RNS Number:8369H
Ultra Electronics Holdings PLC
24 February 2003



Embargoed until 7.00am                           24 February 2003

                  ULTRA ELECTRONICS HOLDINGS PLC
                     ("Ultra" or "the Group")

  Preliminary Audited Results For The Year Ended 31 December 2002

FINANCIAL HIGHLIGHTS
                         Year ended            Year ended      Change
                   31 December 2002      31 December 2001

Turnover                    #260.4m               #239.5m       +8.7%
Operating profit*            #33.5m                #31.7m       +5.6%
Profit before tax*           #29.9m                #27.1m      +10.6%
Earnings per share*           33.2p                 30.5p**     +9.1%
Dividend per share - final     7.5p                  7.0p       +7.1%
                   - total    11.2p                 10.4p       +7.7%

*before goodwill amortisation of #3.9m (2001: #3.7m)
** 2001 tax restated for FRS19


-    Record levels of sales, profit and order book

-    Sales  driven  by  growth in Battlespace IT,  anti-submarine
     warfare equipment and HiPPAG

-    North American market now almost 40% of sales

-    Order  book  up 10% at #348m, representing approximately  15
     months of future sales

-    Excellent  cash  performance with  conversion  of  operating
     profit to operating cash flow of 116%

-    Successes during the year included:
         - the award of Ultra's largest contract to date for the supply
           of SSTD to the UK Royal Navy, worth #54m
         - the signature of a partnership intent memorandum on sonobuoys
           with the MoD

-    Acquisition  of MilComm, (now called Tactical  Communication
     Systems) for C$53m (#21.5m), before expenses, in September  2002
     strengthens Ultra's position in Battlespace IT


Dr  Julian Blogh, Chief Executive, commented: "The outlook for the
Group  remains  strong  with  the background  of  growing  defence
budgets,   particularly   in  the  US.    Expenditure   is   being
concentrated  on Battlespace IT, unmanned vehicles for  air,  land
and  sea  and  highly  mobile  systems.   Through  its  continuing
investments,  Ultra  is  well  positioned  to  benefit  from  this
activity.

"Recent important contract wins in the UK and in the export market
have more than compensated for the slowdown in civil aerospace and
are  laying  the  foundations for further business  growth.   With
interest cover before goodwill amortisation of 9.5 times in  2002,
Ultra  enters 2003 with the capacity to continue its  strategy  of
acquiring  complementary  businesses in order  to  strengthen  its
market  niches.   These factors, coupled with the  record  closing
order  book, give the Board confidence in the performance  of  the
Group in 2003."

                             - Ends -
Enquiries:
Ultra Electronics Holdings plc           (24.02.03) 020 7067 0700
Dr Julian Blogh, Chief Executive         Thereafter 020 8813 4321
David Jeffcoat, Finance Director        www.ultra-electronics.com

Weber Shandwick Square Mile                         020 7067 0700
Susan Ellis or Susanne Walker




                  Ultra Electronics Holdings plc
                     ("Ultra" or "the Group")

  PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002

Ultra  Electronics  again  produced  excellent  results  in  2002,
achieving  record  levels  of  sales,  profit  and  order  intake.
Confirming  the quality of earnings, the conversion  of  operating
profit  to  operating cash flow was 116%.  Successes  in  the  year
included  the award of the largest contract received by the  Group
to  date  and the signing of the partnership intent memorandum  on
sonobuoys  with the Defence Procurement Agency of the UK  Ministry
of Defence (MoD).

RESULTS

Sales  increased to #260.4m, (2001: #239.5m), a rise of  8.7%,  of
which  5.8%  was  organic.  This encouraging  sales  increase  was
achieved  despite the translation impact of the weaker  US  dollar
without which growth would have been 2% higher.  Sales growth  was
driven primarily by a rising demand for Battlespace IT systems, an
increase  in the delivery of anti-submarine warfare equipment  and
higher production of the HiPPAG missile cooling product.  Sales of
civil  aerospace products declined in line with both the reduction
of  Airbus  aircraft deliveries and the reduced demand for  spares
and  repairs  from airlines as they attempted to  move  back  into
profit.  However, Ultra's civil aerospace business, including  the
airport IT activity, represented less than 12% of the Group's 2002
sales.

