21st Feb 2005 07:00
Ultra Electronics Holdings PLC21 February 2005 Embargoed until 07.00 21 February 2005 Ultra Electronics Holdings plc ("Ultra" or "the Group") Preliminary Audited Results for the Year Ended 31 December 2004 FINANCIAL HIGHLIGHTS Year ended Year ended 31 December 2004 31 December 2003 Change Turnover £319.7m £284.4m +12.4%Operating profit* £42.5m £37.5m +13.1%Profit before tax* £39.7m £34.4m +15.5%Earnings per share* 44.1p 38.2p +15.4%Dividend per share - final 9.2p 8.2p +12.2% - total 13.8p 12.3p +12.2%*before goodwill amortisation of £5.9m (2003: £4.9m). Statutory information after goodwill amortisation: operating profit £36.6m (2003: £32.7m), profit before tax £33.8m (2003: £29.5m) and earnings per share 35.2p (2003: 30.8p) • Record levels of sales and profit • Sales growth driven by battlespace IT and airport systems • High quality of earnings - operating cash** conversion of 111% • Investment strategy continues to underpin strong performance - £21m invested in existing businesses - £23m invested in complementary acquisitions, DNE Systems and Videcom • Operating margin* higher at 13.3% despite currency impact • Acquisitions performed well in the year and are now fully integrated • Order book grown to £395m • Douglas Caster will become Chief Executive after the AGM in April • Dr Julian Blogh is proposed to become Chairman upon Peter Macfarlane's retirement after the AGM Dr Julian Blogh, Chief Executive, commented: "At the heart of Ultra's success isits investment strategy and its expertise in identifying investmentopportunities that deliver growth, either within existing businesses or byacquiring businesses which complement and broaden the Group's portfolio ofproducts and capabilities. Ultra has a proven strategy of providing nicheproducts and being a responsive and competent supplier; this underpins further progress for the Group. The outlook for the Group remains encouraging although in 2005 there will be a further impact on sales and profit of the continuing weakness of the US dollar. Current market conditions together with recent acquisitions and contract awards provide the foundations for future growth. These factors, coupled with the size of the closing order book, give the Board confidence in the continued progress of the Group in 2005." - Ends - Enquiries:Ultra Electronics Holdings plc (21.02.05) 020 7067 0700Dr Julian Blogh, Chief Executive Thereafter 020 8813 4321Douglas Caster, Chief Operating Officer www.ultra-electronics.comDavid Jeffcoat, Finance Director Weber Shandwick Square Mile 020 7067 0700Susan Ellis / Susanne Walker / Stephanie Badjonat ** after capital expenditure and Long Term Incentive Plan share purchase Embargoed until 07.00 21 February 2005 Ultra Electronics Holdings plc ("Ultra" or "the Group") Preliminary Audited Results for the Year Ended 31 December 2004 Ultra made excellent progress in 2004, achieving high growth in sales andprofits. The three acquisitions made in the second half of 2003 performed welland the Group's investment in two further acquisitions during 2004 strengthensUltra's position in the growth sectors of battlespace IT and airport systems. In2004 the Group underpinned its position in its key sonobuoy and civil aerospaceactivities with the signing of ten year sole source agreements. Ultra also won abroad range of new contracts in 2004 that will support the continuing progressof the Group. Group Results Sales increased to £320m, a rise of 12.4% over the prior year, and this wasachieved despite the significant weakening of the US dollar. At constantcurrencies, sales growth reached 17%, of which 9% was organic. The main driversof the organic increase were higher battlespace and airport IT activity anddeliveries of equipment for military vehicles. There was a further increase in the Group's operating margin* to 13.3% (2003:13.2%), driven mainly by a combination of increased volume, effective executionof development contracts and a continuing focus on cost control. Operatingprofit* rose by 13.1% to £42.5m (2003: £37.5m), while profit before tax andgoodwill amortisation increased by 15.5% to £39.7m (2003: £34.4m). A slightlylower effective tax rate* of 26.0%, due partly to additional UK R&D tax credits,helped the Group achieve a 15.4% increase in earnings per share* to 44.1p (2003:38.2p). Operating cash flow** was again excellent at £46.9m (2003: £48.3m). Conversionof operating profit* to operating cash flow** was 111%, giving an averageconversion over the last five years of 106%. Net debt at the year end reduced to£23.2m (2003: £30.3m) despite investing £23.3m after expenses on twoacquisitions during the year. In addition, the Group invested £20.7m (2003:£19.5m) in research & development, capital expenditure and new businessdevelopment. Interest paid was covered 15 times by operating profit*. Ultra had net current liabilities at the year end of £33.9m compared with net current assets of £12.7m at the end of 2003. The Group's banking facility matures in December 2005, with £48.1m (2003: £nil) of the loan therefore failing due within one year. In preliminary discussions, all of the banks providing Ultra's existing facility