<S>                                                                                                         <C>

Independent Auditors' Report                                                                                F-2
Report of Independent Auditors                                                                              F-3
Independent Auditors' Report                                                                                F-4
Audited Financial Statements
  Consolidated Profit and Loss Accounts for the years ended May 31, 2001, 2002 and 2003                     F-5
  Consolidated Statements of Total Recognized Gains and Losses for the years ended May 31,
  2001, 2002 and 2003                                                                                       F-6
  Consolidated Balance Sheets at May 31, 2002 and 2003                                                      F-7
  Consolidated Cash Flow Statements for the years ended May 31, 2001, 2002 and 2003                         F-8
  Consolidated Statements of Movements in Shareholders' Funds for the years ended May 31,
  2001, 2002 and 2003                                                                                       F-9
  Notes to the Financial Statements                                                                        F-11

</TABLE>


                                        F-1

<PAGE>

                                   FILTRONIC plc

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors Filtronic plc

     We have audited the  accompanying  consolidated  balance sheet of Filtronic
plc as of May 31, 2003,  and the related  consolidated  profit and loss account,
consolidated  statement of total  recognized  gains and losses,  cash flows, and
movements  in  shareholders'  funds  for the  year  ended  May 31,  2003.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

     We conducted our audit in  accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Filtronic
plc as of May 31, 2003, and the results of its operations and its cash flows for
the year ended May 31, 2003, in conformity  with generally  accepted  accounting
principles in the United Kingdom.

     Accounting  principles  generally  accepted in the United  Kingdom  vary in
certain significant  respects from accounting  principles  generally accepted in
the United States of America.  Application  of accounting  principles  generally
accepted  in the  United  States of  America  would  have  affected  results  of
operations for the year ended May 31, 2003 and shareholders' funds as of May 31,
2003,  to  the  extent  summarized  in  Note  38 to the  consolidated  financial
statements.


KPMG Audit Plc
Leeds, England
November 28, 2003


                                        F-2

<PAGE>

                                    FILTRONIC plc

                          REPORT OF INDEPENDENT AUDITORS



To the Directors of Filtronic plc

     We have audited the  consolidated  balance sheet of Filtronic plc as at May
31, 2002 and the related  consolidated profit and loss accounts and consolidated
statements  of total  recognized  gains and losses,  cash flows and movements in
shareholders'  funds for each of the two years in the period ended May 31, 2002.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our  audits.  We did not  audit  the  consolidated  financial  statements  of
Filtronic  Microtek  Limited  (formerly  Filtronic  (Holdings)  Limited),  which
statements  reflect  total assets of  GBP11,567,000  at May 31, 2002,  and total
sales of GBP12,430,000  and  GBP10,852,000  for the years ended May 31, 2001 and
2002,  respectively.  Those financial  statements were audited by other auditors
whose report have been  furnished to us, and our opinion,  insofar as it relates
to the amounts  included for  Filtronic  Microtek  Limited  (formerly  Filtronic
(Holdings) Limited), is based solely on the report of the other auditors.

     We  conducted  our  audits  in  accordance  with  United  Kingdom  auditing
standards  and  United  States  generally  accepted  auditing  standards.  Those
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.

     In our opinion,  based on our audits and the report of other auditors,  the
financial statements referred to above present fairly, in all material respects,
the  consolidated  financial  position of Filtronic plc at May 31, 2002, and the
consolidated  results of its operations and its consolidated cash flows for each
of the two years in the period ended May 31, 2002 in conformity  with accounting
principles  generally  accepted in the United  Kingdom  which  differ in certain
respects  from those  generally  accepted  in the United  States (see Note 38 of
Notes to the Financial Statements).

ERNST & YOUNG LLP

Leeds, England
November 22, 2002


                                        F-3

<PAGE>

      FILTRONIC MICROTEK LIMITED (FORMERLY FILTRONIC (HOLDINGS) LIMITED)

                          INDEPENDENT AUDITORS' REPORT


To the Directors of Filtronic plc

     We have  audited  the  consolidated  balance  sheet of  Filtronic  Microtek
Limited  (formerly  Filtronic  (Holdings)  Limited) as of May 31, 2002,  and the
related  consolidated  profit and loss accounts and statements of cash flows and
movements in shareholders'  equity for each of the two years in the period ended
May 31, 2002 (not presented  separately herein).  These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

     We  conducted  our  audits  in  accordance  with  United  Kingdom  auditing
standards  and  United  States  generally  accepted  auditing  standards.  Those
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position of Filtronic
Microtek Limited (formerly Filtronic (Holdings) Limited) as at May 31, 2002, and
the consolidated  results of its operations and its consolidated  cash flows for
each of the two  years in the  period  ended  May 31,  2002 in  conformity  with
accounting  principles  generally accepted in the United Kingdom which differ in
certain  respects from generally  accepted  accounting  principles in the United
States of America (see Note 21 of Notes to the Financial Statements).


Baker Tilly
Chartered Accountants

Bradford, England
November 22, 2002

                                        F-4

<PAGE>

                                     FILTRONIC plc

                       CONSOLIDATED PROFIT AND LOSS ACCOUNTS

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                             ____________________________________
                                                                     Notes       2001        2002        2003
                                                                     _____  ___________  __________   ___________
                                                                            (thousands, except per share amounts)
Sales                                                               2,3,4     GBP297,434  GBP280,547  GBP241,268
                                                                            ___________  __________   ___________
<S>                                                                   <C>            <C>         <C>         <C>

Costs
(Increase)/decrease in stocks of finished goods and
  work in progress                                                                (7,410)      6,437       2,877
Raw materials and consumables                                                    138,520     108,776     101,233
Staff costs - excluding share compensation                                        89,751      84,807      70,136
Staff costs - share compensation                                        6          2,293       1,570         146
Depreciation                                                                      16,759      20,433      19,322
Exceptional tangible fixed asset impairment                             7              -       7,938           -
Goodwill amortization                                                              4,884       5,352       2,348
Exceptional goodwill impairment                                         8         14,078      16,036           -
Other operating charges                                                           47,590      42,261      38,491
                                                                             ___________ ___________  __________
                                                                                 306,465     293,610     234,553
                                                                             ___________ ___________  __________
Operating (loss)/profit                                               2,3         (9,031)    (13,063)      6,715
Net interest payable                                                   11        (12,531)    (12,638)     (7,995)
Net financing currency exchange gain                                   12            335         165       4,236
Exceptional net gain on repayment of debt                              13              -           -         881
                                                                             ___________ ___________  __________
(Loss)/profit on ordinary activities before taxation                             (21,227)    (25,536)      3,837
Taxation on (loss)/profit on ordinary activities                       14         (1,564)     (3,508)     (2,753)
                                                                             ___________ ___________  __________
(Loss)/profit for the year (1)                                                   (22,791)    (29,044)      1,084
Dividends                                                              15         (1,994)     (1,999)     (2,006)
                                                                             ___________ ___________  __________
Deficit for the year                                                         GBP (24,785)GBP (31,043)   GBP (922)
                                                                             =========== ============ ==========
(Loss)/earnings per share                                              16
  Basic                                                                          (31.24)p     (39.31)p      1.46p
  Diluted                                                                        (31.24)p     (39.31)p      1.45p
                                                                             =========== ============ ==========
Weighted average numbers of shares outstanding                         16
  Basic                                                                           72,963      73,882      74,245
  Diluted                                                                         72,963      73,882      74,705
                                                                             =========== ============ ==========
</TABLE>

_______________

(1)  A summary of the significant adjustments to (loss)/profit for the year that
     would be required if United States generally accepted accounting principles
     were to be  applied  instead  of those  generally  accepted  in the  United
     Kingdom is set forth in note 38 of Notes to the Financial Statements.

 The Notes to the Financial Statements are an integral part of these Financial
                                   Statements.


                                      F-5
<PAGE>

                                  FILTRONIC plc

          CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                         _______________________________________
                                                                                 2001        2002        2003
                                                                         ____________  ___________    __________
                                                                                        (thousands)
<S>                                                                               <C>          <C>           <C>

(Loss)/profit for the year                                                GBP (22,791) GBP (29,044)    GBP 1,084
Currency exchange movement arising on consolidation                             3,047        1,422          (590)
Currency exchange movement on loan                                             (5,932)       2,496         5,329
                                                                         ____________  ___________    __________
Total recognized gains and losses for the year                            GBP (25,676) GBP (25,126)    GBP 5,823
                                                                         ============  ===========    ==========
</TABLE>

____________________

The statement of  comprehensive  income  required under United States  generally
accepted accounting principles is set forth in Note 38 of Notes to the Financial
Statements.


The Notes to the Financial Statements are an integral part of these Financial
                                  Statements.

                                      F-6
<PAGE>

                                  FILTRONIC plc

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                                  May 31,
                                                                                       ___________________________
                                                                                 Notes       2002        2003
                                                                                ______ ___________   _____________
                                                                                                (thousands)
<S>                                                                                <C>         <C>             <C>
Fixed assets
Intangible assets                                                                   17 GBP  34,720     GBP  35,769
Tangible assets                                                                     18     108,589          96,272
                                                                                       ___________   _____________
                                                                                    14       3,309         132,041
                                                                                       ___________   _____________
Current assets
Stocks                                                                              19      43,735          34,344
Debtors                                                                             20      55,435          50,908
Cash                                                                                         9,083           6,522
                                                                                       ___________   _____________
                                                                                           108,253          91,774
                                                                                       ___________   _____________
Creditors: amounts falling due within one year                                      21      39,774          38,821
                                                                                       ___________   _____________
Net current assets                                                                          68,479          52,953
                                                                                       ___________   _____________
Total assets less current liabilities                                                      211,788         184,994
Creditors: amounts falling due after one year                                       22      93,769          61,942
Provision for deferred tax                                                          23         408             750
Deferred income                                                                     24      12,415          13,143
                                                                                       ___________   _____________
Net assets                                                                              GBP105,196      GBP109,159
                                                                                       ===========   =============
Capital and reserves
Called up share capital                                                                  GBP 7,409       GBP 7,430
Share premium account                                                                      134,151         135,851
Shares to be issued                                                                          6,682           4,321
Revaluation reserve                                                                            106             106
Other reserve                                                                                    -             828
Profit and loss account                                                                    (43,152)        (39,377)
                                                                                       ___________   _____________
Equity shareholders' funds (1)                                                          GBP105,196      GBP109,159
                                                                                       ===========   =============

</TABLE>

___________

(1)  A summary of the significant adjustments to equity shareholders' funds that
     would be required if United States generally accepted accounting principles
     were to be  applied  instead  of those  generally  accepted  in the  United
     Kingdom is set forth in Note 38 of Notes to the Financial Statements.


The Notes to the Financial Statements are an integral part of these Financial
                                  Statements.

                                      F-7
<PAGE>

                                  FILTRONIC plc

                        CONSOLIDATED CASH FLOW STATEMENTS

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                               ___________________________________
                                                                     Notes       2001         2002          2003
                                                                     _____     _________  ___________  ___________
                                                                                          (thousands)
<S>                                                                     <C>          <C>         <C>           <C>
Net cash flow from operating activities                               25(a)    GBP 7,522  GBP 64,218    GBP 38,528
                                                                     _____     _________  ___________  ___________
Returns on investment and servicing of finance
Interest received                                                                  1,031         358           231
Interest paid                                                                    (12,716)    (11,629)       (7,638)
Interest element of finance lease payments                                            (4)          -             -
                                                                               _________  ___________  ___________
Net cash flow from returns on investment and servicing of
finance                                                                          (11,689)    (11,271)       (7,407)
                                                                               _________  ___________  ___________
Tax paid                                                                          (3,091)     (2,345)       (4,128)
                                                                               _________  ___________  ___________
Capital expenditure
Purchase of tangible fixed assets                                                (40,982)    (11,369)       (8,198)
Sale of tangible fixed assets                                                        171       1,312         1,378
Government grants received                                                           480       1,034         1,319
                                                                               _________  ___________  ___________
Net cash flow from capital expenditure                                           (40,331)     (9,023)       (5,501)
                                                                               _________  ___________  ___________
Acquisitions
Purchase of subsidiaries                                                            (118)          -             -
Cash acquired with subsidiaries                                                       14           -             -
                                                                               _________  ___________  ___________
Net cash flow from acquisitions                                                     (104)          -             -
                                                                               _________  ___________  ___________
Equity dividends paid                                                             (1,964)     (1,992)       (2,002)
                                                                               _________  ___________  ___________

                                                                               _________  ___________  ___________
Net cash flow before financing                                                   (49,657)     39,587        19,490
                                                                               _________  ___________  ___________
Financing
Issue of shares                                                                    1,844         264             -
Capital element of finance lease payments                                           (147)          -             -
Loans repaid                                                                        (567)    (21,982)      (22,107)
                                                                               _________  ___________  ___________
Net cash flow from financing                                                       1,130     (21,718)      (22,107)
                                                                               _________  ___________  ___________


(Decrease)/increase in cash                                           25(b)  GBP (48,527) GBP 17,869   GBP  (2,617)

</TABLE>


_______________

The significant differences between the cash flow statements presented above and
those required under United States generally accepted accounting  principles are
set forth in Note 38 of Notes to the Financial Statements.


The Notes to the Financial Statements are an integral part of these Financial
                                  Statements.

                                      F-8
<PAGE>

                                  FILTRONIC plc

           CONSOLIDATED STATEMENTS OF MOVEMENTS IN SHAREHOLDERS' FUNDS

<TABLE>
<CAPTION>
                                         Share Capital
                                  Ordinary shares of 10p each
                         ___________________________________________
                                                Allotted, issued       Share    Shares       Re-     Other      Profit
                                                      and             Premium    to be    valuation  Reserve   and Loss
                                 Authorized     fully paid up       Account(i) issued(i)  Reserve(i) (i)(vi)    Account      Total
                       ________________________ ___________________ ___________ _______   __________ _______    _______   _________
                            (number)(thousands) (number)                                 (thousands)
<S>                              <C>       <C>        <C>       <C>         <C>      <C>         <C>   <C>          <C>         <C>

At June 1,
2000 (ii) (iii) (iv)     100,000,000 GBP10,000 71,989,105 GBP 7,199 GBP 128,106   GBP  -     GBP 106 GBP  -   GBP10,138  GBP145,549
Shares allotted at
30p each under the
  Initial Share Option
  Scheme                           -         -    961,020        96         192        -           -      -           -         288
Shares allotted at up to
450p each under
  Executive Share Option
  Schemes                          -         -    392,685        39       1,452        -           -      -           -       1,491
Shares allotted at up to
429p each
  under Savings Related Share
  Option Schemes                   -         -     35,528         3          75        -           -      -           -          78
Shares allotted at 277p each
to QUEST                           -         -      4,637         1          12        -           -      -           -          13
Shares allotted at 1177p
each as
  acquisition consideration        -         -    267,427        27       3,121        -           -      -           -       3,148
Share issue costs                  -         -          -         -         (26)       -           -      -           -         (26)
Acquisition contingent
consideration                      -         -          -         -           -    5,323           -      -           -       5,323
Share compensation                 -         -          -         -           -    2,293           -      -           -       2,293
Deficit for the year               -         -          -         -           -        -           -      -     (24,785)    (24,785)
Currency exchange
movement arising
  on consolidation                 -         -          -         -           -        -           -      -       3,047       3,047
Currency exchange movement
on loan                            -         -          -         -           -        -           -      -      (5,932)     (5,932)
                       _____________ _________ __________ _________ ___________ ________ ___________ _______ __________   _________
At May 31, 2001
(ii) (iii) (iv)          100,000,000 GBP10,000 73,650,402 GBP 7,365  GBP132,932 GBP7,616    GBP  106 GBP  -  GBP(17,532) GBP130,487
Shares allotted at up to
399p each under
  Executive Share Option
  Schemes                          -         -     27,623         3          57        -           -      -           -          60
Shares allotted at up to
194p each
  under Savings Related
  Share
  Option Schemes                   -         -     43,383         4          79        -           -      -           -          83
Shares allotted at up to
373p each to
  QUEST                            -         -    157,254        16         566        -           -      -           -         582
Shares allotted at
1177p each as
  - acquisition
    consideration                  -         -     44,230         4         517     (521)          -      -           -           -
  - share compensation             -         -    168,490        17           -   (1,983)          -      -       1,966           -
Share compensation                 -         -          -         -           -    1,570           -      -           -       1,570
Deficit for the year               -         -          -         -           -        -           -      -     (31,043)    (31,043)
Contribution to QUEST              -         -          -         -           -        -           -      -        (461)       (461)
Currency exchange
movement arising
  on consolidation                 -         -          -         -           -        -           -      -       1,422       1,422
Currency exchange
movement on loan                   -         -          -         -           -        -           -      -       2,496       2,496
                       _____________ _________ __________ _________ ___________ ________ ___________ _______ __________   _________
At May 31,
2002 (ii) (iii) (iv)     100,000,000 GBP10,000 74,091,382 GBP 7,409  GBP134,151 GBP6,682    GBP  106 GBP  -  GBP(43,152) GBP105,196
Shares allotted at 1177p
each as
 - acquisition
   consideration                   -         -    145,723        14       1,700   (1,714)          -      -           -          -
 - share compensation              -         -     67,338         7           -     (793)          -      -         786          -
Share compensation                 -         -          -         -           -      146           -      -           -        146
Deficit for the year               -         -          -         -           -        -           -      -        (922)      (922)
Transfer to other reserve          -         -          -         -           -        -           -    828        (828)         -
Currency exchange movement
arising on
  consolidation                    -         -          -         -           -        -           -      -         (590)      (590)
Currency exchange movement
on loan                            -         -          -         -           -        -           -      -       5,329       5,329
                       _____________ _________ __________ _________ ___________ ________ ___________ _______ __________   _________
At May 31,
2003 (ii)
(iii) (iv) (v)           100,000,000 GBP10,000 74,304,443  GBP7,430  GBP135,851 GBP4,321    GBP  106 GBP 828 GBP(39,377) GBP109,159
                       ============= ========= ========== ========= =========== ========  ========== ======= ==========  ==========
</TABLE>


The Notes to the Financial Statements are an integral part of these Financial
                                  Statements.

