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Interim Results for 6 months ending 30 June 2007

Interim Results for 6 months ending 30 June 2007. Dr Julian Blogh, Chairman Douglas Caster, Chief Executive David Jeffcoat , Finance Director. 2005. 2006. 2007. 2005. 2006. 2007. Ultra Electronics Interim Results 2007. Interim 2007 Overview. Sales £m. 342.4. 377.0.

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Interim Results for 6 months ending 30 June 2007

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  1. Interim Results for 6 months ending 30 June 2007 Dr Julian Blogh, Chairman Douglas Caster, Chief Executive David Jeffcoat, Finance Director

  2. 2005 2006 2007 2005 2006 2007 Ultra Electronics Interim Results 2007 Interim 2007 Overview Sales £m 342.4 377.0 • Another good first half • revenue up 7% • PBT* up 10% • EPS* up 11% • DPS up 14% • Margins maintained despite currency impact • Continuing investment to underpin medium term growth • Acquisition of Criticom completed after period-end • Order book of £575m provides good visibility 158.2 180.7 192.9 2005 2006 2007 PBT* £m 47.4 54.9 20.7 23.8 26.2 EPS* pence 50.7 58.4 * before amortisation of intangibles arising on acquisition and profit on fair value movements on derivatives 22.4 25.5 28.2

  3. Ultra Electronics Interim Results 2007 Profit & Loss * before amortisation of intangibles arising on acquisition** before amortisation of intangibles arising on acquisition and profit on fair value movements on derivatives

  4. Ultra Electronics Interim Results 2007 Sales Analysis 2007 H1 Sales £192.9m 2007 H1 sales by sector 2007 H1 sales by region Civilequipment15%(2006: 14%) UK42%(2006: 39%) Sonar22%(2006: 24%) Civil aircraftequipment10%(2006: 10%) Mainland Europe9%(2006: 9%) ROW8%(2006: 8%) Defenceequipment13% (2006: 10%) Battlespace IT29% (2006: 31%) Military aircraftequipment11%(1006: 11%) North America41%(2006: 44%)

  5. Ultra Electronics Interim Results 2007 Operating Profit Progression 2007 H1 OP*£27.0m Acquisitions +£0.4m Improved margins+£0.4m Organic growth at constant rates and margin +£2.5m 2006 H1 OP* £25.3m Currency transaction -£0.7m Currency translation -£0.9m * before amortisation of intangibles arising on acquisition

  6. Ultra Electronics Interim Results 2007 Currency Effects US$20m @1.14 US$31m @1.81 Profit impact Transaction Translation US$ into C$ N/A -3% -£0.4m US$ into £ -2% -£0.3m -7% -£0.7m C$ into £ -7% -£0.1m N/A Total profit impact -£1.5m (-6%) Revenue translation impact -£6.4m (-4%)

  7. Ultra Electronics Interim Results 2007 Cash Flow * before amortisation of intangibles arising on acquisition

  8. Operational Review

  9. Financial results Revenue £49.5m +9% Profit £7.7m +12% Order book £173.6m +15% Market trends High civil aircraft build rates – large backlogs Civil aerospace aftermarket buoyant Focus on improved armoured vehicles new build upgrades Aircraft & Vehicle SystemsOVERVIEW 26% of Group sales 29% of Group OP Business highlights • Investment in Boeing 787 systems continues • passed icing tunnel qualification tests • Continuing development of JSF engine ice protection system • Satisfactory progress on five A400M development programmes • Further sales on British Army Mastiff vehicles • now in service in Iraq and Afghanistan

  10. British Army’s Mastiff Vehicle • 108 vehicles ordered by MoD • Original US Cougar vehicles modified with appliqué armour • Indirect vision system required • driver’s night vision capability • First deliveries to theatre at end of 2006 – 23 week programme • Picture-in-picture display • initial capability developed in 8 weeks • New CCTV camera • developed in 7 weeks • low light through to desert sunlight • solid state Total initial contract value to Ultra £5m • Deliveries to be complete by August 2007

  11. Aircraft & Vehicle SystemsSELECTED OPPORTUNITIES Programme Estimated date EstimatedUltra value Products $10m+ pa • Wing ice protection system • Proximity sensor electronics 2007 Boeing 787 production • Engine inlet ice protection • Engine inlet ice protection • HiPPAG for weapons ejection Joint Strike Fighter 2007/8 $100m+ $5m/$50m+ • HiPPAG for weapons ejection 2008 HiPPAG for USAF multi-purpose bomb rack Armoured vehicle electronic upgrades 2008 £10m+ • Electrical power management • HUMS data management • Vision systems Warrior turret upgrade 2008/10 £10m • Crew controls • Power distribution FRES armoured vehicle electronics 2009 £25m+ • Indirect vision system • Power controls • HUMS capability

