1st Aug 2005 07:00
Ultra Electronics Holdings PLC01 August 2005 Embargoed until 0700 1 August 2005 Ultra Electronics Holdings plc ("Ultra" or "the Group") Interim Results for the Six Months to 30 June 2005 FINANCIAL HIGHLIGHTS Six months to Six months to Change 30 June 2005 30 June 2004Revenue £158.2m £143.4m +10%Operating profit* £22.3m £19.6m +14%Profit before tax** £20.7m £17.9m +16%Earnings per share** 22.4p 19.7p +14%Dividend per share 5.2p 4.6p +13% * before amortisation of intangibles arising on acquisition. IFRS profit from operations £22.1m (2004: £19.6m).** before amortisation of intangibles arising on acquisition and loss on derivative financial instruments. IFRS profit before tax £19.1m (2004: £17.9m). Basic EPS 20.6p (2004: 19.7p). • Strong performance in first half - excellent growth in Information & Power Systems - buoyant civil aerospace market reflected in Aircraft & Vehicle Systems performance - good progress in Tactical & Sonar Systems• Improved efficiencies strengthen margins• High quality of earnings - cash conversion of 73%• Contributions from 2004 and 2005 acquisitions• Acquisition of Audiopack since period-end• Order book of £407m provides good visibility Douglas Caster, Chief Executive, commented:"Ultra has again demonstrated solid growth in sales and profits. The Group iswell positioned in its broad range of market niches and constantly seeksopportunities to offer new products and services to meet customer demand, asexemplified by the recent acquisition of Audiopack. Ultra's broad spread of activities, positions on a wide range of long-terminternational programmes together with a proven ability to implement programmessuccessfully, are key strengths of the Group. These strengths, coupled with thestrong order book, give the Board confidence that the Group will continue tomake progress in 2005." Enquiries:Ultra Electronics Holdings plc 020 8813 4321Douglas Caster, Chief Executive www.ultra-electronics.comDavid Jeffcoat, Group Finance Director [email protected] Weber Shandwick Square Mile 020 7067 0700Susan Ellis / Susanne Walker Notes to editors: Ultra Electronics is a group of specialist businesses designing, manufacturingand supporting electronic and electromechanical systems, sub-systems andproducts for defence, security and aerospace applications worldwide. Ultra, which employs 3,000 people in the UK and North America, focuses on highintegrity sensing, control, communication and display systems with an emphasison integrated information technology solutions. The Group concentrates onobtaining a technological edge in niche markets, with many of its products andtechnologies being market leaders in their field. Ultra's products and services are used on aircraft, ships, submarines, armouredvehicles, surveillance systems, airports and transport systems around the world.Ultra also plays an important role in supporting prime contractors byundertaking specialist system and sub-system integration using the combinedexpertise of the Group businesses. Ultra is organised into three divisions as follows: Aircraft & Vehicle Systems including miniature airborne compressors; highintegrity software and systems; aircraft system electronics; aircraft cockpitindicators; aircraft noise and vibration control systems; airframe protectionsystems, armoured vehicle electronic information and control systems; human/computer interface equipment and shared working environment solutions. Information & Power Systems including command and control systems equipment;weapons interfacing electronics; radar tracking; electro optical tracking;surveillance systems; naval data processing and distribution; airport andairline information management systems; ID card systems; naval power conversion;signature management of naval vessels and transit system power conversion andcontrol equipment. Tactical & Sonar Systems including secure tactical line-of-sight radio systems,multiplexers and switches; voice communication systems; tactical data links;cryptographic equipment; active, passive and multi-static sonobuoys; sonobuoyreceivers and processors; distributed surveillance sensor arrays; ship's sonarsystems; acoustic countermeasure systems and ship's torpedo defence systems. Embargoed until 0700 1 August 2005 Ultra Electronics Holdings plc ("Ultra" or "the Group") Interim Results for the Six Months to 30 June 2005 FINANCIAL RESULTS Trading for the Group remained strong in the first half of 2005 and sales growthcontinued, boosted by contributions from its 2004 acquisitions and an initialcontribution from Horizon Aerospace, acquired in March this year. Ultra hasagain improved margins, despite currency effects. Sales increased by 10% to £158.2m, compared to £143.4m for the same period lastyear. Good sales growth in Aircraft & Vehicle Systems reflected the buoyancy ofthe civil aerospace market and increasing sales of equipment for