25 May 10. QinetiQ Group’s preliminary results for year ended 31 March 2010.
Revenue £1,625.4m £1,617.3m
Organic change at constant currency (3)% 7%
Underlying operating profit* £120.3m £151.6m
Underlying operating margin* 7.4% 9.4%
Underlying profit before tax* £85.7m £130.2m
Underlying net cash from operations*
(post capex) £174.3m £169.8m
Underlying cash conversion ratio* 145% 107%
Net debt £457.4m £537.9m
Underlying earnings per share* 11.1p 15.9p
Dividend per share 1.58p 4.75p
Operating (loss)/profit £(25.3)m £128.1m
(Loss)/profit before tax £(66.1)m £114.0m
Earnings per share (9.7)p 14.3p
* Difficult year – sales disappointing, margins weakened;
* Markets remain challenging;
* Review of operations complete – priorities agreed;
* Programme underway to restore QinetiQ to strength over next two years;
* Immediate drive on debt reduction to reduce net debt:EBITDA from 2.5x+ to a target of below 2x+ by decisive internal programme to restore value; and
* Board recommending suspension of dividend for 12 months.
Leo Quinn, Chief Executive Officer of QinetiQ Group plc, said “This has been a difficult year for QinetiQ, with challenging conditions in our core markets and considerable internal change. Our markets are likely to remain uncertain for some time, but we now have a decisive programme of self-help to restore value. We are acting to make our costs more competitive, our productivity better and our debt lower. We are changing our structure to benefit from QinetiQ’s overall strengths. Most of all, we are working to transform our culture into one based on leadership, accountability and empowerment of what is an outstanding group of people.
With these immediate steps, the Board believes that it will meet its expectations for the current year. At the same time our goal is to build the right foundation for a return to profitable and sustainable growth in the future.
27 May 10. Qinetiq needs to shrink before it can grow again and will see its revenue fall over the next two to three years, according to its new chief executive as he unveiled a sweeping overhaul of the former government research group. Leo Quinn said Qinetiq, which reported a 34 per cent drop in full-year profits and suspended its dividend for 12 months, will seek to cut 10 per cent of operating costs, which will include redundancies. The company, which was floated in 2006, had failed to deliver its “full potential”, he said. The previous management had pursued a strategy of “forced growth” focused on driving the share price through revenue growth rather than on achieving a sustainable earnings stream. He added that Qinetiq had also failed to become sufficiently commercial and had taken on riskier work that was outside its sweet spot of consulting. One of its biggest programmes, which is running behind schedule and over budget, is the Defence Training Review to outsource technical training for the military. Asked whether DTR was one contract Qinetiq should not have bid for, Mr Quinn said “unfortunately we are where we are” but added it was a strategic fit. Qinetiq has lost £400m ($583m) in value since its flotation when its shares stood at 200p. They rose 13.7p to 130p as investors welcomed news of the restructuring and expressed relief that there was no rights issue. Mr Quinn, who took the helm last November, said the planned 24-month restructuring programme would focus on cutting costs, improving productivity and reducing debt. He is simplifying the company’s structure with an emphasis on its services activities. The company is also in talks with its UK employees about new redundancy terms to