have expressed a desire to participate in a future arrangement.The Board is confident that new funding arrangements will be secured in a timely manner. There was a 5.4% increase in the Group's order book in the year, with a closingvalue of £395.4m, maintaining historic levels of firm order cover for the comingyear and providing in total equivalent cover of approximately 14 months offuture sales. DividendThe proposed final dividend is 9.2p, bringing the total dividend for the year to13.8p (2003: 12.3p). This represents an annual increase of 12.2% and reflectsthe Board's confidence in Ultra's prospects. The dividend is covered 3.2 timesby earnings per share*. If approved, the dividend will be paid on 6 May 2005 toshareholders on the register on 15 April 2005. Investing in Growing Markets At the heart of Ultra's success is its investment strategy. Ultra has a realexpertise in identifying investment opportunities that deliver growth, eitherwithin existing businesses or by acquiring businesses which complement andbroaden the Group's portfolio of products and capabilities. During 2004, Ultrainvested a total of £44.0m (2003: £37.8m) on acquisitions, research &development, capital expenditure and new business development. This investmentcontributed directly to the new contracts won in the year and underpins theGroup's long-term positioning for future business. * before goodwill amortisation** after capital expenditure and Long Term Incentive Plan share purchase In Ultra's largest markets, the UK and US defence sector, there is a growingemphasis on electronic systems for military platforms, battlespace IT andhomeland security. The businesses acquired by Ultra in recent years operatemainly in these growth sectors. Ultra is well placed to benefit from this marketgrowth by continuing successfully to develop innovative solutions to meetcustomer needs. In the civil air transport sector the recovery of the aftermarket and the risein orders and production schedules for civil aircraft continues as passengernumbers rise. Demand for airport IT systems is continuing to see strong growth,driven by investment in new airport facilities both in the UK and overseas. Inthe UK rail sector, following recent rapid growth, activity is expected toreduce in 2005. Worldwide, however, investment in mass transit systeminfrastructure is increasing as a solution to urban congestion. 2004 Acquisitions The Group made two acquisitions in 2004, DNE Systems Inc. ("DNE") and Videcomfor a total cash cost of £23.3m, financed using Ultra's existing bankingfacilities. DNE strengthens Ultra's tactical communications capability within thebattlespace IT sector and is now part of the Tactical & Sonar Systems divisionof Ultra. Based in Wallingford, Connecticut, USA, DNE provides specialistequipment to conserve bandwidth when transmitting over satellite and terrestrialradio links and to achieve interoperability between commercial and militarycommunication interfaces for modern and legacy systems. Videcom, based in Henley-on-Thames, has a strong capability in airport ITsystems and complements Ultra's product portfolio with flight check-in, aircraftpassenger seat allocation, baggage reconciliation and departure control systems.The products are used in a wide variety of airports around the world and Videcomhas a presence in the rapidly growing Chinese market. Ultra will benefit byoffering the combined range of products to its airline and airport customers. Aircraft & Vehicle Systems Aircraft & Vehicle Systems comprises five businesses in the UK and US thatsupply advanced technology products and software for military aircraft and landvehicles and also for the civil aerospace markets. Sales in the division increased by 2.6% to £81.9m (2003: £79.9m). Operatingprofit* was £14.7m (2003: £13.9m) giving an operating margin* of 17.9% (2003:17.4%). The continuing recovery in air travel since the terrorist attacks of September2001 drove the launch of new aircraft development programmes, an increase inbuild rates on existing programmes and a rise in aftermarket support activityduring 2004. An important achievement in the year was the selection of Ultra tosupply two sub-systems on the Boeing 787 "Dreamliner" aeroplane. For the firsttime, the Group will have a direct presence on a Boeing civil aircraft. Ultrawill be the system integrator and supply the electronic controls for the systemthat provides electro-thermal ice protection for the wings of the 787. Ultraalso teamed with Goodrich to provide the proximity sensing equipment for the 787passenger cabin, cargo and landing gear doors. Sales of these systems shouldcommence in 2008, ahead of the aircraft entering service in 2009. Sales of Ultra's HiPPAG for the US navy's F-18 E/F Super Hornet aircraftachieved record levels. The development of HiPPAG variants for use in themunitions ejection systems of both the US Small Diameter Bomb programme and theF-35 Joint Strike Fighter aircraft proceeded to plan. In the US, Ultra achieved notable success in supplying its joysticks and related'cockpit' equipment for a large number of different types of unmanned aerialvehicles and for many variants of vehicle