Slide 1: Delivering enduring value for our customers and shareholders
COMMERCIAL IN CONFIDENCE Delivering enduring value for our customers and shareholders QinetiQ Group plc Preliminary results for year ended 31 March 2024 23 May 2024 COMMERCIAL IN CONFIDENCE
Slide 2: Agenda
Agenda 1 Year in review Steve Wadey – Group CEO 2 Financial results Heather Cashin – Interim Group CFO 3 Strategic outlook Steve Wadey – Group CEO 4 Q&A 3 Preliminary results for year ended 31 March 2024 | 23 May 2024 | ©
Slide 3: Year in review
Year in review Steve Wadey Group Chief Executive Officer
Slide 4: Headlines
Headlines Delivered a further year of strong overall Group 1 operational and financial performance in FY24 Strong momentum entering FY25 and on-track to deliver 2 c.£2.4bn organic revenue at c.12% margin by FY27 Enhanced focus on capital allocation with optionality for 3 investment in growth and fur
Slide 5: Financial highlights
Financial highlights FY24 performance • Record order intake at £1.74bn, with a book-to-bill1 of 1.1x Orders Revenue • Revenue up 21%, up 14% on an organic basis £1,740.4m +1% £1,912.1m +21% • Profit up 20% with stable margin at 11.3%, up 16% organically FY23: £1,724.1m FY23: £1,580.7m • High cash co
Slide 6: EMEA Services
EMEA Services Excellent growth at stable margin Successful delivery of long-term contracts • Early delivery of mission data transformation for RAF • MSP2 contract extended by 3 years with $87m new orders • First Laser Directed Energy Weapon (LDEW) firing in UK • On-track to secure LTPA4 5-year exten
Slide 7: Global Solutions
Global Solutions Lower growth at stable margin US platform built with Avantus integrated • Record production of Targets; planned CRS-I1 ramp-down • Secured $1.3bn2 of total contract awards, inc. re-competes • Successful Targets certification enabling US market entry • $224m SDA3, $126m SCO4 & $170m
Slide 8: Financial results
Financial results Heather Cashin Interim Group Chief Financial Officer
Slide 9: FY24 Financial Highlights
FY24 Financial Highlights Orders +1%1 Revenue +21% Operating profit +20% £1,740.4m £1,912.1m £215.2m 11.3%2 FY23: £1,724.1m FY23: £1,580.7m FY23: £178.9m 11.3% Cash conversion EPS +11% ROCE -2% pt & leverage 104% 0.5x 29.4p 21% FY23: 106% 0.8x FY23: 26.5p FY23: 23% All measures on this page are unde
Slide 10: Record order intake with book-to-bill of 1.1x supporting future growth
1 Record order intake with book-to-bill of 1.1x supporting future growth Orders (£m) Orders won (£m) 2,318 1,724 5783 7% growth excl. MSCA2 19% growth excl. MSCA 10% organic decline 1% total growth 1,227 260 MSCA 675 559 3 419 MSCA 1,724.1 (187.3) 23.1 (23.5) 204.0 1,740.4 905 1,065 675 808 FY22 FY2
Slide 11: Strong revenue growth; excellent EMEA Services and lower Global Solutions growth
Strong revenue growth; excellent EMEA Services and lower Global Solutions growth Revenue (£m) FY25 Revenue Cover 14% 21% organic growth total growth To Win 30% 1,580.7 229.6 (10.7) (20.9) 133.4 1,912.1 US unfunded 6%1 Contracted 64% FY23 EMEA Services Global Solutions Foreign exchange Acquisitions &
Slide 12: Strong profit growth with stable margin
Strong profit growth with stable margin Underlying operating profit from segments (£m) 16% 20% organic growth FY24 FY23 total growth £m £m 178.9 25.8 2.1 (2.2) 10.6 215.2 Operating profit from segments 215.2 178.9 RDEC Income 27.2 17.4 Amortisation of intangibles (25.2) (15.6) Acquisitions and dispo
Slide 13: EMEA Services – excellent growth driven by strong order book
EMEA Services – excellent growth driven by strong order book Orders (£m) EMEA Services FY24 FY23 1,372 1,193 £m £m MSCA 260 919 Orders 1,193.1 1,372.2 Revenue 1,417.4 1,179.3 Underlying operating profit 163.4 137.1 FY22 FY23 FY24 Underlying operating profit margin 11.5% 11.6% Book-to-bill ratio1 1.0
Slide 14: Global Solutions – strong orders with revenue at stable margin
Global Solutions – strong orders with revenue at stable margin Orders (£m) Global Solutions FY24 FY23 £m £m 578 Orders 547.3 351.9 308 352 Revenue 494.7 401.4 547 Underlying operating profit 51.8 41.8 FY22 FY23 FY24 Underlying operating profit margin 10.5% 10.4% Revenue (£m) Book-to-bill ratio 1.1x
Slide 15: High cash generation through excellent delivery