                                      F-9
<PAGE>


                                  FILTRONIC plc

     CONSOLIDATED STATEMENTS OF MOVEMENTS IN SHAREHOLDERS' FUNDS (continued)



(i)  The share premium  account,  shares to be issued,  revaluation  reserve and
     other reserve are not distributable.
(ii) Cumulative  exchange  translation  adjustments,  net of  related  taxation,
     included  in the  profit  and loss  account  balance  at May 31,  2003 were
     GBP4,256,000 (2002: GBP(483,000); 2001: GBP(4,401,000)).
(iii)The parent  company's  profits  available for  distribution at May 31, 2003
     were GBP55,164,000 (2002: GBP28,464,000; 2001: GBP11,001,000).
(iv) Cumulative   goodwill  set  off  against  reserves  at  May  31,  2003  was
     GBP11,917,000 (2002: GBP11,917,000; 2001: GBP11,917,000).
(v)  Included in the profit and loss account  balance at May 31, 2003 was GBPnil
     (2002:  GBP353,000;  2001: GBPnil) relating to an  undistributable  reserve
     fund  of the  Chinese  subsidiary,  Filtronic  (Suzhou)  Telecommunications
     Products Co. Limited.
(vi) The other  reserve is an  undistributable  surplus  reserve of the  Chinese
     subsidiary, Filtronic (Suzhou) Telecommunications Products Co. Limited.

The Notes to the Financial Statements are an integral part of these Financial
                                  Statements.

                                      F-10

<PAGE>


                                  FILTRONIC plc

                        NOTES TO THE FINANCIAL STATEMENTS



1.   Accounting policies

Basis of accounting

     The financial statements have been prepared on the historical cost basis of
accounting  and  in  accordance  with  applicable   United  Kingdom   accounting
standards.  The following  accounting policies have been applied consistently in
accounting for material items in the financial statements.

Consolidation

     The  financial  statements  consolidate  the  results  and  net  assets  of
Filtronic plc and all of its subsidiaries (the "Company").

Sales

     Sales represents amounts receivable, excluding value added tax and overseas
sales taxes,  in respect of goods  provided in the ordinary  course of business.
Sales are recognized on shipment.

Foreign currency

     The financial  statements of overseas  subsidiaries  are  translated at the
rate of exchange ruling at the balance sheet date.  Currency exchange  movements
arising on overseas  subsidiaries' net assets,  long-term  intra-group loans and
intra-group  dividends  are taken  directly to reserves.  Sales and purchases in
foreign  currencies are translated at the rate of exchange ruling at the time of
the transaction.  Monetary assets and liabilities are translated at the year-end
rate of exchange.  Currency  exchange  movements  are included in the profit and
loss account for the year, except those arising on long-term loans. The currency
exchange  movements  on  long-term  loans are taken  directly to reserves to the
extent that they are offset by the currency  exchange  movements  arising on the
net assets of overseas  subsidiaries and long-term  intra-group  loans that they
finance.  Any currency  exchange  movements which are not offset are included in
the profit and loss account for the year.

Goodwill

     Goodwill arising on acquisitions is capitalized in the consolidated balance
sheet as intangible  fixed assets.  Goodwill is amortized in equal  installments
over the lower of 20 years or its  estimated  useful life.  Goodwill is reviewed
for  impairment  at the end of the  first  full  financial  year  following  the
acquisition,  and in other  periods if there are  indications  that the carrying
value may not be recoverable.  Goodwill that arose on acquisitions prior to June
1, 1998 was set off directly against reserves.  This goodwill will be taken into
account in the event that these businesses are disposed.

Tangible fixed assets

     Fixed  assets  are  included  in the  financial  statements  at  cost  less
accumulated  depreciation.  Depreciation  is  provided in order to write off the
cost of tangible fixed assets in equal  installments  over their useful lives as
follows

Freehold land                                                Not depreciated
Freehold buildings                                           50 years
Plant and machinery                                          3-10 years
Fixtures and fittings                                        7-10 years
Motor vehicles                                               3-5 years

     The carrying values of tangible fixed assets are reviewed for impairment if
there are indications that the carrying values may not be recoverable.

                                      F-11


<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)



1.   Accounting policies - (continued)

Operating leases

     Operating  lease  rentals are  charged to the profit and loss  account on a
straight line basis over the lease term.

Research and development expenditure

     Research and development  expenditure is written off to the profit and loss
account as incurred.

Stocks and work in progress

     Stocks and work in progress are stated at the lower of cost, on a first-in,
first-out basis, and estimated net realizable value. Cost comprises the purchase
price  of  raw  materials  and   components   together  with  direct  labor  and
attributable overheads. Estimated net realizable value is based on the estimated
selling price less further costs expected to be incurred to completion and sale.

Government grants

     Government  grants which are related to revenue  expenditure are recognized
in the profit  and loss  account  so as to match the  expenditure  to which they
relate.  Capital grants are shown as deferred  income and credited to the profit
and loss account over the expected  useful economic life of the related asset in
line with the depreciation policy set out above.

Debt issue costs

     Costs incurred in issuing debt are amortized over the term of the loan.

Deferred taxation

     Deferred tax is recognised  as a liability or an asset if the  transactions
or events  that give rise to an  obligation  to pay more tax in the  future or a
right to pay less tax in the future have  occurred  by the  balance  sheet date.
Deferred  tax  assets  are  recognised  only to the  extent  that the  directors
consider  that it is more likely  than not that there will be  suitable  taxable
profits from which the underlying timing  differences can be deducted.  Deferred
tax is not provided on unremitted earnings of overseas  subsidiaries where there
is no  commitment  to remit  these  earnings.  Deferred  tax is  measured  on an
undiscounted basis at the tax rates that are expected to apply in the periods in
which  timing  differences  reverse,  based on tax  rates  and laws  enacted  or
substantively enacted at the balance sheet date.

Pension schemes

     The Company  operates a defined  benefits  pension scheme for UK employees.
The contributions to the scheme are charged to the profit and loss account so as
to spread the costs over the  employees'  working  lives with the  Company.  The
Company's overseas subsidiaries operate defined contribution pension schemes for
their  employees.  Contributions  are charged to the profit and loss  account as
they become payable.

Share compensation

     Share  compensation  due to  employees  is  charged  to the profit and loss
account over the vesting period of the shares.

Use of estimates

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United Kingdom requires management to make
estimates and  assumptions  that affect  reported  sales,  expenses,  assets and
liabilities. Actual amounts could differ from such estimates.

                                      F-12

<PAGE>



                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)



2.   Geographical segment analysis by origin

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                            _______________________________________
                                                                                 2001        2002        2003
                                                                            ____________ ____________   ___________
                                                                                          (thousands)
<S>                                                                                  <C>          <C>           <C>
Sales
United Kingdom                                                                GBP114,030   GBP108,951    GBP102,807
Finland                                                                           54,223       68,936        64,954
United States                                                                    118,946       98,871        56,967
Australia                                                                         17,774       14,962         5,490
China                                                                             12,448       12,857        21,791
Inter segment                                                                    (19,987)     (24,030)      (10,741)
                                                                            ____________ ____________   ___________
                                                                              GBP297,434   GBP280,547    GBP241,268
                                                                            ============ ===========    ===========

Operating (loss)/profit
United Kingdom                                                                 GBP 1,961    GBP 2,862     GBP   167
Finland                                                                            2,147       10,424         5,960
United States                                                                    (13,278)     (26,522)          716
Australia                                                                          2,315          793        (2,004)
China                                                                              1,649        4,332         6,811
Central costs                                                                     (3,825)      (4,952)       (4,935)
                                                                            ____________ ____________   ___________
                                                                             GBP  (9,031) GBP (13,063)  GBP   6,715
                                                                            ============ ===========    ===========


</TABLE>

                                      F-13

<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)



2.   Geographical segment analysis by origin - (continued)

<TABLE>
<CAPTION>

                                                                                                  May 31,
                                                                                        _______________________
                                                                                             2002        2003
                                                                                        ___________  __________
                                                                                                (thousands)
<S>                                                                                            <C>          <C>
Net operating assets
United Kingdom                                                                           GBP 70,978  GBP 64,282
Finland                                                                                      58,462      56,756
United States                                                                                48,325      30,466
Australia                                                                                     7,928       6,031
China                                                                                         9,026      10,922
Central                                                                                        (390)       (507)
                                                                                        ___________  __________
Net operating assets                                                                        194,329     167,950
Non-operating liabilities                                                                    (4,447)     (3,371)
Net debt                                                                                    (84,686)    (55,420)
                                                                                        ___________  __________
Net assets                                                                               GBP105,196  GBP109,159
                                                                                        ===========  ==========

Total assets
United Kingdom                                                                           GBP106,520  GBP 96,956
Finland                                                                                      69,294      67,604
United States                                                                                55,736      38,430
Australia                                                                                     9,123       6,719
China                                                                                        10,889      14,106
                                                                                        ___________  __________
                                                                                         GBP251,562  GBP223,815
                                                                                        ===========  ==========
</TABLE>


3.   Business segment analysis

     The Company has five reportable business segments: wireless infrastructure,
cellular handset  products,  electronic  warfare,  broadband access and compound
semiconductors.  The wireless infrastructure segment designs and manufactures RF
integrated  subsystems  for base  stations  used in  wireless  telecommunication
networks.  The cellular  handset  products  segment designs and  manufactures RF
antennas and filters for cellular  telephone  handsets.  The electronic  warfare
segment  designs and  manufactures  RF components  and subsystems for electronic
warfare systems installed in military aircraft,  ships and ground installations.
The  broadband  access  segment  designs and  manufactures  RF products  used in
linking base stations in wireless telecommunication networks, cable networks and
digital signal processing products. The compound semiconductors business segment
designs and manufactures  compound  semiconductors for wireless  infrastructure,
cellular handset, electronic warfare and broadband access applications.

     The  accounting  policies of the business  segments are those  described in
Note 1. Accounting policies.  The Company evaluates  performance of the business
segments based on operating profit/(loss). Inter segment sales and transfers are
accounted for at market value as if they were with a third party.

     The Company's  reportable  business  segments are strategic  business units
that design and manufacture  different products for different markets.  They are
managed   separately   because  each  business  requires  different  design  and
manufacturing technology and operates in different markets.

                                      F-14

<PAGE>



                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


3.   Business segment analysis - (continued)

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              ___________________________________
                                                                                 2001        2002        2003
                                                                              __________  ___________ ___________
                                                                                          (thousands)
<S>                                                                                 <C>           <C>         <C>
Sales
Wireless infrastructure                                                       GBP207,777   GBP188,589  GBP151,715
Cellular handset products                                                         42,174       48,845      51,242
Electronic warfare                                                                25,728       26,977      25,721
Broadband access                                                                  11,273       12,544      10,796
Compound semiconductors                                                           11,233        7,481       3,452
Inter segment                                                                       (751)      (3,889)     (1,658)
                                                                              __________  ___________ ___________
                                                                              GBP297,434   GBP280,547  GBP241,268
                                                                              ==========  =========== ===========

Operating (loss)/profit
Wireless infrastructure                                                       GBP 27,212   GBP 31,777  GBP 20,962
Cellular handset products                                                          5,211        9,678      10,834
Electronic warfare                                                                  (698)      (1,583)       (713)
Broadband access                                                                  (6,407)     (11,999)     (2,984)
Compound semiconductors                                                          (30,524)     (35,984)    (16,449)
Central costs                                                                     (3,825)      (4,952)     (4,935)
                                                                              __________  ___________ ___________
                                                                             GBP  (9,031) GBP (13,063) GBP  6,715
                                                                              ==========  =========== ===========
Depreciation
Wireless infrastructure                                                        GBP 6,567    GBP 7,909  GBP  6,154
Cellular handset products                                                          3,001        3,883       5,931
Electronic warfare                                                                 1,668        1,789       1,915
Broadband access                                                                     586          881         895
Compound semiconductors                                                            4,628        5,607       4,053
Central                                                                              309          364         374
                                                                              __________  ___________ ___________
                                                                              GBP 16,759   GBP 20,433  GBP 19,322
                                                                              ==========  =========== ===========
Capital expenditure
Wireless infrastructure                                                       GBP 10,782    GBP 4,857   GBP 1,757
Cellular handset products                                                          7,800        1,938       3,365
Electronic warfare                                                                 1,810        2,352       1,201
Broadband access                                                                   1,862          918         325
Compound semiconductors                                                           14,207        1,249       1,463
Central                                                                              361           55          87
                                                                              __________  ___________ ___________
                                                                              GBP 36,822   GBP 11,369   GBP 8,198
                                                                              ==========  =========== ===========
</TABLE>


                                      F-15
<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


3.   Business segment analysis - (continued)
<TABLE>
<CAPTION>

                                                                                                  May 31,
                                                                                       ________________________
                                                                                             2002        2003
                                                                                       ____________  __________
                                                                                                (thousands)
<S>                                                                                             <C>         <C>
Net operating assets
Wireless infrastructure                                                                  GBP 91,675  GBP 73,841
Cellular handset products                                                                    48,904      51,723
Electronic warfare                                                                           18,122      16,049
Broadband access                                                                              7,055       3,441
Compound semiconductors                                                                      28,963      23,403
Central                                                                                        (390)       (507)
                                                                                       ____________  __________
Net operating assets                                                                        194,329     167,950
Non-operating liabilities                                                                    (4,447)     (3,371)
Net debt                                                                                    (84,686)    (55,420)
                                                                                       ____________  __________
Net assets                                                                               GBP105,196  GBP109,159
                                                                                       ============ ===========
Total assets
Wireless infrastructure                                                                  GBP112,647  GBP 93,291
Cellular handset products                                                                    55,389      59,619
Electronic warfare                                                                           26,351      23,825
Broadband access                                                                              8,624       4,722
Compound semiconductors                                                                      43,060      38,069
Central                                                                                       5,491       4,289
                                                                                       ____________  __________
                                                                                         GBP251,562  GBP223,815
                                                                                       ============ ===========
</TABLE>

                                      F-16

<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


4.   Sales analysis by destination

<TABLE>
<CAPTION>
                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________ ___________
                                                                                          (thousands)
<S>                                                                                  <C>        <C>         <C>
United Kingdom                                                                GBP 43,313 GBP 14,108  GBP 12,875
Europe                                                                            78,274    112,976     131,800
North America                                                                    128,168     84,800      48,180
Asia Pacific                                                                      47,679     68,663      48,413
                                                                              __________ __________ ___________
                                                                              GBP297,434 GBP280,547  GBP241,268
                                                                              ========== ========== ===========
</TABLE>

Major customers

     The Company's  principal  customers are major wireless  infrastructure  and
cellular handset  original  equipment  manufacturers.  Following is a summary of
revenues from all customers which have exceeded 10% of total revenues:


<TABLE>
<CAPTION>
                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________ ___________
                                                                                   %           %           %
<S>                                                                                <C>        <C>         <C>
Nokia Corporation                                                                 35.9       52.1        62.2
Lucent Technologies, Inc                                                          21.7       19.5         9.9
Motorola, Inc                                                                     12.5        6.8         6.9

</TABLE>

5.   Profit and loss account items

     Operating (loss)/profit is stated after charging/(crediting):

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________ ___________
                                                                                          (thousands)
<S>                                                                                  <C>        <C>         <C>
Research and development costs                                                GBP 31,979 GBP 32,131  GBP 28,323
(Profit)/loss on disposal of tangible fixed assets                                   (70)       191        (518)
Auditors' remuneration  - audit services                                             141        221         163
                        - other assurance services                                    35         22          15
                        - other services                                              73         41           -
Operating lease rentals - land and buildings                                       1,272      1,383       1,345
                        - other                                                    2,079      2,369       2,266
Licence fee released                                                                   -          -         (66)
Government grants released                                                          (167)      (134)       (525)
Wages and salaries                                                                77,864     73,611      60,455
Social security costs                                                              7,158      6,844       5,811
Other pension costs                                                                4,729      4,352       3,870
Exceptional closure costs                                                              -          -       1,812

</TABLE>

     The  exceptional  closure  costs  relate  to the  closure  of the  compound
semiconductor  fabrication  facility at  Filtronic  Solid  State,  Santa  Clara,
California.

                                      F-17

<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


6.   Share compensation

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,

                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________ ___________
                                                                                          (thousands)
<S>                                                                                  <C>        <C>         <C>
Share compensation                                                             GBP 2,293  GBP 1,570    GBP  146

</TABLE>

     As a result of the  acquisition  of  Filtronic  Sigtek,  Inc. on August 29,
2000,  a maximum  cumulative  charge of  GBP4,285,000,  comprising  the issue to
certain  employees of Filtronic  Sigtek,  Inc. of a maximum of 364,067  ordinary
shares of 10p each in  Filtronic  plc,  could  arise  over the four year  period
following the  acquisition.  This share  compensation is contingent on Filtronic
Sigtek,  Inc.  maintaining  the number and  quality of its  engineers  over that
period.  The  cumulative  charge  at  May  31,  2003  was  GBP4,009,000   (2002:
GBP3,863,000; 2001: GBP2,293,000).

7.   Exceptional tangible fixed asset impairment

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,

                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________ ___________
                                                                                          (thousands)
<S>                                                                                 <C>          <C>        <C>
Exceptional tangible fixed asset impairment                                     GBP   -    GBP 7,938    GBP   -

</TABLE>

     There has been no impairment to tangible fixed assets in the year ended May
31,  2003.  In the year  ended May 31,  2002,  the  exceptional  tangible  fixed
impairment  arose  in  respect  of  the  compound  semiconductors  operation  at
Filtronic Solid State.

8.   Exceptional goodwill impairment

<TABLE>
<CAPTION>
                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________ ___________
                                                                                          (thousands)
<S>                                                                                  <C>        <C>         <C>
Exceptional goodwill impairment                                               GBP 14,078 GBP 16,036     GBP   -

</TABLE>

     There has been no  impairment  to goodwill in the year ended May 31,  2003.
GBPnil (2002:  GBP10,378,000;  2001:  GBP14,078,000) of the exceptional goodwill
impairment arose in respect of the compound semiconductor operation at Filtronic
Solid  State and  GBPnil  (2002:  GBP5,658,000;  2001:  GBPnil)  in  respect  of
Filtronic  Sigtek,  Inc.,  which  forms part of the  broadband  access  business
segment.

     In carrying out impairment  reviews under Financial  Reporting  Standard 11
"Impairment of Fixed Assets and  Goodwill",  the Board has reviewed value in use
calculations for the business units of Sage Laboratories, Inc., and the compound
semiconductor  activities of Filtronic  Solid State and at Newton  Aycliffe.  In
each of these  calculations,  a  discount  rate of 10% has been  applied  to the
projected cash flows. With respect to Sage  Laboratories,  Inc., the calculation
period before assuming a zero long term growth rate extended to 8 years. This is
deemed  appropriate due to the time cycles  associated  with electronic  warfare
programmes.  With  respect to the Newton  Aycliffe  investment,  the period over
which  discounted  cash flows were  calculated  was 7 years.  No cash flows were
assumed from that point forward. This is deemed appropriate as the sales revenue
projections were based upon both internally  generated forecasts and independent
data extending through that period.