armouredvehicles. A strong performance in Information & Power Systems was driven mainlyby higher sales of Ultra's ADSI real time command and control system. Tactical &Sonar Systems achieved modest growth, pending the introduction of a new USsonobuoy variant in the second half of the year. Operating profit(1) was 14% higher at £22.3m (2004: £19.6m). The operatingmargin(1) improved to 14.1% (2004: 13.7%) as the Group maintained its focus onachieving operational efficiencies. The net interest charge was £1.6m (2004:£1.6m) and profit before tax(2) rose to £20.7m, a 16% increase when compared tolast year's result of £17.9m. Earnings per share(2) grew by 14% to 22.4p (2004:19.7p). Following the outstanding operating cash performance achieved in recent yearsand especially in the second half of 2004, there was a small increase in workingcapital levels in the first half of 2005. This resulted in operating cashgeneration(3) in the period of £16.3m (2004: £16.2m), giving a conversion ratefrom operating profit(1) of 73% (2004: 83%). Net debt was £24.3m at theperiod-end, compared with £24.1m at the beginning of the year. The Group'sbalance sheet remains strong, with net interest payable on borrowings coveredapproximately 21 times by operating profit(1). An interim dividend of 5.2p (2004: 4.6p) will be paid on 27 September 2005 tothose shareholders on the register at the close of business on 26 August 2005. OPERATIONAL REVIEW Within the large defence budgets in Ultra's main markets, demand for electronicequipment continues to rise. As the demand for 'smart capability' continues, thekey areas of expenditure remain unchanged: battlespace IT, mobility, smartmunitions, protection and security. The cost of current peacekeeping operationsis, however, putting pressure on defence budgets and affecting the timing ofsome contract awards. Homeland security is becoming more important worldwide andthis is reflected in an increasing demand for coastal and border surveillancesystems. In the civil aerospace market, trading conditions are buoyant as passengernumbers continue to rise. This is reflected in both increased sales of originalequipment as aircraft build rates increase and also in the level of demand foraftermarket support. Demand worldwide for modern airport IT systems also remainsstrong. (1) before amortisation of intangibles arising on acquisition (see note 4)(2) before amortisation of intangibles arising on acquisition and loss on derivative financial instruments (see note 4)(3) cash generated by operations, less net capital expenditure, R&D and LTIP (see note 4) Aircraft & Vehicle Systems Total sales in Aircraft & Vehicles Systems increased by 15% to £39.4m (2004:£34.4m) and operating profit(1) was £7.7m compared with £6.8m last year, anincrease of 13%. The order book has decreased by 3% to £75.0m since June 2004,pending receipt of Eurofighter tranche 2 awards now in negotiation.Growth in the period was principally as a result of additional equipment salesfor armoured vehicles and from sales to the civil aerospace market. This growthwas partially offset by a revision to the HiPPAG delivery plan for Eurofighterto allow incorporation of compatibility with the ASRAAM missile. Ultra's HiPPAG airborne compressor has now achieved a fleet total of one millionflying hours without a single mission failure, thereby demonstrating itsexceptional in-service reliability. The US Navy placed further orders in theperiod for HiPPAG systems for use on its F/A-18 E/F Super Hornet aircraft. After the approval of the tranche 2 of the Eurofighter programme in late 2004,Ultra has received initial orders for some of the equipment that it supplies forthe aircraft. Ultra's relationship with Boeing continued to strengthen through the highlycollaborative team-work on the development of the wing ice protection system andproximity sensor electronics for the 787 Dreamliner aircraft. During the period,Ultra was selected to supply proximity sensors and electronics for the A400M,the new Airbus military turbo-prop transport aircraft. In the period, a commitment to upgrade the turret of the Warrior armouredvehicle was announced by the UK MoD. Ultra has teamed with CTAI, a joint venturebetween BAES and Giat Industries, to bid for control system and powerdistribution electronic equipment on this programme. Information & Power Systems Information & Power Systems sales increased by 15% to £58.8m (2004: £51.3m),while operating profit(1) increased by 22% to £7.3m (2004: £6.0m). The orderbook increased by 3% to £113.4m over the twelve month period.The continuing growth in the demand for battlespace IT systems fuelled sales inthis division. The certification in 2004 of new software for ADSI, Ultra's realtime command & control system, drove strong demand for new systems, as well assoftware and hardware upgrades, in the first half of 2005. At the end of theperiod, an initial