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

Results for the year ending 31 December 2005

2005 Overview

• Another strong year with high revenue and profit growth

• All divisions contributed to growth

• Margins continued to improve

• 105% cash conversion and strong balance sheet

• Investment in growth market sectors

• Strong order book of £500m

Sales £m

20042003 2005 20042003 2005 (UK GAAP) (IFRS) (IFRS)

284.4310.7

PBT* £m

40.134.4

20042003 2005 (UK GAAP) (IFRS) (IFRS)

* before amortisation of intangibles arising on acquisition and loss on financial instruments

EPS* pence

38.243.7

50.7

20042003 2005 (UK GAAP) (IFRS) (IFRS)

342.4

47.4

Ultra Electronics Preliminary Results 2005


Financial Review


Profit & Loss

2005 2004 Growth

Sales £342.4m £310.7m +10% Operating profit* £51.1m £43.3m +18%

Profit before tax** £47.4m £40.1m +18%

Earnings per share** 50.7p 43.7p +16% Dividend per share 15.9p 13.8p +15%

* before amortisation of intangibles arising on acquisition ** before amortisation of intangibles arising on acquisition and loss on financial instruments



Civil aircraftequipment

9%(2004: 8%)

Civil equipment 13%

(2004: 15%)

Defenceequipment

12%(2004: 13%)

BattlespaceIT 30%(2004: 29%)

Sonar26%(2004: 24%)

Europe 11%

(2004: 11%)

UK 39%

(2004: 42%)

Military aircraftequipment

10%(2004: 11%)

2005 Sales Analysis

Sales by SectorSales by Destination

N America42%(2004: 35%)

RoW8%(2004: 12%)

Sales £342m

Operating Profit Progression

* before amortisation of intangibles arising on acquisition

2004 OP* £43.3m

Currency transaction - £5.2mCurrency translation + £1.0m

Sales Growth + £2.0m

Improved margins + £7.9m

2005 OP* £51.1m

Acquisitions + £2.1m


Cash Flow

£m 2005 2004 Operating profit* 51.1 43.3 Capital expenditure less depreciation (0.5) (0.4)

Net capitalised development costs (0.7) (1.5)

Working capital reduction 3.8 5.6

Other 0.1 (0.1)

Operating cash flow

53.8

46.9

Cash conversion

105%

108%

Net debt

34.3

24.1


* before amortisation of intangibles arising on acquisition


Share issues £1.4m

Acquisitions £36.6m

Interest £2.9m

Investing for Growth

Cash for investing£61.2m

Currency £3.3m

Tax £13.0m

Extra debt £10.2m

Capex £7.2m

R&D £17.4m

Dividend £9.6m Cash generated £49.6m



Operational Review


Developments in Defence Market

UK Defence Industrial Strategy

• UK Armed Forces need sovereign operational independence

• Capability upgrades rather than new platforms

• Electronics is key to providing enhanced capability

• International solutions required

― technology transfer for UK support

• Innovative capabilities of Tier 2+ businesses recognised

US Quadrennial Defense Review and FY07 Defense Budget

• Capability needed to wage simultaneous campaigns – ‘near peer’ and ‘prolonged irregular’

• No major weapon cancellations announced – affordability not addressed

• US must be a robust and dependable partner – possible benefit to UK on technology transfer?

• FY07 budget request $439bn― procurement and R&D up >5%― increase in R&D to fund continuing transformation – high electronics content― for first time supplementary for Iraq includes funds for equipment procurement

Aircraft & Vehicle SystemsOverview

Financial resultsRevenue £84.4m +10.2%Profit £15.9m +7.1%Order book £133.9m +85.1%

• Operating margin 18.9% despite currency impact• Investing in Airbus and Boeing programmes• Strong order book for Airbus and Eurofighter

