RNS Number:2628O
Ultra Electronics Holdings PLC
04 August 2003
Embargoed until 0700 4 August 2003
Ultra Electronics Holdings plc
("Ultra" or "the Group")
Interim Results for the Six Months to 30 June 2003
FINANCIAL HIGHLIGHTS
Six months to Six months to Change
30 June 2003 30 June 2002
Turnover #135.7m #125.6m +8.0%
Operating profit* #17.4m #15.6m +11.4%
Profit before tax* #15.8m #13.8m +14.9%
Earnings per share* 17.6p 15.3p +14.8%
Dividend per share 4.1p 3.7p +10.8%
* before goodwill amortisation of #2.3m (2002 H1: #1.8m)
* Record sales and profit, with a strong contribution from Aircraft &
Vehicle Systems
* Aircraft & Vehicle Systems
- increased sales of armoured vehicle systems
- excellent HiPPAG performance
- higher activity in aerospace after-market
* Information & Power Systems
- increased orders for airport IT systems
- contracts received relating to UK Bowman programme
- first installation completed for Network Rail power supply upgrade
* Tactical & Sonar Systems
- good performance from Tactical Communication Systems
- worldwide anti-submarine warfare equipment contracts received worth
over #16m
- Torpedo defence and Type 45 sonar development programmes on schedule
* Excellent cash performance and strong balance sheet
* Two acquisitions made since period end
* Order book increased to record #359m
Dr Julian Blogh, Chief Executive, commented:
"Ultra has again demonstrated solid growth of sales and profits. The broad
spread of Ultra's activities, mostly within the defence sector, its strong order
book and proven ability to execute programmes successfully give an excellent
basis for continued progress in the medium term. The two acquisitions made since
the period end, SML Technologies and Radamec Defence Systems will strengthen
Ultra by complementing the high technology products and services that the Group
provides to its customers.
"The Board expects Ultra's results for the full year to be broadly in line with
current market expectations."
- Ends -
Enquiries:
Ultra Electronics Holdings plc (4.8.03) 020 7067 0700
Dr Julian Blogh, Chief Executive Thereafter 020 8813 4321
www.ultra-electronics.com
information@ultra-scs.com
Weber Shandwick Square Mile 020 7067 0700
Susanne Walker or Christian San-Jose
Notes to Editors:
Ultra Electronics is a group of specialist businesses designing, manufacturing
and supporting electronic and electromechanical systems, sub-systems and
products for aircraft, ships, submarines, armoured vehicles, airports and
transport systems worldwide. 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.
Embargoed until 0700 4 August 2003
Ultra Electronics Holdings plc
("Ultra" or "the Group")
Interim Results for the Six Months to 30 June 2003
FINANCIAL RESULTS
Ultra's performance in the first half of 2003 was very encouraging with record
sales and profits and strong cash generation.
Sales increased by 8.0% to #135.7m, compared to #125.6m in the same period last
year. Organic sales increased by 1% in local currencies compared to the first
half of 2002, offset by a 3% reduction in sterling terms for the US dollar
translation effect. This growth reflected a strong performance in the Aircraft &
Vehicle Systems division, with increased sales of HiPPAG and equipment for
armoured vehicles. The Group's Information & Power Systems businesses also
performed well, reflecting higher defence spending in the Battlespace IT sector.
Tactical Communication Systems, acquired in September 2002, boosted the
performance of Ultra's Tactical & Sonar Systems division.
Operating profit before goodwill amortisation was 11.4% higher at #17.4m (2002:
#15.6m). The operating margin improved to 12.8% (2002: 12.4%) which was due
mainly to an increased level of higher margin aerospace spares and repairs
activity. The interest charge dropped by #0.3m and profit before tax and
amortisation rose to #15.8m, a 14.9% increase when compared to last year's
result of #13.8m. Earnings per share before amortisation of goodwill grew by
14.8% to 17.6p (2002:15.3p).
Ultra achieved excellent operating cash generation in the period of #18.4m
(2002: #11.9m) after capital expenditure, a conversion rate from operating
profit of 106%. After non-operating payments including interest, taxation and
dividends of #13.0m (2002: #8.2m), net debt was #33.9m at the period end, a
reduction of #5.4m since the beginning of the year. The strength of the Group's
balance sheet is demonstrated by a first half interest cover of approximately
eleven times.
