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RNS Number : 3213V
QinetiQ Group plc
05 April 2019
QinetiQ secures GBP1.3bn LTPA amendment enabling military
capability for the future
5 April 2019
QinetiQ has signed a ground-breaking agreement with the UK
Ministry of Defence (MOD) to modernise 16 of the country's critical
defence facilities, firmly positioning the UK as a world-leader in
the generation and assurance of military capability.
This amendment to the Long Term Partnering Agreement (LTPA), a
25-year contract under which QinetiQ provides experimentation,
test, evaluation and training support to the MOD, secures GBP1.3bn
of revenue until 31 March 2028.
As global threats and adversaries become more sophisticated, UK
armed forces require modern, advanced environments to create new
military capabilities, test their effectiveness and train defence
personnel to use them safely and successfully. This amendment
creates highly efficient new ways of working, saving GBP85m of
taxpayers' money, and enables QinetiQ and the MOD to invest GBP190m
in modernising the infrastructure, equipment, and working practices
across all 16 MOD-owned sites.
This contract amendment transforms QinetiQ's ability to enable
the delivery of the MOD's future programmes, such as the Queen
Elizabeth Class aircraft carrier, Dreadnought submarine and future
combat aircraft. It will also drive international growth by
attracting additional overseas customers. The investment projects
include:
-- noise and electromagnetic signature measurement to enhance the "stealth" performance of ships,
submarines and aircraft, enabling them to better evade detection;
-- ground-based evaluation of electronic warfare, communication and advanced weapon systems,
to enable operational advantage; and
-- a new digital test and evaluation 'backbone' to accelerate the processing of critical data
and associated information, to enable simultaneous testing across multiple locations, essential
for supporting new, complex defence capabilities.
The capital investment will be funded by QinetiQ and
subsequently recovered from the MOD over the life of the contract
using the same mechanism as the amendment signed in December 2016,
ensuring appropriate rates of return for QinetiQ in line with its
capital allocation policy. The level and phasing of this investment
is consistent with the guidance given by QinetiQ at its Interim
Results in November 2018.
Defence Secretary Gavin Williamson said:
"Ensuring our cutting-edge equipment is tried and tested before
it is sent to the frontline is crucial to our military's
capability.
"This GBP1.3bn investment will not only guarantee our Armed
Forces' have the reliable, state-of-the-art weaponry they need, but
will also support jobs across the nation."
Steve Wadey, QinetiQ Chief Executive, said:
"Today's agreement enhances our contribution to the safety and
operational effectiveness of UK armed forces in an era when threats
to our security remain acute and are changing rapidly. In line with
our strategy, we are introducing innovative ways of working and
making selective investments to reinforce the UK's position as a
world-leader in the generation and assurance of military
capability. This will enable us to support the MOD's future
programmes and win more work from both UK and international
customers."
Chief Executive Officer at DE&S, the MOD's procurement
agency, Sir Simon Bollom said:
"This latest contract amendment under the LTPA demonstrates how
we are continuing to support our key defence programmes by
investing in essential test and evaluation services.
"This is another example of how DE&S is working
collaboratively with industry and the Front Line Commands to ensure
our Armed Forces have the best value equipment and training to meet
the operational demand."
To hear more from QinetiQ and the MOD about what this amendment
means, please view this video https://youtu.be/wP52kib4aUE
This announcement contains inside information and the person
responsible for making this announcement is Jon Messent, Company
Secretary.
There will be a call for QinetiQ analysts and investors at 0800
hours UK time on Monday 8 April 2019.
Dial in number: +44 (0) 20 3003 2666 Passcode: QinetiQ
A playback of the call will be available shortly afterwards by
dialling +44 (0) 203 451 9993 and entering PIN number 9485756
QinetiQ will host a seminar for analysts and investors at 9:00am
on 24 April 2019 covering its strategic priority to lead and
modernise UK test and evaluation. The event will take place in
London and will also be available via webcast. As space is limited,
please register your interest in attending in person by emailing
investors@qinetiq.com. Registration for the webcast will be made
available on www.QinetiQ.com/investors in due course.
About the LTPA:
The Long Term Partnering Agreement (LTPA) is a 25 year contract
with the MOD, established in 2003, for the provision of critical
skills and facilities to generate and assure national defence
capabilities through test, evaluation and training support
services.
The LTPA is a key contract through which QinetiQ and the MOD
develop technology into military capability and ensure it works
when critically needed. Recent examples of capabilities that have
been deployed more quickly and effectively as a result of work
under the LTPA include the introduction of the Typhoon aircraft,
and the entry into operational service of the Queen Elizabeth Class
Aircraft Carrier.
