As filed with the Securities and Exchange Commission on November 22, 2002


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   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, 2002

                    Commission file number: ________________

                                 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:

                     74,091,382 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


<PAGE>

<TABLE>
<CAPTION>

                               TABLE OF CONTENTS
                                                                                                   Page
                                     PART I


                    <S>             <C>                                                             <C>

                    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                                        9
                                         Introduction                                                 9
                                             Organization                                             9
                                             History                                                  9
                                             Business Summary                                        10
                                             Organizational Structure and Subsidiaries               11
                                         Description of Business Segments                            12
                                             Products                                                12
                                             Sales by Business Segment and Geographical Destination  14
                                             Customers and Markets                                   14
                                             Competition                                             15
                                             Capital Expenditures                                    16
                                         Research and Development                                    17
                                         Seasonality                                                 17
                                         Raw Materials                                               17
                                         Sales and Marketing                                         17
                                         Patents, Licenses, Contracts and Manufacturing Processes    17
                                         Environmental Matters                                       18
                                         Properties, Plant and Equipment                             19
                    Item 5.         Operating and Financial Review and Prospects                     21
                                         Accounting Principles                                       21
                                         Critical Accounting Policis                                 21
                                         Operating Results                                           22
                                         Liquidity and Capital Resorces                              29
                                         Research and Development                                    30
                                         Outlook                                                     31
                    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>


                    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 16.        (Reserved)                                                       48

                                    PART III

                    Item 17.        Financial Statements                                             49
                    Item 18.        Financial Statements                                             49
                    Item 19.        Exhibits                                                         49
                    Signatures                                                                       50
                    Certifications                                                                   51
</TABLE>


                                       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 37 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 2002" means
the year ended May 31, 2002.

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 $1.4625 = GBP1.00.  This rate represents the noon buying rate
in New York City for cable  transfers  in pounds  sterling on May 31,  2002,  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, 2002.  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, 2002.  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
                                            1998         1999       2000       2001        2002
                                                   (thousands, except per share amounts)
  <S>                                  <C>         <C>           <C>         <C>         <C>

  Profit and Loss Account Data:
  Sales                               GBP 94,093  GBP187,302    GBP222,294  GBP297,434  GBP280,547
  Operating profit/(loss)                 12,024      21,893         5,063      (9,031)    (13,063)
  Profit/(loss) for the year               7,875      10,776        (7,924)    (22,791)    (29,044)
  Earnings/(loss) per share                16.44p      18.49p       (11.64)p    (31.24)p    (39.31)p
  Diluted earnings/(loss) per share        14.80p      16.85p       (11.64)p    (31.24)p    (39.31)p
  Weighted average number of shares       47,893      58,294        68,055      72,963      73,882
  outstanding
  Diluted weighted average number of      53,180      63,956        68,055      72,963      74,834
  shares
  Dividend per share                        2.00p       2.70p         2.70p       2.70p       2.70p
  Dividend per share                    $ 0.0330    $ 0.0440      $ 0.0431    $ 0.0384    $ 0.0395

</TABLE>


<TABLE>
<CAPTION>
                                                                      May 31,
                                            1998        1999       2000        2001        2002
                                                                  (thousands)
  <S>                                 <C>         <C>         <C>          <C>        <C>

  Balance Sheet Data:
  Total assets                        GBP 67,685  GBP214,071  GBP310,450  GBP304,609  GBP251,562
  Net assets                              29,231      80,118     145,549     130,487     105,196
  Share capital                            4,903       5,995       7,199       7,365       7,409

</TABLE>

<TABLE>
<CAPTION>

                                                                   Year ended May 31,
  US GAAP
                                            1998        1999       2000        2001        2002
                                                    (thousands, except per share amounts)
  <S>                                 <C>         <C>           <C>         <C>         <C>

  Income Statement Data:
  Sales                               GBP 94,093  GBP187,286    GBP217,800  GBP296,309  GBP279,788
  Operating profit/(loss)                 10,786      10,252       (17,112)      2,736     (16,990)
  Net income/(loss)                        6,613      (3,520)      (29,l04)    (11,419)    (33,033)
  Earnings/(loss) per share                13.81p      (6.04)p      (42.77)p    (15.65)p    (44.71)p
  Diluted earnings/(loss) per share        12.44p      (6.04)p      (42.77)p    (15.65)p    (44.71)p


</TABLE>


<TABLE>
<CAPTION>


                                                                         May 31,
                                            1998        1999        2000       2001        2002
                                                                  (thousands)
  <S>                                 <C>         <C>           <C>         <C>          <C>

  Balance Sheet Data:
  Total assets                        GBP 78,834  GBP224,114    GBP319,853  GBP308,305  GBP253,893
  Net assets                              41,208      88,807       155,554     129,838     103,138
</TABLE>


                                       2
<PAGE>

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
  <S>                                   <C>       <C>         <C>                   <C>

  1998(a)                               1.7035    1.5775     1.6503                1.6308
  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

  May 2002                              1.4676    1.4470                           1.4625
  June 2002                             1.5285    1.4574                           1.5245
  July 2002                             1.5800    1.5206                           1.5625
  August 2002                           1.5709    1.5192                           1.5476
  September 2002                        1.5700    1.5343                           1.5700
  October 2002                          1.5708    1.5418                           1.5630
  November 2002 (through November 7)    1.5796    1.5545                           1.5796


(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.

</TABLE>

                                       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, 2002,  Filtronic
plc's total debt was GBP96.2 million ($140.8  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 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

                                       4
<PAGE>

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.

    In  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.

    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 euros.  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, 2002,  Filtronic had invested  GBP41.8  million ($61.1
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, 2002, Filtronic had not recorded
any sales as a result of these agreements, although a license fee of GBP10.0
million ($14.6 million) had been received from BAe. 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.  These
agreements and the consequent business deriving from them are vital to the
financial  results of the Newton  Aycliffe  facility.  These  agreements  do not
contain any  binding  obligations  upon  M/A-Com or BAe to place  business  with
Filtronic.  A failure to generate  significant revenues from these agreements 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.

    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.

                                       8
<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 U.S. 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 had its initial public offering and listing
on the London Stock Exchange.

    On  January  26,  1998,  Filtronic  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  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  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 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.

                                       9
<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 2002,  approximately  36% of sales were  generated  from  Filtronic's
operations in the United Kingdom,  33% in the United States, 24% in Finland,  3%
in Australia and 4% in China.

    Filtronic's  sales  were  GBP280.5  million  ($410.2  million)  in fiscal
2002, GBP297.4  million ($421.6  million) in fiscal 2001 and GBP222.3  million
($315.1 million) in fiscal 2000.

    Filtronic's  aggregate  capital  expenditures for property,  plant and
equipment were GBP11.4  million  ($16.7  million) in fiscal 2002,  GBP36.8
million ($52.2 million) in fiscal 2001 and GBP59.0  million ($83.6 million) in
fiscal 2000. The United Kingdom  accounted for 44%, the United States 8%,
Finland 12%,  Australia 5% and China 31% of Filtronic's capital expenditures in
fiscal 2002.

    At May 31, 2002,  Filtronic plc  had 74,091,382  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.

                                       10

<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, 2002.

<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 (Overseas Holdings) Limited   England & Wales             100%          Holding company
  Filtronic (Holdings) Limited (a)        England & Wales             100%          Holding company
  Filtronic Broadband Limited             England & Wales             100%          Design and manufacture of
                                                                                    microwave products
  Filtronic QUEST Trustees Limited        England & Wales             100%          Qualifying Employee Share
                                                                                    Ownership Trust trustee company
  Filtronic Executive Share Option        England & Wales             100%          Dormant company
  Trustees Limited
  Filtronic Sigtek, Inc.                  USA                         100%          Design and manufacture of
                                                                                    digital signal processing
                                                                                    products
  Owned by subsidiaries

  Filtronic Components Limited            England & Wales             100%          Design and manufacture of
                                                                                    microwave products
  Filtronic Properties Limited            England & Wales             100%          Property company
  Filtronic Cable Communications          England & Wales             100%          Design and manufacture of
  Limited                                                                           microwave products
  Filtronic Pty Limited                   Australia                   100%          Design and manufacture of
                                                                                    microwave products
  Filtronic LK Oy                         Finland                     100%          Design and manufacture of
                                                                                    microwave products
  Filtronic (Suzhou) Telecommunication    China                       100%          Manufacture of microwave
  Products Co Limited                                                               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%          U.S. 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,     USA                         100%          Design and manufacture of
  Inc.                                                                              microwave products
  Sage Laboratories Investment            USA                         100%          Investment company
  Corporation


(a) The name of Filtronic  (Holdings)  Limited was changed to Filtronic Microtek
Limited on July 18, 2002.

</TABLE>


                                       11
<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.

                                       12
<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 13 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.


                                       13


<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 2000, 2001 and 2002.


<TABLE>
<CAPTION>
                                                                     Year ended May 31,
                                                               2000          2001         2002
                                                                       (thousands)
                       <S>                                    <C>           <C>           <C>

                        Sales by business segment

                        Wireless Infrastructure           GBP131,868   GBP207,777   GBP188,589
                        Cellular Handset Products             48,177       42,174       48,845
                        Electronic Warfare                    25,995       25,728       26,977
                        Broadband Access                       9,524       11,273       12,544
                        Compound Semiconductors                7,212       11,233        7,481
                        Inter-segment sales                     (482)        (751)      (3,889)
                                                          GBP222,294   GBP297,434   GBP280,547
</TABLE>



<TABLE>
<CAPTION>


                                                                    Year ended May 31,
                                                               2000         2001         2002
                                                                        (thousands)
                        <S>                                  <C>           <C>           <C>

                        Sales by geographical destination

                        United Kingdom                    GBP 43,079   GBP 43,313   GBP 14,108
                        Europe                                53,247       78,274      112,976
                        North America                         95,336      128,168       84,800
                        Asia Pacific                          30,632       47,679       68,663
                                                          GBP222,294   GBP297,434   GBP280,547

</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  2002,  Nokia  represented  52% of  Filtronic's  sales of
Wireless Infrastructure products, with Lucent representing 29% and Motorola 10%.

                                       14
<PAGE>

Cellular Handset Products

    Filtronic's principal customer in the cellular handset products market is
Nokia.  During  fiscal 2002,  Nokia  accounted for 86% of  Filtronic's  Cellular
Handset Products sales.

Electronic Warfare

    Filtronic's principal customers in the electronic warfare market are BAe,
Bharat Electronics, Elettronica, Racal and Thales. During fiscal 2002, 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  two  fiscal  years.  Wireless   point-to-point  products
represented 45% of Broadband Access sales in fiscal 2002. In fiscal 2002, 44% of
Filtronic's sales of Broadband Access products were to Nokia.  Filtronic Sigtek,
which was  acquired by Filtronic  in August  2000,  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 2002,
24% of Broadband Access sales were to Harmonic Lightwave for cable products.

Compound Semiconductors

    Filtronic's  principal customers in the compound  semiconductor  market  are
Richardson and Honeywell.  During fiscal 2002,  Filtronic's  largest customer in
this  area was  Richardson,  which  accounted  for 24% of  Filtronic's  Compound
Semiconductor  sales.  On July 26, 2002,  Filtronic  announced that its compound
semiconductor fabrication facility at Santa Clara, California,  which is part of
Filtronic Solid State,  would be closed 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 in connection with two strategic  development and supply
agreements.  One of these  agreements  is with  M/A-Com for  certain  commercial
markets and the other is with BAe for the defence market.

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.

                                       15
<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,
                                  2000        2001       2002
                                          (thousands)
<S>                              <C>        <C>           <C>

Wireless Infrastructure     GBP 10,748  GBP 10,782  GBP 4,857
Cellular Handset Products        7,254       7,800      1,938
Electronic Warfare               2,478       1,810      2,352
Broadband Access                   246       1,862        918
Compound Semiconductors         38,239      14,207      1,249

</TABLE>


Wireless Infrastructure

    The Wireless Infrastructure business had GBP4.9  million ($7.2  million) of
capital  expenditures in fiscal 2002,  GBP10.8 million ($15.3 million) in fiscal
2001 and GBP10.7  million  ($15.2  million) in fiscal 2000.  Principal  areas of
investment in fiscal 2002 were the development of new  manufacturing  facilities
in  Suzhou,  China,  and the  purchase  of  production  equipment  in the United
Kingdom, the United States, Finland and Australia.

Cellular Handset Products

    The Cellular  Handset Products  business had GBP1.9  million ($2.8 million)
of capital expenditures in fiscal 2002, GBP7.8 million ($11.1 million) in fiscal
2001 and GBP7.3  million  ($10.3  million) in fiscal  2000.  Principal  areas of
investment in fiscal 2002 were the purchase of new  manufacturing  equipment for
handset antennas in Kempele, Finland and in Suzhou, China.

Electronic Warfare

    The  Electronic  Warfare  business had GBP2.4  million ($3.5 million) of
capital  expenditures  in fiscal 2002,  GBP1.8  million ($2.6 million) in fiscal
2001 and GBP2.5  million ($3.5  million) in fiscal 2000.  The principal  area of
investment in fiscal 2002 was to establish a new manufacturing line for products
associated with the European Fighter Aircraft programme.

                                       16
<PAGE>

Broadband Access

    The Broadband  Access business had capital expenditures of GBP0.9 million
($1.3 million) in fiscal 2002,  GBP1.9 million ($2.7 million) in fiscal 2001 and
GBP0.2  million ($0.3  million) in fiscal 2000. The principal area of investment
in  fiscal  2002  was  the  purchase  of   equipment   to  establish   automated
manufacturing capabilities in the UK.

Compound Semiconductors

    The Compound Semiconductors  business  had GBP1.2  million  ($1.8  million)
of capital  expenditures  in fiscal 2002,  GBP14.2  million  ($20.1  million) in
fiscal 2001 and GBP38.2  million  ($54.1  million) in fiscal 2000. The principal
area of  investment  in fiscal 2002 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 comprise approximately 400 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 program. In the Electronic
Warfare business segment,  customers from time to time finance a portion of such
expenditures.  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.  With the exception of certain
process technology which is developed at its compound  semiconductor facility in
Newton  Aycliffe  for M/A-Com and is jointly  owned by  Filtronic  and  M/A-Com,
Filtronic  has,  by  virtue of the  provisions  of the  agreements  which it has
entered into with its customers, executive Directors and employees, retained 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.

                                      17

<PAGE>

    Filtronic is not dependent on any particular  contract with a supplier.  In
each of the  Wireless  Infrastructure,  Cellular  Handset  Products,  Electronic
Warfare and  Broadband  Access  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 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.

                                       18
<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>

  <S>                          <C>          <C>                                  <C>

                                            Operating subsidiaries occupying
  Location                     Ownership    and business segment(s)              Description of facility

  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


                                       19

<PAGE>

                                            Operating subsidiaries occupying
  Location                     Ownership    and business segment(s)              Description of facility

  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 22,000 square foot facility in Kempele,  Finland, which is used
as a  warehouse,  and 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.

                                       20
<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 37 of the Notes to the  Financial  Statements.  The  principal  differences
relate to the treatment of foreign currency  translations,  pension costs, stock
compensation, goodwill amortization and foreign exchange gains.

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,  currency hedges, 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 has resulted
in a GBP10.4  million write down of intangible  fixed assets and a write down of
GBP7.9  million  against  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.
                                       21
<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.

