25 July 2013: QinetiQ Group plc, the defence, security and aerospace company, today issues an Interim Management Statement covering the period from 31 March 2013 to date, prior to holding its Annual General Meeting at 11am today at The Royal Berkshire Hotel, London Road, Sunninghill, Ascot, Berkshire, SL5 0PP.
The Group’s UK Services division has performed well, delivering a steady performance and good order intake. During the quarter it was awarded a four-year contract to manage the joint MOD / industry Weapons Science and Technology Centre and a new defence logistics research contract won in a competitive tender. The division is expanding its services to international customers, winning a £14m contract to provide technical and information services to a Middle Eastern government, and a £2m contract to provide test and evaluation services to South Korea. The UK Services division is also pursuing other overseas opportunities and has been renamed EMEA Services to reflect its current and potential geographic end markets.
The US Services division has performed in line with expectations, with management continuing to control costs tightly to ensure competitive rates. Market conditions remain challenging and current delays to decision-making are likely to be exacerbated by furloughs – mandatory non-paid leave for government employees that commence this month. It is also not yet clear how sequestration will impact budgets for the new US Government fiscal year which begins on 1 October 2013. As previously announced, the Group is conducting a strategic review of this division, which possesses some strong capabilities and market positions, to determine the best way to maximise its value.
Global Products, which has shorter order cycles and a more lumpy revenue profile than the services divisions, has made a slower start to the year than planned. Sales of conflict-related products and spares continue to be impacted by budgetary pressures and the drawdown of US troops from Afghanistan. Visibility of key orders and their timing remains limited. The Global Products division is continuing to diversify its portfolio with an increased focus on non-conflict markets. The OptaSense® business won its first major infrastructure monitoring contract in South America during the quarter and trials of the down-hole application are underway with three new oil and gas companies. Global Products also secured a £4m order for its Modular Electronic Warfare System (MEWSTM), an emerging technology that is being taken to market with L-3 TRL, and its latest Proba mini satellite was launched by the European Space Agency.
Cash generation during the first quarter was good, improving the Group’s net cash position.
The outlook for the full year to 31 March 2014 is unchanged from that set out in the preliminary results on 23 May 2013. While the range of possible outcomes is wider than usual at this stage in the year particularly in Global Products and the full impact of sequestration remains unclear, the Board is maintaining its expectations for overall Group performance in the current year absent any material changes in customer requirements.
Notes for Editors:
A FTSE250 company, QinetiQ uses its domain knowledge to provide technical support and know-how 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.
Download the QinetiQ investor relations app for iPad from the App Store.
For further information, please contact
Investor relations: David Bishop, QinetiQ, +44 (0) 7920 108675
QinetiQ Press Office on Tel: +44 (0) 1252 39 3500