                                      F-18
<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


9.   Employees

     The  monthly  average  number of  people,  including  executive  directors,
employed by the Company was:

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________ ___________
                                                                                           (number)
<S>                                                                                  <C>        <C>         <C>
United Kingdom                                                                     1,494      1,409       1,282
Finland                                                                            1,006        841         557
United States                                                                        886        649         520
Australia                                                                            210        216         131
China                                                                                133        202         402
Japan                                                                                  -          1           1
                                                                              __________ __________ ___________
                                                                                   3,729      3,318       2,893
                                                                              ========== ========== ===========
</TABLE>

10.  Directors' emoluments

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              _____________________________________
                                                                                 2001        2002        2003
                                                                              __________ ____________ _____________
<S>                                                                                  <C>          <C>           <C>
Emoluments                                                                    GBP765,477 GBP1,028,010  GBP1,058,280
Company contributions paid to money purchase pension schemes                      13,446       13,967        14,273
                                                                              __________ ____________ _____________
                                                                              GBP778,923 GBP1,041,977  GBP1,072,553
                                                                              ========== ============ =============

Accrued pension at end of year                                                GBP135,381   GBP158,083    GBP179,491

</TABLE>

     The  number of  directors  who were  members  of the  defined  contribution
schemes and the defined benefit scheme was:

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              _____________________________________
                                                                                 2001        2002        2003
                                                                              __________ ____________ _____________
                                                                                           (number)
<S>                                                                               <C>         <C>         <C>
Members of the defined contribution schemes                                        1           1           1
Members of the defined benefit scheme                                              5           5           5

</TABLE>

     The amounts in respect of the highest paid director are as follows:

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              _____________________________________
                                                                                 2001        2002        2003
                                                                              __________ ____________ _____________
<S>                                                                                  <C>        <C>           <C>
Emoluments                                                                    GBP179,220 GBP188,066    GBP206,440
Accrued pension at end of year                                                    62,367     68,438        75,328

</TABLE>

                                      F-19

<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


11.  Net interest payable

<TABLE>
<CAPTION>
                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                   2001        2002        2003
                                                                              __________ __________   _________
                                                                                          (thousands)
<S>                                                                                   <C>       <C>         <C>
Interest receivable
Interest on bank deposits                                                      GBP 1,031   GBP  358    GBP  231
                                                                              __________ __________   _________
Interest payable
Interest on bank borrowings                                                          603        460          51
Interest on other loans                                                           12,113     11,169       7,587
Finance lease interest                                                                 4          -           -
Debt issue costs - amortization                                                      842        824         588
Debt issue costs - loss on repayment of debt                                           -        543           -
                                                                              __________ __________   _________
                                                                                  13,562     12,996       8,226
                                                                              __________ __________   _________
Net interest payable                                                          GBP 12,531 GBP 12,638   GBP 7,995
                                                                              ========== ==========   =========

12.  Net financing currency exchange gain

                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                  2001        2002        2003
                                                                              __________ __________   _________
                                                                                          (thousands)
Currency exchange gain/(loss) on cash balances                                  GBP  335   GBP (224)    GBP 138
Currency exchange gain on loan                                                         -        389       4,098
                                                                              __________ __________   _________
                                                                                GBP  335   GBP  165   GBP 4,236
                                                                              ========== ==========   =========


13.  Exceptional net gain on repayment of debt

                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________   _________
                                                                                          (thousands)
Profit on repayment of debt                                                      GBP   -    GBP   -   GBP 1,443
Debt issue costs - loss on repayment of debt                                           -          -        (562)
                                                                              __________ __________   _________
                                                                                 GBP   -    GBP   -    GBP  881
                                                                              ========== ==========   =========

</TABLE>

                                      F-20

<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


14.  Taxation on (loss)/profit on ordinary activities

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                 2001        2002        2003
                                                                              __________ __________   _________
                                                                                          (thousands)
<S>                                                                                 <C>         <C>         <C>
Current tax
United Kingdom                                                                 GBP   130  GBP   162    GBP   37
Overseas                                                                           1,434      2,938       2,425

                                                                                   1,564      3,100       2,462
Deferred tax
Overseas origination and reversal of timing differences                                -        408         291
                                                                              __________ __________   _________
                                                                               GBP 1,564  GBP 3,508   GBP 2,753
                                                                               =========  =========   =========

</TABLE>

     The United  Kingdom  current tax charge  arises from taxes paid overseas on
income paid to the United Kingdom which cannot be fully relieved  against United
Kingdom  taxes.  The overseas tax charge for the year arises  primarily from the
Company's  operations in Finland and to a lesser extent in China,  where taxable
profits  cannot  be  relieved  by  losses  available  in  other   jurisdictions.
Additionally, the overseas tax charge includes certain state taxes in the United
States.

     The current tax charged for the period is higher than the standard  rate of
corporation tax in the United Kingdom. The difference is analysed below:

<TABLE>
<CAPTION>

                                                                                      Year ended May 31,
                                                                              ___________________________________
                                                                                 2001        2002        2003
                                                                              __________   __________   _________
                                                                                          (thousands)
<S>                                                                                  <C>          <C>         <C>
(Loss)/profit on ordinary activities before tax                              GBP (21,227) GBP (25,536)  GBP 3,837

(Loss)/profit on ordinary activities multiplied by standard rate of
corporation tax in the UK of 30%                                             GBP  (6,368) GBP  (7,661)  GBP 1,151
Effect of:
Disallowable items                                                                   208          166         172
Disallowable goodwill amortisation and impairment                                    918        2,861         624
Depreciation and impairment in advance of capital allowances                       1,441        3,298       1,880
Goodwill amortisation and impairment in advance of tax allowance                   4,165        2,966           -
Tax allowance on impaired goodwill                                                     -            -        (526)
Other timing differences                                                             667          183         303
Tax losses carried forward                                                         1,305        2,031       2,094
Start-up years profit exemption and rate reduction in China                         (510)      (1,130)     (1,357)
Overseas tax rate differences                                                          -            -        (247)
Foreign exchange differences                                                        (254)         (65)     (1,656)
Allowable share option deductions                                                   (696)         (20)          -
Disallowable share compensation                                                      688          471          24
                                                                              __________   __________   _________
Current tax                                                                    GBP 1,564    GBP 3,100   GBP 2,462
                                                                              ==========   ==========   =========

</TABLE>

     The  Company  tax  charge is  expected  to be  primarily  the tax charge on
profits  arising in Finland  and China  together  with state taxes in the United
States.

                                      F-21

<PAGE>


                                     FILTRONIC plc

                   NOTES TO THE FINANCIAL STATEMENTS - (Continued)

<TABLE>
<CAPTION>

14.  Taxation on (loss)/profit on ordinary activities - (continued)
(Loss)/profit before taxation is analyzed as follows:
                                                                                      Year ended May 31,
                                                                                 _______________________________
                                                                                 2001        2002        2003
                                                                                 _______     ______    __________
                                                                                          (thousands)
<S>                                                                                 <C>          <C>           <C>
United Kingdom                                                               GBP  (5,423) GBP  (5,338)   GBP (6,091)
Overseas                                                                         (15,804)     (20,198)        9,928
                                                                             _____________ ____________  __________
                                                                             GBP (21,227) GBP (25,536)   GBP 3,837
                                                                             ============ =============  ==========

A reconciliation of the UK statutory rate of corporation tax to the
 effective rate is as follows:

                                                                                        Year ended May 31,
                                                                                 _________________________________
                                                                                      2001        2002        2003
                                                                                   _________     ________   ______
                                                                                     %           %           %
UK statutory rate                                                                     30.0       30.0        30.0
Adjusted for:
Disallowable items                                                                    (1.0)      (0.7)        4.5
Disallowable goodwill amortisation and impairment                                     (4.3)     (11.2)       16.2
Depreciation and impairment in advance of capital allowances                          (6.8)     (14.5)       56.6
Goodwill amortisation and impairment in advance of tax allowance                     (19.6)     (11.6)        -
Tax allowance on impaired goodwill                                                     -          -         (13.7)
Other timing differences                                                              (3.1)      (0.7)        7.9
Tax losses carried forward                                                            (6.1)      (8.0)       54.6
Start-up years profit exemption and rate reductions in China                           2.4        4.4       (35.4)
Overseas tax rate differences                                                          -          -          (6.4)
Foreign exchange differences                                                           1.2        0.3       (43.2)
Allowable share option deductions                                                      3.3        0.1         0.0
Disallowable share compensation                                                       (3.3)      (1.8)        0.6
                                                                                     ______     _______    ______
Effective rate                                                                        (7.3)     (13.7)       71.7
                                                                                    =======     =======    ======
</TABLE>

<TABLE>
<CAPTION>

15.  Dividends
                                                                    Year ended May 31,
                                                ________________________________________________________________
                                                 2001        2002       2003        2001        2002        2003
                                                _____       ____       ____        ____        ____        _____
<S>                                                <C>      <C>          <C>       <C>       <C>            <C>
                                                       (per share)                        (thousands)
Interim dividend - paid                         0.90p       0.90p       0.90p  GBP  668   GBP  666      GBP  669
Final dividend - proposed                       1.80p       1.80p       1.80p     1,326      1,333         1,337
                                                _____       _____       _____  ________   _________    _________
                                                2.70p       2.70p       2.70p GBP 1,994  GBP 1,999     GBP 2,006
                                               ======       =====       ===== =========  ==========    =========
</TABLE>

<TABLE>
<CAPTION>

16.  (Loss)/earnings per share
                                                                                      Year ended May 31,
                                                                                 _____________________________
                                                                                 2001        2002        2003
                                                                                 _____       _____       _____
                                                                                 (thousands, except shares and
                                                                                      per share amounts)
<S>                                                                               <C>        <C>            <C>
Basic (loss)/earnings per share                                                 (31.24)p   (39.31)p       1.46p
Diluted (loss)/earnings per share                                               (31.24)p   (39.31)p       1.45p

(Loss)/profit on ordinary activities after taxation                        GBP (22,791) GBP (29,044)  GBP 1,084

Weighted average number of shares in issue                                  72,962,735    73,881,832 74,245,267
Dilution effect of share options                                                     -             -          -
Dilution effect of contingently issuable shares                                      -             -    459,850
                                                                            ___________   __________  _________

Diluted weighted average number of shares                                   72,962,735    73,881,832 74,705,117
                                                                            ===========   ========== ==========
</TABLE>

                                      F-22

<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)
<TABLE>
<CAPTION>


17.  Intangible fixed assets

                                                                                                        Goodwill
                                                                                                      ___________
                                                                                                      (thousands)


<S>                                                                                                       <C>
Cost
At June 1, 2000                                                                                      GBP 70,434
Additions                                                                                                 8,548
Currency exchange movement                                                                                  762
                                                                                                     __________
At May 31, 2001                                                                                          79,744
Currency exchange movement                                                                                1,188
                                                                                                     __________
At May 31, 2002                                                                                          80,932
Currency exchange movement                                                                                   96
                                                                                                     __________
At May 31, 2003                                                                                      GBP 81,028
                                                                                                     ==========

Amortization
At June 1, 2000                                                                                       GBP 6,083
Charge for the year                                                                                       4,884
Exceptional goodwill impairment                                                                          14,078
Currency exchange movement                                                                                   26
                                                                                                     __________
At May 31, 2001                                                                                          25,071
Charge for the year                                                                                       5,352
Exceptional goodwill impairment                                                                          16,036
Currency exchange movement                                                                                 (247)
                                                                                                     ___________
At May 31, 2002                                                                                          46,212
Charge for the year                                                                                       2,348
Currency exchange movement                                                                               (3,301)
                                                                                                     ___________
At May 31, 2003                                                                                       GBP 45,259
                                                                                                     ===========

Net book value at May 31, 2003                                                                       GBP 35,769
                                                                                                     ==========
Net book value at May 31, 2002                                                                       GBP 34,720
                                                                                                     ==========
Net book value at May 31, 2001                                                                       GBP 54,673
                                                                                                     ==========

</TABLE>


     The goodwill is being amortized over its estimated economic life of 20
years.

                                      F-23

<PAGE>


                                  FILTRONIC plc

                       NOTES TO THE FINANCIAL STATEMENTS - (Continued)

<TABLE>
<CAPTION>

18.  Tangible fixed assets

                                                    Freehold land   Plant and   Fixtures      Motor
                                                    and buildings   machinery   and fittings  vehicles    Total
                                                    _____________   _________   ____________  ________   ______
                                                                              (thousands)
<S>                                                       <C>         <C>         <C>          <C>        <C>
Cost
At June 1, 2000                                       GBP 45,477  GBP 75,175   GBP 7,069    GBP 223  GBP127,944
Additions                                                  1,792      32,236       2,759         35      36,822
Acquired with subsidiary                                       -         128           -          -         128
Disposals                                                     (5)       (169)        (76)       (37)       (287)
Currency exchange movement                                     9         719         152          2         882
                                                      __________  __________   __________   ________ __________
At May 31, 2001                                           47,273     108,089       9,904        223     165,489
Additions                                                    202       8,971       2,184         12      11,369
Disposals                                                   (106)     (8,828)     (1,428)      (129)    (10,491)
Currency exchange movement                                   461         607         (48)         7       1,027
                                                      __________  ___________  _________    ________  __________
At May 31, 2002                                           47,830     108,839      10,612        113     167,394
Additions                                                    188       7,249         756          5       8,198
Disposals                                                   (258)     (6,400)        (43)       (41)     (6,742)
Currency exchange movement                                     6      (1,467)       (598)       (18)     (2,077)
                                                      __________  ___________  __________   _______   _________
At May 31, 2003                                       GBP 47,766   GBP108,221  GBP 10,727   GBP  59  GBP166,773
                                                      ==========  ===========  ==========   =======  ==========

Depreciation
At June 1, 2000                                       GBP  1,532  GBP 18,378   GBP 2,448    GBP  48  GBP 22,406
Charge for the year                                          932      13,969       1,783         75      16,759
Disposals                                                      -        (108)        (57)       (21)       (186)
Currency exchange movement                                    18         116          73          1         208
                                                      __________  __________   _________   ________  __________
At May 31, 2001                                            2,482      32,355       4,247        103      39,187
Charge for the year                                        1,063      17,276       2,035         59      20,433
Exceptional tangible fixed asset impairment                    -       7,938           -          -       7,938
Disposals                                                    (60)     (7,486)     (1,330)      (112)     (8,988)
Currency exchange movement                                    15         255         (39)         4         235
                                                      __________  __________   _________   ________  __________
At May 31, 2002                                            3,500      50,338       4,913         54      58,805
Charge for the year                                        1,099      16,405       1,789         29      19,322
Disposals                                                      -      (5,810)        (31)       (41)     (5,882)
Currency exchange movement                                     3      (1,422)       (312)       (13)     (1,744)
                                                      __________  ___________  __________  _________  __________
At May 31, 2003                                       GBP  4,602  GBP 59,511   GBP 6,359   GBP   29   GBP 70,501
                                                      ==========  ==========   =========   =========  ==========

Net book value at May 31, 2003                        GBP 43,164  GBP 48,710   GBP 4,368   GBP  30    GBP 96,272
                                                      ==========  ==========   =========   ========   ==========
Net book value at May 31, 2002                        GBP 44,330  GBP 58,501   GBP 5,699   GBP  59    GBP108,589
                                                      ==========  ==========   =========   ========   ==========
Net book value at May 31, 2001                        GBP 44,791  GBP 75,734   GBP 5,657   GBP  120   GBP126,302
                                                      ==========  ==========   =========   ========   ==========
</TABLE>


     Impairment  reviews  have been  carried  out in  respect  of certain of the
group's tangible fixed assets.  Following these reviews, the Board has concluded
that no impairment has taken place in the year ended May 31, 2003.


                                      F-24

<PAGE>



                              FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

<TABLE>
<CAPTION>


19.  Stocks

                                                                                                  May 31,
                                                                                          ____________________
                                                                                             2002        2003
                                                                                          _______        ______
                                                                                                (thousands)
<S>                                                                                          <C>         <C>
Raw materials                                                                            GBP 29,340  GBP 22,826
Work in progress                                                                              7,595       5,664
Finished goods                                                                                6,800       5,854
                                                                                         __________  __________
                                                                                         GBP 43,735  GBP 34,344
                                                                                         ==========  ==========

20.  Debtors

                                                                                                  May 31,
                                                                                         ______________________
                                                                                             2002        2003
                                                                                         _________      _______
                                                                                                (thousands)

Trade debtors                                                                            GBP 48,925  GBP 44,492
Current tax                                                                                     422         320
Other taxation                                                                                1,638       1,151
Prepayments                                                                                   4,450       4,945
                                                                                         __________  __________
                                                                                         GBP 55,435  GBP 50,908
                                                                                         ==========  ==========


21.  Creditors: amounts falling due within one year

                                                                                                  May 31,
                                                                                        _______________________
                                                                                             2002        2003
                                                                                         _______        ______
                                                                                                (thousands)
Trade creditors                                                                          GBP 19,061  GBP 20,595
Current tax                                                                                   3,128       1,604
Other taxation and social security                                                            1,452       1,559
Accruals                                                                                     14,800      13,726
Dividend payable                                                                              1,333       1,337
                                                                                         __________  __________
                                                                                         GBP 39,774  GBP 38,821
                                                                                         ==========  ==========


                                      F-25

<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


22.  Creditors: amounts falling due after more than one year

                                                                                                  May 31,
                                                                                          _____________________
                                                                                             2002        2003
                                                                                          ________      _______
                                                                                                (thousands)
Amounts falling due:
Loans between 1 and 2 years                                                              GBP      -  GBP      -
Loans between 2 and 3 years                                                                       -      63,216
Loans between 3 and 4 years                                                                  96,193           -
Less deferred debt issue costs                                                               (2,424)     (1,274)
                                                                                        ___________  __________
                                                                                         GBP 93,769  GBP 61,942
                                                                                        ===========  ==========
</TABLE>

Loans comprise:
<TABLE>
<CAPTION>

                                                                                       May 31,
                                                        ___________________________________________
                                                          2002       2003         2002         2003
                                                         ______     ______       _____        _____
                                                                           (thousands)
<S>                                                       <C>         <C>           <C>         <C>
Senior Notes repayable December 1, 2005                 $140,750    $103,573  GBP 96,193  GBP 63,216
                                                        ========    ========  ==========  ===========
</TABLE>


   The unsecured US dollar Senior Notes bear interest at 10% per annum and have
no maintenance covenants attached to them.

