Interim Results
14 November 2024
Good Group performance and increased returns
Results for six months to 30 September 2024 ('H1 FY25')
Steve Wadey, Group Chief Executive Officer, said: "We have delivered a good operational and financial performance across the Group, set against a backdrop of political change and an evolving threat environment. Our talented people do critical work, highly relevant to our customers' mission and this is driving increasing demand for our capabilities.
"As a result of our continued focus on disciplined capital allocation, we have extended our
Financial highlights
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Underlying[1] results |
Statutory results |
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H1 FY25 |
H1 FY24 |
H1 FY25 |
H1 FY24 |
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Revenue |
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Operating profit[2] |
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Profit after tax |
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Earnings per share |
14.2p |
13.4p |
11.1p |
11.0p |
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Interim dividend per share |
2.8p |
2.6p |
2.8p |
2.6p |
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Orders |
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Order backlog |
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Net cash flow from operations |
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Net debt |
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Good overall Group financial performance
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Revenue up 7% through consistent operational performance, up 8% on an organic[3] basis |
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Underlying operating profit up 7% with stable margin at 11.3%, up 7% on an organic basis |
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Good cash conversion at 84%, with leverage at 0.6x[4] |
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Orders up 9% at |
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Continued earnings growth with underlying EPS up 6% to 14.2p |
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Progressive dividend growth of 7%, with interim dividend one third of prior year total at 2.8p |
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Share buyback programme extended by |
High relevance to our customers' mission driving increasing demand
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Strong programme execution across EMEA Services |
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Global Solutions, including Avantus, performing in line with our expectations |
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Significant progress on a number of strategic programmes with future growth potential |
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Rapidly changing character of warfare increasing demand for our capabilities |
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Healthy backlog and pipeline gives significant long-term visibility |
FY25 guidance unchanged and on-track to deliver FY27 outlook
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FY25 performance set to deliver high single digit organic revenue growth at stable margin |
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On-track for organic revenue growth to c. |
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Interim results presentation:
We will be hosting an in-person results presentation at 09:30 GMT at the London Stock Exchange, 10 Paternoster Square,
About QinetiQ:
QinetiQ is an integrated global defence and security company focused on mission-led innovation. QinetiQ employs c.8,500 highly-skilled people, committed to creating new ways of protecting what matters most; testing technologies, systems, and processes to make sure they meet operational needs; and enabling customers to deploy new and enhanced capabilities with the assurance they will deliver the performance required.
For further information please contact:
Stephen Lamacraft, Interim Group Investor Relations Director: +44 (0) 7471 885817
Lindsay Walls, Group Communications Director (Media enquiries) +44 (0) 7793 427582
Basis of preparation:
Throughout this document, 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 underlying measures of performance, which are adjusted to exclude certain 'specific adjusting items'. In the judgment of the Directors, the use of alternative performance measures (APMs) such as underlying operating profit and underlying earnings per share are more representative of ongoing trading, facilitate meaningful year-to-year comparison and, therefore, allow the reader to obtain a fuller understanding of the financial information. The adjusted measures used by QinetiQ may differ from adjusted measures used by other companies. Details of QinetiQ's APMs are set out in the glossary to the document.
Year references (FY25, FY24, 2025, 2024) refer to the year ended 31 March.
Disclaimer
This document contains certain forward-looking statements relating to the business, strategy, 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 those implied by the forward-looking statements. The forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words 'believes',' expects', 'predicts', 'intends', 'projects', 'plans', 'estimates', 'aims', 'foresees', 'anticipates', 'targets', 'goals', 'due', 'could', 'may', 'should', 'potential', 'likely' and similar expressions, although these words are not the exclusive means of doing so. These forward-looking statements include, without limitation, statements regarding the Company's future financial position, income growth, impairment charges, business strategy, projected levels of growth in the relevant markets, projected costs, estimates of capital expenditures, and plans and objectives for future operations. Forward-looking statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Nothing in this document should be regarded as a profit forecast.
The forward-looking statements, including assumptions, opinions and views of the Company or cited from third party sources, contained in this announcement are solely opinions and forecasts which are uncertain and subject to risks. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Actual results may differ materially from those expressed or implied by these forward-looking statements. A number of factors could cause actual events to differ significantly and these are set out in the principal risks and uncertainties section of this document.
Most of these factors are difficult to predict accurately and are generally beyond the control of the Company. Any forward-looking statements made by, or on behalf of, the Company speak only as of the date they are made. Save as required by applicable law, the Company will not publicly release the results of any revisions to any forward-looking statements in this document that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this document. All subsequent written and oral forward-looking statements attributable to either QinetiQ Group plc or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to in this disclaimer and contained elsewhere in this document.
QinetiQ Group plc and its directors accept no liability to third parties in respect of this document save as would arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with Schedule 10A of the Financial Services and Markets Act 2000. It should be noted that Schedule 10A and Section 463 of the Companies Act 2006 contain limits on the liability of the directors of QinetiQ Group plc so that their liability is solely to QinetiQ Group plc.
Chief Executive Officer's Review
Overview
In the first half we delivered good, consistent operational and financial performance across the Group. We secured a record first half order intake of
We are increasing shareholder returns with the extension of our
EMEA Services continues to maintain the order and revenue momentum from FY24, delivering 10% organic revenue growth, and strong margins of 11.5%. Orders increased by 16% delivering a robust book-to-bill of 1.2x.
Global Solutions performance is in line with our expectations, with good order intake of
Operational highlights
We have continued to make good progress over the first half in implementing our strategy. Major strategic achievements delivered in the first half include:
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Next Generation German Aerial Training Services (NGGATS) contract,
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DragonFire Minimum Deployable Capability contract,
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NATO Support & Procurement Agency (NSPA) contract, NATO - A framework contract for NATO member nations to more easily access Test & Evaluation services in the |
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Major Service Provider (MSP) contract growth, |
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TacSys Resource Partner (TRP) contract with Defence Digital, |
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Significant on-contract growth, US - In the US we achieved more than 10% on-contract growth, across our major five year programmes that provide engineering services and mission support for the Space Development Agency (SDA), the Strategic Capabilities Office (SCO) and the Tethered Aerostat Radar System (TARS) for Homeland Security. |
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Aerial Target Systems ( |
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High relevance to our customers' mission driving increased demand
We operate in a rapidly changing and highly uncertain geopolitical environment, with ongoing conflicts in
Our strategy and unique value proposition are well matched to respond to these market dynamics as the need for strong national defence and security endures, focused on greater resilience and rapid modernisation. This is driving our customers' capability and investment priorities to enable them to maintain technological superiority, acceleration of capabilities and operational advantage. In turn, this is increasing demand for our differentiated capabilities in Research & Development, Engineering Services, Test & Training and Cyber & Intelligence. These remain highly relevant and critical to national defence and security priorities underpinning our sustainable growth and is why we have delivered organic revenue at broadly double the growth rate of national defence budgets over the last five years.
Clear purpose driven strategy delivering for our customers
Our purpose of protecting lives and serving the national security interests of our customers has never been more relevant. It guides our strategy which has three inter-related components:
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Delivering six distinctive and mutually supportive offerings: We co-create high-value differentiated solutions for our customers in experimentation, test, training, information, engineering and autonomous systems; |
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Applying disruptive and innovative technology and business models: We invest in and apply disruptive business models, digitisation and advanced technologies to enable our customers' operational mission at pace; and, |
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Leveraging those capabilities across our global operations: We are developing an integrated global defence and security company that leverages our capability in the |
By focusing on our customers' needs, partnering with industry and investing in our capabilities, we have won larger longer-term programmes enabling us to deliver consistent organic growth and attractive returns. We have a healthy order backlog of
We continue to invest in our people, technology and capabilities to drive organic growth. The delivery of our strategy and focused execution of our order book is dependent on the highly-skilled people we employ. We continue to make progress creating an environment where they can all thrive and have achieved our highest ever level of employee engagement. We invest c.
Leadership changes
We have our strengthened leadership team, through the arrival of Martin Cooper (Group Chief Financial Officer) and Iain Stevenson (Chief Operating Officer), both providing increased oversight of our growing and increasingly global company.
Outlook: FY25 expectations unchanged and on track to deliver FY27 guidance
Our FY25 guidance remains unchanged. We expect to deliver high single-digit organic[8] revenue growth, compared to FY24, at a stable operating profit margin. We are on-track to achieve c.
Cash conversion will remain high at 90%+ with capital expenditure within the
Following the completion of the sale and leaseback of the Cody Technology Park year-end Net Debt will be improved by c.
Summary
I am pleased with the continued progress we have made in the first half. Building on our strong track record we have delivered good consistent operational and financial performance across the Group. We remain on-track to deliver
Trading environment
Global context
We are operating in an environment of escalating regional conflicts and geopolitical tension, with outcomes remaining uncertain in the
Strategic response
To meet these increasing challenges, our three home countries of
The new Labour government launched a Strategic Defence Review (SDR) in July 2024 and is due to report in the first half of 2025. This will inform the decisions of a multi-year Spending Review, due to be published in Spring 2025. Although a timetable has yet to be set, Labour has committed to an increase in Defence spending to 2.5% GDP from its current 2.32% GDP[9].