  12. Financial results Revenue £61.6m +3% Profit £9.1m = Order book £108.2m -6% Market trends Battlespace IT demand is strong Increasing focus on nuclear power generation Continuing investment in airport IT systems Information & Power SystemsOVERVIEW 32% of Group sales 34% of Group OP Business highlights • Continuing development and sustainment funding for ADSI • Contract for combat system for Trinidad & Tobago vessels • Accelerating progress on naval nuclear power control system • High activity levels at Heathrow Terminal 5

  13. OSIRIS Combat System • VT procuring OSIRIS for Trinidad & Tobago offshore patrol vessels • OSIRIS gives situational awareness, command and control, and gunfire control capabilities • Scope of supply includes surface and air surveillance radars and electro-optic sensor suite • Optimised for warships up to 100m long • Demand driven by operations against smuggling, terrorism, piracy, EEZ incursions • OSIRIS integrated solution reduces manning levels

  14. Information & Power SystemsSELECTED OPPORTUNITIES Programme Estimated date EstimatedUltra value Products Rolls-Royce RC&I production 2007/9 £20m • Naval nuclear reactor control system Civil nuclear equipment upgrades 2007/8 £5m+ • Surveys of existing systems • Outline designs • Nucleonic sensors and cables Heathrow East Terminal 2008 £10m • IT integration • Flight information display systems UK aircraft carriers 2008 £15m+ • Power equipment • Signature management • Electro-optic sensors Astute boat 4 2008 £20m • Power equipment • Signature management • Reactor control equipment FRES SOSI role 2008 £20m • Signature management systems • Power equipment

  15. Financial results Revenue £81.8m +9% Profit £10.2m +10% Order book £293.0m +2% Markettrends Increasing demand for battlespace IT equipment Focus on upgrading capabilities of existing platforms Increasing focus on improving ASW Tactical & Sonar SystemsOVERVIEW 42% of Group sales 37% of Group OP Business highlights • High sales of airborne targeting pods • excellent in-service performance • Completed development of higher bandwidth tactical radio • Deliveries of sea mine disposal system to Royal Navy • Won command and control system for Halifax Port, Canada

  16. Criticom Offerings • Secure video conferencing • certified for use up to Top Secret • certified for NATO inter-operability • add security and encryption to commercial equipment • manages security aspects of call set-up and clear-down • Managed service/networks • Synergies with DNE Technologies and TCS Financials • 2006 revenues $19.3m • 2006 adjusted EBIT $3.8m Business • Located in Lanham, Maryland, US • 40 employees

  17. Enhanced Battlespace IT Systems • US Army and Marines need to replace worn-out equipment • Constant demand for more bandwidth • Current contract for 426 systems (awarded in 2006) • Deployable communication system • mounted in transit cases • carried by HMMWV • Tactical line-of-sight radios from Tactical Communication Systems • speed increased from 8Mbps to 16 Mbps • software defined architecture implemented • 34Mbps in development • Multiplexers and protocol converters from DNE Technologies • increased capacity and connectivity • reduced size, weight and cost • PacketAssure breakthrough

  18. Tactical & Sonar SystemsSELECTED OPPORTUNITIES Programme Estimated date EstimatedUltra value Products Loitering munition for British Army US KG40 crypto production 2006/7 2007/8 £10m+ $20m+ • High grade cryptographic equipment US and export torpedo defence systems 2007/8 £10m+ • Torpedo detection • Countermeasure system • Communications control system • Cryptographic protection Secure comms upgrade for UK Tornado aircraft 2008 £10m+ High capacity tactical radios – export 2008 $20m+ • High capacity tactical radio systems 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

  19. Investing for Growth • Managing the portfolio • internal and external investments • Cash investment in programmes, processes and acquisitions • Programmes must have good returns • Boeing 787 at 16 aircraft per month: $20m pa (production only) • F-35 Joint Strike Fighter: $180k per aircraft • Acquisition criteria • bolt-on or bolt-in • defence or aerospace • related niche (new, adjacent) • widen geographic reach • not organisation transforming • value enhancing • Successful bolt-in acquisitions: • 2003 : Radamec • 2004 : Videcom • 2005 : Horizon • 2006 : Polyflex, Winfrith

  20. Summary & Outlook

  21. Summary & Outlook • Solid performance for first half • Strong 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 • £575m order book gives good visibility • Growth to continue in second half

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