The  operating  margin, before the amortisation of  goodwill,  was
12.9%,   slightly  below  that  recorded  in  2001.   This  margin
reduction  resulted mainly from the lower level of civil aerospace
spares  and repairs activity during the period together  with  the
currency  effect  noted  above.   Operating  profit,  before   the
amortisation  of goodwill, increased by 5.6%, while profit  before
tax  and amortisation rose by 10.6% to #29.9m (2001: #27.1m).  The
effective  tax rate for the Group was 1% higher at  27.1%.   As  a
result, earnings per share before goodwill amortisation were  9.1%
higher  at 33.2p (2001: 30.5p, as restated following the  adoption
of FRS19).

Operating cash flow was very strong at #38.7m (2001: #35.2m) after
capital  expenditure,  with an operating profit  (before  goodwill
amortisation) to operating cash flow conversion of  115.7%.   This
brings  the average conversion ratio over the past five  years  to
85%.  Despite the acquisition of TCS for #21.5m (before expenses),
net  debt  during the year decreased by over #1m to #39.3m  (2001:
#40.6m).

The Group's order book at the year-end stood at a record level  of
#348m,  an  increase of 10% compared to the same point  last  year
(2001: #315m).  This represents the equivalent of approximately 15
months of future sales.

Dividend

The  proposed final dividend is 7.5p, bringing the total  dividend
for  the  year to 11.2p (2001: 10.4p).  This represents an  annual
increase  of  8%  and reflects the Board's confidence  in  Ultra's
future  prospects.  The dividend is covered 3.0 times by  earnings
per share before amortisation.  If approved, the dividend will  be
paid  on  6 May 2003 to shareholders on the register on  11  April
2003.

STRATEGY

The  Group  continues  to  focus its strategy  on  being  a  niche
supplier  of  electronic  systems  and  products  in  defence  and
aerospace  markets.  In order to strengthen its  niche  positions,
the   Group  continued  its  high  level  of  investment  in   the
application of advanced technology to create new products  in  its
chosen  markets,  coupled  with the acquisition  of  complementary
businesses.   Ultra's  2002  results  show  the  success  of  this
strategy  through  both  the operating results  reported  and  the
Group's record order book at the year-end.

ACQUISITION

In accordance with its strategy, in September 2002 Ultra completed
the  acquisition  of  MilComm, now renamed Tactical  Communication
Systems (TCS), for C$53m (#21.5m) before expenses.  TCS, based  in
Montreal, Canada, designs and manufactures military high bandwidth
line-of-sight  radios,  a critical part  of  command  and  control
systems.  Major customers include the US DoD, the UK MoD  and  the
Korean   armed  forces.   TCS  strengthens  Ultra's  position   in
Battlespace  IT,  an area of increasing military expenditure,  and
complements its existing data link activities.


OPERATIONAL REVIEW

Air & Land Systems

Air  and Land Systems, with the addition of TCS, comprises  eleven
businesses  in  the  UK  and North America  that  supply  advanced
technology  products for military aircraft and land vehicles,  the
anti-submarine warfare market and the civil aerospace market.

Sales  growth in the division was 7.5% to #177.5m (2001: #165.1m).
Organic   growth  was  3.4%.   Operating  profit  before  goodwill
amortisation  was #22.5m (2001: #24.1m).  Reduced civil  aerospace
spares  and  repair  activity, combined  with  the  completion  of
deliveries  to  the  US  Navy of sonobuoys  on  older  low  margin
contracts,  contributed to the reduction in  operating  margin  to
12.7%  (2001: 14.6%).  The effect was somewhat mitigated, however,
by  the excellent growth of HiPPAG deliveries for both the US Navy
and the Eurofighter programme.