We remain well positioned to enable the
US
The 2025 Department of Defense Budget request of
We serve our US customers' mission in the areas of Intelligence, Surveillance and Reconnaissance (ISR), mission operations, advanced cyber, information advantage, multi-domain autonomous solutions and systems and engineering and innovation.
2024 Integrated Investment Program (IIP) detailing a generational investment in the Australian Defence Force's posture, capability and structure. The commensurate increase in annual funding will see the Defence budget grow to more than AUD$100bn by 2033-34[11].
We continue to support the Australian forces in modernising sovereign defence capabilities, leveraging expertise across the global business.
Broader international markets
Global defence spending continues to rise. The 2025 forecast for global defence spending stands at
While priority and investment focus will be attached to the prosecution of our three home country strategies (
Chief Financial Officer's Review
Operating performance
We delivered good orders performance in the period with orders of
Revenue visibility remains good and the Group's total funded order backlog at 30 September 2024 stood at
Revenue was
Operating profit was
Operating profit from segments excludes income from Research and Development Expenditure Credits (RDEC). RDEC income was
Specific adjusting items
The total impact of specific adjusting items on operating profit (which are excluded from underlying performance) was an expense of
Acquisition and disposal costs of
We continue to deliver on our discrete investment project to build our digital platform to enable our global growth strategy and our AUKUS customers' needs. The majority of the costs in the first half are reported as specific adjusting items in the P&L given their one-off nature, with ongoing recurring operating costs (such as licence costs and overheads) remaining within underlying operating costs. In H1 FY25 the exceptional cost element of the digital investment programme within specific adjusting items totals
Amortisation of acquisition intangibles was
Also included within specific adjusting items in H1 FY24 were a gain on the sale of property in the
Net finance costs
Underlying net finance expense on the group's net debt position was
Tax
The total tax charge is
The Group's full year expected underlying effective tax rate is 27.2% in line with the half year underlying effective tax rate of 27.1% (H1 FY24: 25.9%). The increase on last year is due to the jurisdictional mix of profits.
In future we expect the effective rate to be above the
Tax on specific adjusting items includes a
Return on Capital Employed (ROCE)
ROCE is calculated as underlying operating profit less amortisation for the previous 12 months / (average capital employed less net pension asset), where average capital employed is defined as shareholders' equity plus net debt (or minus net cash).
For H1 FY25 Group ROCE was 20.1% (H1 FY24: 25.5%). This reduced due to the full year impact of capital employed with the acquisitions completed in H2 FY23. ROCE is expected to increase modestly following the completion of the sale and leaseback of Cody Technology Park at the end of October.
Earnings per share
Underlying basic earnings per share for the Group was 14.2p up 6% on the prior year first half (H1 FY24: 13.4p), with the increase primarily due to the increase in profits. Statutory basic earnings per share (including specific adjusting items) were marginally up at 11.1p (H1 FY24: 11.0p), with the increase in underlying operating profit offset by specific adjusting items.
Dividend
An interim dividend of 2.8p (H1 FY24: 2.6p) will be paid on 7 February 2025 to shareholders on the register on 9 January 2025. The interim dividend represents one third of the prior year total dividend reflecting our previously communicated methodology. The full year proposed dividend will be announced with our full year preliminary results in May 2025.
Cash performance
Underlying net cash flows from operations was
Capex for the period was
At 30 September 2024 the Group had
The reported H2 FY24 and H1 FY25 EBITDA and 30 September 2024 net debt position result in a leverage ratio of 0.6x (31 March 2024: 0.5x).
The net debt balance as at 30 September 2024 includes
We maintain a rigorous approach to the deployment of our capital, scrutinising organic and inorganic opportunities to ensure returns to our shareholders are appropriate. Our capital allocation policy as follows:
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Invest in our organic growth; |
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Complement with value accretive acquisitions; |
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Provide a progressive dividend to shareholders; and |
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Return of excess cash to shareholders. |
Committed facilities
The Group has a
The Group has a
We adopt a strict policy on managing counterparty risk through a combination of diversification of investments and regular reviews of counterparty limits using credit rating assessments. We are proud that our debt sits with our key relationship banks who have strong credit ratings and diverse portfolios demonstrating their resilience to the bank turmoil. The banks have been selected for their capabilities in our home countries to support our business.
Foreign exchange
The Group's income and expenditure is largely settled in the functional currency of the relevant Group entity, mainly Sterling, US Dollar or Australian Dollar. The Group has a policy to hedge all material transaction exposure at the point of commitment to the underlying transaction. Uncommitted future transactions are not routinely hedged. The Group does not hedge its exposure to translation of the income statement. The principal exchange rates affecting the Group were the Sterling to US Dollar and Sterling to Australian Dollar exchange rates.
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H1 FY25 |
H1 FY24 |
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£/US$ - average |
1.29 |
1.25 |
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£/US$ - closing |
1.34 |
1.22 |
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£/US$ - opening |
1.26 |
1.24 |
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£/AU$ - average |
1.93 |
1.91 |
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£/AU$ - closing |
1.93 |
1.89 |
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£/AU$ - opening |
1.94 |
1.85 |
Foreign exchange translation has provided a modest headwind to revenue and operating profit compared to the previous half year. Most significantly, the US Dollar has strengthened with the average exchange rate to Sterling increasing from 1.25 to 1.29. In H1 FY25, c.20% of our total Group revenue was generated in the US. As a result of the strengthening US Dollar and other FX movements in year, revenue decreased by
Pensions
The net pension asset under IAS 19, before adjusting for deferred tax, was
The key assumptions used in the IAS 19 valuation of the scheme are set out in note 13.
Post balance sheet events
On 30 September 2024 the Group announced an agreement for the sale and leaseback of our site at Cody Technology Park, Farnborough,
On 31 October 2024, subsequent to the period end, the transaction was completed. A cash receipt of
Operating review
EMEA Services
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H1 FY25 |
H1 FY24 |
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£m |
£m |
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Orders |
730.4 |
631.1 |
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Revenue |
717.8 |
654.8 |
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Underlying operating profit* |
82.9 |
77.4 |
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Underlying operating margin* |
11.5% |
11.8% |
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Book-to-bill ratio(1) |
1.2x |
1.2x |
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Order backlog |
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2,732.8 |
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Definitions of the Group's 'Alternative Performance Measures' can be found in the glossary |
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B2B ratio is orders won divided by revenue recognised, excluding the LTPA contract |
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Overview
EMEA (
Financial performance
Orders were up 16% to
Revenue increased 10% on an organic basis on the back of strong orders won last year and strong programme execution on that backlog.
Underlying operating profit increased by 7% on an organic basis to
Including the LTPA, approximately 66% of EMEA Services revenue is derived from single source contracts (H1 FY24: approximately 67%) demonstrating our critical and unique capabilities for our customers.
Sector commentary
The
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Through the LTPA, during the first half we have both tested new military capabilities and developed facilities to support future operational requirements. To defeat the drone threat in a more cost effective way, we have enabled the successful Martlet missile test firing from a Wildcat against a representative target - demonstrating a new way to neutralise airborne threats. In addition, to better protect against attempts to disrupt the
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Through the EDP framework, we continue to win and deliver services for a range of vitally important
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To promote and maximise the use of our facilities and skills internationally, we signed a framework contract with NATO Support & Procurement Agency (NSPA), enabling NATO member nations easier access to our LTPA Test & Evaluation services in the
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We continue to demonstrate our central role in global defence and security, through one of the world's largest tests of naval and missile defences, Formidable Shield. The exercise harnesses advanced technologies to enable a joint NATO force to operate seamlessly together and creating better understanding of how to defeat complex evolving threats. We secured additional orders of
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We secured a
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The
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We won the three-year TacSys Resource Partner (TRP) programme worth up to
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SOCIETAS, a competed opportunity won in H2 FY23, is successfully delivering and achieving positive feedback from the MOD Joint Electronic Warfare Operational Support Centre (JEWOSC) customer. Through the programme we sustain and enhance delivery of Electronic Warfare (EW) mission data and related intelligence outputs to the
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Following the successful win in H2 FY23 of the follow-on Accelerated Capability Environment (ACE) contract by our Vivace consortium, our partnership with the Home Office continues on a positive trajectory. We had good first half orders at
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Our
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In
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There continues to be demand for our advisory and engineering services expertise in
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Since 2021, the QinetiQ-run Army MakerSpace programme, delivered in collaboration with the Australian Army, has equipped soldiers with the technical and creative skills to anticipate and solve the challenges that future warfare scenarios may require. The MakerSpace contract was renewed for its fourth year with a contract value of AU$4.8m and has been extended to deliver across nine Australian Army sites.
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In September, we launched 'Team TECSA', a collaborative initiative bringing together Australian industry and academia in response to the government's National Defence Strategy and Defence Industry Development Strategy identifying Test and Evaluation, Certification and Systems Assurance (TECSA) as one of the Sovereign Defence Industrial Priorities. The collaboration, through our leadership, is focused on building a partnership to develop the workforce, infrastructure, and creating the innovation needed to meet
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Global Solutions
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H1 FY25 |
H1 FY24 |
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£m |
£m |
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Orders |
304.4 |
321.6 |
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Revenue |
229.0 |
228.3 |
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Underlying operating profit* |
23.7 |
22.7 |
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Underlying operating margin* |
10.3% |
9.9% |
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Book to bill ratio |
1.3x |
1.4x |
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Order backlog |
376.3 |
399.2 |
* Definitions of the Group's 'Alternative Performance Measures' can be found in the glossary
Global Solutions combines our world-leading technology-based products and services. Our strategy is to expand the portfolio of solutions to win larger, longer-term programmes providing good visibility of revenue and cash flows.
