Updates

Ultra Electronics - Swings into net cash

May 2011

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Against a difficult market that has seen some delays in contract awards Ultra Electronics, which provides electronics and IT systems to the defence and aerospace sectors, delivered strong finals with pretax profit rising 15% to £102.7m, on turnover 9% ahead at £710m. Eps rose 12% to 107.9p. Particularly encouraging was the 0.5% rise in operating margin to 15.5% and swing from net debt of £29m to net cash of £18m.Investors clearly worry over the effects on defence spend reductions but Ultra made the following points. In the US (50% of turnover) President Obama is pursuing slow growth in defence spend with substantial additional monies for Afghanistan and Iraq and crucially the focus is on improving informati ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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