within the Future Combat Systemprogramme. In the UK, deliveries to BAE Systems of the indirect vision equipmentfor the Engineer Tank System and development activity on the crew controls forthe British Army's Terrier combat engineering vehicle progressed to plan. * before goodwill amortisation** after capital expenditure and Long Term Incentive Plan share purchase Information & Power Systems Information & Power Systems, with the integration of Videcom into the AirportSystems business, consists of the seven businesses that supply informationmanagement and power products for defence, commercial and airport applicationsworldwide. Sales increased in the division by 21.1% to £115.6m (2003: £95.5m) of which12.7% was organic. Operating profit* increased 34.6% to £14.8m (2003: £11.0m).The operating margin* was 12.8%, an increase of 1.3% over the prior year. The airport IT systems business achieved an excellent performance whichcontributed significantly to the growth of the division. Development work on theIT infrastructure for BAA's Terminal 5 at Heathrow Airport proceeded well andUltra's flight information display system was selected by BAA to be usedthroughout all its operations. In the US, the airport IT system at Kansas City,for which Ultra is the integrator, neared completion and the installation of anintegrated suite of airport IT at Oakland, California provides another showcasefor Ultra's systems integration capabilities. UltraTrak, the world-leadingpassenger baggage reconciliation system was selected for all the internationalairports in New Zealand, building on the managed service provision now operatingsuccessfully at Heathrow and in Australia, as well as in the US. The division benefited from a rise in government expenditure on battlespace ITwhich resulted in new sales and upgrades of the latest version of the ADSI datalink processor and situational awareness system. Radar coastal surveillancesystem contracts were secured in the UAE and for commercial ports in the US toimprove homeland security. There was a high level of contract manufacturingactivity where deliveries of battlespace IT equipment for the British ArmyBowman programme also increased. Rolls-Royce placed an important order for the development of a replacementcontrol system for the nuclear reactors that power the Royal Navy's submarines.In the medium-term, this is expected to lead to further orders for productionand long-term support. Tactical & Sonar Systems Tactical & Sonar Systems, with the addition of DNE, comprises seven businessesin the UK and North America that supply tactical communications and underwaterwarfare equipment to military users worldwide. Sales in the division increased to £122.1m from £109.0m in 2003, a rise of12.0%. Operating profit* increased 2.7% to £13.0m (2003: £12.7m) giving anoperating margin* of 10.7%. At constant currencies the sales growth was 19.9%and the operating profit* growth was 19.2%. As anticipated, the level of sales of sonobuoys in the year was broadlyunchanged from 2003. Sales of anti-submarine warfare mission system equipmentwere also flat as deliveries to the RAF Nimrod programme ended. One of thehighlights of the year was securing a long-term, sole source partnering contractwith the UK Ministry of Defence for the supply and support of all the UK'ssonobuoys. Ultra's dominance of the sonobuoy export market continued with salesto France, Canada, Australia and Korea. The Group's Surface Ship Torpedo Defence system entered service with the RoyalNavy on schedule during the year and a contract for a torpedo defence technologydemonstrator programme for the US Navy was also secured. Both Lockheed Martinand General Dynamics have selected Ultra's torpedo defence system for the USNavy Littoral Combat Ship. Sales of battlespace IT equipment contributed to the growth of this division,with deliveries of high capacity radios to the US Army for its Patriot missiledefence systems and network access equipment for all the US armed services. Theaward to Ultra in the UK of a contract from the US Navy for the development ofspecialist cryptographic equipment is expected to contribute to future growth ascontracts for production items are secured. This is the first time the USgovernment has contracted offshore for the development of such equipment. * before goodwill amortisation** after capital expenditure and Long Term Incentive Plan share purchase Management Changes It is planned that the management changes described last year will come intofull effect after the Annual General Meeting on 22 April 2005. Peter Macfarlanewill retire from the Board at that time, having been Chairman since 1994, and DrJulian Blogh will take over the role. The Board would like to thank Peter forhis excellent contribution to the development of Ultra, and wishes him well inhis retirement. Douglas Caster, currently Chief Operating Officer will succeedDr Julian Blogh as Chief Executive. Prospects In Ultra's main defence markets, expenditure is increasing on battlespace IT toenable better situational awareness, quicker command and control, and thesynchronisation of military effects with much improved accuracy. Modern armedforces