Financial performance
Orders decreased by 3% on an organic (constant currency) basis to
Revenue was flat at
Underlying operating profit increased to
Sector commentary
Our US sector provides design, development, rapid prototyping, systems engineering, and integration and manufacture of speciality defence mission products and solutions related to robotics, autonomy, maritime and sensors. We provide a complementary suite of services related to mission support, modernisation, enablement and operations, technical advisory, cyber, information advantage for US Defense, Federal, Homeland and National Security customers.
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We competed and were awarded a place on the Aerial Target Systems (ATS) multiple-award, indefinite-delivery/indefinite-quantity (IDIQ) contract. Through the contract, with an estimated ceiling of
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Building on our surveillance growth strategy and our |
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In our continuing provision of engineering services for the US Army C5ISR[15] Center, we won two multi-year contracts totalling
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We achieved successful delivery of two Robotic Combat Vehicle (RCV) platform prototypes to the US Army in August. These developmental systems are being used for performance test and soldier integration assessments as part of the competitive downselect on the RCV programme scheduled to take place in 2025.
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Other Products and Solutions (26% of Global Solutions revenue)
The portfolio of our Global Solutions products provide research services and bespoke technological solutions derived from EMEA Services, and includes QinetiQ Target Systems (QTS). As a key component of our Threat Representation offering, QTS provides products and product related services to global defence customers in support of their training, test and evaluation requirements. Our portfolio includes multi-role fixed-wing aerial targets and maritime surface vessels which are remotely-operated and deliver comprehensive threat simulation scenarios, as well as customised uncrewed special mission vehicles, command and control systems, and teams, scoring systems, and launchers.
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We continue to see high levels of demand for uncrewed aerial and maritime surface targets used in complex operational test and training environments and are on track to achieve the significant production milestone of 10,000 Banshee and 750 Hammerhead targets during FY25.
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Our
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In September, we entered into a strategic partnership agreement with RENK Group AG, a leading supplier of military and civilian propulsion solutions. The partnership focuses on hybrid drive solutions for military land platforms, including Uncrewed Ground Vehicles (UGVs). By leveraging our technology, alongside RENK's global expertise, we have established a powerful combination to address our customers' future military requirements for ground vehicles.
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Principal risks and uncertainties
There are a number of risks and uncertainties which management continue to identify, assess and mitigate to minimise their potential impact on performance. An explanation of risks and their mitigations, together with details of our risk management framework can be found in the 2024 Annual Report and Accounts (on pages 56 to 61) which is available for download at: https://www.qinetiq.com/investors.
Having considered recent geopolitical and macroeconomic events, the Group believes the principal risks and uncertainties for the remainder of FY25 are included in, and are therefore unchanged from, those reported in the 2024 Annual Report and Accounts. The Group's principal risks and uncertainties at 31 March 2024 related to the following areas: competitive landscape, disruptive technologies, acquisition integration, climate change, organisational culture, cyber security, management of change, health, safety & wellbeing, information security, IT infrastructure, licence to operate, P3M capability and strategic capability planning.
Condensed consolidated income statement
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H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
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All figures in £ million unless stated otherwise |
Note |
Underlying* |
Specific adjusting items* |
Total |
Underlying* |
Specific adjusting items* |
Total |
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Revenue |
1,2 |
946.8 |
- |
946.8 |
883.1 |
- |
883.1 |
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Operating costs excluding depreciation, impairment and amortisation |
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(808.8) |
(12.8) |
(821.6) |
(757.8) |
(9.4) |
(767.2) |
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Other income |
1 |
18.1 |
- |
18.1 |
18.2 |
2.1 |
20.3 |
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EBITDA* (earnings before interest, tax, depreciation and amortisation) |
|
156.1 |
(12.8) |
143.3 |
143.5 |
(7.3) |
136.2 |
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Depreciation and impairment of property, plant and equipment |
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(31.5) |
- |
(31.5) |
(28.1) |
(0.7) |
(28.8) |
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Amortisation of intangible assets |
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(5.4) |
(12.1) |
(17.5) |
(3.4) |
(12.7) |
(16.1) |
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Operating profit/(loss) |
2 |
119.2 |
(24.9) |
94.3 |
112.0 |
(20.7) |
91.3 |
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Finance income |
5 |
3.4 |
0.4 |
3.8 |
8.9 |
2.2 |
11.1 |
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Finance expense |
5 |
(11.6) |
- |
(11.6) |
(16.6) |
- |
(16.6) |
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Profit/(loss) before tax |
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111.0 |
(24.5) |
86.5 |
104.3 |
(18.5) |
85.8 |
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Taxation (expense)/income |
6 |
(30.1) |
6.6 |
(23.5) |
(27.0) |
4.9 |
(22.1) |
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Profit/(loss) for the period, attributable to the owners of the parent company |
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80.9 |
(17.9) |
63.0 |
77.3 |
(13.6) |
63.7 |
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Earnings per share for profit attributable to the owners of the Company |
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Basic (pence) |
7 |
14.2 |
|
11.1 |
13.4 |
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11.0 |
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Diluted (pence) |
7 |
14.0 |
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10.9 |
13.2 |
|
10.9 |
* Alternative performance measures are used to supplement the statutory figures. These are additional financial indicators used by management internally to assess the underlying performance of the Group. Definitions can be found in the glossary.
Condensed consolidated statement of comprehensive income
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All figures in £ million |
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
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Profit for the period |
63.0 |
63.7 |
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Items that will not be reclassified to the income statement: |
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Actuarial gain/(loss) recognised in defined benefit pension schemes |
13.0 |
(26.5) |
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Tax on items that will not be reclassified to the income statement |
(3.3) |
6.6 |
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Total items that will not be reclassified to the income statement |
9.7 |
(19.9) |
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Items that may be reclassified to the income statement: |
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Foreign currency translation (loss)/gain for foreign operations |
(31.1) |
6.7 |
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Movement in deferred tax on foreign currency translation |
0.6 |
(0.1) |
|
(Decrease)/increase in fair value of hedging derivatives |
(4.3) |
5.3 |
|
Movement on deferred tax on hedging derivatives |
1.1 |
(1.3) |
|
Total items that may be reclassified to the income statement |
(33.7) |
10.6 |
|
Other comprehensive expense for the period, net of tax |
(24.0) |
(9.3) |
|
|
|
|
|
Total comprehensive income for the period, net of tax |
39.0 |
54.4 |
Condensed consolidated statement of changes in equity
|
All figures in £ million |
Issued share capital |
Capital redemption reserve |
Share premium |
Hedging reserve |
Translation reserve |
Retained earnings |
Total equity |
|
At 1 April 2024 |
5.7 |
40.8 |
147.6 |
6.4 |
(16.7) |
742.3 |
926.1 |
|
Profit for the period |
- |
- |
- |
- |
- |
63.0 |
63.0 |
|
Other comprehensive (expense)/income, net of tax |
- |
- |
- |
(3.2) |
(30.5) |
9.7 |
(24.0) |
|
Purchase of own shares |
(0.1) |
0.1 |
- |
- |
- |
(12.3) |
(12.3) |
|
Share-based payments charge |
- |
- |
- |
- |
- |
6.3 |
6.3 |
|
Tax on share-based payments |
- |
- |
- |
- |
- |
1.1 |
1.1 |
|
Dividends |
- |
- |
- |
- |
- |
(32.2) |
(32.2) |
|