An interim dividend of 4.1p (2002: 3.7p) will be paid on 26 September 2003 to
those shareholders on the register at the close of business on 29 August 2003.
MARKETS
Equipment that provides mobility and the rapid and secure management of vital
information remains a key focus in all of Ultra's main defence markets. There
has been particular emphasis on Battlespace IT systems that facilitate the
exchange, networking and interoperability of data. In the USA, which accounts
for around 35% of Ultra's sales, defence and related budgets continue to
increase significantly. Real budget growth has been less rapid in the UK,
although expenditure is rising on specific equipment programmes in which Ultra
is involved. Worldwide, budgeted levels of expenditure on Anti-Submarine Warfare
(ASW) equipment are reducing, as anticipated, although a number of new ASW
aircraft are currently under development. Demand for longer life distributed
sensor systems, using sonobuoy-like technology, is rising.
The civil aerospace sector remains soft and build rates for new aircraft are
flat at best. There has, however, in recent months been some evidence of a
recovery in demand for after-market products and services. Infrastructure
investment at selected airports around the world has continued in anticipation
of a medium-term increase in passenger traffic. There is an increased focus on
systems, including IT, that can make travel easier whilst maintaining an
appropriate level of security and control.
OPERATIONAL REVIEW
Aircraft & Vehicle Systems
Includes miniature airborne compressors; high integrity software and systems;
aircraft system electronics; aircraft noise and vibration control; propeller
de-icing, balancing and control systems; armoured vehicle electronic information
and control systems, human/computer interface equipment and shared working
environment solutions.
Total sales increased by 12.3% to #40.6m (2002: #36.2m) and the operating profit
before goodwill amortisation was #7.1m compared with #6.1m last year, an
increase of 16.0%. The order book reduced by 3.2% to #80.1m (December 2002:
#82.8m) mainly reflecting the sales made against multi-year Eurofighter
contracts.
The sales growth resulted from a significant increase in sales of the HiPPAG
airborne compressor, additional sales of equipment for armoured vehicles and
some recovery in the civil aerospace after market. In the period, HiPPAG,
according to the US Navy, "significantly enhanced the combat readiness and
deployability" of the F/A-18 aircraft during military operations in Iraq. Ultra
has received a contract to adapt HiPPAG to meet the requirements of the F-35
Joint Strike Fighter. The Group has also continued to win contracts for hand
controls for unmanned aerial vehicles, particularly in the USA. Sales of cockpit
equipment for the Eurofighter programme increased in the first half as did
activity levels associated with the development of the electronics systems for
the UK Army's Engineer Tank System. Also in the period, Ultra achieved further
sales of its innovative Internet-based shared working environment to the UK
Defence Procurement Agency.
Tactical & Sonar Systems
Includes secure tactical line-of-sight radio systems, multiplexers and switches;
tactical datalinks; cryptographic equipment; active, passive and multi-static
sonobuoys; sonobuoy receivers and processors; distributed surveillance sensor
arrays; ship's sonar systems and ship's torpedo defence systems.
Total sales increased by 7.8% to #53.3m (2002: #49.4m) and operating profit
before goodwill amortisation was #5.4m (2002: #5.3m). The order book at the end
of the period reduced by 2.5% to #192.0m (December 2002: #196.8m) reflecting
sales made against the long-term contracts in this division.
The anticipated reduction in the level of sales of Ultra's Anti-Submarine
Warfare (ASW) equipment affected turnover in the period although the Group has
continued to win orders for sonobuoys in the international market. However, the
large development programmes for naval systems, including the Type 45 sonar and
the Royal Navy's new torpedo defence system, are on schedule. Tactical
Communication Systems in Canada, acquired in September 2002, has been integrated
into the Group and is performing ahead of budget; the next tranches of orders
for its tactical radio communication systems from the armies of the USA and
South Korea were received in the period.
Information & Power Systems
Includes command and control systems equipment; weapons interfacing electronics;
coastal surveillance systems; naval data processing and distribution; airport
and airline information management systems; passenger baggage reconciliation
systems; ID card systems; naval power conversion; signature management of naval
vessels; transit system power conversion and control.
Information & Power Systems recorded a good performance in the first half, with
sales growth of 4.4% to #41.8m (2002: #40.0m) and a 15.0% increase in operating
profit before goodwill amortisation to #4.8m (2002: #4.2m). Encouragingly, the
order book increased by 27.2% to #87.1m (December 2002: #68.4m).
