Qinetiq Regulatory News (QQ.)

QinetiQ Group plc

First Quarter Trading Update

19 July 2017 - QinetiQ Group plc ("QinetiQ"), the science and engineering company that operates primarily in the defence, security and aerospace markets, today issues a trading update covering the period from 31 March 2017 to date and reconfirms its outlook for FY18 from its preliminary results.

This statement is issued ahead of QinetiQ's 2017 Annual General Meeting (AGM) to be held at the offices of Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA at 11am today.

Trading environment

The trading environment remains dynamic, particularly in the UK following the recent General Election, and presents both opportunities and challenges. QinetiQ has the inherent capabilities and strategy to thrive in this environment despite some near-term unpredictability of order intake.

EMEA Services

In the EMEA Services division, first quarter revenue under contract is similar to the position a year ago but orders have been slower than expected with some customer contract award decisions deferred or delayed.

Despite the somewhat slower start to the year for orders, we continue to expect the division to deliver modest revenue growth in FY18. The lower baseline profit rate for single source contracts continues to represent a headwind for operating margins, as previously advised.

Global Products

The Global Products division has shorter order cycles than EMEA Services and its performance is dependent on the timing and shipment of key orders.

Revenue performance in Global Products during the first quarter was similar to the prior year and we expect the division to grow in FY18 as a result of its contracted orders and pipeline of opportunities, as well as the anticipated full year contribution from the Target Systems acquisition.

Balance Sheet

As outlined at our preliminary results, we are investing in our key contracts and their associated facilities. FY18 cash flow will reflect this increased investment, with capex of £80m - £100m to support the amendment to the Long Term Partnering Agreement announced in December 2016.

Outlook

We continue to make good progress delivering our strategy, embedding the cultural changes needed to improve customer focus and deliver our long-term growth aspirations.

Consequently, we are reaffirming the previous outlook outlined at our preliminary results dated 25 May 2017 and expect steady progress in FY18, excluding the non-recurring benefits in FY17, supported by revenue growth and consistent with our strategy.

Notes for Editors:

Disclaimer

This document contains certain forward-looking statements relating to the business, strategy, financial performance and results of the Company and/or the industry in which it operates. Actual results, levels of activity, performance, achievements and events are most likely to vary materially from those implied by the forward-looking statements. The forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words 'believes',' expects', 'predicts', 'intends', 'projects', 'plans', 'estimates', 'aims', 'foresees', 'anticipates', 'targets', 'goals', 'due', 'could', 'may', 'should', 'potential', 'likely' and similar expressions, although these words are not the exclusive means of doing so. These forward-looking statements include, without limitation, statements regarding the Company's future financial position, income growth, impairment charges, business strategy, projected levels of growth in the relevant markets, projected costs, estimates of capital expenditures, and plans and objectives for future operations. Forward-looking statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Nothing in this document should be regarded as a profit forecast.

The forward-looking statements, including assumptions, opinions and views of the Company or cited from third party sources, contained in this announcement are solely opinions and forecasts which are uncertain and subject to risks. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Actual results may differ materially from those expressed or implied by these forward-looking statements. A number of factors could cause actual events to differ significantly and these are set out in the principal risks and uncertainties section of this document. Most of these factors are difficult to predict accurately and are generally beyond the control of the Company. Any forward-looking statements made by, or on behalf of, the Company speak only as of the date they are made. Save as required by law, the Company will not publicly release the results of any revisions to any forward-looking statements in this document that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this document.