Qinetiq Group Plc · LSE:QQ.

Qinetiq — Merger or Acquisition (April 2014)

14 slides from Qinetiq's merger presentation, Apr 22, 2014

  1. Slide 1: QinetiQ Group plc: A stronger, more focused Group

    Draft QinetiQ Group plc A stronger, more focused Group 22 April 2014 1

  2. Slide 2: Disclaimer

    Disclaimer This presentation, which has been prepared by QinetiQ Group plc (the "Company"), is strictly confidential and is being provided to you solely for your information and comprises the written materials/slides for a presentation concerning the proposed disposal of the entire issued share capi

  3. Slide 3: Headlines

    Headlines • Proposed disposal of US Services division to The SI Organization Inc. for an initial cash consideration of $165 million plus a potential earnout* of up to $50 million in cash • £150 million capital return to shareholders by way of an on-market share buyback • Dividend will not be re-base

  4. Slide 4: Strategic review of US Services

    Strategic review of US Services US Services • No preconceived outcomes Strategic • Competitive market − Not fulfilling strategic review testing process growth role − Lacked both scale and • At the forefront of synergies with rest of Group market consolidation − Added governance costs Disposal is bes

  5. Slide 5: A stronger, more focused Group

    A stronger, more focused Group Core Explore Test for Value Maximise Scale Maintain the rigour Cyveillance® ALARMTM International Ranges Power Line Sensors OptaSense® E-X-Drive® EMEA QinetiQ Training (inc cueSim) Integrated WarriorTM Services Protective monitoring MEWSTM Global Robotic controller kit

  6. Slide 6: Terms of the disposal & transition arrangements

    Terms of the disposal & transition arrangements • Initial gross cash consideration $165m on completion • Potential earnout up to $50m in cash − Based on US Services FY15 Gross Profit*, between $100- 132m in FY15 (straight line) • Transition Services Agreement − c.$5m impact in TSG in FY15 H1 to set

  7. Slide 7: Reconciliation of proceeds

    Reconciliation of proceeds Transaction proceeds £m Use of funds £m Proceeds on close ($165m) 100 Net transaction proceeds 94 Transaction costs (6) Accelerated interest on repayment of private placement (28) Net transaction proceeds at close 94 Pension contribution (6) 60 Pro-forma net cash as at 30

  8. Slide 8: Earnings per share impacts of the transactions

    Earnings per share impacts of the transactions • Disposed profits from US Services (in H1 FY14 contributed £10.1m underlying operating profit*) • Reduced PP interest cost (annualised saving approximately £12m pre tax, PP to be paid down in Q1 FY15*) • Weighted average number of shares in issue will

  9. Slide 9: Steps to completion

    Steps to completion • Conditions − Shareholder approval − US Government approvals and/or authorisations (e.g. Hart-Scott- Rodino anti-trust filing) − Normal closing conditions including no material adverse effects • Conditions to Purchaser's bank financing to be satisfied • Timetable − April 2014: C

  10. Slide 10: Conclusion

    Conclusion • Disposal represents the best route to maximise value for our shareholders • Creates a stronger, more focused Group • Differentiated by high-end technical expertise • Strong core plus growth businesses = better positioned to deliver increase in sustainable earnings • Cash generation for

  11. Slide 11: Questions

    Draft Questions Download our iPad app from the App Store or scan the QR code 11

  12. Slide 12: Appendices

    Draft Appendices 12

  13. Slide 13: Trading results of US Services

    Trading results of US Services FY13 FY14 H1 £m £m US Services disposal group Revenue 463.8 222.2 Underlying operating profit* 23.7 10.1 Reported US Services Revenue 475.6 228.7 Underlying operating profit* 21.9 9.4 • Disposal Group excludes Cyveillance® previously reported as part of the US Services

  14. Slide 14: Definitions

    Definitions • Underlying performance is stated before − Amortisation of intangibles arising from acquisitions; − Impairment of goodwill; − Gains on disposal of investments; − Restructuring costs; and − Tax effect of the above. 14

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