At 30 September 2024 (unaudited) |
5.6 |
40.9 |
147.6 |
3.2 |
(47.2) |
777.9 |
928.0 |
|
|
|
|
|
|
|
|
|
|
At 1 April 2023 |
5.8 |
40.8 |
147.6 |
6.3 |
(4.2) |
772.0 |
968.3 |
|
Profit for the period |
- |
- |
- |
- |
- |
63.7 |
63.7 |
|
Other comprehensive income/(expense), net of tax |
- |
- |
- |
4.0 |
6.6 |
(19.9) |
(9.3) |
|
Purchase of own shares |
- |
- |
- |
- |
- |
(0.4) |
(0.4) |
|
Share-based payments charge |
- |
- |
- |
- |
- |
4.2 |
4.2 |
|
Tax on share-based payments |
- |
- |
- |
- |
- |
(0.2) |
(0.2) |
|
Dividends |
- |
- |
- |
- |
- |
(30.6) |
(30.6) |
|
At 30 September 2023 (unaudited) |
5.8 |
40.8 |
147.6 |
10.3 |
2.4 |
788.8 |
995.7 |
Condensed consolidated balance sheet
|
All figures in £ million |
Note |
30 September 2024 (unaudited) |
30 September 2023 (unaudited) |
31 March 2024 (audited) |
|
Non-current assets |
|
|
|
|
|
Goodwill |
12 |
382.2 |
413.2 |
401.4 |
|
Intangible assets |
|
301.2 |
333.4 |
321.8 |
|
Property, plant and equipment |
|
454.2 |
518.0 |
531.8 |
|
Other financial assets |
|
3.2 |
8.9 |
4.9 |
|
Equity accounted investments |
|
2.5 |
1.6 |
2.2 |
|
Net pension asset |
13 |
31.1 |
95.0 |
18.4 |
|
Deferred tax asset |
|
35.7 |
33.4 |
36.7 |
|
|
|
1,210.1 |
1,403.5 |
1,317.2 |
|
Current assets |
|
|
|
|
|
Inventories |
|
92.9 |
75.9 |
89.2 |
|
Other financial assets |
|
5.7 |
7.3 |
6.2 |
|
Trade and other receivables |
|
420.4 |
448.7 |
456.8 |
|
Assets classified as held for sale |
18 |
98.4 |
- |
- |
|
Current tax asset |
|
4.9 |
5.7 |
5.8 |
|
Cash and cash equivalents |
|
189.6 |
104.0 |
231.0 |
|
|
|
811.9 |
641.6 |
789.0 |
|
Total assets |
|
2,022.0 |
2,045.1 |
2,106.2 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(574.0) |
(485.5) |
(654.7) |
|
Current tax payable |
|
- |
(4.7) |
(6.6) |
|
Provisions |
|
(15.6) |
(20.1) |
(15.3) |
|
Other financial liabilities |
|
(11.3) |
(7.9) |
(9.2) |
|
|
|
(600.9) |
(518.2) |
(685.8) |
|
Non-current liabilities |
|
|
|
|
|
Deferred tax liability |
|
(97.3) |
(112.3) |
(94.4) |
|
Provisions |
|
(4.2) |
(3.6) |
(4.2) |
|
Borrowings and other financial liabilities |
|
(378.1) |
(386.1) |
(384.1) |
|
Other payables |
|
(13.5) |
(29.2) |
(11.6) |
|
|
|
(493.1) |
(531.2) |
(494.3) |
|
Total liabilities |
|
(1,094.0) |
(1,049.4) |
(1,180.1) |
|
Net assets |
|
928.0 |
995.7 |
926.1 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Issued share capital |
|
5.6 |
5.8 |
5.7 |
|
Capital redemption reserve |
|
40.9 |
40.8 |
40.8 |
|
Share premium |
|
147.6 |
147.6 |
147.6 |
|
Hedging reserve |
|
3.2 |
10.3 |
6.4 |
|
Translation reserve |
|
(47.2) |
2.4 |
(16.7) |
|
Retained earnings |
|
777.9 |
788.8 |
742.3 |
|
Total equity |
|
928.0 |
995.7 |
926.1 |
Condensed consolidated cash flow statement
|
All figures in £ million |
Note |
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
FY24 (audited) |
|
Underlying net cash inflow from operations |
9 |
130.9 |
71.7 |
320.2 |
|
Less: specific adjusting items |
9 |
(12.8) |
(9.5) |
(26.1) |
|
Net cash inflow from operations |
9 |
118.1 |
62.2 |
294.1 |
|
Tax paid |
|
(27.8) |
(18.9) |
(36.9) |
|
Interest received |
|
3.4 |
8.9 |
5.3 |
|
Interest paid |
|
(10.7) |
(15.7) |
(19.4) |
|
Net cash inflow from operating activities |
|
83.0 |
36.5 |
243.1 |
|
Purchases of intangible assets |
|
(7.0) |
(4.0) |
(10.9) |
|
Purchases of property, plant and equipment |
|
(41.6) |
(42.9) |
(85.4) |
|
Proceeds from sale of property |
|
- |
2.1 |
2.1 |
|
Proceeds from sale of plant and equipment |
|
- |
- |
0.2 |
|
Acquisition of businesses |
|
(0.2) |
(4.9) |
(5.1) |
|
Net cash outflow from investing activities |
|
(48.8) |
(49.7) |
(99.1) |
|
Purchase of own shares |
|
(46.2) |
(0.4) |
(17.1) |
|
Dividends paid to shareholders |
|
(32.2) |
(30.6) |
(45.6) |
|
Payment of debt financing arrangement fees |
|
(1.6) |
(0.5) |
(0.5) |
|
Capital element of finance lease payments |
|
(4.0) |
(3.2) |
(6.8) |
|
Cash flow relating to intercompany loan hedges |
|
10.3 |
1.3 |
6.8 |
|
Net cash outflow from financing activities |
|
(73.7) |
(33.4) |
(63.2) |
|
(Decrease)/increase in cash and cash equivalents |
|
(39.5) |
(46.6) |
80.8 |
|
Effect of foreign exchange changes on cash and cash equivalents |
|
(1.9) |
(0.6) |
(1.0) |
|
Cash and cash equivalents at beginning of period |
|
231.0 |
151.2 |
151.2 |
|
Cash and cash equivalents at end of period |
|
189.6 |
104.0 |
231.0 |
Reconciliation of movement in net debt
|
All figures in £ million |
Note |
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
FY24 (audited) |
|
Decrease in cash and cash equivalents |
|
(39.5) |
(46.6) |
80.8 |
|
Add back net cash flows not impacting net debt |
|
5.6 |
3.7 |
7.3 |
|
Change in net debt resulting from cash flows |
|
(33.9) |
(42.9) |
88.1 |
|
Net increase in lease obligations |
|
(3.3) |
(26.4) |
(31.2) |
|
Net movement in derivative financial instruments |
|
(4.4) |
4.3 |
(0.5) |
|
Other movements including foreign exchange |
|
1.9 |
(1.9) |
(0.7) |
|
Movement in net debt as defined by the Group |
|
(39.7) |
(66.9) |
55.7 |
|
Opening net debt as defined by the Group |
|
(151.2) |
(206.9) |
(206.9) |
|
Closing net debt as defined by the Group |
8 |
(190.9) |
(273.8) |
(151.2) |
|
Less: non-cash net financial liabilities |
8 |
380.5 |
377.8 |
382.2 |
|
Total cash and cash equivalents |
8 |
189.6 |
104.0 |
231.0 |
Notes to the condensed interim financial statements
|
1. |
Revenue from contracts with customers and other income |
Revenue by category and reconciliation to revenue on an organic, constant currency basis
|
|
All figures in £ million |
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
|
|
Service contracts with customers |
|
888.0 |
843.6 |
|
|
Sale of goods contracts with customers |
|
50.5 |
37.9 |
|
|
Royalties and licences |
|
8.3 |
1.6 |
|
|
Total revenue |
|
946.8 |
883.1 |
|
|
Adjust to constant prior year exchange rates |
|
4.7 |
- |
|
|
Total revenue on an organic, constant currency basis |
951.5 |
883.1 |
|
|
|
Organic revenue growth at constant currency |
|
8% |
19% |
Other income
|
|
All figures in £ million |
|
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
|
|
Share of joint ventures' and associates' profit after tax |
|
|
0.3 |
0.2 |
|
|
Research and development expenditure credits (RDEC) |
|
|
12.6 |
11.9 |
|
|
Other income: property related |
|
|
5.2 |
6.1 |
|
|
Other income: underlying |
|
|
18.1 |
18.2 |
|
|
Specific adjusting item: gain on sale of property |
|
|
- |
2.1 |
|
|
Other income: total |
|
|
18.1 |
20.3 |
Revenue by customer geographical location
|
|
All figures in £ million |
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
|
|
|
|
628.0 |
581.4 |
|
|
|
|
174.6 |
196.3 |
|
|
|
|
83.3 |
63.8 |
|
|
Home countries (94% and 95% of total revenue for H1 FY25 and H1 FY24 respectively) |
885.9 |
841.5 |
|
|
|
|
|
34.8 |
22.5 |
|
|
Rest of World |
|
26.1 |
19.1 |
|
|
Total revenue |
|
946.8 |
883.1 |
Revenue by major customer type
For the six months ended 30 September
|
|
All figures in £ million |
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
|
|
|
|
582.4 |
543.8 |
|
|
US Government |
|
161.1 |
186.0 |
|
|
Other |
|
203.3 |
153.3 |
|
|
Total revenue |
946.8
|
883.1
|
|
2. |
Segmental analysis |
Operating segments
|
|
All figures in £ million |
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
||
|
|
|
|
Revenue from external customers |
Underlying* operating profit* |
Revenue from external customers |
Underlying* operating profit |
|
|
EMEA Services |
|
717.8 |
82.9 |
654.8 |
77.4 |
|
|
Global Solutions |
|
229.0 |
23.7 |
228.3 |
22.7 |
|
|
Total operating segments |
|
946.8 |
106.6 |
883.1 |
100.1 |
|
|
Operating profit margin from segments* |
|
|
11.3% |
|
11.3% |
|
|
|
|
|
|
|
|
|
|
Total operating segments |
|
946.8 |
106.6 |
883.1 |
100.1 |
|
|
Research and development expenditure credits (RDEC) |
|
|
12.6 |
|
11.9 |
|
|
Underlying operating profit |
|
|
119.2 |
|
112.0 |
Reconciliation of segmental results to total profit
|
|
All figures in £ million |
Note |
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
|
|
Operating profit from segments* |
|
106.6 |
100.1 |
|
|
Research and development expenditure credits (RDEC) |
|
12.6 |
11.9 |
|
|
Underlying operating profit* |
|
119.2 |
112.0 |
|
|
Specific adjusting items operating loss |
3 |
(24.9) |
(20.7) |
|
|
Operating profit |
|
94.3 |
91.3 |
|
|
Net finance expense |
|
(7.8) |
(5.5) |
|
|
Profit before tax |
|
86.5 |
85.8 |
|
|
Taxation expense |
|
(23.5) |
(22.1) |
|
|
Profit for the period attributable to equity shareholders |
|
63.0 |
63.7 |
* Definitions of the Group's 'Alternative Performance Measures' can be found in the glossary
|
3. |
Specific adjusting items |
In the income statement, the Group presents specific adjusting items separately. In the judgement of the Directors, for the reader to obtain a proper understanding of the financial information, specific adjusting items need to be disclosed separately because of their size and nature. Underlying measures of performance exclude specific adjusting items. The following specific adjusting items have been (charged)/credited in the consolidated income statement:
|
All figures in £ million |
Note |
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
|
Acquisition and disposal costs |
|
(0.8) |
(0.6) |
|
Acquisition integration costs |
|
(1.7) |
(2.6) |
|
Acquisition related remuneration |
|
(0.4) |
(1.1) |
|
Digital investment |
|
(9.9) |
(5.1) |
|
Gain on sale of property |
|
- |
2.1 |
|
Specific adjusting items before depreciation, amortisation and impairment |
|
(12.8) |
(7.3) |
|
Impairment of property |
|
- |
(0.7) |
|
