QinetiQ Group PLC Trading Update

15 Jan 2010

QinetiQ Group plc ('QinetiQ'), the international provider of technology-based services and solutions to the defence, security and related markets, today issues a trading update which covers the period since 30 September 2009.

Group Outlook

In its interim results announcement of 25 November 2009, the Board noted that both QinetiQ’s main geographic markets were experiencing short-term uncertainties in specific areas. In the seven weeks since that time, these conditions have not improved and delays have been seen in orders from government customers in both the UK and US. The Board now believes that the normal trading pattern of a seasonally stronger second half performance will not occur in the current financial year. As a result, the Group’s performance in the second half is expected to be broadly similar to that of the first half.

QinetiQ North America (QNA)

The US Administration has now announced its policy for the campaign in Afghanistan. Nonetheless, this has not yet clarified the position regarding certain orders for survivability products and Unmanned Ground Vehicles within Technology Solutions which have been pending throughout the year. At this stage, the Board does not expect these orders to be realised during the current financial year. As a consequence, performance for the second half is not expected to exceed those of the first half.

EMEA

The UK political and economic factors delaying the letting of orders have remained largely unchanged. The Board expects that EMEA will not experience its traditionally stronger second half performance this year.

Financial Position

Net debt at 31 December 2009 closed at £509m, up from the half year level due to the impact of cash restructuring, payment of £12m deferred consideration for the acquisition of DTRI last year and other outflows. At the expected level of trading performance for the year, the Group remains well within its banking covenants.

Operational Review

Leo Quinn is undertaking a review of the Group's operations and processes. The output from this will be reported in the preliminary results announcement in May.

This trading update now forms QinetiQ’s Interim Management Statement.

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QinetiQ Group PLC Trading Update