Qinetiq Regulatory News (QQ.)

30 September 2014

QinetiQ Group plc

Pre Close Trading Update

Prior to entering its closed period, QinetiQ Group plc, the defence, security and aerospace company, reaffirms its previous guidance for Group performance in the full year to 31 March 2015.

EMEA Services

Utilisation levels and order intake in EMEA Services have been higher than at this stage last year. In addition profitability has been assisted by the completion of a final milestone on an international project as well as continuing productivity improvements and better project execution. QinetiQ Training, an "Explore" business, followed its success in the US where it has secured a position on two IDIQ contracts, with the award of a five-year, £33m contract for the continued provision of synthetic air and land mission training for the UK military principally at RAF Waddington in Lincoln, UK.

Global Products

The Global Products division has shorter order cycles than EMEA Services. The impact of the US military drawdown means that bookings have been slower than last year and visibility remains limited. As previously announced, the division will incur approximately $5m costs during H1 associated with separating from US Services infrastructure. The Global Products division continues to diversify its portfolio particularly into new sectors and earlier this month OptaSense announced that, working with Shell, it had established the world's first permanent fibre-optic Distributed Acoustic Sensing (DAS) in-well production flow monitoring system.

Balance sheet

Cash generation to date has been strong. A £150m share buyback was initiated on 28 May 2014 and at 26 September 2014 the Group had bought back 19m shares at a cost of £41m. The Group has also successfully re-financed its multi-currency revolving credit facility. The new five-year facility totals £225m and is undrawn.

Outlook

The outlook for the full year to 31 March 2015 is unchanged from that set out in the Interim Management Statement (IMS) dated 22 July 2014. Notwithstanding the strong performance in EMEA Services, the MOD transformation programme is likely to create some short-term uncertainty in the UK defence market, and the division's performance as a whole is expected to remain steady this year. At the same time there is a wide range of possible outcomes for the performance of Global Products as the division has a lumpy revenue profile which is dependent on the timing and shipment of key orders. Although newer products are recording notable milestones, the drawdown of American overseas military forces is expected to continue to depress demand for conflict-related products, and the division is unlikely to see significant benefits from the repositioning of its US operations until later in the financial year.

ENDS

Notes to Editors:

QinetiQ interim results for the half year ending 30 September 2014 will be announced on 20 November 2014.

A FTSE250 company, QinetiQ uses its world class knowledge, research and innovation to provide high-end technical expertise and advice, 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 as well as other international customers in targeted sectors.

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