Ultra Electronics Holdings plc Annual Report and Accounts 
meeting our commitments
2002 2002 2001
£m £m Growth
Turnover 260.4 239.5 +8.7%
Profit before taxation* 29.9 27.1 +10.6%
Earnings per share* 33.2p 30.5p** +9.1%
Equity shareholders’ funds 55.7 43.7**
Operating profit margin* 12.9% 13.2%
Employees (average number) 2,395 2,376
Financial Highlights
** Before amortisation of goodwill. 
In 2002 this amounted to £3.9m
** 2000 and 2001 tax restated for FRS 19
£260.4m
Turnover
£260.4m
£239.5m
02
01
£226.9m 00
£193.0m 99
£158.7m 98
33.2 pence
Earnings per share*
33.2p
30.5p**
02
01
28.7p** 00
25.9p 99
22.6p 98
£348m
Order book
£348m
£315m
02
01
£275m 00
£264m 99
£302m 98
£29.9m
Profit before taxation*
£29.9m
£27.1m
02
01
£25.6m 00
£23.2m 99
£21.1m 98
Ultra Electronics Holdings plc 01
ULTRA ELECTRONICS IS A GROUP OF SPECIALIST BUSINESSES DESIGNING,
MANUFACTURING AND SUPPORTING ELECTRONIC AND ELECTROMECHANICAL
SYSTEMS, SUB-SYSTEMS AND PRODUCTS FOR INTERNATIONAL DEFENCE AND
AEROSPACE MARKETS.
THE GROUP CONCENTRATES ON OBTAINING A TECHNOLOGICAL EDGE IN
NICHE MARKETS, WITH MANY OF ITS PRODUCTS AND TECHNOLOGIES BEING
MARKET LEADERS IN THEIR FIELD.
ULTRA, WHICH EMPLOYS 2,600 PEOPLE IN THE UK AND NORTH AMERICA,
FOCUSES ON HIGH INTEGRITY SENSING, CONTROL, COMMUNICATION AND
DISPLAY SYSTEMS WITH AN EMPHASIS ON INTEGRATED INFORMATION
TECHNOLOGY SOLUTIONS.
ULTRA HAS AN INCREASING ROLE OF SUPPORTING PRIME CONTRACTORS BY
UNDERTAKING SPECIALIST SYSTEM AND SUB-SYSTEM INTEGRATION USING
THE COMBINED EXPERTISE OF THE GROUP BUSINESSES.
THE QUEEN’S AWARD 
FOR ENTERPRISE 2000 
FOR THE 
MAGICARD PRINTER 
AT MANUFACTURING 
& CARD SYSTEMS
Financial Highlights 01
Ultra Electronics at a Glance 02
Chairman‘s Statement 03
Chief Executive‘s Review 04
Financial Review 18
Board of Directors 20
The Evolution of Ultra 22
Directors‘ Report 23
Corporate Governance 26
Remuneration Report 28
Independent Auditors’ Report 34
Consolidated Profit and Loss Account 36
Balance Sheets 37
Consolidated Cash Flow Statement 38
Consolidated Statement of Total
Recognised Gains and Losses 38
Notes to Accounts 39
Statement of Accounting Policies 60
Shareholder Analysis 63
Notice of Meeting 64
Five Year Review 66 I am pleased to report that Ultra has enjoyed
an excellent year with record sales and profit.
The order book is at a new high reflecting
the continuing growth in the business and
major orders won in 2002. Importantly, Ultra
has continued to meet its commitments
across the range of its major defence
programmes. Ultra’s strategic objectives
remain to concentrate on growth in its niche
aerospace and defence markets and to make
acquisitions of complementary businesses.
Sales were 8.7% higher at £260.4m despite
the softness in the civil aircraft market. This
strong sales growth reflected Ultra’s focus on
the expanding defence electronics sector
and, in total, military sales now represent
over 80% of turnover. Profit before tax and
amortisation of goodwill grew by 10.6% to
£29.9m whilst earnings per share before
goodwill amortisation increased by 9.1% to
33.2p in 2002.
The continued international development of
Ultra is demonstrated by the growing
importance of North America as a market,
now representing almost 40% of Group sales.
Once again, I am delighted to report a very
strong cash performance, and especially
pleasing is the cash conversion ratio of 116%.
Net debt at £39.3m leaves Ultra with ample
resources from which to make further
targeted acquisitions. New syndicated banking
facilities established during the year have
reinforced the Group’s ﬁnancial strength.
Based on this year’s profit performance,
the Board is recommending a dividend
increase of 7.7% to give a total dividend
of 11.2p per share.
In 2002, Ultra made a substantial acquisition,
Tactical Communication Systems (TCS), a
manufacturer of military radios based in
Montreal, Canada, for £21.5m before
expenses. With a similar customer base to
other Ultra companies and with many
opportunities to win business internationally,
TCS is an excellent complementary ﬁt for Ultra.
The Group had considerable success during
2002 in winning large orders in its core
business areas. This reﬂects the excellent
long-term relationships that Ultra has with its
key customers worldwide. The largest
contract secured by Ultra to date was a
programme to develop, supply and support a
system to protect Royal Navy surface ships
from attack by torpedoes. This contract
utilises the combined strength of several Ultra
businesses. Additionally, the Group won a
contract from BAE Systems to supply bow
sonars for the Royal Navy’s new Type 45
destroyer. Ultra has supplied the UK MoD
with its sonobuoys for many years and this
position is now being reinforced by
negotiations for a ten-year partnership
agreement with MoD to develop and supply
sonobuoys exclusively.
The outlook for civil aerospace remains dull
and a recovery in demand for new aircraft is
not expected in the next twelve months.
There are, however, a number of airport
investment programmes underway, some
reflecting the requirement for enhanced
security. Ultra is winning orders for electronic
systems in these areas. Demand for defence
electronics is growing strongly, particularly in
the USA, and Battlespace IT equipment
remains a high priority for military
expenditure. Ultra’s expertise in supplying
electrical power conversion equipment for
rapid transit rail systems in the United
Kingdom also holds significant potential.
With an order book at the year-end of
£348m and with headroom for further
acquisitions, the Board is confident of the
outlook for the current year and beyond.
Finally, I would like to thank all Ultra
employees for their continuing commitment
and for their contribution to the success of
the Group.
Peter Macfarlane Chairman
Ultra Electronics at a glance 
ADVANCED PROGRAMMING CONCEPTS
▲ Battlespace IT solutions. Software based data
fusion and display systems for applications in
military command, control, communications,
computers, intelligence, surveillance and
reconnaissance (C
4
ISR) systems.
COMMAND & CONTROL SYSTEMS
■ Battlespace IT solutions. Geographical
information management systems. Data link
communication systems. Multifunction
console systems with integrated application
software and ﬂat panel displays for command
and control. Weapon interface electronics.
CONTROLS DIVISION
■ Landing gear control systems. Propeller 
de-icing, balancing and control systems.
Supervisory engine controls.
DATEL DEFENCE
■ High integrity systems including safety
critical software, Internet-based shared
working environments and secure
communication networks.
ELECTRICS DIVISION
■ Specialised control handles, high integrity
switches and indicators, lighting systems.
Ruggedised cable harnesses. Data
management and vision control systems for
armoured vehicles.
EMS
▲ Specialised power supplies and demagnetising
systems for the electromagnetic silencing of
naval vessels. 
FASL
■ Airport IT system integration. IT services 
and solutions for airlines and airports: 
central database (UltraDB); flight 
information (UltraFIDS); management
information (UltraMIS); passenger bag
matching (UltraTrak); resource 
management (UltraResource); data
acquisition and control (UltraControl).
FLIGHTLINE SYSTEMS
▲ Sonobuoy telemetry receivers for 
maritime patrol aircraft and helicopters.
Mechanical gyroscopes.
MANUFACTURING & CARD SYSTEMS
■▲
High integrity contract manufacturing. The
Magicard range of identity card printers.
MARITIME SYSTEMS
▲ Passive sonobuoys and bathythermal 
buoys. Towed array sonars. High power
sonar transducers.
MEASUREMENT SYSTEMS INC
▲ Displacement and force joysticks, hand 
grip controls, trackballs, encoders and
simulation equipment.
NOISE & VIBRATION SYSTEMS
■ Civil and military aircraft cabin quieting
systems using active noise and vibration
control technology.
PMES
■ High power solid state power conversion and
control equipment. Naval data processing and
distribution systems. Transit system power
conversion and control.
PRECISION AIR SYSTEMS
■▲
High pressure pure air generators (HiPPAG)
for cooling thermal imagers and infra red
sensors, and for pneumatic ejection of
aircraft munitions. Sidewinder missile
overhaul and repair.
SIGNATURE MANAGEMENT SYSTEMS
■ Multi-influence measurement ranges for
measuring complex signatures of naval
vessels. Magnetic sensors, instruments and
ship demagnetising systems.
SONAR & COMMUNICATION SYSTEMS
■ Active and passive sonobuoys. Sonobuoy
receivers and acoustic processors for
maritime patrol aircraft and helicopters. Ship
sonar systems. Torpedo defence systems and
countermeasures. Data link communication
systems. Cryptographic equipment.
TACTICAL COMMUNICATION SYSTEMS
▲ High capacity, multi-channel line-of-sight
radios. Electronic counter-counter measure
radio systems. Multiplexers and switches.
UNDERSEA SENSOR SYSTEMS INC
▲ Active and passive sonobuoys. Advanced
autonomous sensor systems for coastal
surveillance. Hydrophones.
■ Businesses in the UNITED KINGDOM
▲ Businesses in NORTH AMERICA
ULTRA ELECTRONICS SPECIALISES IN THE DESIGN, MANUFACTURE AND SUPPORT
OF ELECTRONIC AND ELECTROMECHANICAL SYSTEMS, SUB-SYSTEMS AND
PRODUCTS FOR AIRCRAFT, SHIPS, SUBMARINES, ARMOURED VEHICLES, AIRPORTS
AND TRANSPORT SYSTEMS.
THE ORDER BOOK IS AT A NEW HIGH REFLECTING
THE CONTINUING GROWTH IN THE BUSINESS AND
MAJOR ORDERS WON IN 2002.
TACTICAL 
Chairman’s Statement
Peter Macfarlane, Chairman
capability
Ultra Electronics Holdings plc 03 02 Ultra Electronics Holdings plc 
SONAR INFORMATION
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101
AIRCRAFT 
& VEHICLES 
POWER
1011010
0110
011101
010
101
1011010
0110
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101 Successes in the year included the award of
the largest contract received by the Group 
to date and the signing of a partnership
intent memorandum on sonobuoys with the
Defence Procurement Agency of the UK
Ministry of Defence (MoD).
Group strategy
The Group continues to focus its strategy on
being a niche supplier of electronic systems
and products in defence and aerospace
markets. In order to strengthen its niche
positions, the Group continued its high level
of investment in the application of advanced
technology to create new products in its
chosen markets, coupled with the acquisition
of complementary businesses. Ultra’s 2002
results show the success of this strategy
through both the operating results reported
and the Group’s record order book at the
year-end.
Acquisition
In accordance with its strategy, in September
2002 Ultra completed the acquisition of
MilComm, now renamed Tactical
Communication Systems (TCS), for C$53m
(£21.5m) before expenses. TCS, based in
Montreal, Canada, designs and manufactures
military high bandwidth line-of-sight radios, a
critical part of command and control systems.
Major customers include the US Department
of Defense (DoD), the UK MoD and the
Korean armed forces. TCS strengthens Ultra’s
position in Battlespace IT, an area of
increasing military expenditure, and
complements its existing data link activities.
Group results
Sales increased to £260.4m, (2001: £239.5m),
a rise of 8.7%, of which 5.8% was organic.
This encouraging sales increase was
achieved despite the translation impact of
the weaker US dollar without which growth
would have been 2% higher. Sales growth
was driven primarily by a rising demand for
Battlespace IT systems, an increase in the
delivery of anti-submarine warfare
equipment and higher production of the
HiPPAG missile cooling product. Sales of civil
aerospace products declined in line with
both the reduction of Airbus aircraft
deliveries and reduced demand for spares
and repairs from airlines as they attempted
to move back into profit. However, Ultra’s
civil aerospace business, including the
airport IT activity, represented less than 
12% of the Group’s 2002 sales.
The operating margin, before the amortisation
of goodwill, was 12.9%, slightly below that
recorded in 2001. This margin reduction
resulted mainly from the lower level of civil
aerospace spares and repairs activity during
the period. Operating proﬁt, before the
amortisation of goodwill, increased by 5.6%,
while proﬁt before tax and amortisation rose
by 10.6% to £29.9m (2001: £27.1m). The
effective tax rate for the Group was 1%
higher at 27.1%. As a result, earnings per
share before goodwill amortisation were
9.1% higher at 33.2p (2001: 30.5p, as
restated following the adoption of FRS 19).
Operating cash ﬂow was very strong at
£38.7m (2001: £35.2m) after capital
expenditure, with an operating proﬁt to
operating cash ﬂow conversion of 116%.
†
This brings the average conversion ratio 
over the past ﬁve years to 85%. Despite 
the acquisition of TCS for £21.5m (before
expenses), net debt during the year decreased
by £1.3m to £39.3m (2001: £40.6m).
The Group’s order book at the year-end
stood at a record level of £348m, an
increase of 10% compared to the same
point last year (2001: £315m). This
represents the equivalent of approximately
15 months of future sales.
Air & Land Systems
Air & Land Systems, with the addition of TCS,
comprises eleven businesses in the UK and
North America that supply advanced
technology products for military aircraft and
land vehicles, the anti-submarine warfare
market and the civil aerospace market.
Sales growth in the division was 7.5% to
£177.5m (2001: £165.1m). Organic growth
was 3.4%. Operating proﬁt before goodwill
amortisation was £22.5m (2001: £24.1m).
Reduced civil aerospace spares and repair
activity, combined with the completion of
deliveries to the US Navy of sonobuoys on
older low margin contracts, contributed to the
reduction in operating margin to 12.7% 
(2001: 14.6%). The effect was somewhat
mitigated, however, by the excellent growth of
HiPPAG deliveries for both the US Navy and
the Euroﬁghter programme.
The year produced a number of notable
successes. In March, Ultra was awarded a
£20m contract to develop and deliver the bow
sonar for the Royal Navy's Type 45 destroyer.
This was Ultra’s ﬁrst major ship sonar contract
and was achieved in collaboration with our US
partner, EDO Corporation. Further success in
an associated ﬁeld came with the award of
the main part of the Surface Ship Torpedo
Defence contract in July, bringing the total
contract value to £54m, Ultra’s largest single
contract to date.
In anti-submarine warfare, where Ultra is the
world’s largest supplier of sonobuoys, the
Group continued to increase its market share
of new orders with major contracts being won
in the US, the UK, Canada, France and
Australia. Ultra’s traditional dominance of the
export market for passive sonobuoys is now
being complemented by its ability to win
major active sonobuoy awards with a
competitive new design which recently
entered production.
In recognition of Ultra’s record in meeting its
commitments as a supplier of sonobuoys to
the MoD, a memorandum of intent to partner
has been signed between Ultra and the MoD.
The ﬁnal agreement, when signed, will bind
Ultra and the MoD together, with Ultra being
the developer and supplier of all sonobuoys
and derivative products to the MoD for a
period of at least ten years.
During the year, Ultra’s commitments were
met on the Nimrod, Euroﬁghter and Engineer
Tank System programmes, with development
milestones being achieved and deliveries being
made in a timely manner.
ULTRA ELECTRONICS AGAIN PRODUCED EXCELLENT
RESULTS IN 2002, ACHIEVING RECORD LEVELS OF SALES,
PROFIT AND ORDER INTAKE. CONFIRMING THE QUALITY
OF EARNINGS, THE CONVERSION OF OPERATING PROFIT
TO OPERATING CASH FLOW WAS 116%.
†
total commitment to our
customers and our
shareholders
Julian Blogh, Chief Executive
+11%
Profits
Profit before tax and amortisation
increased by 11% to £29.9m 
(2001: £27.1m)
Successful
strategy
Increased shareholder value through
organic growth in niche markets and
strategic acquisitions
+9%
Sales
Reﬂecting increased demand for
Battlespace IT systems, growth in sales
of Anti-Submarine Warfare equipment
and higher production of HiPPAG
04 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 05
Chief Executive’s Review
†see definition on page 6 £348m
Order book
The order book of £348m, an increase
of 10%, represents the equivalent
of about 15 months of future sales
Information & Sea Systems
Information & Sea Systems consists of seven
businesses in the UK and North America that
supply information management and power
products for defence, commercial and airport
applications worldwide.
Divisional turnover was £82.9m (2001: £74.4m),
an increase of 11.3%, all of which was
organic. Operating profit, before the
amortisation of goodwill, rose by 43.9% to
£11.0m (2001: £7.6m). The operating margin
before amortisation was 13.3%, up from
10.3% in 2001. This resulted from increased
Battlespace IT activity, improved profitability
at the airport information systems business
and the completion of a number of Astute
equipment development programmes
allowing higher margins to be taken.
