Preliminary Results for the Year Ended 31 December 2014

FINANCIAL HIGHLIGHTS

• Excluding the effect of the early termination of the Oman Airport IT contract, 2014 results are broadly in line with the prior year
• Underlying order intake* is up by 21% to £760.0m
• Underlying earnings performance is in line with expectations
• Underlying operating margin(1) of 16.5% slightly higher than normal range
• Cash conversion up at 70%
• Investment to support future growth maintained
  - over 5% of revenue reinvested by Ultra in new products and business development
  - acquisition spend of £107.5m on four specialist businesses
• Strong balance sheet provides firepower to fund further acquisitions
• Refinancing preserves investment capacity at advantageous rates

Rakesh Sharma, Chief Executive, commented:
In 2014 Group order intake increased significantly, reflecting demand across our market segments for Ultra’s specialist capabilities. Market conditions, specifically government spending pressures in the US and UK, continued to frustrate revenues in 2014, although excluding Oman the second half performance showed an improvement on the first half. Within the Group, good progress has been made in implementing market facing initiatives whilst continuing prudent cost management. The events that culminated in the early termination of our Oman Airport IT contract provided an unwelcome distraction, although this will allow us to bring to a head what is a unique and increasingly difficult commercial contract. The Group intends to vigorously pursue all options towards a satisfactory settlement.

Performance for 2015 will benefit from acquisitions made in 2014 and from foreign exchange translation at current rates. However, set against the current market backdrop of uncertainty over the timing and feasibility of proposed US DoD budgets, together with election activity in both the US and UK, overall Ultra expects 2015 performance to be broadly stable. We will continue to balance investment for future growth with focus on efficiencies and managing our costs to support profitability.

Looking further ahead our optimism improves as market growth drivers present revenue opportunities for our businesses and the expected pace of order book execution ticks up as a result of recent contract awards. Further growth is expected as the Group identifies and completes acquisitions. Internally, following on from our cost management actions, we are launching a group-wide initiative to standardise our systems and some of our processes. This will enable us to go beyond individual businesses efficiencies, whilst retaining Ultra’s critical success factors of autonomy and agility. The Board acknowledges the short-term headwinds but judges that the actions being taken should enable the Group to achieve an improved performance from 2016

(1) before Oman Airport IT contract termination costs, amortisation of intangibles arising on acquisitions, impairment of goodwill and adjustments to deferred consideration net of acquisition related costs. IFRS operating profit was £39.5m (2013: £57.4m). See Note 2 for reconciliation.
(2) before Oman Airport IT contract termination costs, amortisation of intangibles arising on acquisitions, impairment of goodwill, fair value movements on derivatives, unwinding of discount on provisions, defined benefit pension interest charges and adjustments to deferred consideration net of acquisition related costs and, in the case of underlying earnings per share, before related taxation. Basic EPS 29.8p (2013: 54.8p). See Note 2 for reconciliation.
(3) the Oman results include revenue of £11.7m (2013: £41.7m), operating profit of £nil (2013: £4.2m) and exceptional non-underlying termination costs of £46.9m (2013:£nil)