This result reflected the continuing growth in the Group's Battlespace IT
activities, with sales of the ADSI real-time command and control system up
almost 10% on the equivalent period in 2002.
In the UK, Ultra has started to supply equipment relating to the Army's Bowman
digitisation programme. In Airport IT, Ultra is now benefiting from having won
contracts to integrate IT systems at airports such as Toronto and Kansas City,
and at the new fifth terminal at London Heathrow. In addition, the Group was
selected to install its UltraTrak baggage reconciliation system at Terminals 1,
2 and 3 at Heathrow. Market acceptance of Ultra's expanded range of ID card
printers has been good during the first half. Finally, in the period, the first
installation took place of Ultra equipment to support the upgrade of the power
supply for Network Rail's southern region.
PENSIONS
Changes have been made to the Group's UK defined benefit pension scheme to
reduce the long-term uncertainty, and therefore risk, that previously existed.
The #0.4m increase in pension contributions this year, that was mentioned in the
2002 preliminary results announcement, has been implemented. Additionally,
employees' contributions will increase by 2.0% by April 2004, equivalent to an
extra #0.5m in a full year. The scheme has now also been closed to new members
who will be offered a new defined contribution arrangement.
PROSPECTS
The Group's order book stood at #359m at the end of June (December 2002: #348m)
representing approximately 15 months of future sales. This reflects the
continuing supply of equipment on existing platforms for which there are firm
contracts as well as new programmes won.
The infrastructure investment programmes for airports and airlines in which
Ultra is involved will continue, as will Network Rail's investment programme for
the southern region power supply. Whilst no increase in the rate of build of new
aircraft in civil aerospace is assumed before the end of 2004, it is anticipated
that the partial recovery in the after-market will be sustained.
Additional ASW platforms are being developed, incorporating Ultra equipment,
which are expected to drive a longer-term increase in sonobuoy usage. New longer
life sensor systems, utilising technology derived from sonobuoys, are also in
development. However, sales of sonobuoys are expected to reduce further in 2004
despite an initial contribution from advanced new sonobuoy systems entering
development.
Strong growth in expenditure on defence equipment in the USA is forecast to
continue and Ultra is well positioned to benefit from this. There will be a
continuing focus on equipment to improve the connectivity of systems and to
increase the tempo of battle and these are areas where Ultra has distinct
expertise.
The broad spread of Ultra's activities, mostly within the defence sector, its
strong order book and proven ability to execute programmes successfully give an
excellent basis for continued progress in the medium term. Two acquisitions have
been made since the period end, SML Technologies and Radamec Defence Systems,
for a combined cost of #12.5m. Both businesses are involved in Battlespace IT
activities and will be part of the Group's Information & Power Systems division.
They will strengthen Ultra by complementing the high technology products and
services that the Group provides to its customers.
The Board expects Ultra's results for the full year to be broadly in line with
current market expectations with growth continuing in the medium term.
