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Dr Julian Blogh Chairman Douglas Caster Chief Executive David Jeffcoat Finance Director. 2005. 2005. 2005. 2006. 2006. 2006. 2007. 2007. 2007. Ultra Electronics Preliminary Results 2007. 2007 Overview. Sales £m. 412.9. 377.0. Another good year revenue up 10%

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2007 overview

Dr Julian Blogh Chairman Douglas Caster Chief Executive David Jeffcoat Finance Director


2007 overview

2005

2005

2005

2006

2006

2006

2007

2007

2007

Ultra Electronics Preliminary Results 2007

2007 Overview

Sales £m

412.9

377.0

  • Another good year

    • revenue up 10%

    • PBT* up 11%

    • EPS* up 12%

    • DPS up 15%

  • Margins maintained

    • investment to underpin medium-term growth

    • continuing currency impact

  • 83% cash conversion

  • Four acquisitions made in 2007

  • Strong balance sheet

  • Order book of £621m provides good visibility

342.4

PBT* £m

61.1

54.9

47.4

EPS* pence

65.4

58.4

50.7

* before amortisation of intangibles arising on acquisition and profit/loss on financial instruments


Financial review

Financial Review


Profit loss

Ultra Electronics Preliminary Results 2007

Profit & Loss

* before amortisation of intangibles arising on acquisition** before amortisation of intangibles arising on acquisition and profit/loss on fair value movements on derivatives


Revenue

Ultra Electronics Preliminary Results 2007

Revenue

Sector

Destination

UK42%(2006: 40%)

Civilequipment16%(2006: 15%)

Sonar21%(2006: 24%)

Civil aircraftequipment9%(2006: 9%)

Mainland Europe10%(2006: 9%)

ROW6%(2006: 8%)

Defenceequipment12% (2006: 13%)

Battlespace IT32% (2006: 29%)

Military aircraftequipment10%(2006: 10%)

North America42%(2006: 43%)


2007 overview

Ultra Electronics Preliminary Results 2007

Profit Progression

2007 OP* £62.9m

Acquisitions+£2.3m

Improved margins+£6.4m

2006 OP* £57.5m

Currency translation-£2.2m

Organic growth+£6.3m

Currency transaction-£1.7m

Higher R&D costs -£5.7m

* before amortisation of intangibles arising on acquisition


Currency effects

Ultra Electronics Preliminary Results 2007

Currency Effects

US$38m @1.13

US$68m @1.82

Profit impact

Transaction

Translation

US$ into C$

N/A

-4%

-£0.9m

US$ into £

-2%

-£0.8m

-8%

-£2.0m

C$ into £

-3%

-£0.2m

N/A

Total profit impact -£3.9m (-6%)

Revenue translation impact -£16.1m (-4%)


New business development expenditure

Ultra Electronics Preliminary Results 2007

New Business Development Expenditure

Cash

£105.0m

(2006: £92.3m)

Customer funded £74.8m(2006: £69.4m)

R&D capitalised

£4.1m

(2006: £3.8m)

Balance sheet

Ultra funded £30.2m

(2006: £22.9m)

Capitalised development costs

£8.4m

(2006: £5.2m)

R&D expensed

£26.1m

(2006: £19.1m)

P&L

Development costs amortised

£0.9m

(2006: £2.2m)

P&L charge

£27.0m

(2006: £21.3m)


