Rakesh Sharma, Chief Executive, commented:
“The Group’s first half performance is in line with our expectations and reflects a generally lower level of activity across most parts of our government related business and the expected pause in normal business given the UK and US election cycles. The uncertainty surrounding the next US fiscal budget and the potential of a Continuing Resolution in relation to Government appropriations has continued to dampen US defence revenues. Further, recent challenges to the Patriot Act are impacting revenues from our US Sotech business and, as previously advised, working capital movements and the impact of the Oman contract termination are reducing cash conversion.
The full year performance is weighted to the second half of the year and is expected to remain in line with previous guidance of a stable 2015 performance. We enter the second half with a full-year order cover of 83%, consistent with the previous year. We continue to focus our efforts on securing further long-term contracts by offering the competitive, niche capability solutions required by customers, driven through our redefined market segment approach. Investment in leading edge technology, identifying strategic acquisitions and creating sound international partnerships remain integral to our approach. Internally, we have started our standardisation initiatives to optimise efficiencies in our businesses and processes. The Board acknowledges the short-term headwinds but judges that the actions being taken should enable the Group to achieve an improved performance from 2016.”
(1) before Oman contract termination and liquidation related costs, amortisation of intangibles arising on acquisitions, impairment ofgoodwill and adjustments to deferred consideration net of acquisition related costs. IFRS operating profit was £17.6m (2014:£48.0m). See Note 4 for reconciliation.
(2) before Oman contract termination and liquidation related costs, amortisation of intangibles arising on acquisitions, impairment ofgoodwill, fair value movements on derivatives, unwinding of discount on provisions, defined benefit pension interest charges andadjustments to contingent consideration net of acquisition related costs and, in the case of underlying earnings per share, beforerelated taxation. Basic EPS 11.9p (2014: 53.3p). See Note 10 for reconciliation.