- Ends -
Ultra Electronics Holdings plc (4.8.03) 020 7067 0700
Dr Julian Blogh, Chief Executive Thereafter 020 8813 4321
www.ultra-electronics.com
information@ultra-scs.com
Weber Shandwick Square Mile 020 7067 0700
Susanne Walker or Christian San-Jose
Ultra Electronics Holdings plc
Interim Results for the Six Months to 30 June 2003
Consolidated Profit and Loss Account
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Turnover
- existing operations 1,2 135,669 125,597 260,352
---------- ----------- ----------
Operating profit before
goodwill amortisation
- existing operations 17,365 15,588 33,453
Goodwill amortisation
- existing operations (2,320) (1,809) (3,875)
---------- ----------- ----------
Operating profit
- existing operations 15,045 13,779 29,578
Net interest payable (1,518) (1,794) (3,533)
---------- ----------- ----------
Profit before taxation 13,527 11,985 26,045
Taxation 3 (4,231) (3,724) (8,099)
---------- ----------- ----------
Profit after taxation 9,296 8,261 17,946
Dividends 4 (2,731) (2,438) (7,385)
---------- ----------- ----------
Retained profit 6,565 5,823 10,561
========== =========== ==========
Earnings per share (pence)
After goodwill amortisation
- Basic 5 14.1 12.6 27.3
- Diluted 5 14.0 12.5 27.3
Before goodwill amortisation
- Basic 5 17.6 15.3 33.2
========== =========== ==========
Ultra Electronics Holdings plc
Interim Results for the Six Months to 30 June 2003
Consolidated Balance Sheet
At At At
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Fixed assets
Tangible assets 16,829 14,484 15,180
Intangible assets
- patents and trademarks 582 628 605
Intangible assets - goodwill 78,630 62,603 80,871
Investments 1,527 1,346 1,050
--------- ---------- ----------
97,568 79,061 97,706
--------- ---------- ----------
Current assets
Stocks 21,004 26,130 23,834
Debtors 58,636 53,384 57,579
Cash at bank and in hand 13,104 9,503 8,132
--------- ---------- ----------
92,744 89,017 89,545
Creditors: Amounts falling due
within one year (73,633) (89,602) (80,622)
--------- ---------- ----------
Net current assets/(liabilities) 19,111 (585) 8,923
--------- ---------- ----------
Total assets less current
liabilities 116,679 78,476 106,629
Creditors: Amounts falling due
after more than one year (50,377) (25,060) (46,126)
Provisions for liabilities and
charges (5,589) (3,246) (4,822)
--------- ---------- ----------
Net assets 60,713 50,170 55,681
========= ========== ==========
Capital and reserves
Called up share capital 3,312 3,294 3,302
Share premium account 27,626 26,225 26,891
Profit and loss account 6 29,775 20,651 25,488
--------- ---------- ----------
Shareholders' funds 60,713 50,170 55,681
========= ========== ==========
Ultra Electronics Holdings plc
Interim Results for the Six Months to 30 June 2003
Consolidated Cash Flow Statement
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Net cash inflow from
operating activities 7 22,636 13,878 42,765
Returns on investments
and servicing of finance (1,586) (1,527) (3,414)
Taxation (4,750) (3,122) (7,279)
Capital expenditure and
financial investment (4,203) (1,934) (4,076)
Acquisitions (79) (50) (21,996)
Equity dividends paid (4,959) (4,606) (7,045)
---------- ----------- ----------
Cash inflow/(outflow)
before use of liquid
resources and financing 7,059 2,639 (1,045)
Financing (2,685) (9,015) (6,381)
---------- ----------- ----------
Increase/(decrease) in cash in
the period 4,374 (6,376) (7,426)
========== =========== ==========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash in
the period 4,374 (6,376) (7,426)
Cash outflow from decrease in
debt and lease financing 3,453 9,458 7,369
---------- ----------- ----------
Change in net debt resulting
from cash flows 7,827 3,082 (57)
Amortisation of finance costs
of debt (49) (190) (196)
Translation difference (2,377) 733 1,559
---------- ----------- ----------
Decrease in net debt in the
period 5,401 3,625 1,306
Net debt at start of period (39,256) (40,562) (40,562)
---------- ----------- ----------
Net debt at end of period (33,855) (36,937) (39,256)
========== =========== ==========
ANALYSIS OF NET DEBT
Cash at bank and in hand 13,104 9,503 8,132
Debt due within one year 126 (25,345) (1,219)
Debt due after one year (47,085) (21,000) (46,126)
Finance leases - (95) (43)
---------- ----------- ----------
(33,855) (36,937) (39,256)
========== =========== ==========
Consolidated Statement of Total Recognised Gains and Losses
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Group profit for the period 9,296 8,261 17,946
(Loss)/gain on foreign currency
translation (2,278) 240 474
Adjustment in respect of the
adoption of FRS 19 for
prior years - 1,162 1,162
---------- ----------- ----------
Total recognised gains and losses
relating to the period 7,018 9,663 19,582
---------- ----------- ----------
Ultra Electronics Holdings plc
Interim Results for the Six Months to 30 June 2003
Notes to the Interim Statement
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
1.Divisional analysis #'000 #'000 #'000
Turnover
Aircraft & Vehicle Systems 40,620 36,178 76,427
Information & Power Systems 41,769 39,999 82,859
Tactical & Sonar Systems 53,280 49,420 101,066
----------- ---------- -----------
135,669 125,597 260,352
=========== ========== ===========
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit
Aircraft & Vehicle Systems 7,125 6,143 12,495
Information & Power Systems 4,796 4,172 10,989
Tactical & Sonar Systems 5,444 5,273 9,969
----------- ---------- -----------
17,365 15,588 33,453
Goodwill amortisation (2,320) (1,809) (3,875)
----------- ---------- -----------
Operating profit 15,045 13,779 29,578
=========== ========== ===========
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
2.Turnover by geographical
destination
United Kingdom 55,916 55,023 110,547
Continental Europe 17,384 15,947 33,700
North America 49,261 49,513 100,549
Rest of World 13,108 5,114 15,556
----------- ---------- -----------
135,669 125,597 260,352
=========== ========== ===========
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
3.Taxation
United Kingdom
- Corporation tax 3,096 3,015 6,662
- Deferred tax 268 180 482
----------- ---------- -----------
3,364 3,195 7,144
----------- ---------- -----------
Overseas
- Corporation tax 1,098 578 895
- Deferred tax (231) (49) 60
----------- ---------- -----------
867 529 955
----------- ---------- -----------
Total tax on profit on
ordinary activities 4,231 3,724 8,099
=========== ========== ===========
The tax charge for the six months to 30 June 2003 has been based on an
estimated effective rate, before amortisation of goodwill, for the year to 31
December 2003 of 26.7% (30 June 2002: 27.0%).
