H1 2021 Trading Statement

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

For Immediate Release

5 July 2021

Ultra Electronics Holdings plc

("Ultra" or "the Group")

H1 2021 Trading Statement

'Trading ahead of our expectations, strong transformation progress'

Strong Trading Performance

Ultra today provides the following trading update for the six-months ended 2 July 2021.

Since the Q1 2021 update, underlying trading in H1 2021 has been strong and ahead of our expectations.

The order book continues to grow and is significantly ahead of last year, reflecting continued customer demand for Ultra's market leading technologies and capabilities. The Group has also achieved good order intake in H1 2021 and orders for the full financial year are expected to be well ahead of 2020, driven by Maritime, Intelligence & Communications and Forensic Technology.

Group revenue growth in H1 2021 has been robust despite the previously announced mainly Covid-19 driven operational inefficiencies experienced in the Maritime SBU in Q1 2021 which are now broadly resolved.

Net financial debt (excluding leases) had declined to £32m at the end of May 2021. Underlying cash conversion was again robust in H1 2021 due to good working capital management, strong advanced payments and lower than expected capital expenditure due to phasing and continued disciplined spending. Pension liabilities are still expected to reduce significantly over 2021 and the overall Group book tax rate is now forecast to be below original expectations.

Good Strategic and Operational Progress

The Group's strategic progress and transformation programme is delivering ahead of our expectations, and is reflected in the Group's strong performance in H1 2021 which has been driven by:

a. Earlier than expected benefits from the Focus; Fix; Grow transformation, including the results of the continuous improvement, HR & Finance excellence initiatives, in addition to anticipated benefits from our on-going site consolidation programme;

b. An extremely strong performance from the Intelligence & Communications SBU, in particular in the Communications and Cyber business units;

c. Continuing lower indirect costs due to Covid-19 driven changes in ways of working; and

d. Lower than planned internal research & development spend driven by more value disciplined oversight and engineering demand in support of operational improvement and growth.

Ultra remains an agile player in long-term growth markets, with a sustainable technology and cost advantage which positions the Group well to deliver growth.

The Group has a robust business model with excellent order visibility, high returns on invested capital and strong cash generation. This, combined with the already significant progress and enhanced potential from the Focus; Fix; Grow transformation plan, gives management the opportunity to accelerate growth, and improve operational performance.

In summary, the Board is confident that the ONE Ultra strategy will deliver improved and sustainable long-term value for all stakeholders.

Simon Pryce, CEO of Ultra commented

"We performed well in the first half of 2021, despite the continuing impact of Covid-19, thanks to the exceptional efforts of our talented people. We have a number of strategic opportunities that are progressing well and our Focus; Fix; Grow transformation is already delivering ahead of plan, with more longer-term opportunity than we originally envisaged. We will give Ultra shareholders a fuller update on these transformation benefits with our interim results.

We remain excited about the significant opportunity within Ultra to capture market share and accelerate growth through a combination of continued investment in our strong technology base and our ONE Ultra approach, whilst delivering much improved operational performance. We are increasingly confident in our ability to deliver exceptional value for all our stakeholders and further demonstrating the truly unique opportunity at Ultra."

Review of guidance

Ultra is reviewing the implications of its trading performance in the six months ended 2 July 2021 in the context of its previously stated guidance and it expects to provide, as part of the publication of its forthcoming interim results for the six months ended 2 July 2021, an update on outlook for the full year. Any such update will, if relevant, be made in accordance with applicable requirements of Rule 28 of The City Code on Takeovers and Mergers (the "Code"). Nothing in this announcement constitutes or should be construed as constituting a profit forecast.

Enquiries

About Ultra

Ultra provides application-engineered solutions in the key elements of mission critical and intelligent systems. Through innovative problem solving, using sustainable capabilities, and evolving technologies, we deliver outstanding solutions to our customers' most complex problems in defence, security, critical detection and control environments. 

www.ultra.group 

Person responsible

The person responsible for arranging the release of this announcement on behalf of Ultra is Louise Ruppel, General Counsel & Company Secretary.

Disclaimer

J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority. J.P. Morgan Cazenove is acting as financial adviser exclusively for Ultra and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Ultra for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation to any matter referred to herein.

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as Corporate Broker exclusively for Ultra and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Ultra for providing the protections afforded to clients of Numis, nor for providing advice in relation to any matter referred to herein.

Forward looking statements

Statements included herein that are not historical facts, including without limitation statements concerning future strategy, plans, objectives, expectations and intentions, projected revenues, the anticipated timing of clinical trials and approvals for, and the commercial potential of, inline or pipeline products, are forward-looking statements. Such forward-looking statements are made by Ultra in good faith based on the information available at the time of this announcement; however, forward-looking statements involve a number of risks and uncertainties and are subject to change at any time, and should therefore be treated with caution. In the event such risks or uncertainties materialise, Ultra's results could be materially adversely affected.

This announcement has been prepared solely to provide additional information to enable shareholders to assess Ultra's strategies and the potential for those strategies to be fulfilled. It should not be relied upon by any other party or for any other purpose.

Website publication

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available (subject to certain restrictions relating to persons resident in restricted jurisdictions) at www.ultra.group by no later than 12 noon (London time) on the business day following the date of this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4). Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.