New boss Steve Wadey sprinkled in enough good news to spice up what was otherwise an uninspiring period of trading at QinetiQ (QQ.) Challenging defence markets resulted in flat underlying operating profit and a 29 per cent fall in order intake in the six months to September. But a new £50m share buyback programme and a deal with the Ministry of Defence grabbed the headlines, propelling shares in the defence contractor up 8 per cent on results day.
The announcement of a £153m five-year deal to deliver technical services to fast jets and heavy-lift aircraft means 90 per cent of targeted revenue for the year to March 2016 is now in the bag. According to Mr Wadey, it also shows that QinetiQ is capable of meeting the UK government's call for contractors to deliver more for less. A rise in Isis-inspired attacks has pushed governments to increase security, he says, without their having the ability to pay the previous going rates.
QinetiQ's efforts to help the government achieve its conflicting objectives form part of a wider push by the new management team to improve customer focus. But the company's capital allocation priorities, consisting of share buybacks and bolt-on acquisitions to boost growth, will be maintained.
Broker JPMorgan Cazenove expects adjusted EPS of 15.8p for the year to March 2016, up from 15.3p in FY2015.
| QINETIQ (QQ.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 256.4p | MARKET VALUE: | £1.5bn | |
| TOUCH: | 256.3-256.5p | 12-MONTH HIGH: | 260p | LOW: 179p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 48p* | NET CASH: | £182m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 366 | 44.4 | 5.9 | 1.8 |
| 2015 | 371 | 48.3 | 7.1 | 1.9 |
| % change | +1 | +9 | +20 | +6 |
Ex-div: 14 Jan Payment: 12 Feb *Includes intangible assets of £119m, or 20p a share | ||||