Amortisation of intangible assets arising from acquisition |
|
(12.1) |
(12.7) |
|
Specific adjusting items operating loss |
|
(24.9) |
(20.7) |
|
Defined benefit pension scheme net finance income |
13 |
0.4 |
2.2 |
|
Specific adjusting items loss before tax |
|
(24.5) |
(18.5) |
|
Specific adjusting items - tax expense |
6 |
6.6 |
4.9 |
|
Total specific adjusting items loss after tax |
|
(17.9) |
(13.6) |
Reconciliation of underlying profit for the period to total profit for the period
|
All figures in £ million |
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
|
Underlying profit after tax |
|
80.9 |
77.3 |
|
Total specific adjusting items loss after tax (see above) |
|
(17.9) |
(13.6) |
|
Total profit for the period attributable to equity shareholders |
|
63.0 |
63.7 |
The total impact of specific adjusting items on operating profit (which are excluded from underlying performance) was an expense of
Acquisition and disposal costs of
Our digital investment programme continues to deliver improvements to the infrastructure, digital tools and operating systems of the company - the majority of the costs in the first half are reported as specific adjusting items in the P&L given their one-off nature, with ongoing recurring operating costs (such as licence costs and overheads) remaining within underlying operating costs. In H1 FY25 the exceptional cost element of the digital investment programme within specific adjusting items totals
Amortisation of acquisition intangibles was
Also included within specific adjusting items in H1 FY24 were a gain on the sale of property in the
|
4. |
Business combinations |
There were no acquisitions in H1 FY25 or H1 FY24. The cash flow statement for H1 FY24 included
|
5. |
Finance income and expense |
|
||
|
All figures in £ million |
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
||
|
Receivable on bank deposits |
3.4 |
8.9 |
||
|
Underlying finance income |
3.4 |
8.9 |
||
|
|
|
|
||
|
Amortisation of recapitalisation fee |
(0.8) |
(0.6) |
||
|
Interest on bank loans and overdrafts |
(9.3) |
(14.6) |
||
|
Lease expense |
(1.5) |
(1.3) |
||
|
Other interest expense |
- |
(0.1) |
||
|
Underlying finance expense |
(11.6) |
(16.6) |
||
|
Underlying net finance expense |
(8.2) |
(7.7) |
||
|
Specific adjusting items: |
|
|
||
|
Defined benefit pension scheme net finance income |
0.4 |
2.2 |
||
|
Net finance expense |
(7.8) |
(5.5) |
||
|
6. |
Taxation |
|
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
||||
|
All figures in £ million unless stated otherwise |
Underlying |
Specific |
Total |
Underlying |
Specific |
Total |
|
Profit/(loss) before tax |
111.0 |
(24.5) |
86.5 |
104.3 |
(18.5) |
85.8 |
|
Taxation (expense)/income |
(30.1) |
6.6 |
(23.5) |
(27.0) |
4.9 |
(22.1) |
|
Profit/(loss) for the period attributable to equity shareholders |
80.9 |
(17.9) |
63.0 |
77.3 |
(13.6) |
63.7 |
|
Effective tax rate |
27.1% |
|
|
25.9% |
|
|
The total tax charge is
The Group's full year expected underlying effective tax rate is 27.2% which is higher than the half year underlying effective tax rate of 27.1% (H1 FY24: 25.9%) due to the jurisdictional mix of profits in H1 FY25.
In future we expect the effective rate to be above the
Tax losses and specific adjusting items
At 30 September 2024 the Group had unused tax losses and surplus interest costs of
Within deferred tax assets recognised on the balance sheet is
No deferred tax asset is recognised in respect of the
Tax on specific adjusting items includes a
|
7. |
Earnings per share |
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period. The weighted average number of shares used excludes those shares bought by the Group and held as own shares. For diluted earnings per share the weighted average number of shares in issue is adjusted to assume conversion of potentially dilutive ordinary shares arising from unvested share-based awards including share options.
|
|
|
H1 FY25 |
H1 FY24 |
|
Weighted average number of shares |
Million |
569.1 |
577.3 |
|
Effect of dilutive securities |
Million |
8.3 |
7.1 |
|
Diluted number of shares |
Million |
577.4 |
584.4 |
Underlying basic earnings per share figures are presented below, in addition to the basic and diluted earnings per share, because the Directors consider this gives a more relevant indication of underlying business performance and reflects the adjustments to basic earnings per share for the impact of specific adjusting items (see note 3) and tax thereon.
|
Underlying basic and diluted EPS |
|
H1 FY25 |
H1 FY24 |
|
Profit attributable to the owners of the Company |
£ million |
63.0 |
63.7 |
|
Remove loss after tax in respect of specific adjusting items |
£ million |
17.9 |
13.6 |
|
Underlying profit after taxation |
£ million |
80.9 |
77.3 |
|
Weighted average number of shares |
Million |
569.1 |
577.3 |
|
Underlying basic EPS |
Pence |
14.2 |
13.4 |
|
Diluted number of shares |
Million |
577.4 |
584.4 |
|
Underlying diluted EPS |
Pence |
14.0 |
13.2 |
|
Basic and diluted EPS |
|
H1 FY25 |
H1 FY24 |
|
Profit attributable to the owners of the Company |
£ million |
63.0 |
63.7 |
|
Weighted average number of shares |
Million |
569.1 |
577.3 |
|
Basic EPS - total Group |
Pence |
11.1 |
11.0 |
|
Diluted number of shares |
Million |
577.4 |
584.4 |
|
Diluted EPS - total Group |
Pence |
10.9 |
10.9 |
|
8. |
Net debt |
|||
|
All figures in £ million |
30 September 2024 |
30 September 2023 |
31 March 2024 (audited) |
|
|
Current financial (liabilities)/assets |
|
|
|
|
|
Deferred financing costs |
1.2 |
1.2 |
1.0 |
|
|
Derivative financial assets |
4.5 |
6.1 |
5.2 |
|
|
Lease liabilities |
(9.0) |
(7.0) |
(8.1) |
|
|
Derivative financial liabilities |
(2.3) |
(0.9) |
(1.1) |
|
|
Total current net financial liabilities |
(5.6) |
(0.6) |
(3.0) |
|
|
Non-current financial (liabilities)/assets |
|
|
|
|
|
Deferred financing costs |
1.7 |
1.5 |
1.1 |
|
|
Derivative financial assets |
1.5 |
7.4 |
3.8 |
|
|
Lease liabilities |
(44.8) |
(47.3) |
(47.4) |
|
|
Borrowings - Term loan |
(332.7) |
(338.5) |
(336.3) |
|
|
Derivative financial liabilities |
(0.6) |
(0.3) |
(0.4) |
|
|
Total non-current net financial liabilities |
(374.9) |
(377.2) |
(379.2) |
|
|
Total net financial liabilities |
(380.5) |
(377.8) |
(382.2) |
|
|
Cash and cash equivalents |
189.6 |
104.0 |
231.0 |
|
|
Total net debt as defined by the Group |
(190.9) |
(273.8) |
(151.2) |
|
|
9. |
Cash flows from operations |
|||
|
All figures in £ million |
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
FY24 (audited) |
|
|
Profit after tax for the period |
63.0 |
63.7 |
139.6 |
|
|
Adjustments for: |
|
|
|
|
|
Taxation expense |
23.5 |
22.1 |
43.1 |
|
|
Net finance expense |
7.8 |
5.5 |
9.8 |
|
|
(Gain)/loss on disposal of PPE and intangibles |
(0.3) |
- |
0.9 |
|
|
Gain on sale of property |
- |
(2.1) |
(2.1) |
|
|
Impairment of property, plant and equipment |
- |
0.7 |
0.7 |
|
|
Amortisation of purchased or internally developed intangible assets |
5.4 |
3.4 |
7.4 |
|
|
Amortisation of intangible assets arising from acquisitions |
12.1 |
12.7 |
25.2 |
|
|
Depreciation of property, plant and equipment |
31.5 |
28.1 |
58.1 |
|
|
Share of post-tax gain of equity accounted entities |
(0.3) |
(0.2) |
(0.8) |
|
|
Share-based payments charge |
6.8 |
4.6 |
9.4 |
|
|
Retirement benefit contributions lower/(higher) than income statement expense |
0.7 |
0.5 |
(1.9) |
|
|
Net movement in provisions |
0.3 |
(2.6) |
(5.1) |
|
|
|
150.5 |
136.4 |
284.3 |
|
|
Increase in inventories |
(6.9) |
(6.8) |
(21.4) |
|
|
Decrease/(Increase) in receivables |
21.6 |
4.1 |
(10.0) |
|
|
(Decrease)/Increase in payables |
(47.1) |
(71.5) |
41.2 |
|
|
Changes in working capital |
(32.4) |
(74.2) |
9.8 |
|
|
Net cash inflow from operations |
118.1 |
62.2 |
294.1 |
|
Reconciliation of net cash flow from operations to underlying net cash inflow from operations to free cash flow
|
All figures in £ million |
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
FY24 (audited) |
|
Net cash inflow from operations |
|
118.1 |
62.2 |
294.1 |
|
Add back cash impact of specific adjusting item: acquisition and disposal costs (including integration and acquisition related remuneration costs) |
|
2.9 |
4.4 |
9.2 |
|
Add back cash impact of specific adjusting item: digital investment |
|
9.9 |
5.1 |
16.9 |
|
Underlying net cash inflow from operations |
|
130.9 |
71.7 |
320.2 |
|
Less: tax and net interest payments |
|
(35.1) |
(25.7) |
(51.0) |
|
Less: purchases of intangible assets and property, plant & equipment |
|
(48.6) |
(46.9) |
(96.1) |
|
Free cash flow |
|
47.2 |
(0.9) |
173.1 |
Underlying cash conversion ratio
|
|
|
H1 FY25 (unaudited) |
H1 FY24 (unaudited) |
FY24 (audited) |
|
Underlying EBITDA - £ million |
|
156.1 |
143.5 |
307.9 |
|
Underlying net cash flow from operations - £ million |
|
130.9 |
71.7 |
320.2 |
|
Underlying cash conversion ratio - % |
|
84% |
50% |
104% |
|
10. |
Financial risk management |
The interim financial statements do not include all financial risk management information and disclosures required in annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 March 2024. There have been no changes in any risk management policies since the year end. The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1 - measured using quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 2 derivatives comprise forward foreign exchange contracts which have been fair valued using forward exchange rates that are quoted in an active market; and
Level 3 - measured using inputs for the assets or liability that are not based on observable market data (i.e. unobservable inputs).
