QinetiQ Group plc Interim Results Announcement Six months ended 30 September 2010

18 Nov 2010

Restoring QinetiQ to Strength – Solid Progress in First Half

H1 FY2011 H1 FY2010
Business Performance
Revenue £864.9m £806.3m
Organic change at constant currency 6% (1)%
Underlying operating profit* £64.9m £62.5m
Underlying operating margin* 7.5% 7.8%
Underlying profit before tax* £51.6m £45.1m
Underlying net cash from operations* £149.9m £92.4m
Underlying cash conversion ratio* 231% 148%
Net debt £327.0m £452.3m
Underlying earnings per share* 6.5p 5.7p
Dividend per share - 1.58p
Statutory Reporting
Operating (loss)/profit £(24.3)m £9.6m
Loss before tax £(37.6)m £(1.3)m
Earnings per share (6.4)p 0.1

  • Group revenues up 7%, driven by strong sales of survivability products;
  • Balance sheet strengthened:
      Very strong cash generation;
    • Net debt at 30 September 2010 £327.0m (H1 FY10: £452.3m);
  • Gearing ratio** of 1.9x achieved ahead of plan;
  • Significant progress in first six months of the 24 month self-help programme:
      Simplified structure implemented: US Services, UK Services and Global Products;
    • Action to eliminate loss-making and/or non-core activities; sale of S&IS;
  • Leadership teams upgraded;
  • UK employee terms and conditions renegotiated; restructuring programme on track.
  • Leo Quinn, Chief Executive Officer of QinetiQ Group plc, said: “Our reduction in the Group’s debt is a yardstick of our progress in building the right foundation for the Group going forward. Our goal is to become more competitive and to use our deep relationships with customers to help them find solutions to the challenges they face. Government policy reviews in both the US and UK have impacted the letting of contracts in our services businesses, but tight control on costs and the strong demand in Global Products have produced a solid performance. At the same time, the level of cash generation demonstrates our determination to strengthen the balance sheet.

    “Work continues on streamlining the Group structure and processes, building up the leadership team and embedding the changes we have put in place.

    "As yet the effect of new Government policy, in both the US and UK, has not worked through to detailed implementation. Absent any immediate material change in customer requirements, overall the Board believes that the Group will meet its expectations for the current financial year, as the Global Products business fulfils current order demand. We will continue to position the Group for profitable growth in the medium term.”
    * Definitions of underlying measures of performance can be found in the glossary on page 20. Underlying financial measures, excluding amortisation of intangible assets arising from acquisitions and specific non-recurring items, are presented as the Board believes these provide a better representation of the Group’s long-term performance trends. Specific non-recurring items include gains on business divestments, impairments of investments, impairment of property, plant and equipment, restructuring costs, inventory provisions in respect of capitalised DTR-programme bid costs, and tax thereon.

    ** The gearing ratio (adjusted net debt:EBITDA) is the ratio of net borrowings at the balance sheet date translated at average exchange rates for the period to EBITDA generated in the 12 month period to the balance sheet date, and calculated in accordance with the Group’s credit facility ratios.

    For Further Information Contact:

    Media relations:   
    QinetiQ press office  +44 (0) 1252 393500
    Liz Morley, Maitland  +44 (0) 7798 683108
    Brian Hudspith, Maitland  +44 (0) 7771 825606
    Investor relations:   
    David Bishop, QinetiQ 

    +44 (0) 7920 108675

    Downloadable copy of the interim results release [PDF]

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    QinetiQ Group plc Interim Results Announcement Six months ended 30 September 2010