Cash flow

Ultra Electronics Preliminary Results 2007

Cash Flow

* before amortisation of intangibles arising on acquisition


2007 overview

Operational Review


Aircraft vehicle systems overview

Financial results

Revenue £100.0m+6%

Profit £16.1m+22%

Order book£181.6m+3%

Aircraft & Vehicle SystemsOVERVIEW

Market trends

  • Buoyant civil aerospace market sector

    • large backlogs and strong aftermarket

  • Continuing military aircraft build commitment

    • air superiority, ground attack and mobility

  • Focus on improved armoured vehicles

    • new build and upgrades

24% of Group sales

26% of Group OP

Business highlights

  • Investment in Boeing 787 systems continues

    • flight-worthy equipment delivered

  • Continuing development of JSF engine ice protection system

    • selected for lift fan

  • Satisfactory progress on five A400M development programmes

  • Increased sales of HiPPAG airborne compressor


Aircraft vehicle systems acquisitions

AIRCRAFT & VEHICLE SYSTEMS

Aircraft & Vehicle SystemsACQUISITIONS

Atkins

  • Software for crisis and incident management

  • Differentiated through ease of use

  • Sells to MoD and emergency services

  • Key element of harbour and border protection

  • Bolt-in to Datel business

BCF Designs

  • Aircraft electronic test equipment

    • fuel quantity

    • data buses

  • US Navy contract driving growth

  • Broad defence and commercial customer base

  • Bolt-in to Electrics business


2007 overview

Ultra Electronics Preliminary Results 2007

AIRCRAFT & VEHICLE SYSTEMS

Aircraft & Vehicle SystemsADVANCED SYSTEMS FOR ARMOURED VEHICLES

Indirect vision

Electrical power management

Control panels

Advanced remote control of weapons


Aircraft vehicle systems selected opportunities

Aircraft & Vehicle SystemsSELECTED OPPORTUNITIES

Programme

Estimated date

EstimatedUltra value

Products

$10m+ pa

  • Wing ice protection system

  • Proximity sensor electronics

2008

Boeing 787 production

  • Engine inlet ice protection

  • Ice protection

    • engine intake and lift fan

  • HiPPAG for weapons ejection

Joint Strike Fighter

2008

$200m+

$5m/$50m+

  • HiPPAG for weapons ejection

2008

HiPPAG for USAF multi-purpose bomb rack

Armoured vehicle electronic upgrades

2008

£15m+

  • Electrical power management

  • Indirect vision system

  • Crew controls

Astute submarine platform management

2008/10

£20m

  • Vessel control and monitoring

FRES armoured vehicle electronics

2009

£25m+

  • Indirect vision system

  • Electrical power management

  • HUMS capability


Information power systems overview

Financial results

Revenue£126.6m+5%

Profit£19.6m+2%

Order book £133.6m+21%

Ultra Electronics Preliminary Results 2007

INFORMATION & POWER SYSTEMS

Information & Power SystemsOVERVIEW

Market trends

  • Battlespace IT demand is strong

  • Increasing demand for power equipment

    • naval, transit and nuclear

  • Continuing investment in airport IT systems

31% of Group sales

31% of Group OP

Business highlights

  • Contract for combat system for Trinidad & Tobago vessels

  • Strong demand for trackside power equipment

  • Production commitment for submarine nuclear reactor control and instrumentation

  • Airport IT system contracts around the world


Information power systems advanced airport it systems

Ultra Electronics Preliminary Results 2007

INFORMATION & POWER SYSTEMS

Information & Power SystemsADVANCED AIRPORT IT SYSTEMS

  • Heathrow T5 success

    • excellent reference site

  • International successes

    • IT integration

    • airport management

    • passenger processing

    • information processing

    • baggage processing

London Heathrow T5

Shanghai Pudong

Dublin

Cape Town


Information power systems selected opportunities

Ultra Electronics Preliminary Results 2007

INFORMATION & POWER SYSTEMS

Information & Power SystemsSELECTED OPPORTUNITIES

Programme

Estimated date

EstimatedUltra value

Products

Rolls-Royce RC&I production

2008/9

£20m

  • Naval nuclear reactor control system

Civil nuclear equipment upgrades

2008/9

£20m+

  • Surveys of existing systems

  • Outline designs

  • Nucleonic sensors and cables

Olympics transport infrastructure upgrade

2008/2011

£20m

  • Trackside power equipment

UK aircraft carriers

2008

£15m+

  • Power equipment

  • Signature management

  • Electro-optic sensors

Astute boat 4

2008

£20m

  • Power equipment

  • Signature management

  • Reactor control equipment

Airport IT system upgrades and extensions

2008+

£20m+ p.a.