The division benefited from a rise in
government expenditure on Battlespace IT.
There was significant growth in Ultra’s US
activity in this area as efforts are made to
improve the situational awareness of
operating forces. Progress was also made in
the UK with the first order from the MoD
for the Group’s Air Defense Systems
Integrator. In a related area, BAE Systems
ordered command systems equipment for
the third contract of the Korean KDX
destroyer programme.
Ultra provides power systems for naval and
rail transit applications and, in October, initial
contracts were placed with the Group by
Network Rail to provide trackside power
equipment as part of the rail infrastructure
upgrade for the south of England. This is
expected to lead to an increasing involvement
by Ultra in this high investment sector.
While civil aerospace continues to operate
in a difficult environment, the need for 
long-term investment in airport
infrastructure remains, supplemented by
security concerns. Ultra’s work defining the
IT infrastructure for London Heathrow’s new
fifth terminal continued throughout the
year. In addition, there was an upturn in
demand for Ultra’s baggage reconciliation
system, and equipment was installed for
British Airways and Virgin Atlantic in their
North American terminals.
Finally, Ultra again met its commitments by
delivering on time initial equipment for the
Astute class submarine, and equipment for
the US Virginia class submarine and Air
Defense Systems Integrators for the DoD.
†Operating cash conversion is defined as being operating
cash flow less capital expenditure and financial
investment, as a percentage of operating profit before
goodwill amortisation.
Reporting in 2003
Ultra has expanded in capability, in products
and in the number of operating businesses
since its ﬂotation in 1996. Ultra’s two-
divisional reporting structure therefore no
longer adequately presents the Group in a
format related to its activities, neither does it
provide sufﬁcient detail. From the beginning
of 2003, the Group will report on the basis 
of three divisions, with the objective of
making Ultra easier to understand. The new
reporting structure is explained in more detail
on page 22.
Prospects
Increasing concerns about the activities of
rogue states and terrorist organisations is
driving an increase in defence expenditure in
many countries. In the US, the defence
procurement budget for 2003 has risen by
11%, while in the UK defence procurement is
also growing in real terms. Expenditure is
being concentrated on Battlespace IT,
unmanned vehicles for air, land and sea and
highly mobile systems. Through its continuing
investments, Ultra is well positioned to beneﬁt
from this activity. 
Major UK opportunities include: control
electronics for the UK’s submarine ﬂeet; a
new active search sonobuoy system;
electronics for new armoured vehicles and
Network Rail trackside power equipment. In
the US, new opportunities for Ultra are
presented through: the F-35 Joint Strike
Fighter programme; the Small Diameter Bomb
programme and Battlespace IT activity. 
The civil aerospace market is not expected to
recover for at least the next twelve months
with Ultra’s sales in this market likely to
remain static over this period. However, with
this sector representing less than 12% of
Ultra’s total sales, this will not have a major
impact on performance. Overall, non-military
activity is expected to rise in absolute terms as
rail transit, airport IT and security product
sales increase.
The outlook for the Group remains strong,
recent important contract wins in the UK and
in export markets laying the foundations for
further business growth. With interest cover
before goodwill amortisation of 9.5 times in
2002, Ultra enters 2003 with the capacity to
continue its strategy of organic growth and
acquisition of complementary businesses in
order to strengthen its market niches. These
factors, coupled with the record closing order
book, give the Board conﬁdence in the
performance of the Group in 2003.
THE OUTLOOK FOR THE GROUP REMAINS STRONG,
WITH RECENT IMPORTANT CONTRACT WINS IN 
THE UK AND IN EXPORT MARKETS LAYING THE
FOUNDATIONS FOR FURTHER BUSINESS GROWTH.
116%
†
Cash performance
Cash ﬂow was very strong at £38.7m
(2001: £35.2m) with an operating
profit to operating cash conversion
of 116%
£54m
Largest ever contract received
Successes in the year included the
award of the largest contract received
by Ultra to date, valued at £54m
+9%
Earnings per share
Earnings per share were 9% higher 
at 33.2p (2001: 30.5p)
Orders 
Ultra increased its share of the
sonobuoy market with orders from
the US, the UK, Canada, France 
and Australia
Completed
Strategic acquisition
The acquisition of TCS strengthens
Ultra’s position in Battlespace IT
06 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 07
Chief Executive’s Review
Julian Blogh, Chief Executive
Partnership
with MoD
An intent to act in partnership has
been signed between Ultra and the
MoD for future sonobuoy supplies
Outlook
With an order book at the year-end
of £348m and the headroom for
further acquisitions, the Board is
confident of the outlook for the
current year and beyond The success of military operations is
dependent upon having secure and robust
communications. A key element of military
tactical communication systems is the wide
area network for voice and data transmission
between the various command levels in land
forces. An essential component of this
network is the microwave trunk radio which
provides the highway for the trafﬁc between
the system nodes. Ultra’s advanced radio
products serve as the backbone of modern
tactical line-of-sight networks. They provide
secure battleﬁeld trunk telephone and high
capacity data telecommunication services to
link battleﬁeld theatre commanders and their
combat forces.
To satisfy the high mobility needs of the
tactical environment, users are demanding
ever-greater transmission distances, increased
reliability and low error performance of the
link. Systems must also make efficient use of
the available radio spectrum. In satisfying all
of these requirements, Ultra has become a
world-leading supplier of high-capacity,
line-of-sight radio systems.
In a trend that mirrors the digitisation of the
commercial business environment, the
capabilities of the tactical communication
system must now accommodate an increasing
need for data-based communications,
including e-mail and near-real-time video
transmissions, in addition to the usual voice
communications. This supports the increasing
data content of modern command and
control systems which depend on the high
bandwidth wide area communications system.
To be tactically useful, communication needs
to be secure. Attempts will constantly be
made to intercept radio traffic or to jam
transmissions. The need for security can be
met through techniques such as frequency
hopping and encryption. By transmitting
data at different frequencies, the system can
reduce its susceptibility to enemy
interference or jamming. In addition, several
levels of data encryption can be provided
dependent on the nature of the information
being transmitted.
Ultra’s radio systems are state of the art 
and have been designed to meet user
requirements well into the 21st century.
In order to provide and maintain the most
up-to-date battlefield picture, real-time
video images of the battlespace and data
from other specialised sensors are captured
by surveillance equipment mounted in
manned and unmanned aerial vehicles.
These various data sources must be linked
together and the information passed to the
battlespace network. Ultra specialises in the
supply of data links to allow ground-based
operators to control multiple remotely
piloted aircraft simultaneously. In addition,
Ultra’s data links are used to transmit digital
battlespace information from aircraft to
ground based centres in real-time using
secure and robust communications.
TACTICAL
ULTRA IS COMMITTED TO BEING A WORLD-LEADING
SUPPLIER OF MILITARY TACTICAL COMMUNICATION
EQUIPMENT THAT PROVIDES ENHANCED CAPACITY
FOR VOICE, DATA AND VIDEO IMAGES.
effectivecommunication systems
08 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 09
15,000
Ultra has over 15,000 line-of-sight
tactical radio systems in use worldwide
– more than any other supplier
Chief Executive’s Review
meeting our commitment for…
Ultra’s advanced data link equipment for unmanned aircraft Specialist cryptography equipment for secure communications Ultra supplies secure battleﬁeld radio communication systems Submarines pose an enormous threat to
ships in wartime. Small, highly capable diesel
electric submarines are difficult to detect
especially when the underwater battlespace
is noisy, cluttered, shallow coastal waters.
Increasingly, though, this is where navies are
having to operate. The threat of torpedo
attack is ever present and, in times of war,
mines may litter the coastal waters.
Ultra is the world leader at designing and
supplying advanced sonobuoys, the highly
sensitive acoustic sensors that are dropped
from maritime patrol aircraft and helicopters.
Ultra supplies more than half of the western
world’s sonobuoys. Dropping an array of
active and passive sonobuoys into the sea
allows even the quietest target submarine to
be tracked and, if necessary, attacked. The
signal from the sonobuoy, carrying acoustic
information about the target, is relayed back
to an aircraft overhead where Ultra’s highly
sensitive acoustic receivers and processors
are used to evaluate the data. In the year,
Ultra upgraded the mission equipment on
the UK’s existing fleet of Nimrod MR2
aircraft and continued to supply systems for
the new MRA4 Nimrod.
In this underwater battlespace, Ultra’s
commitment to providing ever more capable,
cost-effective solutions has been rewarded in
2002. Ultra won all UK sonobuoy
requirements, half of the contracts in the
USA and Canada and important export
contracts from France, Australia and
Sweden. In late 2002, Ultra signed an intent
to act in partnership with the UK MoD
covering the development and procurement
of future sonobuoy and derivative systems.
Modern warships are equipped with sensitive
bow-mounted sonar equipment, a key
element of the ship’s own defences, which
can detect submarines in the area or mines
that are capable of disabling the ship if
triggered. Ultra was awarded a major
contract in the year to supply the UK’s new
Type 45 destroyer with its bow sonar system.
As a further layer of defence against torpedo
attack, ships can be equipped with a torpedo
defence system such as the Surface Ship
Torpedo Defence (SSTD) system. In 2002,
Ultra received the main contract to supply
SSTD to the Royal Navy. The system detects
and locates incoming torpedoes and provides
the means to decoy or jam their homing
mechanisms. It also gives the captain of the
ship tactical advice on ship manoeuvres.
Ultra has already successfully demonstrated
the in-water performance of key elements of
the SSTD system.
An even higher level of protection from
attack can be provided around harbour
entrances or in critical shipping lanes. Here,
Ultra’s expertise in expendable sonobuoys,
data fusion and in-buoy processing is being
used to develop long-life multi-sensor
tactical surveillance systems.
SONAR
ULTRA IS COMMITTED TO DEVELOPING WORLD-CLASS
UNDERWATER BATTLESPACE EQUIPMENT TO MEET THE
CHALLENGE OF TORPEDO ATTACK FROM MODERN,
STEALTHY SUBMARINES.
enhanced sonar capability
Chief Executive’s Review
meeting our commitment for…
10 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 11
170,000
Ultra supplied over 170,000 sonobuoys 
in 2002 to a total of 15 countries
around the world
Ultra is developing the bow sonar for the Type 45 destroyer Ultra is the world-leading supplier of sonobuoy systems The Nimrod MR2’s mission system has been upgraded by Ultra Ultra’s products can be found on the world’s
latest aircraft, manned and unmanned, fixed
and rotary wing. Ultra supports all stages of
the customer programmes, from concept
studies to in-service support.
The American F/A-18 E/F “Super Hornet”
aircraft is flying extended missions over
Afghanistan, fitted with Ultra’s HiPPAG
airborne compressor. HiPPAG provides a
constant, controlled flow of high pressure
pure air to cool the seekers of the aircraft’s
defensive missiles, keeping them ready for
action. HiPPAG performs beyond the
capability of the traditional solution, thereby
meeting a vital operational requirement.
Ultra’s HiPPAG controllable compressor is also
part of Boeing’s proposed new, high
performance weapons ejection system for
future smart munitions delivery systems.
HiPPAG is also being developed for use on
the new Lockheed Martin F-35 Joint Strike
Fighter for smooth munitions ejection.
Ultra’s advanced Human Computer Interface
(HCI) equipment is used not only in advanced
cockpits such as that on Euroﬁghter but also in
the control suite for unmanned aerial vehicles.
In the USA, Ultra has accelerated the
development and production of HCI equipment
to support several such programmes. Ultra
enhanced the scope of its supply of cockpit
equipment on the EH101 helicopter to reduce
Agusta Westland’s total procurement cost.
Ultra is committed to supporting Pilatus in
Switzerland with rapid development of the
displays on the PC21 trainer aircraft so as to
emulate the cockpit of the aircraft onto
which the trainee pilot will graduate. This will
be a key selling feature of the PC21 which
had its first flight in mid-2002. Ultra also
continued through the year managing the
vital software upgrades of the weapons
system of the Tornado aircraft. This is typical
of the long-term support that Ultra offers to
such programmes.
Ultra completed a highly successful
demonstration of its unique active noise 
cancellation equipment on a C130 aircraft.
This trial improved the aircrew’s working
environment by reducing significantly the
noise levels in the cockpit. Ultra also
demonstrated its innovative active propeller
balancing system on the powerplant for the
existing fleets of C130 transport and P3
maritime surveillance aircraft.
Ultra frequently responds to urgent customer
requirements. In the USA, Ultra met the need
for rapidly prototyped driver’s grips and
handles for technology demonstrations to suit
the Future Combat System armoured vehicle
programme. In the UK, Ultra was selected to
meet tight development timescales for the Alvis
Vickers Engineer Tank System. The challenge
has been met and consequently additions to
the scope of the contract have been agreed.
The Bowman programme in the UK upgrades
the Army’s communication system which will
be incorporated on armoured vehicles. Ultra
will be supplying equipment to help integrate
Bowman with other advanced vehicle systems.
AIRCRAFT & VEHICLES
ULTRA PROVIDES A BROAD RANGE OF ADVANCED
ELECTRONIC, ELECTROMECHANICAL AND
MECHANICAL SOLUTIONS FOR THE MOST
CHALLENGING OF CUSTOMER REQUIREMENTS.
fulﬁlling thecustomer requirement
12 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 13
Advanced
Ultra’s advanced grips and hand controls
are used on at least six different
unmanned vehicle programmes
Chief Executive’s Review
meeting our commitment through…
Ultra’s landing gear controls will be on easyJet's Airbus aircraft Advanced indirect vision systems for armoured vehicles Ultra demonstrated cockpit noise reduction on C130 Hercules 1011010
0110
011101
010
101
In the USA, the terrorist attacks of
September 2001 highlighted the urgent
need for an integrated real-time air picture,
bringing together onto one display multiple
radar plots and intelligence feeds. Ultra’s Air
Defense System Integrator (ADSI) product
was ideally placed to act as the computing
heart of this system and emergency funding
was made available for the required
development. Ultra’s staff responded with
enormous personal commitment to ensure
that the need for enhanced security was
met. The quality culture prevailing in the
team was demonstrated when a ‘right first
time’ pass was achieved after critical
integration testing of an enhanced version of
ADSI at a government test facility.
In the UK, Ultra responded to an urgent
operational requirement by bidding, winning
a contract, developing and delivering a
mobile high technology multi-media
communication system in less than twenty
weeks. This equipment allows UK peace-
keeping forces to communicate effectively
with the civilian population.
In the year, the Group made on-time
deliveries of computers and display consoles
for the UK Astute submarine programme. The
equipment delivered to the integration facility
included key elements of the weapons
interfacing and combat management systems.
Ultra is also supplying critical information
processing and networking equipment as part
of the command and control system for the
Korean KDX range of destroyers. In 2002,
Ultra won a contract to supply equipment for
the second batch of three KDX-II ships.
Ultra’s Olympus collaborative planning
system allows real-time, highly mobile
electronic sharing of geographic and tactical
information. An upgrade to this innovative
battlespace digitisation system was
demonstrated that would enhance the
command and control response to a major
incident such as a chemical or biological
terrorist attack.
Airports and airlines are able to improve the
safety and security of commercial flights
when a positive match is maintained between
passengers and their baggage. The UltraTrak
baggage reconciliation system is being
supplied to both BA and Virgin in North
America and to BAA plc for general use at
London’s Heathrow airport. In addition,
through its airport IT business, the entire IT
infrastructure at the new fifth terminal at
Heathrow will be provided by Ultra. The
relationship with BAA is built on trust with
open collaborative working to meet a
common goal including joint R&D activities.
At facilities such as airports, schools and
similarly sensitive areas, access control is vital
to minimise any risk to security. Ultra has
expanded its range of ID card printers with
holographic anti-counterfeiting technology.
This has given Ultra a significant presence in
this sector of the access control market.
INFORMATION
ULTRA SPECIALISES IN SYSTEMS THAT ENHANCE
SAFETY, SECURITY AND THE EFFECTIVENESS OF
CONTROL THROUGH THE PROVISION OF ACCURATE
AND TIMELY DATA.
improvedinformation management
Chief Executive’s Review
meeting our commitment for…
14 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 15
25 million
Ultra has sold printers and, in 2002,
enough dye-film to create ID cards
for over 25 million people
Ultra’s range of ID printers increases security of access control Enhanced command and control for major incidents Ultra’s baggage tracking system used by both BA and Virgin Electrical power provides clean solutions.
For naval vessels, solid-state electrical power
supplies are more flexible and tolerant of
battle damage than hydraulic systems, as
well as being more reliable, smaller and
lighter than rotary converters. For transport,
electric rail systems are cleaner and more
efficient than diesel trains or buses.
Rising populations and the concentration of
those populations in relatively small areas
have led to ever worsening trafﬁc congestion
and have emphasised the need for investment
in advanced transportation systems. A key
element of the solution is the provision or
upgrade of mass transit systems. These usually
require direct current electrical supplies and
Ultra has powerful solutions to meet these
customer requirements.
