Ultra Electronics (ULE) - Interim Management Statement RNS Number : 2778R Ultra Electronics Holdings PLC 16 November 2012 Embargoed until 0700 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 November 2012. Markets 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. Performance 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 years. 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 facilities. 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. Management change 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. Summary 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 medium term. Ultra will make its preliminary announcement for the year ending 31 December 2012 on 4 March 2013. - Ends - Enquiries: Rakesh Sharma, Chief Executive 020 8813 4307 Paul Dean, Group Finance Director Susan Ellis, Senior Communications Adviser 07836 522 722 James White, MHP Communications 020 3128 8756 www.ultra-electronics.com Cautionary Statement: 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 statements. 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, corporate strategy. Across the Group's three divisions, the major market sectors in which Ultra operates are: 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 hydrocarbon mapping. This information is provided by RNS The company news service from the London Stock Exchange END IMSDELFFLFFXFBZ -0- Nov/16/2012 07:00 GMT
Ultra Electronics ULE Interim Management Statement
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