Trading Statement

RNS Number : 5314I

QinetiQ Group plc

26 July 2012

QinetiQ Group plc

Interim Management Statement

QinetiQ Group plc ('QinetiQ') today issues an Interim Management Statement for the first quarter prior to holding its Annual General Meeting at 1pm today at The Royal Berkshire Hotel, London Road, Sunninghill, Ascot, Berkshire, SL5 0PP.

Trading environment

As described in the full year results announcement on 24 May 2012, defence markets remain challenging as governments seek to re-set budgets to deliver deficit reduction goals. While recent government announcements suggest uncertainty is reducing in the UK, visibility remains extremely limited in the US, with delays continuing in the award of both Department of Defense and federal civil business. The uncertainty is expected to continue at least until the outcome of the US Presidential elections, particularly as the overhang of possible sequestration is unlikely to be resolved before the end of the calendar year.

Business update

The Group has made a solid start to the 2012 / 2013 financial year.

UK Services is performing well and continues to benefit from a more competitive cost base and better project execution as a result of the rigour embedded during the self-help programme. The division is continuing to build on its core services expertise, securing a contract to establish a new Unmanned Air Systems Capability Development Centre (UASCDC) to support the MOD with the rapid development of UAS programmes from concept to deployment.

As expected, the performance of US Services reflects continued uncertainties in the federal services market with customers delaying contract awards. The division still has a large number of submitted bids awaiting award decisions.

Global Products has had a strong first quarter, receiving orders for the Q-Net^TM vehicle survivability product that were expected in the second half of the year. Two key orders, with a combined value of $44m, were for Navistar's MaxxPro^® MRAP vehicles operating in Afghanistan and for the US Army's Heavy Expanded Mobility Tactical Truck (HEMTT) - the first time Q-Net has been fitted to a large haulage vehicle.

Financial position

Cash generation has remained strong during the quarter. As previously announced, the Group received a one-off net payment of £65m during April which discharges the MOD from its accumulated liabilities for rationalisation costs incurred in previous years. The Group has also completed a programme to repay $177m of private placement debt.

Outlook

Despite continuing uncertainty in the US market, the Board believes that QinetiQ's increased competitiveness and agility will enable the Group as a whole to perform in line with its expectations for the current financial year.

ENDS

Notes to Editors:

A FTSE250 company, QinetiQ uses its domain knowledge to provide technical support and know-how to customers in the global aerospace, defence and security markets. QinetiQ's unique position enables it to be a trusted partner to government organisations, predominantly in the UK and the US, including defence departments, intelligence services and security agencies.

QinetiQ is holding an investor day at its UK businesses in Farnborough, Hampshire on 26 September 2012. For further information and to register your interest please see www.QinetiQ.com/investors. The Group will report its results for the six months to 30 September 2012 on 21 November 2012.

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