                                       22
<PAGE>

Extracts from the Consolidated Profit and Loss Accounts

<TABLE>
<CAPTION>


                                                                                           Year ended May 31,
                                                                                     2000          2001           2002
                                                                                  (thousands, except per share amounts)
  <S>                                                                              <C>            <C>             <C>

  Sales - continuing operations                                                GBP222,294    GBP297,434     GBP280,547

  Costs
  (Increase)/decrease in stocks of finished
   goods and work in progress                                                      (5,534)       (7,410)        6,437
  Raw materials and consumables                                                    97,630       138,520       108,776
  Staff costs - excluding share compensation                                       74,062        89,751        84,807
  Staff costs - share compensation                                                      -         2,293         1,570
  Depreciation                                                                      9,737        16,759        20,433
  Exceptional tangible fixed asset impairment                                           -             -         7,938
  Goodwill amortization                                                             3,522         4,884         5,352
  Exceptional goodwill impairment                                                       -        14,078        16,036
  Other operating charges                                                          37,814        47,590        42,261
                                                                                  217,231       306,465       293,610
  Operating profit/(loss)                                                           5,063        (9,031)      (13,063)
  Net interest payable                                                             (9,878)      (12,531)      (12,638)
  Net financing currency exchange gain                                                923           335           165

  Loss on ordinary activities before taxation                                      (3,892)      (21,227)      (25,536)
  Taxation on profit on ordinary activities                                        (4,032)       (1,564)       (3,508)

  Loss for the year                                                                (7,924)      (22,791)      (29,044)
  Dividends                                                                        (1,943)       (1,994)       (1,999)

  Deficit for the year                                                         GBP (9,867)  GBP (24,785)  GBP (31,043)

  Loss per share
    Basic                                                                          (11.64)p      (31.24)p      (39.31)p
    Diluted                                                                        (11.64)p      (31.24)p      (39.31)p

  Weighted average numbers of shares outstanding
    Basic                                                                          68,055        72,963        73,882
    Diluted                                                                        68,055        72,963        74,834

</TABLE>

                                       23
<PAGE>

<TABLE>
<CAPTION>

Business Segment Analysis


                                                                                    Year ended May 31,
                                                                             2000          2001          2002
                                                                                       (thousands)
  <S>                                                                  <C>                   <C>           <C>

  Sales
  Wireless infrastructure                                              GBP131,868    GBP207,777    GBP188,589
  Cellular handset products                                                48,177        42,174        48,845
  Electronic warfare                                                       25,995        25,728        26,977
  Broadband access                                                          9,524        11,273        12,544
  Inter-segment                                                              (482)         (751)       (3,889)
  Total excluding compound semiconductors                                 215,082       286,201       273,066
  Compound semiconductors                                                   7,212        11,233         7,481
                                                                       GBP222,294    GBP297,434    GBP280,547

  Operating profit/(loss) before goodwill amortization and
  impairment, tangible fixed asset impairment and share compensation
  Wireless infrastructure                                               GBP 9,296    GBP 27,212    GBP 31,777
  Cellular handset products                                                11,917         6,979        11,570
  Electronic warfare                                                        1,295          (443)       (1,336)
  Broadband access                                                         (3,365)       (2,769)       (3,030)
  Central costs                                                            (2,347)       (3,825)       (4,952)
  Total excluding compound semiconductors                                  16,796        27,154        34,029
  Compound semiconductors                                                  (8,211)      (14,930)      (16,196)
                                                                        GBP 8,585    GBP 12,224    GBP 17,833
  Operating profit/(loss)
  Wireless infrastructure                                               GBP 9,296    GBP 27,212    GBP 31,777
  Cellular handset products                                                10,078         5,211         9,678
  Electronic warfare                                                        1,053          (698)       (1,583)
  Broadband access                                                         (3,365)       (6,407)      (11,999)
  Central costs                                                            (2,347)       (3,825)       (4,952)
  Total excluding compound semiconductors                                  14,715        21,493        22,921
  Compound semiconductors                                                  (9,652)      (30,524)      (35,984)
                                                                        GBP 5,063    GBP (9,031)  GBP (13,063)
</TABLE>


                                       24
<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.
                                       25
<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.
                                       26
<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.

Fiscal 2001 compared with fiscal 2000

Filtronic Group

    Sales increased by 25.3% from GBP222.3 million to GBP297.4 million,  an
increase of GBP75.1  million.  This  increase was  primarily  attributable  to a
GBP75.9  million  increase  in sales  in the  Wireless  Infrastructure  business
segment.  GBP2.5  million of the increase was  attributable  to the inclusion of
sales arising from the  acquisition of Filtronic  Sigtek,  which was made during
the year.

    Operating profit decreased by GBP14.1 million from an operating profit of
GBP5.1 million to an operating loss of GBP9.0  million.  A decrease in operating
profits in the Cellular Handset Products  business segment  accounted for GBP4.9
million  of this  decrease.  Increased  losses  in the  Compound  Semiconductors
business segment, which included a charge for exceptional goodwill impairment of
GBP14.1  million,  accounted  for a further  GBP20.9  million of this  decrease.
Additionally,  the results of the Electronic  Warfare business segment accounted
for GBP1.7  million of this  decrease  and  Central  costs  increased  by GBP1.5
million.  The Broadband Access business segment's  operating losses increased by
GBP3.0  million,  including  GBP4.1  million  attributable  to the  inclusion of
operating  losses arising from the  acquisition  of Filtronic  Sigtek during the
fiscal  year.  These  increased  operating  losses were  partially  offset by an
increase  of  GBP17.9   million  in  the  operating   profits  of  the  Wireless
Infrastructure business segment.

    Research  and  development  costs  increased  by 21.2% from  GBP26.4
million to GBP32.0 million.  As a percentage of sales,  research and development
costs  decreased from 11.9% to 10.8%.  The increase in research and  development
costs was  primarily  due to staff  recruitment  in the  Compound  Semiconductor
business segment. The decrease in research and development costs as a percentage
of sales was due to the increase in Wireless Infrastructure sales.

    Raw  materials  and  consumables  increased  by 41.9%  from  GBP97.6
million to GBP138.5 million. This increase was primarily due to increased levels
of activity  in the  Wireless  Infrastructure  business  segment.  Levels of raw
materials  in  this  business   segment  were   increased  to  provide   greater
manufacturing flexibility and levels of finished goods were increased to support
shorter delivery times to customers.

    Staff costs  increased by 24.2% from GBP74.1  million to GBP92.0  million.
As a percentage of sales, staff costs decreased from 33.3% to 30.9%. The monthly
average  number  of  people  employed  increased  by 28.6%  from  2,900 to 3,729
primarily because of the increasing size of the Wireless Infrastructure business
and also because of recruitment in the Compound Semiconductor business segment.

    Goodwill amortization  increased by 28.1% primarily as a result of the
impact of the acquisition of Sigtek in August 2000.

    An exceptional  goodwill  impairment  charge of GBP14.1 million  relating
to the  compound  semiconductor  business  at  Filtronic  Solid  State  was made
following  a review of the  forecast  cash  flows  expected  to arise  from that
business.
                                       27
<PAGE>

    Other  operating  charges  increased  by 25.8% from  GBP37.8  million to
GBP47.6 million as a result of the increase in sales and numbers of employees.

    Net interest payable  increased from GBP9.9 million to GBP12.5 million
primarily as a result of Filtronic  utilising a greater  proportion  of its bank
overdraft  facility to fund  losses,  increases  in working  capital and capital
expenditure.  The increase in net interest payable was also due to a decrease in
interest  receivable from GBP2.5 million to GBP1.0 million which was in turn due
to a decrease in average cash balances.

    A net financing  currency  exchange gain of GBP0.3  million arose in fiscal
2001 compared to GBP0.9 million in fiscal 2000. The gain was attributable to the
translation of certain cash balances held in foreign currencies. The decrease of
GBP0.6  million when compared to fiscal 2000 is primarily due to the stronger US
dollar compared to the pound sterling at May 31, 2001 compared to May 31, 2000.

    Taxation  on profit on ordinary  activities  decreased  from  GBP4.0
million to GBP1.6  million,  primarily  as a result of lower  levels of taxable
profits in Finland and Australia.

    As a result of the above,  Filtronic  incurred a loss for fiscal 2001 of
GBP22.8  million  compared  to  GBP7.9  million  in  fiscal  2000.  Due to these
increased losses and to an increase in the number of shares in issue,  Filtronic
reported a loss per share of 31.24p for fiscal 2001 compared to a loss of 11.64p
for fiscal 2000. These are the same if calculated on a diluted basis.

    Dividends  increased  from  GBP1.9  million to GBP2.0  million as a result
of an  increase  in the number of shares in issue  from 72.0  million at May 31,
2000 to 73.6  million  at May 31,  2001.  The  value of the  dividend  per share
remained constant at 2.70p.

Wireless Infrastructure

    The  Wireless  Infrastructure  business  segment  increased  sales by 57.5%
from GBP131.9 million to GBP207.8 million, an increase of GBP75.9 million.  This
increase was  primarily due to an increase in sales in the United States of TDMA
and CDMA products of GBP28.6  million.  In addition,  sales in the UK of GSM 900
and PCN 1800 products increased by GBP19.6 million. Sales in Australia increased
by GBP10.0  million,  primarily  due to demand for CDMA and WCDMA  products from
China and Japan, respectively. Sales in Finland increased by GBP10.8 million and
in China by GBP6.9  million.  These  increases  were each due to demand  for GSM
products.

    Operating profit increased by 192.5% from GBP9.3 million to GBP27.2 million,
an increase of GBP17.9 million. Every one of Filtronic's Wireless Infrastructure
operations  throughout the world improved its operating  result when compared to
fiscal  2000.  In the UK,  operating  profit  increased  from GBP9.6  million to
GBP15.7  million,  an increase of GBP6.1 million or 63.5%; in the United States,
operating profit increased by GBP10.4  million;  in Australia,  operating profit
increased by GBP1.2 million or 93.3%; and in Finland, operating losses decreased
by GBP0.7 million. Each of these movements was primarily due to increased sales.
Start up losses of GBP0.4  million were incurred in China and GBP0.1  million in
Japan, where a representative office was established in April 2001. The Japanese
subsidiary had no sales in fiscal 2001.

Cellular Handset Products

    Sales in the Cellular Handset Products  business segment decreased by 12.4%
from GBP48.2 million to GBP42.2 million, a decrease of GBP6.0 million.  This was
primarily  due to a decrease  in demand for helical  filters  which were used in
analog cellular handsets,  the market for which has now ended. This decrease was
partially  offset  by  increased  sales  due to  increased  demand  for  handset
antennas.  Demand for ceramic filters for handsets  remained  broadly  constant.
Filtronic's  share of  antenna  sales in the  world  handset  market  grew  from
approximately 15% in fiscal 2000 to approximately 18% in fiscal 2001. Operations
in China  contributed  GBP5.5 million of the sales in this business segment with
the remaining GBP36.7 million being derived from Finland.

    Operating  profits fell from GBP10.1  million to GBP5.2  million,  a
decrease of GBP4.9 million, primarily as a result of the reduced levels of sales
but also because of the costs of establishing manufacturing operations in China.
Other relevant factors included the reduction of selling prices caused by market
supply  pressures.  As a result of all of these factors,  operating  profit as a
percentage of sales decreased from 20.9% to 12.4%.

                                       28
<PAGE>

Electronic Warfare

    Sales fell by GBP0.3 million from GBP26.0 million to GBP25.7 million. Sales
were broadly constant in each of the Electronic  Warfare  operations  throughout
the world.

    Operating  profit decreased by GBP1.8 million from an operating profit of
GBP1.1 million to an operating loss of GBP0.7  million.  This loss was primarily
caused by  losses in the UK and  Australia  as a result  of  increased  costs of
materials.

Broadband Access

    Sales  increased by GBP1.8  million from GBP9.5 million to GBP11.3  million,
an increase of 18.9%.  This increase was due to the inclusion of GBP2.5  million
of sales  attributable to the acquisition of Filtronic  Sigtek.  275 days of the
operating  results of Filtronic Sigtek are included in the fiscal 2001 operating
results of this business segment.

    Operating  losses  increased  by GBP3.0  million  from GBP3.4  million to
GBP6.4 million.  Filtronic  Sigtek incurred GBP4.1 million of these losses.  The
Filtronic  Sigtek losses  included  goodwill  amortization of GBP1.3 million and
share compensation expense of GBP2.3 million.

Compound Semiconductors

    Sales  increased by GBP4.0  million from GBP7.2 million to GBP11.2  million,
an increase of 55.6%.  The  increase  in sales was due to  increased  demand for
compound  semiconductors  for the merchant  market  supplied by Filtronic  Solid
State.  No sales  arose  from the  compound  semiconductor  facility  at  Newton
Aycliffe.

    Operating  losses  increased by GBP20.9  million from GBP9.6  million to
GBP30.5  million.  GBP14.1  million  of this  increase  was  attributable  to an
exceptional  goodwill  impairment  charge  relating  to  Filtronic  Solid  State
following  a review of the  forecast  cash  flows  expected  to arise  from that
business. The remainder of the increase was attributable to increased numbers of
employees and costs at the Newton Aycliffe facility.

Central Costs

    Central  costs  increased  by 65.2% from GBP2.3  million to GBP3.8  million,
an  increase  of  GBP1.5   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 2002 compared with fiscal 2001 and fiscal 2000

    In fiscal 2002, fiscal 2001 and fiscal 2000,  Filtronic utilized funds
generated by operating activities, from the issue of shares and from borrowings,
to finance working capital,  capital  expenditure and  acquisitions.  During the
three fiscal years, Filtronic issued new shares to the value of GBP77.1 million.
The proceeds  from the issuance of these shares were used  primarily for capital
expenditure.  At May 31, 2002,  Filtronic had cash  balances of GBP9.1  million,
compared to GBP5.6 million at May 31, 2001 and GBP39.5  million at May 31, 2000.
Borrowings  totalled  GBP96.2  million at May 31,  2002,  compared  to  GBP135.3
million at May 31,  2001 and  GBP115.5  million at May 31,  2000.  In  addition,
Filtronic  has a  GBP31.0  million  bank  overdraft  facility,  all of which was
undrawn at May 31, 2002. On July 1, 2002,  this  overdraft  facility was renewed
and it is due for review again in June 2003.

    In fiscal 2002, fiscal 2001 and fiscal 2000, cash flow from operating
activities  totalled  GBP64.2  million,   GBP7.5  million  and  GBP6.9  million,
respectively,  after expensing all research and development costs and accounting
for all movements in working  capital.  In fiscal 2002, cash flow from operating
activities  increased  by GBP56.7  million  compared  to fiscal  2001.  This was
primarily  due to a cash inflow of GBP15.9  million  arising from a reduction in
working  capital in fiscal 2002  compared to a cash  outflow of GBP21.2  million
arising  from an increase in working  capital in fiscal 2001.  Additionally,  in
fiscal 2002, cash flow from operating activities  benefitted from the receipt of
GBP10  million  deferred  licence  fee income  from BAe.  There was no  material
difference  in cash flow from  operating  activities  in fiscal  2001 and fiscal
2000.

                                       29
<PAGE>

    Net cash outflows from returns on investment  and servicing of finance
totalled GBP11.3 million, GBP11.7 million and GBP10.0 million, respectively, for
fiscal 2002,  fiscal 2001 and fiscal 2000.  In each of these fiscal  years,  the
principal  outflow was interest paid in relation to the Senior  Notes.  Interest
received of GBP2.5  million in fiscal 2000 caused the fiscal 2000  outflow to be
less than that in fiscal 2001 and fiscal 2002.

    Net capital  expenditure  in fiscal 2002,  fiscal 2001 and fiscal 2000
totalled GBP9.0 million,  GBP40.3 million and GBP52.6 million  respectively.  In
fiscal 2002, capital expenditure was substantially lower than in fiscal 2001 and
fiscal 2000 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.  In fiscal 2000, the
principal  areas  of  capital  expenditure  were  GBP38.2  million  in  Compound
Semiconductors  and GBP7.3 million in Cellular Handset Products.  Of the GBP52.6
million  of  expenditure  in fiscal  2000,  GBP19.5  million  was in  respect of
freehold land and buildings and included  GBP2.3  million to acquire 13 acres of
land near Filtronic's headquarters in the UK for future expansion.

    As a result of the above,  net cash inflow before  financing was GBP39.6
million in fiscal 2002 compared to an outflow of GBP49.7  million in fiscal 2001
and an outflow of GBP59.7 million in fiscal 2000. 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  2000 the  outflow  was  financed  by the raising of GBP75.0
million from the issue of new shares. In fiscal 2002,  Filtronic applied GBP22.0
million of its cash inflow before financing to repaying loans,  including $29.25
million  of the  Notes and  GBP1.4  million  of other  loans.  Cash  flow  after
financing was a cash inflow of GBP17.9 million in fiscal 2002, a cash outflow of
GBP48.5  million in fiscal 2001 and a cash  inflow of GBP12.3  million in fiscal
2000. In fiscal 2002,  Filtronic's cash balances increased by GBP3.5 million and
its bank overdraft decreased by GBP14.2 million.

    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 29, 2002
or the  authorized  but unissued  share capital of Filtronic plc. This authority
was granted at the Annual General Meeting held on September 27, 2002.