The  year produced a number of notable successes.  In March, Ultra
was  awarded a #20m contract to develop and deliver the bow  sonar
for  the  Royal Navy's Type 45 destroyer.  This was Ultra's  first
major  ship sonar contract and was achieved in collaboration  with
our US partner, EDO Corporation.  Further success in an associated
field  came  with the award of the main part of the  Surface  Ship
Torpedo  Defence  contract in July, bringing  the  total  contract
value to #54m, Ultra's largest single contract to date.

In  anti-submarine  warfare, where Ultra is  the  world's  largest
supplier of sonobuoys, the Group continued to increase its  market
share of new orders with major contracts being won in the US,  the
UK,  Canada, France and Australia.  Ultra's traditional  dominance
of   the  export  market  for  passive  sonobuoys  is  now   being
complemented  by  its ability to win major active sonobuoy  awards
with a competitive new design which recently entered production.

In  recognition of Ultra's record in meeting its commitments as  a
supplier  of  sonobuoys  to the MoD, a  memorandum  of  intent  to
partner  has  been signed between Ultra and the  MoD.   The  final
agreement, when signed, will bind Ultra and the MoD together, with
Ultra  being  the  developer and supplier  of  all  sonobuoys  and
derivative products to the MoD for a period of at least ten years.

During  the  year,  Ultra's commitments were met  on  the  Nimrod,
Eurofighter  and Engineer Tank System programmes, with development
milestones  being achieved and deliveries being made in  a  timely
manner.

Information & Sea Systems

Information and Sea Systems consists of seven businesses in the UK
and  North  America that supply information management  and  power
products   for   defence,  commercial  and  airport   applications
worldwide.

Divisional  turnover  was #82.9m (2001: #74.4m),  an  increase  of
11.3%,  all  of which was organic.  Operating profit,  before  the
amortisation  of goodwill, rose by 43.9% to #11.0m (2001:  #7.6m).
The  operating margin before amortisation was 13.3%, up from 10.3%
in  2001.   This resulted from increased Battlespace IT  activity,
improved profitability at the airport information systems business
and  the  completion  of a number of Astute equipment  development
programmes allowing higher margins to be taken.

The  division  benefited from a rise in government expenditure  on
Battlespace  IT.   There  was significant  growth  in  Ultra's  US
activity  in  this  area  as  efforts  are  made  to  improve  the
situational awareness of operating forces.  Progress was also made
in  the  UK with the first order from the MoD for the Group's  Air
Defense  Systems  Integrator.   In a  related  area,  BAE  Systems
ordered  command systems equipment for the third contract  of  the
Korean KDX destroyer programme.

Ultra   provides  power  systems  for  naval  and   rail   transit
applications  and in October, initial contracts were  placed  with
the Group by Network Rail to provide trackside power equipment  as
part  of the rail infrastructure upgrade for the south of England.
This is expected to lead to an increasing involvement by Ultra  in
this high investment sector.

While   civil  aerospace  continues  to  operate  in  a  difficult
environment,  the  need  for  long-term  investment   in   airport
infrastructure   remains,  supplemented  by   security   concerns.
Ultra's  work defining the IT infrastructure for London Heathrow's
new  fifth  terminal continued throughout the year.  In  addition,
there  was  an upturn in demand for Ultra's baggage reconciliation
system, and equipment was installed for British Airways and Virgin
Atlantic in their North American terminals.

Finally,  Ultra  again met its commitments by delivering  on  time
initial  equipment for the Astute class submarine,  equipment  for
the   US   Virginia  class  submarine  and  Air  Defense   Systems
Integrators for the DoD.

PENSIONS

The  retirement benefits of Ultra's UK workforce are funded  by  a
combination  of  defined benefit and defined contribution  pension
schemes,  with  most  staff participating  in  a  defined  benefit
scheme.   This scheme was actuarially assessed in April 2001  when
its  solvency was 105%, or 115% on an MFR basis.  As a  result  of
stockmarket falls since then, the Company raised its contributions
to  the  scheme by #0.5m in 2002.  A further increase of #0.4m  is
planned  for 2003.  The scheme is relatively immature,  with  just
13% of retired members, and remains strongly cash positive.

