QinetiQ Strategy

Organic-Plus Strategy

  • The objective of our Organic-Plus strategy is to deliver growing sustainable earnings by optimising our portfolio.
  • We aim to win market share in core markets and nurture ‘Explore’ opportunities to deliver growth particularly beyond defence, all underpinned by continued financial discipline.
  • The Group is sufficiently cash generative and disciplined about capital allocation to support ongoing investment in growth opportunities, a progressive dividend policy and the maintenance of a strong balance sheet.

Value Pipeline

  • Our Organic-Plus strategy prioritises active portfolio management. All of our business operations are graded within a value pipeline which gives us full visibility and direction over our assets and capabilities.
  • Whether they are well-established business models or new capabilities with as yet unclear commercial potential, we manage and invest in them according to three criteria:
  • Maturity, how ready is our offering and is there an attractive market?
  • - Potential scale: can it one day earn significant profits?
  • - Investment: how much will it cost to achieve success?

The Group’s principal role is to optimise business returns by allocating resources appropriately.


Core c 85% revenue

Sustainable and defensible businesses, focused on growing market share. This is the ‘engine’ on which our reputation and customer relationships are built, the driver for continual renewal of our expertise and technology, and the source of the majority of our profit and cash flow.


Explore c 10% revenue

Our ‘Explore’ businesses are high potential, emerging businesses, typically with a proven competitive offering in growth markets, often beyond defence. They represent the best opportunities for future growth, to at least $100 million revenue a year, from both our services and products divisions.


Test for value c 5% revenue.

‘Test for Value’ offerings are early-stage options that are typically based around innovative technology or know-how.

The Key Elements

Our core businesses are focused on relatively resilient sectors in which the technical expertise and domain know-how of our people is used to provide trusted independent advice and solutions for our customers’ critical operations.

These are our sustainable and defensible core capabilities, mostly comprising EMEA Services, and operating largely in the defence, security and aerospace markets.Much of the revenue is derived from longer-term contracts, with known dates for renewal and re-tender. These contracts exhibit relatively low risk characteristics with low capital requirements and strong, predictable cash flows that can be invested for future growth. Our core businesses also provide a dynamic source of new intellectual property that is initially collected and categorised in ‘Test for Value’ and managed through the value pipeline. Representing around 85% of our revenue, the performance of the core is the main driver of the future value of the Group and the majority of capital investment is focused on these businesses. We are investing selectively in key capabilities to win market share in existing markets and to deploy these capabilities in new sectors and international territories.

The Key Elements

These are established, commercially viable businesses that have proven technology and customers. In many cases, they have been separated out as ‘Explore’ business units in their own right, with appropriate support from the corporate team. The challenge they face is to evolve a business model that can achieve significant scale in order to become the sustainable, value-accretive core businesses of the future. By meeting this challenge we will deliver a broader base of significant businesses, thereby increasing the diversification of the Group.

We are selectively investing in these businesses to determine their ability to deliver growth both in the UK and overseas. Investments can include new leadership and skills, accelerated business development, strategic acquisitions, alliances and partnership as appropriate to build momentum.

The Key Elements

These technologies are often developed under customer funded programmes, so the portfolio can be likened to a drug pipeline for a pharmaceutical company, except that development takes place in partnership with customers who provide the majority of early-stage funding.

Investment is required to achieve full commercialisation and so we rigorously assess the viability of these options and their markets to determine how best to realise their potential. Technologies are often licensed out to reduce implementation and sales risks, or taken to market with partners. They can also be integrated to ‘Explore’ and receive investment, divested or closed.