23.  Provision for deferred tax
<TABLE>
<CAPTION>

                                                                                                  May 31,
                                                                                          ____________________
                                                                                             2002        2003
                                                                                          ________       _____
                                                                                                (thousands)
<S>                                                                                            <C>           <C>
Capital allowances in advance of depreciation                                               GBP   408      GBP  750
                                                                                            =========      ========

Opening balance                                                                             GBP     -      GBP  408
Deferred tax charge                                                                               408           291
Currency exchange movement                                                                          -            51
                                                                                            _________      ________
Closing balance                                                                             GBP   408      GBP  750
                                                                                            =========      ========

     Deferred tax assets which have not been recognised:

                                                                                                  May 31,
                                                                                           ___________________
                                                                                             2002        2003
                                                                                           _______       ______
                                                                                                (thousands)

Depreciation in advance of capital allowances - United Kingdom                             GBP 2,973    GBP  5,482
Amortisation in advance of tax allowances     - Overseas                                       8,592         7,458
Other timing differences                      - Overseas                                       2,208         2,562
Trading losses available for relief against
  future trading profits                      - United Kingdom                                 1,582         2,380
                                              - Overseas                                      14,707        15,623
                                                                                          __________    __________
                                                                                          GBP 30,062    GBP 33,505
                                                                                          ==========    ==========
</TABLE>


     The deferred tax assets have not been recognised as the directors  consider
that, due to the geographical distribution of the Company's deferred tax assets,
it is  unlikely  that the  underlying  timing  differences  will  reverse in the
foreseeable future.

                                      F-26

<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

<TABLE>
<CAPTION>

24.  Deferred income

                                            Deferred licence fee    Deferred government grants    Total deferred income
                                            ____________________    __________________________    _____________________
                                                   May 31,                May 31,                        May 31,
                                            ____________________    __________________________    _____________________
                                              2002        2003       2002        2003              2002        2003
                                            ______        _____     _____        _____________    _______     _________
                                                 (thousands)            (thousands)             (thousands)
<S>                                             <C>          <C>        <C>         <C>               <C>         <C>
Opening balance                           GBP      -   GBP 10,000   GBP  1,515   GBP 2,415       GBP  1,515  GBP 12,415
Received during the year                      10,000           -         1,034       1,319           11,034       1,319
Released during the year                           -          (66)        (134)       (525)            (134)       (591)
                                          __________   __________   ___________  __________      ___________ __________
Closing balance                           GBP 10,000   GBP  9,934   GBP  2,415   GBP 3,209       GBP 12,415  GBP 13,143
                                          ==========   ==========   ===========  =========       ==========  ==========
</TABLE>


     Deferred  licence fee comprises  the cash fee paid by BAE SYSTEMS  Avionics
Limited ("BAE") to Filtronic Compound  Semiconductors Limited ("FCSL") under the
terms of a Supply and  Development  Agreement  dated  November  30, 2001 between
Filtronic  plc,  FCSL  (together  "Filtronic")  and BAE.  The whole fee was paid
during the year ended May 31, 2002.  The fee revenue is being  recognised in the
profit and loss account in equal monthly amounts from May 1, 2003 until December
31, 2015.

     The fee has been paid by BAE in  consideration  of Filtronic  entering into
the  agreement  to enable BAE to utilise the Newton  Aycliffe  facility by inter
alia maintaining the availability of the Newton Aycliffe facility for the supply
of gallium arsenide  ("GaAs")  products for defence  applications and performing
the other obligations of Filtronic under the agreement.  The agreement  provides
for its continuance until December 31, 2015 but may be extended at the option of
BAE until December 31, 2025.

     In the event that BAE is unable,  other than for reasons within the control
of BAE,  to  utilise  the Newton  Aycliffe  facility  as  described  above,  the
agreement  provides that  Filtronic will repay the fee. If such an event occurs,
the fee becomes  repayable  pro rata on a declining  linear scale between May 1,
2003 and May 1, 2008. The agreement  makes no provision for the repayment of the
fee beyond that date.

     The agreement  contains a number of obligations  on both parties  including
obligations  upon  Filtronic to accept and perform  purchase  orders from BAE in
accordance with a schedule of agreed  commercial  terms, to supply GaAs products
to BAE, to maintain the  availability  of the Newton  Aycliffe  facility for the
continuance of the agreement,  to develop and qualify certain  processes between
March  2002 and July 2003 and to make such  processes  available  to BAE for the
design and supply of certain GaAs products for defence applications.  All of the
product  supply  obligations  within the  agreement  will be fulfilled on normal
commercial terms.

     As part of the agreement,  Filtronic agreed to supply,  and has supplied to
BAE,  generic  design  data  for the  creation  of  GaAs  products  for  defence
applications using the Newton Aycliffe facility.  Filtronic has granted to BAE a
worldwide, royalty free, irrevocable, sole, non-transferable licence to use this
intellectual property. The intellectual property over which the licence has been
granted remains the property of Filtronic.

     The agreement also contains other obligations on the parties including some
relating to  collaboration  on the development and production of T/R Modules for
application in active array radar, some relating to the manufacture of microwave
modules for BAE's defence  requirements  and some relating to the development of
other new compound semiconductor materials and processes which are considered to
be appropriate for military applications.

                                      F-27
<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)



25.  Notes to the cash flow statements

     (a) The reconciliation of operating profit to net cash flow from operating
         activities is as follows:
<TABLE>
<CAPTION>
                                                                                      Year ended May 31,
                                                                              ________________________________
                                                                                 2001        2002        2003
                                                                             _________     ______       _______
                                                                                          (thousands)
<S>                                                                               <C>         <C>          <C>
Operating (loss)/profit                                                      GBP  (9,031)GBP(13,063)  GBP 6,715
Goodwill amortization                                                              4,884      5,352       2,348
Exceptional goodwill impairment                                                   14,078     16,036           -
Share compensation                                                                 2,293      1,570         146
Depreciation                                                                      16,759     20,433      19,322
Exceptional tangible fixed asset impairment                                            -      7,938           -
(Profit)/loss on disposal of tangible fixed assets                                   (70)       191        (518)
Licence fee income received                                                            -     10,000           -
Licence fee released                                                                   -          -         (66)
Government grants released                                                          (167)      (134)       (525)
Movement in stocks                                                               (10,642)     7,445       8,734
Movement in debtors                                                               (4,307)    12,115       3,876
Movement in creditors                                                             (6,275)    (3,665)     (1,504)
                                                                              __________ ___________  __________
Net cash flow from operating activities                                      GBP   7,522  GBP 64,218  GBP 38,528
                                                                             =========== ===========  ==========

     (b) Reconciliation of net cash flow to movement in net debt

                                                                                      Year ended May 31,
                                                                             ___________________________________
                                                                                 2001        2002        2003
                                                                             ________      _______      ________
                                                                                          (thousands)

(Decrease)/increase in cash                                                  GBP (48,527)GBP 17,869  GBP (2,617)
Cash flow from debt                                                                  567     21,982      22,107
Cash flow from finance leases                                                        147          -           -
                                                                             ___________ __________  __________
Change in net debt from cash flows                                               (47,813)    39,851      19,490
Loans acquired with subsidiaries                                                    (300)         -           -
Non-cash movement                                                                   (842)    (1,367)        293
Currency exchange movement                                                        (5,662)     2,754       9,483
                                                                             ___________ __________  __________
Movement in net debt                                                             (54,617)    41,238      29,266
Opening net debt                                                                 (71,307)  (125,924)    (84,686)
                                                                             ___________ __________  ___________
Closing net debt                                                             GBP(125,924)GBP (84,686)GBP(55,420)
                                                                             =========== =========== ===========
</TABLE>

                                      F-28

<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


25.  Notes to the cash flow statements -(continued)

     (c) Analysis of movement in net debt
<TABLE>
<CAPTION>



                                               At                    Acquired                   Currency          At
                                             June 1,      Cash        with          Non-cash    exchange        May 31,
                                              2000        flow      subsidiary      movement    movement         2001
                                           _________      _____     __________     ________     ________        _______
                                                                        (thousands)
<S>                                           <C>           <C>            <C>          <C>          <C>           <C>
Cash                                      GBP 39,545                                                          GBP 5,589
Overdraft                                          -                                                            (14,202)
                                          __________                                                          __________
Net cash/(overdraft)                          39,545   GBP (48,527)    GBP     -     GBP     -   GBP    369      (8,613)
                                          __________                                                          __________
Loans due within one year                       (240)                                                              (228)
Loans due after one year                    (110,465)                                                          (117,083)
                                          ___________                                                         __________
Total loans                                 (110,705)          567          (842)         (300)      (6,031)   (117,311)

Finance leases                                  (147)          147             -             -            -           -
                                         ___________   ____________     ___________  ___________ ___________   __________
Net debt                                 GBP (71,307)  GBP (47,813)     GBP (842)     GBP (300) GBP  (5,662) GBP(125,924)
                                         ===========   ============     =========     ========= ============ ============
</TABLE>


<TABLE>
<CAPTION>

                                                           At                              Currency       At
                                                         June 1,     Cash      Non-cash    exchange     May 31,
                                                          2001       flow      movement    movement      2002
                                                       _________    _______    _________   ________     ________
                                                                              (thousands)
<S>                                                        <C>         <C>         <C>       <C>         <C>
Cash                                                   GBP 5,589                                         GBP 9,083
Overdraft                                                (14,202)                                                -
                                                       __________                                        _________
Net cash/(overdraft)                                      (8,613)   GBP 17,869      GBP  -   GBP (173)       9,083
                                                       __________                                        _________
Loans due within one year                                   (228)                                                -
Loans due after one year                                (117,083)                                          (93,769)
                                                       __________                                       __________
Total loans                                             (117,311)       21,982      (1,367)     2,927      (93,769)
                                                     ___________   ____________  ________  _________    __________
Net debt                                             GBP(125,924)   GBP 39,851  GBP (1,367)  GBP 2,754 GBP (84,686)
                                                     ============   ===========  ========== =========  ============


                                                           At                              Currency       At
                                                         June 1,     Cash      Non-cash    exchange     May 31,
                                                          2002       flow      movement    movement      2003
                                                       _________    _______    _________   ________     ________
                                                                              (thousands)

Cash                                                  GBP  9,083    GBP (2,617)  GBP   -   GBP   56     GBP 6,522
Loans due after one year                                 (93,769)       22,107       293      9,427       (61,942)
                                                      __________    ___________  ________  ________   ____________
Net debt                                              GBP(84,686)   GBP 19,490   GBP 293   GBP9,483   GBP (55,420)
                                                      ===========   ==========   =======   ========   ============
</TABLE>

                                      F-29

<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


26.  Financial commitments

     Annual commitments under non-cancellable operating leases which expire as
follows:
<TABLE>
<CAPTION>

                                                                                                  May 31,
                                                                                           ______________________
                                                                                             2002         2003
                                                                                           _______       _______
                                                                                                (thousands)
<S>                                                                                        <C>              <C>
Land and buildings
In two to five years                                                                      GBP  453      GBP  877
In over five years                                                                             986           317
                                                                                          _________     _________
                                                                                          GBP 1,439     GBP 1,194
                                                                                          =========     =========

Other
In two to five years                                                                      GBP 2,127     GBP 1,695
                                                                                          =========     =========
</TABLE>

     The aggregate  payments,  for which there are  commitments  under operating
leases at May 31, 2003, fall due as follows:
<TABLE>
<CAPTION>

                                                                                 Land
                                                                                  and
                                                                               buildings     Other       Total
                                                                               _________    _______      ______
                                                                                          (thousands)
<S>                                                                                  <C>        <C>       <C>
Within 1 year                                                                  GBP 1,194  GBP 1,695   GBP 2,889
Between 1 and 2 years                                                                642        723       1,365
Between 2 and 3 years                                                                529        371         900
Between 3 and 4 years                                                                490        155         645
Between 4 and 5 years                                                                378          -         378
After 5 years                                                                        637          -         637
                                                                               _________  _________   _________
                                                                               GBP 3,870  GBP 2,944   GBP 6,814
                                                                               =========  =========   =========
</TABLE>

27.  Capital commitments
<TABLE>
<CAPTION>
                                                                                                  May 31,
                                                                                            ____________________
                                                                                               2002        2003
                                                                                           _________     ______
                                                                                                (thousands)
<S>                                                                                             <C>           <C>
Capital expenditure contracted for but not provided in the financial statements             GBP 2,187     GBP 3,615

</TABLE>

                                      F-30
<PAGE>


                                FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


28.  Pension schemes

     For United Kingdom employees,  the Company operates a funded pension scheme
providing  benefits based on final pensionable pay. The assets of the scheme are
held  in  a  separate  trustee  fund  administered  by  professional  investment
managers. Contributions to the scheme are charged to the profit and loss account
so as to spread the cost of  pensions  over  employees'  working  lives with the
Company. The contributions are determined by a qualified actuary on the basis of
annual  valuations  using the projected  unit method and are met in the ratio of
two  thirds  by the  Company  and one  third by the  employee.  The most  recent
valuation was at July 1, 2002. The assumptions  which have the most  significant
effect on the results of the valuation are those  relating to the rate of return
on  investments  and the rates of  increase  in salaries  and  pensions.  It was
assumed that the  investment  returns  would be 2% per annum in excess of future
salary increases and 4.5% per annum in excess of future pension increases.

     The pension cost for the year was GBP1,793,000 (2002:  GBP1,725,000;  2001:
GBP1,548,000).  The pension cost allowed for a deficit variation to be amortized
over  the  working  lifetimes  of  the  active  members.  The  amortization  was
calculated to be GBP150,352. The most recent actuarial variation showed that the
market value of the scheme's  assets was  GBP12,900,000  and that the  actuarial
value of those  assets  represented  86% of the  benefits  that had  accrued  to
members after allowing for expected future increases in earnings.  In accordance
with the actuary's  recommendations,  contributions to the scheme will remain at
15% of pensionable salaries, two thirds of which is payable by the Company.

     For  employees  in  Finland,  Filtronic  LK  Oy  contributes  to a  defined
contribution  pension plan in accordance with Finnish regulations and practices.
The  pension  cost for the year,  based on  insurance  companies'  charges,  was
GBP1,402,000 (2002: GBP1,796,000; 2001: GBP2,460,000).

     For  employees in the United  States,  contributions  are made to a defined
contribution plan under section 401(k) of the Internal Revenue Code. The pension
cost for the year was GBP396,000 (2002: GBP504,000; 2001: GBP471,000).

     For employees in Australia,  Filtronic Pty Limited contributes to a defined
contribution  superannuation fund operated by an independent  insurance company.
The  pension  cost  for  the  year  was  GBP265,000  (2002:  GBP313,000;   2001:
GBP237,000).

                                      F-31

<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


29.  Financial Reporting Standard 17
     The Company has accounted for pension costs in accordance with Statement
of Standard Accounting Practice No 24. Under Financial Reporting Standard 17
("FRS17"), certain transitional disclosures are required and these are set out
 below.

     The calculations have been based on the findings of the actuarial valuation
carried out with effect from July 1, 2002.  The results of that  valuation  have
been  projected  to May 31, 2003 and then  recalculated  based on the  following
assumptions, which the directors consider to be appropriate.

<TABLE>
<CAPTION>
                                                                                                    May 31,
                                                                                                __________________
                                                                                                 2002        2003
                                                                                                 ______       _____

<S>                                                                                               <C>         <C>
Rate of inflation                                                                                 2.75%       2.40%
Salary increase rate                                                                              4.25%       3.80%
Increases for pensions in payment                                                                 2.50%       2.40%
Revaluation of deferred pensions                                                                  2.75%       2.40%
Liability discount rate                                                                           6.00%       5.10%
</TABLE>

     The  fair  value of the  scheme's  assets,  which  are not  intended  to be
realised in the short term and may be subject to significant  change before they
are  realised,  and the present  value of the  scheme's  liabilities,  which are
derived from cash flow  projections  over long  periods and are thus  inherently
uncertain, are set out below:
<TABLE>
<CAPTION>

                                                                          Long term
                                                                       expected return         Value May 31,
                                                             __________________________     ___________________
                                                               2002        2003              2002        2003
                                                             ______________    _________    _______      _______
                                                                                                (thousands)
<S>                                                            <C>         <C>               <C>          <C>
Equities                                                       7.00%       6.50%         GBP 10,793   GBP 11,205
Bonds                                                          5.00%       4.50%              1,837        2,476
Property                                                       7.00%       6.50%                308            -
Cash                                                           5.00%       4.50%                695          255
                                                                                        ___________   ___________
Market value of pension scheme assets                                                        13,633        13,936
Present value of pension scheme liabilities                                                 (18,500)      (25,486)
                                                                                        ___________   ____________
FRS17 pension scheme deficit                                                                 (4,867)      (11,550)
Related deferred tax asset                                                                    1,460         3,465
                                                                                        ____________  ____________
Net FRS17 pension liability                                                             GBP  (3,407)  GBP  (8,085)
                                                                                        ============  ============
</TABLE>

     The  pension  scheme  assets,  the  majority  of which  are  equities,  are
potentially  subject to significant market movements.  FRS17 disclosures measure
the value of these assets at a single  point in time,  namely May 31, each year.
The pension  scheme's  liabilities  are  measured by  reference  to long-term AA
corporate bond yields that can again move  significantly and according to market
conditions.  FRS17  indicates a deficit in relation to the pension scheme at May
31, 2003. The Minimum Funding Requirement  valuation at July 1, 2002 indicated a
surplus with a funding level of 122%.

     If the group had adopted  FRS17  early,  the  consolidated  profit and loss
account reserve and net assets would have been as follows:

<TABLE>
<CAPTION>
                                                                                                 May 31,
                                                                                         _______________________
                                                                                             2002        2003
                                                                                         __________     ________
                                                                                                (thousands)
<S>                                                                                         <C>           <C>
Profit and loss account reserve excluding FRS17 pension liability                       GBP (43,152)  GBP (39,377)
Net FRS17 pension liability                                                                  (3,407)       (8,085)
                                                                                        ____________  ____________
Profit and loss account reserve including FRS17 pension liability                       GBP (46,559)  GBP (47,462)
                                                                                        ============  ============

Net assets excluding FRS17 pension liability                                            GBP105,196    GBP109,159
Net FRS17 pension liability                                                                 (3,407)       (8,085)
                                                                                        ___________   ___________
Net assets including FRS17 pension liability                                            GBP101,789    GBP101,074
                                                                                        ===========   ===========
</TABLE>
                                      F-32

<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


29.  Financial Reporting Standard 17 - (continued)

     If the group  had  adopted  FRS17  early,  the  amounts  recognised  in the
consolidated profit and loss account would have been as follows:

     The amount that would have been charged to operating profit:
<TABLE>
<CAPTION>

                                                                                                     Year ended
                                                                                                    May 31, 2003
                                                                                                   _______________
                                                                                                     (thousands)

<S>                                                                                                         <C>
Current service cost                                                                                    GBP 2,143

Total operating charge                                                                                  GBP 2,143

The amount that would have been charged as other financial costs:

                                                                                                     Year ended
                                                                                                    May 31, 2003
                                                                                                   ______________
                                                                                                     (thousands)

Expected return on pension scheme assets                                                               GBP  979
Interest on pension scheme liabilities                                                                   (1,188)

Net financial return                                                                                   GBP (209)
</TABLE>


     If the  group  had  adopted  FRS17  early  the  amounts  recognised  in the
consolidated  statement of total  recognized gains and losses would have been as
follows:
<TABLE>
<CAPTION>

                                                                                            Year ended May 31,
                                                                                       ________________________
                                                                                             2003           2003
                                                                                       ___________       __________
                                                                                     % pension scheme
                                                                                      assets/liabilities (thousands)

<S>                                                                                         <C>              <C>
Actual return less expected return on pension scheme assets                                 (21%)        GBP (2,935)
Experience gain on pension scheme liabilities                                                 2%                478
Impact of changes in assumptions relating to the present value of
pension scheme liabilities                                                                   (14%)           (3,672)
                                                                                                         ___________
Actuarial loss                                                                               (24%)       GBP (6,129)
                                                                                                         ===========
</TABLE>

The movement in FRS17 pension scheme deficit during the year:
<TABLE>
<CAPTION>

                                                                                                     Year ended
                                                                                                    May 31, 2003
                                                                                                   ______________
                                                                                                     (thousands)
<S>                                                                                                        <C>
FRS17 pension scheme deficit brought forward                                                        GBP  (4,867)
Current service cost                                                                                     (2,143)
Contributions                                                                                             1,798
Net financial return                                                                                       (209)
Actuarial loss                                                                                           (6,129)

FRS17 pension scheme deficit carried forward                                                        GBP (11,550)

</TABLE>
                                      F-33

<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


30.  Share options

     The Company's policy is to grant options under the Executive Schemes at the
point of recruitment  or promotion.  The Company also operates  savings  related
schemes in the United  Kingdom,  the United States,  Finland and Australia which
are open to all employees who have fulfilled the  eligibility  criteria.  All of
these  schemes are  available to all  qualifying  employees  within the relevant
countries.