In the UK, Network Rail has embarked on a
programme to upgrade the power supply for
Southern Region trains serving London and
the South East. Network Rail, aware that
they are working to challenging timescales,
needed to build a strong team around them.
They needed companies with the right
technologies, skills and capacity and, above
all, the right culture, attitude and will to
succeed. In Ultra’s PMES business, Network
Rail found these attributes and, as a result,
selected the division to play a key role in the
solution to the Southern Region power
supply challenge.
Ultra’s record of meeting its commitments
was reinforced during 2002 with the on-time
design and delivery of modular sub-stations
for installation at Fawkham Junction, to the
south east of London.
Ultra’s capability in transit power systems
mirrors an equivalent capability for defence
power systems. In the UK, the Astute class of
submarine and the Type 45 destroyer are
being developed and Ultra is providing
critical power systems for both programmes.
For the Type 45 destroyer, Ultra is supplying a
range of solid-state power supplies and
associated control equipment. During the year
Ultra delivered power systems equipment for
the ﬁrst Astute submarine which included a
range of specialist power supplies, all
characterised by a need for the highest quality
and integrity of supply. One example is the
equipment that powers part of the
submarine’s nuclear reactor control system.
Ultra is also a world-leading supplier of
equipment to sense and control the
magnetic signature of naval vessels. These
should be degaussed continuously to prevent
them from triggering magnetic influence
mines that may litter coastal waters in times
of war. Ultra is providing this specialist
equipment for modern day ships and
submarines and, in 2002, was selected to
supply the US Navy T-AKE class of cargo and
ammunition ships.
POWER
ULTRA PROVIDES HIGHLY RELIABLE SOLID-STATE
ELECTRICAL POWER SUPPLIES FOR USE WORLDWIDE
IN MISSION-CRITICAL APPLICATIONS ON SHIPS,
SUBMARINES AND MASS TRANSIT SYSTEMS.
providing powerful solutions
16 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 17
Upgrade
Ultra will supply electrical sub-stations
as part of Network Rail's upgrade
programme for the Southern Region
Chief Executive’s Review
meeting our commitment through…
Specialist power equipment for the USN Virginia submarines Advanced signature management for the Type 45 destroyer Magnetic signature management for USN T-AKE cargo ships Trading results
Sales rose by 9% to £260.4m, a new record
level for the Group. Underlying organic
growth was 6% with an additional
contribution from Tactical Communication
Systems (TCS), acquired in September.
Operating profit before goodwill amortisation
was 6% higher at £33.5m, giving an
operating margin of 12.9% (2001: 13.2%).
This encouraging result was achieved in spite
of lower sales and further reorganisation
costs in Ultra’s civil aerospace businesses,
negative currency translation effects and
higher insurance premiums resulting from the
11 September 2001 terrorist attacks.
Ultra increased its sales in North America,
where the share of total Group sales rose to
39% (2001: 35%). The rapid increase in
Battlespace IT spending by the US DoD is a
key driver of this trend and sonobuoy sales
were also strong in 2002. Ultra reduced its
dependence on the UK with sales dropping 
to 42% of turnover in the year (2001: 47%).
Sales in Continental Europe remained at
13% of sales, with HiPPAG equipment for
Eurofighter and Airbus landing gear
computers the main elements.
2002 saw Ultra’s defence sales rise above
80% of turnover. This was caused by a
combination of lower civil aerospace sales,
higher defence sales in the USA and the
acquisition of TCS, which is solely a defence
manufacturer. Civil aerospace activity, at
12% of Group turnover, formed the major
part of Ultra’s sales to the civil sector.
Group-funded R&D expenditure was £10.7m
(2001: £10.0m). Including customer funding
the total investment in new product
development was £58.6m (2001: £50.1m),
equivalent to 22% of turnover. The biggest
development programmes were Ultra’s Air
Defense Systems Integrator in the USA,
equipment for Astute and the important
new Surface Ship Torpedo Defence system 
in the UK.
Interest and proﬁt before taxation
Interest costs were significantly lower at
£3.5m, compared to £4.6m in 2001. This
was due partly to lower borrowings, as the
Group benefited from its recent strong cash
performance. In addition the interest rates
that applied to Ultra’s floating rate debt
were lower than in 2001. This saving in
interest costs increased profit before tax 
and goodwill amortisation to £29.9m, 
11% more than in 2001 (£27.1m). The
interest charge was covered 9.5 times by
operating profit before goodwill
amortisation. Amortisation of goodwill and
intangibles increased to £3.9m (2001: £3.7m)
with £0.26m being charged for the new
acquisition, TCS.
Taxation
The effective tax rate on profit before
amortisation was 27%. This is 1% higher
than the 2001 rate, which was restated to
reflect the adoption of the new accounting
standard FRS 19 in 2002. The new standard
has also led to the recognition of deferred
tax assets, brought about mainly by timing
differences and tax deductible goodwill in
the USA. The net deferred tax asset was
£0.2m at the end of the year.
Earnings per share and dividends
Earnings per share before amortisation
increased by 9% to 33.2p despite the 
higher tax rate. The proposed final dividend
is 7.5p, bringing the total dividend to 11.2p
(2001: 10.4p), an increase of 8%. The full
year dividend is covered 3.0 times by earnings
per share before amortisation, maintaining a
policy of strong dividend cover.
Cash ﬂow and borrowings
With its focus upon long-term contracts,
Ultra regards cash performance as a key
indicator of its financial strength. It is
therefore encouraging that operating cash
flow, after capital expenditure, was £38.7m
in the year (2001: £35.2m). The ratio of
operating cash to operating profit was
116%, bringing the average conversion ratio
to 85% over the past five years. Investments
in fixed assets were £3.3m, approximately
£0.5m less than the depreciation charge and
indicative of Ultra’s low dependence on
fixed capital investment. Operating working
capital was reduced by £4.9m in spite of the
6% organic increase in turnover. As a result
of this strong cash performance, free cash
flow before dividends and acquisitions was
£28.0m. Despite making the investment in
TCS, net debt fell by £1.3m to close the
year at £39.3m.
Acquisition
Ultra acquired TCS, based in Montreal, Canada,
in September 2002 for a cash consideration of
C$53m (£21.5m). The net assets acquired have
been valued provisionally at £1.6m. The balance
of the acquisition cost will be capitalised as
goodwill and amortised over twenty years,
increasing the Group’s annual amortisation
charge by approximately £1.0m.
After initial reorganisation costs, TCS made a
£0.5m operating profit before goodwill
amortisation in its first three months under
Ultra ownership. The business should make a
positive contribution to profit after financing
costs during the coming year.
Financial risk management
Ultra’s ﬁnancial instruments, other than
derivatives, comprise borrowings, cash and
trade funding consisting of debtors, creditors
and customer advances. Group policy prohibits
speculative transactions and no trading activity
in ﬁnancial instruments is undertaken. Treasury
policies are determined by the Group Finance
Director, based on forecast business
requirements, and are reviewed regularly.
Financing
The Group ﬁnances its existing operations and
new acquisitions through a mix of retained
cash and bank borrowings. During 2002 Ultra
established a new £80m three-year revolving
credit facility with a small syndicate of banks,
led by The Royal Bank of Scotland. There will
be no interim repayments during the term of
the facility. It is denominated in a range of
currencies to meet balance sheet hedging and
operational needs. Both the Sterling and US
Dollar elements of the facility will fund
working capital requirements. The US and
Canadian Dollar borrowings will provide
hedges for assets denominated in those
currencies. A further £10m overdraft is also
available for working capital funding.
The new facility replaces a ﬁve-year term loan
used to ﬁnance the acquisition of the DF Group
in 2000. An interest rate swap that ﬁxed the
effective interest rate at 7.7% for the full term
of the original loan will remain in place until
April 2005, despite the reﬁnancing. At 
31 December 2002, 48% of total debt was at
ﬂoating rates after taking account of the swap,
which applied to the ﬁrst £16.5m of debt.
Foreign currency exposure
Ultra’s main translation exposure is to the 
US Dollar with lesser exposure to the
Canadian Dollar. The average Sterling
exchange rate against these currencies
strengthened by 6% during the year, leading
to a reduced contribution from Ultra’s North
American subsidiaries when their results were
translated into Sterling. The impact upon
Group sales and proﬁts was a reduction of
approximately 2% in both cases.
The principal currency transaction exposure is
to the US Dollar as virtually all civil aerospace
sales are denominated in US Dollars. Group
policy is to hedge the net exposure on orders
in hand using forward foreign exchange
contracts, typically extending to 18-24 months.
Exposure to the Canadian Dollar and the
Euro is hedged in the same way. Any
exposure to other currencies is hedged as it
arises on specific contracts.
Pensions
The retirement beneﬁts of Ultra’s UK workforce
are funded by a combination of deﬁned
beneﬁt and deﬁned contribution pension
schemes, with most staff participating in the
Ultra Electronics Ltd. deﬁned beneﬁt scheme.
This scheme was actuarially assessed in April
2001 when its solvency was 105%, or 115%
on an MFR basis. As a result of stockmarket
falls since then, the Company has committed
to raise its contributions to the scheme from
10% to 13.5% of pensionable pay by 2003, a
total increase of approximately £0.9m per
annum. The scheme is relatively immature,
with just 13% of retired members, and remains
strongly cash positive. Ultra’s US subsidiaries
and Maritime Systems Inc. in Canada operate
deﬁned contribution schemes. Employees at
TCS participate in a limited deﬁned beneﬁt
scheme. Note 24 to these accounts contains
additional disclosures on Ultra’s deﬁned beneﬁt
pension funding position in accordance with
UK Financial Reporting Standard FRS 17 –
Retirement Beneﬁts. The FRS 17 valuation at
the end of 2002 showed a deﬁcit of £20.4m
(2001: £7.1m), after deducting the associated
deferred tax asset.
David Jeffcoat, Finance Director and Company Secretary
18 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 19
Financial Review
Sales by market sector
Civil aerospace 12%
Other civil 7%
Defence 81% 
Sales by destination
UK 42%
North America 39% 
Europe 13%
ROW 6% 
sales rose by 9% to £260.4m…
arecord level for
the Group
David Jeffcoat, Finance Director and Company Secretary Peter Macfarlane* FCA FCT, 
Non-Executive Chairman, age 64, qualiﬁed as
a Chartered Accountant with Touche Ross
and, after three years with Coopers & Lybrand
joined Kimberley Clark, managing their
ﬁnancial affairs in Europe, Africa and the
Middle East. He joined Rolls Royce in 1979 as
Group Treasurer and, after a period as
Director of Corporate Development, was
appointed Finance Director in 1989. 
Mr Macfarlane retired from the board of
Allied Domecq plc in 1998 where he had
been initially Finance Director and
subsequently Chairman of two divisions. He
was appointed to the board of Ultra in
January 1995.
Julian Blogh CBE BA MSc PhD CEng MIEE, 
Chief Executive, age 59, has spent most of his
working life in the electronics industry
working with Ferranti Radar, Plessey Radar
and Dowty Electronic Systems. He was
Managing Director of Sonar & Communication
Systems from 1987 to 1992, when he was
appointed Managing Director of Dowty
Avionics. He became Chief Executive of 
Ultra Electronics when it began trading in
October 1993.
Douglas Caster BSc MIEE,
Managing Director, Information & Power
Systems, age 49, started as a Design Engineer
with Racal in 1975, before moving to
Schlumberger and then to Dowty as
Engineering Director of Sonar &
Communication Systems in 1988. In 1992, he
became Managing Director of that division
and joined the board of Ultra in October 1993.
In 1999 he became Managing Director of
Command & Control Systems with
responsibility for Ocean Systems, PMES, and
APC. In April 2000, he was appointed to his
current position.
Andrew Hamment BA, 
Marketing Director, age 48, started his career
with Hawker Siddeley before moving to
Schlumberger in 1980, working in procurement
and then marketing at Weston Aerospace
before transferring to Solartron as Aerospace
Business Manager. He joined Dowty in 1988 as
Managing Director of the Controls business.
He was appointed to his current position in
July 2000 and joined the board at that time.
Sir Frank Holroyd* KBE CB MSc FREng CEng 
FRAeS FIEE CIMgt, 
Non-Executive Director, age 67, retired from the
RAF in 1991 as Air Marshal after 35 years’
service, latterly as Chief of Logistics and Chief
Engineer; formerly Chief Engineer of Strike
Command and Director General of Procurement
(MoD) for Strategic Electronic Systems. He is
Chairman of Composite Technology Ltd, Deputy
Chairman of Military Aircraft Spares Ltd and
Deputy Chairman of Council at Cranﬁeld
University. Sir Frank was appointed to the board
of Ultra in March 1995.
Frank Hope BSc PhD CPhys MInstP, 
Managing Director, Aircraft & Vehicle Systems,
age 48, started his career with Tecalemit as a
design engineer working on robotics. He
spent 13 years with Avimo Limited latterly as
Managing Director, having previously held the
positions of Technical Director and Operations
Director. He joined Ultra in 1994 as Managing
Director of the Electrics Division and was
appointed to the board of Ultra in January
1999. In April 2000 he was appointed to his
present position.
David Jeffcoat BA FCMA, 
Finance Director and Company Secretary, age
52, started his career in the motor industry as
a Production Engineer. Since qualifying as an
accountant he has held senior ﬁnancial
positions in several large corporations
including GlaxoWellcome plc, where he was
Finance Director of two subsidiaries. Before
joining Ultra he was Group Financial Controller
of Smiths Industries plc for three years. He was
appointed to the board in July 2000.
Andrew Walker* MA CEng, 
Senior Non-Executive Director, age 51, was
appointed to the board in June 1996. Joining
the Dowty Group plc in 1978, he became an
operating board member during 1991/92.
Following TI Group’s acquisition of Dowty, he
became Managing Director of John Crane
Polymer Engineering. He was Chief Executive
of South Wales Electricity plc (SWALEC) from
1993 to 1996, and was Chief Executive of
McKechnie plc from 1997 to 2001. In 2000, he
successfully led the MBO of McKechnie plc. Mr
Walker is also a non-executive director of
Galileo Innovations plc and Bioganix Limited.
20 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 21
Board of Directors
*Audit and Remuneration Committee members The evolution of Ultra
evolution
ADVANCED PROGRAMMING CONCEPTS
COMMAND & CONTROL SYSTEMS
EMS
FASL
MANUFACTURING & CARD SYSTEMS 
PMES
SIGNATURE MANAGEMENT SYSTEMS
ADVANCED PROGRAMMING CONCEPTS
COMMAND & CONTROL SYSTEMS
EMS
FASL
MANUFACTURING & CARD SYSTEMS
PMES
CONTROLS DIVISION 
DATEL DEFENCE
ELECTRICS DIVISION
FLIGHTLINE SYSTEMS
MARITIME SYSTEMS
MEASUREMENT SYSTEMS INC 
PRECISION AIR SYSTEMS
NOISE & VIBRATION SYSTEMS
SONAR & COMMUNICATION SYSTEMS
TACTICAL COMMUNICATION SYSTEMS
UNDERSEA SENSOR SYSTEMS INC
FLIGHTLINE SYSTEMS
MARITIME SYSTEMS
SONAR & COMMUNICATION SYSTEMS
TACTICAL COMMUNICATION SYSTEMS
UNDERSEA SENSOR SYSTEMS INC
CONTROLS DIVISION 
DATEL DEFENCE
ELECTRICS DIVISION
MEASUREMENT SYSTEMS INC
PRECISION AIR SYSTEMS
sales £177.5m
proﬁt £22.5m
sales £82.9m
proﬁt £11.0m
sales £76.4m
proﬁt £12.4m
sales £82.9m
proﬁt £11.0m
sales £101.1m
proﬁt £10.1m
22 Ultra Electronics Holdings plc 
ULTRA ELECTRONICS HAS EXPANDED SUBSTANTIALLY SINCE ITS FORMATION.
FROM JANUARY 2003, THE GROUP WILL BE ORGANISED INTO THREE DIVISIONS AS
SHOWN BELOW. THE NEW DIVISIONAL NAMES MORE ACCURATELY REFLECT THE
ACTIVITIES OF THE BUSINESSES IN EACH DIVISION.
Information 
& Sea Systems
Air & Land
Systems
Aircraft & 
Vehicle Systems
Tactical &
Sonar Systems 
Information &
Power Systems 
Tactical & Sonar Systems
Flightline Systems
7625 Omnitech Place
Victor
New York 14564-9795
USA
Tel: +1 585 924 4000 
Fax: +1 585 924 5732
Maritime Systems
40 Atlantic Street
Dartmouth
Nova Scotia B2Y4N2
Canada
Tel: +1 902 466 7491 
Fax: +1 902 463 6098
Sonar & Communication Systems
419 Bridport Road
Greenford
Middlesex UB6 8UA
England
Tel: +44 (0) 20 8813 4567 
Fax: +44 (0) 20 8813 4568
Tactical Communication Systems
600 Dr Frederik Philips Boulevard 
Ville Saint-Laurent
Quebec H4M2S9
Canada
Tel: +1 514 855 6363 
Fax: +1 514 855 6353
UnderSea Sensor Systems Inc.