The Group's assets and liabilities that are measured at fair value, as at 30 September 2024, are as follows:
|
All figures in £ million |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Assets: |
|
|
|
|
|
Current derivative financial instruments |
- |
4.5 |
- |
4.5 |
|
Non-current derivative financial instruments |
- |
1.5 |
- |
1.5 |
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Current derivative financial instruments |
- |
(2.3) |
- |
(2.3) |
|
Non-current derivative financial instruments |
- |
(0.6) |
- |
(0.6) |
|
Total |
- |
3.1 |
- |
3.1 |
The following table presents the Group's assets and liabilities that are measured at fair value as at 31 March 2024:
|
All figures in £ million |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Assets: |
|
|
|
|
|
Current derivative financial instruments |
- |
5.2 |
- |
5.2 |
|
Non-current derivative financial instruments |
- |
3.8 |
- |
3.8 |
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Current derivative financial instruments |
- |
(1.1) |
- |
(1.1) |
|
Non-current derivative financial instruments |
- |
(0.4) |
- |
(0.4) |
|
Total |
- |
7.5 |
- |
7.5 |
For cash and cash equivalents, trade and other receivables and bank and current borrowings, the fair value of the financial instruments approximate to their carrying value as a result of the short maturity periods of these financial instruments. For trade and other receivables, allowances are made within the carrying value for credit risk. For other financial instruments, the fair value is based on market value, where available. Where market values are not available, the fair values have been calculated by discounting cash flows to net present value using prevailing market-based interest rates translated at the year-end rates, except for unlisted fixed asset investments where fair value equals carrying value. There have been no transfers between levels.
|
11. |
Dividends |
An analysis of the dividends paid and proposed in respect of the period ended 30 September 2024 and comparative periods is provided below:
|
|
Pence per ordinary share |
£m |
Date paid/payable |
|
Interim FY25 |
2.80 |
15.6 |
Feb 2025 |
|
|
|
|
|
|
Interim FY24 |
2.60 |
15.0 |
Feb 2024 |
|
Final FY24 |
5.65 |
32.2 |
Aug 2024 |
|
Total for the year ended 31 March 2024 |
8.25 |
47.2 |
|
The interim dividend is 2.8p (Interim FY24: 2.6p). The dividend will be paid on 7 February 2025. The ex-dividend date is 9 January 2025 and the record date is 10 January 2025.
|
12. |
Goodwill |
Goodwill is allocated across six Cash Generating Units (CGUs) within the EMEA Services segment and four CGUs within the Global Solutions segment. The full list of CGUs that have goodwill allocated to them is as follows:
|
All figures in £ million |
Primary reporting segment |
30 September 2024 (unaudited) |
30 September 2023 (unaudited) |
31 March (audited) |
|||
|
US Technology Solutions |
Global Solutions |
40.7 |
44.6 |
43.1 |
|||
|
US C5ISR |
Global Solutions |
33.9 |
37.3 |
36.0 |
|||
|
US Avantus |
Global Solutions |
238.2 |
261.2 |
252.5 |
|||
|
Target Systems |
Global Solutions |
24.1 |
24.5 |
24.4 |
|||
|
|
EMEA Services |
2.6 |
2.7 |
2.7 |
|||
|
Inzpire |
EMEA Services |
11.7 |
11.7 |
14.8 |
|||
|
QinetiQ Training and Simulation |
EMEA Services |
7.8 |
7.8 |
11.7 |
|||
|
Naimuri |
EMEA Services |
14.8 |
14.8 |
7.8 |
|||
|
|
EMEA Services |
5.6 |
5.7 |
5.6 |
|||
|
Air Affairs |
EMEA Services |
2.8 |
2.9 |
2.8 |
|||
|
Net book value |
|
382.2 |
413.2 |
401.4 |
|||
|
|
|
|
|
|
|
||
Goodwill is attributable to the excess of consideration over the fair value of net assets acquired and includes expected synergies, future growth prospects and employee knowledge, expertise and security clearances. The Group tests each CGU for impairment annually, or more frequently if there are indications that goodwill might be impaired. No indicators of potential impairment have been identified at the current time. Impairment testing is dependent on management's estimates and judgments, particularly as they relate to the forecasting of future cash flows, the discount rates selected and expected long-term growth rates.
|
13. |
Post-retirement benefits |
In the
|
All figures in £ million |
30 September 2024 (unaudited) |
30 September 2023 (unaudited) |
31 March (audited) |
|
Fair value of plan assets |
1,269.8 |
1,236.2 |
1,316.2 |
|
Present value of Scheme liabilities |
(1,238.7) |
(1,141.2) |
(1,297.8) |
|
Net pension asset before deferred tax |
31.1 |
95.0 |
18.4 |
|
Deferred tax liability |
(12.8) |
(29.4) |
(9.6) |
|
Net pension asset after deferred tax |
18.3 |
65.6 |
8.8 |
The balance sheet net pension asset is a snapshot view which can be significantly influenced by short-term market factors. The calculation of the net asset depends on factors which are beyond the control of the Group - principally the value at the balance sheet date of the various categories of assets in which the Scheme has invested and long-term interest rates and inflation rates used to value the Scheme's liabilities. This is particularly pertinent in the current economic climate whilst markets are extremely volatile. Sensitivities and risks are described below.
Per the Scheme rules the Company has an unconditional right to a refund of any surplus, assuming gradual settlement of all liabilities over time. Such surplus may arise on cessation of the Scheme in the context of IFRIC 14 paragraphs 11(b) and 12 and therefore the full net pension asset can be recognised on the Group's balance sheet and the Group's minimum funding commitments to the Scheme do not give rise to an additional balance sheet liability.
The fair value of the QinetiQ Pension Scheme assets, which are not intended to be realised in the short term and may be subject to significant changes before they are realised, were:
|
All figures in £ million |
30 September 2024 (unaudited) |
30 September 2023^ (unaudited) |
31 March (audited) |
|
Equities |
16.2 |
24.6 |
21.8 |
|
Liability driven investment |
415.4 |
302.9 |
414.9 |
|
Asset backed security investments |
72.8 |
4.5 |
35.5 |
|
Alternative bonds1 |
241.0 |
263.1 |
253.8 |
|
Corporate bonds2 |
109.2 |
111.2 |
151.7 |
|
Cash and cash equivalents |
49.1 |
31.4 |
36.5 |
|
Equity derivative financial instruments3 |
(3.1) |
9.8 |
15.8 |
|
Corporate credit derivative financial instruments4 |
2.0 |
2.3 |
2.2 |
|
Other derivatives (forward FX contracts)5 |
6.8 |
(6.3) |
1.6 |
|
Insurance buy-in policies |
485.4 |
492.7 |
507.4 |
|
Borrowings |
(125.0) |
- |
(125.0) |
|
Total market value of Scheme assets |
1,269.8 |
1,236.2 |
1,316.2 |
^ Restated to reclassify equity and corporate credit derivatives based on fair values
1 Primarily private market debt investments.
2 Includes unlisted corporate bonds with commercial property held as security.
3 The fair value of equity derivative financial instruments is negative £3.1m. This reflects the marked to market valuation of all equity derivatives held by the Scheme. The exposure to equities is significantly greater than the fair value, with a notional value of the equity derivative financial instruments of £180.0m as at 30 September 2024, and a total economic exposure value of £176.9m.