Initial Share Option Scheme

     On June 20, 1994  Filtronic  Comtek (UK)  Limited  established  the Initial
Share  Option  Scheme  ("ISOS").  Under the rules of the  ISOS,  certain  of the
directors and key employees were granted  unapproved share options in respect of
up to 342,375 shares in Filtronic Comtek (UK) Limited.  Under the ISOS rules, in
each of the seven option  exercise  periods  between October 1, 1994 and May 31,
2001,  an  employee  could have  exercised  options in respect of that number of
shares  which were equal to one seventh of the total number of shares which were
the  subject of the option held by that  employee  under the ISOS or 350 shares,
whichever  was the  greater.  On October 14, 1994 the  Company  entered  into an
agreement with each option holder whereunder each relevant employee was entitled
to receive 20  ordinary  shares in the Company  for each  Filtronic  Comtek (UK)
Limited share allotted to him under the ISOS.  All remaining  options under this
scheme were exercised in the year ended May 31, 2001.

Executive Share Option Schemes

     The Company's  Executive Share Option Schemes include the Executive Scheme,
1997 Scheme, Unapproved Share Option Scheme and US Executive Scheme. The ability
to  exercise  options  granted  under the  Executive  Share  Option  Schemes  is
conditional  upon  the  Company  achieving  certain  performance   targets.  The
Remuneration Committee may vary any performance target if it considers that such
a target no longer represents a fair measure of performance.

     Executive  Scheme.  Under the Filtronic  plc Executive  Share Option Scheme
(the "Executive Scheme"),  the Remuneration Committee has a discretion to invite
any full time Director or employee who is required to devote  substantially  all
of his time to the  business  of the  Company  or any  member of the  Company to
participate  in the scheme.  Options  granted  under this  scheme are  generally
exercisable within the period of three to ten years after the date of grant and,
except in certain  circumstances,  only if certain performance targets have been
satisfied.  The exercise  price for an option is the higher of the nominal value
of Filtronic  plc's ordinary  shares and the average middle market  quotation of
Filtronic  plc's ordinary  shares as derived from the Daily Official List of the
United  Kingdom  Financial   Services  Authority  for  the  three  dealing  days
immediately prior to the date of grant of the option.

     1997 Scheme.  Under the Filtronic  plc Executive  Share Option Scheme 1997)
(the "1997 Scheme"),  the Remuneration  Committee has a discretion to invite any
full time  Director or employee who is required to devote  substantially  all of
his  time to the  business  of the  Company  or any  member  of the  Company  to
participate  in the scheme.  Options  granted  under this  scheme are  generally
exercisable in five equal annual tranches over a five-year period and, except in
certain circumstances,  only if certain performance targets have been satisfied.
The exercise price for an option is the higher of the nominal value of Filtronic
plc's ordinary shares and the average middle market quotation of Filtronic plc's
ordinary  shares  as  derived  from  the  Official  List of the  United  Kingdom
Financial Services Authority for the three dealing days immediately prior to the
date of grant of the option.

                                      F-34

<PAGE>

                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

30.  Share options - (continued)


     Unapproved  Share  Option  Scheme.  The  Company has also  established  the
Filtronic  plc  Unapproved   Executive  Share  Option  Scheme  (the  "Unapproved
Scheme"), the principal features of which are substantially the same as those of
the Executive Scheme.

     US Executive  Scheme.  The Company has also  established  the Filtronic plc
United States  Executive  Share Option Scheme (the "US Executive  Scheme").  The
rules of the US Executive  Scheme are the same as those of the Executive  Scheme
save where the rules have been  modified to take account of the relevant laws of
the United States.

Savings Related Schemes

     The Company has established  savings-related schemes in the United Kingdom,
the United States, Australia and Finland.

     United Kingdom. Under the Filtronic plc Savings Related Share Option Scheme
(the "UK SAYE  Scheme"),  any  full-time  Director or  employee  who works for a
certain  number of hours  per week and who has  completed  at least  one  year's
service is eligible to, and will be invited to, participate in the scheme.

     Each  employee  who has applied for an option  under this scheme will enter
into a savings contract (the "Contract"). The employee will make monthly savings
under the  Contract.  The  exercise  price  for an  option is the  higher of the
nominal value of Filtronic  plc's ordinary  shares and the average middle market
quotation  of  Filtronic  plc's  ordinary  shares  (discounted  by up to 20%) as
derived from the Daily  Official List of the United Kingdom  Financial  Services
Authority  for the three  dealing  days  immediately  prior to the date on which
invitations to apply for options are issued.  The number of ordinary shares over
which a participant will be granted will be the number of ordinary shares which,
taking into account the exercise  price,  can be purchased with the amount saved
under the  Contract.  Options  granted  under the UK SAYE  Scheme are  generally
exercisable not later than six months after the maturity date of the Contract.

     United  States,  Australia  and  Finland.  The rules of the  schemes in the
United  States,  Australia  and  Finland  are the  same as  those of the UK SAYE
Scheme,  save where the rules have been modified to take account of the relevant
laws of those countries.

     Summarized  information  about  options  outstanding  at May 31, 2003 is as
follows:
<TABLE>
<CAPTION>

                                                                             Options outstanding     Options exercisable
                                                                             ____________________    ___________________
                                                                                  Weighted
                                                                                  average      Weighted             Weighted
                                                        Range of                 remaining     average               average
                                                        exercise     Number      contractual   option   Number       option
                                                         prices    outstanding       life      price    exercisable  price
                                                        ________   ___________   ___________   _______  ___________  ________
                                                         (pence)                     (years)    (pence)              (pence)
<S>                                                         <C>         <C>            <C>        <C>       <C>          <C>
Executive Share Option Schemes                           149 - 1791  6,772,029        5.9         475     4,593,555     456
                                                         ==========  =========        ===         ===     =========     ===

Savings Related Share Option Schemes                     194 -  680   269,155         1.2         580        20,338     419
                                                         ==========   =======         ===         ===        ======     ===

</TABLE>

                                      F-35
<PAGE>



                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

30.  Share options - (continued)

<TABLE>
<CAPTION>

     Movement in options outstanding are as follows:

                                                         Initial Share      Executive Share  Savings Related Share
                                                         Option Scheme      Option Schemes      Option Schemes
                                                       __________________  __________________ ___________________
                                                                 Weighted            Weighted            Weighted
                                                                  average             average             average
                                                       Number of  option   Number of  option   Number of  option
                                                        shares    prices    shares    prices    shares    prices

                                                                  (pence)             (pence)             (pence)
<S>                                                          <C>      <C>        <C>      <C>        <C>       <C>
Options outstanding at June 1, 2000                      961,020     30    7,480,157    504    1,216,717    472
Granted                                                        -             648,580    367            -
Exercised                                               (961,020)    30     (392,685)   381      (39,265)   230
Lapsed or cancelled                                            -            (612,845)   595     (394,651)   556
                                                       _________          __________          ___________
Options outstanding at May 31, 2001                            -           7,123,207    491      782,801    441
Granted                                                        -             788,987    404            -
Exercised                                                      -             (27,623)   215     (172,659)   149
Lapsed or cancelled                                            -            (489,549)   546     (211,533)   474
                                                       _________          __________          ___________
Options outstanding at May 31, 2002                            -           7,395,022    479      398,609    550
Granted                                                        -              33,600    208            -
Exercised                                                      -                   -             (16,250)   120
Lapsed or cancelled                                            -            (656,593)   501     (113,204)   543
                                                       _________          __________          ___________
Options outstanding at May 31, 2003                            -           6,772,029    475      269,155    580
                                                       =========          ==========            ========

Options exercisable at May 31, 2003                            -           4,593,555    456       20,338    419
                                                        =========          =========            ========


                                                       Fair value          Fair value          Fair value
                                                         (pence)             (pence)             (pence)

Fair values of options granted
in the year ended May 31,
2001                                                           -         245      -
2002                                                           -         285      -
2003                                                           -         128      -

</TABLE>


-------------
The fair values of options granted were estimated using the Black-Scholes option
pricing model with the following assumptions:  dividend yield - 2001 1.06%, 2002
1.42%,  2003 1.93%;  expected  volatility - 2001 98%, 2002 110%, 2003 100%; risk
free interest  rate - 2001 5.00%,  2002 5.00%,  2003 5.00%;  and expected life -
four years for the  Executive  Schemes  and five to seven  years for the Savings
Related Schemes.

                                      F-36
<PAGE>



                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


31.  Qualifying Employee Share Trust

     The Company has established a Qualifying  Employee Share Trust ("QUEST") to
acquire  ordinary  shares  of 10p each in the  Company  for  issue to  employees
exercising options under the UK Savings Related Share Option Scheme. The trustee
of the  QUEST is  Filtronic  QUEST  Trustees  Limited,  which is a wholly  owned
subsidiary of the Company. All UK employees,  including executive directors, are
potential beneficiaries under the QUEST.

     During  the  year  the  Company  made  a  contribution   of  GBPnil  (2002:
GBP461,000;  2001:  GBPnil) to the QUEST.  Filtronic QUEST Trustees  Limited has
waived its right to dividends on the 19,628 shares held by the QUEST,  which had
a market value of GBP27,000 at May 31, 2003.

32.  Contingently issuable shares

<TABLE>
<CAPTION>

     The contingently issuable shares outstanding at May 31, 2003 were:

                                                                                           Vesting periods                  Number
                                                                                     __________________________________ __________
<S>                                                                                                <C>                        <C>
Acquisition contingent consideration                                                 August 22, 2000 to August 22, 2004    262,295
Share compensation                                                                   August 22, 2000 to August 22, 2004    128,239
                                                                                                                        __________
                                                                                                                           390,534
                                                                                                                        ==========
</TABLE>

     Vesting  of  the  shares  is  conditional  upon  Filtronic   Sigtek,   Inc.
maintaining the number and quality of its engineers over the vesting periods.

                                      F-37
<PAGE>



                                 FILTRONIC plc

                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


33.  Related party transactions

     2003

     The following related party transactions  occurred during the year and were
all on an arm's length basis.

     Filtronic  plc  and  some  of its  UK  subsidiaries  incurred  professional
charges,  totalling GBP45,864,  with Schofield Sweeney, a firm of solicitors, in
which C E Schofield is a partner.

     Filtronic  Components  Limited subleases  premises to Techceram  Limited, a
company in which  Professor J D Rhodes and his family have a material  interest.
Rents charged amounted to GBP9,652. At May 31, 2003 GBP7,021 was outstanding.

     Filtronic  plc incurred  costs of GBP20,477  for the rental of an executive
box and the provision of refreshments with Bradford City A.F.C.  (1983) Limited,
a company of which Professor J D Rhodes is a director.

     Filtronic  Components  Limited  earned  royalties of GBP7,692  from Photarc
Surveys Limited, a company in which J Samuel has a material interest. At May 31,
2003 GBP3,595 was outstanding.

     2002

     The following related party transactions  occurred during the year and were
all on an arm's length basis.

     Filtronic  plc  and  some  of its  UK  subsidiaries  incurred  professional
charges, totalling GBP15,422, with Schofield Sweeney.

     Filtronic Components Limited subleases premises to Techceram Limited. Rents
charged amounted to GBP16,500. At May 31, 2002 GBP11,665 was outstanding.

     Filtronic Comtek (UK) Limited incurred costs of GBP13,561 for the rental of
an executive  box and the  provision of  refreshments  with Bradford City A.F.C.
(1983) Limited.

     Filtronic  Components  Limited  earned  royalties of GBP11,244 from Photarc
Surveys Limited. At May 31, 2002 GBP3,595 was outstanding.

     2001

     The following related party transactions  occurred during the year and were
all on an arm's length basis.

     Filtronic  plc  and  some  of its  UK  subsidiaries  incurred  professional
charges, totalling GBP26,468, with Schofield Sweeney.

     Filtronic Components Limited subleases premises to Techceram Limited. Rents
charged amounted to GBP16,500.

     Filtronic Comtek (UK) Limited incurred costs of GBP31,037 for the rental of
an executive  box and the  provision of  refreshments  with Bradford City A.F.C.
(1983) Limited.

     Filtronic  Components  Limited  earned  royalties of GBP4,320  from Photarc
Surveys Limited.

                                  F-38
<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


34.  Financial instruments

Foreign currency and exchange rates

     The Company's  policy is not to hedge against  transactions  which occur in
any of the  functional  currencies of any of the Company's  subsidiaries.  These
currencies are sterling, US dollars, euros, Australian dollars and Chinese yuan.
Sales and  purchases  which  occur in other  currencies  are  hedged by  forward
foreign exchange  contracts or similar  instruments  where such transactions are
material.  The  Company  does not  hedge  against  any  balance  sheet  currency
translation risks. However,  where practicable,  all subsidiaries retain surplus
cash funds in US dollars and on short-term deposit.

Interest rate risk and currency profile of financial assets

     The interest rate risk and currency profile of financial assets,  excluding
short-term debtors, was as follows:

<TABLE>
<CAPTION>

                                                      Floating rate
                                                     financial assets
                                                 ________________________
                                                         May 31,
                                                 ________________________
                                                     2002        2003
                                                   _______     _______
                                                       (thousands)
<S>                                                    <C>            <C>
Sterling                                         GBP 5,396     GBP 4,149
US dollar                                            1,395         1,105
Euro                                                 1,347           963
Australian dollar                                      358           123
Chinese yuan                                           565           170
Japanese yen                                            22            12
                                                   _______     _________
                                                GBP  9,083    GBP  6,522
                                                ==========    ==========
</TABLE>


     Floating rate financial assets comprise overnight money market deposits and
bank deposit accounts.

Interest rate risk profile of financial liabilities

     The  interest  rate  risk  profile  of  financial  liabilities,   excluding
short-term creditors, was as follows:
<TABLE>
<CAPTION>

                                                               Fixed rate               Financial liabilities
                                                         ________________________   _________________________________
                                                           Average     Average       Fixed    Interest
                                                       interest rate fixed period    rate       free            Total
                                                       _____________ ____________   ______    ________      __________
                                                             (%)        (years)              (thousands)
<S>                                                            <C>            <C>     <C>          <C>            <C>
May 31, 2003
Sterling                                                         -           - GBP     -      GBP 9,934     GBP 9,934
US dollar repayable December 1, 2005                          10.0         2.5    63,216              -        63,216
                                                                               _________      _________     _________
                                                                               GBP63,216      GBP 9,934    GBP 73,150
                                                                               =========      =========    ==========

May 31, 2002
Sterling                                                         -           - GBP     -     GBP 10,000    GBP 10,000
US dollar repayable December 1, 2005                          10.0         3.5    96,193              -        96,193
                                                                               _________     __________    __________
                                                                               GBP96,193     GBP 10,000    GBP106,193
                                                                               =========     ==========    ==========
</TABLE>


                                      F-39

<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

Borrowing facilities

     At May 31, 2003 the Company had a bank borrowing  facility of GBP31,000,000
(2002:  GBP31,000,000),  all of which was undrawn.  This facility was renewed in
July 2003 and is due to review again in June 2004. This facility is secured by a
fixed  charge over the  group's  freehold  property in the United  Kingdom and a
floating charge over the group's other United Kingdom assets.

<TABLE>
<CAPTION>

Currency exposures
                                                                                               Net US dollar
                                                                                                  monetary
                                                                                             assets/(liabilities)
                                                                                         __________________________
                                                                                                  May 31,
                                                                                         __________________________
                                                                                             2002        2003
                                                                                         ___________  _____________
                                                                                                (thousands)
<S>                                                                                           <C>                <C>
Functional currency of operations:
Sterling                                                                               GBP (45,267)  GBP (30,390)
Australian dollar                                                                            4,260           308
                                                                                       ___________   ___________
                                                                                       GBP (41,007)  GBP (30,082)
                                                                                       ===========   ===========

</TABLE>

     Currency   exchange   movements   arising   on  the   $103,573,000   (2002:
$140,750,000) Senior Notes that are offset by currency exchange movements on the
net assets,  including goodwill, of overseas subsidiaries and intra-group loans,
that they finance,  are taken directly to reserves.  Currency exchange movements
on the Senior  Notes which are not offset are taken  through the profit and loss
account.

<TABLE>
<CAPTION>

     The currency exchange movement on the Senior Notes comprised:
                                                                                              Year ended May 31,
                                                                                            _______________________
                                                                                             2002           2003
                                                                                            _________     _________
                                                                                                  (thousands)
<S>                                                                                           <C>         <C>
Currency exchange gain taken directly to reserves                                           GBP 2,496     GBP 5,329
Currency exchange gain taken through the profit and loss account                                  389         4,098
                                                                                            _________     _________
                                                                                            GBP 2,885     GBP 9,427
                                                                                            =========     =========

</TABLE>

                                      F-40

<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

34.  Financial instruments - (continued)

Fair values of financial assets and liabilities

<TABLE>
<CAPTION>

     The carrying amounts and fair values of the Company's financial instruments
are as follows:

                                                                                    May 31,
                                                                  ___________________________________________
                                                                           2002                    2003
                                                                  ______________________  ___________________
                                                                   Carrying      Fair      Carrying      Fair
                                                                    amount       value      amount       value
                                                                  _________  _________    _________  _________
                                                                                  (thousands)
<S>                                                                      <C>        <C>          <C>       <C>
Assets

Cash and short-term deposits                                      GBP 9,083  GBP 9,083    GBP 6,522  GBP 6,522
                                                                  =========  =========    =========  =========


Liabilities

Senior Notes - gross                                             GBP 96,193 GBP 96,073   GBP 63,216 GBP 63,348
Deferred debt issue costs                                            (2,424)    (2,424)      (1,274)    (1,274)


Senior Notes - net                                               GBP 93,769 GBP 93,649   GBP 61,942 GBP 62,074
                                                                 ========== ==========   ========== ==========

</TABLE>

____________

The following methods and assumptions were used to establish the fair values set
forth above:

Cash and short-term deposits:  the carrying amount reported in the balance sheet
for cash equates to its fair value.

