Qioptiq logo Raytheon

Defence Miscellany – Budgets, Vexatious Claims, CDS, Ultra Electronics and F-35 By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.





For the record, it is just one month now since General Carter said in his first speech at RUSI that “failure to change now and our adversaries, slowly but surely will overcome us. They will erode and finally overturn the democratic rules based system under which we have all lived comfortably for nigh on three generations” adding that “I fear that our 70 year holiday from history may well be over and that we all have a job to do to fix it”.

Ultra Electronics

Although I have known the company and what it does for decades, Ultra Electronics was one of the very few companies that for some reason was not on my list during the 28 years I spent as an equities analyst. A company that has a long history of engagement in specialist defence and aerospace, security and cyber, transport and energy equipment, suffice to say that Ultra has gone through the wars of late as it struggled with serious contract cost overruns and other issues.

First Half year per-tax profits for the period to 30th June 2018 announced this morning declined by a not unexpected 35% on revenue down 4.3%. However, bearing in mind that one of the other issues to impact on the company over the past three years has been falling defence orders it is good to see a 20% rise in the order book at period end to £969.2 million.

Do not company well enough to be able to predict whether Ultra Electronics has passed its worst but given that guidance for the second half is unchanged if I was to guess I would say that it probably has. Under new management so to speak, Ultra’s CEO, Simon Pryce said in the statement that “Although I have only been here a short time, it is clear that the Group has a strong and relevant technology base and a range of specialist capabilities supporting a broad number of long term platforms and programmes” and that “We enter the second half with a strong order book and remain focused on execution and delivery while continuing to win new business. The Group is well positioned in areas of priority spend with significant exposure to the strengthening US defence budget. We will also be looking at the potential for greater connectivity, operational improvement and further targeted investment in core technology, processes and people. Management’s expectations for 2018 are unchanged from our recent pre-close trading statement.”

Given that this is a company that has been buying back its own shares, one that has a strong balance sheet having cut net debt at period end to £170 million from a previous £260 million, has excellent interest cover and is targeting 70% to 75% cash conversion for the full year and that is continuing to invest in its own future with strong research and development expenditure together with the general outlook for defence markets to strengthen over the next few years, investors in Ultra Electronics may be in for some much needed better times ahead.

And Finally…..5 More F-35 Lightning Joint Strike Fighters Arrive at RAF Marham plus….  

So, with the arrival of no fewer than five more F-35’s at RAF Marham on Friday evening for the UK means that 617 Squadron now has a total of nine of these superb aircraft. Awesome technology this is and let no one tell you otherwise. Sceptics and cynics of the F-35 are plenty but I am in no doubt whatsoever that they will all be proven wrong.

I and many others who understand the complications of air-to-air tanker refuelling were particularly angered over the weekend when one of those may armchair sceptics who had somehow got hold of a copy of a video apparently showing that one of the F-35 pilots flying from the US to RAF Marham had troubles on its first attempt to link with the tanker and placed this on social media.

The sceptic concerned then had the audacity to suggest that the F-35 had ‘unmitigated refuelling issues’ to wit all that I can say is what absolute rubbish this is.

Any military fast jet pilot will tell you that it only takes a minute degree of turbulence to cause difficulty in making the attachment. I have had the pleasure of being in the back seat of a Tornado GR4 twice when we have undertaken air to air refuelling – in both cases from a VC-10. I know and understand just how difficult it was to link up even if in my own case, the pilots made it look easy on both occasions.

Such appalling none evidence based cynicism aimed at discrediting F-35 beggars’ belief.

As to the other issue over the weekend, that of the ‘Mail on Sunday’ article which made the ridiculous assertion that F-35 secrets were stolen via a dating app and that a member of the RAF’s Tinder account was hacked, with the perpetrator aiming to get information on the F-35 best here that I repeat the MOD response to this ludicrous story:

“No F-35 secrets have been stolen, as the headline inaccurately claims. No F-35 information of a sensitive or classified nature has been disclosed via a dating site. The member of RAF personnel involved is not even associated with the F-35 programme”.

CHW (London – 6th August 2018)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon






Back to article list