QinetiQ Group plc · LSE:QQ.
QinetiQ — FY2015 Earnings Presentation
34 slides from QinetiQ's earnings presentation, May 21, 2015
Slide 1: Preliminary results for year ended 31 March 2015
Preliminary results for year ended 31 March 2015 QinetiQ Group Plc 21 May 2015
Slide 2: Introduction
Introduction Mark Elliott Chairman 2
Slide 3: Opening remarks
Opening remarks Steve Wadey Chief Executive Officer 3
Slide 4: Opening remarks
Opening remarks My perspective First impressions Looking at the market Strong position Looking at QinetiQ Outstanding people Key principles Ready to move forward Preliminary results for year ended 31 March 2015 4
Slide 5: Year in review
Year in review David Mellors Chief Financial Officer 5
Slide 6: Headlines
Headlines Strategic Operational • Sale of US Services • Strong performance in EMEA Services • Separation of US Global Products with standalone • Restructured US Global Products with new infrastructure management team • Paid off US Private Placement notes • Continued high cash conversion: 103% • £150
Slide 7: Markets
Markets Market Drivers Global Markets • Increasingly diverse threats to our security • US • Customers need to achieve more with less – post-conflict environment UK Defence Market • Australia and Canada • Ongoing defence transformation – similar objectives to UK – Revised single source regulations •
Slide 8: Summary financial headlines
Summary financial headlines FY15 FY14^ £m £m Revenue 763.8 782.6 Operating profit* 111.3 113.7 Operating margin* 14.6% 14.5% Earnings per share* (pence) - continuing operations 15.2 13.8 Net cash from continuing operations (post capex)* 114.9 106.2 Cash conversion from continuing operations (post ca
Slide 9: EMEA Services – financial performance
EMEA Services – financial performance FY15 FY14 £m £m Orders† 461.6 447.8 Revenue 625.6 607.0 Underlying Operating Profit* 93.0 86.7 Underlying Operating Profit Margin* 14.9% 14.3% Book to Bill Ratio† 1.1x 1.1x Funded Backlog† 678.6 661.0 • 3% revenue growth • Core Air, Weapons & Maritime all perfor
Slide 10: EMEA Services – Year in review
EMEA Services – Year in review Value pipeline Core Explore Test for Value Increased market share Growth in new markets Commercial traction • Air • Training • International procurement • Weapons • Cyber Security advice • Maritime • Cyveillance® • Smart metering assurance • C4ISR • Procurement Advisor
Slide 11: Global Products – financial performance
Global Products – financial performance FY15 FY14 £m £m £m 500 Orders 152.0 149.1 Revenue 138.2 175.6 400 Underlying Operating Profit* 18.3 27.0 Underlying Operating Profit Margin* 13.2% 15.4% 300 Book to Bill Ratio 1.1x 0.8x Funded Backlog 116.7 97.1 200 • Drawdown impact still reducing revenues in
Slide 12: Global Products – Year in review
Global Products – Year in review Value pipeline Core Explore Test for Value Increased market share Growth in new markets Commercial traction • Talon®robots • OptaSense® • Linewatch TM • Survivability products • Space Products • MEWS TM • Contract-funded research and development • Robotic applique ki
Slide 13: Our employees and customers – non-financial KPIs
Our employees and customers – non-financial KPIs Investing in Employee engagement future capability Customer satisfaction Best Companies Employee Survey Apprentices & Graduates Customer Champions Survey 85% said we are performing QinetiQ’s overall project Target as a top 3 supplier performance (out
Slide 14: Specific adjusting items
Specific adjusting items* FY15 FY14 £m £m Items with cash impact Reduction in pension liabilities on closure to future accrual (net of costs) - 27.1 Gain on disposal of business - UK Calibration - 1.1 Non-cash items Amortisation of acquired intangibles (2.8) (3.4) Impairment of goodwill - (41.9) Oth
Slide 15: Movements in net cash
Movements in net cash 170.5 143.9 (29.0) 2.2 (28.8) 79.6 (106.1) (31.7) (5.1) 195.5 £138m shareholder 103% cash conversion returns £ million £117m free cash flow* Net cash Cash flow Net capex Tax & PP US Services Share Dividends Other Net cash 31 Mar 14 from underlying accelerated disposal buyback 3
Slide 16: Balance sheet position
Balance sheet position FY09 FY10 FY11 FY12 FY13 FY14 FY15 400 200 £ million - (200) (400) (600) FY09 FY10 FY11 FY12 FY13 FY14 FY15 £m £m £m £m £m £m £m Working capital 154.0 107.2 (30.7) (62.7) (148.3) (155.3) (174.6) Retirement benefit obligation (pre-tax) (105.2) (147.3) (124.6) (31.5) (54.1) (22.