sub-contract was received from Northrop Grumman relating toJSS, a potentially large tactical data link programme in the US. In the UK,deliveries of equipment relating to the Bowman army communications programmealso contributed to the growth of the division. With regard to airport IT systems, sales growth resulted from higher activitylevels in the sector generally as passenger numbers continued to increase. Inaddition, Videcom made a good contribution and Ultra's activity level atHeathrow's Terminal 5 increased, reflecting the progress of the project.The upgrade programme for the power supplies for Network Rail's southern regionis now complete. As predicted, demand for Ultra's transit power system equipmentreduced and is now at a sustainable level. For defence power equipment, thecontinuing investment by the US DoD in its naval shipbuilding programme wasreflected in continuing demand for Ultra's specialist power equipment for shipsand submarines. Reflecting the increased focus worldwide on homeland security, Ultra executedits contract, awarded last year, to supply an advanced coastal and landsurveillance system in the Middle East. Late in the period, Ultra was selected as part of Lockheed Martin's team toundertake system studies for the UK Future Rapid Effects System armoured vehicleprogramme. This programme is the largest planned procurement of armouredvehicles in the UK. (1) before amortisation of intangibles arising on acquisition (see note 4) Tactical & Sonar Systems Total sales in Tactical & Sonar Systems increased by 4% to £59.9m (2004: £57.7m)and operating profit(1) was £7.3m (2004: £6.8m), an increase of 7%. The orderbook has increased by 15% to £219.0m since June 2004, reflecting strong orderintake for the Group's tactical radio systems. The division benefited from the inclusion of last year's acquisition, DNE, aswell as a small contribution from Horizon which was acquired in March this year.Horizon, which provides aerospace cockpit equipment for military and civilaircraft, has been fully integrated with Flightline. The modest sales growth inthis division was due to the level of sonobuoy sales being reduced pending theintroduction of a new US sonobuoy variant planned for the second half of theyear. The continuing commitment to anti-submarine warfare (ASW) in the market isdemonstrated by the number of major new ASW platforms that are currently beingdeveloped. Ultra secured contracts for its acoustic mission equipment on theseplatforms, including the P-8A variant of the Boeing 737 aircraft in the US andthe Canadian maritime helicopter programme. Ultra has enjoyed further success with its range of high capacity tacticalradios and won development and supply contracts with the armies of South Korea,Canada and the US. The contracts include funded enhancements to make the radioscapable of handling higher rates of information flow, as required by modernbattlespace IT systems. Reflecting the Group's strong relationship with the US Navy, two further torpedocountermeasure contracts were secured, underlining Ultra's strong position inthe underwater battlespace arena. In the UK, the MoD has selected Ultra tosupply a new mine disposal system though, due to the pressures on budgets,contract signature has not yet been achieved. Audiopack, acquired since the period-end, will be part of this division.Audiopack's main activity is developing and manufacturing rugged voicecommunications equipment for personnel wearing protective clothing, masks andbreathing apparatus in harsh and hazardous environments. In the year ended 31December 2004, Audiopack achieved sales of $22.1m and made an operating profitof $6.8m. PROSPECTS In recent years, global defence budgets have grown as governments have respondedto the need to provide an enhanced security and defence capability, both at homeand overseas. A focus of expenditure remains on improving the use ofintelligence, the ability more rapidly to deploy forces and in providingincreased protection. Ultra has pursued a strategy that has positioned the Groupto benefit from these trends, and constantly seeks opportunities to offer newproducts and services to meet such customer requirements. The Group's latestacquisition, Audiopack, exemplifies this strategy as it is a business that hasresponded rapidly to the demands of the market and has developed world-leadingcommunications solutions for the most demanding defence, homeland security andother 'first responder' customers. Ultra's strategy will continue to be toposition the Group in market niches that are expanding in the defence andsecurity sector. The civil aerospace market continues to grow, despite wider concerns about theprofitability of major airlines. Ultra now enjoys positions on both Airbus andBoeing programmes and anticipates further growth in original equipment sales andin aftermarket demand. The market for modern airport IT systems