Market trends• Civil aircraft build rates increasing

• Civil aerospace aftermarket buoyant

• Important military aircraft programmescontinuing

• Continuing focus on mobility, smart munitionsand capability upgrades

• Initial production contract for Small Diameter Bomb

• Teamed for Warrior turret upgrade competition

Business highlights• Selected for A400M active noise cancellation

system

• Boeing 787 development milestones achieved

25% of Group sales

31% of Group OP


Positioning for Armoured Vehicle Electronics

Importance of teaming• Close relationship with CTAI for Warrior

― joint venture between BAES and GIAT

• Teamed with Lockheed Martin for FRESelectronic architecture TDP

• Internal teaming to share domain knowledge― Aircraft & Vehicle Systems with Information &

Power Systems

Status• In production for ETS indirect vision system

• Successful HUMS trials for British Army

• In development for Terrier vision equipment

• Prototype systems for new CTAI turretdemonstrated

• Undertaking funded studies for FRES electronic architecture

Strategic emphasis• Fundamental change in vehicle types

• Capability upgrades require electronic systems

• International solutions

• Multi-programme approach for Ultra― performing on ETS, Terrier― positioning for Warrior competition― teamed for FRES development


Aircraft & Vehicle SystemsSelected Opportunities

• WIPS• Proximity sensor electronics

$10m pa+2007Boeing 787 production orders

• Crew controls• Power distribution

£10m2007Warrior turret upgrade

• Indirect vision system• Power controls• HUMS capability

£25m+2009FRES armoured vehicle electronics

• Engine inlet ice protection$100m+2006Joint Strike Fighter

• HiPPAG for weapons ejection$100m+2007Joint Strike Fighter

• HiPPAG for missile cooling£20m2006Eurofighter tranche 2

ProductsEstimatedUltra value

Estimated date

Programme


Information & Power SystemsOverview

Financial resultsRevenue £117.3m +3.1%Profit £18.1m +20.3%

Order book £127.9m +4.7%

• Low transit power equipment demand

• Strong demand for ADSI systems and software

• Increasing activity at Heathrow T5

Market trends• Battlespace IT demand is strong

― situational awareness is key― ‘system of systems’ solutions required

• Continuing investment in airport IT systems― international demand increasing

• Coastal and border surveillance demand rising― ‘minor warships’ required― oil field surveillance to protect assets

Business highlights• ADSI contracts for both JSS and CLIP programmes

• ADSI systems for local airspace management• Under contract for FRES electronic architecture studies

• Won airport IT integration contract at Shanghai

34% of Group sales

35% of Group OP



Ultra’s Airport IT Integration CapabilityUltra Electronics Preliminary Results 2005

BackOffice

Systems

Retail Systems

Retail MIS

Car parks

Resourcerostering

Billing

Enterprise

Maintenancemanagement

Metering management

GroundTransportation

Road transport

Inter-terminal

Rail transport

Airline System

Departure control

Self-service check-in

Airport check-in

Load Plan

Airlinecheck-in

Boarding gatemanagement

PassengerscreeningPassenger

profiling

Information Interchange

Message ManagementCentral Data

Base

LANWAN

Baggage SystemsContainertracking

Airport dataswitching

Baggage tracking & reconciliation

Worldtracer

Baggage datadistribution hub

Security

Safety mgmt &retrieval facility

Commonlounge

Access control

CCTV

Expeditedarrivals

Airport Operations System

Flight information

Airport database

Dynamicsignage

Resourceplanning

Datawarehouse

Publicaddress

Operational Systems

Facilities and Utilities Systems

Lighting

Heating/ventilation

Building SystemsIntegration

Lifts & escalators

Fire alarm

Integrated building monitoring

Apron ServicesAir monitoring

Noise monitoringGround lightingWater

High voltage system

Utilities/ Environment

Utilities control

Flight information

Airport database

Resourceplanning

Existing Ultra offering

New Ultraoffering

Third party offering

Information & Power SystemsSelected Opportunities

• Airport IT for MoD‘internal airline’