Slide 17: FY16 Outlook
FY16 Outlook EMEA Services Defence transformation, and the forthcoming Comprehensive Spending Review and SDSR are expected to have an impact on the UK defence market this year. This will provide future opportunities for EMEA Services to build on its strong record of delivering ‘more for less’, whils
Slide 18: Questions
Questions QinetiQ iPad App Preliminary Results for year ended 31 March 2015 18
Slide 19: Appendices
Appendices Scan the QR code to access investor information Preliminary Results for year ended 31 March 2015 19
Slide 20: Definitions
Definitions Underlying performance is stated before • Amortisation of intangibles arising from acquistions • Pension gain on closure to future accrual and associated Scheme-closure mitigation costs • Pension net finance expense • Gains/losses on business divestments and disposal of investments • Res
Slide 21: Revenue by sector and customer – continuing Group
Revenue by sector and customer – continuing Group Revenue by sector (%) Revenue by customer (%) FY15 FY14^ FY15 FY14^ £763.8m £782.6m £763.8m £782.6m % % % % EMEA Services 82 EMEA Services 78 MOD 67 MOD 62 Global Products 18 Global Products 22 DoD 6 DoD 9 Government agencies 11 Government agencies 1
Slide 22: Income Statement
Income Statement FY15 FY14^ £m £m Revenue 763.8 782.6 Underlying operating profit* 111.3 113.7 Net finance expense (3.5) (12.5) Underlying profit before tax* 107.8 101.2 Amortisation & impairment of acqn-related intangibles - continuing (2.8) (3.4) Impairment of goodwill and reversal of impairment o
Slide 23: Revenue bridge
Revenue bridge 782.6 (3.7) 21.2 (36.3) 763.8 Revenue Global 175.6 138.2 Products EMEA Services 607.0 625.6 £ million FY14 continuing Group^ FX EMEA Services Global Products FY15 ^ 2014 data has been restated for the reclassification of US Services (excluding Cyveillance®) as a discontinued operation
Slide 24: Segmental analysis of profit and margin
Segmental analysis of profit and margin EMEA Services FY15: 14.9% FY14: 14.3% FY15: 13.2% FY14: 15.4% Global Products Operating profit* FY15 FY14 £m £m EMEA Services 93.0 86.7 Global Products 18.3 27.0 Continuing Group 111.3 113.7 * Underlying performance as defined in appendix Preliminary results f
Slide 25: Earnings per share (pence) – underlying performance
Earnings per share (pence) – underlying performance 13.8 (0.3) 1.2 0.1 0.4 15.2 pence Underlying FY14 Underlying PP interest Effective tax rate Change in Underlying FY15 EPS operating profit number of shares EPS Continuing operations only Preliminary results for year ended 31 March 2015 25
Slide 26: Number of shares in issue
Number of shares in issue 660.5m 630.9m 608.6m Opening number of shares Weighted average Closing number of shares (1 April 2014) number of shares (31 March 2015) Preliminary results for year ended 31 March 2015 26
Slide 27: Balance sheet
Balance sheet 31 March 2015 31 March 2014 £m £m Goodwill 107.2 141.3 Intangible assets 15.3 44.2 Property, plant and equipment 229.6 233.8 Working capital (174.6) (155.3) Retirement benefit obligation (net of tax) (37.8) (20.9) Other assets and liabilities (37.1) (35.5) Net cash 195.5 170.5 Net asse
Slide 28: Taxation
Taxation FY15 FY14^ £m £m Underlying tax charge* (11.8) (11.4) Tax on non-recurring items 23.8 (4.6) Headline tax charge 12.0 (16.0) Underlying tax rate* 10.9% 11.3% * Underlying performance as defined in appendix ^ 2014 data has been restated for the reclassification of US Services (excluding Cyvei
Slide 29: Cash conversion
Cash conversion FY15 FY14^ £m £m Underlying operating profit* 111.3 113.7 Cash flow from operations* 143.9 127.0 Net capex (29.0) (20.8) Net cash flow from continuing operations post capex 114.9 106.2 Cash conversion %* 103% 93% Net interest paid (6.6) (11.3) Taxation - continuing operations 8.8 2.1
Slide 30: Movements in net cash
Movements in net cash FY15 FY14 £m £m Free cash flow from continuing Group 117.1 97.0 PP accelerated interest (28.8) - Reorganisation costs (0.6) (10.3) Pension scheme closure - (4.0) Disposal related pension contribution (6.0) - US Services disposal proceeds 79.6 - Acquisition of businesses (3.7) -
Slide 31: Defined benefit pension scheme – IAS 19 balance sheet position
Defined benefit pension scheme – IAS 19 balance sheet position FY15 FY14 £m £m Market value of assets 1,454.6 1,304.6 Present value of scheme liabilities (1,494.0) (1,326.8) Net pension liability before deferred tax (39.4) (22.2) Deferred tax asset 1.6 1.3 Net pension liability (37.8) (20.9) FY15 FY
Slide 32: Credit facilities
Credit facilities Value Value Maturity date Denomination in denomination £m Revolving Credit Facility August 2019 £m 166.0 166.0 Revolving Credit Facility August 2019 $m 100.0 67.3 Total Committed Facilities 233.3 Preliminary results for year ended 31 March 2015 32
Slide 33: Employee numbers
Employee numbers 31 March 2015 31 March 2014 EMEA Services 5,576 5,399 Global Products 674 834 Continuing operations 6,250 6,233 US Services - 2,704 Total 6,250 8,937 Preliminary results for year ended 31 March 2015 33
Slide 34: Disclaimer
Disclaimer This document contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Actual results, levels of activity, performance, achievements and events are most likely to vary materially from t