BUSINESS NEWS
28 May 08. QinetiQ Group plc audited preliminary results for the year ended 31 March 2008.
Financial summary
2008 2007
Underlying profit before tax £109.0m £94.0m
Profit before tax 51.4m 89.3m
Underlying earnings per share 13.4p 11.3p
Basic earnings per share 7.2p 10.5p
Interest cover 9.2 times 11.7 times
Net debt £379.9m £300.8m
Cash flow from operations £102.3m £94.1m
Orders £1,277.1m £1,214.0m
Funded backlog (excluding LTPA) £947.7m £850.9m
Underlying effective tax rate 19.30% 21.20%
Full year dividend per ordinary share 4.25p 3.65p
Financial Highlights
– Revenue up 19% to £1,366m includes organic revenue growth of 8.6%
– Underlying operating profit increased 20% to £127.0m
– Underlying earnings per share growth of 19% to 13.4p (2007: 11.3p)
– Full year dividend increased by 16% to 4.25 pence per share (2007: 3.65 pence per share)
– Healthy book to bill ratio of 1.1:1
– Total funded backlog of £5.7bn (including LTPA)
Operating Highlights
– Organic revenue growth of 17.5%
– $1bn+ business consolidating market presence
– Business integration delivering continued strong organic growth
– Completed five acquisitions in key markets
EMEA
– Organic revenue growth of 4.5%
– Continued growth in revenue from MOD
– Overseas expansion into Australia through investment of £13m in three acquisitions
– Business reorganised to exploit future growth opportunities
– Restructuring ahead of schedule and will deliver improved margins
Ventures
– Continued investment in Ventures in year
– Venture fund established with Coller Capital
Commenting on the results QinetiQ CEO Graham Love, “QinetiQ has delivered another year of strong operating and financial performance with EPS growth of 19% reflecting the benefits of the highly differentiated business we have built in the UK and North America. Our North American performance continues to demonstrate the quality of the businesses we have acquired and their successful integration into a focussed $1bn plus turnover enterprise. It is also pleasing to see EMEA deliver organic revenue growth of 4.5% with more to come as our capability review and restructuring bear fruit. Our business model and forward visibility to earnings are robust. Our ability to innovate and respond quickly to our customers’ needs with value for money solutions through the deep expertise of our people ensures that the Group is well positioned to benefit from the opportunities that exist in all of our key markets. We enter the new year with confidence and expect to continue making good progress towards our Group targets including our increased medium-term operating margin target of 11%.”
Comment: QinetiQ is becoming a business of two types, the existing U.K. R&D business inherited from its original core and the acquisitions in the USA in particular, made post spin-off. The original business is struggling due to budget problems in the UK whilst the USA business is growing thanks in part to Supplementals for the Iraq and Afghan Wars. The share price is still languishing at post-floatation lows, although this news pushed it up 3.8%. Graham Love said he has £200m to spend on acquisitions which no doubt will be spent overseas. Post U.S. Election pundits suggest that the Supplementals will disappear which will put the U.S. business under pressure whist the U.K. will continue to suffer in the wake of Gordon Brown’s self-inflicted mini-Defence Review.
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