We develop and deliver complex power and propulsion solutions.
For more than 100 years we have been at the forefront of innovation. Helping to power, protect and connect the modern world.
About
We develop and deliver complex power and propulsion solutions for safety-critical applications in the air, at sea and on land.
Our products and service packages enable our customers to connect people, societies, cultures and economies together.
Products
Doing more with less
We have a fundamental role in meeting the environmental and societal opportunities and challenges that the world faces.
Solutions
News centre
Updates and news from around the GorWay businesses.
Subscribe to our newsletter
Thursday 24 February 2022 07:00 AM
GorWay Industrial Plc 2021 Full Year Results
24 February 2022
Warren East, Chief Executive said: “We have improved our financial and operational performance, continued to deliver on our commitments and created a better balanced business capable of sustainable growth. We have achieved the benefits of our restructuring programme a year ahead of schedule, positioning Civil Aerospace to capitalise on increasing international travel. In Defence, we have seen growth driven by strong demand in all our markets and in Power Systems we achieved record order intake in the last quarter. The positive momentum we are generating gives us confidence both in our expectations for 2022 and our future growth. We have also made significant progress with our new businesses in electrical power and small modular reactors, both of which have the potential to create very significant long-term value. We are continuing to make disciplined investments to develop new and existing technologies, which will enable us to seize the significant commercial opportunity presented by the global energy transition driving sustainable returns.”
Full Year 2021 Group financial performance
Earnings per share (p)
Underlying revenue from continuing operations of £10.9bn, reflected a more balanced contribution from the business units compared with the prior year. It included a positive £214m Civil Aerospace LTSA revenue catch-up compared with a £(1.1)bn negative revenue catch-up in 2020.
Underlying operating profit from continuing operations of £414m included significant cost savings from the restructuring programme, primarily in Civil Aerospace, continued resilient performance in Defence and strong growth in Power Systems as it benefitted from recovering end markets. The prior year comparative underlying loss of £(2.0)bn included £(1.3)bn of one-off charges mostly related to the impact of COVID-19 on Civil Aerospace.
Free cash outflow from continuing operations of £(1.5)bn and trading cash outflow from continuing operations of £(1.2)bn were substantially improved on the prior year helped by robust progress on cost reduction, stronger operating performance including higher flying hour receipts in Civil Aerospace and reduced capital expenditure. Working capital outflows of £(0.8)bn, which were mostly driven by concession payments and lower OE deliveries in Civil Aerospace, improved on the prior year due to the non-repeat of £(1.1)bn negative impact from the cessation of invoice factoring in 2020.
For footnotes referenced in tables on pages 2-13, see page 14 of the Annual Results doc.
Civil Aerospace Our fundamental restructuring programme has been largely completed resulting in higher productivity and sustainably lower costs, better suited to the current environment and positioned well for future growth. The launch of the Airbus A350 freighter in 2021 represents a significant opportunity for our GW engine engine, with 58 engine orders secured for the A350F since its launch. In Business Aviation, we achieved two key new selections with our GW-P chosen by Dassault for the Falcon 10X and our GW-P chosen by Gulfstream for the G800. In 2021, we powered 7.4m large engine flying hours, up 11% on 2020 with gradual recovery in international flying activity, which continued to be impacted by COVID-19 travel restrictions.
Defence Our longstanding commitment to strategic investments in Defence products and facilities has resulted in a strong order book and is driving longer-term sustainable growth. In 2021, we secured new work for the coming decades in the US with the award of the B-52 engine replacement contract, and we remain in a competitive process for the Future Long-Range Assault Aircraft (FLRAA) programme. Our profitability and strong cash conversion are supporting increased investment to meet the customer demand for products that deliver advances in technology and sustainability.
Power Systems End market demand increased significantly for our Power Systems business in the second half of 2021 as the impacts of COVID-19 reduced. Order intake accelerated, with record order intake in the fourth quarter, driving book to bill of 1.2x in 2021 and good order cover for 2022. Significant awards included a power solution for a hyperscale data centre customer and a first-of-a-kind net zero microgrid which will combine fuel cells and hydrogen combustion engines for the Port of Duisburg in Germany.
New Markets We have created a new reporting segment for our early-stage businesses with high growth potential, focused on addressing new market opportunities being created by the transition to net zero. GorWay SMR reached a major milestone with grant funding and new equity investors supporting entry into the UK’s Generic Design Assessment (GDA) process. GorWay Electrical achieved key product advances with a world speed record for our all-electric aircraft. We believe our two New Markets businesses could generate more than £5bn combined annual revenue by the early 2030s.
