Ultra Electronics : Dissemination Announcement

RELATED PARTY TRANSACTIONS

Remuneration of key management personnel

The remuneration of key management personnel, which includes the Directors of the Group, is set out below in aggregate for each of the categories specified in IAS 24: Related Party Disclosures. Further information about the remuneration of individual Directors is provided in the audited part of the Directors' Remuneration Report on pages 62−77.

	2018 £,000	2017 £'000
Short-term employee benefits	3,301	3,428
Post-employment benefits	277	425
Share-based payments	3,761	2,592
	7,339	6,445

Statement of going concern

The Directors have a reasonable expectation that the Group has adequate resources for a period of at least 12 months from the date of approval of the financial statements and have therefore assessed that the going concern basis of accounting is appropriate in preparing the financial statements and that there are no material uncertainties to disclose.

Ultra's net debt at 31 December 2018 was £157.4m (2017: £74.5m). The Group's committed banking facilities amount to £526.4m in total, together with a £5.0m and $10.0m overdraft. The Group's revolving credit facility of £300m is denominated in Sterling, US Dollars, Canadian Dollars, Australian Dollars or Euros. The facility is provided by a group of six international banks and has a committed maturity to November 2023, and may be extended to November 2024 subject to lender consent. The facility agreement permits an additional £150m 'accordion' which is uncommitted and subject to lender consent and can be used in certain acquisition scenarios. The Group holds $165m of term loan which was established in May 2015; $40m is repayable on 31 March 2019, $40m on 30 June 2019 and the remainder on 1 August 2019. The Group also has loan notes in issue to Pricoa which totalled £50m (with an expiry date of October 2025) and $60m (with an expiry date of 25 January 2019) at 31 December 2018 (2017: $70m). Agreement was reached with Pricoa in September 2018 to issue new loan notes of $70m. These were issued on 25 January 2019. This debt will expire in January 2026 and January 2029.

As well as being used to fund acquisitions, the financing facilities are also used for other balance sheet and operational needs, including the funding of day-to-day working capital requirements. The US Dollar borrowings also represent natural hedges against assets denominated in that currency. Details of how Ultra manages its liquidity risk can be found in note 22 - Financial Instruments and Financial Risk Management.

Though global macro-economic conditions remain uncertain, and there continues to be uncertainty over the future UK landscape due to Brexit (detail on the potential risks to the Group associated with this are set out on pages 35 and 38), the long-term nature of Ultra's business and its positioning in attractive sectors of its markets, taken together with the Group's forward order book, provide a satisfactory level of confidence in respect of trading in the year to come.

Directors' responsibilities statement

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the Group financial statements in accordance with IFRSs as adopted by the European Union and Article 4 of the International Accounting Standards Regulation (IAS) and have elected to prepare the Company's financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 101. Under company law, the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs and of the profit or loss of the Company, as well as the undertakings included in the consolidation for that period.

In preparing the Company's financial statements, the Directors are required to:

• Select suitable accounting policies and then apply them consistently.

• Make judgements and accounting estimates that are reasonable and prudent.

• State whether applicable UK Accounting Standards have been followed subject to any material departures disclosed and explained in the financial statements.

• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:

• Properly select and apply accounting policies.

• Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information.

• Provide additional disclosures, when compliance with the specific requirements in IFRS are insufficient, to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

• Make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website (www.ultra- electronics.com). Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that, to the best of our knowledge, taken as a whole:

• The financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole.

• The Strategic Report includes a fair review of the development and

performance of the business and the position of the Company and the undertakings included in the consolidation, together with a description of the principal risks and uncertainties that they face.

• The Annual Report and financial statements, taken as a whole, are fair,

balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

The Annual Report (including the Strategic Report on pages 3-43 and this Directors' Responsibilities Statement) was approved by the Board on 6 March 2019 and signed on its behalf by:

LOUISE RUPPEL

General Counsel and Company Secretary

Further information about Ultra:

Ultra Electronics is a group of businesses which manage a portfolio of specialist capabilities, generating highly differentiated solutions and products in the defence & aerospace, security & cyber, transport and energy markets by applying electronic and software technologies in demanding and critical environments to meet customer needs.

Ultra has world-leading positions in many of its specialist capabilities and, as an independent, non-threatening partner, is able to support multiple prime contractors in each of its sectors.

Ultra's systems, equipment or services are often mission or safety-critical to the successful operation of the platform to which they contribute. In turn, this mission-criticality secures Ultra's positions for the long term which underpins the financial performance of the Group.

Ultra offers support to its customers through the design, delivery and support phases of a programme. Ultra businesses have a high degree of operational autonomy where the local management teams are empowered to devise and implement competitive strategies that reflect their expertise in their specific niches.

The Group has a flat structure and small head office and executive team that provide to the individual businesses the same agile, responsive support that the businesses provide to their customers. In addition this team formulates Ultra's overarching, corporate strategy.