Ultra Electronics' (ULE) business overhaul, restructuring programme and biggest ever acquisition combined to ensure a steady 2 per cent rise in adjusted operating profit last year to £120m. That it came in a year when both the US and UK governments promised to halt defence budget cuts should have been the icing on the cake.
A 6 per cent fall in the share price on results day suggested otherwise. This muted reaction can most likely be attributed to management's conservative outlook for 2016, guiding for flat organic growth when most of its peers have been talking up prospects clearly wasn't the best recipe for confidence. But perhaps the group's bosses should be applauded for pointing out that the improved US fiscal budget won't probably be coming through to suppliers until 2017.
A potential surge of contract wins should help to bridge that gap, as delayed orders come through this year. There is also the promise of extra synergies from the acquisition of radio frequency and microwave system maker Herley, together with the plethora of work it has brought to the table. Management is hopeful the "significant revenue opportunities" realised from this deal will compensate for the fact that its £165m cost caused net debt to more than double to £296m.
Analysts at Investec expect pre-tax profit of £119m in 2016, giving EPS of 129p, compared with £112m and 124p in 2015.
| ULTRA ELECTRONICS (ULE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,793p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 1,791-1,793p | 12-MONTH HIGH: | 2,044p | LOW: 1,627p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 50 | |
| NET ASSET VALUE: | 451p* | NET DEBT: | 93% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 732 | 91.2 | 96.2 | 38.5 |
| 2012 | 761 | 79.8 | 88.1 | 40.0 |
| 2013 | 745 | 49.3 | 54.8 | 42.2 |
| 2014 | 714 | 21.5 | 29.8 | 44.3 |
| 2015 | 726 | 34.8 | 35.7 | 46.1 |
| % change | +2 | +62 | +20 | +4 |
Ex-div: 7 Apr Payment: 5 May *Includes intangible assets of £569m, or 809p a share | ||||
