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Demand for IT systems on the front-line is enriching UK defence company Ultra Electronics, which has posted a 16% rise in half-year tax profits. Chief executive Douglas Caster said the firm’s offering of niche communication products to civil and defence markets, in particular “battlefield IT”, had boosted orders. For having clients with long-term IT programmes, the company said it was “unaffected by short-term perturbations in consumer spending and the credit markets.” Its trading figures show that pre-tax profits for the half-year to June 30 were £30.4m, and revenues, like operating profit, jumped 20% on last year, to £231m. The biggest growth in orders was for its aircraft and vehicle systems, like portable command and control devices, buoyed by contract wins at airports in South Africa, the US and China. Mr Caster said the devices, which resemble the controls of a PlayStation, played upon the fact that army recruits were coming out of school “as experts” on the popular games console. However tactical and sonar systems, like radios and computer systems used at military bases, were the company’s best performers, as their revenues rose 30% on last year. “Defence expenditure worldwide is being sustained by the continuing high level of international tension,” Ultra Electronics said in its trading update. “The global nature of the threats continues to drive expenditure on those capabilities that allow the projection of military effects and the protection of personnel around the world. “A key part of modern warfare and counter-terrorism is the maintenance of information superiority. This in turn drives continued strong demand for battlespace IT equipment that can provide enhanced communications bandwidth and capacity.“ Although the US/UK military plans to scale down their front-line presence, Mr Caster reportedly said American forces were demanding more and more capacity for internet usage; for video downloads, emails and surveillance. “While it is planned that current military operations will be scaled down in the medium term, this is unlikely to be a quick process,” Ultra said, pointing to Iraq and Afghanistan. The company anticipated “a period of rebuilding the systems and equipment base that has been eroded by years of high intensity operations,” and said it was well-placed to win such work. Turning to its civil aerospace projects, Ultra said it expected work from Boeing and its rival Airbus to continue, as each company strives to lower build times over the next few years. Adding that is also foresees strong demand for business jets, fuelled by “high net worth individuals” wanting speed and convenience, the firm said airports would have to keep up. A further boost for the company is likely for its trackside power equipment business, as the London 2012 Olympic Games is driving investment in rail transit system infrastructure. This year, Ultra has bought four companies – Magneto Inductive Systems, Harris Acoustics, Graytonics and its biggest new asset, ProLogic, a US battlespace IT giant for £30m. “Ultra businesses have differentiated positions in growing market niches and these acquisitions all have that characteristic,” Mr Caster said. “The group's balance sheet will support further purchases and the pipeline of potential targets is healthy. [We are] positioned in high growth market sectors worldwide. With Ultra's proven ability to win new business and to execute contracts effectively, the board has confidence in [our] continuing progress”. Aug 7, 2008 Email this article Printer friendly page Previous Page
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