Ultra Electronics’ (ULE) efforts to win back the confidence of investors was dealt a huge blow on results day, when the defence contractor revealed that its proposed $234m (£170m) acquisition of Sparton, a manufacturer of anti-submarine warfare devices popular with the US Navy, had been terminated due to anti-trust concerns. Management sought to make amends by pledging to return the £134m raised from last year’s equity placing back to shareholders, but the owners of Ultra clearly weren’t impressed, and a 10 per cent share price markdown duly followed.
Ultra’s latest setback overshadowed an otherwise encouraging set of results. Look past the 8.4 per cent decline in underlying operating profit, driven by the forewarned slowdown in UK defence spending and record investment outlay on new development contracts, and business appears to be ticking along nicely. Highlights included a 16 per cent rise in order intake to £901m, together with a sharp drop in the group’s net debt to cash profits ratio to 0.56 times, aided by a cash conversion rate of 97 per cent, the highest percentage achieved since 2011.
Investec expects adjusted pre-tax profit of £104.4m for 2018, giving EPS of 106.8p, against £109.5m and 116p in 2017.
| ULTRA ELECTRONICS (ULE) | ||||
| ORD PRICE: | 1,333p | MARKET VALUE: | £ 1.04bn | |
| TOUCH: | 1,333-1,339p | 12-MONTH HIGH: | 2,245p | LOW: 1,138p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 659p* | NET DEBT: | 15% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 745 | 49.3 | 54.8 | 42.2 |
| 2014 | 714 | 21.5 | 29.8 | 44.3 |
| 2015 | 726 | 34.8 | 35.7 | 46.1 |
| 2016 | 786 | 67.6 | 82.8 | 47.8 |
| 2017 | 775 | 60.6 | 66.2 | 49.6 |
| % change | -1 | -10 | -20 | +4 |
| Ex-div: | 05 Apr | |||
| Payment: | 03 May | |||
| *Includes intangible assets of £531m, or 684p a share | ||||