High cash generation through excellent delivery Cash generation (£m) 104% cash conversion 215.2 27.2 65.5 307.9 9.8 2.5 320.2 (96.1) 224.1 Underlying RDEC Depreciation & Underlying Underlying working Other¹ Underlying net cash Capex Underlying net cash operating profit from amortisation EBITDA capit
Slide 16: Strong balance sheet, material deleveraging, and enhanced focus on capital allocation
Strong balance sheet, material deleveraging, and enhanced focus on capital allocation Net (debt) / cash (£m) (206.9) 224.1 (36.9) (14.1) (12.2) (16.9) (45.6) (16.0) (26.7) (151.2) £0m Leverage 0.5x Leverage 0.8x Net debt Net cash inflow Taxation Net Acqusitions & Digital Platform Dividends Share buy
Slide 17: Outlook Statement
Outlook Statement FY25 guidance increased and on-track to deliver FY27 outlook • We enter FY25 with strong momentum, a healthy order book and increased visibility, with 64% revenue under contract. We expect FY25 to deliver high single-digit organic revenue growth, compared to FY24, at a stable opera
Slide 18: Strategic outlook
Strategic outlook Steve Wadey Group Chief Executive Officer
Slide 19: Rising global instability driving increasing spending in defence and security
Rising global instability driving increasing spending in defence and security Increasing threats Market opportunity1 >£30bn per year $850bn budget with record R&D2 and >£23bn T&E3 at $145bn for new technologies £402m <2% Defence budget growing to 2.5% GDP >£5bn by 2030 with R&D increasing to >5% £1,
Slide 20: Strategy delivering long-term consistent performance and sustainable growth
Strategy delivering long-term consistent performance and sustainable growth Strong track record Increasing revenue visibility Revenue (£bn) Operating profit (£m)2 Revenue under contract for next 3 years (£bn)3 Orders pipeline for next 5 years (£bn)4 2.5 250 2.5 12 12% CAGR 9% CAGR 17% CAGR 2.0 16% C
Slide 21: Building an integrated global company aligned to our AUKUS customers’ needs
Building an integrated global company aligned to our AUKUS1 customers’ needs Thriving people Cutting-edge technology Leveraging capability • Strengthened leadership team to • Cutting-edge innovation underpinned • Continued investment in bidding, execute plan for sustainable growth by c.£20m p.a. inv
Slide 22: Rapidly changing character of warfare increasing demand for our strengths
Rapidly changing character of warfare increasing demand for our strengths AUKUS1 customers’ priorities R&D4 for disruptive technologies T&E5 for major sovereign capabilities • Autonomous systems & C-UAS2 • Directed energy weapons and hypersonics and counter-hypersonics • Undersea warfare • Electroni
Slide 23: Enhanced focus on disciplined capital allocation and execution
Enhanced focus on disciplined capital allocation and execution Capital allocation policy Invest in our organic Complement with value Provide a progressive Return excess cash to growth accretive acquisitions dividend to shareholders shareholders Near term focus • Focusing on execution of our organic
Slide 24: A differentiated defence and security company with clear investment case
A differentiated defence and security company with clear investment case Driven by our purpose and strategy High organic revenue growth 7 – 9% Aligned to structural Highly relevant to growth markets increasing threat Stable operating margin 11 – 12% High cash conversion 90%+ Strong operational Inves
Slide 25: Summary
Summary Steve Wadey Group Chief Executive Officer
Slide 26: Summary
Summary Financial performance Delivered a further year of strong overall Group 1 Revenue (£bn) operational and financial performance in FY24 3.0 c.8% Organic CAGR at c.12% margin 2.5 2.0 c.16% Total CAGR1 Strong momentum entering FY25 and on-track to deliver at c.12% margin 2 c.£2.4bn organic revenu
Slide 27: Q&A
COMMERCIAL IN CONFIDENCE Q&A 28 Preliminary results for year ended 31 March 2024 | 23 May 2024 | © COMMERCIAL IN CONFIDENCE
Slide 28: Appendix
Appendix
Slide 29: A differentiated company responding to national and global security needs