must be equipped to allow the rapid deployment of light, mobile troopsand must be able to exploit superior intelligence of the military situationthrough the use of battlespace IT. The perceived terrorist threat to individuals and to economically importantassets together with the need to protect borders and coastlines from illegalimmigrants and smugglers are driving an increase in global demand forsurveillance and enforcement systems. With its range of niche businesses, Ultra is well placed to benefit from thesemarket forces. In civil markets, aerospace is continuing to recover with both Airbus and Boeingforecasting increased build rates, leading to further growth in originalequipment sales and after-market support. The growth in air traffic is strong,driving new airport construction and refurbishment with increasing demand forairport IT systems. Investment in rail transport and mass transit systems thatrequire specialist power equipment continues, although in the UK this will be ata lower level than experienced in recent years. Following its successful 2004, Ultra enters 2005 with a strong balance sheet anda record order book. Its proven strategy of providing niche products, being aresponsive and competent supplier and achieving growth, both organically andthrough acquisition, underpins further progress for the Group. Ultra's investment in new products and in the acquisition of complementary businesses is expected to be funded from internal cash generation, unless a truly compelling acquisition opportunity demanding additional finance arises. The Board's prime objective is to outperform the market in terms of annual increases in shareholder value by delivering above average annual increases in earnings. The outlook for the Group remains encouraging although in 2005 there will be a further impact on sales and profit of the continuing weakness of the US dollar. Current market conditions coupled with recent acquisitions and contract awards provide the foundations for future growth. The Board has confidence in the continued progress of the Group in 2005. - Ends - Enquiries:Ultra Electronics Holdings plc (21.02.05) 020 7067 0700Dr Julian Blogh, Chief Executive Thereafter 020 8813 4321Douglas Caster, Chief Operating Officer www.ultra-electronics.comDavid Jeffcoat, Finance Director Weber Shandwick Square Mile 020 7067 0700Susan Ellis / Susanne Walker / Stephanie Badjonat Ultra Electronics Holdings plc Preliminary Audited Results for the Year Ended 31 December 2004 Consolidated Profit and Loss Account 2004 2003 Note £000 £000-------------------------------------------------------------------------------- Turnover - existing operations 311,583 284,350 - acquisitions 8,086 ---------------------------------------------------------------------------------Continuing operations 1,2 319,669 284,350-------------------------------------------------------------------------------- Cost of sales - existing operations (230,107) (210,688) - acquisitions (4,910) ---------------------------------------------------------------------------------Continuing operations (235,017) (210,688)-------------------------------------------------------------------------------- Gross profit - existing operations 81,476 73,662 - acquisitions 3,176 ---------------------------------------------------------------------------------Continuing operations 84,652 73,662 Other operating expenses (net) (48,082) (40,997)-------------------------------------------------------------------------------- Operating profit - existing operations 35,590 32,665 - acquisitions 980 ---------------------------------------------------------------------------------Continuing operations 1 36,570 32,665 Finance charges (net) (2,785) (3,173)-------------------------------------------------------------------------------- Profit on ordinary activities before taxation 33,785 29,492Tax on profit on ordinary activities 3 (10,308) (9,086)-------------------------------------------------------------------------------- Profit on ordinary activities after taxation, being profit for the financial year 23,477 20,406 Dividends paid and proposed on equity shares (9,246) (8,173)--------------------------------------------------------------------------------Retained profit for the year 14,231 12,233-------------------------------------------------------------------------------- Earnings per ordinary share (pence) After goodwill amortisation - Basic 35.2 30.8 - Diluted 35.0 30.7 Before goodwill amortisation - Basic 44.1 38.2-------------------------------------------------------------------------------- Ultra Electronics Holdings plc Preliminary Audited Results for the Year Ended 31 December 2004 Group Balance Sheet at 31 December 2004 2004 2003 Note £000 £000-------------------------------------------------------------------------------- Fixed assetsTangible assets 20,213 19,170Intangible assets - patents and trademarks 515 560Intangible assets - goodwill 106,766 90,287-------------------------------------------------------------------------------- 127,494 110,017-------------------------------------------------------------------------------- Current assetsStocks 