4578 East Park 30 Drive 
Columbia City
Indiana 46725-8869
USA
Tel: +1 260 248 3500 
Fax: +1 260 248 3510
Aircraft & Vehicle Systems
Controls Division
417 Bridport Road
Greenford
Middlesex UB6 8UA
England
Tel: +44 (0) 20 8813 4444 
Fax: +44 (0) 20 8813 4351
Datel Defence
1 Chain Caul Way
Ashton-on-Ribble 
Preston PR2 2YL
England
Tel: +44 (0) 1772 325200 
Fax: +44 (0) 1772 325201
Electrics Division
Kingsditch Lane
Cheltenham
Gloucestershire GL51 9PG
England
Tel: +44 (0) 1242 221166 
Fax: +44 (0) 1242 221167
Measurement Systems Inc.
777 Commerce Drive
Fairfield
Connecticut 06432
USA
Tel: +1 203 336 4590 
Fax: +1 203 336 5945
Precision Air Systems
Anson Business Park
Cheltenham Road East
Gloucester GL2 9QN
England
Tel: +44 (0) 1452 714382 
Fax: +44 (0) 1452 715252
Information & Power Systems
Advanced Programming Concepts 
3300 Duval Road, Suite 200
Austin
Texas 78759
USA
Tel: +1 512 327 6795 
Fax: +1 512 327 8043
Command & Control Systems
Knaves Beech Business Centre 
Loudwater
High Wycombe 
Buckinghamshire HP10 9UT
England
Tel: +44 (0) 1628 530000 
Fax: +44 (0) 1628 524557
EMS
95 Horseblock Road
PO Box 640 
Yaphank
New York 11980
USA
Tel: +1 631 345 6200 
Fax: +1 631 345 6216
FASL
The Oaks
Crewe Road
Wythenshawe
Manchester M23 9SS
England
Tel: +44 (0) 161 946 3600 
Fax: +44 (0) 161 946 3601
Manufacturing & Card Systems
Waverley House
Hampshire Road
Granby Estate
Weymouth
Dorset DT4 9XD
England
Tel: +44 (0) 1305 784738 
Fax: +44 (0) 1305 777904
PMES
Armitage Road
Rugeley
Staffordshire WS15 1DR
England
Tel: +44 (0) 1889 503300 
Fax: +44 (0) 1889 572929
Business addresses Registered Office:
Ultra Electronics Holdings plc
417 Bridport Road
Greenford
Middlesex UB6 8UA
England
Tel: +44 (0) 20 8813 4321
Fax: +44 (0) 20 8813 4322
www.ultra-electronics.com
information@ultra-scs.com Design and production: HaT Associates +44 (0)1242 253112 Ultra Electronics Holdings plc 23
The Directors present their annual report on the affairs of the Group, together with the accounts and auditors’
report, for the year ended 31 December 2002.
Principal activity
Ultra Electronics is a group of businesses engaged in the design, development and manufacture of electronic systems
for the international defence and aerospace markets.
Results and dividends
The review of operations is contained on pages 4 to 17. Group results and dividends are as follows:
2002
£’000
Balance on profit and loss account, beginning of year (as restated – see note 20) 14,588
Profit for the financial year 17,946
Dividends: Interim paid of 3.7p per share (2,439)
Final proposed of 7.5p per share (4,946)
Amounts gifted to the Employee Share Ownership Trust (see note 19) (135)
Foreign exchange differences 474
Balance on profit and loss account, end of year 25,488
The final 2002 dividend is proposed to be paid on 6 May 2003 to shareholders on the register at 11 April 2003.
The interim dividend was paid on 27 September 2002, making a total of 11.2p (2001: 10.4p) per share for the year.
Future developments 
A review of the activities and future developments of the Group is contained in the Chief Executive’s Review on 
pages 4 to 17.
Research and development
The Directors are committed to maintaining a significant level of research and development expenditure in order to
expand the Group’s range of proprietary products. During the year a total of £58.6 million (2001: £50.1 million) was spent
on engineering development of which £47.9 million (2001: £40.1 million) was funded by customers and £10.7 million
(2001: £10.0 million) by the Group.
Directors and their interests
The Directors who served in the year and their interests in the shares of the Company are listed on page 33.
Substantial shareholdings
At 21 February 2003, the Company had been notified in accordance with Sections 198-208 of the Companies Act 1985
that the following were registered as having an interest in 3% or more of the Company’s ordinary share capital:
Percentage of 
ordinary share Number of 5p
capital % ordinary shares
Zurich Financial Services Group 4.80 3,157,414
The Aegon UK plc Group of Companies 3.98 2,617,826
Fidelity International Limited 3.87 2,536,171
Legal and General 3.63 2,397,439
Sun Life Assurance 3.13 2,064,069
Scottish Widows Investment Partnership Limited 3.03 1,987,582
Directors’ report
For the year ended 31 December 2002 24 Ultra Electronics Holdings plc
Charitable and political contributions
The Group contributed £14,000 (2001: £14,000) to charities and made no contributions for political purposes in 
either year.
Health, safety and the environment
Ultra’s Board recognises that it is important, both for its employees and the communities in which it operates, that Ultra
maintains high standards of health and safety and takes effective measures to ensure that its activities do not damage
the environment.
The Board continues to operate a policy of bi-annual external audits of each UK site in respect of health, safety and
environmental matters. These audits are next scheduled to take place during 2003. A similar process has recently been
established for the Group’s North American sites and the first of such audits commenced in early 2003.
In particular Ultra recognises the responsibility it has towards the environment. The Group Environmental Policy
addresses compliance with environmental legislation, conformity with standards for air, waste disposal and noise, the
economical use of materials and the establishment of environmental performance standards. All Ultra businesses
commenced implementation of this policy during 2002, a process that will continue into 2003.
Business ethics and employment practices
Ultra’s Board of Directors requires that its employees comply with the laws and standards of conduct of the countries in
which it does business. The Directors and employees are all required to avoid personal conflicts of interest regarding
company business.
In complying with the Public Interest Disclosure Act 1998 in the United Kingdom, the Group has established a procedure
enabling employees to bring matters to the attention of an appropriate manager outside of their own business in the
event that they do not feel able to approach their local line management.
It is the policy of the Board to be an equal opportunities employer and to oppose all forms of unlawful or unfair
discrimination on the grounds of sex, race, nationality, disability, sexual orientation, age, marital status, religion or
political belief. Applicants and employees are treated equally and fairly in respect of recruitment, remuneration,
training, promotion and career development.
Employee consultation
The Board places considerable value on the involvement of its employees and keeps them informed on matters
affecting them as employees, and on the various factors affecting the performance of the Group, through formal and
informal meetings and a Group magazine. An employee survey, ‘YOURviews’, provides local management teams with
feedback and an opportunity to benchmark across the Group.
Supplier payment policy
Operating divisions are responsible for agreeing the terms and conditions under which they conduct business
transactions with their suppliers. It is Group policy that payments to suppliers are made in accordance with those
terms, provided that the supplier is also complying with all relevant terms and conditions.
Trade creditor days of the Group for the year ended 31 December 2002 were 47 days (2001: 53 days), based on the ratio of
Group trade creditors at the end of the year to the amounts invoiced during the year by suppliers. The Company had no
trade creditors at the year-end.
Directors’ report (continued) Annual general meeting
Explanation of special business resolutions is given below:
Resolution 7
Arthur Andersen resigned as auditors of the Group during 2002 and the Board appointed Deloitte & Touche to replace
them following a formal tender process. Resolution 7 confirms Deloitte & Touche as Ultra’s auditors for the year to come.
Resolution 8
This resolution authorises the Directors to allot shares in the Company up to a maximum nominal amount of £1,100,666
(33% of the allotted and fully paid up share capital of the Company).
Resolution 9
This resolution authorises the Directors to allot shares for cash, without first having offered to allot such shares to
existing shareholders in proportion to their existing holdings, in respect of 5% of the total issued share capital of the
Company. Resolutions 8 and 9 comply with the Association of British Insurers’ guidelines and renew similar authorities
given previously. The authorities expire on the earlier of the conclusion of the next annual general meeting of the
Company or 15 months after the date of passing these resolutions. The Directors have no current intention to exercise
the authorities sought by these resolutions except for employee share option schemes.
Resolution 10
This resolution authorises the Directors to purchase up to a total of 3,301,997 of the Company’s shares (representing
5% of the issued share capital of the Company). This authority expires on the earlier of 12 months from the date of
passing this resolution or the conclusion of the next annual general meeting of the Company.
The Directors will use the share purchase authority with discretion. In reaching a decision to purchase shares of the
Company the Directors would take account of the Company’s business and any impact on earnings per share and net
tangible assets per share. The Directors have no current intention to exercise the authority sought by this resolution.
By order of the Board,
D. Jeffcoat 
Company Secretary
24 February 2003
Registered Office: 417 Bridport Road, Greenford, Middlesex UB6 8UA
Registered Number: 2830397 
Ultra Electronics Holdings plc 25
Directors’ report (continued) The Group complies with the Combined Code provisions on Corporate Governance. During the past year it has
operated the procedures necessary to follow the 1999 internal control guidelines and has maintained a reporting
process in accordance with them. 
The Board, which currently comprises three independent non-executive Directors and five executive Directors, normally
meets monthly throughout the year. It deals with the important aspects of the Group’s affairs including setting and
monitoring strategy, reviewing performance, ensuring that the Group has adequate financial resources and reporting
to shareholders. It has overall responsibility for reviewing the effectiveness of internal controls throughout the Group.
The Board has an Audit Committee, comprising the non-executive Directors and is chaired by Peter Macfarlane, which
considers the adequacy of the Group’s internal financial controls and procedures. The Committee reviews the scope of
work and the findings of the Group’s external and internal auditors and commissions any additional investigations that
may be needed. 
The Board Remuneration Committee is responsible for setting the remuneration of executive Directors. It consists of the
non-executive Directors and is chaired by Sir Frank Holroyd. A Directors’ remuneration table is included in the
Remuneration report, together with details of the Directors’ pension entitlements, long-term incentive share awards and
shareholdings. These disclosures are consistent with the latest Department of Trade and Industry regulations.
The Board also has a Nominations Committee which comprises the non-executive Directors and the Chief Executive. The
Committee, which is chaired by Peter Macfarlane, reviews all senior appointments.
Internal controls
The Combined Code states that Directors should review the effectiveness of the Group’s entire system of internal
controls, covering business risks associated with strategic, operational, financial and information technology matters.
Ultra’s internal controls are designed to meet the company’s particular needs and the risks to which it is exposed. In this
context the controls can provide only reasonable, not absolute, assurance against material errors, losses or fraud. The key
features of the internal control system that operated during the year are described below.
Control environment
Ultra’s organisational structure has clearly defined lines of responsibility and delegated authorities, which have been
reviewed by the Board during the year to ensure that they are still relevant given the current size and structure of the
Group. Ethical values and control consciousness are communicated to managers and staff via performance appraisal
and development and training programmes.
All businesses are required to maintain written financial procedure manuals. Acquisitions, major capital investments
and very large bids require Board approval. 
Risk management
Management has a responsibility for identifying the risks facing Ultra’s businesses and for putting in place procedures
to monitor and mitigate such risks.
Strategic risks are formally assessed by the Board during the annual strategic planning process and steps are taken
following this process to ensure that all such risks are minimised throughout the year.
Operational risks are monitored as part of the Group’s monthly business performance review process. Business units
are required to report on all key areas of risk, indicating situations that are not compliant with normal controls.
Remedial actions must be indicated and such situations are then monitored until a satisfactory conclusion is reached.
All significant deviations are reported to the Board by the responsible Director twice annually. 
Corporate governance
26 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 27
Risk management (continued)
The Board has established an Internal Audit function with responsibility to review financial and information systems
control procedures throughout the Group, following a two-year cycle. Major businesses and those judged to represent
a higher risk are reviewed annually, with the remaining businesses being visited at least once every two years. Internal
Audit reports to the Chief Executive and presents its findings to the Audit Committee. Follow-up actions to deal with
any control weaknesses are reported to the Committee every six months and Internal Audit confirms that satisfactory
progress has been made during its next visit to the business concerned.
Financial reporting systems
The Group has a comprehensive system of financial reporting covering key performance indicators such as sales, profits
and cash flow. The annual budget and five year strategic plan for each business are approved by the executive
Directors and the Board approves the Group’s budget and plan. The actual results for each business are reported
monthly to the Board and variances against budget are monitored by the executive Directors. Revised forecasts for the
year are prepared each month and presented to the Board.
Effectiveness of controls 
The Board accepts overall responsibility for reviewing the operation and effectiveness of the Group’s internal control
framework on a regular basis; internal procedures are reviewed and updated where necessary. The Board has
performed a specific assessment for the purpose of this annual report. This assessment considered all significant
aspects of internal control arising during the period covered by the report, including the work of Internal Audit. The
Audit Committee assists the Board in discharging its review responsibilities.
Going concern
After making enquiries the Directors have a reasonable expectation that the Company and Group have adequate
resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt a
going concern basis in preparing the accounts.
Statement of responsibilities
United Kingdom company law requires the Directors to prepare accounts for each financial year which give a true
and fair view of the state of affairs of the Company and Group and of the profit or loss of the Group for that period.
In preparing those accounts the Directors are required to:
● select suitable accounting policies and apply them consistently;
● make judgements and estimates that are reasonable and prudent; and
● state whether applicable accounting standards have been followed.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any
time the financial position of the Company and enable them to ensure that the accounts comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Corporate governance (continued) 28 Ultra Electronics Holdings plc
Remuneration report
UNAUDITED INFORMATION
Composition and role of the Remuneration Committee
The Company complies with the relevant conditions of the Combined Code on Corporate Governance relating to
Directors’ remuneration as published by the London Stock Exchange and the new Directors’ Remuneration Report
Regulations 2002.
The members of the Committee are the non-executive Directors (P Macfarlane and A Walker) and Sir Frank Holroyd 
is the Chairman.
The task of the Committee is to make recommendations to the Board on the framework of executive remuneration
and to determine annually the individual salaries, annual bonuses payable (if any) and other terms and conditions of
employment of the executive Directors and other senior executives. The Committee also approves the terms of any
discretionary share schemes in which executive Directors and senior executives may be invited to participate, and the
terms of the Company’s Savings Related Share Option Scheme and All-Employee Share Ownership Plan.
The Committee consulted with one other Director, Dr Julian Blogh (Chief Executive), with regard to the remuneration
and benefits packages offered to executive Directors and senior executives during the year (except in relation to his
own remuneration and benefits package).
In addition, wholly independent advice on executive remuneration and share schemes was received from specialist
consultants who were appointed by the Company and who provided no other services to the Company during the year.
Remuneration policy
The policy of the Committee is to reward senior management competitively, enabling the Company to recruit,
motivate and retain executives of high calibre, whilst avoiding paying excessive remuneration. Further details of the
remuneration policy followed by the Committee are set out below. In conjunction with the remuneration consultants
who advise the Committee, the remuneration practices adopted by a group of like companies (that, in the opinion of
the Committee, face similar remuneration issues to the Company) are considered. The size and nature of each key
element of the remuneration package of executive Directors has been determined following this analysis.
It is the aim of the Committee to encourage and reward high performance. It is the opinion of the Committee that
shareholders’ interests are best served by setting a moderate level of fixed pay while providing competitive potential
levels of total remuneration through short and longer term incentive arrangements which would require the
satisfaction of challenging performance conditions. Therefore, a significant proportion of the executive Director’s
remuneration is performance-linked.
Salaries
Salaries of executive Directors are reviewed by the Committee annually. In addition to an analysis presented by
specialist consultants, the Committee uses published salary surveys and information available in the annual reports of
similar companies as sources of market information. The Committee takes account of pay and employment conditions
elsewhere in the Group when determining annual salary increases.
Specific factors taken into account by the Committee when determining each executive Director’s base salary are:
● the median level of base salary for a similar position within a like group of companies;
● the individual Director’s performance; and
● the responsibilities of the respective Director.
Annual bonus scheme
Bonus payments are based upon the achievement of operating profit and cash flow targets. The maximum bonus for
2002 was 40% of base salary. The performance measures for bonus payments are reviewed annually by the Committee to
ensure that they are appropriate to the current market conditions and position of the Company and, therefore, that they Ultra Electronics Holdings plc 29
Remuneration report (continued)
continue to remain challenging. It is the opinion of the Committee that the use of operating profit and cash flow targets
remain appropriate for the 2003 bonus. For 2003, the maximum bonus payable will be 50% of base salary. However, the
maximum bonus will only be payable in return for exceptional performance which will require the achievement of even
more stretching operating cash flow targets than was required to achieve maximum bonus in 2002.