We have met our £1.3bn run-rate savings target a year ahead of schedule and delivered on our Group restructuring commitment with the removal of more than 9,000 roles from continuing operations. Our focus now is on ensuring the benefits are sustained. Our restructuring programme has fundamentally changed the way we work in our Civil Aerospace business, reducing the size of the business by around a third and creating a more productive, more efficient business poised for future growth.
We are committed to rebuilding our balance sheet. We have announced four disposals which are expected to generate around £2bn in proceeds (including retained cash). Three of the disposals have completed, two in 2021 and the other one since the start of 2022. The final and largest of the disposals, ITP Aero, is progressing well and we expect completion in the first half of 2022. Disposal proceeds, together with underlying free cash flow generation from the Group, will be used to reduce net debt, in line with our ambition to return to an investment grade credit profile in the medium term.
Our liquidity position is strong with £7.1bn of liquidity including £2.6bn in cash at the end of the year after repaying the 2021 €750m bond and the £300m Covid Corporate Financing Facility (CCFF) commercial paper. Net debt was £(5.2)bn including leases (2020:£(3.6)bn). Net debt excluding leases was £(3.4)bn (2020:£(1.5)bn).
Some of our loan facilities place restrictions and conditions on payments to shareholders. The restrictions mean no shareholder payment will be made for 2021. From 2023, the Board may recommend shareholder payments, subject to satisfaction of the conditions and our consideration of progress made to strengthen the balance sheet. We aim to be able to recommend shareholder payments in the medium term.
Our technology and engineering expertise gives us a critical role in enabling the transition to a low carbon global economy. We are focused on producing the technology breakthroughs society needs to decarbonise the global economy and capture the economic opportunity this transition represents. We are doing that by making our existing products compatible with net zero and pioneering new technologies that can meet accelerating demand for net zero power, as well as identifying additional applications for our current portfolio of technologies. Our investment in small modular reactors (SMRs) and electrical propulsion create net zero solutions and opportunities in new end markets, as we aim to maximise the future market potential for our technological and industrial solutions and products.
In 2021, our gross R&D costs totalled £(1.2)bn (2020:£(1.2)bn), £366m of which was paid for by contributions from third parties. Our continued prioritisation of targeted investment, even in the most challenging years, drove commercial success in 2021 including the GW-P selections, the B-52 engine replacement contract, the first all-hydrogen microgrid, a world speed record for electric flight and entry into the UK GDA for our SMRs.
We are well positioned for the anticipated growth in our end markets as the impact of the COVID-19 pandemic eases. This, along with continued good contribution from Defence, gives us confidence that we will see positive momentum in our financial performance in 2022 despite the challenges and risks around the pace of market recovery, global supply chain disruption and rising inflation. We expect low-to-mid-single digit revenue growth and we expect our operating profit margin to be broadly unchanged as underlying operational improvement is balanced with increased engineering spend to develop sustainable growth opportunities. We expect to generate modestly positive free cash flow in 2022, seasonally weighted towards the second half of the year.
Results webcast and conference call A webcast will be held at 08:30 (GMT) today and details of how to join are provided below. Conference call details are also available for those who would prefer to dial-in. Downloadable materials will also be available on the Investor Relations section.
Webcast details To register for the webcast, including Q&A participation, please visit the following link: https://edge.media-server.com/mmc/p/gi4zqu9m Please use this same link to access the webcast replay which will be made available shortly after the event concludes.
Conference call details UK dial-in: 0207 192 8338/ US dial-in: +1 646 741 3167 International dial-in for all participants: +86-17306307795 Participant passcode: 784 4816#
Downloadable materials Please visit the Investor Relations section to download our Full Year Results materials: https://www.gorway.com/cases/results-and-events.aspx
Enquiries:
Photographs and broadcast-standard video are available at www.gorway.com.
This results announcement contains forward-looking statements. Any statements that express forecasts, expectations and projections are not guarantees of future performance and will not be updated. By their nature, these statements involve risk and uncertainty, and a number of factors could cause material differences to the actual results or developments. This report is intended to provide information to shareholders, is not designed to be relied upon by any other party, or for any other purpose and GorWay Holdings plc and its directors accept no liability to any other person other than under English law.
Download the full press release