Ultra Electronics plc, is a FTSE250 specialist electronics and engineering company focused on providing mission-specific bespoke solutions to defence and other highly regulated markets.
Historically Ultra had enjoyed an excellent reputation in the investment community with a record of delivering good growth based on a strategy of small, bolt-on acquisitions. However, in 2017, the Company was impacted by several issues, including an aborted US acquisition following intervention by the US Department of Justice after funds had been raised through a rights issue. The subsequent profits warning led to the resignation of the Chief Executive at the end of the year. Consequently, the share price fell sharply and was trading at around half the level of the rights issue price a few months earlier. Confidence in the company was weak and the shares were heavily shorted following several ‘bear notes’ citing misplaced, but damaging, concerns over cash generation and working capital.
In Spring 2018 the Board announced the appointment of Simon Pryce as Chief Executive, a very experienced manager who, previously as CEO of BBA Aviation, had overseen its major strategic transformation. The Board tasked Simon to:
Soon after joining, Simon commissioned h2glenfern to undertake a detailed Perception Study. The exercise was an essential component in helping Simon understand the specific concerns of his significant shareholders and their expectations for his strategic review and future priorities.
A list of topic areas and questions was recommended and agreed by the Ultra management team. Over a month, h2glenfern conducted 23 interviews with the Company’s major institutional shareholders accounting for nearly 70% of the actively managed issued share capital and spoke to 5 sell-side analysts who followed the Company.
The output of the exercise was a 130-page report containing the detailed transcripts of these interviews, an executive summary, an overview of the top-level findings and a few key recommendations. We were able to identify and quantify the most frequently cited issues that were expressed by shareholders, together with a detailed plan of how these might be addressed in the coming months. h2glenfern presented the conclusions of the Perception Study to the Ultra Board.
The outcome of our research was an important contributing element in the delivery of Simon Pryce’s successful rebuilding of Ultra’s standing in the investment community. This led to a steady recovery in both the share price and rating driving equity value for investors.