REPORTING IN 2003

Ultra has expanded in capability, in products and in the number of
operating  businesses since its flotation in 1996.   Ultra's  two-
divisional  reporting  structure therefore  no  longer  adequately
presents the Group in a format related to its activities,  neither
does  it  provide sufficient detail.  From the beginning of  2003,
the  Group will report on the basis of three divisions,  with  the
objective  of  making  Ultra  easier  to  understand.   The  three
divisions will be Tactical & Sonar, Aircraft & Vehicle Systems and
Information & Power, representing 39%, 29% and 32% of Ultra's 2002
sales respectively.

PROSPECTS

Increasing  concerns  about the activities  of  rogue  states  and
terrorist   organisations  is  driving  an  increase  in   defence
expenditure in many countries.  In the US, the defence procurement
budget  for  2003  has  risen by 11%,  while  in  the  UK  defence
procurement is also growing in real terms.  Expenditure  is  being
concentrated  on Battlespace IT, unmanned vehicles for  air,  land
and  sea  and  highly  mobile  systems.   Through  its  continuing
investments,  Ultra  is  well  positioned  to  benefit  from  this
activity.

Major UK opportunities include:
-   control electronics for the UK's submarine fleet
-   a new active search sonobuoy system
-   electronics for new armoured vehicles
-   Network Rail track-side power equipment

In the US, new opportunities for Ultra are presented through:
-   the F-35 Joint Strike Fighter programme
-   the Small Diameter Bomb programme
-   increased Battlespace IT activity

The civil aerospace market is not expected to recover for at least
the next twelve months with Ultra's sales in this market likely to
remain  static  over  this  period.   However,  with  this  sector
representing less than 12% of Ultra's total sales, this  will  not
have   a  major  impact  on  performance.   Overall,  non-military
activity  is  expected to rise in absolute terms as rail  transit,
airport IT and security product sales increase.

The  outlook  for the Group remains strong, with recent  important
contract  wins  in  the  UK  and  in  export  markets  laying  the
foundations  for  further business growth.   With  interest  cover
before  goodwill amortisation of 9.5 times in 2002,  Ultra  enters
2003  with the capacity to continue its strategy of organic growth
and acquisition of complementary businesses in order to strengthen
its market niches.  These factors, coupled with the record closing
order  book, give the Board confidence in the performance  of  the
Group in 2003.

                             - Ends -

Enquiries:
Ultra Electronics Holdings plc           (24.02.03) 020 7067 0700
Dr Julian Blogh, Chief Executive         Thereafter 020 8813 4321
David Jeffcoat, Finance Director        www.ultra-electronics.com

Weber Shandwick Square Mile                         020 7067 0700
Susan Ellis or Susanne Walker


Notes to editors:
Ultra  Electronics is a group of specialist businesses  designing,
manufacturing  and  supporting  electronic  and  electromechanical
systems,  sub-systems and products for international  defence  and
aerospace markets.  The Group, which employs 2,600 people  in  the
UK  and North America, focuses on high integrity sensing, control,
communication  and display systems with an emphasis on  integrated
Information Technology solutions.

The Group concentrates on obtaining a technological edge in niche
markets, with many of its products and technologies being market
leaders in their field.  Ultra has an increasing role of
supporting prime contractors by undertaking specialist system and
sub-system integration using the combined expertise of the Group
businesses.