continues to be healthy. Ultra shouldbenefit from such infrastructure investment as the Group has established areputation for effective service and solution delivery. The Group's order book, valued at £407m and representing approximately 14 monthsof future sales, continues to provide good visibility. With its strong balancesheet, Ultra has headroom for further acquisitions, even after the Audiopackacquisition, and the Group continues to consider complementary businesses thatcan be acquired at earnings enhancing prices. Ultra's broad spread of activities, positions on a wide range of long-terminternational programmes together with a proven ability to implement programmessuccessfully are key strengths of the Group. These strengths, coupled with thestrong order book, give the Board confidence that the Group will continue tomake progress in 2005. (1) before amortisation of intangibles arising on acquisition (see note 4) - Ends - Enquiries:Ultra Electronics Holdings plc 020 8813 4321Douglas Caster, Chief Executive www.ultra-electronics.comDavid Jeffcoat, Group Finance Director [email protected] Weber Shandwick Square Mile 020 7067 0700Susan Ellis / Susanne Walker Ultra Electronics Holdings plc Interim Results for the Six Months to 30 June 2005 Consolidated Income Statement Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 Note £'000 £'000 £'000 Continuing operations Revenue 3,5 158,200 143,389 310,742Cost of sales (118,264) (105,993) (229,627) ---------- ---------- ----------Gross profit 39,936 37,396 81,115 Other operating income 2,596 1,299 3,828Distribution costs (274) (314) (777)Administrative expenses (19,783) (18,107) (40,599)Other operating expenses (369) (684) (273) ---------- ---------- ----------Profit from operations 3 22,106 19,590 43,294 Investment income 72 34 157Finance costs 6 (3,088) (1,675) (3,362) ---------- ---------- ----------Profit before tax 19,090 17,949 40,089Tax on profit on ordinary activities 7 (5,292) (4,849) (10,938) ---------- ---------- ----------Profit for the period from continuing operations 13,798 13,100 29,151 Ordinary dividends 8 (6,078) (5,462) (8,531) ========== ========== ==========Profit for the period from continuing operations attributable to equity holders of the parent 7,720 7,638 20,620 ========== ========== ========== Earnings per share (pence) From continuing operationsBasic 9 20.6 19.7 43.7 Diluted 9 20.5 19.6 43.4 ========== ========== ========== The results are presented under IFRS and comparatives have been restatedaccordingly (see note 2). Ultra Electronics Holdings plc Interim Results for the Six Months to 30 June 2005 Consolidated Balance Sheet At At At 30 June 30 June 31 December 2005 2004 2004 Note £'000 £'000 £'000 Non-current assetsIntangible assets 119,449 92,651 114,843Property, plant and equipment 21,491 18,472 20,213Deferred tax assets 14,230 9,876 14,000 ---------- ---------- ---------- 155,170 120,999 149,056 ---------- ---------- ----------Current assetsInventories 19,774 13,695 16,955Trade and other receivables 76,211 61,253 68,352Cash and cash equivalents 17,267 19,637 24,060 ---------- ---------- ---------- 113,252 94,585 109,367 ---------- ---------- ----------Total assets 268,422 215,584 258,423 ========== ========== ==========Current liabilitiesTrade and other payables (88,138) (69,547) (84,496)Tax liabilities (7,272) (6,880) (8,030)Obligations under finance leases (16) (13) (21)Bank overdrafts and loans (41,499) - (48,104)Short-term provisions (4,026) (3,239) (3,164) ---------- ---------- ---------- (140,951) (79,679) (143,815) ---------- ---------- ----------Non-current liabilitiesRetirement benefit obligations 10 (40,958) (29,333) (40,219)Other payables (1,416) - (1,115)Deferred tax liabilities (1,743) (547) (1,406)Obligations under finance leases (5) (9) (10)Bank overdrafts and loans - (43,021) -Long-term provisions (7,282) (4,834) (7,472) ---------- ---------- ---------- (51,404) (77,744) (50,222) ---------- ---------- ----------Total liabilities (192,355) (157,423) (194,037) ---------- ---------- ----------Net assets 5 76,067 58,161 64,386 ========== ========== ========== EquityShare capital 11 3,355 3,332 3,345Share premium account 31,137 29,269 30,306Own shares (2,582) (2,814) (2,807)Hedging and translation reserves (221) (245) (1,098)Retained earnings 44,378 28,619 34,640 ========== ========== ==========Total equity attributable to equity holders of the parent 76,067 58,161 64,386 ========== ========== ========== Ultra Electronics Holdings plc Interim Results for the Six Months to 30 June 2005 Consolidated Cash Flow Statement Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 Note £'000 £'000 £'000 Net cash from operating activities 12 13,731 15,543 44,121 Investing activitiesInterest received 72 34 157Purchase of property, plant and equipment (3,031) (1,908) (5,246)Proceeds on disposal of property, plant and equipment 17 - 