Sustained performance despite the challenging US defence market conditions
· Continued investment to drive future growth
- 5.8% of revenue reinvested by Ultra in new products and business development
- acquisition of two specialist businesses in the period
· Underlying operating margin maintained at 16.3%
· Cash conversion of 65% (rolling 5 year average cash conversion of 91%)
· Robust balance sheet at 0.3x net debt/EBITDA with headroom for further acquisitions
· Dividend increased by +5.5%, maintaining 3 times cover and reflecting confidence in future prospects
Rakesh Sharma, Chief Executive, commented:
"Market conditions in 2013 continued broadly as outlined at the beginning of the period. Non-defence markets remained healthy and the Group saw pleasing progress in a number of these sectors. In the US defence market, overall uncertainty and delays rather than budget constraints impacted order placement and payment approvals. In response to these factors Ultra continued to reduce business costs, whilst maintaining its investment internally and in acquisitions. There continue to be a number of larger opportunities for growth alongside the regular flow of smaller orders and we have a healthy acquisition pipeline, as evidenced by the recent acquisition of 3 Phoenix Inc.
During 2014, Ultra's non-defence sectors are expected to remain positive. The US defence market will continue to provide challenges but we expect improving certainty and order placement in Ultra's niche areas during the second half of the year. Ultra will continue its geographic expansion and development of collaborative solutions to secure new contracts. The focus on investment and tight cost management will remain integral to our business strategy. Ultra enters 2014 with order cover levels consistent with previous years, supplemented by a noticeable shift toward more annual contract awards. Combining these factors, and recognising current currency headwinds, we are confident that the Group can achieve progress in 2014."