Long-Term Incentive Plan
At the last Annual General Meeting in April 2002, shareholders approved the establishment of the Ultra Electronics
Long-term Incentive Plan 2002-2007 (the ‘New LTIP’) to replace the previous Ultra Electronics Long-term Incentive Plan
(the ‘Old LTIP’) that had expired. The Committee’s current policy is for the New LTIP to be the sole vehicle through
which long-term incentives are provided to executive Directors and that executive Directors who participate in the New
LTIP will not be granted options under either the Company Share Option Plan or the Executive Share Option Scheme
(which are share schemes operated by the Company for the benefit of less senior executives and certain key employees).
Under the New LTIP, a participant may be granted an award over ordinary shares worth up to 100% of gross base
salary each year. The vesting of awards is dependent on the extent to which genuinely stretching performance
conditions are met over the three-year period following grant. The Committee believes that the most appropriate
approach to determine the extent to which these performance targets are achieved is for the relevant calculations to
be undertaken by an independent third party. For the purposes of the performance targets, the Company’s EPS will be
taken as earnings per share calculated before goodwill amortisation but after exceptional items.
More particularly, the Committee’s current policy is for vesting of awards to be dependent upon the Company’s EPS
growth over this three-year period relative to the EPS growth of the following group of aerospace, engineering and
defence companies:
Aim Group plc Delta plc Senior plc
Alba plc Domino Printing Sciences plc Smiths Group plc
Alvis plc Halma plc Spirax-Sarco Engineering plc
Amstrad plc Hampson Industries plc Telemetrix plc
BAE Systems plc Henlys Group plc TT Electronics plc
Charter plc Meggitt plc Vitec Group plc
Chemring Group plc Pressac plc Volex Group plc 
Chloride Group plc Rolls-Royce plc VT Group plc
Cobham plc Rotork plc Whatman plc
Vesting commences at 20% for median performance, rising on a straight-line basis so that the award vests in full for
upper-quartile performance. To the extent that the targets are not met at the end of the three-year period, the award
lapses. This system of measuring performance has been in place since 2000 and, in that period, upper-quartile performance
has been achieved in each year against the comparative group of companies.
The Committee believes that the appropriate performance measure for New LTIP awards is comparative EPS, because
this measure ensures that the Company’s earnings growth must be at the upper-quartile of a group of similar
companies before awards vest in full. Such earnings growth performance, sustained over the medium to long-term,
should ensure above average share price growth.
The executive Directors are also eligible to participate in the Company’s Inland Revenue approved Savings Related
Share Option (“SAYE”) Scheme and All-Employee Share Ownership Plan (“AESOP”). Under the SAYE Scheme,
participants open an approved savings account. When the saving starts, options are granted to acquire the number of
shares that the total savings (plus bonuses payable) will buy when the contract matures.
Under the AESOP, employees in the UK are offered the opportunity to buy shares up to the value of £1,500 per year from
pre-tax salary. Shares are then held in trust on behalf of employees until the maturity date or until they leave the Company. Total Shareholder Return performance graph
The graph below shows the Total Shareholder Return (TSR) performance of the Company in comparison to the FTSE Mid 250
over the past 5 years. The graph shows the value in 2002 of £100 invested in 1998, in the Company and in the Index.
The Committee considers the FTSE Mid 250 index a relevant index for TSR comparison as the index members represent a
broad range of UK quoted companies.
Total Shareholder Return
Source: Datastream
Directors’ service contracts
The Service contracts of executive Directors have a notice period of one year, which the Committee considers
appropriately reflects both current market practice and the balance between the interests of the Company and each
executive Director. In the event of early termination, it is the Committee’s policy that the amount of compensation
paid to executive Directors will be considered in light of all the relevant circumstances, subject to the overriding
caveats that: 
● the Committee’s aim will be to avoid rewarding poor performance;
● the duty of the relevant executive Director to mitigate his loss will be taken into account; and
● no compensation payment can exceed one year’s salary.The following table provides more information on each
executive Director’s service contract:
Name Date of contract Notice period
J. Blogh 25 September 1996 12 months
D. Caster 25 September 1996 12 months
A. Hamment 1 July 2000 12 months
F. Hope 1 January 1999 12 months
D. Jeffcoat 10 July 2000 12 months
No executive Directors had any provisions in their contracts for compensation on early termination other than the
notice period.
The non-executive Directors have fixed twelve-month contracts expiring on 31 December each year with no notice
period. There are no provisions in their contracts for compensation on early termination.
30 Ultra Electronics Holdings plc
Remuneration report (continued)
0
20
40
60
80
100
120
140
160
31 December 97 31 December 98 31 December 99 31 December 00 31 December 01
Ultra Electronics
FTSE Mid 250 Index
31 December 02
Value (£) Ultra Electronics Holdings plc 31
Remuneration report (continued)
AUDITED INFORMATION 
Directors’ pension entitlements
The Company operates a contributory pension scheme for executive Directors. A pension equal to two-thirds of salary
at retirement is provided at the normal retirement age of 63 years. Where pensionable service is less than 20 years,
the pension is calculated at one-thirtieth of the retirement salary for each year of service. With the Company’s
consent, executive Directors may retire from age 50. After age 58, Company consent to early retirement is not
required. Pensions are reduced in the event of early retirement. Death-in-service cover is a lump sum of four times
pensionable earnings. In addition a spouse’s pension of 33% of pensionable earnings is payable, together with an
allowance for dependent children up to a maximum of 33% of pensionable earnings where relevant. On the death of
a retired Director a spouse’s pension of 50% of the Director’s pension is payable. Once the pension is in payment, the
part of the Director’s pension above the Guaranteed Minimum Pension will be increased each year in line with the
increase in the retail price index, capped at 7.5%, above which increases are at the Trustees’ discretion.
The table below sets out the pension benefits earned by executive Directors for the year ended 31 December 2002:
Accrued Increase Transfer Accrued Transfer Movement
benefit at in period value of benefit value at Transfer in transfer 
Age at beginning (net of increase at end beginning value at end value during
year-end of period indexation) in period of period of period of period period*
£’000 £’000 £’000 £’000 £’000 £’000 £’000
J. Blogh 59 114 11 107 127 1,416 1,448 20
D. Caster 49 43 42048 368 313 (62)
A. Hamment 48 32 41536 256 219 (42)
F. Hope 48 20 31223 159 140 (24)
D. Jeffcoat 52 5 320 8 44 59 10
*Less Director’s contributions.
Directors’ remuneration
Directors’ emoluments are detailed below:
Annual
Basic performance 2002 2001
salary Fees bonus Benefits Total Total
£’000 £’000 £’000 £’000 £’000 £’000
P. Macfarlane -62 - - 62 59
J. Blogh 231 - 92 11 334 305
D. Caster 138 - 55 12 205 186
A. Hamment 110 - 44 10 164 147
F. Holroyd -24 - - 24 23
F. Hope 132 - 53 10 195 176
D. Jeffcoat 141 - 56 12 209 190
A. Walker -24 - - 24 23
Total 752 110 300 55 1,217 1,109
Pension contributions to Directors of £87,000 (2001: £78,000) were paid by the Company, including £28,000 (2001: £22,000)
in respect of the highest paid Director.
Other benefits of executive Directors comprise a car, provision of fuel and insurances for life, personal accident and
family medical cover.
The fees of non-executive Directors are set by a committee of executive Directors in the absence of the non-executive
Directors. Non-executive Directors are not eligible for pension scheme membership and do not participate in any of
the Group’s bonus or other incentive plans. Remuneration report (continued)
32 Ultra Electronics Holdings plc
Directors’ interests under Long-term Incentive Plans
As described above, the Company operated the Old LTIP until its expiry and replacement by the New LTIP. Details of
the executive Directors’ interests in these arrangements are given below:
Interests under the Ultra Electronics Long-term Incentive Plan (the ‘Old LTIP’)
Market Crystallising
price dates of
of shares outstanding
J. Blogh D. Caster A. Hamment F. Hope D. Jeffcoat granted awards
Award periods:
1999 21,456 13,793 10,310* 11,285 - £3.59 n/a
2000 43,839 27,743 20,233* 23,605 - £4.00 April 2003
2001 45,455 28,671 23,310 26,340 30,303 £4.29 April 2004
Interests at 1 January 2002 110,750 70,207 53,853 61,230 30,303
2002 award 52,170 31,302 24,662 29,879 32,013 £4.22 April 2005
1999 award crystallised
during the year (21,456) (13,793) (10,310)* (11,285) -
Interests at 
31 December 2002 141,464 87,716 68,205 79,824 62,316
*These awards relate to periods prior to Andrew Hamment becoming a Director. 
The 1999 award crystallised during the year as detailed above. These shares were granted under the Old LTIP that was
subject to the above perfomance conditions. The actual date of the award was March 1999. The market price of the
shares when granted was £3.59: the market price of the shares on vesting were £4.745.
During the year, the Group purchased 191,310 shares (nominal value of £9,566) for a net £824,000 relating to the 2002
awards. This includes £771,000 worth of Ultra shares for the Directors (2001: £676,000).
Interests under the Ultra Electronics Long-term Incentive Plan 2002-2007 (the ‘New LTIP’)
The first awards made under the New LTIP will occur in 2003.
Directors’ interests under the Savings Related Share Option Scheme
As described above, the Company operates a Savings-Related Share Option Scheme in which the executive Directors
are eligible to participate. Details of the executive Directors’ interests in this arrangement are given below:
Options Options Date from
held at start held at end which
Name of Director of year of year exercisable Expiry date
F. Hope 890 890 1 December 2004 31 May 2005
All of the options were granted at £3.79 per share. The market price of ordinary shares at 31 December 2002 was £4.515
and the range during the year was £3.835 to £5.10. 
In 1999, the Company set up an Employee Share Ownership Trust to satisfy options granted under the Group’s SAYE
schemes. During the year, the Trust purchased 144,526 newly allotted Ultra Electronics Holdings plc shares (nominal value
£7,226) for £660,026. Remuneration report (continued)
Ultra Electronics Holdings plc 33
Directors’ interests under the All-Employee Share Ownership Plan
As described above, the Company operates an All-Employee Share Ownership Plan (“AESOP”) in which the executive
Directors are eligible to participate. Details of the executive Directors’ interests in this arrangement are given below:
Interests as at Partnership shares Interests as at Interests at
Name of Director start of the year acquired during year end of the year 21 February 2003
D. Caster 239 343 582 637
A. Hamment 239 343 582 637
F. Hope 239 343 582 637
D. Jeffcoat 154 341 495 550
Total 871 1,370 2,241 2,461
During the year, the Share Ownership Plan Trust established and operated in connection with the AESOP 
purchased 71,294 Ultra Electronics Holdings plc shares (nominal value £3,565) for £316,293. One executive Director,
David Jeffcoat, is a trustee of the Plan Trust as well as participating in the AESOP.
Directors’ interests
Details of Directors’ shareholdings are given below:
At start of year At end of year At 21 Feb 2003
Indirect Indirect
Direct beneficial Direct beneficial Direct
ownership ownership ownership ownership ownership
P. Macfarlane 194,453 208,900 192,653 194,300 192,653
J. Blogh 162,427 884,921 183,883 884,921 183,883
D. Caster 785,818 486,783 799,954 486,783 800,009
A. Hamment 20,570 43,535 31,223 43,535 31,278
F. Holroyd 6,000 - 6,000 - 6,000
F. Hope 23,464 - 35,092 - 35,147
D. Jeffcoat 154 2,500 495 13,500 550
A. Walker 300 - 300 - 300
There were no changes in indirect beneficial ownership between 1 January and 21 February 2003.
Sir Frank Holroyd 
Chairman of the Remuneration Committee
24 February 2003 34 Ultra Electronics Holdings plc
To the members of Ultra Electronics Holdings plc
We have audited the accounts of Ultra Electronics Holdings plc for the year ended 31 December 2002 which comprise
the Consolidated Profit and Loss Account, the Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated
Statement of Total Recognised Gains and Losses, the related Notes numbered 1 to 25 and the Statement of Accounting
Policies. These accounts have been prepared under the accounting policies set out therein. We have also audited the
information in the part of the Directors’ Remuneration report that is described as having been audited.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act
1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for
our audit work, for this report, or for the opinions we have formed. 
Respective responsibilities of Directors and Auditors
As described in the statement of Directors’ responsibilities, the Company’s Directors are responsible for the
preparation of the accounts in accordance with applicable United Kingdom law and accounting standards. They are
also responsible for the preparation of the other information contained in the annual report including the Directors’
Remuneration report. Our responsibility is to audit the accounts and the part of the Directors’ Remuneration report
described as having been audited in accordance with relevant United Kingdom legal and regulatory requirements and
auditing standards.
We report to you our opinion as to whether the accounts give a true and fair view and whether the accounts and the
part of the Directors’ Remuneration report described as having been audited have been properly prepared in
accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ Report is not
consistent with the accounts, if the Company has not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if information specified by law regarding Directors’
remuneration and transactions with the Company and other members of the Group is not disclosed.
We review whether the Corporate Governance Statement reflects the Company’s compliance with the seven provisions
of the Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report
if it does not. We are not required to consider whether the Board's statements on internal control cover all risks and
controls, or form an opinion on the effectiveness of the Group's corporate governance procedures or its risk and
control procedures.
We read the Directors’ Report and other information contained in the Annual Report for the above year as described in
the contents section, including the unaudited part of the Directors’ Remuneration report and consider the implications
for our report if we become aware of any apparent misstatements or material inconsistencies within the accounts.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
accounts and the part of the Directors’ Remuneration report described as having been audited. It also includes an
assessment of the significant estimates and judgements made by the Directors in the preparation of the accounts and
of whether the accounting policies are appropriate to the circumstances of the Company and the Group, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the accounts and the part of the
Directors’ Remuneration report described as having been audited are free from material misstatement, whether caused by
fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of
information in the accounts and the part of the Directors’ Remuneration report described as having been audited.
Independent auditors’ report Ultra Electronics Holdings plc 35
Opinion
In our opinion the accounts give a true and fair view of the state of affairs of the Company and of the Group as at
31 December 2002 and of the profit of the Group for the year then ended and the accounts and part of the
Directors’ Remuneration report described as having been audited have been properly prepared in accordance with
the Companies Act 1985.
Deloitte & Touche
Chartered Accountants and Registered Auditors
Reading
24 February 2003
Independent auditors’ report (continued)
An audit does not provide assurance on the maintenance and integrity of the website, including controls used to
achieve this, and in particular on whether any changes may have occurred to the accounts since first published. These
matters are the responsibility of the Directors but no control procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of accounts differs from legislation in
other jurisdictions. 36 Ultra Electronics Holdings plc
Restated
Note 20
2002 2001
Note £’000 £’000
Turnover
– existing operations 253,521 239,540
– acquisition 6,831 -
Continuing operations 1 260,352 239,540
Cost of sales
– existing operations (189,967) (178,446)
– acquisition (5,751) -
Continuing operations (195,718) (178,446)
Gross profit
– existing operations 63,554 61,094
– acquisition 1,080 -
Continuing operations 64,634 61,094
Other operating expenses (net) 2 (35,056) (33,061)
Operating profit
– existing operations 29,323 28,033
– acquisition 255 -
Continuing operations 29,578 28,033
Finance charges (net) 3 (3,533) (4,624)
Profit on ordinary activities before taxation 4 26,045 23,409
Tax on profit on ordinary activities 6 (8,099) (7,086)
Profit on ordinary activities after taxation, 
being the profit for the financial year 17,946 16,323
Dividends paid and proposed on equity shares 7 (7,385) (6,835)
Retained profit for the year 10,561 9,488
Earnings per ordinary share (pence):
After goodwill amortisation
Basic 8 27.3 24.9
Diluted 8 27.3 24.8
Before goodwill amortisation
Basic 8 33.2 30.5
A statement of movements on reserves is given in note 20 to the accounts.
The accompanying notes are an integral part of this consolidated profit and loss account.
Consolidated profit and loss account
For the year ended 31 December 2002 Ultra Electronics Holdings plc 37
Group Group Company Company
Restated Restated
Note 20 Note 20
2002 2001 2002 2001
Note £’000 £’000 £’000 £’000
Fixed assets
Tangible assets 9 15,180 15,426 30 52
Intangible assets – Patents and trademarks 10 605 650 - -
Intangible assets – Goodwill 11 80,871 64,412 - -
Investments 12 1,050 836 118,726 99,228
97,706 81,324 118,756 99,280
Current assets
Stocks 13 23,834 22,030 - -
Debtors: Amounts falling due within one year 14 57,579 55,147 11,337 20,066
Debtors: Amounts falling due after more than one year 14 - 77 8,100 12,113
Cash at bank and in hand 8,132 15,992 2 2
89,545 93,246 19,439 32,181
Creditors: Amounts falling due within one year 15 (80,622) (94,834) (37,663) (45,386)
Net current assets/(liabilities) 8,923 (1,588) (18,224) (13,205)
Total assets less current liabilities 106,629 79,736 100,532 86,075
Creditors: Amounts falling due after more than one year 16 (46,126) (32,907) (61,869) (48,611)
Provisions for liabilities and charges 18 (4,822) (3,165) - -
Net assets 55,681 43,664 38,663 37,464
Capital and reserves
Called-up share capital 19 3,302 3,288 3,302 3,288
Share premium account 20 26,891 25,788 26,891 25,788
Profit and loss account 20 25,488 14,588 8,470 8,388
Equity shareholders’ funds 21 55,681 43,664 38,663 37,464
Signed on behalf of the Board
J. Blogh, Chief Executive
D. Jeffcoat, Finance Director
24 February 2003
The accompanying notes are an integral part of these balance sheets.
