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QinetiQ, the defence, security and aerospace company, announces its preliminary results for the year ended 31 March 2015 which saw:

  • Strong performance in EMEA Services with increased orders, revenue and operating profit
  • Core Air, Weapons and Maritime businesses all performed well
  • New President appointed to lead repositioning of US Global Products in response to a challenging market
  • Continued high cash conversion
  • £150m share buyback well advanced; £128m complete at 15 May 2015
  • 17% increase in full year dividend reflecting upgrade at the half year and progressive dividend policy
  • 77% revenue under contract at start of FY16 consistent with prior year; balance supported by pipeline of opportunities
  • Maintaining expectations for Group performance in the current financial year
2015 2014
(restated^)
% Change
Business Performance – continuing operations+
Orders £613.6m £596.9m 3%
Revenue £763.8m £782.6m (2)%
Underlying operating profit £111.3m £113.7m (2)%
Underlying operating margin 14.6% 14.5%  
Underlying profit before tax £107.8m £101.2m 7%
Underlying net cash from operations (post capex) £114.9m £106.2m 8%
Underlying cash conversion ratio 103% 93%  
Underlying earnings per share 15.2p 13.8p 10%
Net cash £195.5m £170.5m  
Full year dividend per share 5.4p 4.6p 17%

+The Group completed the sale of US Services on 23 May 2014. Total Group performance in 2015 included approximately two months contribution from US Services compared to twelve months in the prior period. Continuing operations (above) comprise EMEA Services and Global Products but exclude US Services.

The statutory reporting summary below includes the effect of the US Services disposal in 2015 and other specific adjusting items.

Statutory Reporting 2015 2014
Operating profit from continuing operations £109.5m £97.1m
Profit/(loss) attributable to shareholders £104.7m £(12.7)m
Earnings per share including US Services 16.6p (1.9)p

Steve Wadey, who joined QinetiQ as Chief Executive Officer on 27 April 2015, said:

“In my first few weeks at QinetiQ I’ve been impressed with the expertise of our people, as well as our capabilities and technologies, all of which are well matched to the dynamics in our markets. It’s a company with great potential and I look forward to working with our customers to develop and grow QinetiQ to meet their changing needs.”

Defence transformation, and the forthcoming Comprehensive Spending Review and SDSR are expected to have an impact on the UK defence market this year. This will provide future opportunities for EMEA Services to build on its strong record of delivering ‘more for less’, whilst recognising that in FY16 there will be uncertainty and the potential for interruptions to order flow. The portion of revenue under contract at the start of FY16 was similar to a year ago and the balance is supported by a pipeline of opportunities but order flow and contract cover will be watched closely over the coming months. Overall, given the opening backlog position, expectations for the performance of EMEA Services in the current financial year are unchanged.

In Global Products, newer products are recording notable milestones and the amount of revenue under contract at the start of FY16 is up slightly on a year ago, but the drawdown of American overseas military forces is continuing to depress demand for conflict-related products. As the division has a lumpy revenue profile which is dependent on the timing and shipment of key orders, there is a range of possible outcomes for the performance of Global Products in the current year.

In balancing the market uncertainties with the strength of the Group’s operations, the Board is maintaining its expectations for Group performance in the current financial year.

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