                  Ultra Electronics Holdings plc
      Preliminary Results for the Year Ended 31 December 2002
               Consolidated Profit and Loss Account

                                                           Restated
                                                            (Note 8)
                                                   2002        2001
                                         Note      #000        #000
---------------------------------------------------------------------

Turnover
  - existing operations                   1,2   253,521     239,540
  - acquisition                                   6,831           -
---------------------------------------------------------------------
Continuing operations                           260,352     239,540
---------------------------------------------------------------------
Cost of sales
  - existing operations                        (189,967)   (178,446)
  - acquisition                                  (5,751)          -
---------------------------------------------------------------------
Continuing operations                          (195,718)   (178,446)
---------------------------------------------------------------------

Gross profit
  - existing operations                          63,554      61,094
  - acquisition                                   1,080           -
---------------------------------------------------------------------
Continuing operations                            64,634      61,094
---------------------------------------------------------------------

Other operating expenses (net)                  (35,056)    (33,061)
---------------------------------------------------------------------

Operating profit
  - existing operations                          29,323      28,033
  - acquisition                                     255           -
---------------------------------------------------------------------
                                                 29,578      28,033

Finance charges (net)                            (3,533)     (4,624)
---------------------------------------------------------------------

Profit on ordinary activities before
taxation                                         26,045      23,409
Tax on profit on ordinary activities        3    (8,099)     (7,086)
---------------------------------------------------------------------
Profit on ordinary activities after
taxation, being profit for the financial
year                                             17,946      16,323

Dividends paid and proposed on equity
shares                                           (7,385)     (6,835)
---------------------------------------------------------------------
Retained profit for the year                     10,561       9,488
=====================================================================

Earnings per ordinary share (pence)
  After goodwill amortisation
  - Basic                                          27.3        24.9
  - Diluted                                        27.3        24.8
  Before goodwill amortisation
  - Basic                                          33.2        30.5
=====================================================================



                  Ultra Electronics Holdings plc
      Preliminary Results for the Year Ended 31 December 2002
              Group Balance Sheet at 31 December 2002

                                                           Restated
                                                            (Note 8)
                                                   2002        2001
                                         Note      #000        #000
---------------------------------------------------------------------

Fixed assets
Tangible assets                                  15,180      15,426
Intangible assets - patents and
trademarks                                          605         650
Intangible assets - goodwill                     80,871      64,412
Investments                                       1,050         836
---------------------------------------------------------------------
                                                 97,706      81,324
=====================================================================
Current assets
Stocks                                      4    23,834      22,030
Debtors: amounts falling due within
one year                                    5    57,579      55,147
Debtors: amounts falling due after
more than one year                          5         -          77
Cash at bank and in hand                          8,132      15,992
---------------------------------------------------------------------
                                                 89,545      93,246
=====================================================================

Creditors: amounts falling due
within one year                             6   (80,622)    (94,834)
---------------------------------------------------------------------
Net current assets/(liabilities)                  8,923      (1,588)
=====================================================================

Total assets less current
liabilities                                     106,629      79,736

Creditors: amounts falling due after
more than one year                              (46,126)    (32,907)
Provisions for liabilities and
charges                                     7    (4,822)     (3,165)
---------------------------------------------------------------------
Net assets                                       55,681      43,664
=====================================================================
Capital and reserves
Called-up share capital                           3,302       3,288
Share premium account                  8         26,891      25,788
Profit and loss account                8         25,488      14,588
---------------------------------------------------------------------
Equity shareholders' funds                       55,681      43,664
=====================================================================


                  Ultra Electronics Holdings plc
      Preliminary Results for the Year Ended 31 December 2002
                 Consolidated Cash Flow Statement

                                   Note      2002       2001
                                             #000       #000
---------------------------------------------------------------
Net cash inflow from operating
activities                            9    42,765     39,328

Returns on investments and
servicing of finance                       (3,414)    (4,972)
Taxation                                   (7,279)    (8,383)
Capital expenditure and financial
investment                                 (4,076)    (4,172)
Acquisitions                              (21,996)      (130)
Equity dividends paid                      (7,045)    (6,485)
---------------------------------------------------------------
Cash (outflow)/inflow before use
of liquid resources and financing          (1,045)    15,186
Financing                                  (6,381)   (11,963)
---------------------------------------------------------------
(Decrease)/increase in cash in
the year                                   (7,426)     3,223
===============================================================



