Pre Close Trading Update

28 Mar 2013

28 March 2013 - Prior to entering its closed period, QinetiQ Group plc (‘QinetiQ’) today reconfirms the guidance given in its Interim Management Statement (IMS) dated 5 February 2013. QinetiQ remains on course to deliver on its expectations for the financial year ending 31 March 2013.

UK Services continues to perform well, benefiting from a more competitive cost base, better project execution and improved alignment with customer needs. As announced in February, terms have been agreed until 2018 for the provision of test, evaluation and training support services to the MOD under the Long Term Partnering Agreement (LTPA). The division is also continuing to explore the medium-term opportunities presented by MOD’s defence transformation programme.

In the US, market conditions remain challenging with order flow and visibility much lower than usual as customers defer decisions due to continued budget uncertainty. As highlighted in the Group’s IMS, the business is proactively managing its cost base ahead of the implementation of sequestration in order to maintain competitive rates. These actions are focused on cutting property and infrastructure costs, as well as reducing management layers, and will result in an exceptional charge this financial year of approximately $25m. The majority of these cost reductions are in the US Services division where reduced federal services spending is creating a more competitive trading environment. Given this market background, the carrying value of the acquired goodwill held in this division will be re-assessed at the year end.

As previously indicated, the performance of Global Products for the year will be first half weighted following the delivery of key orders for Q-Nets and spares during the first six months of the year. As announced last week, OptaSense has signed follow-on contracts with Shell to fund £10m of product development over the next three years and enable deployment of the technology throughout Shell within a recurring services model, as well as to other companies.

Following the achievement of a net cash position at the half year, the Group’s balance sheet and cash generation remain strong.

QinetiQ preliminary results for the financial year ending 31 March 2013 will be announced on 23 May 2013.

Notes to 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.

For further information please contact:

Investor relations:          David Bishop, QinetiQ            +44 (0) 7920 108675

Media relations:              QinetiQ press office                +44 (0) 1252 393500
                                                Liz Morley, Maitland               +44 (0) 7798 683108

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Pre Close Trading Update