4 The fair value of corporate credit derivative financial instruments is £2.0m. This is in respect of various credit default swap financial instruments held by the Scheme. These provide significantly greater exposure to corporate bonds. The notional value of these financial instruments was £95.8m as at 30 September 2024, with a total economic exposure value of £97.8m.
5 The fair value of other derivative financial instruments is £6.8m. This is in respect of various foreign exchange contracts held by the Scheme. The exposure to foreign exchange risk is significantly greater than the £6.8m marked to market value of the forward contracts. The notional value of these financial instruments was £164.9m as at 30 September 2024, with a total economic exposure value of £171.7m.
The Scheme's assets do not include any of the Group's own transferable financial instruments, property occupied by, or other assets used by the Group.
The movement in the net pension asset (before deferred tax) is set out below:
|
All figures in £ million |
30 September 2024 (unaudited) |
30 September 2023 (unaudited) |
31 March (audited) |
|
Opening net pension asset before deferred tax |
18.4 |
119.8 |
119.8 |
|
Net finance income |
0.4 |
2.2 |
5.6 |
|
Net actuarial gain/(loss) |
13.0 |
(26.5) |
(108.9) |
|
Administration expenses |
(0.7) |
(0.5) |
(1.5) |
|
Contributions by the employer |
- |
- |
3.4 |
|
Closing net pension asset before deferred tax |
31.1 |
95.0 |
18.4 |
Assumptions
The major assumptions used in the IAS 19 valuations of the Scheme were:
|
|
30 September 2024 (unaudited) |
30 September 2023 (unaudited) |
31 March 2024 (audited) |
|||
|
|
Un-insured members |
Insured members |
Un-insured members |
Insured members |
Un-insured members |
Insured members |
|
Discount rate applied to Scheme liabilities |
5.05% |
5.00% |
5.40% |
5.50% |
4.80% |
4.80% |
|
CPI inflation assumption |
2.55% |
2.50% |
2.70% |
2.65% |
2.60% |
2.55% |
|
Net rate (discount rate less inflation) |
2.50% |
2.50% |
2.70% |
2.85% |
2.20% |
2.25% |
|
Assumed life expectancies(at age 60) in years: |
|
|
|
|
|
|
|
For males currently aged 40 |
27.7 |
n/a |
27.9 |
n/a |
28.3 |
n/a |
|
For females currently aged 40 |
30.2 |
n/a |
30.3 |
n/a |
30.7 |
n/a |
|
For males currently aged 60^ |
26.4 |
22.0 |
26.2 |
21.5 |
26.7 |
22.3 |
|
For females currently aged 60^ |
28.9 |
24.6 |
28.2 |
23.3 |
29.1 |
24.8 |
^For pensioners (insured members) at age 65 currently aged 65
Risks
The Group is exposed to a number of risks in respect to the valuation of the Scheme, the most significant of which are detailed below:
Volatility in market conditions
Results under IAS 19 can change dramatically depending on market conditions. The present value of Scheme liabilities is linked to yields on AA-rated corporate bonds, while many of the assets of the Scheme are invested in various forms of assets subject to fluctuating valuations. Changing markets in conjunction with discount rate volatility will lead to volatility in the net pension asset on the Group's balance sheet and in other comprehensive income. To a lesser extent this will also lead to volatility in the IAS 19 pension net finance income in the Group's income statement.
Choice of accounting assumptions
The calculation of the present value of Scheme liabilities involves projecting future cash flows from the Scheme many years into the future. This means that the assumptions used can have a material impact on the balance sheet position and profit and loss charge. In practice future experience within the Scheme may not be in-line with the assumptions adopted. For example, members could live longer than foreseen or inflation could be higher or lower than allowed for in the calculation of the liabilities. Sensitivities to the main assumptions are set out below.
|
Key assumptions |
Indicative impact on Scheme assets |
Indicative impact on Scheme liabilities |
Indicative impact on net pension asset |
|
Decrease discount rate by 0.25% |
Increase by £11.9m |
Increase by £39.3m |
Decrease by £27.3m |
|
Increase rate of inflation by 0.25% |
Increase by £11.5m |
Increase by £38.6m |
Decrease by £27.0m |
|
Increase life expectancy by one year |
Increase by £12.9m |
Increase by £32.2m |
Decrease by £19.3m |
The impact of movements in Scheme liabilities will, to an extent, be offset by movements in the value of Scheme assets as the Scheme has assets invested in a Liability Driven Investment Portfolio. As at 30 September 2024 this hedges against approximately 100% of the interest rate risk and also approximately 100% of the inflation rate risk, as measured on the actuarial funding valuation basis.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the pension liability recognised within the statement of financial position. The methods and types of assumption did not change.
In addition to the sensitivity of the liability side of the net pension asset (which will impact the value of the net pension asset) the net pension asset is also exposed to significant variation due to changes in the fair value of Scheme assets. A specific sensitivity on assets has not been included in the above table but any change in valuation of assets flows straight through to the value of the net pension asset e.g. if equities fall by £10m then the net pension asset falls by £10m. The values of unquoted assets assume that an available buyer is willing to purchase those assets at that value. For the Group's portfolio of assets, the unquoted alternative bonds, unquoted corporate bonds and unquoted equities of £241.0m, £109.2m and £16.2m respectively are the assets with most uncertainty as to valuation as at 30 September 2024.
The accounting assumptions noted are used to calculate the year end net pension asset in accordance with the relevant accounting standard, IAS 19 (revised) 'Employee Benefits'. Changes in these assumptions have no impact on the Group's cash payments into the scheme. The payments into the scheme are reassessed after every triennial valuation. The triennial valuations are calculated on a funding basis and use a different set of assumptions, as agreed with the pension Trustees. The key assumption that varies between the two methods of valuation is the discount rate. The funding basis valuation uses the risk-free rate from
The most recent completed full actuarial valuation of the Scheme was undertaken as at 30 June 2023 and resulted in an actuarially assessed surplus of £11.4m (relative to the technical provisions i.e. the level of assets agreed by the Trustee and the Company as being appropriate to meet member benefits, assuming the Scheme continues as a going concern). The next triennial valuation will be performed as at 30 June 2026. Under the new schedule of contributions agreed at the conclusion of the recent triennial valuation, and reflecting the Scheme being in surplus, there are no employer contributions required. Separately to the schedule of contributions the Company does have a cash commitment to the Scheme in respect of an asset-backed funding arrangement established in 2012. The annual distribution in the year to 31 March 2025 will be £3.5m, which will increase thereafter, indexed by reference to CPI, until 2032.
In June 2023, in Virgin Media Limited v NTL Pension Trustees II Limited, the
|
14. |
Own shares and share-based awards |
Own shares represent shares in the Company that are held by independent trusts and include treasury shares and shares held by the employee share ownership plan. Included in retained earnings at 30 September 2024 are 2,706,072 shares (31 March 2024: 2,767,125 shares).
In H1 FY25 the Group granted 5.7 million new share-based awards to employees (H1 FY24: 7.4 million).
|
15. |
Related party transactions with equity accounted investments |
During H1 FY25 there were sales to associates and joint ventures of £2.1m (H1 FY24: £1.4m). At the period end there were outstanding receivables from associates and joint ventures of £1.3m (31 March 2024: £2.8m).
|
16. |
Capital commitments |
The Group has the following capital commitments for which no provision has been made:
|
All figures in £ million |
|
30 September 2024 (unaudited) |
31 March 2024 (audited) |
|
Contracted |
|
47.3 |
57.8 |
Capital commitments at 30 September 2024 include £42.2m (31 March 2024: £49.7m) in relation to property, plant and equipment that will be wholly funded by a third party customer under a long-term contract arrangement. These primarily relate to investments under the LTPA contract.
|
17. |
Contingent liabilities |
The Company has on occasion been required to take legal action to protect its intellectual property rights, to enforce commercial contracts or otherwise and similarly to defend itself against proceedings brought by other parties, including in respect of environmental, health & safety and regulatory issues. Provisions are made for the expected costs associated with such matters, based on past experience of similar items and other known factors, taking into account professional advice received, and represent management's best estimate of the likely outcome. The timing of utilisation of these provisions is uncertain pending the outcome of various court proceedings, ongoing investigations and negotiations. However, no provision is made for proceedings which have been or might be brought by other parties unless management, taking into account professional advice received, assesses that it is more likely than not that such proceedings may be successful. Contingent liabilities associated with such proceedings have been identified but the Directors are of the opinion that any associated claims that might be brought can be resisted successfully and therefore the possibility of any outflow in settlement is assessed as remote.
|
18. |
Post balance sheet events |
On 30 September 2024 the Group announced an agreement for the sale and leaseback of our site at Cody Technology Park, Farnborough,
On 31 October 2024, subsequent to the period end, the transaction was completed. A cash receipt of £112m was received and a new 15 year lease was entered into. The sale and leaseback accounting under IFRS16, which will be completed in H2 FY25, is expected to result in a one-off, non-cash, accounting loss, which will be calculated based on the varying values of assets being sold and those being leased back
|
19. |
Material accounting policies |
Basis of preparation
QinetiQ Group plc is a public limited company, which is listed on the London Stock Exchange and is incorporated and domiciled in
The condensed consolidated interim financial statements of the Group for the six months ended 30 September 2024 comprise statements for the Company and its subsidiaries (together referred to as the 'Group') and were approved by the Board of Directors on 14 November 2024.