    At May 31, 2002 Filtronic was committed to capital expenditure of GBP2.2
million which was  contracted  for but not provided in the financial  statements
for the year ended May 31, 2002.

    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.

Research and Development

    For the  years  ended May 31,  2002,  2001 and 2000,  Filtronic's  research
and  development  expenditure  totalled  GBP32.1  million,  GBP32.0  million and
GBP26.4  million,  respectively.   This  represented  11.4%,  10.8%  and  11.9%,
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,  although,  in the Electronic Warfare business segment,  an element of the
costs may be financed by customers,  typically on the achievement of development
milestones.
                                       30
<PAGE>

    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.

Outlook

    As a result of the  terrorist  activities  perpetrated  in the United
States  on  September  11,  2001,   world   economic   conditions   have  become
unpredictable.  Nevertheless  worldwide  development of wireless  communications
systems is expected to continue for the next several years,  creating demand for
Filtronic's Wireless Infrastructure, Cellular Handset Products, Broadband Access
and  Compound  Semiconductors  business  segments.  Additionally,  all of  these
business  segments  may benefit  from the  forthcoming  deployment  of 3G mobile
cellular systems.

    In the Wireless Infrastructure  business,  which represents approximately
67% of Filtronic's  fiscal 2002 sales,  Filtronic  remains a supplier to each of
three major OEM customers on cellular  base station  programs.  Uncertain  short
term global market conditions remain for the Wireless  Infrastructure  business.
Currently,  demand for 2.5G GSM  products  remains  strong,  underpinned  by the
deployment  of  these  systems  in the  United  States.  Demand  for  CDMA  2000
transmit/receive  modules weakened in the first quarter of fiscal 2003, however,
and future requirements are uncertain.

    Demand for these  wireless  infrastructure  products  is  expected  to
continue throughout the rest of fiscal 2003 and beyond,  although,  as Filtronic
has  previously  emphasized  on  numerous  occasions,  the timing of  customers'
manufacturing  programs  can  cause  significant   fluctuations  in  short  term
performance.  The timing of the introduction of 3G systems by cellular operators
remains  uncertain,  but it is likely that the  deployment  of such systems will
offer further growth opportunities to Filtronic.

    Worldwide  demand for the supply of  telecommunications  products  has
declined  significantly  during  the last  year  with few  signs of an  imminent
upturn.  Within this  environment,  Filtronic has increased and consolidated its
position as the leading  independent  supplier of transmit  receive  modules for
mobile  base  stations.  Additionally,  the company  has  developed  several new
processes including those for high power microwave transistors, which is the key
technology for the company's high performance power amplifier modules.

    Technology hardware  demonstrations of these modules have taken place with
three leading OEMs.  These have been well received and further  development work
for these  potential  customers is underway,  including  the provision of sample
modules. The objective remains to become qualified into 3G WCDMA programmes with
one or more of these customers.

    Additionally,  Filtronic has signed a Product Development and Marketing
Alliance  Agreement with Powerwave  Technologies,  Inc.  ("Powerwave")  based in
Santa  Ana,  California.  Powerwave,  which is listed  on  NASDAQ in the  United
States,  is the  leading  independent  supplier of power  amplifiers  for mobile
communications  base  stations,  with  annual  sales in excess of $400  million.
Through  this  agreement  Filtronic  and  Powerwave  aim to  develop  and supply
integrated  RF solutions  combining  Powerwave's  power  amplifier  products and
Filtronic's RF transmit receive  products.  These  integrated  solutions will be
offered to OEM customers in the wireless  infrastructure  market.  Additionally,
the  agreement  may  provide  an  opportunity  for  sales of  Filtronic's  power
amplifier modules to Powerwave.

    In Cellular  Handset  Products,  the antenna business has continued to grow,
and Management  believes that Filtronic is one of the world's leading  suppliers
of handset  antennas.  Filtronic's  market  share has been  increasing  with the
market shift towards internal antennas.  Antennas represented 74% of Filtronic's
Cellular Handset Products sales in fiscal 2002. Demand for antennas in the first
half of fiscal 2003 has  increased,  driven by the new generation of GSM phones.
The outlook for ceramic  diplexers for cellular  handsets is dependent  upon the
successful  development  of such products for WCDMA and CDMA  applications.  The
demand for the current range of ceramic diplexers, which address the TDMA market
in the United States, has reduced materially in the first half of fiscal 2003.

    The  Electronic  Warfare  business  segment is  expected to grow  steadily.
The  manufacture  of the European  Fighter  Aircraft  offers  additional  growth
opportunities for the next several years. In fiscal 2002, the Electronic Warfare
business  segment  traded weakly with  increased  operating  losses  compared to
fiscal 2001 and lower sales

                                       31
<PAGE>

than  Management  expected  although  order  backlog is strong.  The shipment of
certain  major  subsystems  in the  second  half of fiscal  2003  should  have a
significant positive impact on the financial results of this segment.

    The  Broadband  Access  business  segment has  suffered  from very low
levels of demand for its  current  point to point  transceiver  products  in the
second half of fiscal 2002 resulting in continuing losses. Market conditions are
such that major improvements in the trading performance of this business segment
are unlikely in fiscal 2003.  Resources are being  focused on the  automation of
certain of the manufacturing  steps to produce  millimeter wave transceivers for
the cellular  communications market.  Progress has been made in this regard, and
as  Filtronic  improves its ability to produce  such  products in high  volumes,
Filtronic's position in this market should also improve.

    The strategy for the investment in the compound semiconductor facility at
Newton Aycliffe remains unaltered but with an additional range of products.  The
Supply and Development Agreement with BAe resulted in a substantial cash receipt
during the second half of fiscal 2002, although none of this has been recognised
in  the  profit  and  loss   account.   Business   opportunities   for  compound
semiconductor products are arising from Filtronic's  strengthening  relationship
with BAe. These  opportunities  have been enhanced by restrictions on the export
of strategic compound semiconductor products from the United States for military
applications.

    On September  16, 2002,  Filtronic  announced  that its Compound
Semiconductors  business had received initial  production orders from M/A-Com to
supply RF switches  for  cellular  handsets  for a major  non-European  OEM. The
switches are scheduled for  manufacture  over the final quarter of calendar year
2002 with further  follow-on  orders  expected.  The first sales to M/A-Com have
been recorded in the first half of fiscal 2003,  although  currently they are at
modest  levels.  The rate of increase in and the ultimate  level of the business
with  M/A-Com is  dependent  on its  success in the  related  end  markets,  the
principal  one of which is the  cellular  handset  market.  It is probable  that
handset  switches  will now form the  majority of the products to be supplied to
M/A-Com.

    M/A-Com has  identified  eight  specific  switch  opportunities,  among
several, which, were M/A-Com to be successful in winning the business from these
opportunities,  should  provide  volume wafer  throughput  for Newton  Aycliffe.
Supplying  volume  wafers to M/A-Com was the original  objective of  Filtronic's
agreement   with  M/A-Com.   Of  these  eight   opportunities,   four  are  with
non-telecommunication  OEMs for the volume  manufacture  of switch  products for
wireless local area networks  which are  anticipated to start early in the first
quarter  of  calendar  year  2003.  If  M/A-Com  is not  successful  with  these
opportunities,  or if these  opportunities  are  delayed,  then losses at Newton
Aycliffe would be expected to be not materially less than GBP1 million per month
for the rest of fiscal 2003, since other revenue  opportunities  are expected to
only contribute materially after May 31, 2003.

    The main  objective of the Newton  Aycliffe  facility  remains the
production of high quality compound  semiconductor  devices for integration into
higher added value Filtronic  products.  The first major product of this type is
the power  amplifier  module,  the  development of which  continues to progress.
Customer  evaluation of these modules  continues to be positive,  and Management
believes that these products will play a significant role in future GSM EDGE and
3G WCDMA base stations.

    On July 26, 2002,  Filtronic  announced the closing of the fabrication
facility for compound  semiconductors  at  Filtronic  Solid State,  Santa Clara,
California.  Although the  acquisition  of this  three-inch  wafer facility four
years ago  enabled  Filtronic  to enter the  compound  semiconductor  market and
subsequently develop the Newton Aycliffe facility,  substantial investment would
now be  required  for the Santa  Clara  facility  to become a viable  operation.
Closure  costs  estimated to be GBP2.5  million will be incurred  during  fiscal
2003.  Filtronic  Solid State will  operate a "fabless"  compound  semiconductor
business using the manufacturing capability at Newton Aycliffe.

    Overall  profitability  in fiscal 2003 is  expected  to be weighted
towards the second half of the  financial  year  primarily  due to the timing of
cost  reductions  being carried out in the first half,  including the closure of
the Santa Clara compound semiconductor fabrication facility.

    Management  expects  the  importance  of  compound  semiconductors  to
wireless  communications  to grow  over the next  decade in much the same way as
silicon  did  for the  electronics  industry  in the  last 25  years.  The  high
efficiency power amplifier  modules are the first of what should be many leading
edge  products  based on  compound  semiconductor  technology  to be produced at
Newton Aycliffe. Filtronic's marketing strategy is to support OEMs directly with
these  modules and to supply the  merchant  market  through the  agreement  with
Powerwave. The

                                       32
<PAGE>

proprietary  design concepts used rely upon the  availability of the high power,
high gain field effect transistors, which have been developed at Newton Aycliffe
during fiscal 2002 and can be produced cost effectively.

    Management   expects   Filtronic's   two  major  business   segments,
Wireless Infrastructure and Cellular Handset Products,  which together accounted
for 85% of fiscal 2002  sales,  to remain  profitable  and cash  generative,  to
increase their market share and to continue to supply highly customized products
to the  principal  wireless  communications  OEMs.  Filtronic's  position in the
forthcoming 3G base station and handset markets is strong and Management expects
it will be further  enhanced by the  introduction of a range of high performance
compound  semiconductor  devices from Newton  Aycliffe  and base  station  power
amplifier products.

    While global market conditions remain  challenging and the short term
outlook is unclear,  Filtronic  will  endeavour to improve the efficiency of its
businesses  and reduce its debt when  practical.  The  development  of  compound
semiconductor  based  products and investment in the related  technologies  will
remain the principal technical focus.

    Filtronic has  continued to generate  cash since May 31, 2002.  This has
enabled  Filtronic  plc to buy back more than $21  million  of the Notes  during
August and September  2002.  Management  expects that Filtronic will continue to
generate cash during fiscal 2003.

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           59     Director, Executive Chairman and Chief Executive
                                                         Officer
              Professor Christopher M. Snowden    46     Director and Chief Executive Officer of
                                                         Compound Semiconductors
              Alan R. Needle                      47     Managing Director
              Dr. Christopher I. Mobbs            40     Director of Engineering
              John Samuel                         46     Director and Financial Director
              Christopher E. Schofield            40     Director and Company Secretary
              Rhys J. Williams                    68     Non-executive Director
              Richard J. B. Blake                 66     Non-executive Director
              Professor Stephen B. Burbank        55     Non-executive Director
              Ian J. Hardington                   38     Non-executive Director
              Graham E. Meek                      55     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.  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 Financial  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 July 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 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, 2002:

<TABLE>
<CAPTION>
                                                                                                  Total
                                                                                             Emoluments
                                                                                              Including
                                                        Salary     Pension       Other          Pension
                                                       or Fees    Benefits    Benefits    Contributions
                <S>                                <C>          <C>          <C>          <C>

                Executive Directors:
                Prof. J. David Rhodes              GBP 173,979  GBP 17,398  GBP 14,087      GBP 205,464
                Prof. Christopher Snowden              139,708      13,971      11,132          164,811
                Alan Needle                            148,000      14,800      12,830          175,630
                Dr. Christopher Mobbs                  124,208      12,421      14,878          151,507
                John Samuel                            139,271      13,967       9,376          162,614
                Christopher Schofield                  109,583      10,958      10,958          131,499
                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:         449,129      21,545      37,532          508,206
                                                 GBP 1,403,878  GBP105,060  GBP110,793     GBP1,619,731

</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 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  Financial  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 restricted  primarily to  assistance  with United States income tax
compliance and reporting on the financial  statements included in the Form 20-F.
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 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,
                    2000        2001     2002

 <S>                <C>          <C>      <C>
United Kingdom     1,111       1,494    1,409
Finland              883       1,006      841
United States        778         886      649
Australia            108         210      216
China                 20         133      202
Japan                  -           -        1
                   2,900       3,729    3,318
</TABLE>

    The  decrease  in the number of  employees  from  fiscal  2001 to fiscal
2002 is attributable to a programme of  redundancies  and not replacing  certain
staff  who left  employment  during  fiscal  2002.  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 1, 2002, the Directors owned in aggregate 5,467,705
Filtronic plc ordinary shares,  representing  7.4% 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                               455,459             -
          Christopher Schofield                       7,193        60,000               459p         August 7, 2008
          Rhys Williams                              87,833             -
          Richard Blake                               8,500             -
          Prof. Stephen Burbank                         900             -
          Ian Hardington                                  -             -
          Graham Meek                               125,000             -
                                                  5,467,705       300,000

</TABLE>

    Filtronic  operates  executive and savings  related share option  schemes
in the United  Kingdom,  the United  States,  Australia  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 29 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 1,
2002,  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>

Fidelity International Limited                               9,687,275         13.0%
Prudential plc                                               9,561,246         12.9%
Professor J. David Rhodes(a)                                 4,230,001          5.7%
Legal and General Investment Management Limited              2,231,828          3.0%

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

</TABLE>

As of November 1, 2002,  Filtronic plc had 5,935 shareholders,  120 of whom were
US holders.

Related Party Transactions

    The following  related party  transactions  occurred during fiscal 2002 and
were  all  on an  arm's  length  basis.

    Filtronic  plc  and  certain  of its UK subsidiaries incurred professional
charges,  totalling GBP15,422, 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 GBP16,500. As of May 31, 2002, GBP11,665 in
rent 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, a company operating a professional  soccer team, which is wholly
owned by Bradford City (Holdings)  plc.  Professor J. David Rhodes is a director
of Bradford City A.F.C. (1983) Limited and served as a director of Bradford City
(Holdings) plc throughout fiscal 2002 and until August 9, 2002. Professor Rhodes
had an ownership interest in Bradford City (Holdings) plc throughout fiscal 2002
and  until  August  9,  2002.  Professor  Rhodes'  family  continues  to have an
ownership interest subsequent to that date.

    Filtronic  Components Limited earned royalties of GBP11,244 from Photarc
Surveys Limited, a company in which John Samuel has an ownership interest. As of
May 31, 2002, GBP3,595 in royalties 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, 2002 export sales were  approximately  GBP153
million or 55% 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.

    Mr. G. Young, the former Production  Manager of Filtronic Comtek,  Inc.,
filed a case in the  Circuit  Court  of  Wicomico  County,  State  of  Maryland,
alleging  violation of the Wage Payment and Collection  Law,  breach of contract
and wrongful  termination  of employment.  In September  2001, the court awarded
summary  judgment in the case in Filtronic's  favour.  Mr. G. Young is currently
appealing that decision.

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

                                       43
<PAGE>

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.

    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). The UK and US governments
have signed a new double  taxation  treaty that will replace the existing  UK/US
Tax Treaty.  The new treaty has not yet been  ratified and therefore has not yet
come into 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  UK  has  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 branch
or agency 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 branch or
agency.

    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

    The European  Commission has presented 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 in the initial  seven-year  period after  ratification
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 and 20% 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 is not yet
final and may be subject to further amendment and/or clarification.

    It has been announced that the European  Commission will enter into
discussions  with the United States 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 branch or agency 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 branch or agency and such Notes are,
or have been,  used, held or acquired for the purposes of such trade,  branch or
agency.

    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
                                       45

<PAGE>

the UK  through a branch  or  agency  and the Note is, or has been, used, held
or acquired for the purposes of such trade, branch or agency.

    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 branch or agency and such Note is,
or has been,  used,  held or acquired for the purposes of such trade,  branch or
agency.

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., New York, New York and
Chicago, Illinois. 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 such derivative  financial  instruments at May
31, 2002.  Filtronic's policy is, where practical,  to hold surplus cash in
United States dollars.

