Preliminary Results for year ended 31 March 2011

26 May 2011

Restoring Strength, Building Value 

  2011  2010  
Business Performance 
Revenue  £1,702.6m  £1,625.4m  
Organic change at constant currency  5%  (3)%  
Underlying operating profit*  £145.4m  £120.3m  
Underlying operating margin*  8.5%  7.4%  
Underlying profit before tax*  £114.6m  £85.7m  
Underlying net cash from operations* (post capex)  £265.8m  £174.3m  
Underlying cash conversion ratio*  183%  145%  
Net debt  £260.9m  £457.4m  
Underlying earnings per share*  14.2p  11.1p  
Dividend per share  1.60p  1.58p  
 
Statutory Reporting 
Operating profit/(loss)  £54.7m  £(25.3)m  
Profit/(loss) before tax  £26.6m  £(66.1)m  
Earnings per share  0.8p  (9.7)p  

 

Headlines

Group revenues up 5% and underlying operating profit* up 21%, driven by strong sales of Q-NET vehicle survivability product
Delivering on self-help programme to build future value
12 months into 24 month plan
Business reorganisation delivering focus
US Services being fully integrated
UK Services restructured
Global Products common framework implemented
Cultural transformation delivering a commercial, performance-orientated approach
Group-wide drive to reduce cost base, increase competitiveness
Balance sheet strengthened
Excellent cash generation reduced net debt to £261m (31 March 2010: £457m)
Gearing ratio† down from 2.5x to 1.4x
New revolving credit facility signed, 2013 private placement repaid May 2011 - no further debt maturity for 5 years
Dividend reinstated in line with commitment made May 2010. Proposed final dividend 1.60p per share.

Leo Quinn, Chief Executive Officer said: “We are making significant progress in restoring QinetiQ to strength. Our reshaping of the businesses, together with the reduction and refinancing of the debt, all contribute to a leaner and more agile Group. With a stronger balance sheet, we are now able to fund future growth and reinstate the dividend for shareholders.

“Internally, we have made significant changes which we will embed and extend this year, to ensure that over the medium term we maximise value from both QinetiQ’s inherent capabilities and emerging opportunities. Externally, by working closely with its US and UK government customers, QinetiQ will be able to align its unique expertise with their priorities to achieve greater value and efficiency.

“We are unlikely to see a repetition of last year's level of Q-NET sales, but the Board believes that the programme underway to increase competitiveness will enable the Group to perform in line with its expectations for the current financial year in what are likely to remain challenging market conditions.”

* Definitions of underlying measures of performance can be found in the glossary. 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 amounts relating to: restructuring costs; pension curtailment gains; contingent payments on acquisition treated as remuneration; net inventory write-offs in respect of capitalised DTR-programme bid costs; impairment of property, plant and equipment; impairment of intangible assets; gain/(loss) on business combinations and divestments; unrealised impairments of investments; 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 please 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


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QinetiQ People Who Know How
Preliminary Results for year ended 31 March 2011