Balance sheets
31 December 2002 38 Ultra Electronics Holdings plc
Consolidated cash flow statement
For the year ended 31 December 2002
2002 2001
Note £’000 £’000
Net cash inflow from operating activities 22 42,765 39,328
Returns on investments and servicing of finance 22 (3,414) (4,972)
Taxation – UK (6,440) (6,948)
– Overseas (839) (1,435)
Capital expenditure and financial investment 22 (4,076) (4,172)
Acquisitions 22 (21,996) (130)
Equity dividends paid (7,045) (6,485)
Cash (outflow)/inflow before financing (1,045) 15,186
Financing 22 (6,381) (11,963)
(Decrease)/increase in cash in the year (7,426) 3,223
The accompanying notes are an integral part of this consolidated cash flow statement.
Restated
Note 20
2002 2001
£’000 £’000
Group profit for the financial year 17,946 16,323
Gain/(loss) on foreign currency translation 474 (480)
Adjustment in respect of the adoption of FRS 19 for prior periods (see note 20) 1,162 -
Total recognised gains and losses relating to the year 19,582 15,843
The accompanying notes are an integral part of this consolidated statement of total recognised gains and losses.
Consolidated statement of total recognised gains and losses
For the year ended 31 December 2002 Ultra Electronics Holdings plc 39
1 Segment information 
All turnover and results for the year were generated by a single class of business. Turnover by geographical destination
for the year was as follows: 
2002 2001
£’000 £’000
United Kingdom 110,547 110,680
Continental Europe 33,700 32,014
North America 100,549 84,144
Rest of the World 15,556 12,702
260,352 239,540
Turnover, trading profit and net operating assets by geographical source for the year were as follows:
United Kingdom North America Group
Restated
2002 2001 2002 2001 2002 2001
£’000 £’000 £’000 £’000 £’000 £’000
Turnover 167,061 167,528 93,291 72,012 260,352 239,540
Trading profit 23,940 24,303 9,513 7,382 33,453 31,685
Goodwill amortisation (3,875) (3,652)
Operating profit 29,578 28,033
Interest (net) (3,533) (4,624)
Profit before tax 26,045 23,409
Net operating assets 13,548 16,283 11,150 12,925 24,698 29,208
Net non operating assets 30,983 14,456
Net assets 55,681 43,664
Turnover and trading profit by division were as follows:
Turnover Profit
Restated
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Division
Air & Land Systems 177,493 165,121 22,464 24,050
Information & Sea Systems 82,859 74,419 10,989 7,635
260,352 239,540 33,453 31,685
Goodwill amortisation (3,875) (3,652)
Operating profit 29,578 28,033
2 Other operating expenses (net) 
2002 2001
Existing Restated
Operations Acquisition Total Total
£’000 £’000 £’000 £’000
Selling and distribution costs 10,793 55 10,848 10,833
Administrative expenses 24,227 770 24,997 22,995
Other operating income (789) - (789) (767)
34,231 825 35,056 33,061
Notes to accounts
31 December 2002 Notes to accounts (continued)
40 Ultra Electronics Holdings plc
3 Finance charges (net)
2002 2001
£’000 £’000
Interest receivable and similar income 144 300
Amortisation of finance costs of debt (196) (57)
Interest payable on bank loans and overdraft
– repayable within five years (3,466) (4,846)
Interest payable on finance leases (15) (21)
(3,533) (4,624)
4Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after charging/(crediting):
Restated
2002 2001
£’000 £’000
Depreciation and amounts written off tangible fixed assets
– owned 3,698 3,903
– held under finance leases and hire purchase contracts 73 121
Provision against investments 604 372
Amortisation of goodwill 3,875 3,652
Amortisation of patents and trademarks 45 37
Operating lease rentals
– plant and machinery 1,163 1,293
– land and buildings 3,546 3,090
Research and development 
– current year expenditure (see also Directors’ report) 10,687 10,022
Auditors’ remuneration
– audit fees and expenses 195 166
– other fees and expenses 21 -
Government grants received (63) (49)
In addition to the above, in 2002 Deloitte & Touche received £18,000 in connection with the Group’s refinancing of existing
facilities. This has been included as part of the cost of raising debt. Notes to accounts (continued)
Ultra Electronics Holdings plc 41
5 Staff costs
Particulars of employees (including executive Directors) are shown below.
Employee costs during the year amounted to:
2002 2001
£’000 £’000
Wages and salaries 69,591 65,983
Social security costs 6,182 6,104
Other pension costs (see also note 24) 3,956 3,060
79,729 75,147
The average number of persons employed by the Group during the year was as follows:
2002 2001
Number Number
Production 1,026 1,089
Engineering 904 809
Selling 132 132
Support services 333 346
2,395 2,376
Information on Directors’ remuneration is given in the Remuneration report and those elements required by the
Companies Act 1985 and the Financial Services Authority form part of these accounts.
6Tax on profit on ordinary activities
The tax charge is based on the profit for the year and comprises:
Restated
2002 2001
£’000 £’000
UK taxes
Corporation tax at 30% 7,139 6,138
Adjustment in respect of prior years (477) 8
6,662 6,146
Overseas taxes
Current taxation 917 1,343
Adjustment in respect of prior years (22) (151)
895 1,192
Total current tax 7,557 7,338
Deferred tax
Origination and reversal of timing differences
UK deferred tax 482 (278)
Overseas deferred tax 60 26
Total deferred tax (see note 18) 542 (252)
Total tax on profit on ordinary activities 8,099 7,086 Notes to accounts (continued)
6Tax on profit on ordinary activities (continued)
The difference between the total current tax shown above and the amount calculated by applying the standard rate of
UK corporation tax to the profit before tax is as follows:
GROUP
2002 2001
£’000 £’000
Group profit on ordinary activities before tax 26,045 23,409
Tax on Group profit on ordinary activities at standard UK corporation tax rate of 30% (2001: 30%) 7,813 7,023
Effects of:
Expenses not deductible for tax purposes 837 816
Capital allowances less depreciation (56) 21
Other timing differences 547 (219) 
Utilisation of UK tax losses - (143)
Utilisation of US tax losses (1,353) (195)
Higher tax rates on overseas earnings 268 331
ACT brought forward relieved - (153)
Adjustments to tax charge in respect of previous periods (499) (143)
Group current tax charge for the year 7,557 7,338
7 Dividends paid and proposed on equity shares
2002 2001
£’000 £’000
Interim ordinary dividend paid of 3.7p per share (2001: 3.4p) 2,439 2,229
Final ordinary dividend proposed of 7.5p per share (2001: 7.0p) 4,946 4,606
7,385 6,835
8 Earnings per share
The weighted average number of shares and earnings used to calculate earnings per share are given below:
2002 2001
No. of shares No. of shares
Number of shares used for basic earnings per share 65,647,904 65,543,566
Number of shares deemed to be issued at nil consideration following 
exercise of share options 174,036 168,697
Number of shares used for diluted earnings per share 65,821,940 65,712,263
Earnings attributable to ordinary shareholders:
Restated
2002 2001
£’000 £’000
After goodwill amortisation 17,946 16,323
Before goodwill amortisation* 21,821 19,975
*Presented as an alternative performance measure.
42 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 43
9Tangible fixed assets
The movement in the year was as follows:
GROUP
Land and Buildings
Short Plant and
Freehold leasehold machinery Total
£’000 £’000 £’000 £’000
Cost
Beginning of year 5,151 3,779 31,573 40,503
Foreign exchange differences (167) (35) (1,122) (1,324)
Acquisition of subsidiary undertaking - - 4,469 4,469
Additions 145 371 2,901 3,417
Disposals - (273) (1,660) (1,933)
End of year 5,129 3,842 36,161 45,132
Depreciation
Beginning of year 865 2,185 22,027 25,077
Foreign exchange differences (48) (33) (834) (915)
Acquisition of subsidiary undertaking - - 3,922 3,922
Charge 137 240 3,394 3,771
Disposals - (269) (1,634) (1,903)
End of year 954 2,123 26,875 29,952
Net book value
Beginning of year 4,286 1,594 9,546 15,426
End of year 4,175 1,719 9,286 15,180
Freehold land amounting to £999,772 (2001: £1,015,000) has not been depreciated. Plant and machinery includes
fixtures and fittings, tooling and test rigs, computers and motor vehicles. The net book value of plant and machinery
held under finance leases was £48,000 (2001: £131,000).
COMPANY
Plant and
machinery
£’000
Cost
Beginning of year 228
Additions 2
End of year 230
Depreciation
Beginning of year 176
Charge 24
End of year 200
Net book value
Beginning of year 52
End of year 30 Notes to accounts (continued)
10 Intangible assets – Patents and trademarks
Group
£’000
Cost
Beginning of year 717
Additions -
End of year 717
Amortisation
Beginning of year 67
Charge 45
End of year 112
Net book value
Beginning of year 650
End of year 605
11 Intangible assets – Goodwill
Restated
Group
£’000
Cost
Beginning of year 72,389
Additions (see below) 20,334
End of year 92,723
Amortisation
Beginning of year 7,977
Charge 3,875
End of year 11,852
Net book value
Beginning of year 64,412
End of year 80,871
44 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 45
11 Intangible assets – Goodwill (continued)
Acquisition during the year – Tactical Communication Systems Inc.
On 27 September 2002, the Group purchased all of the share capital of Tactical Communication Systems Inc. (TCS), a
company based in Montreal, Canada, for a cash consideration before expenses of £21.5 million. TCS was previously a
division of CMC Electronics Inc. The book value of the identifiable assets and liabilities acquired and their provisional fair
values, based on the Directors’ initial assessment of net realisable value, were as follows:
Book value Revaluations Fair value
£’000 £’000 £’000
Tangible fixed assets 547 - 547
Current assets:
Stocks 5,102 (1,901) 3,201
Debtors 133 112 245
Creditors falling due within one year (1,104) (168) (1,272)
Provisions for liabilities and charges (529) (580) (1,109)
Net assets acquired 4,149 (2,537) 1,612
Goodwill capitalised 20,334
Purchase consideration, including certain costs 21,946
The TCS results for the period 1 April 2002 to 27 September 2002, based on accounting policies followed prior to
acquisition, were turnover £8.1 million, cost of sales £6.2 million, gross profit £1.9 million, other operating expenses 
£1.2 million, resulting in an operating profit of £0.7 million. TCS earned a profit before tax of £4.5 million in the year
ended 31 March 2002 based on information provided to the Company.
12 Investments
a) Principal subsidiary undertakings
The Company owns 100% of the ordinary share capital of the following principal subsidiary undertakings:
Place of registration 
Name or incorporation
Ultra Electronics Limited England and Wales
Advanced Programming Concepts Inc Texas, USA
Datel Defence Limited England and Wales
Ferranti Air Systems Limited England and Wales
Flightline Electronics Inc New York, USA
Measurement Systems Inc Delaware, USA
Tactical Communication Systems Inc Canada
Ultra Electronics Maritime Systems Inc Canada
UnderSea Sensor Systems Inc Delaware, USA
The principal activity of the subsidiary undertakings is the design, development and manufacture of electronic systems. Notes to accounts (continued)
12 Investments (continued)
b) Current year movement on fixed asset investments
Group Company
Long-term Long-term Investment
Incentive Incentive in subsidiary
Own shares Plan shares Total Own shares Plan shares undertakings Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Cost
Beginning of year 42 1,274 1,316 42 1,274 98,392 99,708
Additions 36 824 860 36 824 21,946 22,806
Disposals (42) - (42) (42) - - (42)
Redemption of long-term loans ---- - (2,662) (2,662)
Transfer to participants - (107) (107) - (107) - (107)
End of year 36 1,991 2,027 36 1,991 117,676 119,703
Provision
Beginning of year - 480 480 - 480 - 480
Charge - 604 604 - 604 - 604
Transfer to participants - (107) (107) - (107) - (107)
End of year - 977 977 - 977 - 977
Net book value
Beginning of year 42 794 836 42 794 98,392 99,228
End of year 36 1,014 1,050 36 1,014 117,676 118,726
13 Stocks
Group Group
2002 2001
£’000 £’000
Raw materials and consumables 15,696 15,457
Work-in-progress 14,070 20,315
Finished goods and goods for resale 2,045 1,235
Payments on account (8,514) (15,064)
23,297 21,943
Long-term contract balances
– costs less foreseeable losses 766 522
– less payments on account (229) (435)
537 87
23,834 22,030
No stocks were held by the Company at either year-end.
46 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 47
14 Debtors
Group Group Company Company
Restated Restated
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Amounts falling due within one year:
Trade debtors 34,615 35,933 - -
Amounts recoverable on contracts 17,284 14,233 - -
Amounts owed by subsidiary undertakings - - 10,968 19,357
Deferred tax assets (see note 18) 1,036 1,243 122 564
Other debtors 2,045 1,867 95 50
Prepayments and accrued income 2,599 1,871 152 95
57,579 55,147 11,337 20,066
Amounts falling due after more than one year:
Amounts recoverable on contracts - 77 - -
Amounts owed by subsidiary undertakings - - 8,100 12,113
- 77 8,100 12,113
15 Creditors: Amounts falling due within one year
Group Group Company Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Obligations under finance leases 43 111 - -
Bank loans and overdraft (see note 16) 1,219 23,536 27,842 34,954
Payments received on account 27,078 23,131 - -
Trade creditors 20,161 19,811 - -
Amounts owed to subsidiary undertakings - - 2,559 3,653
Other creditors:
– Corporation tax payable 5,930 5,650 707 822
– VAT 1,173 1,168 - 21
– social security and PAYE 2,176 1,818 119 121
– other creditors 4,278 4,732 726 667
Pension related liabilities 282 331 - 34
Accruals and deferred income 13,336 9,940 764 508
Proposed dividends 4,946 4,606 4,946 4,606
80,622 94,834 37,663 45,386 Notes to accounts (continued)
16 Creditors: Amounts falling due after more than one year
Group Group Company Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Obligations under finance leases - 39 - -
Bank loans 46,126 32,868 46,126 32,868
Amounts owed to subsidiary undertakings - - 15,743 15,743
46,126 32,907 61,869 48,611
The bank loans are unsecured and due for repayment in 3 years. Interest is charged at 0.85% above base rates.
Borrowings fall due as analysed below:
Group Group Company Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Bank loans and overdraft
In one year or less or on demand 1,341 23,594 27,964 35,012
In more than one year but not more than two years - 6,000 - 6,000
In more than two years but not more than five years 46,364 27,000 46,364 27,000
47,705 56,594 74,328 68,012
Less: unamortised finance costs of debt (360) (190) (360) (190)
47,345 56,404 73,968 67,822
Less: included in Creditors: Amounts falling due within one year (1,219) (23,536) (27,842) (34,954)
46,126 32,868 46,126 32,868
Group Group
2002 2001
£’000 £’000
Finance leases 
In one year or less or on demand 43 111
In more than one year but not more than two years - 39
43 150
Less: included in Creditors: Amounts falling due within one year (43) (111)
- 39
The Company had no finance leases at either year-end.
48 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 49
17 Financial risk management
The Group’s approach to managing financial risk is described in the Financial Review on page 19. Certain financial assets,
such as investments in subsidiary undertakings, are excluded from the scope of these disclosures. As permitted by FRS 13,
short-term debtors and creditors have been excluded from the disclosures except for the currency risk disclosures.
a) Interest rate profile 
At floating At floating
interest rates Interest free Total interest rates Interest free Total
2002 2002 2002 2001 2001 2001
£’000 £’000 £’000 £’000 £’000 £’000
Financial assets
Sterling 246 - 246 7,018 77 7,095
US dollar 11,036 - 11,036 6,631 - 6,631
Canadian dollar 2,224 - 2,224 1,970 - 1,970
Korean won 296 - 296 181 - 181
Euro 575 - 575 141 - 141
Other 57 - 57 51 - 51
14,434 - 14,434 15,992 77 16,069
The financial assets of the Group comprised:
2002 2001
£’000 £’000
Cash 8,132 15,992
Creditors: Bank overdraft falling due within one year (see below) 6,302 -
Debtors: Amounts falling due after more than one year - 77
14,434 16,069
The Group’s overdraft has been disaggregated into financial assets and financial liabilities for the purpose of this disclosure.
