For immediate Release                                                                                                                                                         14 April 2020 

Ultra Electronics Holdings plc

("Ultra" or "the Group")

Market Update

Ultra provides the following update in the light of the ongoing COVID-19 pandemic and Government mandated actions taken to mitigate its impact.

Response to COVID-19

Our first priority is to keep our employees as safe and healthy as possible. We are also required to continue to support our customers' needs. Where possible, we have therefore enabled home working across the Group, and we have changed shop floor practices to meet recommendations on social distancing and employee protection.

Our employees are showing great spirit and resilience. As a result of their exceptional efforts, all facilities remain open and productive, and there has been no significant disruption to product or programme delivery. 

Current Trading

Trading in the first quarter of 2020 was broadly in line with our expectations with good underlying order book, revenue, profit and cash performance.

Demand in our defence markets and most of our critical detection and control markets remains robust.  Our supply chains are also proving generally stable, and we are working to mitigate and provide support as necessary where we see isolated issues. Production inefficiency associated with changing working patterns has so far been kept to a minimum.

We also remain focused on driving transformation across Ultra and we made good progress on the key initiatives in the first quarter. 

Whilst Ultra is currently operating broadly as normal, as a result of the rapidly changing environment caused by COVID-19 we have developed a response plan with detailed actions to mitigate any possible profitability, liquidity and cash flow challenges that may arise. Currently we do not see any material deterioration in trading that merits the need to initiate any of these actions. We are therefore continuing to invest in Ultra where we see opportunities to improve the long-term growth prospects for the business and remain focused on delivering our order book. We will continue to keep the situation under constant review.

Liquidity and balance sheet position

The liquidity of the Group is strong, with significant cash and access to our £300m Revolving Credit Facility ("RCF"), the majority of which is committed to November 2024, along with long-term committed Private Placement debt of £50m and $70m, as well as other smaller uncommitted short-term overdraft facilities.  At 31 December 2019 the Group had committed liquidity available of £296.7m comprising cash of £82.2m and £214.5m of undrawn RCF.

At 31 December 2019 the Group's net debt (excluding IFRS 16) was £113.6m. The net debt to EBITDA covenant on our debt facilities is 3.00x (on a pre-IFRS16 covenant basis) and is tested on a rolling twelve-month basis at 30 June and 31 December. At 31 December 2019 our net debt to EBITDA was 0.86x (on a pre-IFRS 16 covenant basis) and further improved in the first quarter. 

Full Year Dividend and 2020 Annual General Meeting

Ultra has an exciting strategy for value creation, is financially very robust and continues to trade broadly in line with expectations. The Board is, however, mindful of the uncertainty as to the duration and impact of further disruption from COVID-19. As a precautionary measure the Board has therefore decided to delay payment of its 2019 final dividend by withdrawing the proposed recommendation to pay a final 2019 dividend of 39.2 pence per share from the resolutions being put at the forthcoming AGM. Based on the Board's current knowledge, it intends to pay an additional interim dividend of the same amount in the second half of 2020.  The Board will keep this under review as the COVID-19 pandemic unfolds.

The 2020 Annual General Meeting ("AGM") will take place on 13 May 2020. The Notice of AGM and Form of Proxy will be made available on www.ultra.group and will be posted this week to those shareholders who have elected to receive hard copy communications.

As public gatherings of more than two people are currently prohibited, shareholders (other than two senior executives) will not be able to attend the meeting in person.  Should the Government relax this requirement, or other measures be necessary, alternative arrangements will be considered.  Shareholders will still be able to vote by proxy using the usual online and postal facilities.   A poll will be taken on each of the resolutions put to the meeting and the results will be posted on the Company website. 

Given the revised dividend arrangements described above, a resolution to approve a final dividend will not be put to Shareholders at the AGM. 

Outlook

The Group remains in a strong financial position, is operating in robust markets and continues to trade well despite the current crisis.

It is too early to judge what the full impact on 2020 will be, but order book and demand remain strong. We do anticipate a small impact on revenue from weakness in commercial aerospace and wider customer driven delays, and on margin due to production inefficiencies, but these are expected to be limited. We currently still expect 2020 to be a year of good progress for Ultra. A further update will be given at the time of our Interim Results.

In the longer term, Ultra has an exciting strategy and is pursuing a transformation agenda to continue to drive growth in market share and to deliver exceptional value creation for all our stakeholders.

Enquiries:

About Ultra:

Ultra specialises in providing application-engineered tailored solutions. We focus on our customers' mission critical and intelligent systems in the defence, security, critical detection & control markets.

www.ultra.group