Senior Notes: the fair value is the market value of the Senior Notes.

                                      F-41
<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


35. Acquisition of subsidiary

Filtronic Sigtek, Inc.

     On August 29, 2000 the Company  completed the  acquisition of Sigtek,  Inc.
for  consideration in shares.  Its results and cash flows have been consolidated
from that date. The name of the subsidiary has been changed to Filtronic Sigtek,
Inc.  The  goodwill  arising on the  acquisition  was being  amortized  over its
estimated  useful life of five years.  The unamortized  goodwill of GBP5,658,000
was written off in the year ended May 31, 2002, following an impairment review.

<TABLE>
<CAPTION>

Analysis of acquisition

                                                                                                      (thousands)

<S>                                                                                                          <C>
Initial consideration - shares issued (267,427 ordinary shares of 10p at 1177p)                       GBP 3,148
Contingent consideration - shares to be issued (452,248 ordinary shares of 10p at 1177p)                  5,323
Acquisition costs                                                                                           118
                                                                                                      _________
                                                                                                      GBP 8,589
                                                                                                      =========

Net assets at date of acquisition

                                                                                                      Book Value
                                                                                                          and
                                                                                                      Fair Value
                                                                                                     ___________
                                                                                                     (thousands)
Tangible fixed assets                                                                                  GBP  128
Stocks                                                                                                       98
Debtors                                                                                                     255
Creditors                                                                                                  (154)
Cash                                                                                                         14
Loans                                                                                                      (300)
                                                                                                     __________
Net assets                                                                                                   41
Goodwill arising on acquisition                                                                           8,548
                                                                                                     __________
                                                                                                      GBP 8,589
                                                                                                     ==========
</TABLE>


     Filtronic Sigtek, Inc. is located in the United States of America and forms
part of the broadband access business  segment.  Its results for the periods pre
and post-acquisition are set out below.
<TABLE>
<CAPTION>

                                                                    Pre-acquisition   Pre-acquisition   Post-acquisition
                                                                       year ended       period ended      period ended
                                                                      December 31,       August 29,          May 31,
                                                                          1999              2000               2001
                                                                    ______________    _______________   ________________
                                                                                        (thousands)
<S>                                                                             <C>               <C>                 <C>
Sales                                                               GBP      2,979    GBP       1,642   GBP        2,484
                                                                    ______________    _______________   ________________
Operating profit/(loss) before goodwill amortisation and
share compensation                                                               36              (139)              (500)
Goodwill amortisation                                                             -                 -             (1,345)
Share compensation                                                                -                 -             (2,293)
                                                                    _______________   _______________   ________________
Operating profit/(loss)                                                          36              (139)            (4,138)
Net interest payable                                                            (26)              (17)               (62)
                                                                    _______________   _______________   ________________

Profit/(loss) for the financial period                              GBP          10   GBP        (156)  GBP       (4,200)
                                                                    ===============   ===============   ================

</TABLE>

     There were no recognized gains or losses other than the  profit/(loss)  for
the financial period.

                                      F-42


<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

35.  Acquisition of subsidiary - (continued)


Unaudited pro forma information

     The unaudited pro forma effect of this acquisition on the results for 2001,
assuming  it was  consummated  at the  beginning  of the  year in  which  it was
acquired.

<TABLE>
<CAPTION>

                                                       Year ended May 31, 2001
                                                       ________________________
                                                         (thousands, except
                                                         per share amounts)
<S>                                                                     <C>
Sales                                                          GBP298,262
Loss for the year                                                 (24,191)
Loss per share     - basic                                       (33.16)p
                   - diluted                                     (33.16)p

</TABLE>


36.  Subsequent events

     In August 2003 the Company purchased $13,540,000 of its 10% Senior Notes in
the market.  These Senior Notes were  cancelled  leaving  $90,033,000  of Senior
Notes outstanding.

     On October 30,  2003 the  Company  gave notice to holders of its 10% Senior
Notes that it would redeem  $16,033,000  of the Senior Notes on December 1, 2003
at a  redemption  price  of  $1,025  per  $1,000  principal  amount.  After  the
redemption there will be $74,000,000 of Senior Notes outstanding.

37.  Companies Act 1985

     These financial statements do not comprise the Company's statutory accounts
within the meaning of section 240 of the  Companies  Act 1985 of Great  Britain.
Statutory accounts for the years ended May 31, 2001, 2002 and 2003, on which the
auditors'  reports were  unqualified,  have been  delivered to the  Registrar of
Companies for England and Wales.

                                      F-43
<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

38.  Differences between United Kingdom and United States generally accepted
     accounting principles

     The Company's  consolidated financial statements are prepared in accordance
with accounting  principles generally accepted in the United Kingdom ("UK GAAP")
which differ from United States generally  accepted  accounting  principles ("US
GAAP").  The  significant  differences  applicable to the Company are summarized
below.

Foreign currency translation

     In the preparation of the Company's consolidated financial statements under
UK GAAP,  financial  statements of non-UK  companies are  translated at year-end
rates of  exchange.  Under US GAAP,  the profit and loss  accounts and cash flow
statements would be translated at average rates for the year.

Pension costs

     The expected  costs of  providing  pensions  benefits  under the UK pension
scheme,  which is a defined  benefits  plan,  are charged to the profit and loss
account so as to spread the costs over the  service  lives of the  participating
employees.  Contributions to the Company's other schemes,  which are all defined
contribution plans, are charged to the profit and loss account as incurred. With
respect to defined  benefit  plans,  US GAAP require that the projected  benefit
obligation be matched  against the fair value of the relevant  plan's assets and
be adjusted to reflect any unrecognized obligations or assets in determining the
pension  cost or credit for the year.  For the  purpose  of the  reconciliations
below,  the Company adopted the provisions of Statement of Financial  Accounting
Standards 87, "Employers'  Accounting for Pensions'("SFAS  87"), with respect to
the UK pension plan from June 1, 1996. The Company has not  implemented  SFAS 87
as of its effective date for non-US plans (fiscal years beginning after December
15, 1988) due to the unavailability of actuarial data. Accordingly, a portion of
the transition asset at June 1, 1996 was allocated to shareholders' equity based
on a ratio of 7:15, being the number of years elapsed between the effective date
of SFAS 87 (the Company's  fiscal year beginning June 1, 1989) and June 1, 1996,
over the 15-year period being used to amortize the transition asset.

Revaluation of tangible fixed assets

     Under UK GAAP, one of the Company's freehold buildings was revalued in 1994
and the resulting  valuation  was  incorporated  into the financial  statements.
Depreciation  has been  charged  on the  revalued  amount.  Under US GAAP,  such
revaluation  is not  permitted  and  depreciation  is charged on the  property's
historical cost.

Goodwill

     Under UK GAAP,  goodwill arising on  consolidation  before June 1, 1998 was
set off directly against  reserves and goodwill  arising on  consolidation  from
June 1, 1998 is capitalized  and amortized  over its estimated  useful life to a
maximum  of 20  years.  Under  US  GAAP  prior  to June 1,  2002,  goodwill  (as
determined  under US GAAP) was  capitalized  and  amortized  over its  estimated
useful  life,  a  period  not  exceeding  40  years.  For  the  purposes  of the
reconciliations  below,  a period  of 20 years  has been  used for the  goodwill
arising  before June 1, 1998.  Following an  impairment  review,  the  remaining
goodwill  arising  on  consolidation  before  June 1,  1998 was  impaired.  This
impairment was expensed in the year ended May 31, 2001.  Under US GAAP from June
1, 2002 goodwill is no longer  amortized,  but is subject to impairment  reviews
and write downs when the book value exceeds its fair value.

Impairment of fixed assets

     Under UK GAAP,  impairment  of fixed  assets is accounted as an addition to
the  accumulated  depreciation.  Under US GAAP,  impairment  of fixed  assets is
accounted as a deduction from cost.

                                      F-44

<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

Stock-based compensation

     Under UK GAAP, no compensation  expense arises under the Company's  various
share option plans.  For the purposes of the  reconciliations  below,  the Group
used the intrinsic value basis in determining compensation expense under US GAAP
for periods  prior to June 1, 1999.  On this basis,  the Savings  Related  Share
Option  Schemes and the Initial  Share Option  Scheme were not  considered to be
compensatory and thus no compensation  expense arose. The Executive Share Option
Plans are variable plans and compensation expense for these plans was determined
by  reference  to the market  price of the  Company's  shares at each period end
compared with the option price and charged to income over the vesting period. At
May 31, 2002, no deferred compensation expense remained to be expensed under the
intrinsic value method.

     From June 1, 1999,  the  Company  elected  to use the fair value  method in
Statement of Financial  Accounting  Standards  123 in  determining  compensation
expense under US GAAP. Under this method,  the fair value of all options granted
by the Company  from that date is  determined  at the date of grant and expensed
over the vesting  period.  For options  issued prior to that date,  compensation
expense  continued  to be  accounted  for using the  intrinsic  value  method as
described above.

     Deferred  compensation expense remaining to be expensed at May 31, 2003 was
GBP2,554,000.

Financing costs

     Under US GAAP, the net financing  currency  exchange gain would be included
in other operating  costs.  Under UK GAAP, the net financing  currency  exchange
gain is included in finance costs.

Deferred debt issue costs

     Under US GAAP, deferred debt issue costs would be included in assets. Under
UK GAAP, deferred debt issue costs are deducted from the loan liability.

Dividends

     Under UK GAAP,  dividends  are provided for in the year in respect of which
they are proposed or declared. Under US GAAP, dividends are only provided in the
period in which they are declared.

                                      F-45

<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

     The following is a summary of the significant adjustments to profit for the
year and  shareholders'  funds  which  would be  required  if US GAAP were to be
applied instead of UK GAAP:

<TABLE>
<CAPTION>

Income

                                                                                      Year ended May 31,
                                                                               ______________________________________
                                                                                     2001        2002        2003
                                                                               ___________  ___________    __________
                                                                                              (thousands)
<S>                                                                                   <C>          <C>             <C>
(Loss)/profit for the financial year as reported in the consolidated
   profit and loss account under UK GAAP                                       GBP (22,791) GBP (29,044)   GBP  1,084

Adjustments:
   Foreign currency translation                                                        415         (778)          (28)
   Depreciation on revalued property                                                     2            2             2
   Pension costs                                                                    (1,186)      (1,418)         (540)
   Stock compensation                                                               21,641       (1,795)         (494)
   Goodwill amortization                                                              (538)           -         2,348
   Goodwill impairment                                                              (8,962)           -             -
                                                                               ___________  ___________   ___________
Net (loss)/income as adjusted to accord with US GAAP                           GBP (11,419) GBP (33,033)  GBP   2,372
                                                                               ===========  ===========   ===========

</TABLE>

     The consolidated statement of income under US GAAP is as follows:

<TABLE>
<CAPTION>

                                                                                         Year ended May 31,
                                                                              _____________________________________
                                                                                 2001        2002          2003
                                                                              __________   __________    _________
                                                                              (thousands, except per share amounts)
<S>                                                                                  <C>        <C>             <C>
Net sales                                                                     GBP296,309   GBP279,788    GBP238,326

Costs and expenses
   Cost of sales                                                                 215,131      200,742       168,994
   Engineering and development costs                                              31,979       31,906        28,323
   Selling, general and administrative expenses                                   46,463       64,130        28,953
   Interest expense, net                                                          12,531       12,638         7,114
                                                                              __________   __________    __________
(Loss)/profit before income taxes                                                 (9,795)     (29,628)        4,942
Income taxes                                                                      (1,624)      (3,405)       (2,570)
                                                                              __________   __________    __________
Net (loss)/income                                                             GBP(11,419) GBP (33,033)  GBP   2,372
                                                                              ==========  ===========   ===========

Per ordinary share:

   Basic                                                                        (15.65)p     (44.71)p         3.19p
   Diluted                                                                      (15.65)p     (44.71)p         3.18p

</TABLE>

                                      F-46

<PAGE>


                                  FILTRONIC plc

                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

<TABLE>
<CAPTION>

     A reconciliation  of the numerators and denominators of the basic and fully
diluted US GAAP earnings per share calculations is as follows:

                                                                                      Year ended May 31,
                                                                            ___________________________________
                                                                                 2001        2002        2003
                                                                            ___________ ___________ ___________
                                                                                          (thousands)
<S>                                                                               <C>          <C>         <C>
Numerator

   Basic and diluted calculation - net (loss)/income as adjusted to
     accord with US GAAP                                                    GBP  (11,419)GBP (33,033)GBP   2,372
                                                                            ============ =========== ===========
Denominator

   Basic - weighted average number of shares outstanding                          72,963      73,882      74,245
   Dilutive effect of share options                                                    -           -           -
   Dilutive effect of contingently issuable shares                                     -           -         460
                                                                            ____________ ___________ ___________
   Diluted - weighted average number of shares outstanding                        72,963      73,882      74,705
                                                                            ============ =========== ===========

</TABLE>

<TABLE>
<CAPTION>

Comprehensive income

     The  consolidated  statement  of  comprehensive  income under US GAAP is as
follows:

                                                                                      Year ended May 31,
                                                                             _______________________________________
                                                                                 2001         2002            2003
                                                                             ___________  ____________  ___________
                                                                                           (thousands)
<S>                                                                               <C>              <C>           <C>
Net (loss)/income as adjusted to accord with US GAAP                         GBP (11,419) GBP (33,033)  GBP   2,372
Other comprehensive income
   Pensions additional minimum liability                                               -            -        (2,556)
   Translation adjustment
     Arising on consolidation                                                      2,632        2,200          (562)
     Currency exchange movement on loans                                          (5,932)       2,496         5,329
                                                                             ____________ ____________  ____________
Comprehensive income                                                         GBP (14,719) GBP (28,337)  GBP   4,583
                                                                             ============ ============  ============

     Movements in other comprehensive income amounts are as follows:

                                                                                      Year ended May 31,
                                                                             _______________________________________
                                                                                 2001           2002           2003
                                                                             ____________ ____________  ____________
                                                                                           (thousands)
Cumulative translation adjustment, net of taxation
   At June 1                                                                 GBP (7,668) GBP (10,968)  GBP  (6,272)
   Arising in year                                                               (3,300)       4,696         4,767
                                                                             ___________ ____________  ____________
   At May 31                                                                 GBP(10,968) GBP  (6,272)  GBP  (1,505)
                                                                             =========== ============  ============

</TABLE>

                                      F-47

<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

<TABLE>
<CAPTION>

Shareholders' funds

                                                                                                May 31,
                                                                                         _______________________
                                                                                            2002        2003
                                                                                         __________  ___________
                                                                                              (thousands)
<S>                                                                                          <C>          <C>
Equity shareholders' funds as reported in the consolidated balance sheet under

   UK GAAP                                                                               GBP105,196  GBP109,159
                                                                                         __________  __________
Adjustments:

   Intangible fixed assets - goodwill classification - cost                                 (38,148)    (45,259)

                                                     - amortization                          38,148      45,259

                           - goodwill amortization                                                -       2,348

   Tangible fixed assets   - revalued property - cost                                          (106)       (106)
                                               - depreciation                                    13          15
                           - impairment - cost                                               (7,938)     (7,938)
                                        - depreciation                                        7,938       7,938

   Non-current assets - deferred debt issue costs                                             1,661         764
   Current assets - deferred debt issue costs                                                   763         510
   Current liabilities - accrued pension costs                                               (3,298)     (6,394)
                       - proposed dividend                                                    1,333       1,337
   Long term liabilities - deferred debt issue costs                                         (2,424)     (1,274)
                                                                                         __________  __________
Shareholders' equity as adjusted to accord with US GAAP                                  GBP103,138  GBP106,359
                                                                                         ==========  ==========

</TABLE>

Consolidated cash flow statement

     The  consolidated  cash  flow  statement  prepared  under UK GAAP  presents
substantially  the  same  information  as that  required  under US GAAP but they
differ with regard to the classification of items within them and as regards the
definition  of cash under UK GAAP and cash and cash  equivalents  under US GAAP.
Under  US GAAP,  cash and cash  equivalents  include  short-term  highly  liquid
investments  but do not include bank  overdrafts.  Under UK GAAP, cash flows are
presented  separately  for  operating  activities,  returns on  investments  and
servicing of finance,  taxation,  capital expenditure and financial  investment,
acquisitions, equity dividends, management of liquid resources and financing. US
GAAP  requires  only three  categories  of cash flow  activity  to be  reported,
operating,  investing  and  financing.  Cash flows from  taxation and returns on
investments  and  servicing  of finance  shown  under UK GAAP would be  included
within  operating  activities  under US GAAP. The payment of dividends  would be
included  within  financing  activities  under  US  GAAP.  Capital  expenditure,
financial  investment and acquisitions are included within investing  activities
under US GAAP.