At fixed At floating At fixed At floating
interest rates interest rates Total interest rates interest rates Total
2002 2002 2002 2001 2001 2001
£’000 £’000 £’000 £’000 £’000 £’000
Financial liabilities
Sterling 16,543 7,283 23,826 33,138 6,200 39,338
US dollar 5,834 3,165 8,999 12,250 5,156 17,406
Canadian dollar - 20,865 20,865 -- -
22,377 31,313 53,690 45,388 11,356 56,744
The financial liabilities of the Group comprised:
2002 2001
£’000 £’000
Total borrowings and finance leases 46,169 56,744
Creditors: Bank overdraft falling due within one year 7,521 -
53,690 56,744
The benchmark rate for floating interest rates is Royal Bank of Scotland base rates. Notes to accounts (continued)
17 Financial risk management (continued)
a) Interest rate profile (continued) 
The Group has loans of C$52.9 million and US$14.5 million to hedge overseas net investments. To hedge the inherent
interest rate risk, the Group has taken out an interest rate collar with a notional amount at 31 December 2002 of 
$9.4 million, with a cap set at 6.5% and a floor of 4.67%. The interest rate floor was triggered at the year-end and
hence part of the US$ borrowings have been classified as fixed. An interest rate swap has been taken out to fix the
interest rate on a £16.5 million loan at 6.7% (before margin of 0.85%). The weighted average profile is as follows:
2002
Fixed rate financial liabilities
Weighted average period 
Weighted average interest rate for which rate is fixed 
%Years
Currency
Sterling 7.5 3.0
2001
Fixed rate financial liabilities
Weighted average period 
Weighted average interest rate for which rate is fixed 
%Years
Currency
Sterling 7.8 2.6
US dollar 9.8 1.3
7.8 2.6
b) Currency risk
The table below shows the extent to which Group companies have monetary assets and liabilities in currencies other
than their functional currencies. Foreign exchange differences on translation of such assets and liabilities are taken to
the profit and loss account:
Net foreign currency monetary assets/(liabilities)
US$ C$ Other Total US$ C$ Other Total
2002 2002 2002 2002 2001 2001 2001 2001
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Functional currency of 
Group operations
Sterling 1,411 849 172 2,432 259 816 417 1,492
US $ --- -----
Canadian $ 851 - - 851 (29) - - (29)
2,262 849 172 3,283 230 816 417 1,463
The amounts shown in the above table take into account the effect of forward foreign currency contracts taken out to
manage these currency risks.
50 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 51
17 Financial risk management (continued)
c) Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities, other than short-term creditors such as trade creditors and
accruals, at 31 December 2002 was as follows:
2002 2001
£’000 £’000
In one year or less, or on demand 7,564 23,705
In more than one year but not more than two years - 6,039
In more than two years but not more than five years 46,126 27,000
53,690 56,744
d) Undrawn committed borrowing facilities
The Group’s undrawn committed borrowing facilities available at 31 December 2002, in respect of which all conditions
precedent have been met, were as follows:
2002 2001
£’000 £’000
Expiring in one year or less - 13,800
Expiring in more than two years 33,636 16,717
33,636 30,517
e) Fair value of financial instruments
The book value of the Group’s financial instruments approximate to their fair value, except for the following:
2002 2002 2001 2001
Book value Fair value Book value Fair value
£’000 £’000 £’000 £’000
Derivative financial instruments held to hedge 
the interest rate profile and currency profile
– Interest rate collar - (43) - (212)
– Interest rate swap - (1,531) - (1,441)
Derivative financial instruments held to hedge 
the currency exposure on expected future sales
– Forward foreign exchange contracts - 1,471 - (1,045)
- (103) - (2,698)
The fair values of the interest rate collar and interest rate swap have been calculated using option pricing models. 
The fair value of forward exchange contracts represents the unrealised gain or loss on revaluation of the contracts to
year-end exchange rates. Notes to accounts (continued)
17 Financial risk management (continued)
f) Gains and losses on hedges
Forward exchange contracts are used to hedge exchange exposures arising on forecast receipts and payments in
foreign currencies. Gains and losses are taken to the profit and loss account on maturity of the hedge. The interest
rate collar and interest swap are used to manage the interest rate profile. Gains and losses disclosed below are based
on market values at 31 December 2002.
Total net
Gains Losses gains/(losses)
£’000 £’000 £’000
Unrecognised gains and (losses) on hedges at 31 December 2001 112 (2,810) (2,698)
(Gains) and losses arising before 31 December 2001, recognised 2002 (87) 1,287 1,200
Gains and (losses) arising before 31 December 2001, not recognised in 2002 25 (1,523) (1,498)
Gains and (losses) arising in 2002, not recognised in 2002 2,122 (727) 1,395
Unrecognised gains and (losses) on hedges at 31 December 2002 2,147 (2,250) (103)
Of which:
Gains and (losses) expected to be recognised in 2003 1,341 (741) 600
Gains and (losses) expected to be recognised in 2004 and beyond 806 (1,509) (703)
18 Provisions for liabilities and charges
GROUP
Deferred Total
taxation Warranties £’000
Beginning of year (as restated) 421 2,744 3,165
Exchange differences (37) (43) (80)
Acquisition of subsidiary undertaking - 1,109 1,109
Transfer to deferred tax assets (106) - (106)
Utilised during the year - (585) (585)
Charge to the profit and loss account 549 770 1,319
End of year 827 3,995 4,822
The Company had no warranty provisions at either year-end. The Company’s deferred tax asset is included in 
‘Debtors: Amounts falling due within one year’.
Deferred taxation
Net deferred tax movements during the year were as follows: 
Group Company
2002 2002
£’000 £’000
Beginning of year (822) (564)
Exchange differences 71 -
Charge to the profit and loss account 542 442
End of year (209) (122)
52 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 53
18 Provisions for liabilities and charges (continued)
Deferred tax balances are analysed as follows: 
Group Group Company Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Accelerated/(deferred) capital allowances 696 620 (8) (6)
Other timing differences relating to current assets and liabilities (905) (1,442) (114) (558)
Deferred tax asset (209) (822) (122) (564)
These balances are shown as follows: 
Group Group Company Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Debtors: Amounts falling due within one year (see note 14) (1,036) (1,243) (122) (564)
Provisions for liabilities and charges (see above) 827 421 - -
(209) (822) (122) (564)
Deferred tax in respect of the Group’s defined benefit pension scheme is disclosed in note 24. The Group has not
recognised deferred tax assets of £2.5 million relating to tax losses, due to the uncertainty as to their recoverability.
19 Called-up share capital
2002 2001
No. £'000 No. £'000
Authorised:
5p ordinary shares 90,000,000 4,500 90,000,000 4,500
Allotted, called-up and fully paid:
5p ordinary shares 66,039,930 3,302 65,763,560 3,288
276,370 ordinary shares having a nominal value of £13,819 were allotted during the year under the terms of the Group’s
various Share Option Schemes. The aggregate consideration received by the Company was £1,116,673. In 1999, the
Company set up an Employee Share Ownership Trust to satisfy options granted under the Group’s SAYE scheme and,
during the year, employing UK Companies within the Group gifted £135,000 (2001: £349,000) to the Trust. 19 Called-up share capital (continued)
Share options
At 31 December 2002 the following options granted to staff remained outstanding:
Options Number of shares Option Exercise
granted 2002 2001 price (£) dates
Savings Related Share 1996 - 25,050 2.30 December 2001 - May 2002
Option Scheme 1999 184,539 353,473 3.79 December 2002 - May 2005
2000 26,696 45,225 3.87 August 2003 - February 2004
2001 33,082 34,722 3.88 September 2003 - December 2003
244,317 458,470
Company Share Option Plan 1996 45,260 69,164 2.87 March 2000 - November 2006
1997 - 10,715 2.80 March 2000 - March 2007
1998 40,379 59,646 4.05 March 2001 - March 2008
1999 78,728 102,450 4.15 to 4.265 March 2002 - September 2009
2000 113,670 122,168 3.855 May 2003 - May 2010
2001 99,923 105,081 4.385 March 2004 - March 2011
2002 93,757 - 4.485 March 2005 - March 2012
471,717 469,224
Executive Share Option Scheme 1996 27,088 51,550 2.87 March 2000 - November 2003
1997 8,832 14,546 2.80 March 2000 - March 2004
1998 17,851 25,114 4.05 March 2001 - March 2005
1999 135,903 156,961 4.15 to 4.265 March 2002 - September 2006
2000 207,898 213,389 3.855 to 4.39 May 2003 - May 2007
2001 241,436 249,907 4.385 March 2004 - March 2008
2002 272,678 - 4.485 March 2005 - March 2009
911,686 711,467
20 Reserves
Group Company
Share Profit and Share Profit and
premium loss account premium loss account
£’000 £’000 £’000 £’000
Beginning of year 25,788 13,426 25,788 7,824
Prior year adjustment (see below) - 1,162 - 564
Retained profit for the year - 10,561 - 82
Amounts gifted to the Employee Share Ownership Trust (see note 19) - (135) - -
Issue of new shares 1,103 - 1,103 -
Foreign exchange differences - 474 - -
End of year 26,891 25,488 26,891 8,470
Cumulative goodwill written off directly to reserves is £33,294,000 (2001: £33,294,000). The Company's retained profit
for the year is after dividends of £7,385,000.
Prior year adjustment
In previous years, the Group complied with the Statement of Standard Accounting Practice 15 – Deferred Tax (SSAP 15)
which has been superseded by the introduction of the Financial Reporting Standard 19 – Deferred Tax (FRS 19). FRS 19
has been adopted for the first time by the Group in this Annual Report. SSAP 15 required provision for deferred tax to
be made using the liability method to the extent that net deferred tax assets or liabilities were likely to crystallise in the
foreseeable future, i.e. a partial provisioning approach. FRS 19 requires a full provisioning approach.
Notes to accounts (continued)
54 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 55
20 Reserves (continued)
The effect of the implementation of FRS 19 on the reported results is as follows: 
2002 2001
£’000 £’000
Profit and Loss Account
Goodwill amortisation (19) (33)
Tax on profits (542) 252
(Reduction)/increase in retained profits (561) 219
Balance Sheet
Increase in goodwill 321 340
Increase in deferred tax assets 1,036 1,243
Increase in deferred tax liabilities (827) (421)
Increase in net assets 530 1,162
The adoption of FRS 19 has resulted in the recognition of deferred tax assets primarily in respect of timing differences
and tax deductible goodwill in the US. In addition, deferred tax liabilities arise on accelerated capital allowances and
other short-term timing differences which were not recognised previously under SSAP 15.
The increase in goodwill is in respect of deferred tax liabilities previously unrecognised on the acquisition of the 
DF Group Limited in 2000.
21 Reconciliation of movements in Group equity shareholders’ funds
£’000
Retained profit for the financial year 10,561
Foreign exchange differences 474
Amounts gifted to the Employee Share Ownership Trust (see note 19) (135)
Issue of new shares 1,117
Net increase to equity shareholders’ funds 12,017
Opening equity shareholders’ funds (as restated) 43,664
Closing equity shareholders’ funds 55,681
22 Cash flow information
Reconciliation of operating profit to operating cash flow
Restated
2002 2001
£’000 £’000
Operating profit 29,578 28,033
Depreciation and amounts written off tangible fixed assets 3,771 4,024
Amortisation of goodwill 3,875 3,652
Amortisation of patents and trademarks 45 37
Provision against investments 604 372
(Profit)/loss on disposal of tangible fixed assets (11) 56
Decrease/(increase) in stocks 623 (2,649)
Increase in debtors (3,240) (2,520)
Increase in creditors 6,161 8,366
Increase in provisions 1,410 95
Other (51) (138)
Net cash inflow from operating activities 42,765 39,328 22 Cash flow information (continued)
Analysis of cash flows 
2002 2001
£’000 £’000
Returns on investments and servicing of finance
Interest received 144 300
Interest paid (3,543) (5,251)
Interest element of finance lease rentals (15) (21)
Net cash outflow from returns on investments and servicing of finance (3,414) (4,972)
Capital expenditure and financial investment
Capital expenditure (3,293) (3,370)
Sale of tangible fixed assets 41 -
Purchase of Long-term Incentive Plan shares (824) (802)
Net cash outflow from capital expenditure and financial investment (4,076) (4,172)
Acquisitions
Purchase of business undertaking (21,946) -
Purchase of patents and trademarks (50) (130)
Net cash outflow from acquisitions (21,996) (130)
Financing
Issue of ordinary share capital (net of expenses) 988 726
Capital element of finance lease rental payments (107) (120)
Debt due within one year (22,381) (4,069)
Debt due after more than one year 15,119 (8,500)
Net cash outflow from financing (6,381) (11,963)
Tactical Communication Systems Inc. contributed £117,000 to the Group’s operating cash flows following acquisition
and utilised £324,000 for capital expenditure.
Analysis of changes in net funds
At start Other Foreign At end 
of year Cash flow non cash exchange of year
£’000 £’000 £’000 £’000 £’000
2001
Cash at bank and in hand 12,823 3,223 - (54) 15,992
Debt due within one year (27,127) 4,069 (11) (467) (23,536)
Debt due after more than one year (41,322) 8,500 (46) - (32,868)
Finance leases (270) 120 - - (150)
(55,896) 15,912 (57) (521) (40,562)
2002
Cash at bank and in hand 15,992 (7,426) - (434) 8,132
Debt due within one year (23,536) 22,381 (64) - (1,219)
Debt due after more than one year (32,868) (15,119) (132) 1,993 (46,126)
Finance leases (150) 107 - - (43)
(40,562) (57) (196) 1,559 (39,256)
Notes to accounts (continued)
56 Ultra Electronics Holdings plc Notes to accounts (continued)
Ultra Electronics Holdings plc 57
22 Cash flow information (continued)
Reconciliation of net cash flow to movement in net debt
2002 2001
£’000 £’000
(Decrease)/increase in cash in the year (7,426) 3,223
Cash outflow from decrease in debt and lease financing 7,369 12,689
Change in net debt resulting from cash flows (57) 15,912
Amortisation of finance costs of debt (196) (57)
Translation difference 1,559 (521)
Movement in net debt in the year 1,306 15,334
Net debt at start of year (40,562) (55,896)
Net debt at end of year (39,256) (40,562)
There have been no major non-cash transactions in either year.
23 Guarantees and other financial commitments
a) Capital commitments
At the end of the year capital commitments were:
Group Group Company Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Contracted but not provided 424 258 - -
b) Lease commitments
The minimum rentals under the foregoing leases for the next 12 months are as follows:
Group Group Company Company
Land and Plant and Land and Plant and
buildings machinery buildings machinery
£’000 £’000 £’000 £’000
2002
Operating lease rentals which expire
– within one year 19 230 - 23
– within two to five years 516 797 - 22
– after five years 3,171 - - -
3,706 1,027 - 45
2001 2,999 1,050 - 33 24 Pension arrangements
Most UK employees of the Group are eligible to join the Ultra Electronics Limited defined benefit scheme which was
established on 1 March 1994. Within the UK, DF Group employees are able to participate in a defined contribution plan.
The Group also operates two defined contribution schemes for overseas employees.
The pension cost for the year was £3,956,000 (2001: £3,060,000) of which £3,127,000 (2001: £2,446,000) related to the
regular cost of the defined benefit scheme. Contribution balances prepaid or payable at the year-end are shown in the
balance sheet under prepayments or accruals as appropriate. Pension contributions have been made in accordance
with actuarial advice. The contribution rate for the defined benefit scheme in 2002 was 12% of pensionable earnings
and the agreed contribution rate for 2003 is 13.5% of pensionable earnings. The cost of the overseas pension schemes
was £526,000 (2001: £324,000).
The defined benefit scheme was actuarially assessed at 6 April 2001 using the projected unit method. The principal
assumptions adopted in the valuation were that the scheme’s yield would be 6.5% per annum, salary increases would be
4.5% per annum for staff members and 5% for Directors, and that pensions would increase by 2.25% per annum.
The market value of the scheme at 6 April 2001 was £64.3 million. The solvency of the scheme was established at 105%
using the scheme’s normal funding assumptions. The SSAP24 valuation does not take into account any impact of the fall
in general stock market values since that date. Any such impact will be reflected in the next full triennial valuation in
2004, based upon which subsequent pension costs will be determined until the adoption of FRS 17, which uses a
different basis to SSAP 24. Tactical Communication Systems Inc., based in Montreal, Canada and acquired during the year,
has a defined benefit scheme. A valuation is currently being prepared: any surplus or deficit is not expected to be
material to the Group.
FRS 17 retirement benefits
The valuation used for FRS 17 disclosures has been based on the most recent actuarial valuation as at 6 April 2001 
and updated by our actuaries, Entegria Limited, in order to assess the liabilities of the Ultra Electronics Pension
Scheme at 31 December 2002. Scheme assets are stated at their market value on that date.
