Update on Oman contract

Embargoed until 0700 25 February 2015

Ultra Electronics Holdings plc

("Ultra" or "the Group")

Update on Oman Airport IT contract ("the Contract")

Following the announcement on 23 January 2015 that Ithra, Ultra's JV Company with the Oman Investment Corporation, had received a notice of termination of its Oman Airport IT contract, the Contract was formally terminated on 9 February 2015.

Ithra is cooperating with the Employer (the Omani Ministry of Transport and Communication) and the Engineer (Hill International) to effect a formal handover of the Contract to what has been termed a "Completion Contractor", after which a settlement account will be produced by the Employer.

The substantive reasons given in the notice of termination are related to Ithra not meeting contractual milestones and Ithra's assessment is that the termination is unjustified, wrongful and unlawful. Ultra is in discussions with its legal and claims advisers regarding the termination of the Contract and recovery of Ithra's costs and claims. An exceptional, non-underlying, provision will be recognised in the year to December 2014 in respect of the Contract. The provision, which totals £47m, includes the write off of contract balances, together with provision for all known liabilities.

Cumulative revenue recognised from the Contract is £114m, with 2014 revenue limited to £12m recognised in the six months to June 2014.

Impairment of minority holding

Ultra has also reviewed its activities in the Middle East and while it continues to do business there and see good opportunities in the region, there may be some short term impact. Consequently, it has been decided to take a non-cash impairment of the outstanding goodwill on the Al Shaheen joint venture in the UAE totalling £7.4m. Ultra is a minority shareholder in Al Shaheen, the JV partner being Emirates Advanced Investments (EAI). Al Shaheen's principle area of business is in the training sector.

Ultra will announce its 2014 preliminary results on 2 March 2015.

- Ends -

Enquiries:

Rakesh Sharma, Chief Executive 020 8813 4307

Mary Waldner, Group Finance Director

Susan McErlain, Corporate Affairs Director 07836 522 722

www.ultra-electronics.com 

Further information about Ultra:

Ultra Electronics is a group of businesses which manage a portfolio of specialist capabilities, generating highly differentiated solutions and products in the defence & aerospace, security & cyber, transport and energy markets by applying electronic and software technologies in demanding and critical environments to meet customer needs

Ultra has world-leading positions in many of its specialist capabilities and, as an independent, non-threatening partner, is able to support all of the main prime contractors in its sectors. As a result of such positioning, Ultra's systems, equipment or services are often mission or safety-critical to the successful operation of the platform to which they contribute. In turn, this mission-criticality secures Ultra's positions for the long term which underpins the superior financial performance of the Group.

Ultra offers support to its customers through the design, delivery and support phases of a programme. Ultra businesses have a high degree of operational autonomy where the local management teams are empowered to devise and implement competitive strategies that reflect their expertise in their specific niches. The Group has a small head office and executive team that provide to the individual businesses the same agile, responsive support that they provide to customers as well as formulating Ultra's overarching, corporate strategy.

Across the Group's three divisions, the major market sectors in which Ultra operates are:

Defence: Ultra supplies advanced electronic and electrical systems and equipment to coalition defence forces around the world. The Group innovates to provide battle-winning, specialist capabilities that are tailored to the customer's need and environment. Ultra has world-class capabilities in sonar systems, command & control, platform electrics, surveillance systems and network communications solutions.

Security: Ultra provides highly differentiated systems and capabilities to the broad security, intelligence and cyber market. Ultra has highly specialised capabilities in secure communications, networks and cryptographic equipment, key management systems and surveillance systems and intelligence gathering systems.

Transport: Ultra provides specialist software, systems and equipment for use in mass passenger transport systems. This includes high integrity real-time controls for civil aircraft, advanced IT solutions for modern airports and trackside power equipment for transit rail systems.

Energy: Ultra has a range of safety critical sensors and controls used in existing and new build nuclear reactors. The Group has innovative portable energy sources powered by readily available propane gas.