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Operations
The Wireless Infrastructure division accounted for 59% (2003
63%) of the group's sales at £140.9m (2003 £151.7m) a reduction
of 7%. With the inclusion this year of the costs associated
with integrated power amplifiers and the continued expansion
in China, it contributed £10.4m (2003 £20.9m) of operating
profit, a fall of 50%.
The global wireless infrastructure market continued to decline
in 2003, starting to recover at the beginning of 2004. This
recovery was reflected in substantially higher sales within
the division in the final quarter. The Wireless Infrastructure
division remains profitable and cash generative. With the
successful transition to low cost manufacturing in China and
the addition of significant orders from two new OEMs, it is
well positioned to capitalise on these recent improvements
in the market.
Handset Products accounted for 24% (2003 21%) of the group's
sales at £57.4m (2003 £51.2m), an increase of 12%, and contributed
£10.4m (2003 £10.8m) of operating profit, a fall of 4%. Handset
antenna sales increased by 14% to over 121 million units (2003
106m), of which nearly 50% were manufactured in our facilities
in Suzhou, China.
The Integrated Products division, formed early in the financial
year, includes the Defence (Electronic Warfare), Compound
Semiconductors, Broadband Access, and automated assembly (Microtek)
businesses. Integrated Products accounted for 16% (2003 16%)
of the group's sales at £37.8m (2003 £37.5m). It made a loss
of £13.3m (2003 £19.3m loss), with significant improvement
in the second half of the year. The electronic warfare business
at Filtronic Solid State was divested during the year. Sales
in both the UK Defence and Compound Semiconductor elements
increased, whilst sales in Broadband Access were lower than
in 2003 following the transfer of Filtronic Sigtek Inc to
Central Services.
The Defence business operated profitably in both the UK and
USA, following improvements in the operational performance
of all sites. New defence programme opportunities are being
developed in both the UK and USA. Compound Semiconductors,
won business in new high volume RF switch products for cellular
handset and wireless LAN applications during the year, and
re-established the transistor product line transferred from
the US operation in 2003. Broadband Access has focused on
the supply of transceivers for point-to-point cellular base
station interconnection and the development of new products
for electronically scanned radar (E-Scan radar). Additional
transceiver product opportunities were secured during the
year with new OEM customers. This included the company's new
compact transceivers based on multi-function gallium arsenide
integrated circuits, which will enter production in 2005.
At the end of the financial year, the group employed 3,590
people, an increase of 652 (22%) from May 2003. This increase
has come predominantly from the Wireless Infrastructure division,
485 people, and the Handset business, 205 people, as more
production moves to China. A small reduction of 27 people
occurred in Integrated Products.
A R Needle, Chief Executive Officer, Wireless Infrastructure
J Anttila, Chief Executive Officer, Handset Products
Professor C M Snowden, Chief Executive Officer, Integrated
Products
2 August 2004
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