Ultra Electronics (ULE) - Interim Management Statement
RNS Number : 2778R
Ultra Electronics Holdings PLC
16 November 2012
16 November 2012
Ultra Electronics Holdings plc
("Ultra" or "the Group")
Interim Management Statement
Ultra, the international defence, security, transport and energy company,
today issues its Interim Management Statement for the period 1 July 2012 to15
Conditions in Ultra's markets remain broadly as noted on 30 July 2012 when the
Group reported its Interim Results.
In the US, a six-month Continuing Resolution from 1 October 2012, a
Presidential election year and the approaching possibility of sequestration
measures combine to cause a lack of clarity on future defence funding. In the
UK, while the Government has acted to stabilise defence spending around a core
programme, the overall programme is yet to be established. As a consequence,
in both the US and UK defence markets, contract officers are delaying the
start of new programmes and are unwilling to commit more than incremental
funding from approved programmes, resulting in a reduction of order flow.
Despite this backdrop, certain segments of the defence market, such as sonar
and surveillance, continue to offer long term growth prospects.
The security and cyber market remains strong and now represents over 20% of
Group revenue. Strategic acquisitions have equipped Ultra with a comprehensive
suite of specialist cryptographic and cyber security capabilities that will
benefit from the growing government and commercial spend in cyber protection.
Within transport and energy markets, which also represent over 20% of Group
revenue, long-term, worldwide growth in air travel continues to drive
investment in commercial aircraft production and airport infrastructure; both
areas benefit Ultra's specialist capabilities. Investment in new nuclear power
station build and life-extension of existing plants offer opportunities for
Ultra's nuclear control and specialist sensor products.
Against a backdrop of adverse market conditions in the defence sector, largely
driven by political discord over US deficit management, the Board expects the
Group's performance in the year to be sustained around 2011 levels.
In segments where high demand has fallen, such as tactical radios for the US
Army, the Group has acted swiftly to reduce its cost base, with restructuring
costs also impacting 2012 profits.
Ultra continues to secure contracts in areas of preferential spend on
multi-year, international platforms and programmes which support long-term
revenues. Recent substantial orders include: a significant spend by the US
Navy on perimeter security, anti-terrorism and energy control products; and an
order to provide additional Litening targeting pods for the Royal Air Force -
following the system's exceptional performance in the Libyan conflict. Ultra's
other markets remain strong, evidenced by the recent award of a five year
contract to update and expand the system supplying baggage reconciliation
services to all five terminals at London Heathrow, the largest international
airport in Europe. Ultra's position on a number of aircraft programmes will
start to provide increased benefit as deliveries accelerate over the coming
Elsewhere, growing sales in security and cyber, transport and energy, which
collectively now account for about 45% of revenue, are contributing strongly
to Ultra's overall performance.
Ultra's balance sheet remains strong and there has been no significant change
in the financial position of the Group since that reported on 30 July 2012.
The Group has substantial headroom associated with its current banking
There has been no significant event or transaction since 30 June 2012 that
could have a material impact on the financial position of the Group.
The Group continues to be cash generative and has the balance sheet to
maintain its investment, both internally and in bolt-on acquisitions, to
exploit areas of growth and preferential spend. With regard to further
acquisitions, Ultra continues to target companies with a proven track record,
that have differentiated positions in growing, niche markets and that can be
acquired at value-enhancing prices.
Paul Dean has been approached to take a Finance Director role outside of the
defence and aerospace sector and he has announced his intention to leave the
Group. After four highly valuable years of service, he will leave Ultra around
the end of March 2013. A selection process to identify a new Finance Director
is underway and the market will be updated in due course. The Board wish Paul
every success in his new role.
The Board remains confident in the Group's strategies for growth. Ultra
manages an extensive portfolio of differentiated capabilities which provide
resilience in today's challenging conditions. The Group is well positioned on
new build and upgrade programmes that will serve to underpin growth into the
Ultra will make its preliminary announcement for the year ending 31 December
2012 on 4 March 2013.
- Ends -
Rakesh Sharma, Chief Executive
Paul Dean, Group Finance Director
Susan Ellis, Senior Communications
Adviser 07836 522 722
James White, MHP
020 3128 8756
This interim management statement has been prepared solely to provide
additional information to shareholders as a body to meet the relevant
requirements of the UK Listing Authority's Disclosure and Transparency Rules.
The interim management statement should not be relied upon by any other party
for any other purpose.
The interim management statement contains certain forward-looking statements.
These statements are made by the directors of Ultra in good faith, based on
the information available to them up to the time of the publication of the
interim management statement but such forward-looking statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward-looking
This interim management statement has been prepared for the Group as a whole
and therefore gives greater emphasis to those matters which are significant to
Ultra and its subsidiary undertakings as a whole
Ultra undertakes no obligation to revise or update any forward looking
statement contained within this announcement, regardless of whether those
statements are affected as a result of new information, future events or
otherwise, save as required by law and regulations.
Further information about Ultra:
Ultra Electronics is an internationally successful defence, security,
transport and energy company with a long, consistent track record of
development and growth. Ultra businesses constantly innovate to create
solutions to customer requirements that are different from and better than
those of the Group's competitors. The Group has about one hundred and eighty
distinct market or technology niches within its twenty eight businesses. The
diversity of niches enables Ultra to contribute to a large number of platforms
and programmes and provides resilience to the Group's financial performance.
Ultra has world-leading positions in many of its niches and, as an
independent, non-threatening partner, is able to support all of the main prime
contractors with specialist capabilities and solutions. As a result of such
positioning, Ultra's systems, equipment or services are often mission-critical
to the successful operation of the platform to which they contribute. In turn,
this mission-criticality secures Ultra's positions for the long term which
underpin the superior financial performance of the Group.
Ultra offers support to its customers through the design, delivery and support
phases of a programme. Ultra businesses have a high degree of operational
autonomy where the local management teams are empowered to devise and
implement competitive strategies that reflect their expertise in their
specific niches. The Group has a small head office and executive team that
provide to the individual businesses the same agile, responsive support that
they provide to customers as well as formulating Ultra's overarching,
Across the Group's three divisions, the major market sectors in which Ultra
Defence: Ultra supplies advanced electronic and electrical systems and
equipment to coalition defence forces around the world. The Group innovates to
provide specialist capabilities that are superior to those available to the
enemy. By focusing on delivering comparative military advantage, Ultra can
gain market share and exploit the headroom for growth that is available in
defence budgets worldwide.
Security and cyber: Ultra provides highly differentiated systems and
capabilities to the broad security, intelligence and cyber market. Driven by
the actions of rogue states, terrorist groups and organised crime, governments
worldwide are focusing expenditure preferentially on addressing these threats.
Ultra has highly specialised capabilities in secure communications, networks
and high grade cryptographic equipment, key management systems and
surveillance and intelligence gathering systems.
Transport: Ultra provides specialist software, systems and equipment for use
in mass passenger transport systems. This includes high integrity real-time
controls for civil aircraft, advanced IT solutions for modern airports and
trackside power equipment for transit rail systems. Demand in all areas is
driven by rising populations in affluent and developing regions of the world.
Energy: Countries around the world are addressing the strategic need to have
secure access to increasing amounts of low carbon energy. Ultra has a range of
safety critical sensors and controls used in existing and new build nuclear
reactors. The Group has innovative portable energy sources powered by readily
available propane gas. Ultra also has specialist sensors, derived from defence
applications, which are highly effective in the underwater environment at
This information is provided by RNS
The company news service from the London Stock Exchange
IMSDELFFLFFXFBZ -0- Nov/16/2012 07:00 GMT
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