3Expenditure on product development (895) (770) (1,919)Acquisition of subsidiary undertakings (2,692) 222 (23,288) ---------- ---------- ----------Net cash used in investing activities (6,529) (2,422) (30,293) ---------- ---------- ----------Financing activitiesIssue of share capital 841 1,187 2,237Purchase of Long-Term Incentive (599) (1,124) (1,124)Plan shares Dividends paid (6,078) (5,462) (8,531)Repayments of borrowings (9,182) (5,669) (1,400)Repayments of obligations under finance leases (10) (6) (3)New finance leases - 15 - ---------- ---------- ----------Net cash used in financing activities (15,028) (11,059) (8,821) ---------- ---------- ----------Net (decrease)/increase in cash and cash equivalents (7,826) 2,062 5,007 Cash and cash equivalents at beginning of period 24,060 18,044 18,044 ---------- ---------- ----------Effect of foreign exchange rate changes 1,033 (469) 1,009 ---------- ---------- ---------- ========== ========== ==========Cash and cash equivalents at end of period 17,267 19,637 24,060 ========== ========== ========== Ultra Electronics Holdings plc Interim Results for the Six Months to 30 June 2005 Consolidated Statement of Recognised Income and Expense Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Exchange differences on translation of foreign operations 877 (245) (1,098)Actuarial losses on defined benefit pension schemes - - (7,492)Tax on items taken directly to equity - - 95 ---------- ---------- ----------Net income/(expense) recognised directly in equity 877 (245) (8,495) Profit for the period 13,798 13,100 29,151 ========== ========== ==========Total recognised income and expense for the period attributable to equity holders of the parent 14,675 12,855 20,656 ========== ========== ========== Ultra Electronics Holdings plc Interim Results for the Six Months to 30 June 2005 Notes to the Interim Statement 1. General Information The information for the year ended 31 December 2004, which is prepared under IFRS, does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the UK Generally Accepted Accounting Practice statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified. 2. Basis of preparation The interim results have been prepared on the basis of all IFRS, including International Accounting Standards ("IAS") and interpretations used by the IASB and its committees, and as interpreted by any regulatory bodies applicable to the Group. These are subject to ongoing amendment by the IASB and subsequent endorsement by the European Commission and are therefore subject to possible change. As a result, information contained within this release may require updating for any subsequent amendment to IFRS required for first time adoption or those new standards that the Group may elect to adopt early. The accounting policies and methods of computation adopted by Ultra in the interim financial report were published by Ultra on 22 June 2005, and are available on the Company's website, www.ultra-electronics.com. Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 3. Divisional analysis RevenueAircraft & Vehicle 39,437 34,355 76,593Systems Information & Power Systems 58,818 51,287 113,689Tactical & Sonar Systems 59,945 57,747 120,460 ---------- ---------- ---------- 158,200 143,389 310,742 ========== ========== ==========Profit from operationsAircraft & Vehicle 7,678 6,766 14,867Systems Information & Power Systems 7,340 6,040 15,038Tactical & Sonar Systems 7,271 6,784 13,389 ---------- ---------- ---------- 22,289 19,590 43,294Amortisation of intangibles arising on acquisition (183)* - - ---------- ---------- ----------Profit from operations 22,106 19,590 43,294Investment income 72 34 157Finance costs (3,088) (1,675) (3,362) ---------- ---------- ----------Profit before tax 19,090 17,949 40,089 ========== ========== ========== * The amortisation of intangibles arising on acquisition relates to Tactical & Sonar Systems. 4. Additional performance measures To present the underlying profitability of the Group on a consistent basis year on year, additional performance indicators have been used. These are calculated as follows: Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Profit from operations 22,106 19,590 43,294 ---------- ---------- ----------Add: Amortisation of intangibles arising on acquisition 183 - - ---------- ---------- ----------Operating profit (adjusted)(a) 22,289 19,590 43,294 ========== ========== ==========Profit before tax 19,090 17,949 40,089Add: IAS 39 loss arising on derivatives 1,461 - -Add: Amortisation of intangibles arising on acquisition 183 - - ---------- ---------- ----------Profit before tax (adjusted) (b) 20,734 17,949 40,089 ========== ========== ==========Cash generated by operations (see note 12) 20,845 20,003 55,216 Purchase of property, plant and equipment (3,031) (1,908) (5,246)Proceeds on disposal of property, plant and equipment 17 - 3Expenditure on