£10m2006/7MoD Air Movement Order

• Electronic architecture£15m2007/8FRES development – next phase

• ADSI systems• ADSI function enhancements

$40m2006+JSS and CLIP additional funding

• Command & control system• Navigation system• Weapons direction control

£10m2006/7Minor warship combat system

• Signature managementsystems

• Power equipment

£15m+2008UK aircraft carrier equipment

• Power equipment• Signature management

systems

£10m+2006/7Astute batch 2


Estimated date

Programme


Tactical & Sonar Systems Overview

Financial resultsRevenue £140.8m +16.9%Profit £17.1m +27.8%

Order book £239.0m +18.9%

• Sales included 6 RN torpedo defence systems

• Higher sonobuoy sales in H2

• Operating margin increased to 12.2%

Market trends• International demand for high capacity

communications equipment

• Improved submarine tactical communicationscapability required

• Commitment to new airborne anti-submarinewarfare platforms

• Special forces, homeland security and ‘firstresponders’ well funded

Business highlights• Data link contract received for Watchkeeper UAV

• Sonobuoy receiver award for USN P-8A aircraft

• High capacity radio contracts from US, Canada and South Korea

• UK Mine Disposal System contract received

41% of Group sales

34% of Group OP


UK Mine Disposal System

System solution• Expendable remotely operated vehicle

• Shipborne control station (transportable)

• On-board guidance and navigation system

• Explosive warhead to neutralise mine

• UK variant of existing SEAFOX design

Importance of teaming• Important to offer international ‘best of breed’

• Atlas Elektronik SEAFOX system proven in service

• Babcock for shipfitting and logistic support

Scope of supply• Modify existing SEAFOX design for UK requirement

• Technology transfer to the UK

• Sixteen ship installations and war-stock of vehicles

• Ten year support and upgrade capability

• Contract value >£35m with delivery 2007-2010


Tactical & Sonar Systems Selected Opportunities

• Communications control system

• Cryptographic protection

£10m2006Secure comms upgrade for UK Tornado aircraft

• High capacity tactical radiosystems

$20m+2006/7High capacity tactical radios –export

• Torpedo detection• Countermeasure system

$20m+2007US torpedo defence system

• Surveillance and targetingpod

• Technology transfer and support

£20m+2006Litening pod for UK Eurofighter aircraft

• New sonobuoy type• Aircraft system upgrades

£20m2006Multi-static active ASW system

• UAVs with warheads• Control stations

£10m2006Loitering munition for British Army- system definition


Estimated date

Programme



Summary & Outlook


Summary and Outlook

• Large defence budgets, with focus on achieving force superiority

• Buoyant civil aerospace and airport IT markets

• Broad spread of niches and programmes, with proven implementation capability

• High quality of earnings

• Strong balance sheet, capable of funding further acquisitions

• Record £500m order book gives good visibility

• Growth to continue in 2006


Appendices

Ultra Electronics Preliminary Results 2005Ultra Electronics Preliminary Results 2005

Aircraft & Vehicle SystemsProgramme Status

Feasibility

Development

Production

Support

F-35 Joint Strike FighterF/A-18 E/FTornado updatesEurofighterSmall Diameter BombBoeing 787 “Dreamliner”Airbus – existing rangeEngineering Tank System TerrierFuture Rapid Effects SystemFuture Combat SystemAirbus A400MWarrior turret upgrade

2005 2006 2007 2008 2009 2010


Information & Power SystemsProgramme Status


T45 degaussingAstute power equipmentCV(F)VirginiaLittoral Combat Ship degaussingRolls-Royce reactor control LHR Terminal 5 system integrationUltraTrak LHR, Aus & NZ London Underground power Shanghai Airport IT integrationJSS & CLIP additional fundingADSI for ADAM cellsUK submarine weapon interfacing

2005 2006 2007 2008 2009 2010

Feasibility

Development

Production

Support


Nimrod acoustic systemNH90 ASW equipmentMH60 – system upgradeP-8A ASW equipment SSTD – UKSSTD – export US Navy torpedo defence systemUK mine destructor programmeT45 bow sonarArmy radios – US and Korea KG40AR cryptographic equipment Watchkeeper UAV datalinks RTOF submarine communications

2005 2006 2007 2008 2009 2010

Feasibility

Development

Production

Support

Tactical & Sonar Systems Programme Status


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