4 21,137 17,364Debtors: amounts falling due within one year 5 66,899 63,761Cash at bank and in hand 24,975 19,047-------------------------------------------------------------------------------- 113,011 100,172-------------------------------------------------------------------------------- Creditors: amounts falling due within one year 6 (146,956) (87,516)--------------------------------------------------------------------------------Net current (liabilities)/assets (33,945) 12,656-------------------------------------------------------------------------------- Total assets less current liabilities 93,549 122,673 Creditors: amounts falling due after more than one year 7 (1,794) (50,186)Provisions for liabilities and charges 8 (10,636) (7,813)--------------------------------------------------------------------------------Net assets 81,119 64,674-------------------------------------------------------------------------------- Capital and reservesCalled-up share capital 3,345 3,318Share premium account 9 30,306 28,096Profit and loss account 9 48,793 34,366Own shares 10 (1,325) (1,106)--------------------------------------------------------------------------------Equity shareholders' funds 81,119 64,674-------------------------------------------------------------------------------- Ultra Electronics Holdings plc Preliminary Audited Results for the Year Ended 31 December 2004 Consolidated Cash Flow Statement 2004 2003 Note £000 £000-------------------------------------------------------------------------------- Net cash inflow from operating activities 11 53,297 55,986 Returns on investments and servicing of finance (2,621) (3,125)Taxation - UK (6,120) (7,810) - Overseas (2,197) (1,642)Capital expenditure (5,243) (6,806)Acquisitions (23,288) (18,258)Equity dividends paid (8,531) (7,676)--------------------------------------------------------------------------------Cash inflow before financing 5,297 10,669--------------------------------------------------------------------------------Financing (290) (66)--------------------------------------------------------------------------------Increase in cash in the year 5,007 10,603-------------------------------------------------------------------------------- Consolidated Statement of Total Recognised Gains and Losses 2004 2003 £000 £000-------------------------------------------------------------------------------- Group profit for the financial year 23,477 20,406Gain/(loss) on foreign currency translation 196 (3,355)--------------------------------------------------------------------------------Total recognised gains and losses relating to the year 23,673 17,051-------------------------------------------------------------------------------- Notes: 1. Turnover by geographical destination 2004 2003 £000 £000-------------------------------------------------------------------------------- United Kingdom 127,126 122,074 Continental Europe 37,835 36,799 North America 114,582 99,532 Rest of World 40,126 25,945-------------------------------------------------------------------------------- 319,669 284,350-------------------------------------------------------------------------------- Turnover, trading profit and net operating assets by geographical source United Kingdom North America Group Restated 2004 2003 2004 2003 2004 2003 £000 £000 £000 £000 £000 £000 Turnover 207,243 186,278 112,426 98,072 319,669 284,350-------------------------------------------------------------------------------- Trading profit 29,599 26,606 12,869 10,937 42,468 37,543 Goodwill amortisation (5,898) (4,878) -------- -------- Operating profit 36,570 32,665 Finance charges (net) (2,785) (3,173) -------- -------- Profit before tax 33,785 29,492-------------------------------------------------------------------------------- Net operating assets 51,345 55,498 65,353 48,851 116,698 104,349 Net non-operating liabilities (35,579) (39,675)-------------------------------------------------------------------------------- Net assets 81,119 64,674-------------------------------------------------------------------------------- Operating assets have been adjusted to include goodwill. Net non-operating liabilities represent net debt, dividends and taxation. 2. Turnover and trading profit by division Turnover Profit 2004 2003 2004 2003 £000 £000 £000 £000-------------------------------------------------------------------------------- Aircraft & Vehicle Systems 81,943 79,890 14,694 13,901 Information & Power Systems 115,635 95,474 14,764 10,972 Tactical & Sonar Systems 122,091 108,986 13,010 12,670-------------------------------------------------------------------------------- 319,669 284,350 42,468 37,543 Goodwill amortisation (5,898) (4,878)-------------------------------------------------------------------------------- Operating profit 36,570 32,665-------------------------------------------------------------------------------- Net assets by division 2004 2003 £000 £000-------------------------------------------------------------------------------- Aircraft & Vehicle Systems 27,608 28,961 Information & Power Systems 29,829 33,134 Tactical & Sonar Systems 59,261 42,254-------------------------------------------------------------------------------- 116,698 104,349 Net non-operating liabilities (35,579) (39,675)-------------------------------------------------------------------------------- Net assets 81,119 64,674-------------------------------------------------------------------------------- Net non-operating liabilities represent net debt, dividends and taxation. 