product development (895) (770) (1,919) ---------- ---------- ----------Purchase of Long-Term Incentive Plan shares (599) (1,124) (1,124) ---------- ---------- ----------Operating cash flow (adjusted) 16,337 16,201 46,930 ========== ========== ========== Operating profit at (a) in the table above has been shown before theamortisation of intangible assets arising on acquisitions, which relates mainlyto acquired intellectual property. Under UK GAAP this charge would have formedpart of the amortisation of goodwill, which was also excluded from headlineoperating profit. Since the remainder of goodwill is no longer amortised, thischarge has been excluded for consistency. Profit before tax as shown at (b) inthe above table and adjusted earnings per share (see note 9) are also presentedbefore the amortisation of intangible assets arising on acquisition. IAS 39 requires the Group to fair value the derivative instruments used tomanage Ultra's foreign exchange exposures. This creates volatility in thevaluation of the outstanding instruments as exchange rates move over time. Thiswill have minimal impact on profit over the full term of the instruments, butcan cause significant volatility on particular balance sheet dates. Ultra istherefore stating profit before tax ((b) in the above table) and adjustedearnings per share (see note 9) before changes in the valuation of theseinstruments so that the underlying operating performance of the Group can moreclearly be seen. Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'0005. Revenue by geographical destination United Kingdom 64,949 61,787 127,126Continental Europe 17,002 17,696 34,450North America 58,605 47,959 109,040Rest of World 17,644 15,947 40,126 ---------- ---------- ---------- 158,200 143,389 310,742 ========== ========== ==========Net assets by divisionAircraft & Vehicle Systems 29,876 31,212 29,432Information & Power Systems 39,132 38,351 32,354Tactical & Sonar Systems 67,055 38,888 62,330 ---------- ---------- ---------- 136,063 108,451 124,116Net non-operating liabilities (59,996) (50,290) (59,730) ---------- ---------- ----------Net assets 76,067 58,161 64,386 ========== ========== ========== Net non-operating liabilities represent the pension scheme deficit, net debt andtaxation. Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'0006. Finance costs Amortisation of finance costs of debt 65 65 130Interest payable on bank loans and overdrafts 1,084 1,344 2,700Interest payable on finance leases 2 1 3 ---------- ---------- ----------Total borrowing costs 1,151 1,410 2,833 IAS 39 loss arising on derivatives 1,461 - - ---------- ---------- ----------Retirement benefit scheme finance charges 476 265 529 ---------- ---------- ---------- 3,088 1,675 3,362 ========== ========== ========== Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 7. Tax on profit on ordinary activities Current taxUnited Kingdom 3,087 3,284 6,970Overseas 1,977 1,258 4,071 ---------- ---------- ---------- 5,064 4,542 11,041 ---------- ---------- ----------Deferred taxUnited Kingdom (164) 414 (470)Overseas 392 (107) 367 ---------- ---------- ---------- 228 307 (103) ---------- ---------- ----------Total 5,292 4,849 10,938 ========== ========== ========== The tax charge for the six months to 30 June 2005 has been based on an estimatedeffective rate for the year to 31 December 2005 of 27.7% (30 June 2004: 27.0%). Six months to Six months to 30 June 30 June 2005 2004 £'000 £'000 8. Ordinary dividends Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 31 December 2004 of 9.2p (2003: 8.2p) per share 6,078 5,462 ========== ========== Proposed interim dividend for the year ended 31 December 2005 of 5.2p (2004: 4.6p) per share 3,492 3,069 ========== ========== The proposed interim dividend was approved by the Board after 30 June 2005 andhas not been included as a liability as at 30 June 2005. Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 9. Earnings per share (pence) From continuing operationsBasic adjusted (see below) 22.4 19.7 43.7 ---------- ---------- ----------Diluted adjusted (see below) 22.3 19.6 43.4 ---------- ---------- ----------Basic 20.6 19.7 43.7 ---------- ---------- ----------Diluted 20.5 19.6 43.4 ---------- ---------- ---------- The calculation of the basic, adjusted and diluted earnings per share is basedon the following data: Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 EarningsEarnings for the purposes of earnings per share being profit for the period from continuing operations 13,798 13,100 29,151 ========== ========== ==========Adjusted earningsProfit for the period from continuing operations 13,798 13,100 29,151IAS 39 loss arising on derivatives (net of tax) 1,023 - -Amortisation of intangibles arising on acquisition 183 - - ---------- ---------- ----------Earnings for the purposes of adjusted earnings per share 15,004 13,100 29,151 ========== ========== ========== The weighted average number of shares is given below: Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Number of shares used for basic EPS 66,875,638 66,418,878 66,645,930Number of shares deemed to be issued at nil consideration following exercise of share options 505,881 354,811 450,434 ---------- ---------- ----------Number of shares used for fully diluted EPS 67,381,519 66,773,689 67,096,364 ============ ============ =========== 10. Retirement benefit obligations Ultra's defined benefit schemes were valued for IAS 19 purposes at 31 December2004. The movement in the liability to 30 June 2005 represents operating servicecosts and finance costs for the period. 