The LTPA covers 16 primary MOD-owned sites and approximately
1,800 people across the country. Under the contract, QinetiQ
generates revenue of approximately GBP220m a year for delivering
core capabilities, such as the operation of sites, and
approximately a further GBP100m a year for project tasks, such as
conducting trials.
In December 2016, QinetiQ and the MOD signed the first contract
amendment to modernise and operate world-class air ranges and test
aircrew training. This amendment covered approximately GBP100m of
revenue a year arising from the core capabilities needed by the
MOD, and runs until 2028. The second amendment, subject of this
announcement, covers approximately GBP120m of revenue a year, and
also runs until 2028. Supported by these core capabilities, QinetiQ
receives approximately a further GBP100m a year for project tasks
resulting in total LTPA derived revenue in excess of GBP300m a
year.
Improved ways of working and investment in modernisation will
deliver a range of benefits to the MOD and QinetiQ, including:
-- Securing critical test and evaluation infrastructure until at least 2028
-- Delivering cost efficiencies, saving the UK taxpayer GBP85m
-- Providing a platform for future growth, by giving QinetiQ greater operational freedom and
financial incentives to the MOD to encourage use of the facilities by third-party commercial
and international users
Amongst other improvements, the GBP190m investment will enable
the following:
-- Investment of GBP85m to modernise critical Test & Evaluation (T&E) infrastructure, previously
used to support Astute & Vanguard class submarines and the Typhoon aircraft, to ensure that
the noise and electro-magnetic signature performance of ships, aircraft and submarines is
understood. This improves the operational performance of current ships, submarines and aircraft
and supports the development of the next generation including the Dreadnought submarine, T45
destroyer and future combat aircraft.
-- Investment of GBP50m to modernise a suite of ground-based test facilities, capable of full
platform testing. These are used in the generation of essential safety and performance evidence
to underpin the use of aircraft and land vehicles including their communication and electronic
warfare installations. A broad set of platforms have and will continue to be assessed in this
way including the Typhoon aircraft, Wildcat helicopter, Watchkeeper UAV and Ajax land vehicle.
-- Investment of GBP55m into T&E capabilities covering all weapons systems to support qualification
and acceptance, proofing and subsequent in-service surveillance to ensure through-life operational
safety of weapons and munitions used by all services.
For further information please contact:
David Bishop, Group Director Investor Relations and Communications: +44 (0) 7920 108675
Ian Brown, Group Head of Investor Relations: +44 (0) 7908 251123
Jon Hay-Campbell, Group Head of Communications: +44 (0) 7500 856953
About QinetiQ:
QinetiQ (QQ.L) is a leading science and engineering company
operating primarily in the defence, security and critical
infrastructure markets. We work in partnership with our customers
to solve real world problems through innovative solutions
delivering operational and competitive advantage. Visit our website
www.QinetiQ.com. Follow us on LinkedIn and Twitter @QinetiQ. Visit
our blog www.QinetiQ-blogs.com.
Disclaimer
This document contains certain forward-looking statements
relating to the business, strategy, financial performance and
results of the Company and/or the industry in which it operates.
Actual results, levels of activity, performance, achievements and
events are most likely to vary materially from those implied by the
forward-looking statements. The forward-looking statements concern
future circumstances and results and other statements that are not
historical facts, sometimes identified by the words 'believes','
expects', 'predicts', 'intends', 'projects', 'plans', 'estimates',
'aims', 'foresees', 'anticipates', 'targets', 'goals', 'due',
'could', 'may', 'should', 'potential', 'likely' and similar
expressions, although these words are not the exclusive means of
doing so. These forward-looking statements include, without
limitation, statements regarding the Company's future financial
position, income growth, impairment charges, business strategy,
projected levels of growth in the relevant markets, projected
costs, estimates of capital expenditures, and plans and objectives
for future operations. Forward-looking statements contained in this
announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. Nothing in this document should be regarded
as a profit forecast.
The forward-looking statements, including assumptions, opinions
and views of the Company or cited from third party sources,
contained in this announcement are solely opinions and forecasts
which are uncertain and subject to risks. Although the Company
believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these
expectations will prove to be correct. Actual results may differ
materially from those expressed or implied by these forward-looking
statements. A number of factors could cause actual events to differ
significantly and these are set out in the principal risks and
uncertainties section of this document.
Most of these factors are difficult to predict accurately and
are generally beyond the control of the Company. Any
forward-looking statements made by, or on behalf of, the Company
speak only as of the date they are made. Save as required by law,
the Company will not publicly release the results of any revisions
to any forward-looking statements in this document that may occur
due to any change in the Directors' expectations or to reflect
events or circumstances after the date of this document.
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END
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