4.The proposed interim dividend of 4.1p per ordinary share (30 June 2002:
3.7p) will be paid on 26 September 2003 to shareholders on the register on 29
August 2003.
5.Earnings per share
The number of shares and the earnings used to calculate earnings per share
(EPS) is given below:
Six months Six months
to to Year to
30 June 30 June 31 December
2003 2002 2002
No. of No. of No. of
shares shares shares
Number of shares used for basic EPS 66,005,283 65,706,837 65,647,904
Number of shares deemed to be issued
at nil consideration following exercise
share options of 180,770 285,826 174,036
------------ ------------ ------------
Number of shares used for fully
diluted EPS 66,186,053 65,992,663 65,821,940
============ ============ ============
Earnings attributable to ordinary shareholders
Six months Six months
to to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
After goodwill amortisation 9,296 8,261 17,946
Before goodwill amortisation 11,616 10,070 21,821
========== =========== ==========
6.Profit and loss account
Goodwill, representing the excess of the fair value of consideration given
over the fair value of separable net assets acquired, is capitalised as an
intangible asset and is amortised over a period of 20 years, being the
Directors' assessment of its likely future value. Provision is made for any
impairment. For acquisitions made prior to 30 December 1997, goodwill was
considered separately for each acquisition and was written off immediately to
the goodwill reserve, reflecting the Directors' assessment of its likely
future value to the Group. This reserve, amounting to #33,294,000 at 30 June
2003, 31 December 2002 and at 30 June 2002, has since been offset against the
profit and loss account.
7.Cash flow information
Reconciliation of operating profit to operating cash flow
Six months to Six months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Operating profit 15,045 13,779 29,578
Depreciation and amounts
written off tangible fixed
assets 2,032 1,948 3,771
Amortisation of goodwill 2,320 1,809 3,875
Amortisation of patents and
trademarks 23 22 45
Provision against investments 359 272 604
Loss/(profit) on disposal of
tangible fixed assets 14 (7) (11)
Decrease/(increase) in stocks 3,466 (4,435) 623
(Increase)/decrease in
debtors (409) 1,445 (3,240)
(Decrease)/increase in
creditors (404) (876) 6,161
Increase/(decrease) in
provisions 323 (76) 1,410
Other (133) (3) (51)
---------- ----------- -----------
Net cash inflow from operating
activities 22,636 13,878 42,765
========== =========== ===========
8.The financial information contained in this statement does not constitute
statutory accounts within the meaning of section 240 of the Companies Act
1985, and has not been audited or reviewed.
The unaudited accounts for the half years ended 30th June 2003 and 30th June
2002 have been prepared on a basis consistent with the statutory accounts for
the year ended 31st December 2002. Those statutory accounts received an
unqualified auditor's report and have been filed with the Registrar of
Companies. A copy of this interim statement is being sent to all shareholders,
and will shortly be available on Ultra's web site: www.ultra-electronics.com.
Further copies may be obtained from Ultra's registered office: 417 Bridport
Road, Greenford, Middlesex, UB6 8UA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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