Financial Instruments Exchange Rate Sensitivity

<TABLE>
<CAPTION>
                                                  May 31, 2002
                                          Expected maturity date May 31,
                             2003    2004    2005         2006    2007    Thereafter      Total
                                                      (thousands)
   <S>                        <C>     <C>      <C>         <C>     <C>          <C>        <C>

   Liabilities
   Long term fixed rate
   US dollar debt               -       -       -    GBP96,193       -             -   GBP96,193
   Average interest rate        -       -       -         10.0%      -             -        10.0%

</TABLE>


The long  term  United  States  dollar  debt in the  table  above  was
translated into sterling at $1.4632 per GBP1.00 at May 31, 2002.


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, 2002,  when  translated
into sterling.

<TABLE>
<CAPTION>
                                                     Exchange rate US$ per GBP
                                                1.4632         1.3169        1.6095
                                                            (thousands)
     <S>                                         <C>           <C>           <C>

   Long term fixed rate US dollar debt       GBP96,193     GBP106,880     GBP87,450
   Annual interest payments                      9,619         10,688         8,745

</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, 2002 used to  translate  the results of
the non-UK operations for the year ended May 31, 2002 were as follows.

<TABLE>
<CAPTION>
                                               May 31, 2002
                                            Functional currency
                           United States             Australian    Chinese
                                 dollars      Euro      dollars       yuan
  <S>                               <C>       <C>         <C>         <C>
Sterling exchange rate            1.4632    1.5662       2.5849    12.1098

</TABLE>

                                       47
<PAGE>


The  table  below  shows  an  analysis  by   functional   currency  of
Filtronic's sales and loss for the year ended May 31, 2002.

<TABLE>
<CAPTION>
                                               Year ended May 31, 2002
                                                  Functional currency
                                 United States                 Australian    Chinese
                        Sterling      dollars          Euro       dollars       yuan       Total

                                                 (thousands)
      <S>             <C>             <C>             <C>            <C>       <C>        <C>
      Sales           GBP101,047    GBP92,020     GBP68,060      GBP8,283  GBP11,137  GBP280,547
      (Loss)/profit       (5,585)     (33,319)        6,601          (506)     3,765     (29,044)

</TABLE>


The table below shows the  sensitivity of  Filtronic's  sales and loss
for the year ended May 31,  2002 to a 10% change in the  exchange  rates of
sterling with the functional currencies.


<TABLE>
<CAPTION>
                                 Year ended May 31, 2002
                     Sterling              Sterling        Sterling
                  at May 31, 2002               10%             10%
                  exchange rates       depreciation    appreciation
                                         (thousands)

       <S>            <C>                 <C>             <C>
    Sales          GBP280,547            GBP300,491      GBP264,228
    Loss              (29,044)              (31,649)        (26,911)

</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.

Not applicable.

ITEM 16. (RESERVED).


                                       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>
           Report of Independent Auditors                                                              F-2
           Independent Auditors' Report                                                                F-3
           Audited Financial Statements
             Consolidated Profit and Loss Accounts for the years ended May 31, 2000, 2001 and 2002     F-4
             Consolidated Statements of Total Recognized Gains and Losses for the years ended May 31,
              2000, 2001 and 2002                                                                      F-5
             Consolidated Balance Sheets at May 31, 2001 and 2002                                      F-6
             Consolidated Cash Flow Statements for the years ended May 31, 2000, 2001 and 2002         F-7
             Consolidated Statements of Movements in Shareholders' Funds for the years ended May 31,
              2000, 2001 and 2002                                                                      F-8
             Notes to the Financial Statements                                                        F-10
</TABLE>


ITEM 19. EXHIBITS

<TABLE>
<CAPTION>

Exhibit Number
<S>     <C>
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     Plan of Reorganization and Merger, dated as of August 22, 2000, between Filtronic plc, Wireless
        Communications Acquisition Corporation, Sigtek, Inc. and James Shea.(b)

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

4.3     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."


(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

</TABLE>


                                       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 22, 2002



                                       50

<PAGE>


                                 CERTIFICATIONS



I, Professor 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  annual  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 annual report; and

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

/s/ J David Rhodes
J David Rhodes
Executive Chairman and Chief Executive Officer

November 22, 2002


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  annual  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 annual report; and

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

/s/ John Samuel
John Samuel
Finance Director and Chief Financial Officer

November 22, 2002


                                       51

<PAGE>

                                 FILTRONIC plc
                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                      Page
           <S>                                                                                        <C>

           Report of Independent Auditors                                                              F-2
           Independent Auditors' Report                                                                F-3
           Audited Financial Statements
             Consolidated Profit and Loss Accounts for the years ended May 31, 2000, 2001 and 2002     F-4
             Consolidated Statements of Total Recognized Gains and Losses for the years ended May 31,
              2000, 2001 and 2002                                                                      F-5
             Consolidated Balance Sheets at May 31, 2001 and 2002                                      F-6
             Consolidated Cash Flow Statements for the years ended May 31, 2000, 2001 and 2002         F-7
             Consolidated Statements of Movements in Shareholders' Funds for the years ended May 31,
              2000, 2001 and 2002                                                                      F-8
             Notes to the Financial Statements                                                        F-10

</TABLE>



                                      F-1
<PAGE>


                                 FILTRONIC plc
                         REPORT OF INDEPENDENT AUDITORS


To the Directors of Filtronic plc

     We have audited the consolidated balance sheets of Filtronic plc as at
May 31, 2001 and 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 three 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 GBP10,010,000  and  GBP11,567,000 at May 31, 2001 and 2002,
respectively,   and  total  sales  of   GBP12,637,000,   GBP12,430,000  and
GBP10,852,000   for  the  years  ended  May  31,   2000,   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,
2001 and 2002,  and the  consolidated  results  of its  operations  and its
consolidated cash flows for each of the three 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 37 of Notes  to the  Financial
Statements).


ERNST & YOUNG LLP

Leeds, England
November 22, 2002


                                      F-2

<PAGE>

       FILTRONIC MICROTEK LIMITED (FORMERLY FILTRONIC (HOLDINGS) LIMITED)
                          INDEPENDENT AUDITORS' REPORT


To the Directors of Filtronic plc

     We have audited the consolidated  balance sheets of Filtronic Microtek
Limited  (formerly  Filtronic  (Holdings)  Limited)  as of May 31, 2001 and
2002, and the related  consolidated profit and loss accounts and statements
of cash flows and movements in  shareholders'  equity for each of the three
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, 2001 and 2002, and the  consolidated  results of its operations and
its consolidated cash flows for each of the three 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-3

<PAGE>

FILTRONIC plc
CONSOLIDATED PROFIT AND LOSS ACCOUNTS

<TABLE>
<CAPTION>

                                                                         Year ended May 31,
                                             Notes                  2000           2001        2002
                                                               (thousands, except per share amounts)

  <S>                                        <C>                 <C>           <C>          <C>
  Sales - continuing operations              2,3,4            GBP222,294     GBP297,434  GBP280,547
  Costs
  (Increase)/decrease in stocks of
  finished goods and
  work in progress                                                (5,534)        (7,410)      6,437
  Raw materials and consumables                                   97,630        138,520     108,776
  Staff costs - excluding share                                   74,062         89,751      84,807
  compensation
  Staff costs - share compensation               6                     -          2,293       1,570
  Depreciation                                                     9,737         16,759      20,433
  Exceptional tangible fixed asset               7                     -              -       7,938
  impairment
  Goodwill amortization                                            3,522          4,884       5,352
  Exceptional goodwill impairment                8                     -         14,078      16,036
  Other operating charges                                         37,814         47,590      42,261
                                                                 217,231        306,465     293,610
  Operating profit/(loss)                      2,3                 5,063         (9,031)    (13,063)
  Net interest payable                          11                (9,878)       (12,531)    (12,638)
  Net financing currency exchange gain          12                   923            335         165

  Loss on ordinary activities before                              (3,892)       (21,227)    (25,536)
  taxation
  Taxation on loss on ordinary activities       13                (4,032)        (1,564)     (3,508)

  Loss for the year (1)                                           (7,924)       (22,791)    (29,044)
  Dividends                                     14                (1,943)        (1,994)     (1,999)

  Deficit for the year                                        GBP (9,867)   GBP (24,785)    (31,043)

  Adjusted (loss)/earnings per share            15
   Basic                                                           (7.82)p       (2.56)p      2.28p
   Diluted                                                         (7.82)p       (2.56)p      2.25p

  Loss per share                                15
   Basic                                                          (11.64)p      (31.24)p    (39.31)p
   Diluted                                                        (11.64)p      (31.24)p    (39.31)p

  Weighted average numbers of shares            15
  outstanding
   Basic                                                          68,055         72,963     73,882
   Diluted                                                        68,055         72,963     74,834

</TABLE>



(1) A summary of the significant adjustments to loss 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 37 of Notes to the Financial Statements.




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


                                      F-4

<PAGE>



                                 FILTRONIC plc
          CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES


<TABLE>
<CAPTION>
                                                                               Year ended May 31,
                                                                       2000            2001         2002
                                                                                 (thousands)
        <S>                                                           <C>            <C>             <C>
        Loss for the year                                        GBP (7,924)   GBP (22,791)  GBP (29,044)
        Currency exchange movement arising on consolidation           4,214          3,047         1,422
        Currency exchange movement on loan                           (3,955)        (5,932)        2,496
        Total recognized gains and losses                        GBP (7,665)   GBP (25,676)  GBP (25,126)

</TABLE>



The statement of  comprehensive  income  required  under United States
generally accepted  accounting  principles is set forth in Note 37 of Notes
to the Financial Statements.





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


                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                                 FILTRONIC plc
                          CONSOLIDATED BALANCE SHEETS


                                                                                         May 31,
                                                                     Notes           2001        2002
                                                                                       (thousands)
                  <S>                                                  <C>         <C>         <C>

                  Fixed assets
                  Intangible assets                                     16     GBP 54,673  GBP 34,720
                  Tangible assets                                       17        126,302     108,589
                                                                                  180,975     143,309
                  Current assets
                  Stocks                                                18         51,274      43,735
                  Debtors                                               19         66,771      55,435
                  Cash                                                              5,589       9,083
                                                                                  123,634     108,253
                  Creditors: amounts falling due within one year        20         55,524      39,774

                  Net current assets                                               68,110      68,479

                  Total assets less current liabilities                           249,085     211,788
                  Creditors: amounts falling due after one year         21        117,083      93,769
                  Provision for deferred tax                            22              -         408
                  Deferred income                                       23          1,515      12,415

                  Net assets                                                   GBP130,487  GBP105,196

                  Capital and reserves
                  Called up share capital                                       GBP 7,365   GBP 7,409
                  Share premium account                                           132,932     134,151
                  Shares to be issued                                               7,616       6,682
                  Revaluation reserve                                                 106         106
                  Profit and loss account                                         (17,532)    (43,152)

                  Equity shareholders' funds (1)                               GBP130,487  GBP105,196


(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 37 of Notes to the
    Financial Statements.

</TABLE>



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


                                      F-6

<PAGE>

<TABLE>
<CAPTION>
                                 FILTRONIC plc
                       CONSOLIDATED CASH FLOW STATEMENTS


                                                                                    Year ended May 31,
                                                                 Notes        2000          2001        2002
                                                                                      (thousands)

   <S>                                                           <C>         <C>           <C>        <C>
   Net cash flow from operating activities                       24(a)   GBP 6,926     GBP 7,522  GBP 64,218

   Returns on investment and servicing of finance
   Interest received                                                         2,545         1,031         358
   Interest paid                                                           (11,414)      (12,716)    (11,629)
   Interest element of finance lease payments                                 (153)           (4)          -
   Debt issue costs paid                                                    (1,008)            -           -

   Net cash flow from returns on investment and servicing of
   finance                                                                 (10,030)      (11,689)    (11,271)

   Tax paid                                                                 (2,305)       (3,091)     (2,345)

   Capital expenditure
   Purchase of tangible fixed assets                                       (54,883)      (40,982)    (11,369)
   Sale of tangible fixed assets                                               170           171       1,312
   Government grants received                                                  750           480       1,034
   Exceptional proceeds from insurance claim                                 1,373             -           -

   Net cash flow from capital expenditure                                  (52,590)      (40,331)     (9,023)

   Acquisitions
   Purchase of subsidiaries                                                      -          (118)          -
   Cash acquired with subsidiaries                                               -            14           -

   Net cash flow from acquisitions                                               -          (104)          -

   Equity dividends paid                                                    (1,725)       (1,964)     (1,992)

   Net cash flow before financing                                          (59,724)      (49,657)     39,587

   Financing
   Issue of shares                                                          75,039         1,844         264
   Capital element of finance lease payments                                (1,326)         (147)          -
   Loans repaid                                                             (1,684)         (567)    (21,982)

   Net cash flow from financing                                             72,029         1,130     (21,718)

   Increase/(decrease) in cash                                   24(b)  GBP 12,305   GBP (48,527) GBP 17,869

</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  37 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 STATEMENTS OF MOVEMENTS IN SHAREHOLDERS' FUNDS

<TABLE>
<CAPTION>
                                Share Capital
                         Ordinary shares of 10p each


                                                Allotted,            Share     Shares                   Profit
                                                issued and         Premium     to be     Revaluation  and Loss
                       Authorized              fully paid up      Account(i)  issued(i)  Reserve(i)    Account     Total

                 (number)     (thousands)    (number)                                   (thousands)

  <S>              <C>             <C>        <C>         <C>        <C>        <C>          <C>      <C>          <C>
  At June 1,
  1999 (ii)
  (iii) (iv)     80,000,000     GBP8,000   59,946,296  GBP5,995   GBP54,172     GBP -      GBP 106  GBP19,845   GBP80,118

  Increase       20,000,000        2,000           -          -           -         -            -          -          -

  Shares
  allotted at
  30p each
  under the
  Initial
  Share Option
  Scheme                  -            -      829,540        83         166         -            -          -         249

  Shares
  allotted at
  up to 505p
  each under
  Executive
  Share Option
  Schemes                 -            -    1,027,334       103       2,815         -            -          -       2,918

  Shares
  allotted at
  up to 680p
  each under
  Savings
  Related
  Share Option
  Schemes                 -            -      133,690        13         164         -            -          -         177

  Shares
  allotted at
  1913p each
  to QUEST                -            -        5,904         1         112         -            -          -         113

  Shares
  allotted at
  730p each
  under the
  rights issue            -            -   10,046,341     1,004      72,334         -            -          -      73,338

  Share issue
  costs                   -            -           -          -      (1,657)        -            -          -      (1,657)

  Deficit for
  the year                -            -           -          -           -         -            -     (9,867)     (9,867)

  Contribution
  to QUEST                -            -           -          -           -         -            -        (99)        (99)

  Currency
  exchange
  movement
  arising on
  consolidation           -            -           -          -           -         -            -      4,214       4,214

  Currency
  exchange
  movement on
  loan                    -            -           -          -           -         -            -     (3,955)     (3,955)

  At May 31,
  2000 (ii)
  (iii) (iv) (v) 100,000,000   GBP10,000  71,989,105   GBP7,199  GBP128,106     GBP -      GBP 106  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) (v)100,000,000    GBP10,000  73,650,402   GBP7,365  GBP132,932  GBP7,616      GBP 106 GBP(17,532) GBP130,487

</TABLE>


                                      F-8
<PAGE>

                                 FILTRONIC plc
    CONSOLIDATED STATEMENTS OF MOVEMENTS IN SHAREHOLDERS' FUNDS (continued)


<TABLE>
<CAPTION>
                                    Share Capital
                                 Ordinary shares of 10p each


                                                                                                         Profit
                        Authorized             issued and           Premium        to be   Revaluation  and Loss
                                              fully paid up        Account(i)    issued(i)  Reserve(i)  Account    Total
                   (number)   (thousands)    (number)                                     (thousands)

  <S>             <C>           <C>            <C>        <C>          <C>         <C>         <C>      <C>          <C>
  At May 31,
  2001 (ii)
  (iii) (iv)     100,000,000   GBP10,000   73,650,402   GBP7,365    GBP132,932    GBP7,616   GBP106  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) (v)100,000,000    GBP10,000  74,091,382    GBP7,409    GBP134,151    GBP6,682    GBP106 GBP(43,152)   GBP105,196


(i)     The share premium account, shares to be issued and revaluation reserve are not distributable.
(ii)    Cumulative exchange translation adjustments, net of related taxation, included in the profit and loss
        account balance at May 31, 2002 were GBP(483,000) (2001: GBP(4,401,000); 2000: GBP(1,516,000)).
(iii)   The parent company's profits available for distribution at May 31, 2002 were GBP28,464,000 (2001:
        GBP11,001,000; 2000: GBP4,475,000).
(iv)    Cumulative goodwill set off against reserves at May 31, 2002 was GBP11,917,000 (2001: GBP11,917,000; 2000:
        GBP11,917,000).
(v)     Included in the profit and loss account balance at May 31, 2002 was GBP353,000 (2001: GBPnil; 2000: GBPnil)
        relating to an undistributable reserve fund of the Chinese subsidiary, Filtronic (Suzhou) Telecommunications Products
        Co. Limited.