    Consolidated statement of total recognised gains and losses

                                                    Restated
                                                     (Note 8)
                                          2002          2001
                                          #000          #000
---------------------------------------------------------------
Group profit for the financial year     17,946        16,323
Gain/(loss) on foreign currency
transaction                                474          (480)
Adjustment in respect of the adoption
of FRS 19 for prior periods              1,162             -
---------------------------------------------------------------
Total recognised gains and losses
relating to the year                    19,582        15,843
---------------------------------------------------------------



Notes:

1.   Turnover by geographical destination

                                      2002      2001
                                      #000      #000
----------------------------------------------------------
  United Kingdom                   110,547   110,680
  Continental Europe                33,700    32,014
  North America                    100,549    84,144
  Rest of World                     15,556    12,702
----------------------------------------------------------
                                   260,352   239,540
----------------------------------------------------------


  Turnover, trading profit and net operating assets by
  geographical source

                     United Kingdom     North America          Group
                                                            Restated

                     2002      2001    2002    2001      2002       2001
                     #000      #000    #000    #000      #000       #000

  Turnover        167,061   167,528  93,291  72,012   260,352    239,540
-----------------------------------------------------------------------------

  Trading profit   23,940    24,303   9,513   7,382    33,453     31,685

  Goodwill
  amortisation                                         (3,875)    (3,652)
  Operating                                           -------------------
  profit                                               29,578     28,033
  Interest (net)                                       (3,533)    (4,624)
                                                      -------------------
  Profit before
  tax                                                  26,045     23,409
-----------------------------------------------------------------------------
  Net operating
  assets           13,548    16,283  11,150  12,925    24,698     29,208
-----------------------------------------------------------------------------


2.    Turnover and trading profit by division

                                   Turnover             Profit
                                                                  Restated
                              2002       2001        2002             2001
                              #000       #000        #000             #000
-----------------------------------------------------------------------------
  Air and Land Systems     177,493    165,121      22,464           24,050
  Information and Sea
  Systems                   82,859     74,419      10,989            7,635
-----------------------------------------------------------------------------
                           260,352    239,540      33,453           31,685
  Goodwill amortisation                            (3,875)          (3,652)
  Operating profit                                 29,578           28,033
-----------------------------------------------------------------------------


3.   Taxation
                                             Restated
                                   2002          2001
                                   #000          #000
-------------------------------------------------------------
  UK tax                          6,662         6,146
  Overseas tax                      895         1,192
  Deferred tax                      542          (252)
-------------------------------------------------------------
                                  8,099         7,086
-------------------------------------------------------------

4.   Stocks
                                     2002          2001
                                     #000          #000
-------------------------------------------------------------
  Raw materials and consumables    15,696        15,457
  Work-in-progress                 14,070        20,315
  Finished goods and goods for
  resale                            2,045         1,235
  Payments on account              (8,514)      (15,064)
-------------------------------------------------------------
                                   23,297        21,943
-------------------------------------------------------------
  Long-term contract balances
   - costs less
     foreseeable losses               766           522
   - less payments
     on account                      (229)         (435)
-------------------------------------------------------------
                                   537       87
-------------------------------------------------------------
                                   23,834    22,030
-------------------------------------------------------------

5.   Debtors
                                              Restated
                                       2002       2001
                                       #000       #000
-----------------------------------------------------------
  Amounts falling due within one
  year:
  Trade debtors                      34,615     35,933
  Amounts recoverable on
  contracts                          17,284     14,233
  Deferred tax assets                 1,036      1,243
  Other debtors                       2,045      1,867
  Prepayments and accrued income      2,599      1,871
-----------------------------------------------------------
                                     57,579     55,147
-----------------------------------------------------------
  Amounts falling due after more
  than one year:
  Amounts recoverable on
  contracts                               -         77
-----------------------------------------------------------