<TABLE>
<CAPTION>

     The categories of cash flows under US GAAP can be summarized as follows:
                                                                                      Year ended May 31,
                                                                              _________________________________
                                                                                   2001      2002         2003
                                                                              __________  _________  __________
                                                                                          (thousands)
<S>                                                                                  <C>       <C>          <C>
Cash (outflow)/inflow from operating activities                               GBP (7,258) GBP50,602  GBP 26,993
Cash outflow on investing activities                                             (40,435)    (9,023)     (5,501)
Cash inflow/(outflow) from financing activities                                   13,368    (37,912)    (24,109)
                                                                              __________  _________  __________
(Decrease)/increase in cash and cash equivalents                                 (34,325)     3,667      (2,617)
Effect of foreign exchange rate changes                                              369       (173)         56
Cash and cash equivalents
     At June 1                                                                    39,545      5,589       9,083
                                                                              __________  _________  __________
     At May 31                                                                 GBP 5,589  GBP 9,083  GBP  6,522
                                                                              ==========  =========  ==========

</TABLE>

                                      F-48
<PAGE>



                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

Additional information required by US GAAP in respect of pension benefits

<TABLE>
<CAPTION>

     The cost of the Group's defined benefit pension plan computed in accordance
with US GAAP is summarized as follows:

                                                                                       Year ended May 31,
                                                                               ________________________________
                                                                                    2001      2002       2003
                                                                               _________  _________   _________
                                                                                         (thousands)
<S>                                                                                  <C>        <C>        <C>
Service cost                                                                   GBP 2,526  GBP 2,939   GBP 2,143
Interest cost                                                                        763        981       1,110
Expected return on plan assets                                                      (739)      (927)       (954)
Recognized actuarial loss                                                            134        100           -
Amortization of transitional liability                                                50         50          50
                                                                               _________  _________   _________
Net periodic pension cost                                                      GBP 2,734  GBP 3,143   GBP 2,349
                                                                               =========  =========   =========

     The major assumptions used in computing the net periodic benefit cost are:


                                                                                       Year ended May 31,
                                                                               ________________________________
                                                                                    2001      2002       2003
                                                                               _________  _________   _________
                                                                                       %         %          %

Assumed discount rate                                                               5.25      6.00       5.10
Rate of compensation increase                                                       4.25      4.25       3.80
Expected long-term rate of return on plan assets                                    7.25      7.00       6.50

</TABLE>

<TABLE>
<CAPTION>

The funding of the Company's defined benefit pension scheme is as follows:

                                                                                                  May 31,
                                                                                        _______________________
                                                                                             2002        2003
                                                                                        ___________  __________
                                                                                               (thousands)
<S>                                                                                           <C>         <C>
Accumulated benefit obligation - vested                                                 GBP (14,030) GBP(19,328)
                               - non-vested                                                    (728)     (1,002)
                                                                                        ___________  __________
                                                                                        GBP (14,758) GBP(20,330)
                                                                                        ===========  ==========

Fair value of plan assets                                                                GBP 13,633  GBP 13,936
Projected benefit obligation                                                                (18,500)    (25,486)
                                                                                         __________  __________
Projected benefit obligation in excess of plan assets                                        (4,867)    (11,550)
Unrecognized transitional obligation, net of amortization                                       538         488
Unrecognized net loss due to past experience different from assumptions                       1,042       7,224
                                                                                         __________  __________
Accrued pension cost                                                                    GBP  (3,287) GBP (3,838)
                                                                                        ===========  ==========

Additional minimum liability                                                                GBP  -   GBP  2,556

</TABLE>

                                      F-49
<PAGE>



                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

<TABLE>
<CAPTION>
                                                                                            Year ended May 31,
                                                                                         ______________________
                                                                                             2002        2003
                                                                                         __________  __________
                                                                                               (thousands)
<S>                                                                                           <C>          <C>
Reconciliation of change in benefit obligation:
   Projected benefit obligation at June 1                                                GBP 18,677  GBP 18,500
   Service cost                                                                               2,939       2,143
   Interest cost                                                                                981       1,110
   Plan participant contributions                                                               890         899
   Actuarial (loss)/gain                                                                     (4,629)      3,272
   Benefits paid                                                                               (358)       (438)
                                                                                         __________  __________
   Projected benefit obligation at May 31)                                               GBP 18,500  GBP 25,486
                                                                                         ==========  ==========

Reconciliation of change in plan assets:
   Fair value of plan assets at June 1                                                   GBP 12,793  GBP 13,633
   Actual return on plan assets                                                              (1,472)     (1,956)
   Company contributions                                                                      1,780       1,798
   Plan participant contributions                                                               890         899
   Benefits paid                                                                               (358)       (438)
                                                                                         __________  __________
   Fair value of plan assets at May 31                                                   GBP 13,633  GBP 13,936
                                                                                         ==========  ==========


     The assets of the Company's UK defined benefit pension plan mostly comprise
units in managed equity funds.

Additional information required by US GAAP in respect of deferred taxation

     The analysis of the US GAAP deferred taxation liability is as follows:

                                                                                                  May 31,
                                                                                         ______________________
                                                                                             2002        2003
                                                                                         __________   _________
                                                                                               (thousands)
Deferred taxation assets

   Depreciation in advance of capital allowances                                          GBP 2,973   GBP 5,482
   Amortization in advance of tax allowances                                                  8,592       7,458
   Other                                                                                      4,344       6,862
   Losses                                                                                    16,289      18,003
   Less: valuation allowance                                                                (32,198)    (37,805)
                                                                                          _________   _________
                                                                                                  -           -
                                                                                          =========   =========

Deferred taxation liabilities

   Capital allowances in advance of depreciation                                               (408)       (750)
                                                                                          _________   _________
Net deferred tax liability                                                                GBP  (408)  GBP  (750)
                                                                                          =========   =========

     The tax losses  relate  primarily  to the United  States and will expire 20
years after they were  incurred.  It is more  likely than not that these  losses
will not be realized.

                                                                                            Year ended May 31,
                                                                                         ______________________
                                                                                             2002        2003
                                                                                         __________   _________
                                                                                               (thousands)

   Increase in valuation allowance                                                       GBP 11,824   GBP 5,607

</TABLE>

                                      F-50

<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

<TABLE>
<CAPTION>

Additional information required by US GAAP in respect of taxation losses carried
forward

                                                                      Year ended May 31, 2003
                                                                      _______________________
                                                                            (thousands)
<S>                                                       <C>               <C>        <C>
Taxation losses carried forward expiring in year ended May 31
                                                        2010                 GBP      37
                                                        2018                       5,552
                                                        2019                      34,368
                                                        2020                       7,186
                                                        2021                       8,606
                                                        2022                       2,500
Taxation losses carried forward that do not expire                                11,428
                                                                             ___________
                                                                             GBP  69,677
                                                                             ===========

</TABLE>

Additional pro forma information required by US GAAP in respect of stock-based
compensation

     As described  above,  for US GAAP purposes,  the Company used the intrinsic
value method to measure  compensation under its share option plans prior to June
1, 1999.  From that date it is using the fair value  method.  The US GAAP charge
for stock  compensation  for the years ended May 31, 2001, and May 31, 2002 is a
combination of the expense  arising under APB 25 for options granted before June
1, 1999 under the Group's  compensatory plans and the relevant proportion of the
fair value of all options granted after that date. As such, it is not indicative
of the charge  that would have  arisen had the fair value  method been used with
respect to all outstanding  options. Had the fair value method been used for all
options,  net loss and the related per ordinary share amounts adjusted to accord
with US GAAP would have been as follows:

<TABLE>
<CAPTION>

                                                                                            Year ended May 31,
                                                                                        _______________________
                                                                                             2001        2002
                                                                                        ___________  __________
                                                                                            (thousands except
                                                                                           per share amounts)
<S>                                                                                              <C>          <C>
Net loss as adjusted to accord with US GAAP                                             GBP (11,419) GBP(33,033)
Stock compensation included in net loss                                                     (21,641)      1,795
Pro forma stock compensation                                                                 (1,346)     (2,420)
                                                                                        ___________  __________
Pro forma net loss as adjusted to accord with US GAAP                                   GBP (34,406) GBP(33,658)
                                                                                        ===========  ==========
Per ordinary share:

Basic                                                                                      (15.65)p    (44.71)p
Fully diluted                                                                              (15.65)p    (44.71)p
Pro forma basic                                                                            (47.16)p    (45.56)p
Pro forma fully diluted                                                                    (47.16)p    (45.56)p

</TABLE>

                                      F-51


<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Differences between United Kingdom and United States generally accepted
     accounting principles - (continued)

Additional pro forma information required by US GAAP in respect of
non-amortization of goodwill

     As described above, for US GAAP purposes,  the Company  amortized  goodwill
for the years ended May 31, 2001 and May 31, 2002, but did not amortize goodwill
for the year ended May 31, 2003 in accordance with SFAS No. 142. If goodwill had
not been  amortized  for the  years  ended  May 31,  2001  and May 31,  2002 the
impairment  would have been  increased and the net loss and related per ordinary
share amounts adjusted to accord with US GAAP would have been as follows:

<TABLE>
<CAPTION>
                                                                                      Year ended May 31,
                                                                             __________________________________
                                                                                    2001      2002       2003
                                                                             ___________ __________   _________
                                                                                      (thousands except
                                                                                     per share amounts)
<S>                                                                                    <C>       <C>         <C>
Net (loss)/profit as adjusted to accord with US GAAP                         GBP (11,419)GBP(33,033)  GBP 2,372
Goodwill amortization adjustment                                                   5,422      5,352           -
Goodwill impairment adjustment                                                    (2,055)    (3,213)          -
                                                                             ___________ __________   _________
Pro forma net (loss)/profit as adjusted to accord with US GAAP               GBP  (8,052)GBP(30,894)  GBP 2,372
                                                                             =========== ==========   =========
Per ordinary share:

Basic                                                                           (15.65)p   (44.71)p      3.19p
Fully diluted                                                                   (15.65)p   (44.71)p      3.18p
Pro forma basic                                                                 (11.04)p   (41.82)p      3.19p
Pro forma fully diluted                                                         (11.04)p   (41.82)p      3.18p

</TABLE>

Concentrations of credit risk

     The Company's major  businesses are concentrated on a small number of large
original  equipment   manufacturers  as  customers.   At  May  31,  2003,  Nokia
Corporation represented 52% of trade debtors. No other customer represented more
than 10% of trade debtors.

New US accounting standards

     The Financial  Accounting  Standards  Board ("FASB") has issued a number of
new  Statements of Financial  Accounting  Standards  ("SFAS") which have not yet
been adopted by the Company.

     SFAS No. 143 "Accounting for Asset  Retirement  Obligations"  addresses the
accounting  and reporting  obligations  associated  with the  retirement of long
lived assets and the  associated  asset  retirement  costs.  It is effective for
accounting  periods  beginning  on or after June 15,  2002.  The adoption of the
standard is  expected to result in the  recognition  of a  liability;  it is not
possible  to  produce  an  accurate  estimate  at this  time,  however it is not
expected to be significant.

     In April 2003,  the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative  Instruments and Hedging Activities".  SFAS No. 149 will be effective
for  contracts  entered  into or  modified  after June 30,  2003 and for hedging
relationships  designated after June 30, 2003. The Statement  requires contracts
with  comparable  characteristics  to be accounted  for  similarly and clarifies
under what  circumstances  a contract with an initial net  investment  meets the
characteristic  of a derivative as discussed in SFAS No. 133. It also  clarifies
when  special  reporting  in the  statement  of  cash  flows  is  required  if a
derivative  contains a  financing  component.  The effect of SFAS No. 149 on the
Company's  reported  financial position and results under USGAAP is not expected
to be significant.

     In November  2002,  the Emerging  Issues Task Force  ("EITF"),  of the FASB
reached a consensus  on EITF 00-21  "Accounting  for Revenue  Arrangements  with
Multiple Element  Deliverables".  EITF 00-21 provides guidance on how to account
for arrangements that may involve multiple  revenue-generating  activities,  for
example,  the delivery of products or performance of services,  and/or rights to
use  other  assets.  The  requirements  of  EITF  00-21  will be  applicable  to
agreements entered into for periods beginning after June 15, 2003. The effect of
EITF 00-21 on the  Company's  reported  financial  position and results under US
GAAP is not expected to be significant.

                                      F-52

<PAGE>


                                  FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


39.  Consolidating guarantor and non-guarantor information

     In December  1998  Filtronic plc issued  $170,000,000  10% Senior Notes due
2005. At May 31, 2003 $103,573,000 of the Senior Notes were  outstanding.  These
Notes are guaranteed jointly and severally on a full and unconditional  basis by
all  the   subsidiaries  of  Filtronic  plc,   except  for  Filtronic   (Suzhou)
Telecommunication Products Co Limited, a subsidiary incorporated in China.

     The following condensed  consolidating  financial  information presents the
profit and loss accounts and cash flow statements for each of the three years in
the period  ended May 31,  2003 and the  balance  sheets as at May 31,  2003 and
2002. The condensed  consolidating  financial  information  presents the issuer,
Filtronic  plc, with its  investments  in  subsidiaries  accounted for an equity
basis, the guarantor  subsidiaries on a consolidated  basis,  the  non-guarantor
subsidiary,  and  elimination  entries  necessary to arrive at the  consolidated
information for the Filtronic plc group.

     Significant  differences  between UK GAAP and US GAAP, which  predominantly
relate to the guarantor subsidiaries, are described in note 38.

<TABLE>
<CAPTION>

Profit and loss account for the year ended May 31, 2001

                                                                                  Non-
                                                          Issuer    Guarantor   Guarantor           Filtronic plc
                                                   Filtronic plc  subsidiaries  subsidiary  Eliminations    Group
                                                   _____________  ___________  __________   _______ ____________
<S>                                                           <C>         <C>         <C>       <C>          <C>
Sales                                              GBP         -  GBP 284,986  GBP 12,448   GBP   -  GBP 297,434
                                                   _____________  ___________  __________   _______  ___________

Costs

Increase in stocks of finished goods and
work in progress                                               -      (6,788)       (622)         -      (7,410)
Raw materials and consumables                                  -     129,713       8,807          -     138,520
Staff costs - excluding share compensation                 2,137      86,728         886          -      89,751
Staff costs - share compensation                               -       2,293           -          -       2,293
Depreciation                                                 309      16,006         444          -      16,759
Goodwill amortization                                          -       4,884           -          -       4,884
Exceptional goodwill impairment                                -      14,078           -          -      14,078
Other operating (income)/charges                          (7,882)     54,187       1,285          -      47,590
                                                  ______________  __________   _________   ________  __________
                                                          (5,436)    301,101      10,800          -     306,465
                                                  ______________  __________   _________   ________  __________
Operating profit/(loss)                                    5,436     (16,115)      1,648          -      (9,031)
Net interest (payable)/receivable                        (12,829)        382         (84)         -     (12,531)
Net financing currency exchange gain                          49         153         133          -         335
Equity in loss before taxation of subsidiaries           (13,883)          -           -     13,883           -
                                                  ______________  __________   _________   ________  __________
(Loss)/profit before taxation                            (21,227)    (15,580)      1,697     13,883     (21,227)
Taxation                                                  (1,564)     (1,061)          -      1,061      (1,564)
                                                  ______________  __________   _________   ________  __________
(Loss)/profit for the year                        GBP    (22,791) GBP(16,641)  GBP 1,697  GBP14,944  GBP(22,791)
                                                  ==============  ==========   =========  =========  ==========

</TABLE>

                                      F-53
<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)

39.      Consolidating guarantor and non-guarantor information - (continued)

<TABLE>
<CAPTION>

Profit and loss account for the year ended May 31, 2002
                                                                                  Non-
                                                          Issuer    Guarantor   Guarantor            Filtronic plc
                                                   Filtronic plc  subsidiaries  subsidiary  Eliminations   Group
                                                   _____________  ___________  __________   _______  __________
                                                                              (thousands)
<S>                                                           <C>         <C>         <C>       <C>          <C>
Sales                                              GBP         -  GBP  267,690 GBP 12,857 GBP     -  GBP280,547
                                                   _____________  ___________  __________ _________  __________
Costs
Decrease/(increase) in stocks of finished goods and
work in progress                                               -       6,540        (103)         -       6,437
Raw materials and consumables                                  -     103,519       5,257          -     108,776
Staff costs - excluding share compensation                 2,737      81,132         938          -      84,807
Staff costs - share compensation                               -       1,570           -          -       1,570
Depreciation                                                 364      19,305         764          -      20,433
Exceptional tangible fixed asset impairment                    -       7,938           -          -       7,938
Goodwill amortization                                          -       5,352           -          -       5,352
Exceptional goodwill impairment                                -      16,036           -          -      16,036
Other operating (income)/charges                          (6,057)     46,647       1,671          -      42,261
                                                   _____________  __________   _________    _______  __________
                                                          (2,956)    288,039       8,527          -     293,610
                                                   _____________  __________   _________    _______  __________
Operating profit/(loss)                                    2,956     (20,349)      4,330          -     (13,063)
Net interest (payable)/receivable                        (12,763)        675        (550)         -     (12,638)
Net financing currency exchange gain                         368        (187)        (16)         -         165
Equity in loss before taxation of subsidiaries           (16,097)          -           -     16,097           -
                                                   _____________  __________   _________    _______  __________
(Loss)/profit before taxation                            (25,536)    (19,861)      3,764     16,097     (25,536)
Taxation                                                  (3,508)     (3,469)          -      3,469      (3,508)
                                                   _____________  __________   _________    _______  __________
(Loss)/profit for the year                         GBP   (29,044) GBP(23,330)  GBP 3,764 GBP 19,566  GBP(29,044)
                                                   =============  ==========   ========= ==========  ==========


                                      F-54
</TABLE>

<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


39.  Consolidating guarantor and non-guarantor information - (continued)

<TABLE>
<CAPTION>

Profit and loss account for the year ended May 31, 2003
                                                                                  Non-
                                                          Issuer    Guarantor   Guarantor                Filtronic plc
                                                   Filtronic plc  subsidiaries  subsidiary Eliminations      Group
                                                   _____________  ___________  _________  _____________  _____________
                                                                              (thousands)
<S>                                                           <C>         <C>         <C>       <C>           <C>
Sales                                              GBP         -  GBP 224,825  GBP21,791  GBP(5,348)        GBP241,268
                                                   _____________  ___________  _________  _____________  _____________

Costs
Decrease/(increase) in stocks of finished goods and
work in progress                                               -       3,043        (166)         -              2,877
Raw materials and consumables                                  -      97,211       9,370     (5,348)           101,233
Staff costs - excluding share compensation                 3,105      65,798       1,233          -             70,136
Staff costs - share compensation                               -         146           -          -                146
Depreciation                                                 374      17,265       1,683          -             19,322
Goodwill amortization                                          -       2,348           -          -              2,348
Other operating charges                                    1,251      34,379       2,861          -             38,491
                                                   _____________  ___________  _________  _____________  _____________
                                                           4,730     220,190      14,981     (5,348)           234,553
                                                   _____________  ___________  _________  _____________  _____________
Operating (loss)/profit                                   (4,730)      4,635       6,810          -              6,715
Net interest (payable)/receivable                         (8,115)        102          18          -             (7,995)
Net financing currency exchange gain                       3,366         667         203          -              4,236
Exceptional net gain on repayment of debt                    881           -           -          -                881
Equity in loss before taxation of subsidiaries            12,435           -           -    (12,435)                 -
                                                   _____________  ___________  _________  _____________  _____________
Profit before taxation                                     3,837       5,404       7,031    (12,435)             3,837
Taxation                                                  (2,753)     (2,460)       (287)     2,747             (2,753)
                                                   _____________  ___________  _________  _____________  _____________
Profit for the year                                GBP     1,084  GBP  2,944   GBP 6,744  GBP(9,688)        GBP  1,084
                                                   =============  ==========   =========  =============  =============