</TABLE>


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


                                      F-9

<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.


     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-10

<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-11

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

<TABLE>
<CAPTION>

2.     Geographical segment analysis by origin

                                                                                     Year ended May 31,
                                                                           2000            2001          2002
                                                                                       (thousands)

  <S>                                                                     <C>                  <C>           <C>
  Sales
  United Kingdom                                                       GBP 79,437       GBP114,030    GBP108,951
  Finland                                                                  54,055           54,223        68,936
  United States                                                            86,118          118,946        98,871
  Australia                                                                 8,445           17,774        14,962
  China                                                                       373           12,448        12,857
  Inter segment                                                            (6,134)         (19,987)      (24,030)
                                                                       GBP222,294       GBP297,434    GBP280,547
  Operating profit/(loss) before goodwill amortization and
  impairment,
  tangible fixed asset impairment and share compensation
  United Kingdom                                                          GBP 321        GBP 1,961     GBP 2,862
  Finland                                                                  10,606            3,915        12,316
  United States                                                              (989)           6,209         2,482
  Australia                                                                 1,395            2,315           793
  China                                                                      (401)           1,649         4,332
  Central costs                                                            (2,347)          (3,825)       (4,952)
                                                                        GBP 8,585       GBP 12,224    GBP 17,833
  Operating profit/(loss)
  United Kingdom                                                          GBP 321        GBP 1,961     GBP 2,862
  Finland                                                                   8,767            2,147        10,424
  United States                                                            (2,672)         (13,278)      (26,522)
  Australia                                                                 1,395            2,315           793
  China                                                                      (401)           1,649         4,332
  Central costs                                                            (2,347)          (3,825)       (4,952)
                                                                        GBP 5,063       GBP (9,031)  GBP (13,063)
</TABLE>


                                      F-12

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


<TABLE>
<CAPTION>

2.     Geographical segment analysis - (continued)


                                                                   Year ended May 31,
                                                           2000           2001        2002
                                                    (thousands)
                     <S>                                 <C>              <C>           <C>
                      Net operating assets
                      United Kingdom                 GBP 70,693       GBP 95,439  GBP 70,978
                      Finland                            53,701           55,576      58,462
                      United States                      90,745           90,714      48,325
                      Australia                           5,942           10,871       7,928
                      China                               1,279            7,376       9,026
                      Central                              (684)            (347)       (390)
                      Net operating assets              221,676          259,629     194,329
                      Non-operating liabilities          (4,820)          (3,218)     (4,447)
                      Net debt                          (71,307)        (125,924)    (84,686)
                      Net assets                     GBP145,549       GBP130,487  GBP105,196
                      Total assets
                      United Kingdom                 GBP116,844       GBP112,614  GBP106,520
                      Finland                            71,218           66,948      69,924
                      United States                     113,202          104,047      55,736
                      Australia                           7,686           13,151       9,123
                      China                               1,500            7,849      10,889
                                                     GBP310,450       GBP304,609  GBP251,562
</TABLE>


                                      F-13

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


<TABLE>
<CAPTION>

3.     Business segment analysis


                                                                                      Year ended May 31,
                                                                          2000                2001          2002
                                                                                          (thousands)

  <S>                                                                      <C>              <C>             <C>
  Sales
  Wireless infrastructure                                              GBP131,868         GBP207,777    GBP188,589
  Cellular handset products                                                48,177             42,174        48,845
  Electronic warfare                                                       25,995             25,728        26,977
  Broadband access                                                          9,524             11,273        12,544
  Inter segment                                                              (482)              (751)       (3,889)
  Excluding compound semiconductors                                       215,082            286,201       273,066
  Compound semiconductors                                                   7,212             11,233         7,481
                                                                       GBP222,294         GBP297,434    GBP280,547
  Operating profit/(loss) before goodwill amortization and
  impairment,
  tangible fixed asset impairment and share compensation
  Wireless infrastructure                                               GBP 9,296         GBP 27,212    GBP 31,777
  Cellular handset products                                                11,917              6,979        11,570
  Electronic warfare                                                        1,295               (443)       (1,336)
  Broadband access                                                         (3,365)            (2,769)       (3,030)
  Central costs                                                            (2,347)            (3,825)       (4,952)
  Excluding compound semiconductors                                        16,796             27,154        34,029
  Compound semiconductors                                                  (8,211)           (14,930)      (16,196)
                                                                        GBP 8,585         GBP 12,224    GBP 17,833
  Operating profit/(loss)
  Wireless infrastructure                                               GBP 9,296         GBP 27,212    GBP 31,777
  Cellular handset products                                                10,078              5,211         9,678
  Electronic warfare                                                        1,053               (698)       (1,583)
  Broadband access                                                         (3,365)            (6,407)      (11,999)
  Central costs                                                            (2,347)            (3,825)       (4,952)
  Excluding compound semiconductors                                        14,715             21,493        22,921
  Compound semiconductors                                                  (9,652)           (30,524)      (35,984)
                                                                        GBP 5,063         GBP (9,031)   GBP(13,063)
  Depreciation
  Wireless infrastructure                                               GBP 4,686         GBP  6,567    GBP  7,909
  Cellular handset products                                                 2,579              3,001         3,883
  Electronic warfare                                                        1,388              1,668         1,789
  Broadband access                                                            357                586           881
  Central                                                                     191                309           364
  Excluding compound semiconductors                                         9,201             12,131        14,826
  Compound semiconductors                                                     536              4,628         5,607
                                                                        GBP 9,737         GBP 16,759    GBP 20,433
</TABLE>



                                      F-14

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


<TABLE>
<CAPTION>

3.     Business segment analysis - (continued)

                                                                                   Year ended May 31,
                                                                          2000            2001        2002
                                                                                       (thousands)

        <S>                                                              <C>              <C>          <C>
        Capital expenditure
        Wireless infrastructure                                     GBP 10,748        GBP 10,782   GBP 4,857
        Cellular handset products                                        7,254             7,800       1,938
        Electronic warfare                                               2,478             1,810       2,352
        Broadband access                                                   246             1,862         918
        Central                                                             78               361          55
        Excluding compound semiconductors                               20,804            22,615      10,120
        Compound semiconductors                                         38,239            14,207       1,249
                                                                    GBP 59,043        GBP 36,822  GBP 11,369
        Net operating assets
        Wireless infrastructure                                     GBP 86,771        GBP106,612  GBP 91,675
        Cellular handset products                                       49,481            52,715      48,904
        Electronic warfare                                              21,055            19,679      18,122
        Broadband access                                                 2,897            16,299       7,055
        Central                                                           (684)             (347)       (390)
        Net operating assets excluding compound semiconductors         159,520           194,958     165,366
        Compound semiconductors                                         62,156            64,671      28,963
        Net operating assets                                           221,676           259,629     194,329
        Non-operating liabilities                                       (4,820)           (3,218)     (4,447)
        Net debt                                                       (71,307)         (125,924)    (84,686)
        Net assets                                                  GBP145,549        GBP130,487  GBP105,196

        Total assets
        Wireless infrastructure                                     GBP116,648        GBP130,359  GBP112,647
        Cellular handset products                                       64,358            59,879      55,389
        Electronic warfare                                              28,216            26,008      26,351
        Broadband access                                                 4,399            18,286       8,624
        Central                                                         21,163               648       5,491
        Excluding compound semiconductors                              234,784           235,180     208,502
        Compound semiconductors                                         75,666            69,429      43,060
                                                                    GBP310,450        GBP304,609  GBP251,562
</TABLE>


                                      F-15
<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


<TABLE>
<CAPTION>

4.     Sales analysis by destination

                                                             Year ended May 31,
                                                      2000           2001         2002
                                                                 (thousands)
                            <S>                     <C>             <C>            <C>
                            United Kingdom      GBP 43,079      GBP 43,313     GBP 14,108
                            Europe                  53,247          78,274        112,976
                            North America           95,336         128,168         84,800
                            Asia Pacific            30,632          47,679         68,663
                                                GBP222,294      GBP297,434     GBP280,547

</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,
                                                         2000       2001    2002
                            <S>                          <C>        <C>      <C>
                                                            %        %        %
                            Nokia Corporation            32.2       35.9    52.1
                            Lucent Technologies, Inc     13.4       21.7    19.5
                            Motorola, Inc                13.9       12.5     6.8
</TABLE>



<TABLE>
<CAPTION>

5.     Profit and loss account items

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

                                                                                             Year ended May 31,
                                                                                         2000        2001        2002
                                                                                                 (thousands)
  <S>                                                                                  <C>         <C>         <C>
  Research and development costs                                                   GBP 26,352  GBP 31,979  GBP 32,131
  Loss/(profit) on disposal of tangible fixed                                              33        (70)         191
  assets
  Auditors' remuneration                          - audit fees                            118         141         221
                                                  - other fees                            166         108          63
  Operating lease rentals                         - land and buildings                  1,224       1,272       1,383
                                                  - other                               1,444       2,079       2,369
  Government grants released                                                              (17)       (167)       (134)
  Wages and salaries                                                                   63,521      77,864      73,611
  Social security costs                                                                 6,346       7,158       6,844
  Other pension costs                                                                   4,195       4,729       4,352
  Depreciation on assets held under finance                                               148           -           -
  leases
  Depreciation on owned assets                                                          9,589      16,759      20,433

</TABLE>


In addition, the auditors, Ernst & Young LLP, charged the following amounts for
professional services in connection with:

<TABLE>
<CAPTION>
                                                                                              Year ended May 31,
                                                                                         2000        2001        2002

                  <S>                                                                    <C>         <C>         <C>
                  Debt issue - included in debt issue costs                            GBP 47       GBP -       GBP -
                  Rights issue - included in share issue costs                             25           -           -

</TABLE>

                                      F-16
<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


6.     Share compensation

<TABLE>
<CAPTION>
                                                                                               Year ended May 31,
                                                                                         2000        2001         2002
                                                                                                  (thousands)
                   <S>                                                                   <C>         <C>         <C>
                  Share compensation                                                    GBP -    GBP 2,293   GBP 1,570
</TABLE>



     As a result of the acquisition of Filtronic Sigtek, Inc. on August 29,
2000, a maximum cumulative charge of GBP4,958,000,  comprising the issue of
a maximum of 421,226  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, 2002 was GBP3,863,000 (2001: GBP2,293,000; 2000: GBPnil).



7.     Exceptional tangible fixed asset impairment

<TABLE>
<CAPTION>
                                                                                                Year ended May 31,
                                                                                          2000       2001        2002
                                                                                                  (thousands)
                <S>                                                                      <C>         <C>         <C>
                Exceptional tangible fixed asset impairment                              GBP -      GBP -   GBP 7,938
</TABLE>


     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,
                                                                                         2000        2001          2002
                                                                                                 (thousands)

                <S>                                                                      <C>        <C>         <C>
                Exceptional goodwill impairment                                          GBP -    GBP 14,078  GBP 16,036

</TABLE>


     GBP10,378,000 (2001:  GBP14,078,000;  2000: GBPnil) of the exceptional
goodwill  impairment  arose  in  respect  of  the  compound   semiconductor
operation at Filtronic Solid State and GBP5,658,000  (2001:  GBPnil;  2000:
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 Filtronic Sigtek,  Inc., 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 9  years.  This  is  deemed
appropriate  due to the time  cycles  associated  with  electronic  warfare
programmes. With respect to the Newton Aycliffe investment, the calculation
period  before  assuming a zero long term growth rate  extended to 8 years.
This is deemed appropriate as the sales revenue projections were based upon
independent forecast data extending through that period.


                                      F-17

<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,

                                                                                         2000     2001        2002
                                                                                                 (number)

                               <S>                                                       <C>       <C>        <C>
                              United Kingdom                                            1,111      1,494     1,409
                              Finland                                                     883      1,006       841
                              United States                                               778        886       649
                              Australia                                                   108        210       216
                              China                                                        20        133       202
                              Japan                                                         -          -         1
                                                                                        2,900      3,729     3,318

</TABLE>


10.     Directors' emoluments

<TABLE>
<CAPTION>
                                                                                              Year ended May 31,
                                                                                         2000        2001         2002
     <S>                                                                                  <C>        <C>       <C>
     Emoluments                                                                    GBP634,390  GBP765,477 GBP1,028,010
     Company contributions paid to money purchase pension schemes                      12,040      13,446       13,967
                                                                                   GBP646,430  GBP778,923 GBP1,041,977
     Accrued pension at end of year                                                GBP 63,864  GBP135,381   GBP158,083

</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,
                                                                                        2000        2001      2002
                                                                                                  (number)
                <S>                                                                      <C>        <C>       <C>
                Members of the defined contribution schemes                                1            1       1
                Members of the defined benefit scheme                                      3            5       5
</TABLE>


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

<TABLE>
<CAPTION>
                                                                                               Year ended May 31,
                                                                                        2000         2001     2002
                 <S>                                                                     <C>         <C>      <C>
                 Emoluments                                                       GBP170,919   GBP179,220 GBP188,066
                 Accrued pension at end of year                                       54,433       62,367     68,438
</TABLE>


                                      F-18

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


11.     Net interest payable

<TABLE>
<CAPTION>
                                                                                                Year ended May 31,
                                                                                        2000          2001        2002
                                                                                                  (thousands)
            <S>                                                                          <C>          <C>     <C>
            Interest receivable
            Interest on bank deposits                                               GBP 2,545    GBP 1,031     GBP 358
            Interest payable
            Interest on bank borrowings                                                    81          603         460
            Interest on other loans                                                    11,333       12,113      11,169
            Finance lease interest                                                        153            4           -
            Debt issue costs - amortization                                               856          842         824
            Debt issue costs - loss on repayment of debt                                    -            -         543
                                                                                       12,423        13,562     12,996
            Net interest payable                                                    GBP 9,878    GBP 12,531 GBP 12,638

</TABLE>


12.     Net financing currency exchange gain

<TABLE>
<CAPTION>
                                                                                                Year ended May 31,
                                                                                         2000         2001        2002
                                                                                                  (thousands)
            <S>                                                                           <C>          <C>        <C>
            Currency exchange gain/(loss) on cash balances                          GBP 4,672       GBP 335   GBP (224)
            Currency exchange (loss)/gain on loan                                      (3,749)            -        389
                                                                                      GBP 923       GBP 335    GBP 165

</TABLE>


                                      F-19
<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


13.     Taxation on loss on ordinary activities

<TABLE>
<CAPTION>

                                                                                              Year ended May 31,
                                                                                        2000          2001       2002
                                                                                                   (thousands)
        <S>                                                                             <C>         <C>          <C>
        Current tax
        United Kingdom                                                               GBP 230         GBP 130    GBP 162
        Overseas                                                                       3,802           1,434      2,938
                                                                                   GBP 4,032       GBP 1,564  GBP 3,100
        Deferred tax
        Overseas origination and reversal of timing differences                            -               -        408
                                                                                   GBP 4,032       GBP 1,564  GBP 3,508

</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 where taxable  profits  cannot be
relieved by losses available in the United Kingdom and 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,
                                                                                       2000            2001       2002
                                                                                                   (thousands)
  <S>                                                                                 <C>             <C>        <C>
      Loss on ordinary activities before tax                                     GBP (3,892)    GBP (21,227)GBP (25,536)
      Loss on ordinary activities multiplied by standard rate of
      corporation tax in the UK of 30%                                           GBP (1,168)     GBP (6,368) GBP (7,661)
      Effect of:
      Disallowable items                                                                319             208         166
      Disallowable goodwill amortisation and impairment                                 537             918       2,861
      Depreciation and impairment in advance of capital allowances                      426           1,441       3,298
      Goodwill amortisation and impairment in advance of tax allowance                    -           4,165       2,966
      Other timing differences                                                         (147)            667         183
      Tax losses carried forward                                                      7,496           1,305       2,031
      Start-up years profit exemption in China                                            -            (510)     (1,130)
      Foreign exchange differences                                                     (316)           (254)        (65)
      Allowable share option deductions                                              (3,115)           (696)        (20)
      Disallowable share compensation                                                    -              688         471
      Current tax                                                                 GBP 4,032       GBP 1,564   GBP 3,100

</TABLE>

     The  directors  expect that the effect of losses  brought  forward and
other  deductions will continue to result in taxable profits arising in the
Company  being  substantially  relieved,  except in Finland.  Therefore the
Company tax charge is expected  to be  primarily  the tax charge on profits
arising in Finland.