  • IT integration

  • Passenger, information and baggage processing


Tactical sonar systems overview

Financial results

Revenue£186.3m+15%

Profit£27.2m+9%

Order book£305.8m+3%

Ultra Electronics Preliminary Results 2007

TACTICAL & SONAR SYSTEMS

Tactical & Sonar SystemsOVERVIEW

Market trends

  • Increasing demand for battlespace IT equipment

  • Focus on upgrading capabilities of existing platforms

  • Increasing focus on improving ASW and torpedo defence

45% of Group sales

43% of Group OP

Business highlights

  • Development contract for enhanced ASW capability

  • Completed development of higher capacity tactical radio

  • Deliveries of sea mine disposal system to Royal Navy

  • Won secure communications upgrade for UK Tornado aircraft


Tactical sonar systems acquisitions

Ultra Electronics Preliminary Results 2007

TACTICAL & SONAR SYSTEMS

Tactical & Sonar SystemsACQUISITIONS

Criticom

  • Secure and non-secure video conferencing

  • Embedded US high-grade encryption devices

  • Broad defence and government sector customer base

  • Bolt-on to Tactical & Sonar Systems

Telemus

  • Small, specialist business

  • Electronic warfare and surveillance

    • growing market sector

  • Bolt-in to Tactical Communication Systems


2007 overview

Ultra Electronics Preliminary Results 2007

TACTICAL & SONAR SYSTEMS

Tactical & Sonar SystemsWORLD LEADERS IN UNDERWATER BATTLESPACE NICHES

Systems to communicate with submarines at speed and depth

Ship bow sonar for submarine detection and obstacle avoidance

Advanced multi-static sonobuoy systems for airborne ASW

UUV for sea mine disposal

Expendable acoustic torpedo countermeasures

Innovative towed arrays for submarine and torpedo detection and defence


2007 overview

Ultra Electronics Preliminary Results 2007

TACTICAL & SONAR SYSTEMS

Tactical & Sonar SystemsSELECTED OPPORTUNITIES

Programme

Estimated date

EstimatedUltra value

Products

Sonar system for Australian Air Warfare Destroyer

2008

£20m+

  • Bow sonar

  • Towed array

  • Networked sonobuoys

US and export torpedo defence systems

2009/10

£10m+

  • Torpedo detection

  • Countermeasure system

Harbour surveillance and security systems

2008/9

$20m

  • Command and control system

  • Surveillance equipment

  • Contingency planning tools

  • High capacity tactical radio systems

High capacity tactical radios – export

2008/9

$20m+

New sonobuoy receivers for P-3 and P-8 aircraft

2008

$50m

  • Sonobuoy receivers

Position on UK team complex weapons

2009

£50m+

  • Data link equipment

  • Ground control stations


Maximising long term growth dual focus organic and acquisition

Maximising Long-Term Growth DUAL FOCUS – ORGANIC and ACQUISITION

Investing in acquisitions:

Criteria

  • defence, aerospace or nuclear

  • related niche (new, adjacent)

  • widen geographic reach

  • value-enhancing

Investing in programmes, processes and facilities:

  • Boeing 787: $150k per aircraft

  • A400M: firm contracts for 192 aircraft

    - total value to Ultra: £56m

  • F-35 Lightning II JSF: $120k per aircraft

  • New facilities for Tactical Communication Systems, Datel and PMES

  • Bolt-ons

  • SML

  • Ocean Systems

  • DNE Technologies

  • Audiopack

  • Criticom

  • Bolt-ins

  • Videcom

  • Horizon

  • Polyflex

  • Winfrith

  • Telemus

  • BCF Designs

  • Atkins


2007 overview

Summary & Outlook


Summary outlook

Summary & Outlook

  • Good performance in 2007

  • Favourable market conditions

    • large defence budgets with focus on enhancing capabilities

    • buoyant civil aerospace and airport IT markets

  • Broad spread of niches and programmes gives financial resilience

  • Strong balance sheet, capable of funding further acquisitions

  • £621m order book gives good visibility

  • Growth to continue in 2008 and beyond


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