11. Share capital 193,038 shares, with a nominal value of £9,652, have been allotted in the firstsix months of 2005 under the terms of the Group's various share option schemes.The aggregate consideration received by the Company was £841,000. Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 12. Cash flow information Profit from operations 22,106 19,590 43,294Adjustments for: Depreciation of property, plant and equipment 2,726 2,364 5,069 Amortisation of intangible assets 620 183 422 Cost of equity settled employee share schemes 575 363 797 Increase/(decrease) in post employment benefit obligation 260 (110) (55) Loss on disposal of property, plant and equipment 20 - 58 Other - 277 - Increase in provisions 460 384 2,849 ---------- ---------- ----------Operating cash flows before movements in working capital 26,767 23,051 52,434 (Increase)/decrease in inventories (1,858) 492 (524)(Increase)/decrease in receivables (5,263) 2,200 (3,528)Increase/(decrease) in payables 1,199 (5,740) 6,834 ---------- ---------- ----------Cash generated by operations 20,845 20,003 55,216 Income taxes paid (5,806) (2,994) (8,317)Interest paid (1,308) (1,466) (2,778) ---------- ---------- ----------Net cash from operating activities 13,731 15,543 44,121 ========== ========== ========== Reconciliation of net movement in cash and cash equivalents to movement in net debt Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Net (decrease)/increase in cash and cash equivalents (7,826) 2,062 5,007 ---------- ---------- ----------Cash outflow from decrease in debt and finance leasing 9,192 5,675 1,403 ---------- ---------- ----------Change in net debt arising from cash flows 1,366 7,737 6,410Amortisation of finance costs of debt (65) (65) -Finance leases acquired with subsidiary undertakings - - (19)Finance leases - (15) -Translation differences (1,479) 275 872 ---------- ---------- ----------Movement in net debt in the period (178) 7,932 7,263Net debt at start of period (24,075) (31,338) (31,338) ---------- ---------- ----------Net debt at end of period (24,253) (23,406) (24,075) ========== ========== ========== 13. Related party transactions Transactions between the company and its subsidiaries, which are relatedparties, have been eliminated on consolidation and are not disclosed in thisnote. 14. IAS 32/39: Financial instruments As noted in the Company's press release on 22 June 2005, the Group has appliedIAS 32: "Financial Instruments: Disclosure and Presentation" and IAS 39"Financial Instruments: Recognition and Measurement" prospectively from 1January 2005. Consequently the relevant comparative information for 2004 doesnot reflect the impact of these standards and is accounted for on a UK GAAPbasis. The effect of the transitional adjustment on the balance sheet as at 1January 2005 is to increase debtors and retained earnings by £2.268 million. At30 June 2005, the derivative financial instrument debtor was £0.807 million. Theloss on derivative financial instruments for the period was £1.461 million. 15. Explanation of transition to IFRS's The reconciliation of equity at 31 December 2004 (date of last UK GAAP financialstatements) and the reconciliation of profit for 2004, as required by IFRS 1,together with Ultra's significant accounting policies were published on 22 June2005, and are available on the Company's website, www.ultra-electronics.com. The reconciliation of equity at 1 January 2004, 30 June 2004 and thereconciliation of profit for the six months ended 30 June 2004 have beenincluded below to enable a comparison of the 2005 interim figures with thosepublished in the previous financial year. Reconciliation of equity at 30 June 2004 Effect of UK GAAP transition to IFRS format IFRS IFRS £'000 £'000 £'000Non-current assetsIntangible assets 88,156 4,495 92,651Property, plant and equipment 18,472 - 18,472Deferred tax assets 1,331 8,545 9,876 ---------- ---------- ---------- 107,959 13,040 120,999 ---------- ---------- ----------Current assetsInventories 14,125 (430) 13,695Trade and other receivables 62,199 (946) 61,253Cash and cash equivalents 20,672 (1,035) 19,637 ---------- ---------- ---------- 96,996 (2,411) 94,585 ---------- ---------- ---------- ---------- ---------- ----------Total