A differentiated company responding to national and global security needs Experimentation and technology Robotics and autonomous systems Protecting lives by serving the Engineering services and support national security interests of our customers Test and evaluation Cyber and information advantage T
Slide 30: Definitions
Definitions • Underlying performance is stated before: – Amortisation of intangibles arising from acquisitions – Pension net finance income – Gains/losses on disposal of businesses, investments and property – Transaction, integration and one-off remuneration costs in respect of business acquisitions
Slide 31: Technical guidance
Technical guidance FY24 FY25 Revenue £1.9bn We expect FY25 to deliver high single-digit organic revenue growth, compared to FY24, at a stable operating profit margin. Profit margin 11.3% £340m debt financing taken out with Avantus acquisition (5.2% weighted average Underlying net finance expense £(1
Slide 32: Revenue by customer and country
Revenue by customer and country Revenue by customer (%) Revenue by destination country (%) FY24 FY23 FY24 FY23 £1,912.1m £1,580.7m £1,912.1m £1,580.7m % % % % MOD 57% MOD 57% UK 66% UK 66% DoD 10% DoD 12% US 21% US 19% Government agencies 21% Government agencies 15% Australia 7% Australia 8% Commerc
Slide 33: Income statement including specific adjusting items
Income statement including specific adjusting items* FY24 FY23 £m £m Operating profit from segments 215.2 178.9 RDEC Income 27.2 17.4 Underlying operating profit 242.4 196.3 Amortisation of intangibles assets arising from acqusitions (25.2) (15.6) Acquisition, integration and disposal costs (9.2) (1
Slide 34: Understanding our different underlying profit and tax rates
Understanding our different underlying profit and tax rates FY24 FY23 £m £m Underlying operating profit* 242.4 196.3 Underlying tax charge* 57.4 36.8 Tax income on specific adjusting items (14.3) 0.8 Headline tax charge 43.1 37.6 Underlying tax rate* 25.3% 19.4% Illustrative effective tax rate, with
Slide 35: Underlying earnings per share (pence)
Underlying earnings per share (pence) 26.5 2.8 1.3 2.2 (1.1) (1.9) (0.4) 29.4 Pence FY23 Operating RDEC¹ Acquisitions & Net Finance Effective tax Other including FY24 Underlying profit from disposals¹ Expense¹ rate foreign Underlying EPS Segments exchange EPS (organic)¹ 1 Post-tax 36 Preliminary res
Slide 36: Cash conversion
Cash conversion FY24 FY23 £m £m Operating profit from segments* 215.2 178.9 Underlying RDEC income 27.2 17.4 Underlying operating profit* 242.4 196.3 Depreciation and amortisation 65.5 59.0 EBITDA* 307.9 255.3 Changes in working capital 9.8 11.9 Loss on disposal of PPE and intangibles 0.9 0.2 Share-
Slide 37: Movements in net (debt)/cash
Movements in net (debt)/cash FY24 FY23 £m £m Free cash flow 173.1 126.5 Acquisition of business (5.1) (503.8) Disposal of business and property 2.1 30.6 Acquisition and disposal related costs (2.7) (16.4) Digital investment (16.9) (5.8) Dividends (45.6) (42.6) Purchase of own shares (17.1) (0.8) Cha
Slide 38: Balance sheet
Balance sheet FY24 FY23 £m £m Goodwill 401.4 409.0 Intangible assets 321.8 343.0 Property, plant and equipment 531.8 477.8 Working capital (120.3) (69.0) Net pension asset (after deferred tax) 8.8 84.4 Other assets and liabilities (66.2) (70.0) Net debt (151.2) (206.9) Net assets 926.1 968.3 39 Prel
Slide 39: Net pension asset
Net pension asset FY24 FY23* £m £m Equities 21.8 32.9 LDI investment 414.9 399.2 Asset backed security investments 35.5 4.3 Bonds 405.5 372.0 Property funds - - Cash and cash equivalents 36.5 17.2 Derivatives 19.6 14.1 Insurance buy-in policy 507.4 515.5 Borrowings (125.0) - Market value of assets 1
Slide 40: Glossary
Glossary Term Definition Term Definition B2B Book-to-bill SCO Strategic Capabilities Office LTPA Long Term Partnering Agreement TARS Tethered Aerostat Radar System AUKUS Australia, United Kingdom, United States NDS National Defence Strategy LDEW Laser Directed Energy Weapon MSCA Maritime Strategic C
Slide 41: Basis of preparation
Basis of preparation: Throughout this presentation, certain measures are used to describe the Group’s financial performance, which are not recognised under IFRS or other generally accepted accounting principles (GAAP). The Group’s Directors and management assess financial performance based on underl