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2007 Overview

Dr Julian Blogh Chairman Douglas Caster Chief Executive David Jeffcoat Finance Director. 2005. 2005. 2005. 2006. 2006. 2006. 2007. 2007. 2007. Ultra Electronics Preliminary Results 2007. 2007 Overview. Sales £m. 412.9. 377.0. Another good year revenue up 10%

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2007 Overview

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  1. Dr Julian Blogh Chairman Douglas Caster Chief Executive David Jeffcoat Finance Director

  2. 2005 2005 2005 2006 2006 2006 2007 2007 2007 Ultra Electronics Preliminary Results 2007 2007 Overview Sales £m 412.9 377.0 • Another good year • revenue up 10% • PBT* up 11% • EPS* up 12% • DPS up 15% • Margins maintained • investment to underpin medium-term growth • continuing currency impact • 83% cash conversion • Four acquisitions made in 2007 • Strong balance sheet • Order book of £621m provides good visibility 342.4 PBT* £m 61.1 54.9 47.4 EPS* pence 65.4 58.4 50.7 * before amortisation of intangibles arising on acquisition and profit/loss on financial instruments

  3. Financial Review

  4. Ultra Electronics Preliminary Results 2007 Profit & Loss * before amortisation of intangibles arising on acquisition** before amortisation of intangibles arising on acquisition and profit/loss on fair value movements on derivatives

  5. Ultra Electronics Preliminary Results 2007 Revenue Sector Destination UK42%(2006: 40%) Civilequipment16%(2006: 15%) Sonar21%(2006: 24%) Civil aircraftequipment9%(2006: 9%) Mainland Europe10%(2006: 9%) ROW6%(2006: 8%) Defenceequipment12% (2006: 13%) Battlespace IT32% (2006: 29%) Military aircraftequipment10%(2006: 10%) North America42%(2006: 43%)

  6. Ultra Electronics Preliminary Results 2007 Profit Progression 2007 OP* £62.9m Acquisitions+£2.3m Improved margins+£6.4m 2006 OP* £57.5m Currency translation-£2.2m Organic growth+£6.3m Currency transaction-£1.7m Higher R&D costs -£5.7m * before amortisation of intangibles arising on acquisition

  7. Ultra Electronics Preliminary Results 2007 Currency Effects US$38m @1.13 US$68m @1.82 Profit impact Transaction Translation US$ into C$ N/A -4% -£0.9m US$ into £ -2% -£0.8m -8% -£2.0m C$ into £ -3% -£0.2m N/A Total profit impact -£3.9m (-6%) Revenue translation impact -£16.1m (-4%)

  8. Ultra Electronics Preliminary Results 2007 New Business Development Expenditure Cash £105.0m (2006: £92.3m) Customer funded £74.8m(2006: £69.4m) R&D capitalised £4.1m (2006: £3.8m) Balance sheet Ultra funded £30.2m (2006: £22.9m) Capitalised development costs £8.4m (2006: £5.2m) R&D expensed £26.1m (2006: £19.1m) P&L Development costs amortised £0.9m (2006: £2.2m) P&L charge £27.0m (2006: £21.3m)

  9. Ultra Electronics Preliminary Results 2007 Cash Flow * before amortisation of intangibles arising on acquisition

  10. Operational Review

  11. Financial results Revenue £100.0m +6% Profit £16.1m +22% Order book £181.6m +3% Aircraft & Vehicle SystemsOVERVIEW Market trends • Buoyant civil aerospace market sector • large backlogs and strong aftermarket • Continuing military aircraft build commitment • air superiority, ground attack and mobility • Focus on improved armoured vehicles • new build and upgrades 24% of Group sales 26% of Group OP Business highlights • Investment in Boeing 787 systems continues • flight-worthy equipment delivered • Continuing development of JSF engine ice protection system • selected for lift fan • Satisfactory progress on five A400M development programmes • Increased sales of HiPPAG airborne compressor

  12. AIRCRAFT & VEHICLE SYSTEMS Aircraft & Vehicle SystemsACQUISITIONS Atkins • Software for crisis and incident management • Differentiated through ease of use • Sells to MoD and emergency services • Key element of harbour and border protection • Bolt-in to Datel business BCF Designs • Aircraft electronic test equipment • fuel quantity • data buses • US Navy contract driving growth • Broad defence and commercial customer base • Bolt-in to Electrics business

  13. Ultra Electronics Preliminary Results 2007 AIRCRAFT & VEHICLE SYSTEMS Aircraft & Vehicle SystemsADVANCED SYSTEMS FOR ARMOURED VEHICLES Indirect vision Electrical power management Control panels Advanced remote control of weapons

  14. Aircraft & Vehicle SystemsSELECTED OPPORTUNITIES Programme Estimated date EstimatedUltra value Products $10m+ pa • Wing ice protection system • Proximity sensor electronics 2008 Boeing 787 production • Engine inlet ice protection • Ice protection • engine intake and lift fan • HiPPAG for weapons ejection Joint Strike Fighter 2008 $200m+ $5m/$50m+ • HiPPAG for weapons ejection 2008 HiPPAG for USAF multi-purpose bomb rack Armoured vehicle electronic upgrades 2008 £15m+ • Electrical power management • Indirect vision system • Crew controls Astute submarine platform management 2008/10 £20m • Vessel control and monitoring FRES armoured vehicle electronics 2009 £25m+ • Indirect vision system • Electrical power management • HUMS capability

