QinetiQ Group plc Interim Results Announcement Six months ended 30 September 2008
QinetiQ is an international provider of defence and security technology based services. It operates principally in the UK and North America with operations also in Australia.
Good growth and strong performance in line with expectations
Financial Highlights
* Good first half performance with Group revenue up 13.9% to £727.4m (2007: £638.8m) and organic growth[*1] of 8.6%;
* Underlying operating profit up 19.8% to £55.1m (2007: £46.0m);
* Underlying profit before tax up 22.1% to £45.9m (2007: £37.6m);
* Profit before tax up 41.3% to £36.6m (2007: £25.9m);
* Strong underlying operating cash conversion of 125% (2007: 159%);
* Net cash flow from operations before reorganisation costs of £89.2m (2007: £90.9m);
* Underlying earnings per share increased 20.7% to 5.6p (2007: 4.6p per share);
* Basic earnings per share up 28.6% to 4.3p (2007:3.4p per share); and
Interim dividend per share increased 12.8% to 1.50p (2007:1.33p)
Operating highlights
* Orders won in period up 31.4% to £777.9m (2007: £592.2m) providing enhanced backlog;
* North America revenues up 27.3%, with 18.9% organic growth[*1];
Relationship with NASA extended with significant contract wins during period;
* EMEA reorganisation completed ahead of plan yielding cost savings of £12m on an annualised basis;
* Award of the 15-year £150m maritime facilities contract by MOD;
Contracted and funded backlog (excluding LTPA) increased 21.8% to £1,154.1m; and
* Acquisition of Dominion Technology Resources, Inc. extends QinetiQ North America’s (QNA) presence in the high end product and service provision to the US intelligence community
[*1] Organic growth is calculated at constant foreign exchange rates, adjusting the comparatives to incorporate the results of acquired entities for the same duration of ownership as the current period. See Glossary section on page 28 for definitions of Non GAAP terms used throughout this statement
Underlying financial measures are presented as the Board believes these provide a better representation of the Group’s long-term performance trends.
Commenting on the results, Graham Love, Chief Executive Officer, said:
"The Group produced a strong performance in the first six months, reflecting the broad strength and resilience of our operations. Our North American operations performed well with 19% organic revenue growth, and following its reorganisation, our EMEA business is better focused with a lower cost base.
We remain well placed in areas expected to be key priorities of the new US Administration and expect continued double digit growth in QNA into the medium term.
In the UK we are both well positioned through our technology insertion expertise to respond to changing customer demand and to continue to support existing military operations. In addition our business is underpinned by a number of long term managed service contracts.
There remains a strong pipeline of acquisition opportunities and we will be selective in pursuing those that complement and grow our capabilities and provide access to new markets. We plan to undertake the disposal of certain non-core assets which will enable us to reallocate capital into quality investments whilst retaining a resilient balance sheet.
With the good growth experienced in the first half and a solid order backlog, the Board is announcing a 12.8% increase in the interim dividend and looks forward to the remainder of the year with confidence."
There will be a webcast of the presentation of the preliminary results to analysts at 09:30 am on 26 November 2008. If you wish to watch this broadcast you will need to register in advance. The event will be broadcast at the same address. There will also be an audiocast of the event which can be heard using the following numbers:
UK participants: 0800 634 5205
International: +44 208 817 9301
US Toll Free: 1 866 629 2704
The presentation will be available at our investor relations page on the morning of our results and the video conference will be uploaded to the site following the event.
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