3. Taxation 2004 2003 £000 £000-------------------------------------------------------------------------------- UK tax 6,969 6,326 Overseas tax 4,071 2,019 Deferred tax (732) 741-------------------------------------------------------------------------------- 10,308 9,086-------------------------------------------------------------------------------- 4. Stocks 2004 2003 £000 £000-------------------------------------------------------------------------------- Raw materials and consumables 16,544 13,810 Work-in-progress 12,717 9,188 Finished goods and goods for resale 2,230 1,979 Payments on account (10,963) (9,007)-------------------------------------------------------------------------------- 20,528 15,970-------------------------------------------------------------------------------- Long-term contract balances - costs less foreseeable losses 2,134 3,133 - less payments on account (1,525) (1,739)-------------------------------------------------------------------------------- 609 1,394-------------------------------------------------------------------------------- 21,137 17,364================================================================================ 5. Debtors: Amounts falling due within one year 2004 2003 £000 £000-------------------------------------------------------------------------------- Trade debtors 40,812 40,798 Amounts recoverable on contracts 20,411 18,808 Deferred tax assets 1,768 1,224 Other debtors 2,112 1,244 Prepayments and accrued income 1,796 1,687-------------------------------------------------------------------------------- 66,899 63,761-------------------------------------------------------------------------------- 6. Creditors: Amounts falling due within one year 2004 2003 £000 £000-------------------------------------------------------------------------------- Obligations under finance leases 21 5 Bank loans and overdraft 48,104 - Payments received on account 27,859 31,686 Trade creditors 25,088 21,207 Other creditors: - Corporation tax payable 8,030 5,019 - VAT 2,304 2,084 - social security and PAYE 3,404 2,875 - other creditors 6,910 4,946 Pension related liabilities 555 432 Accruals and deferred income 18,524 13,819 Proposed dividends 6,157 5,443-------------------------------------------------------------------------------- 146,956 87,516-------------------------------------------------------------------------------- 7. Creditors: Amounts falling due after more than one year 2004 2003 £000 £000-------------------------------------------------------------------------------- Obligations under finance leases 10 7 Bank loans - 49,370 Payments received on account 751 - Other creditors 262 - Pension related liabilities 771 809-------------------------------------------------------------------------------- 1,794 50,186-------------------------------------------------------------------------------- 8. Provisions for liabilities and charges-------------------------------------------------------------------------------- Deferred Other taxation Warranties provisions Total £000 £000 £000 £000-------------------------------------------------------------------------------- Beginning of year 102 6,444 1,267 7,813 Exchange differences - (16) (8) (24) Reclassifications - 232 (160) 72 Acquisition of subsidiary undertakings - 74 - 74 Utilised during the year - (1,566) (451) (2,017) Transfer to deferred tax assets (102) - - (102) Charge to the profit and loss account - 3,294 1,526 4,820 -------------------------------------------------------------------------------- End of year - 8,462 2,174 10,636-------------------------------------------------------------------------------- 9. Reserves Share Profit and premium loss account £000 £000-------------------------------------------------------------------------------- Beginning of year 28,096 34,366 Retained profit for the year - 14,231 Issue of new shares 2,210 - Foreign exchange differences - 196-------------------------------------------------------------------------------- End of year 30,306 48,793-------------------------------------------------------------------------------- 10.Own shares Long-term incentive Own shares plan shares Total £000 £000 £000-------------------------------------------------------------------------------- Cost Beginning of year 7 2,485 2,492 Additions 12 1,124 1,136 Disposals (19) - (19) Adjustment - 2 2 Transfer to participants - (802) (802)-------------------------------------------------------------------------------- End of year - 2,809 2,809-------------------------------------------------------------------------------- Amortisation Beginning of year - 1,386 1,386 Charge - 900 900 Transfer to participants - (802) (802)-------------------------------------------------------------------------------- End of year - 1,484 1,484-------------------------------------------------------------------------------- Net book value Beginning of year 7 1,099 1,106-------------------------------------------------------------------------------- End of year - 1,325 1,325-------------------------------------------------------------------------------- The Group, through the Company, holds 643,375 Own shares (2003: 608,836 Own shares). 