Progress in 2015

EMEA Services

  • The Air business secured a £16m extension to its largest MOD test and evaluation contract, and a four-year £5m contract for research into aircrew performance. The business also continued to grow its engineering services offering and now provides maintenance, repair and overhaul services for fixed and rotary wing aircraft across three main contracts, with opportunities to take this capability into new international markets.
  • The Weapons business delivers the MOD’s conventional weapons research programme through the Weapons Science and Technology Centre, which secured £17m of orders during the year. QinetiQ’s expertise continues to attract international customers with work undertaken for the South Korean government as well as European customers. The Weapons business has a long track record of delivering complex managed services in high risk environments and is pursuing a number of outsourcing opportunities.
  • The Maritime business won a £5m contract from a competitor to deliver the MOD’s mobile underwater targets service at the BUTEC range it operates off North West Scotland, which also benefitted from over £20m of investment to modernise its acoustic measurement system. The business was also awarded a contract to deliver technical support for ship procurement for the Canadian government. QinetiQ’s Portsdown site was selected to host the Defence Growth Partnership’s Centre for Maritime Intelligent Systems which will help UK industry meet customer interest in emerging technologies such as autonomous systems.
  • C4ISR is the MOD’s leading supplier of C4ISR research, which underpins the advice capability of the business as well as future opportunities to support customers’ transformation and innovation needs. In the UK, recent funding rounds and announcements have protected or enhanced budgets for C4ISR. The UK’s Joint Forces Command provides a focus for multi-billion pound procurements of ‘enabling’ capabilities that have not existed before and C4ISR is now aligned with the Cyber and Training businesses to meet these requirements. In addition, ongoing instability in the Middle East is increasing opportunities from governments in the region.
  • QinetiQ Australia delivered a steady performance against a background of fiscal pressures and defence reform, securing a two-year extension to the services it delivers at DSTO Fishermans Bend in Melbourne. Greg Barsby, a former KBR executive, took up the role of Managing Director in December 2014. His remit is to target long-term contracts through improved commercial and business development capabilities as well as to reinforce partnerships with government and industry.
  • Global Products

  • In January 2015, Jeff Yorsz took up his appointment as President of QinetiQ’s US products business, joining from Northrop Grumman. Jeff is leading the realignment of the business in response to structural changes in its core markets. This will result in a greater focus on contract-funded research and development and US DoD Programs of Record, as well as on commercial and international markets.
  • The business won $24m of orders to reset TALON® robots, modernising them for future operations.
  • The fifth generation of TALON® was launched during the year, incorporating the ability to use third-party commercial components to capitalise on the continued convergence of military and civil robotic technologies.
  • In addition, $14m of orders for unmanned systems were won from international customers. In response to the growing use of robotics in the construction and demolition industries, the US Products business launched DriveRobotics™, an applique kit that transforms existing and new Bobcat vehicles into unmanned vehicles.
Progress in 2015

EMEA Services

  • QinetiQ’s Training business which Commercial-Off-The-Shelf (COTS) technology secured its largest ever contract for the continued provision in the UK of Distributed Synthetic Air Land Training valued at £33m over five years. It also beat a number of competitors to win the next stage of a core research programme worth £3m over four years.
  • Cyber Security an ‘Explore’ business won a new £3m contract to deliver secure monitoring and hosting services for a major financial institution. QinetiQ’s cyber intelligence business, Cyveillance®, launched a cloud-based cyber threat centre that monitors the internet, provides alerts and delivers data on domain names, IP addresses, phishing and malware attacks.
  • Procurement Advisory Services provided horizon scanning for the UK Cabinet Office, cost forecasting services to the MOD, and won a £2m MOD contract for business case support to help address frontline challenges such as the supply of water, fuel and power. Procurement Advisory Services is spear-heading QinetiQ’s presence in Canada, where an office was opened during the year.
  • The business has developed commercial relationships with the three largest manufacturers of unmanned aircraft outside the US and in September opened the UK’s first airfield capable of operating large UAS at Llanbedr in Wales. During the year, it was awarded a competitively-won contract to provide manpower for a short duration service for an international institution.

Global Products

  • OptaSense® continues to work with German rail operator Deutsche Bahn and also won a $5m initial award from the Saudi Rail Organisation to provide security monitoring for over 1,000km of rail line. In oil and gas, the product development agreement with Shell continues to deliver significant technical progress. They signed a framework supply agreement to protect critical national infrastructure including pipelines, airports and other facilities for a customer in the Middle East.
  • QinetiQ’s Space Products business was awarded a contract worth 16m Euros over three years to develop the computer and avionics for the European Space Agency’s (ESA’s) Proba 3 satellites that will fly in formation and use an eclipsing mechanism to study the Sun. The business is also playing a vital role in ESA’s IXV mission launched in February 2015, as its technology will be responsible for guiding the “space taxi”, a smaller version of the US space shuttle, safely back to Earth.
  • Subsidiaries Boldon James and Commerce Decisions delivered record revenue and profit in FY15, securing an enterprise-wide contract for the third year from the MOD for its AWARD® procurement software, as well as delivering growth in the UK health and transport markets. The business also secured its first order in Canada shortly after year end.
Progress in 2015

Global Products

  • Launch of ASXTM, a small sensor that delivers airborne surveillance capability.
  • The MOD selected QinetiQ’s Modular Electronic Warfare System (MEWSTM) ahead of more established products to form the basis of its Medium Weight Electronic Surveillance Capability for expeditionary operations.
  • Further milestone orders won during the year included a $3m contract with the US Transportation Security Administration to develop the next generation of QinetiQ’s SPOTM stand-off Millimetre Wave threat detection system.
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