Qinetiq Regulatory News (QQ.)

11 February 2015

QinetiQ Group plc

Third Quarter Interim Management Statement

QinetiQ Group plc ('QinetiQ') today issues its Interim Management Statement covering the period from 30 September 2014 to date and reaffirms previous guidance for Group performance in the full year to 31 March 2015 despite the continuing challenging markets.

CEO succession

On 27 January 2015, the QinetiQ Board announced the appointment of Steve Wadey as its new Chief Executive Officer. Mr Wadey, who is currently the Managing Director of MBDA UK, will join QinetiQ on 27 April 2015.

EMEA Services

EMEA Services is performing well and has a high level of contracted revenue for the final quarter despite the uncertainty in UK defence markets resulting from the current MOD transformation programme. Each of the 'Core' Air, Weapons and Maritime businesses delivered a strong performance, and the 'Explore' businesses continue to make progress, with Cyber Security awarded a new £3m contract to deliver secure hosting and secure monitoring services for a major financial institution. The division's unique strengths are also transferable to other geographies and during the period an office was established in Ottawa to meet the anticipated demand for tender assessment, cost and risk advisory services from the Canadian Government.

Global Products

The performance of Global Products continues to be impacted by reduced funding for US military operations which has depressed demand for conflict-related products. In January, Jeff Yorsz joined from Northrop Grumman to lead the repositioning of the US Global Products business with a greater focus on contract-funded research and development, 'programs of record' and non-defence markets. UK product sales are providing a partial offset, with the business winning further orders for its C4ISR solutions and an initial contract for the Canadian Department of National Defence. In addition, although adoption of Distributed Acoustic Sensing (DAS) for well completion is being impacted by the low oil price, the OptaSense DAS business continues to make progress with applications for seismic profiling and flow monitoring, and in other markets. OptaSense recently won £4m of orders for pipeline monitoring driven by security concerns particularly in the Middle East, and has entered into a two-year partnership with Siemens for road traffic monitoring.

Balance Sheet

Cash generation was as expected during the third quarter. A £150m share buyback was initiated on 28 May 2014. By 6 February 2015, the Group had bought back 43m shares at a cost of £87m.

Outlook

EMEA Services' performance is expected to remain steady this year despite the MOD transformation programme and the changes to the budgetary environment resulting from the upcoming UK General Election and subsequent Strategic Defence and Security Review. Together, these will create some short-term uncertainty but also provide opportunities for EMEA Services to build on its strong record of delivering 'more for less.'

At the same time there remains a range of possible outcomes for the performance of Global Products in the current year 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 continuing to depress demand for conflict-related products.

Overall, the Board's expectations for Group performance in the current financial year are unchanged despite continuing challenging markets.

ENDS

Notes to Editors:

* C4ISR is Command, control, communications, computers, intelligence, surveillance and reconnaissance.

QinetiQ will announce its preliminary annual results on 21 May 2015.

Download the QinetiQ investor relations app for iPad from the App Store.

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.

For more information see www.QinetiQ.com

Follow us on twitter @QinetiQ

For further information please contact: