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12 Jan 06. QinetiQ Group plc today announced its intention to proceed with an offer of Ordinary Shares to institutional investors and eligible employees of the Company in the United Kingdom and elsewhere (the “Global Offer”) and to apply for admission of its Ordinary Shares to the Official List of the FSA and to trading on the main market for listed securities of the London Stock Exchange.

Details of the Global Offer:

* The Global Offer will comprise an offer of existing and new Ordinary Shares in the capital of the Company to institutions in the United Kingdom, the United States (under Rule 144A) and internationally. There will also be a priority offer of new Ordinary Shares to eligible group employees.

* The Company is currently majority-owned by the UK Secretary of State for Defence (the “MOD”) and certain entities of The Carlyle Group (the “Carlyle Shareholders”), each of which intend to sell a part of their holding in connection with the Global Offer.

* The Global Offer is expected to raise gross primary proceeds for the Company of approximately £150 million and significant secondary proceeds from the sales by the MOD and the Carlyle Shareholders of a part of their holdings.

* QinetiQ intends to use the proceeds of the Global Offer to continue to grow its business both organically and through appropriate acquisitions. In the short term, QinetiQ intends to use part of the primary proceeds to make an additional one-off payment of approximately £45 million to reduce the deficit in its defined benefit pension scheme, and the balance to reduce the amounts drawn under its revolving bank facility.

* It is currently anticipated that the Global Offer will be priced in February 2006.

* Credit Suisse First Boston (Europe) Limited, JPMorgan Cazenove Limited and Merrill Lynch International have been appointed Joint Global Co-ordinators, Joint Bookrunners, Joint Sponsors and Joint Lead Managers for the proposed flotation.

Commenting on today’s announcement, Sir John Chisholm, Chairman of QinetiQ said: “QinetiQ has transformed itself from a UK R&D operation into the international defence and security technology business we have today. We are well on the way to delivering our founding ambitions of linking defence and civil technologies to create a successful, vibrant and growing organisation meeting the needs of governments and companies in facing the challenges of today’s fast moving world. The IPO will mark a watershed in our development and provide us with the tools to continue to implement our ambitious goals.”


QinetiQ’s total turnover under UK GAAP has increased from £774.9 million in FY 2003 to £795.4 million in FY 2004 and £872.4 million in FY 2005 (31 March year end).

QinetiQ’s total operating profit under UK GAAP before exceptional items, goodwill amortisation and impairment has increased from £35.7 million in FY 2003 to £54.1 million in FY 2004 and £69.3 million in FY 2005.

Board of directors

At the time of Admission, the Board will be constituted as follows:

Sir John Chisholm Chairman
Graham Love Chief Executive Officer
Doug Webb Chief Financial Officer
Sir David Lees Deputy Chairman, Senior Independent Non-executive Director
Nick Luff Non-executive Director
Dr. Peter Fellner Non-executive Director
Noreen Doyle Non-executive Director
Glenn Youngkin Non-executive Director
Colin Balmer Non-executive Director

In 1991, the UK Government placed its non-nuclear defence research laboratories into an executive agency of the MOD, the Defence Research Agency (“DRA”). The DRA was formed with the purpose of commercialising the operations of the UK’s defence research laboratories whilst operating as a separate financial entity on arms-length terms from the UK Government. Following significant improvements in operating performance, the DRA acquired 11 other agencies and operating units from the MOD in 1995 to form DERA.

Following a restructuring in 2001,

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