11.Cash flow information Reconciliation of operating profit to operating cash flow 2004 2003 £000 £000-------------------------------------------------------------------------------- Operating profit 36,570 32,665 Depreciation and amounts written off tangible fixed assets 5,069 4,249 Amortisation of goodwill 5,898 4,878 Amortisation of patents and trademarks 45 45 Amortisation of LTIP awards 900 774 Loss on disposal of tangible fixed assets 58 39 (Increase)/decrease in stocks (2,151) 8,313 Increase in debtors (1,663) (272) Increase in creditors 5,722 3,492 Increase in provisions 2,849 1,803-------------------------------------------------------------------------------- Net cash inflow from operating activities 53,297 55,986-------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net debt 2004 2003 £000 £000-------------------------------------------------------------------------------- Increase in cash in the year 5,007 10,603 Cash outflow from decrease in debt and lease financing 1,403 427-------------------------------------------------------------------------------- Change in net debt resulting from cash flows 6,410 11,030 Amortisation of finance costs of debt - (260) Finance leases acquired with subsidiary undertakings (19) (14) Translation difference 784 (1,835)-------------------------------------------------------------------------------- Movement in net debt in the year 7,175 8,921 Net debt at start of year (30,335) (39,256)-------------------------------------------------------------------------------- Net debt at end of year (23,160) (30,335)-------------------------------------------------------------------------------- The acquisition of DNE resulted in £1.6 million in funds being placed in escrow until 31 March 2005. This has been included in cash because the conditions of the earn-out agreement are considered unlikely to be met. 12. Five year review Restated Restated 2000 2001 2002 2003 2004 £m £m £m £m £m-------------------------------------------------------------------------------- Turnover Aircraft & Vehicle Systems 73.9 78.4 76.4 79.9 82.0 Information & Power Systems 68.6 74.4 82.9 95.5 115.6 Tactical & Sonar Systems 84.4 86.7 101.1 109.0 122.1-------------------------------------------------------------------------------- Total turnover 226.9 239.5 260.4 284.4 319.7-------------------------------------------------------------------------------- Operating profit (before goodwill amortisation) Aircraft & Vehicle Systems 13.1 13.0 12.5 13.9 14.7 Information & Power Systems 8.2 7.6 11.0 11.0 14.8 Tactical & Sonar Systems 9.0 11.1 10.0 12.6 13.0-------------------------------------------------------------------------------- Total 30.3 31.7 33.5 37.5 42.5-------------------------------------------------------------------------------- Operating profit margin % (before goodwill amortisation) 13.4% 13.2% 12.8% 13.2% 13.3%-------------------------------------------------------------------------------- Profit before goodwill amortisation and tax 25.6 27.1 29.9 34.4 39.7 Profit after taxation 15.8 16.3 17.9 20.4 23.5-------------------------------------------------------------------------------- Cash inflow from operating activities (see note 1 below) 16.5 35.2 38.7 48.3 46.9 Free cash flow before dividends, acquisitions and financing (see note 2 below) 7.5 21.8 28.0 35.7 36.0 Net debt at year-end (55.9) (40.6) (39.3) (30.3) (23.2)-------------------------------------------------------------------------------- Headline earnings per share (p) (see note 3 below) 28.7 30.5 33.2 38.2 44.1 Dividends per share (p) 9.7 10.4 11.2 12.3 13.8---------------------------------------------------------------------------------------------------------------------------------------------------------------- Average employee numbers 2,303 2,376 2,395 2,505 2,678--------------------------------------------------------------------------------Notes1. Cash flow from operating activities is stated after capital expenditure and purchase of long-term incentive plan shares. 2002 and 2003 have been restated to reflect this measure.2. Free cash flow has been adjusted to include the purchase of long-term incentive plan shares, which are included in financing.3. Headline earnings per share is calculated before goodwill amortisation and earnings dilution. 13.The consolidated financial information has been prepared on a basis consistent with the consolidated accounts for the year ended 31 December 2003. 14.The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2004 or 2003, but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237 (2) or (3) Companies Act 1985. 15.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 ExchangeRelated Shares:
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