The financial statements have been reviewed, not audited.
This condensed consolidated interim financial report for the half-year reporting period ended 30 September 2024 has been prepared in accordance with the
In the income statement, the Group presents specific adjusting items separately. In the judgement of the Directors, for the reader to obtain a proper understanding of the financial information, 'specific adjusting items' need to be disclosed separately because of their size and nature. Specific adjusting items include:
|
Item |
Distorting due to irregular nature year on year |
Distorting due to fluctuating nature (size and/or sign) |
Does not reflect in-year operational performance |
|
Amortisation of intangible assets arising from acquisitions |
|
|
P |
|
Pension net finance income |
|
P |
P |
|
Gains/(losses) on business divestments and disposal of property and investments |
P |
P |
P |
|
Transaction, integration and acquisition related remuneration costs in respect of business acquisitions and disposals |
P |
P |
P |
|
Digital investment |
P |
P |
P |
|
Costs of group-wide restructuring programmes |
P |
P |
|
|
Impairment of goodwill and property |
P |
P |
P |
|
The tax impact of the above |
P |
P |
P |
|
Other significant non-recurring tax and RDEC movements |
P |
P |
P |
All items treated as a specific adjusting item in the current and prior period are detailed in note 3 and are excluded from the 'underlying' measures of performance. These Alternative Performance Measures (APMs), definitions of which can be found in the glossary at the end of this document, are used to monitor performance and also used for management remuneration purposes.
The accounting policies adopted in the preparation of these condensed consolidated financial statements are consistent with the policies applied by the Group in its consolidated financial statements for the year ended 31 March 2024.
Going-concern basis
The Group is exposed to various risks and uncertainties, the principal ones being summarised in the 'Principal risks and uncertainties' section. Crystallisation of such risks, to the extent not fully mitigated, would lead to a negative impact on the Group's financial results but none are deemed sufficiently material to prevent the Group from continuing as a going concern for at least the next 12 months. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going-concern basis in preparing its interim financial statements.
Comparative data
These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The comparative figures for the year ended 31 March 2024 (and half year ended 30 September 2023) do not contain all of the information required for full annual financial statements. The Group's full annual financial statements for the year ended 31 March 2024 have been delivered to the registrar of companies. The report of the auditors (i) was unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The Group's financial statements for the year ended 31 March 2024 are available upon request from the Company's registered office at Cody Technology Park, Ively Road, Farnborough,
Responsibility statements of the Directors in respect of the interim financial report
The Directors confirm that these condensed interim financial statements have been prepared in accordance with
|
• |
an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and |
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material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
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The Directors of QinetiQ Group plc are listed in the QinetiQ Group plc Annual Report for 31 March 2024. A list of current directors is maintained on the QinetiQ Group plc website: www.qinetiq.com.
By order of the Board
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Steve Wadey |
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Martin Cooper |
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Chief Executive Officer |
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Chief Financial Officer |
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14 November 2024 |
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14 November 2024 |
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Independent review report to QinetiQ Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed QinetiQ Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the Interim Results of QinetiQ Group plc for the 6 month period ended 30 September 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with
The interim financial statements comprise:
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the Condensed consolidated balance sheet as at 30 September 2024; |
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the Condensed consolidated income statement and Condensed consolidated statement of comprehensive income for the period then ended; |
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the Condensed consolidated cash flow statement for the period then ended; |
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the Condensed consolidated statement of changes in equity for the period then ended; and |
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the explanatory notes to the interim financial statements. |
The interim financial statements included in the Interim Results of QinetiQ Group plc have been prepared in accordance with
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (
We have read the other information contained in the Interim Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Interim Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the
Our responsibility is to express a conclusion on the interim financial statements in the Interim Results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the
PricewaterhouseCoopers LLP
Chartered Accountants
14 November 2024
Glossary
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CPI |
Consumer Price Index |
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EBITDA |
Earnings before interest, tax, depreciation and amortisation |
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EPS |
Earnings per share |
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IAS |
International Accounting Standards |
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IFRS |
International Financial Reporting Standards |
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MOD |
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RDEC |
Research and Development Expenditure Credits |
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SSRO |
Single Source Regulations Office |
Alternative performance measures ('APMs')
The Group uses various non-statutory measures of performance, or APMs. Such APMs are used by management internally to monitor and manage the Group's performance and also allow the reader to obtain a proper understanding of performance (in conjunction with statutory financial measures of performance). The APMs used by QinetiQ are set out below:
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Measure |
Explanation |
Note reference to calculation or reconciliation to statutory measure |
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Organic growth |
The level of year-on-year growth, expressed as a percentage, calculated at constant prior year foreign exchange rates, adjusting for business acquisitions and disposals to reflect equivalent composition of the Group |
Note 1 |
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Operating profit from segments |
Total operating profit from segments which excludes 'specific adjusting items' and research and development expenditure credits ('RDEC') |
Note 2 |
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Operating profit margin from segments |
Operating profit from segments expressed as a percentage of revenue |
Note 2 |
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Underlying operating profit |
Operating profit as adjusted to exclude 'specific adjusting items' |
Note 2 |
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Underlying operating margin |
Underlying operating profit expressed as a percentage of revenue |
Operating Review |
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Underlying net finance income/(expense) |
Net finance income/(expense) as adjusted to exclude 'specific adjusting items' |
Note 5 |
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Underlying profit before/after tax |
Profit before/after tax as adjusted to exclude 'specific adjusting items' |
Note 6 |
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Underlying effective tax rate |
The tax charge for the year excluding the tax impact of 'specific adjusting items' expressed as a percentage of underlying profit before tax |
Note 6 |
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Underlying basic and diluted EPS |
Basic and diluted earnings per share as adjusted to exclude 'specific adjusting items' |
Note 7 |
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Orders |
The level of new orders (and amendments to existing orders) booked in the year |
N/A |
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Backlog, funded backlog or order book |
The expected future value of revenue from contractually committed and funded customer orders |
N/A |
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Book to bill ratio |
Ratio of funded orders received in the year to revenue for the year, adjusted to exclude revenue from the 25-year LTPA contract due to significant size and timing differences of LTPA order and revenue recognition which distort the ratio calculation |
N/A |
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Underlying net cash flow from operations |
Net cash flow from operations before cash flows of specific adjusting items |
Note 9 |
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Underlying operating cash conversion or cash conversion ratio |
The ratio of underlying net cash from operations to underlying EBITDA. |
Note 9 |
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Free cash flow |
Underlying net cash flow from operations less net tax and interest payments less purchases of intangible assets and property, plant and equipment plus proceeds from disposals of plant and equipment |
Note 9 |
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Net debt |
Net debt as defined by the Group combines cash and cash equivalents with borrowings and other financial assets and liabilities, primarily available for sale investments, derivative financial instruments and lease liabilities. Net debt does not include liabilities relating to irrevocable share buyback obligations |
Note 8 |
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Return on capital employed |
Calculated as: Underlying EBITA / (average capital employed less net pension asset), where average capital employed is defined as shareholders equity plus net debt (or minus net cash) |
CFO Review |
Specific adjusting items |
Amortisation of intangible assets arising from acquisitions; impairment of property and goodwill; gains/losses on disposal of property, investments and businesses; net pension finance income; transaction, integration and acquisition-related remuneration costs in respect of business acquisitions and disposals; digital investment; tax impact of the preceding items and significant non-recurring tax and RDEC movements |
Note 3 |
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FY |
The financial year ended 31 March |
n/a |
[1] Definitions of the Group's 'Alternative Performance Measures' can be found in the glossary.
[2] Underlying operating profit refers to operating profit from segments. See note 2 for details to the interim financial statements.
[3] Organic denotes results on an organic and constant currency basis.
[4] Excluding benefit of £112m sale and leaseback of Cody Technology Park.
[5] B2B ratio is orders won divided by revenue recognised, excluding the LTPA contract revenue of £131m (H1 FY24: £129m).
[6] Organic revenue on a constant currency basis.
[7] BATCIS Private Sector Support (BPSS) BATCIS was the Battlefield and Tactical Communication Information Systems programme of opportunities to deliver the next generation tactical communications and information systems.
[8] Organic denotes results on an organic and constant currency basis. The average USD rate for H1 FY25 was 1.29. A 5c movement in the USD rate would impact Group revenue by c.£15m.
[12] Janes Defence Budget Spreadsheet, figure in real USD$, database accessed 27th October 2024
[13] https://www.iiss.org/online-analysis/military-balance/2024/07/nato-defence-spending-a-bumper-year/
[14] BATCIS Private Sector Support (BPSS) BATCIS is the Battlefield and Tactical Communication Information Systems programme of opportunities to deliver the next generation tactical communications and information systems.
[15] Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance.
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