</TABLE>

                                      F-55

<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


39.  Consolidating guarantor and non-guarantor information - (continued)

<TABLE>
<CAPTION>

Cash flow statement for the year ended May 31, 2001

                                                                                               Non-
                                                                       Issuer   Guarantor  Guarantor    Filtronic plc
                                                                Filtronic plc  subsidiaries subsidiary      Group
                                                               _____________  __________  ____________  _____________
                                                                                    (thousands)
<S>                                                           <C>         <C>         <C>       <C>          <C>
Net cash flow from operating activities                        GBP     5,679  GBP  3,557     GBP(1,714)     GBP 7,522
                                                               _____________  __________  ____________  _____________
Returns on investment and servicing of finance
Interest received                                                        595         431             5          1,031
Interest paid                                                        (12,582)        (45)          (89)       (12,716)
Interest element of finance lease payments                                 -          (4)            -             (4)
                                                               _____________  __________  ____________  _____________
Net cash flow from returns on investment and servicing
of finance                                                           (11,987)        382           (84)       (11,689)
                                                               _____________  __________  ____________  _____________
Tax paid                                                                 225      (3,316)            -         (3,091)
                                                               _____________  __________  ____________  _____________
Capital expenditure
Purchase of tangible fixed assets                                     (1,533)    (37,046)       (2,403)       (40,982)
Sale of tangible fixed assets                                              -         168             3            171
Government grants received                                                 -         480             -            480
                                                               _____________  __________  ____________  _____________
Net cash flow from capital expenditure                                (1,533)    (36,398)       (2,400)       (40,331)
                                                               _____________  __________  ____________  _____________
Acquisitions
Purchase of subsidiaries                                                   -        (118)            -           (118)
Cash acquired with subsidiaries                                            -          14             -             14
                                                               _____________  __________  ____________  _____________
Net cash flow from acquisitions                                            -        (104)            -           (104)
                                                               _____________  __________  ____________  _____________
Equity dividends paid                                                 (1,964)          -             -         (1,964)
                                                               _____________  __________  ____________  _____________

Net cash flow before financing                                        (9,580)    (35,879)       (4,198)       (49,657)
                                                               _____________  __________  ____________  _____________
Financing
Issue of shares                                                        1,844           -             -          1,844
Capital element of finance lease payments                                  -        (147)            -           (147)
Loans repaid                                                               -        (567)            -           (567)
Movement in amounts due to and from group companies                  (27,911)     23,908         4,003              -
                                                               _____________  __________  ____________  _____________
Net cash flow from financing                                         (26,067)     23,194         4,003          1,130
                                                               _____________  __________  ____________  _____________

                                                               _____________  __________  ____________  _____________
Decrease in cash                                               GBP   (35,647) GBP(12,685)    GBP  (195)    GBP(48,527)
                                                               =============  ==========  ============  =============

</TABLE>

                                      F-56

<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


39.  Consolidating guarantor and non-guarantor information - (continued)

<TABLE>
<CAPTION>

Cash flow statement for the year ended May 31, 2002

                                                                                              Non-
                                                                       Issuer   Guarantor  Guarantor    Filtronic plc
                                                                Filtronic plc  subsidiaries subsidiary      Group
                                                               _____________  __________  ____________  _____________
                                                                                    (thousands)
<S>                                                           <C>         <C>         <C>       <C>          <C>
Net cash flow from operating activities                        GBP     3,299  GBP 55,102     GBP 5,817      GBP64,218
                                                               _____________  __________  ____________  _____________
Returns on investment and servicing of finance
Interest received                                                        187         153            18            358
Interest paid                                                        (11,583)        (45)           (1)       (11,629)
                                                               _____________  __________  ____________  _____________
Net cash flow from returns on investment and servicing
of finance                                                           (11,396)        108            17        (11,271)
                                                               _____________  __________  ____________  _____________
Tax paid                                                                 (47)     (2,208)          (90)        (2,345)
                                                               _____________  __________  ____________  _____________
Capital expenditure
Purchase of tangible fixed assets                                       (232)     (7,608)       (3,529)       (11,369)
Sale of tangible fixed assets                                              -       1,312             -          1,312
Government grants received                                                 -       1,034             -          1,034
                                                               _____________  __________  ____________  _____________
Net cash flow from capital expenditure                                  (232)     (5,262)       (3,529)        (9,023)
                                                               _____________  __________  ____________  _____________
Equity dividends paid                                                 (1,992)          -             -         (1,992)
                                                               _____________  __________  ____________  _____________

                                                               _____________  __________  ____________  _____________
Net cash flow before financing                                       (10,368)     47,740         2,215         39,587
                                                               _____________  __________  ____________  _____________
Financing
Issue of shares                                                          264           -             -            264
Loans repaid                                                         (20,590)     (1,392)            -        (21,982)
Movement in amounts due to and from group companies                   50,474     (49,010)       (1,464)             -
                                                               _____________  __________  ____________  _____________
Net cash flow from financing                                          30,148     (50,042)       (1,464)       (21,718)
                                                               _____________  __________  ____________  _____________

                                                               _____________  __________  ____________  _____________
Increase/(decrease) in cash                                    GBP    19,780  GBP (2,662)    GBP   751      GBP17,869
                                                               =============  ==========  ============  =============

</TABLE>

                                      F-57

<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


39.  Consolidating guarantor and non-guarantor information - (continued)

<TABLE>
<CAPTION>

Cash flow statement for the year ended May 31, 2003



                                                                                               Non-
                                                                       Issuer   Guarantor  Guarantor    Filtronic plc
                                                                Filtronic plc  subsidiaries subsidiary      Group
                                                               _____________  __________  ____________  _____________
                                                                                    (thousands)
<S>                                                           <C>         <C>         <C>       <C>          <C>
Net cash flow from operating activities                        GBP    (4,295) GBP 36,512     GBP 6,311      GBP38,528
                                                               _____________  __________  ____________  _____________

Returns on investment and servicing of finance
Interest received                                                         89         124            18            231
Interest paid                                                         (7,616)        (22)            -         (7,638)
                                                               _____________  __________  ____________  _____________

Net cash flow from returns on investment and servicing
of finance                                                            (7,527)        102            18         (7,407)
                                                               _____________  __________  ____________  _____________

Tax paid                                                                 (32)     (3,964)         (132)        (4,128)
                                                               _____________  __________  ____________  _____________

Capital expenditure
Purchase of tangible fixed assets                                        (87)     (5,748)       (2,363)        (8,198)
Sale of tangible fixed assets                                              -       1,378             -          1,378
Government grants received                                                 -       1,319             -          1,319
                                                               _____________  __________  ____________  _____________

Net cash flow from capital expenditure                                   (87)     (3,051)       (2,363)        (5,501)
                                                               _____________  __________  ____________  _____________

Equity dividends paid                                                 (2,002)          -             -         (2,002)
                                                               _____________  __________  ____________  _____________

                                                               _____________  __________  ____________  _____________

Net cash flow before financing                                       (13,943)     29,599         3,834         19,490
                                                               _____________  __________  ____________  _____________

Financing
Loans repaid                                                         (22,107)          -             -        (22,107)
Movement in amounts due to and from group companies                   35,585     (31,311)       (4,274)             -
                                                               _____________  __________  ____________  _____________

Net cash flow from financing                                          13,478     (31,311)       (4,274)       (22,107)
                                                               _____________  __________  ____________  _____________

                                                               _____________  __________  ____________  _____________

Decrease in cash                                               GBP      (465) GBP (1,712)    GBP  (440)     GBP(2,617)
                                                               =============  ==========  ============  =============

</TABLE>

                                      F-58
<PAGE>

                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


39.  Consolidating guarantor and non-guarantor information - (continued)

<TABLE>
<CAPTION>

Balance sheet at May 31, 2002


                                                                                  Non-
                                                          Issuer    Guarantor   Guarantor              Filtronic plc
                                                   Filtronic plc  subsidiaries subsidiary Eliminations    Group
                                                   _____________  ___________  _________  ____________ _____________
                                                                              (thousands)
<S>                                                           <C>         <C>         <C>       <C>          <C>
Fixed assets
Intangible assets                                  GBP         -  GBP 34,720   GBP     -     GBP     -    GBP 34,720
Tangible assets                                           10,103      93,234       5,252             -       108,589
Investment in subsidiaries                               (45,833)          -           -        45,833             -
                                                   _____________  ___________  _________  ____________ _____________
                                                         (35,730)    127,954       5,252        45,833       143,309
                                                   _____________  ___________  _________  ____________ _____________
Current assets
Stocks                                                         -      41,413       2,322             -        43,735
Debtors                                                      119      52,780       2,536             -        55,435
Amounts due from group companies                         234,579       1,514         280      (236,373)            -
Cash                                                       5,045       3,226         812             -         9,083
                                                   _____________  ___________  _________  ____________ _____________
                                                         239,743      98,933       5,950      (236,373)      108,253
                                                   _____________  ___________  _________  ____________ _____________
Creditors: amounts falling due within one year
Creditors                                                  3,632      35,086       1,056             -        39,774
Amounts due to group companies                             1,416     234,215         742      (236,373)            -
                                                   _____________  ___________  _________  ____________ _____________
                                                           5,048     269,301       1,798      (236,373)       39,774
                                                   _____________  ___________  _________  ____________ _____________
Net current assets/(liabilities)                         234,695    (170,368)      4,152             -        68,479
                                                   _____________  ___________  _________  ____________ _____________
Total assets less current liabilities                    198,965     (42,414)      9,404        45,833       211,788
Creditors: amounts falling due after one year             93,769           -           -             -        93,769
Provision for deferred tax                                     -         408           -             -           408
Deferred income                                                -      12,415           -             -        12,415
                                                   _____________  ___________  _________  ____________ _____________
Net assets                                         GBP   105,196  GBP(55,237)  GBP 9,404     GBP45,833    GBP105,196
                                                   =============  ==========   =========  ============ =============

Capital and reserves
Called up share capital                            GBP     7,409  GBP 26,356   GBP 4,392    GBP(30,748)   GBP  7,409
Share premium account                                    134,151       4,683           -        (4,683)      134,151
Shares to be issued                                        6,682           -           -             -         6,682
Revaluation reserve                                            -         106           -             -           106
Profit and loss account                                  (43,046)    (86,382)      5,012        81,264       (43,152)
                                                   _____________  ___________  _________  ____________ _____________
Equity shareholders' funds                         GBP   105,196  GBP(55,237)  GBP 9,404     GBP45,833    GBP105,196
                                                   =============  ==========   =========  ============ =============

</TABLE>

                                      F-59
<PAGE>


                                 FILTRONIC plc

                 NOTES TO THE FINANCIAL STATEMENTS - (Continued)


39.  Consolidating guarantor and non-guarantor information - (continued)

<TABLE>
<CAPTION>

Balance sheet at May 31, 2003

                                                                                  Non-
                                                          Issuer    Guarantor   Guarantor               Filtronic plc
                                                   Filtronic plc  subsidiaries  subsidiary Eliminations     Group
                                                   _____________  ___________  _________   ____________ _____________
                                                                              (thousands)
<S>                                                           <C>         <C>         <C>       <C>          <C>
Fixed assets
Intangible assets                                  GBP         -  GBP 35,769   GBP     -      GBP     -    GBP 35,769
Tangible assets                                            9,816      81,086       5,370              -        96,272
Investment in subsidiaries                               (65,570)          -           -         65,570             -
                                                   _____________  ___________  _________   ____________ _____________
                                                         (55,754)    116,855       5,370         65,570       132,041
                                                   _____________  ___________  _________   ____________ _____________
Current assets
Stocks                                                         -      30,769       3,575              -        34,344
Debtors                                                      178      46,144       4,586              -        50,908
Amounts due from group companies                         226,885         643         182       (227,710)            -
Cash                                                       3,840       2,107         575              -         6,522
                                                   _____________  ___________  _________   ____________ _____________
                                                         230,903      79,663       8,918       (227,710)       91,774
                                                   _____________  ___________  _________   ____________ _____________
Creditors: amounts falling due within one year
Creditors                                                  3,730      32,353       2,738              -        38,821
Amounts due to group companies                               318     226,759         633       (227,710)            -
                                                   _____________  ___________  _________   ____________ _____________
                                                           4,048     259,112       3,371       (227,710)       38,821
                                                   _____________  ___________  _________   ____________ _____________
Net current assets/(liabilities)                         226,855    (179,449)      5,547              -        52,953
                                                   _____________  ___________  _________   ____________ _____________
Total assets less current liabilities                    171,101     (62,594)     10,917         65,570       184,994
Creditors: amounts falling due after one year             61,942           -           -              -        61,942
Provision for deferred tax                                     -         750           -              -           750
Deferred income                                                -      13,143           -              -        13,143
                                                   _____________  ___________  _________   ____________ _____________
Net assets                                         GBP   109,159  GBP(76,487)  GBP10,917      GBP65,570    GBP109,159
                                                   =============  ==========   =========   ============ =============
Capital and reserves
Called up share capital                            GBP     7,430  GBP28,676    GBP 5,020     GBP(33,696)   GBP  7,430
Share premium account                                    135,851       4,683           -         (4,683)      135,851
Shares to be issued                                        4,321           -           -              -         4,321
Revaluation reserve                                            -         106           -              -           106
Other reserve                                                  -           -         828              -           828
Profit and loss account                                  (38,443)   (109,952)      5,069        103,949       (39,377)
                                                   _____________  ___________  _________   ____________ _____________
Equity shareholders' funds                         GBP   109,159  GBP(76,487)  GBP10,917      GBP65,570    GBP109,159
                                                   =============  ==========   =========   ============ =============

</TABLE>

                                      F-60

<PAGE>


                                  FILTRONIC plc

                           CERTIFICATIONS EXHIBIT 12.1              EXHIBIT 12.1


I, J David Rhodes, certify that:

1.   I have reviewed this annual report on Form 20-F of Filtronic plc;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the company as of, and for, the periods presented in this report;

4.   The  company's  other  certifying   officers  and  I  are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules l3a-15(e) and 15d-15(e)) for the company and have:

     a.   designed such disclosure  controls and procedures or caused such
          disclosure controls and  procedures to be designed  under our
          supervision, to ensure that  material   information   relating  to
          the company, including  its consolidated  subsidiaries,  is made known
          to us by  others  within  those entities, particularly  during the
          period in which  this  report is being prepared;

     b.   [omitted pursuant to the guidance of Release No. 33-8238 (June 5,
           2003)]

     c.   evaluated the effectiveness of the company's disclosure controls and
          procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d.   disclosed in this report any change in the company's internal control
          over financial reporting that occurred during the period covered by
          the annual report that has materially affected, or is reasonably
          likely to materially affect, the company's internal control over
          financial reporting; and

5.   The company's other certifying officers and I have disclosed,  based on our
     most recent evaluation of internal control over financial reporting, to the
     company's  auditors  and the  audit  committee  of the  company's  board of
     directors (or persons performing the equivalent functions):

     a.   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the company's ability to record,
          process, summarise and report financial information; and

     b.   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the company's internal
          control over financial reporting.

Date:     November 28, 2003

                                                    By:     /s/ J David Rhodes
                                                    --------------------------
                                                    Name:   J David Rhodes
                                                    Title:  Executive Chairman
                                                            and Chief Executive
                                                            Officer

<PAGE>


I, John Samuel, certify that:

1.   I have reviewed this annual report on Form 20-F of Filtronic plc;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the company as of and for, the periods presented in this annual report;

4.   The  company's  other  certifying   officers  and  I  are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

     a.   designed such disclosure  controls and procedures or caused such
          disclosure controls and  procedures to be designed  under our
          supervision,  to ensure that  material  information  relating  to  the
          registrant,  including its consolidated subsidiaries, is made
          known to us by others within those entities, particularly during the
          period in which  this  report is being prepared.

     b.   (omitted pursuant to the guidance of Release No. 33-8238 (June 5,
           2003))

     c.   evaluated the effectiveness of the company's disclosure controls and
          procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d.   disclosed in this report any change in the company's internal control
          over financial reporting that occurred during the period covered by
          the annual report that has materially affected, or is reasonably
          likely to materially affect, the company's internal control over
          financial reporting; and

5.   The company's other certifying officers and I have disclosed,  based on our
     most recent evaluation of internal control over financial reporting, to the
     company's  auditors  and the  audit  committee  of the  company's  board of
     directors (or persons performing the equivalent functions):

     a.   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the company's ability to record,
          process, summarize and report financial information; and

     b.   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the company's internal
          control over financial reporting.

Date:     November 28, 2003

                                                      By      /s/  John Samuel
                                                      ------------------------
                                                      Name:   John Samuel
                                                      Title:  Finance Director
                                                              and Chief
                                                              Financial Officer

<PAGE>

                                                                    EXHIBIT 13.1

                    Certification of Chief Executive Officer

                       Pursuant to 18 U.S.C. Section 1350,

      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, J David Rhodes,  Executive  Chairman and Chief Executive Officer of Filtronic
plc, a public  limited  company  incorporated  in England and Wales  ("Filtronic
plc"),  certify,  pursuant to 18 U.S.C.  Section  1350,  as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

     (i)  the Annual Report of Filtronic plc on Form 20-F for the fiscal year
          ended May 31, 2003, as filed with the Securities and Exchange
          Commission on the date hereof (the "Annual Report"), fully complies
          with the requirements of Section 13(a) or 15(d) of the Securities
          Exchange Act of 1934; and

     (ii) the information contained in the Annual Report fairly presents in all
          material respects the financial condition and results of operations of
          Filtronic plc.

This  certification  is provided solely  pursuant to 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not
be deemed to be "filed" for any purpose  whatsoever nor shall it be deemed to be
incorporated  by reference  into the Annual Report or any other filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934.

Date:     November 28, 2003

                                                   By:     /s/ J David Rhodes
                                                   -----------------------------
                                                   Name:   J David Rhodes
                                                   Title:  Executive Chairman
                                                           and Chief Executive
                                                           Officer


<PAGE>

                    Certification of Chief Financial Officer

                       Pursuant to 18 U.S.C. Section 1350,

      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


I, John Samuel, Finance Director and Chief Financial Officer of Filtronic plc, a
public limited  company  incorporated  in England and Wales  ("Filtronic  plc"),
certify,  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

     (i)  the Annual Report of Filtronic plc on Form 20-F for the fiscal year
          ended May 31, 2003, as filed with the Securities and Exchange
          Commission on the date hereof (the "Annual Report"), fully complies
          with the requirements of Section 13(a) or 15(d) of the Securities
          Exchange Act of 1934; and

     (ii) the information contained in the Annual Report fairly presents in all
          material respects the financial condition and results of operations of
          Filtronic plc.

This  certification  is provided solely  pursuant to 18 U.S.C.  Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not
be deemed to be "filed" for any purpose  whatsoever nor shall it be deemed to be
incorporated  by reference  into the Annual Report or any other filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934.

Date:    November 28, 2003

                                                     By      /s/  John Samuel
                                                     ---------------------------
                                                     Name:   John Samuel
                                                     Title:  Finance Director
                                                             and Chief Financial
                                                             Officer

<PAGE>