The financial assumptions used to calculate pension scheme liabilities under FRS 17 are:
Projected unit Projected unit
Valuation method 2002 2001
Discount rate 5.5% pa 5.8% pa
Inflation rate 2.25% pa 2.5% pa
Increases to pensions in payment 2.0% pa 2.25% pa
Salary increases – Directors 5.0% pa 4.25% pa
– Staff 3.5% pa 3.75% pa
Long-term Long-term
rate of return rate of return
expected at Value at expected at Value at
31 December 31 December 31 December 31 December
2002 2002 2001 2001
per annum £m per annum £m
Equities 7.0% 42.9 7.25% 54.4
Bonds 5.5% 5.0 5.8% 7.0
Other 4.5% 4.1 5.8% 1.3
Total market value of assets 52.0 62.7
Present value of scheme liabilities (81.2) (72.9)
Deficit in the scheme (29.2) (10.2)
Related deferred tax asset 8.8 3.1
Net pension liability (20.4) (7.1)
Notes to accounts (continued)
58 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 59
Notes to accounts (continued)
24 Pension arrangements (continued)
Movement in scheme deficit during the year:
2002
£m
At 1 January 2002 (10.2)
Current service cost (4.0)
Contributions 3.0
Net finance income (see below) 0.2
Actuarial loss (see below) (18.2)
At 31 December 2002 (29.2)
Analysis of the amount which would be credited to net finance charges under FRS 17:
2002
£m
Expected return on pension scheme assets 4.5
Interest on pension scheme liabilities (4.3)
0.2
Analysis of the actuarial loss in the statement of total recognised gains and losses under FRS 17:
2002
£m
Actual return less expected return on pension scheme assets (17.5)
Experience gains arising on the scheme liabilities 1.3
Changes in assumptions underlying the present value of the scheme liabilities (2.0)
(18.2)
The actual return less expected return on pension scheme assets represents -33.7% of total scheme assets. The experience
gains arising on scheme liabilities represent 1.6% of total scheme liabilities. The total actuarial loss represents 22.4% of
total scheme liabilities.
If the pension liability was recognised in the accounts, the Group’s net assets and profit and loss reserve would be as follows:
2002 2001
£m £m
Net assets excluding pension liability 55.7 43.7
Pension liability (20.4) (7.1)
Net assets including pension liability 35.3 36.6
Profit and loss reserve excluding pension liability 25.5 14.6
Pension liability (20.4) (7.1)
Profit and loss reserve including pension liability 5.1 7.5
25 Related party transactions
There have been no related party transactions with Directors other than the payment of emoluments in the normal
course of business, as disclosed in the Remuneration report. A summary of the Group’s principal accounting policies, all of which have been applied consistently throughout the
year and the preceding year, incorporating the adoption of Financial Reporting Standard 19 – Deferred tax in both the
current and prior year, is set out below:
a) Basis of accounting 
The accounts are prepared under the historical cost convention and in accordance with applicable accounting standards.
b) Basis of consolidation
The Group’s accounts consolidate the accounts of Ultra Electronics Holdings plc and all of its subsidiary undertakings
each year using the acquisition method of accounting. Under this method, the results of subsidiary undertakings
acquired or disposed of in the year are included in the consolidated profit and loss account from the date of control
passing or up to the date of control being relinquished. 
No profit and loss account is presented for Ultra Electronics Holdings plc, as permitted by section 230 of the Companies
Act 1985. The Company’s retained profit for the year is disclosed in note 20. 
c) Turnover
Group turnover comprises the value of sales (excluding VAT and similar taxes, trade discounts and intra-Group
transactions) of goods and services in the normal course of business. Turnover applicable to long-term contracts represents
the value of work completed during the year, calculated with reference to the total expected value of the contracts.
d) Research and development
Research expenditure is written off in the year of expenditure. Funded development expenditure incurred on specific
contracts is treated as a contract cost in accordance with the general policy for contract work-in-progress. Unfunded
development expenditure incurred on certain projects is carried forward when its recoverability can be foreseen with
reasonable assurance, and amortised in relation to the sales from such projects. The Directors consider that this
treatment results in a proper matching of costs and revenue. All other development expenditure is written off in the
year of expenditure.
e) Pension costs
The Group provides pensions to its employees and Directors through defined benefit and defined contribution pension
schemes. The schemes are funded and their assets are held independently of the Group by trustees.
The amount charged to the profit and loss account for defined benefit schemes is the estimated regular cost of
providing the benefits accrued in the period adjusted to reflect variations from that cost. The regular cost is calculated
so that it represents a substantially level percentage of current and future pensionable payroll. Variations from regular
cost are charged or credited to the profit and loss account over the estimated average remaining working life of
scheme members. The amount charged to the profit and loss account for defined contribution schemes is the
contribution payable for the period.
Any difference between amounts charged to the profit and loss account and contributions paid to the independent
pension schemes is shown as a separately identified liability or asset in the balance sheet.
f) Warranty
Provision is made for the anticipated cost of repair and rectification of products under warranty, based on known
exposures and historical occurrences.
g) Government grants
Government grants are recognised in the profit and loss account so as to match them with the expenditure towards
which they are intended to contribute, to the extent that the conditions for receipt have been met and there is
reasonable assurance that the grant will be received.
Statement of accounting policies
60 Ultra Electronics Holdings plc Ultra Electronics Holdings plc 61
h) Goodwill
Goodwill, representing the excess of the fair value of consideration given over the fair value of separable net assets
acquired, is capitalised as an intangible asset and is amortised over a period of 20 years, being the Directors’ assessment
of its useful economic life. Provision is made for any impairment. 
For acquisitions made prior to 30 December 1997 goodwill was considered separately for each acquisition and was written
off immediately to the goodwill reserve as a matter of accounting policy, depending on the Directors’ assessment of its
likely future value to the Group. That reserve has since been offset against the profit and loss account balance. On disposal
or closure of a previously acquired business, the attributable amount of goodwill previously written off to reserves is
included in determining the profit or loss on disposal.
i) Tangible fixed assets 
Tangible fixed assets are shown at original historical cost, net of depreciation and any provision for impairment.
Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset on a
straight-line basis over its expected useful life as follows:
Freehold buildings 40 to 50 years
Short leasehold improvements over remaining period of lease
Plant and machinery 3 to 20 years
IT hardware and software 3 to 5 years
Freehold land is not depreciated.
j) Patents and trademarks 
Patents and trademarks are included at cost and depreciated in equal annual instalments over the Directors’ estimate of
their useful economic life. Provision is made for any impairment.
k) Investments
Fixed asset investments are shown at cost less any amounts written off. Provision is made for any impairment in value.
Shares acquired by the Ultra Electronics Qualifying Share Ownership Trust to satisfy options granted under the
Company’s SAYE scheme are held at cost less any amounts written off for impairment in value. The cost of shares
purchased for the Company’s Long-term Incentive Plan is written off over the performance period of the award. 
l) Stocks
Stocks and work-in-progress are valued at the lower of cost (determined on a first-in, first-out basis and including an
appropriate proportion of overheads) and net realisable value, less payments on account. Provision is made for any
obsolete, slow moving or defective items. Profit is recognised on long-term contracts by reference to an assessment of
the outcome and the proportion of work completed.
m) Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date where transactions or events that result in an obligation to pay more tax in the future, or a right to pay less tax in
the future, have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable
profits and its results as stated in the accounts. These arise from including gains and losses in tax assessments in
different periods from those recognised in the accounts.
Statement of accounting policies (continued) 62 Ultra Electronics Holdings plc
m) Taxation (continued)
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted. 
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing
differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is not discounted.
n) Foreign currency
Transactions denominated in foreign currencies are recorded in the local currency at actual exchange rates at the date
of the transactions or, where appropriate, at the rate of exchange in a related forward exchange contract. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange
prevailing at that date or, where appropriate, at the rate of exchange in a related forward exchange contract. Any gain
or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange
gain or loss in the profit and loss account.
The trading results and cash flows of overseas undertakings are translated into sterling using average rates of exchange
during the relevant financial period. The balance sheets of overseas subsidiary undertakings are translated into sterling
at rates ruling at the year-end. Exchange differences arising from the re-translation of the opening balance sheets and
results are dealt with through reserves.
o) Leases
Assets held under finance leases, which confer rights and obligations similar to those attached to owned assets, are
capitalised as tangible fixed assets and are depreciated over the shorter of the lease terms and their useful lives. The
capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the
profit and loss account over the period of the leases to produce a constant rate of charge on the balance of capital
repayments outstanding. Hire purchase transactions are dealt with similarly, except that assets are depreciated over
their useful lives.
Rentals under operating leases are charged on a straight-line basis over the lease term.
p) Derivative financial instruments and financing costs
Forward exchange contracts are used to hedge foreign exchange exposures arising on forecast receipts and payments in
foreign currencies. Gains and losses are taken to the profit and loss on maturity of the hedge.
Costs associated with arranging Group finance are written off in accordance with FRS 4. The costs are offset against the
loan and amortised over the life of the loan.
Statement of accounting policies (continued) Statement of accounting policies (continued) Statement of accounting policies (continued) Ultra Electronics Holdings plc 63
By category of shareholder
Shares held
Number % share
‘000 capital
Pension funds 13,644 21
Unit trusts 29,592 45
Insurance companies 7,674 12
Private investors 2,384 4
Investment trusts and other funds 6,650 10
Other 6,096 8
66,040 100
By size of holding
Holders Shares held
% of Number % share
Number holders ’000 capital
1-100 66 5 4 -
101-500 505 35 129 -
501-1,000 314 22 213 -
1,001-5,000 297 21 565 1
5,001-10,000 41 3 319 1
10,001-50,000 83 6 1,934 3
50,001-100,000 21 1 1,481 2
100,000 and over 108 7 61,395 93
1,435 100 66,040 100
Financial calendar
11 April 2003 Record date for 2002 final dividend
17 April 2003 Annual General Meeting
6 May 2003 2002 final dividend paid
4 August 2003 Interim results announced
September 2003 Interim dividend paid
Shareholder Analysis
31 December 2002 64 Ultra Electronics Holdings plc
Notice of Meeting
Notice is hereby given that the annual general meeting of Ultra Electronics Holdings plc will be held at 417 Bridport Road,
Greenford, Middlesex UB6 8UA on Thursday 17 April 2003 at 10.00am for the following purposes:
Ordinary business
Resolution 1: To receive and adopt the Company’s annual accounts for the financial year ended 31 December 2002
together with the Directors’ report and Auditors’ report on those accounts.
Resolution 2: To declare a final dividend for the year ended 31 December 2002 of 7.5p per ordinary share, payable to
shareholders on the register at the close of business on 11 April 2003.
Resolution 3: To receive and adopt the Directors’ Remuneration report for the financial year ended 31 December 2002.
Resolution 4: To re-elect Mr D. Caster as a Director, retiring by rotation in accordance with Article 76 of the Company’s
articles of association.
Resolution 5: To re-elect Mr P. Macfarlane as a Director, retiring by rotation in accordance with Article 76 of the
Company’s articles of association.
Resolution 6: To re-elect Mr A. Hamment as a Director, retiring by rotation in accordance with Article 76 of the
Company’s articles of association.
Resolution 7: To appoint Deloitte & Touche as auditors of the Company to hold office from the conclusion of this
meeting until the conclusion of the next general meeting at which accounts are laid before the Company and to
authorise the Directors to fix their remuneration. Deloitte & Touche were appointed as auditors by the Board during
the year to fill the casual vacancy created by the resignation of Arthur Andersen.
Special business
To consider and, if thought fit, to pass the following resolutions of which resolution 8 will be proposed as an ordinary
resolution and resolutions 9 and 10 will be proposed as special resolutions:
Resolution 8: 
That in substitution for all existing authorities the Directors be generally and unconditionally authorised in accordance
with section 80 of the Companies Act 1985 to exercise all the powers of the Company to allot relevant securities
(within the meaning of that section) up to an aggregate nominal amount of £1,100,666 (approximately one third of
the allotted and fully paid share capital of the Company) for a period expiring (unless previously renewed, varied or
revoked by the Company in general meeting) 15 months after the passing of this resolution or at the conclusion of the
next annual general meeting of the Company, whichever first occurs, but the Company may before such expiry make
an offer or agreement which would or might require relevant securities to be allotted after expiry of this authority
and the Directors may allot relevant securities in pursuance of that offer or agreement as if the authority conferred by
this resolution had not expired.
Resolution 9: 
That, in substitution for all existing powers and subject to the passing of resolution 8, the Directors be generally
empowered, in accordance with Article 4 of the Articles of Association, to allot equity securities for cash provided that
the power conferred by this resolution:
(A) will expire 15 months after the passing of this resolution or at the conclusion of the next annual general meeting
of the Company, whichever first occurs, but the Company may before such expiry make an offer or agreement
which would or might require equity securities to be allotted after expiry of this power and the Directors may allot
equity securities in pursuance of that offer or agreement as if the power conferred by this resolution had not
expired; and Ultra Electronics Holdings plc 65
Notice of meeting (continued)
Resolution 9 (continued) 
(B) is limited to:
(i) allotments of equity securities in connection with a rights issue in favour of holders of ordinary shares made
in proportion (as nearly as may be) to their respective existing holdings of ordinary shares but subject to the
Directors having a right to make such exclusions or other arrangements in connection with the offer as they
deem necessary or expedient:
(a) to deal with equity securities representing fractional entitlements; and
(b) to deal with legal or practical problems arising in any overseas territory or by virtue of shares being
represented by depository receipts, the requirements of any regulatory body or stock exchange; or any
other matter whatsoever; and
(ii) allotments of equity securities for cash otherwise than pursuant to paragraph (i) up to an aggregate
nominal amount of £165,100.
Resolution 10:
That the Company be generally and unconditionally authorised to make one or more market purchases (within the
meaning of S163(3) of the Companies Act 1985) of ordinary shares of 5p each in the capital of the Company (“ordinary
shares”) provided that:
(i) the maximum aggregate number of ordinary shares authorised to be purchased is 3,301,997 (representing
5% of the issued share capital);
(ii) the minimum price which may be paid for an ordinary share is 5p;
(iii) the maximum price which may be paid for an ordinary share is an amount equal to 105% of the average of
the middle market quotations for an ordinary share as derived from the London Stock Exchange Daily Official
List for the 5 business days immediately preceding the day on which that ordinary share is purchased;
(iv) this authority expires at the conclusion of the next annual general meeting of the Company or within 12 months
from the date of the passing of this resolution whichever is earlier; and
(v) the Company may make a contract to purchase ordinary shares under this authority before the expiry of
the authority which will or may be executed wholly or partly after the expiry of the authority, and may
make a purchase of ordinary shares in pursuance of any such contract.
By order of the Board
D. Jeffcoat 
Company Secretary
21 March 2003
Registered Office: 417 Bridport Road, Greenford, Middlesex UB6 8UA
Notes
1. Only those members entered in the register of members of the Company as at 6.00pm on Tuesday 15th April 2003
shall be entitled to attend and vote at the above meeting. Changes to entries in the register of members after 6.00pm
on Tuesday 15th April 2003 shall be disregarded in determining the rights of any person to attend and vote at the
meeting. These requirements reflect Regulation 41 of The Uncertificated Securities Regulations 2001.
2. A member of the Company who is entitled to attend and vote at the meeting is entitled to appoint one or more
proxies to attend and, on a poll, vote instead of the member. A proxy need not also be a member.
3. To be effective, the form of proxy and any authority under which it was executed (or a notarially certified copy of
such authority) must be deposited with the Company’s Registrars Lloyds TSB Registrars, The Causeway, Worthing, 
West Sussex BN99 6ZL not less than 48 hours before the time fixed for the meeting. Completion of the enclosed 
proxy form will not preclude shareholders from attending and voting at the meeting in person.
4. Copies of the Register of Interests of Directors (and their families) in the share capital of the Company and the
Directors’ service contracts will be available for inspection for at least 15 minutes prior to and during the meeting. Restated Restated
1998 1999 2000 2001 2002
£m £m £m £m £m
Turnover
Air & Land Systems 110.2 129.4 158.3 165.1 177.5
Information & Sea Systems 48.5 63.6 68.6 74.4 82.9
Total turnover 158.7 193.0 226.9 239.5 260.4
Operating profit (before goodwill amortisation)
Air & Land Systems 14.5 18.0 22.1 24.1 22.5
Information & Sea Systems 6.4 6.5 8.2 7.6 11.0
Total 20.924.530.331.7 33.5
Operating profit margin % (before goodwill amortisation) 13.2% 12.7% 13.4% 13.2% 12.9%
Profit before goodwill amortisation and tax 21.1 23.2 25.6 27.1 29.9
Profit after taxation 14.6 15.6 15.8 16.3 17.9
Cash inflow from operating activities (see note 1) 21.8 8.2 16.5 35.2 38.7
Free cash flow before dividends and acquisitions 15.5 (0.8) 7.5 21.8 28.0
Net debt at year-end (0.1) (11.7) (55.9) (40.6) (39.3)
Headline earnings per share (p) (see note 2) 22.6 25.9 28.7 30.5 33.2
Dividends per share (p) 8.1 9.0 9.7 10.4 11.2
Average employee numbers 1,707 2,079 2,303 2,376 2,395
Notes
1. Cash flow from operating activities is stated after capital expenditure and financial investments.
2. Headline earnings per share is calculated before goodwill amortisation and earnings dilution.
3. 2000 and 2001 have been restated following the adoption of FRS 19. It has not been possible to restate earlier years
with respect to this Financial Reporting Standard.
Five year review
66 Ultra Electronics Holdings plc