  15. Financial results Revenue £126.6m +5% Profit £19.6m +2% Order book £133.6m +21% Ultra Electronics Preliminary Results 2007 INFORMATION & POWER SYSTEMS Information & Power SystemsOVERVIEW Market trends • Battlespace IT demand is strong • Increasing demand for power equipment • naval, transit and nuclear • Continuing investment in airport IT systems 31% of Group sales 31% of Group OP Business highlights • Contract for combat system for Trinidad & Tobago vessels • Strong demand for trackside power equipment • Production commitment for submarine nuclear reactor control and instrumentation • Airport IT system contracts around the world

  16. Ultra Electronics Preliminary Results 2007 INFORMATION & POWER SYSTEMS Information & Power SystemsADVANCED AIRPORT IT SYSTEMS • Heathrow T5 success • excellent reference site • International successes • IT integration • airport management • passenger processing • information processing • baggage processing London Heathrow T5 Shanghai Pudong Dublin Cape Town

  17. Ultra Electronics Preliminary Results 2007 INFORMATION & POWER SYSTEMS Information & Power SystemsSELECTED OPPORTUNITIES Programme Estimated date EstimatedUltra value Products Rolls-Royce RC&I production 2008/9 £20m • Naval nuclear reactor control system Civil nuclear equipment upgrades 2008/9 £20m+ • Surveys of existing systems • Outline designs • Nucleonic sensors and cables Olympics transport infrastructure upgrade 2008/2011 £20m • Trackside power equipment UK aircraft carriers 2008 £15m+ • Power equipment • Signature management • Electro-optic sensors Astute boat 4 2008 £20m • Power equipment • Signature management • Reactor control equipment Airport IT system upgrades and extensions 2008+ £20m+ p.a. • IT integration • Passenger, information and baggage processing

  18. Financial results Revenue £186.3m +15% Profit £27.2m +9% Order book £305.8m +3% Ultra Electronics Preliminary Results 2007 TACTICAL & SONAR SYSTEMS Tactical & Sonar SystemsOVERVIEW Market trends • Increasing demand for battlespace IT equipment • Focus on upgrading capabilities of existing platforms • Increasing focus on improving ASW and torpedo defence 45% of Group sales 43% of Group OP Business highlights • Development contract for enhanced ASW capability • Completed development of higher capacity tactical radio • Deliveries of sea mine disposal system to Royal Navy • Won secure communications upgrade for UK Tornado aircraft

  19. Ultra Electronics Preliminary Results 2007 TACTICAL & SONAR SYSTEMS Tactical & Sonar SystemsACQUISITIONS Criticom • Secure and non-secure video conferencing • Embedded US high-grade encryption devices • Broad defence and government sector customer base • Bolt-on to Tactical & Sonar Systems Telemus • Small, specialist business • Electronic warfare and surveillance • growing market sector • Bolt-in to Tactical Communication Systems

  20. Ultra Electronics Preliminary Results 2007 TACTICAL & SONAR SYSTEMS Tactical & Sonar SystemsWORLD LEADERS IN UNDERWATER BATTLESPACE NICHES Systems to communicate with submarines at speed and depth Ship bow sonar for submarine detection and obstacle avoidance Advanced multi-static sonobuoy systems for airborne ASW UUV for sea mine disposal Expendable acoustic torpedo countermeasures Innovative towed arrays for submarine and torpedo detection and defence

  21. Ultra Electronics Preliminary Results 2007 TACTICAL & SONAR SYSTEMS Tactical & Sonar SystemsSELECTED OPPORTUNITIES Programme Estimated date EstimatedUltra value Products Sonar system for Australian Air Warfare Destroyer 2008 £20m+ • Bow sonar • Towed array • Networked sonobuoys US and export torpedo defence systems 2009/10 £10m+ • Torpedo detection • Countermeasure system Harbour surveillance and security systems 2008/9 $20m • Command and control system • Surveillance equipment • Contingency planning tools • High capacity tactical radio systems High capacity tactical radios – export 2008/9 $20m+ New sonobuoy receivers for P-3 and P-8 aircraft 2008 $50m • Sonobuoy receivers Position on UK team complex weapons 2009 £50m+ • Data link equipment • Ground control stations

  22. Maximising Long-Term Growth DUAL FOCUS – ORGANIC and ACQUISITION Investing in acquisitions: Criteria • defence, aerospace or nuclear • related niche (new, adjacent) • widen geographic reach • value-enhancing Investing in programmes, processes and facilities: • Boeing 787: $150k per aircraft • A400M: firm contracts for 192 aircraft - total value to Ultra: £56m • F-35 Lightning II JSF: $120k per aircraft • New facilities for Tactical Communication Systems, Datel and PMES • Bolt-ons • SML • Ocean Systems • DNE Technologies • Audiopack • Criticom • Bolt-ins • Videcom • Horizon • Polyflex • Winfrith • Telemus • BCF Designs • Atkins

  23. Summary & Outlook

  24. Summary & Outlook • Good performance in 2007 • Favourable market conditions • large defence budgets with focus on enhancing capabilities • buoyant civil aerospace and airport IT markets • Broad spread of niches and programmes gives financial resilience • Strong balance sheet, capable of funding further acquisitions • £621m order book gives good visibility • Growth to continue in 2008 and beyond

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