                                      F-20

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


13.     Taxation on loss on ordinary activities - (continued)

        Loss before taxation is analyzed as follows:

<TABLE>
<CAPTION>
                                                                                             Year ended May 31,
                                                                                       2000        2001        2002
                                                                                               (thousands)

                          <S>                                                           <C>         <C>        <C>
                          United Kingdom                                          GBP (3,504)  GBP (5,423) GBP (15,338)
                          Overseas                                                      (388)     (15,804)     (20,198)
                                                                                  GBP (3,892) GBP (21,227) GBP (25,536)
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                              Year ended May 31,
                                                                                       2000        2001        2002
                                                                                         %           %           %
      <S>                                                                               <C>         <C>         <C>
      UK statutory rate                                                                30.0        30.0        30.0
      Adjusted for:
      Disallowable items                                                               (8.2)       (1.0)       (0.7)
      Disallowable goodwill amortisation and impairment                               (13.8)       (4.3)      (11.2)
      Depreciation and impairment in advance of capital allowances                    (10.9)       (6.8)      (14.5)
      Goodwill amortisation and impairment in advance of tax allowance                    -       (19.6)      (11.6)
      Other timing differences                                                          3.8        (3.1)       (0.7)
      Tax losses carried forward                                                     (192.6)       (6.1)       (8.0)
      Start-up years profit exemption in China                                            -         2.4         4.4
      Foreign exchange differences                                                      8.1         1.2         0.3
      Allowable share option deductions                                                80.0         3.3         0.1
      Disallowable share compensation                                                     -        (3.3)       (1.8)

      Effective rate                                                                 (103.6)       (7.3)      (13.7)

</TABLE>


                                      F-21

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


14.     Dividends
<TABLE>
<CAPTION>
                                                           Year ended May 31,
                                    2000           2001         2002       2000           2001       2002
                                               (per share)                             (thousands)

     <S>                           <C>            <C>           <C>       <C>            <C>        <C>
     Interim dividend - paid       0.90p          0.90p        0.90p    GBP 647        GBP 668    GBP 666
     Final dividend - proposed     1.80p          1.80p        1.80p      1,296          1,326      1,333
                                   2.70p          2.70p        2.70p  GBP 1,943      GBP 1,994  GBP 1,999

</TABLE>


15.     Loss per share

<TABLE>
<CAPTION>
                                                                                              Year ended May 31,
                                                                                   2000             2001             2002
                                                                                       (thousands, except shares and
                                                                                            per share amounts)
  <S>                                                                               <C>             <C>           <C>
  Adjusted basic (loss)/earnings per share                                        (7.82)p         (2.56)p        2.28p
  Effect of adjusted items net of taxation                                        (3.82)p        (28.68)p      (41.59)p

  Basic loss per share                                                           (11.64)p        (31.24)p      (39.31)p

  Adjusted diluted (loss)/earnings per share                                      (7.82)p         (2.56)p        2.25p
  Effects of adjusted items net of taxation                                       (3.82)p        (28.68)p      (41.56)p

  Diluted loss per share                                                         (11.64)p        (31.24)p      (39.31)p

  Adjusted (loss)/profit                                                     GBP (5,325)     GBP (1,871)   GBP  1,687
  Goodwill amortization                                                          (3,522)         (4,884)       (5,352)
  Exceptional goodwill impairment                                                     -         (14,078)      (16,036)
  Exceptional tangible fixed asset impairment                                         -               -        (7,938)
  Share compensation                                                                  -          (2,293)       (1,570)
  Net financing currency exchange gain                                              923             335           165

  Loss on ordinary activities after taxation                                 GBP (7,924)     GBP(22,791)   GBP(29,044)

  Weighted average number of shares in issue                                 68,054,710      72,962,735    73,881,832
  Dilution effect of share options                                                    -               -       243,482
  Dilution effect of contingently issuable                                            -               -       708,543
  shares

  Diluted weighted average number of shares                                  68,054,710      72,962,735    74,833,857

</TABLE>

     The adjusted earnings per share figures have been provided in order that
the effects of the adjusted items on reported earnings per share can be fully
appreciated.


                                      F-22

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


16.     Intangible fixed assets

<TABLE>
<CAPTION>
                                      Goodwill
                                     (thousands)
Cost
<S>                                     <C>
At June 1, 1999                      GBP 69,932
Currency exchange movement                  502
At May 31, 2000                          70,434
Additions                                 8,548
Currency exchange movement                  762
At May 31, 2001                      GBP 79,744
Currency exchange movement                1,188

At May 31, 2002                          80,932

Amortization
At June 1, 1999                       GBP 2,548
Charge for the year                       3,522
Currency exchange movement                   13

At May 31, 2000                           6,083
Charge for the year                       4,884
Exceptional goodwill impairment          14,078
Currency exchange movement                   26

At May 31, 2001                      GBP 25,071
Charge for the year                       5,352
Exceptional goodwill impairment          16,036
Currency exchange movement                 (247)

At May 31, 2002                      GBP 46,212

Net book value at May 31, 2002       GBP 34,720
Net book value at May 31, 2001       GBP 54,673
Net book value at May 31, 2000       GBP 64,351

</TABLE>



                                      F-23

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


17.     Tangible fixed assets
<TABLE>
<CAPTION>
                                                  Freehold land    Plant and        Fixtures       Motor
                                                  and buildings    machinery    and fittings    vehicles       Total
                                                                                 (thousands)
  <S>                                                   <C>            <C>            <C>           <C>       <C>
  Cost
  At June 1, 1999                                    GBP 25,687   GBP 37,751       GBP 4,738     GBP 317  GBP 68,493
  Additions                                              19,523       37,185           2,282          53      59,043
  Disposals                                                   -         (385)           (120)       (156)       (661)
  Currency exchange movement                                267          624             169           9       1,069
  At May 31, 2000                                        45,477       75,175           7,069         223     127,944
  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                                    GBP 47,830   GBP108,839      GBP 10,612     GBP 113  GBP167,394

  Depreciation
  At June 1, 1999                                       GBP 889   GBP 10,429       GBP 1,445     GBP 120  GBP 12,883
  Charge for the year                                       620        8,024           1,015          78       9,737
  Disposals                                                   -         (228)            (75)       (155)       (458)
  Currency exchange movement                                 23          153              63           5         244

  At May 31, 2000                                         1,532       18,378           2,448          48      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                                     GBP 3,500   GBP 50,338       GBP 4,913      GBP 54  GBP 58,805

  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
  Net book value at May 31, 2000                     GBP 43,945   GBP 56,797       GBP 4,621     GBP 175  GBP105,538

</TABLE>

                                      F-24

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


18.     Stocks

<TABLE>
<CAPTION>
                                                                     May 31,
                                                                2001        2002
                                                                  (thousands)
                                      <S>                      <C>           <C>
                            Raw materials                 GBP 30,442  GBP 29,340
                            Work in progress                  10,531       7,595
                            Finished goods                    10,301       6,800
                                                          GBP 51,274  GBP 43,735

</TABLE>


19.     Debtors

<TABLE>
<CAPTION>

                                                                     May 31,
                                                                2001        2002
                                                                   (thousands)
                                      <S>                      <C>           <C>
                            Trade debtors                 GBP 58,612  GBP 48,925
                            Current tax                            -         422
                            Other taxation                     3,427       1,638
                            Prepayments                        4,732       4,450
                                                          GBP 66,771  GBP 55,435
</TABLE>



20.     Creditors: amounts falling due within one year

<TABLE>
<CAPTION>
                                                                    May 31,
                                                                2001        2002
                                                                  (thousands)
                            <S>                                <C>           <C>
                            Bank overdraft                GBP 14,202       GBP -
                            Loans                                228           -
                            Trade creditors                   22,514      19,061
                            Current tax                        1,892       3,128
                            Other taxation and social security 1,892       1,452
                            Accruals                          13,470      14,800
                            Dividend payable                   1,326       1,333
                                                          GBP 55,524  GBP 39,774
</TABLE>



                                      F-25

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


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

<TABLE>
<CAPTION>
                                                                     May 31,
                                                                2001        2002
                                                                  (thousands)
                              <S>                              <C>           <C>
                              Amounts falling due:
                              Loans between 1 and 2 years     GBP 70       GBP -
                              Loans between 2 and 3 years         53           -
                              Loans between 3 and 4 years         58      96,193
                              Loans between 4 and 5 years    119,727           -
                              Loans over 5 years                 966           -
                              Less deferred debt issue costs  (3,791)     (2,424)
                                                          GBP117,083  GBP 93,769

</TABLE>


Deferred debt issue costs are being amortized over the period to December 1,
2005.

Details of loans are as follows:

<TABLE>
<CAPTION>

                                                                                                          May 31,
   Repayment terms                                    Currency    Interest rate     Security        2001        2002
                                                                                                       (thousands)
   <S>                                                      <C>           <C>      <C>            <C>         <C>
   Repaid during the year (l)                              US$            6.00%    Equipment      GBP 79       GBP -
   Repaid during the year (l)                              US$            6.82%    Equipment       1,232           -
   Repaid during the year (l)                              US$            7.00%     Property         123           -
   Senior Notes repayable December 1, 2005 (2)             US$           10.00%         None     119,668      96,193
                                                                                                 121,102      96,193
   Less deferred debt issue costs                                                                 (3,791)     (2,424)
                                                                                              GBP117,311  GBP 93,769
   Loans due within one year                                                                     GBP 228       GBP -
   Loans due after one year                                                                      117,083      93,769
                                                                                              GBP117,311  GBP 93,769


(1)     Loans from State of Maryland
(2)     2001: $170,000,000; 2002: $140,750,000

</TABLE>



                                      F-26


<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


22.     Provision for deferred tax

<TABLE>
<CAPTION>
                                                                                    May 31,
                                                                                 2001     2002
                                                                                   (thousands)
                        <S>                                                      <C>     <C>
                        Capital allowances in advance of depreciation           GBP -  GBP 408
                        Opening balance                                         GBP -    GBP -
                        Deferred tax charge                                         -      408
                        Closing balance                                         GBP -  GBP 408

</TABLE>


The implementation of Financial Reporting Standard 19 has had no material
effect on the group's taxation charge for prior years.

Deferred tax assets which have not been recognised:

<TABLE>
<CAPTION>
                                                                                              May 31,
                                                                                          2001        2002
                                                                                           (thousands)
            <S>                                                                        <C>           <C>
            Depreciation in advance of capital allowances     - United Kingdom       GBP 1,501   GBP 2,973
                                                              - Overseas                     -       2,208
            Amortisation in advance of tax allowances         - Overseas                 3,650       8,592
            Trading losses available for relief against
            future trading profits                            - United Kingdom           1,601       1,582
                                                              - Overseas                12,505      14,707
                                                                                    GBP 19,247  GBP 30,062
</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-27

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


23.     Deferred income
<TABLE>
<CAPTION>
                                       Deferred licence fee        Deferred government grants             Total
                                             May 31,                        May 31,                       May 31,
                                        2001           2002            2001       2002               2001        2002
                                           (thousands)                    (thousands)                  (thousands)
  <S>                                  <C>            <C>             <C>         <C>                 <C>       <C>
  Opening balance                      GBP -          GBP -         GBP 1,202  GBP 1,515         GBP 1,202   GBP 1,515
  Received during                          -         10,000               480      1,034               480      11,034
  the year
  Released during                          -              -              (167)      (134)             (167)       (134)
  the year
  Closing balance                          -     GBP 10,000         GBP 1,515  GBP 2,415         GBP 1,515  GBP 12,415
</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 fee revenue will be  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 event
occurs before May 1, 2003, then the whole fee becomes repayable and if such
an  event  occurs  thereafter,  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-28


<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


24.     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,
                                                                     2000            2001          2002
                                                                                  (thousands)
          <S>                                                       <C>            <C>            <C>
          Operating profit/(loss)                               GBP 5,063      GBP (9,031)  GBP (13,063)
          Goodwill amortization                                     3,522           4,884         5,352
          Exceptional goodwill impairment                               -          14,078        16,036
          Share compensation                                            -           2,293         1,570
          Depreciation                                              9,737          16,759        20,433
          Exceptional tangible fixed asset impairment                   -               -         7,938
          Loss/(profit) on disposal of tangible fixed assets           33             (70)          191
          Deferred licence fee income received                          -               -        10,000
          Government grants released                                  (17)           (167)         (134)
          Movement in stocks                                      (15,462)        (10,642)        7,445
          Movement in debtors                                     (17,217)         (4,307)       12,115
          Movement in creditors                                    21,267          (6,275)       (3,665)

          Net cash flow from operating activities               GBP 6,926       GBP 7,522    GBP 64,218

</TABLE>



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

<TABLE>
<CAPTION>
                                                                             Year ended May 31,
                                                                     2000           2001          2002
                                                                              (thousands)
                 <S>                                                <C>           <C>             <C>
          Increase/(decrease) in cash                          GBP 12,305    GBP (48,527)   GBP 17,869
          Cash flow from debt                                       2,692            567        21,982
          Cash flow from finance leases                             1,326            147             -
          Change in net debt from cash flows                       16,323        (47,813)       39,851
          Loans acquired with subsidiaries                              -           (300)            -
          Non-cash movement                                        (1,672)          (842)       (1,367)
          Currency exchange movement                               (3,108)        (5,662)        2,754
          Movement in net debt                                     11,543        (54,617)       41,238
          Opening net debt                                        (82,850)       (71,307)     (125,924)

          Closing net debt                                    GBP (71,307)   GBP(125,924)  GBP (84,686)

</TABLE>


                                      F-29

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


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

(c) Analysis of movement in net debt

<TABLE>
<CAPTION>
                                                       At                                Currency            At
                                                  June 1,        Cash       Non-cash     exchange       May 31,
                                                     1999        flow       movement     movement          2000
                                                                         (thousands)
        <S>                                       <C>           <C>           <C>          <C>          <C>
        Cash                                   GBP 22,459  GBP 12,305          GBP -    GBP 4,781    GBP 39,545
        Loans due within one year                    (431)                                                 (240)
        Loans due after one year                 (103,452)                                             (110,465)
        Total loans                              (103,883)      2,692         (1,672)      (7,842)     (110,705)
        Finance leases due within one year           (590)                                                 (147)
        Finance leases due after one year            (836)                                                    -
        Total finance leases                       (1,426)      1,326              -          (47)         (147)
        Net debt                              GBP (82,850) GBP 16,323     GBP (1,672)  GBP (3,108)  GBP (71,307)

</TABLE>


<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)

</TABLE>


                                      F-30


<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


25.     Financial commitments

     Annual commitments under non-cancellable operating leases which expire as
follows:

<TABLE>
<CAPTION>
                                    May 31,
                                2001       2002
                                  (thousands)
<S>                          <C>       <C>
Land and buildings
In two to five years         GBP 361    GBP 453
In over five years               963        986
                           GBP 1,324  GBP 1,439
Other
In two to five years       GBP 2,529  GBP 2,127
</TABLE>



     The aggregate payments, for which there are commitments under operating
leases at May 31, 2002, fall due as follows:

<TABLE>
<CAPTION>
                               Land
                                and
                          buildings          Other      Total
                                        (thousands)
<S>                          <C>              <C>       <C>
Within 1 year             GBP 1,439      GBP 2,127  GBP 3,566
Between 1 and 2 years         1,108            879      1,987
Between 2 and 3 years           586            261        847
Between 3 and 4 years           468             70        538
Between 4 and 5 years           435              -        435
After 5 years                 1,030              -      1,030
                          GBP 5,066      GBP 3,337  GBP 8,403

</TABLE>


26.     Capital commitments

<TABLE>
<CAPTION>
                                                                                               May 31,
                                                                                           2001       2002
                                                                                             (thousands)
<S>                                                                                        <C>         <C>
Capital expenditure contracted for but not provided in the financial statements         GBP 2,226    GBP 2,187

</TABLE>



                                      F-31


<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


27.     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, 2001. 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  GBP1,725,000  (2001:  GBP1,548,000;
2000: GBP1,197,000). 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 GBP99,121.