6.   Creditors: Amounts falling due within one year

                                          2002      2001
                                          #000      #000
-----------------------------------------------------------
  Obligations under finance leases          43       111
  Bank loans and overdraft               1,219    23,536
  Payments received on account          27,078    23,131
  Trade creditors                       20,161    19,811
  Other creditors:
   -  Corporation tax payable            5,930     5,650
   -  VAT                                1,173     1,168
   -  social security and PAYE           2,176     1,818
   -  other creditors                    4,278     4,732
  Pension related liabilities              282       331
  Accruals and deferred income          13,336     9,940
  Proposed dividends                     4,946     4,606
-----------------------------------------------------------
                                        80,622    94,834
-----------------------------------------------------------



7.  Provisions for liabilities and charges

                                   Deferred
                                   Taxation     Warranties     Total
                                      #'000          #'000     #'000
-----------------------------------------------------------------------
  Beginning of year (as
  restated)                             421          2,744     3,165
  Exchange differences                  (37)           (43)      (80)
  Acquisition of subsidiary
  undertaking                             -          1,109     1,109
  Transfer to deferred tax
  assets                               (106)             -      (106)
  Utilised during the year                -           (585)     (585)
  Charge to the profit and loss
  account                               549            770      1,319
-----------------------------------------------------------------------
  End of year                           827          3,995      4,822
-----------------------------------------------------------------------

8.  Reserves
                                     Share       Profit and
                                   Premium     loss account
                                      #000             #000
-----------------------------------------------------------------
  Beginning of year                 25,788           13,426
  Prior   year  adjustment (see
  below)                                 -            1,162
  Retained profit for the year           -           10,561
  Amounts gifted to Employee
  Share Ownership Trust                  -             (135)
  Issue of new shares                1,103                -
  Foreign exchange differences           -              474
-----------------------------------------------------------------
  End of year                       26,891           25,488
-----------------------------------------------------------------

  Prior year adjustment
  In  previous  years, the Group complied with  the  Statement  of
  Standard  Accounting Practice 15 - Deferred Tax  (SSAP  15)
  which  has  been superseded by the introduction of the Financial
  Reporting Standard 19 - Deferred Tax (FRS 19).  FRS 19 has  been
  adopted  for  the  first time by the Group  in  2002.   SSAP  15
  required  provision  for  deferred tax  to  be  made  using  the
  liability  method to the extent that net deferred tax assets  or
  liabilities  were  likely  to  crystallise  in  the  foreseeable
  future,  i.e. a partial provisioning approach.  FRS 19  requires
  a full provisioning approach.

  The  effect  of  the implementation of FRS 19  on  the  reported
  results is as follows:

                                   2002      2001
                                   #000      #000

  Profit and Loss Account
  Goodwill amortisation             (19)      (33)
  Tax on profits                   (542)      252
------------------------------------------------------
  (Reduction)/increase in
  retained profits                 (561)      219
------------------------------------------------------
  Balance Sheet
  Increase in goodwill              321       340
  Increase in deferred tax
  assets                          1,036     1,243
  Increase in deferred tax
  liabilities                      (827)     (421)
------------------------------------------------------
  Increase in net assets           530       1,162
------------------------------------------------------

  The  adoption  of  FRS  19 has resulted in  the  recognition  of
  additional  deferred tax assets primarily in respect  of  timing
  differences  and  tax  deductible  goodwill  in  the   US.    In
  addition, deferred tax liabilities arise on accelerated  capital
  allowances  and other short-term timing differences  which  were
  not recognised previously under SSAP 15.

  The   increase  in  goodwill  is  in  respect  of  deferred  tax
  liabilities  previously unrecognised on the acquisition  of  the
  DF Group Limited in 2000.


