FY18 Q3 Trading Update
Underlying trading for the Group was as expected during the third quarter and the Group maintains its expectations for overall performance for FY18.
In EMEA Services trading for the period was in line with expectations.
The Company is bidding for a number of new opportunities with UK Government that will enable enhanced capability while also driving cost efficiencies. Although the UK environment continues to be challenging as previously announced at our 1H results, this environment creates opportunities for QinetiQ and we remain well placed to support our customers to achieve their objectives.
Internationally, QinetiQ continued to make good progress, particularly in Australia with positive organic growth and in the Middle East where we have seen strong demand for our advisory services.
Trading in Global Products for the period was in line with expectations with good order performance in North America.
QinetiQ continues to make good progress implementing its strategy to become a more customer focused and international company, helping customers improve their capabilities while addressing budgetary concerns.
We are making positive steps in modernising UK Defence Test and Evaluation:
- As result of our strategic investment into UK T&E through the amended Long Term Partnering Agreement (“LTPA”) contract, we delivered the first flights of our new aircraft and signed our first multi-year £6m contract from the Royal Netherlands Air Force to train Dutch test pilots and flight test engineers until at least 2022.
- Under the LTPA contract, we received a £9m order to modernise and develop Electro Magnetic Open Sea Ranges which play a vital role in helping to protect and ensure the survivability of all Royal Navy surface vessels and submarines.
We continue to build an international company through growth in our US and Australian home countries and wider international markets:
- In the US we won US$8m of orders for TALON robots from key defence customers.
- Reflecting our deepening relationship with the Australian Department of Defence, an additional AU$16m has been allocated to our Air 7000 strategic support partner contract, which supports the acquisition of airborne maritime surveillance capability.
- We signed our first £3m contract for the supply of aerial targets and services to a customer in the Middle East, further building our presence within the region.
We continue to advance our innovation strategy across our Company:
- Our commercial and business model innovation has supported the signing of our first weapon system contract under our Strategic Enterprise framework which has transformed the provision of aircraft test and evaluation services.
- As an example of our focus on disruptive technology, we are at the leading edge of laser directed energy weapon development, booking further work in the period as well as recently establishing our centre of excellence for the technology.
Following the latest triennial valuation and discussions with QinetiQ’s pension scheme trustees, the Company has a confirmed actuarial pension surplus of £140.5 million as at 30 June 2017. Consequently, the Company will cease making cash deficit recovery payments of approximately £10.5 million per annum from March 2018.
For further information please contact:
David Bishop, Group Director Investor Relations and Communications: +44 (0) 7920 108675
Investor Relations: Ian Brown, Group Head of Investor Relations: +44 (0) 7908 251123
Jon Hay-Campbell, Group Head of External Communications: +44 (0) 7500 856953
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