     The most recent  actuarial  variation  showed that the market value of
the scheme's assets was GBP12,300,000 and that the actuarial value of those
assets  represented  90% 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 GBP1,796,000 (2001: GBP2,460,000; 2000: GBP2,307,000).

     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 GBP504,000 (2001: GBP471,000; 2000:
GBP575,000).

     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  GBP313,000  (2001:
GBP237,000; 2000: GBP104,000).


                                      F-32

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


28.     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, 2001.  The results of that
valuation have been projected to May 31, 2002 and then  recalculated  based
on  the  following   assumptions,   which  the  directors  consider  to  be
appropriate.

Rate of inflation                                       2.75%
Salary increase rate                                    4.25%
LPI Increase for post April 1997 pensions in payment    2.50%
Revaluation of deferred pensions                        2.75%
Liability discount rate                                 6.00%


     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:

                                                            Expected
                                                          return for
                                               Value    year ending
                                              May 31,        May 31,
                                               2002           2003
                                                   (thousands)
Equities                                 GBP 10,793             7%
Bonds                                         1,837             5%
Property                                        308             7%
Cash                                            695             5%
Total scheme assets                          13,633
Present value of scheme liabilities         (18,500)
Deficit in the scheme                    GBP (4,867)

     Were the  Company to be  required  to  contribute  the amount of FRS17
deficit to the scheme,  the  contribution  would be  deductible  for United
Kingdom  corporation  tax. Tax relief at 30% would amount to  GBP1,460,000,
which would be added to trading losses  available for relief against future
trading profits. The 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 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 scheme at
May 31, 2002.  The Minimum  Funding  Requirement  valuation at July 1, 2001
indicated a surplus with a funding level of 126%.

     If the net pension  liability  had been  recognised  in the  financial
statements,  the  group's  net assets and profit and loss  account  reserve
would have been as follows:

                                                                May 31,
                                                                 2002
                                                              (thousands)

Net assets excluding FRS17 pension deficit                     GBP105,196
Net pension deficit                                                (4,867)
Net assets including pension deficit                           GBP100,329
Profit and loss account reserve excluding pension deficit         (43,152)
Net pension deficit                                                (4,867)
Profit and loss account reserve including pension deficit     GBP (48,019)


                                      F-33

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


29.  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)

29.  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, 2002 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      149-2,030      7,395,022                    6.9         479              3,997,925         425
  Option Schemes
  Savings Related        120-680        398,609                    2.6         550                 23,670         167
  Share Option
  Schemes

</TABLE>



                                      F-35


<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

29.     Share options - (continued)

Movement in options outstanding are as follows:

<TABLE>
<CAPTION>

                                   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          1,797,020          30          7,701,356         381             1,001,627         301
  at June 1, 1999
  Granted                              -                      1,332,531       1,011               494,467         655
  Exercised                     (829,540)         30         (1,027,334)        284              (227,701)        127
  Lapsed or cancelled             (6,460)         30           (526,396)        418               (51,676)        431
  Options outstanding            961,020          30          7,480,157         504             1,216,717         472
  at May 31, 2000
  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                  -                      7,123,207         491               782,801         441
  at May 31, 2001
  Granted                              -                        788,987         404                     -
  Exercised                            -                        (27,623)        215              (172,659)        149
  Lapsed or cancelled                  -                       (489,549)        546              (211,533)        474
  Options outstanding                  -                      7,395,022         479               398,609         550
  at May 31, 2002
  Options exercisable                  -                      3,997,925         425                23,760         167
  at May 31, 2002

</TABLE>


<TABLE>
<CAPTION>
                                                                 Fair value    Fair value    Fair value
                                                                    (pence)       (pence)       (pence)

                <S>                                                     <C>           <C>           <C>
                Fair values of options granted, where the
                stock price was equal to the exercise price,
                in the year ended May 31,
                2000                                                      -           513             -
                2001                                                      -           245             -
                2002                                                      -           285             -
                Fair values of options granted, where the
                stock price exceeded the exercise price, in
                the year ended May 31,
                2000                                                      -             -           499
                2001                                                      -             -             -
                2002                                                      -             -             -

</TABLE>


The  fair  values  of  options   granted  were  estimated   using  the
Black-Scholes option pricing model with the following assumptions: dividend
yield - 2000 0.26%, 2001 1.06%, 2002 1.42%; expected volatility - 2000 62%,
2001 98%, 2002 110%; risk free interest rate - 2000 5.00%, 2001 5.00%, 2002
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)


30.  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 GBP461,000  (2001:
GBPnil; 2000: GBP99,000) to the QUEST. Filtronic QUEST Trustees Limited has
waived its right to dividends on the 35,878 shares held by the QUEST, which
had a market value of GBP68,000 at May 31, 2002.


31.  Contingently issuable shares

     The contingently issuable shares outstanding at May 31, 2002 were:

<TABLE>
<CAPTION>

                                                  Vesting period               Number
<S>                                         <C>                                <C>
Acquisition contingent consideration     August 22, 2000 to August 22, 2004    408,018
Share compensation                       August 22, 2000 to August 22, 2004    252,736
                                                                               660,754
</TABLE>


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


                                      F-37

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


32.  Related party transactions

     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, 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 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,  a company  which is wholly owned by Bradford
City  (Holdings)  Plc, in which  Professor J D Rhodes and his family have a
material interest.

     Filtronic  Components  Limited  earned  royalties  of  GBP11,244  from
Photarc  Surveys  Limited,  a  company  in  which J Samuel  has a  material
interest. 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.


2000

     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 GBP18,650, with Schofield Sweeney.

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

     Filtronic  Comtek (UK) Limited  incurred  costs of  GBP36,012  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 GBP6,484 from Photarc
Surveys Limited. At May 31, 2000 GBP8,057 was outstanding.


                                      F-38

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


33.     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,
                                  2001       2002
                                   (thousands)
<S>                             <C>       <C>
Sterling                        GBP 24  GBP 5,396
US dollar                        3,590      1,395
Euro                             1,477      1,347
Australian dollar                  403        358
Chinese yuan                        55        565
Japanese yen                        40         22
                             GBP 5,589  GBP 9,083

</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     Floating    Interest
                 interest rate    fixed period                rate         rate        free       Total
                           (%)         (years)                             (thousands)
<S>                       <C>              <C>               <C>          <C>        <C>        <C>

May 31, 2002
Sterling                     -               -               GBP -        GBP -  GBP 10,000  GBP 10,000
US dollar                 10.0             3.5              96,193            -           -      96,193
                                                        GBP 96,193        GBP -  GBP 10,000  GBP106,193
May 31, 2001
Sterling                     -               -               GBP -   GBP 14,202       GBP -  GBP 14,202
US dollar                 10.0             4.6             121,102            -           -     121,102
                                                        GBP121,102   GBP 14,202       GBP -  GBP135,304

</TABLE>

     Floating rate financial  liabilities comprised sterling overdraft that
carried  interest  at bank base rate plus  1.25%.  At May 31, 2002 the bank
base rate was 4%. The maturity profile of financial liabilities is shown in
note 21.

                                      F-39

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

33.     Financial instruments - (continued)

Borrowing facilities

     At  May  31,  2002  the  Company  had a  bank  borrowing  facility  of
GBP31,000,000  (2001:  GBP25,000,000),  all  of  which  was  undrawn.  This
facility  was renewed in July 2002 and is due to review again in June 2003.
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.


Currency exposures

<TABLE>
<CAPTION>
                                                                                 Net US dollar
                                                                                    monetary
                                                                              assets/(liabilities)
                                                                                      May 31,
                                                                                 2001         2002
                                                                                    (thousands)
<S>                                                                             <C>           <C>
Functional currency of operations:
Sterling                                                                     GBP 5,687 GBP (11,413)
Euro                                                                               687           -
Australian dollar                                                                3,929       4,260
                                                                            GBP 10,303  GBP (7,153)
</TABLE>

     Currency  exchange  movements  arising  on  the  $140,750,000   (2001:
$170,000,000)  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.

     The currency exchange movement on the Senior Notes comprised:

<TABLE>
<CAPTION>
                                                                                 Year ended May 31,
                                                                                   2001       2002
                                                                                    (thousands)
<S>                                                                            <C>            <C>
Currency exchange (loss)/gain taken directly to reserves                     GBP (5,932) GBP 2,496
Currency exchange gain taken through the profit and loss account                      -        389
                                                                             GBP (5,932) GBP 2,885

</TABLE>


                                      F-40

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

33.  Financial instruments - (continued)

Fair values of financial assets and liabilities

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

<TABLE>
<CAPTION>
                                                                         May 31,
                                                         2001                       2002
                                                     Carrying        Fair       Carrying        Fair
                                                       amount       value         amount       value
                                                                       (thousands)
                    <S>                                <C>           <C>            <C>         <C>
                    Assets
                    Cash and short-term deposits    GBP 5,589   GBP 5,589      GBP 9,083   GBP 9,083
                    Liabilities
                    Long-term loans                 GBP 1,434   GBP 1,434          GBP -       GBP -
                    Senior Notes - gross           GBP119,668  GBP 74,194     GBP 96,193  GBP 96,073
                    Deferred debt issue costs          (3,791)     (3,791)        (2,424)     (2,424)
                    Senior Notes - net             GBP115,877  GBP 70,403     GBP 93,769  GBP 93,649

</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.

Long-term loans: the carrying amount reported in the balance sheet for long-term
loans equates to their 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)


34. 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.

Analysis of acquisition

<TABLE>
<CAPTION>
                                                                                                      (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)

34.     Acquisition of subsidiary - (continued)

Unaudited pro forma information

     The unaudited pro forma effect of this  acquisition on the results for
2000 and 2001,  assuming it was consummated at the beginning of the year in
which it was acquired and at the beginning of the immediate preceding year,
is as follows.

                                        Year ended May 31,
                                         2000        2001
                                       (thousands, except
                                       per share amounts)

Sales                               GBP225,606   GBP298,262
Loss for the year                      (13,524)     (24,191)
Loss per share - basic                  (19.87)p     (33.16)p
               - diluted                (19.87)p     (33.16)p



35.      Subsequent event

     On  July  26,   2002  the  board   decided   to  close  the   compound
semiconductors  fabrication facility at Filtronic Solid State, Santa Clara,
California.  The  consequent  impairment to the carrying  value of tangible
fixed  assets  is set out in note 7.  Closure  costs  are  estimated  to be
GBP2,500,000  and will be charged  to the  profit  and loss  account in the
financial year ending May 31, 2003.

36.      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, 2000,  2001
and 2002,  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)

37.  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

     Goodwill  arising  on  consolidation  before  June 1, 1998 was set off
directly against reserves.  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,  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.

     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)


37.  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, 2002
was GBP2,758,000 (2001: GBP2,890,000).

     Financing costs

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

     Under UK GAAP, the exchange gain on US dollar borrowings which are
financing the overseas investments is taken to reserves net of related taxation.
Under US GAAP,  only the gain  relating  to that  part of the  borrowings  which
qualifies  as a hedge of the  Company's  US  dollar  investments,  less  related
taxation, is taken to shareholders' equity as a component of other comprehensive
income; the remainder, less related taxation, is taken to income.

     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)


37.  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:

     Income

<TABLE>
<CAPTION>
                                                                                          Year ended May 31,
                                                                             2000                  2001          2002
                                                                                              (thousands)
  <S>                                                                       <C>                  <C>           <C>
  Loss for the financial year as reported in the consolidated
  profit and loss account under UK GAAP                                GBP (7,924)          GBP (22,791)  GBP (29,044)
  Adjustments:
  Foreign currency translation                                                509                   415          (778)
  Depreciation on revalued property                                             2                     2             2
  Pension costs                                                              (358)               (1,186)       (1,418)
  Stock compensation                                                      (25,801)               21,641        (1,795)
  Goodwill amortization                                                      (538)                 (538)            -
  Goodwill impairment                                                           -                (8,962)            -
  Foreign exchange gain on Senior Notes                                     3,014                     -             -
  Deferred taxation - methodology                                           2,096                     -             -
  on above adjustments                                                       (104)                    -             -
  Net loss as adjusted to accord with US GAAP                         GBP (29,104)          GBP (11,419)  GBP (33,033)

</TABLE>

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

<TABLE>
<CAPTION>
                                                                   Year ended May 31,
                                                         2000             2001          2002
                                                      (thousands, except per share amounts)
  <S>                                                 <C>              <C>           <C>
  Net sales                                        GBP217,800       GBP296,309    GBP279,788
  Costs and expenses
  Cost of sales                                       157,257          215,131       200,742
  Engineering and development costs                    26,352           31,979        31,906
  Selling, general and administrative expenses         51,303           46,463        64,130
  Interest expense, net                                 9,878           12,531        12,638
  Loss before income taxes                            (26,990)          (9,795)      (29,628)
  Income taxes                                         (2,114)          (1,624)       (3,405)
  Net loss                                        GBP (29,104)     GBP (11,419)  GBP (33,033)
  Per ordinary share:
  Basic                                                (42.77)p         (15.65)p      (44.71)p
  Diluted                                              (42.77)p         (15.65)p      (44.71)p

</TABLE>

                                      F-46
<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


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

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

<TABLE>
<CAPTION>
                                                                      Year ended May 31,
                                                                 2000          2001         2002
                                                                          (thousands)
<S>                                                              <C>        <C>            <C>
Numerator
Basic and diluted calculation - net loss as adjusted to
accord with US GAAP                                        GBP (29,104) GBP (11,419)  GBP (33,033)
Denominator
Basic - weighted average number of shares outstanding           68,055       72,963        73,882
Dilutive effect of share options                                     -            -           243
Dilutive effect of contingently issuable shares                      -            -           709
Diluted - weighted average number of shares outstanding         68,055       72,963        74,834

</TABLE>


     Comprehensive income

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

<TABLE>
<CAPTION>

                                                                         Year ended May 31,
                                                                  2000         2001          2002
                                                                            (thousands)
<S>                                                             <C>           <C>             <C>
Net loss as adjusted to accord with US GAAP                GBP (29,104) GBP (11,419)  GBP (33,033)
Other comprehensive income
Translation adjustment
Arising on consolidation                                         3,705        2,632         2,200
Currency exchange movement on loans                             (6,969)      (5,932)        2,496
Comprehensive income                                       GBP (32,368) GBP (14,719)  GBP (28,337)

</TABLE>


Movements in other comprehensive income amounts are as follows:

<TABLE>
<CAPTION>
                                                                         Year ended May 31,
                                                                  2000         2001          2002
                                                                            (thousands)
          <S>                                                   <C>              <C>            <C>
Cumulative translation adjustment, net of taxation
At June 1                                                   GBP (4,404) GBP  (7,668)  GBP (10,968)
Arising in year                                                 (3,264)      (3,300)        4,696
At May 31                                                   GBP (7,668) GBP (10,968)   GBP (6,272)

</TABLE>


                                      F-47

<PAGE>


                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


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

<TABLE>
<CAPTION>

     Shareholders' funds


                                                                                     May 31,
                                                                                 2001        2002
                                                                                  (thousands)
      <S>                                                                     <C>           <C>
Equity shareholders' funds as reported in the consolidated balance sheet under
UK GAAP                                                                    GBP130,487  GBP105,196
Adjustments:
Intangible fixed assets - goodwill - cost                                     (14,078)    (38,148)
                                     amortisation                              14,078      38,148
Tangible fixed assets - impairment - cost                                           -      (7,938)
                                   - depreciation                                   -       7,938
                      - revalued property - cost                                 (106)       (106)
                                          - depreciation                           11          13
Non-current assets - deferred debt issue costs                                  2,949       1,661
Current assets - deferred debt issue costs                                        842         763
Current liabilities - accrued pension costs                                    (1,880)     (3,298)
                    - proposed dividend                                         1,326       1,333
Long term liabilities - deferred debt issue costs                              (3,791)     (2,424)
Shareholders' equity as adjusted to accord with US GAAP                    GBP129,838  GBP103,138

</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 require 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.

