QinetiQ Group plc QinetiQ secures £1.3bn LTPA amendment

Data : 05/04/2019 @ 14:13
Fonte : UK Regulatory (RNS & others)
Titolo : Qinetiq Group Plc (QQ.)
Quotazione : 376.0  0.0 (0.00%) @ 01:00
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QinetiQ Group plc QinetiQ secures £1.3bn LTPA amendment

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1 Anno : Da Feb 2019 a Feb 2020

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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.


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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.



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April 05, 2019 08:13 ET (12:13 GMT)

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