9.   Cash flow information

  Reconciliation of operating profit to operating cash flow

                                               Restated
                                     2002          2001
                                     #000          #000
------------------------------------------------------------
  Operating profit                 29,578        28,033
  Depreciation and amounts
  written off tangible fixed
  assets                            3,771         4,024
  Amortisation of goodwill          3,875         3,652
  Amortisation of patents and
  trademarks                           45            37
  Provision against investments       604           372
  (Profit)/loss on disposal of
  tangible fixed assets               (11)           56
  Decrease/(increase) in stocks       623        (2,649)
  Increase in debtors              (3,240)       (2,520)
  Increase in creditors             6,161         8,366
  Increase in provisions            1,410            95
  Other                               (51)         (138)
------------------------------------------------------------
  Net cash inflow from operating
  activities                       42,765        39,328
------------------------------------------------------------

 Reconciliation of net cash flow to movement in net debt

                                     2002        2001
                                     #000        #000
----------------------------------------------------------
  (Decrease)/increase in cash in
  the year                         (7,426)      3,223
  Cash outflow from decrease in
  debt and lease financing          7,369      12,689
----------------------------------------------------------
  Change in net debt resulting
  from cash flows                     (57)     15,912
  Amortisation of finance costs
  of debt                            (196)        (57)
  Translation difference            1,559        (521)
==========================================================
  Movement in net debt in the
  year                              1,306      15,334
  Net debt at start of year       (40,562)    (55,896)
----------------------------------------------------------
  Net debt at end of year         (39,256)    (40,562)
----------------------------------------------------------



10.   Five year review
                                                  Restated    Restated
                                    1998    1999      2000        2001    2002
                                      #m      #m        #m          #m      #m
----------------------------------------------------------------------------------
  Turnover
  Air and Land Systems             110.2   129.4     158.3       165.1   177.5
  Information and Sea Systems       48.5    63.6      68.6        74.4    82.9
----------------------------------------------------------------------------------
  Total turnover                   158.7   193.0     226.9       239.5   260.4
----------------------------------------------------------------------------------

  Operating profit (before
  goodwill amortisation)
  Air and Land Systems              14.5    18.0      22.1        24.1    22.5
  Information and Sea Systems        6.4     6.5       8.2         7.6    11.0
----------------------------------------------------------------------------------
  Total                             20.9    24.5      30.3        31.7    33.5
----------------------------------------------------------------------------------

  Operating profit margin %
  (before goodwill amortisation)    13.2%   12.7%     13.4%       13.2%   12.9%
----------------------------------------------------------------------------------
  Profit before goodwill
  amortisation and tax              21.1    23.2      25.6        27.1    29.9
  Profit after taxation             14.6    15.6      15.8        16.3    17.9
----------------------------------------------------------------------------------
  Cash inflow from operating
  activities (see note 1)           21.8     8.2      16.5        35.2    38.7
  Free cash flow before dividends
  and acquisitions                  15.5    (0.8)      7.5        21.8    28.0
  Net debt at year-end              (0.1)  (11.7)    (55.9)      (40.6)  (39.3)
----------------------------------------------------------------------------------
  Headline earnings per share (p)
  (see note 2)                      22.6    25.9      28.7        30.5    33.2
  Dividends per share (p)            8.1     9.0       9.7        10.4    11.2
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
  Average employee numbers         1,707   2,079     2,303       2,376   2,395
----------------------------------------------------------------------------------

  Notes
  1. Cash flow from operating activities is stated after capital
     expenditure and financial investments.
  2. Headline earnings per share is calculated before  goodwill
     amortisation and earnings dilution.
  3. 2000 and 2001 have been restated following the adoption of
     FRS 19.  It has not been possible to restate earlier years with
     respect to this Financial Reporting Standard.


11.  The consolidated financial information has been prepared on a
     basis consistent with the consolidated accounts for the year ended
     31 December 2001, with the exception of the adoption of FRS 19 for
     the first time (see note 8).

12.  The financial information set out above does not comprise the
     Company's statutory accounts.  Statutory accounts for the previous
     financial year ended 31 December 2001 have been delivered to the
     Registrar  of  Companies.  The accounts for the  year  ended  31
     December  2002  have  not been delivered  to  the  Registrar  of
     Companies.

13.  Copies of the annual report will be sent to shareholders  in
     due  course  and  will  also  be available  from  the  Company's
     registered office at 417 Bridport Road, Greenford, Middlesex, UB6
     8UA.





                      This information is provided by RNS
            The company news service from the London Stock Exchange
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