assets 204,955 10,629 215,584 ---------- ---------- ---------- Current liabilitiesTrade and other payables (72,899) 3,352 (69,547)Tax liabilities (6,880) - (6,880)Obligations under finance leases (13) - (13)Short-term provisions (3,239) - (3,239) ---------- ---------- ---------- (83,031) 3,352 (79,679) ---------- ---------- ----------Non-current liabilitiesRetirement benefit obligations (703) (28,630) (29,333)Deferred tax liabilities (547) - (547)Obligations under finance leases (9) - (9)Bank overdrafts and loans (43,021) - (43,021)Long-term provisions (4,834) - (4,834) ---------- ---------- ---------- (49,114) (28,630) (77,744) ---------- ---------- ---------- ---------- ---------- ----------Total liabilities (132,145) (25,278) (157,423) ---------- ---------- ---------- ---------- ---------- ----------Net assets 72,810 (14,649) 58,161 ========== ========== ========== EquityShare capital 3,332 - 3,332Share premium account 29,269 - 29,269Own shares (1,799) (1,015) (2,814)Hedging and translation reserves 293 (538) (245)Retained earnings 41,715 (13,096) 28,619 ========== ========== ==========Total equity attributable to equity holders of the parent 72,810 (14,649) 58,161 ========== ========== ========== Reconciliation of profit for the six months ended 30 June 2004 Effect of UK GAAP transition to IFRS format IFRS IFRS £'000 £'000 £'000 Continuing operations Revenue 146,509 (3,120) 143,389Cost of sales (108,699) 2,706 (105,993) ---------- ---------- ----------Gross profit 37,810 (414) 37,396 ---------- ---------- ---------- Other operating income 251 1,048 1,299Distribution costs (314) - (314)Administrative expenses (20,536) 2,429 (18,107)Other operating expense (548) (136) (684) ---------- ---------- ----------Profit from operations 16,663 2,927 19,590 Investment income 34 - 34Finance costs (1,414) (261) (1,675) ---------- ---------- ---------- Profit before tax 15,283 2,666 17,949Tax on profit on ordinary activities (4,849) - (4,849) ---------- ---------- ----------Profit for the period from continuing operations 10,434 2,666 13,100 Ordinary dividends (3,085) (2,377) (5,462) ---------- ---------- ---------- ========== ========== ==========Profit for the period from continuing operations attributable to equity holders of the parent 7,349 289 7,638 ========== ========== ========== Earnings per share (pence) From continuing operations Basic 15.7 19.7 Diluted 15.6 19.6 ========== ========== Reconciliation of equity at 1 January 2004 Effect of UK GAAP transition to IFRS format IFRS IFRS £'000 £'000 £'000 Non-current assetsIntangible assets 90,847 1,214 92,061Property, plant and equipment 19,170 - 19,170Deferred tax assets 1,224 8,665 9,889 ---------- ---------- ---------- 111,241 9,879 121,120 ---------- ---------- ---------- Current assetsInventories 15,006 (197) 14,809Trade and other receivables 64,895 (1,002) 63,893Cash and cash equivalents 19,047 (1,003) 18,044 ---------- ---------- ---------- 98,948 (2,202) 96,746 ---------- ---------- ---------- ---------- ---------- ----------Total assets 210,189 7,677 217,866 ---------- ---------- ---------- Current liabilitiesTrade and other payables (82,492) 6,550 (75,942)Tax liabilities (5,019) - (5,019)Obligations under finance leases (5) - (5)Short-term provisions (3,881) - (3,881) ---------- ---------- ---------- (91,397) 6,550 (84,847) ---------- ---------- ---------- Non-current liabilitiesRetirement benefit obligations (809) (28,439) (29,248)Deferred tax liabilities (102) (120) (222)Obligations under finance leases (7) - (7)Bank overdrafts and loans (49,370) - (49,370)Long-term provisions (3,830) - (3,830) ---------- ---------- ---------- (54,118) (28,559) (82,677) ---------- ---------- ---------- ---------- ---------- ----------Total liabilities (145,515) (22,009) (167,524) ---------- ---------- ---------- ---------- ---------- ----------Net assets 64,674 (14,332) 50,342 ========== ========== ========== EquityShare capital 3,318 - 3,318Share premium account 28,096 - 28,096Own shares (1,106) (1,387) (2,493)Retained earnings 34,366 (12,945) 21,421 ========== ========== ==========Total equity attributable to equity holders of the parent 64,674 (14,332) 50,342 ========== ========== ========== The IFRS adjustments to the 2004 interim results and 1 January 2004 balancesheet are consistent with those set out in the Company's IFRS press release on22 June 2005. The most significant adjustments to net assets are the inclusionof the pension deficit at 1 January 2004 and the revaluation of foreign exchangebalances. Development costs have been capitalised and amortised in accordancewith IAS 38. Dividends are now accounted for when approved and goodwill is nolonger amortised. Full explanation can be found in Part I of the aforementionedpress release, available on the Company's website, www.ultra-electronics.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ULE.L