   The categories of cash flows under US GAAP can be summarized as follows:

<TABLE>
<CAPTION>

                                                                       Year ended May 31,
                                                                 2000         2001        2002
                                                                          (thousands)
<S>                                                            <C>          <C>          <C>
Cash (outflow)/inflow from operating activities            GBP (5,409)  GBP (7,258)   GBP 50,602
Cash outflow on investing activities                          (52,590)     (40,435)       (9,023)
Cash inflow/(outflow) from financing activities                70,304       13,368       (37,912)
Increase/(decrease) in cash and cash equivalents               12,305      (34,325)        3,667
Effect of foreign exchange rate changes                         4,781          369          (173)
Cash and cash equivalents
At June 1                                                      22,459       39,545         5,589
At May 31                                                  GBP 39,545    GBP 5,589     GBP 9,083

</TABLE>


                                      F-48

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

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

     Additional  information  required  by US GAAP in  respect  of  pension
benefits.

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

<TABLE>
<CAPTION>

                                                                     Year ended May 31,
                                                              2000             2001       2002
                                                                        (thousands)
                      <S>                                        <C>         <C>         <C>
                      Service cost                            GBP 1,496   GBP 2,526  GBP 2,939
                      Interest cost                                 590         763        981
                      Actual return on plan assets               (1,018)        144      1,472
                      Net amortization and deferral                 512        (699)    (2,249)
                      Net periodic pension cost               GBP 1,580   GBP 2,734  GBP 3,143
</TABLE>

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

<TABLE>
<CAPTION>

                                                                           Year ended May 31,
                                                                         2000     2001    2002
                                                                            %        %       %
            <S>                                                            <C>      <C>     <C>
            Assumed discount rate                                         4.75     5.25    6.00
            Rate of compensation increase                                 3.75     4.25    4.25
            Expected long-term rate of return on plan assets              6.75     7.25    7.00
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                   May 31,
                                                                              2001          2002
                                                                                 (thousands)
         <S>                                                               <C>           <C>
Accumulated benefit obligation - vested                                GBP (14,164)  GBP (14,030)
                               - non-vested                                   (735)         (728)
                                                                       GBP (14,899)  GBP (14,758)
Fair value of plan assets                                               GBP 12,793    GBP 13,633
Projected benefit obligation                                               (18,677)      (18,500)
Projected benefit obligation in excess of plan assets                       (5,884)       (4,867)
Unrecognized transitional obligation, net of amortization                      588           538
Unrecognized net loss due to past experience different from assumptions      3,372         1,042
Accrued pension cost                                                    GBP (1,924)   GBP (3,287)

</TABLE>


                                      F-49

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

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

<TABLE>
<CAPTION>

                                                                            Year ended May 31,
                                                                           2001           2002
                  <S>                                                    <C>             <C>
                  Reconciliation of change in benefit obligation:
                  Projected benefit obligation at June 1             GBP 16,055     GBP 18,677
                  Service cost                                            2,526          2,939
                  Interest cost                                             763            981
                  Plan participant contributions                            829            890
                  Actuarial loss                                           (990)        (4,629)
                  Benefits paid                                            (506)          (358)
                  Projected benefit obligation at May 31             GBP 18,677     GBP 18,500
                  Reconciliation of change in plan assets:
                  Fair value of plan assets at June 1                GBP 10,948     GBP 12,793
                  Actual return on plan assets                             (144)        (1,472)
                  Company contributions                                   1,666          1,780
                  Plan participant contributions                            829            890
                  Benefits paid                                            (506)          (358)
                  Fair value of plan assets at May 31                GBP 12,793     GBP 13,633
</TABLE>

     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:

<TABLE>
<CAPTION>

                                                                                     May 31,
                                                                                2001        2002
                                                                                  (thousands)
                       <S>                                                      <C>        <C>
                       Deferred taxation assets
                       Depreciation in advance of capital allowances             -       5,181
                       Amortization in advance of tax allowances                 -       8,592
                       Other                                                 6,037       2,136
                       Losses                                               21,237      16,289
                       Less: valuation allowance                           (20,374)    (32,198)
                                                                             6,900           -
                       Deferred taxation liabilities
                       Capital allowances in advance of depreciation    GBP (6,900)   GBP (408)
                       Net deferred tax liability                            GBP -    GBP (408)

</TABLE>


     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.


                                      F-50


<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

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

     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, 2000,
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,
                                                                  2000          2001          2002
                                                                         (thousands except
                                                                        per share amounts)
            <S>                                                <C>            <C>             <C>
            Net loss as adjusted to accord with US GAAP   GBP (12,529)   GBP (34,406)  GBP (33,658)
            Per ordinary share:
            Basic                                              (18.41)p       (47.16)p      (45.56)p
            Fully diluted                                      (18.41)p       (47.16)p      (45.56)p

</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, 2002, Nokia
Corporation represented 30% of trade debtors. No other customer represented
more than 10% of trade debtors.


                                      F-51

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

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

     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.

     In July  2001,  the FASB  issued  SFAS No.  142,  "Goodwill  and Other
Intangible  Assets."  SFAS No. 142 requires  the use of a  non-amortization
approach to account for purchased goodwill and certain intangibles. Under a
non-amortization  approach,  goodwill and certain  intangibles  will not be
amortized but instead would be reviewed for impairment and written down and
charged in the periods in which the recorded  value of goodwill and certain
intangibles  is more  than its fair  value.  The  Company  will  adopt  the
provisions  of this  statement  on June 1, 2002.  The  financial  statement
effect of the adoption of this standard will be to substantially reduce the
amortization of goodwill commencing June 1, 2002. Transitional impairments,
if any, are not expected to be material,  however,  impairment  reviews may
result in future periodic write-downs.

     SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," is  applicable  to  financial  statements  issued for fiscal years
beginning after December 15, 2001. The FASB's new rules on asset impairment
supersede SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for  Long-Lived  Assets to Be Disposed  Of," and portions of Accounting
Principles Bulletin Opinion 30, "Reporting the Results of Operations." This
Standard  provides a single  accounting  model for long-lived  assets to be
disposed of and  significantly  changes the criteria  that would have to be
met to classify an asset as held-for-sale.  Classification as held-for-sale
is an important  distinction  since such assets are not depreciated and are
stated at the lower of fair value and carrying  amount.  This Standard also
requires expected future operating losses from  discontinued  operations to
be displayed in the period(s) in which the losses are incurred, rather than
as of the measurement  date as presently  required.  The provisions of this
Standard are not  expected to have a  significant  effect on the  Company's
financial position or operating results.

     In April  2002 the  FASB  issued  SFAS  No.  145  "Rescission  of FASB
Statements No. 4, 44, 64, Amendment of FASB Statement No. 13, and Technical
Corrections".  This  statement  rescinds SFAS No. 4,  "Reporting  Gains and
Losses from  Extinguishment  of Debt",  which required all gains and losses
from  extinguishment of debt to be aggregated and, if material,  classified
as an extraordinary  item. As a result, the criteria in APB Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of
a Segment  of a  Business,  and  Extraordinary,  Unusual  and  Infrequently
Occurring Events and Transactions, will now be used to classify those gains
and  losses.  Any  gain or loss on  debt  extinguishment  classified  as an
extraordinary  item in  prior  periods  presented  that  does  not meet the
criteria in APB 30 for  classification  as an extraordinary  item should be
reclassified. SFAS No. 145 is effective for financial years beginning after
May 15, 2002.  The  provisions  of this  Standard have been adopted in year
ended May 31, 2002.

     In July  2002 the FASB  issued  SFAS No.  146,  "Accounting  for Costs
Associated  with  Exit  or  Disposal   Activities",   addresses   financial
accounting  and  reporting  for  costs  associated  with  exit or  disposal
activities and nullifies EITF Issue No. 94-3,  "Liability  Recognition  for
Certain Employee  Termination  Benefits and Other Costs to Exit an Activity
(including  Certain  Costs  Incurred in a  Restructuring)."  Statement  146
requires  that a liability for a cost  associated  with an exit or disposal
activity  be  recognized  when  the  liability  is  incurred.  An  entity's
commitment to a plan does not, by itself,  create an obligation  that meets
the  definition  of a  liability.  Severance  pay  may  be  required  to be
recognized  over time  rather  than up front.  If the  benefit  arrangement
requires  employees to render future  service  beyond a "minimum  retention
period" a liability  should be recognized as employees  render service over
the future service period even if the benefit formula used to calculate the
termination  benefit is based on length of service.  SFAS 146 is  effective
for exit or disposal  activities  initiated  after  December 31, 2002.  The
provisions of this  Standard are not expected to have a significant  effect
on the Company's financial position or operating results.


                                      F-52

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


38.  Consolidating guarantor and non-guarantor information

     In December 1998  Filtronic plc issued  $170,000,000  10% Senior Notes
due  2005.  At  May  31,  2002   $140,750,000  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, 2002 and the balance sheets as at May 31,
2001 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 37.


Profit and loss account for the year ended May 31, 2000

<TABLE>
<CAPTION>
                                                                           Non-
                                           Issuer       Guarantor     Guarantor                   Filtronic plc
                                    Filtronic plc    subsidiaries    subsidiary    Eliminations           Group
                                                                     (thousands)
<S>                                       <C>             <C>           <C>             <C>            <C>
Sales                                     GBP -      GBP221,921       GBP 373           GBP -       GBP222,294
Costs
Increase in stocks of finished
goods and
work in progress                              -          (5,501)          (33)              -           (5,534)
Raw materials and consumables                 -          97,318           312               -           97,630
Staff costs                               1,502          72,421           139               -           74,062
Depreciation                                191           9,530            16               -            9,737
Goodwill amortization                         -           3,522             -               -            3,522
Other operating (income)/charges         (5,619)         43,093           340               -           37,814
                                         (3,926)        220,383           774               -          217,231
Operating profit/(loss)                   3,926           1,538          (401)              -            5,063
Net interest (payable)/receivable       (10,117)            239             -               -           (9,878)
Net financing currency exchange
gain/(loss)                                 564             364            (5)              -              923
Equity in profit before taxation of
subsidiaries                              1,735               -             -          (1,735)               -
(Loss)/profit before taxation            (3,892)          2,141          (406)         (1,735)          (3,892)
Taxation                                 (4,032)         (3,969)            -           3,969           (4,032)
(Loss)/profit for the year           GBP (7,924)     GBP (1,828)     GBP (406)      GBP 2,234       GBP (7,924)

</TABLE>


                                      F-53

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


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

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

<TABLE>
<CAPTION>
                                                                           Non-
                                          Issuer       Guarantor      Guarantor                   Filtronic plc
                                   Filtronic plc    subsidiaries     subsidiary    Eliminations           Group
                                                                     (thousands)
<S>                                       <C>         <C>               <C>             <C>            <C>
Sales                                    GBP -      GBP284,986     GBP 12,448           GBP -       GBP297,434
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      GBP 14,944      GBP (22,791)

</TABLE>



                                      F-54


<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


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

Profit and loss account for the year ended May 31, 2002

<TABLE>
<CAPTION>

                                                                           Non-
                                           Issuer       Guarantor     Guarantor                   Filtronic plc
                                    Filtronic plc    subsidiaries    subsidiary    Eliminations           Group
                                                                     (thousands)
<S>                                       <C>         <C>             <C>              <C>            <C>
Sales                                     GBP -      GBP267,690    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)

</TABLE>



                                      F-55
<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

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

Cash flow statement for the year ended May 31, 2000


<TABLE>
<CAPTION>
                                                                                           Non-
                                                           Issuer       Guarantor     Guarantor    Filtronic plc
                                                    Filtronic plc    subsidiaries    subsidiary            Group
                                                                                (thousands)
<S>                                                          <C>            <C>           <C>              <C>
Net cash flow from operating activities               GBP 4,877       GBP 2,947      GBP (898)       GBP 6,926
Returns on investment and servicing of finance
Interest received                                         1,983             562             -            2,545
Interest paid                                           (11,244)           (170)            -          (11,414)
Interest element of finance lease payments                    -            (153)            -             (153)
Debt issue costs paid                                    (1,008)              -             -           (1,008)
Net cash flow from returns on investment and
servicing
of finance                                              (10,269)            239             -          (10,030)
Tax paid                                                    127          (2,432)            -           (2,305)
Capital expenditure
Purchase of tangible fixed assets                        (2,433)        (51,668)         (782)         (54,883)
Sale of tangible fixed assets                                 -             170             -              170
Government grants received                                    -             750             -              750
Exceptional proceeds from insurance claim                     -           1,373             -            1,373
Net cash flow from capital expenditure                   (2,433)        (49,375)         (782)         (52,590)
Equity dividends paid                                    (1,725)              -             -           (1,725)
Net cash flow before financing                           (9,423)        (48,621)       (1,680)         (59,724)
Financing
Issue of shares                                          75,039               -             -           75,039
Capital element of finance lease payments                     -          (1,326)            -           (1,326)
Loans repaid                                                  -          (1,684)            -           (1,684)
Movement in amounts due to and from group companies     (56,518)         54,694         1,824                -
Net cash flow from financing                             18,521          51,684         1,824           72,029
Increase in cash                                      GBP 9,098       GBP 3,063       GBP 144       GBP 12,305

</TABLE>


                                      F-56


<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)


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

Cash flow statement for the year ended May 31, 2001

<TABLE>
<CAPTION>
                                                                                         Non-
                                                         Issuer       Guarantor     Guarantor    Filtronic plc
                                                   Filtronic plc    subsidiaries    subsidiary           Group
                                                                             (thousands)

<S>                                                       <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-57

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

38.      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>
Net cash flow from operating activities               GBP 3,299      GBP 55,102     GBP 5,817       GBP 64,218
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       GBP 17,869

</TABLE>

                                      F-58


<PAGE>
                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

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

Balance sheet at May 31, 2001

<TABLE>
<CAPTION>
                                                                           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 54,673          GBP -           GBP -       GBP 54,673
Tangible assets                         10,235         113,304          2,763               -          126,302
Investment in subsidiaries               5,261               -              -          (5,261)               -
                                        15,496         167,977          2,763          (5,261)         180,975
Current assets
Stocks                                       -          49,952          1,322               -           51,274
Debtors                                    242          63,074          3,455               -           66,771
Amounts due from group companies       254,704           5,587              -        (260,291)               -
Cash                                        15           5,497             77               -            5,589
                                       254,961         124,110          4,854        (260,291)         123,634
Creditors: amounts falling due
within one year
Creditors                               18,506          36,560            458               -           55,524
Amounts due to group companies           5,587         251,543          3,161        (260,291)               -
                                        24,093         288,103          3,619        (260,291)          55,524
Net current assets/(liabilities)       230,868        (163,993)         1,235               -           68,110
Total assets less current
liabilities                            246,364           3,984          3,998          (5,261)         249,085
Creditors: amounts falling due
after one year                         115,877           1,206              -               -          117,083
Deferred income                              -           1,515              -               -            1,515
Net assets                          GBP130,487       GBP 1,263      GBP 3,998      GBP (5,261)      GBP130,487
Capital and reserves
Called up share capital              GBP 7,365      GBP 26,356      GBP 2,589     GBP (28,945)       GBP 7,365
Share premium account                  132,932           4,683              -          (4,683)         132,932
Shares to be issued                      7,616               -              -               -            7,616
Revaluation reserve                          -             106              -               -              106
Profit and loss account                (17,426)        (29,882)         1,409          28,367          (17,532)
Equity shareholders' funds          GBP130,487       GBP 1,263      GBP 3,998      GBP (5,261)      GBP130,487

</TABLE>

                                      F-59

<PAGE>

                                 FILTRONIC plc
                NOTES TO THE FINANCIAL STATEMENTS - (Continued)

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

Balance sheet at May 31, 2002

<TABLE>
<CAPTION>
                                                                           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               198,965         (42,414)        9,404          45,833          211,788
liabilities
Creditors: amounts falling due           93,769               -             -               -           93,769
after one year
Provision for deferred tax                    -             408             -               -              408
Deferred income                               -          12,415             -               -           12,415
Net assets                          GBP 105,196     GBP (55,237)    GBP 9,404      GBP 45,833      GBP 105,196
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      GBP 45,833      GBP 105,196

</TABLE>


                                      F-60