QinetiQ Group plc

Interim Management Statement

QinetiQ Group plc ('QinetiQ') today issues its Interim Management Statement which covers the period since 23 November 2011. 

Markets

Conditions in UK and US defence markets remain challenging as deficit-reduction requirements drive ongoing uncertainty on levels of future expenditure.  In this environment, the Group's priority remains completion and embedding of its 24 month self-help programme, which is building a stronger and more competitive QinetiQ.

Business update

Despite the external environment, UK Services continues to benefit from better project execution and from having lowered its cost base ahead of the expected revenue reduction.  In December 2011, the division won a four year, £38m contract broadening the scope of the naval combat systems integration services which it delivers to the UK Ministry of Defence.

In the US, defence budgets and spending priorities are still uncertain, delaying the award of contracts. The US Services division is therefore focussed on delivering a more competitive cost base and upgrading its business development process and resources.  In late 2011, US Services was selected for the Training Systems Contract III which provides the US Naval Air Systems Command Team with a quick-reaction acquisition vehicle to access training and simulation capabilities.

The Global Products division continues to perform well with military product sales and spares shipments in the US driving a stronger Q3 than expected.  During the period, initial orders were received for the new Dragon Runner 10 robot and work commenced on the development of the E-X-Drive® electric drive transmission for the US Ground Combat Vehicle programme.

Outlook

The Board believes that, absent any material change in customer requirements, the Group's performance for the current year will at least meet the expectations set out at the Interim Results on 23 November 2011.

However, as market uncertainties are resulting in lower visibility than normal, the outlook beyond the current year is unchanged. The Board continues to have confidence in QinetiQ's ability to build significant value over the medium term.

ENDS

Notes to Editors

Preliminary annual results for the year ending 31 March 2012 will be announced on 24 May 2012.

A FTSE250 company, QinetiQ uses its domain knowledge to provide technical 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, intelligence services and security agencies.  www.QinetiQ.com.

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