Defence innovation
for future warfare
QinetiQ Group plc
Annual Report & Accounts 2025

QinetiQ Group plc | Annual Report & Accounts 2025
Protecting lives
by serving the
national security
interests of
our customers

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Annual Report & Accounts 2025 | QinetiQ Group plc 01
Find out more on
our website at
www.qinetiq.com
P22
Sector review
Strategic report
Corporate governance
Financial statements
Additional information
144 Consolidated income statement
145 Consolidated statement of
comprehensive income
145 Consolidated statement of changes
in equity
146 Consolidated balance sheet
147 Consolidated cash flow statement
147 Reconciliation of movements in net debt
148 Notes to the Consolidated Financial
Statements
194 Company balance sheet
195 Company statement of changes in equity
196 Notes to the Company Financial Statements
198 Five-year financial summary
199 Additional financial information
200 Glossary
202 Alternative performance measures (APMs)
203 Shareholder information
206 Company information and advisers
P10
Group Chief Executive
Officer’s Review
P52
Social
Contents
What's
inside
Overview
02 Financial and operational highlights
04 Strategic framework
06 Investment case
08 Group Chair’s statement
10 Group Chief Executive Officer’s review
Strategy and operating environment
14 Market themes
16 Trading environment
18 Business model
20 Segmental reporting
22 Sector review
30 Group Chief Financial Officer’s review
36 Key Performance Indicators
Sustainability
38 ESG overview
40 Environmental
52 Social
58 Governance
60 Non-financial and sustainability
information statement
Risk
62 Risk management
67 Viability statement
Section 172 statement
70 Key stakeholder groups and
Section 172 statement
73 Section 172 relevant disclosures
75 Group Chair introduction to Governance
76 Governance framework
77 Board leadership and Company purpose
77 Board at a glance
78 The significance of our purpose,
values and strategy
80 Board biographies
83 Governance structure
84 Division of responsibilities
85 Composition, succession and evaluation
87 Board decision-making
89 Board activity
90 Management and control of
US subsidiaries
91 Employee engagement
92 Nominations Committee report
100 Audit Committee report
106 Risk & Security Committee report
110 Directors' Remuneration report
112 Remuneration at a glance
114 Directors’ Remuneration Policy Q&A
115 Summary Directors’ Remuneration Policy
117 Annual Report on Remuneration
130 Directors’ report and statutory information
134 Statement of Directors’ responsibilities in
respect of the financial statements
135 Independent auditor's report
Strategic Report

Orders
£1,955m  12%
FY24: £1,740.4m
Statutory (loss)/earnings per share
(33.0p)

-236%
FY24: 24.2p
Revenue
£1,932m  1%
FY24: £1,912.1m
Statutory operating (loss)/ profit
(£91m)  -147%
FY24: £192.5m
Underlying* operating profit
£185m  -14%
FY24: £215.2m
£1,931.6m£1,954.8m
£185.4m
26.1p
(£90.5m)
(33.0p)
£1,912.1m£1,740.4m
£215.2m
29.4p
£192.5m
24.2p
£1,580.7m£1,724.1m
£178.9m
26.5p
£172.8m
26.8p
FY25
FY25
FY25
FY25
FY25
FY25
FY24
FY24
FY24
FY24
FY24
FY24
FY23
FY23
FY23
FY23
FY23
FY23
Underlying earnings per share
26.1p  -11%
FY24: 29.4p

ETPS fixed
wing aircraft
* Definitions for the Group’s ‘Alternative Performance Measures’ can be
found in the glossary. Underlying operating profit refers to operating
profit from segments. See note 2 for details.
Financial highlights
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QinetiQ Group plc | Annual Report & Accounts 202502
Overview Financial and operational highlights
Our
performance
Highlights

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Annual Report & Accounts 2025 | QinetiQ Group plc 03
Delivering new communications
solution for the front line
In the UK we are providing Defence Digital with
engineering and programme expertise to work in
partnership to deliver the next generation of tactical
military communications that enables the British
Army to make better and faster decision making
when operating on the front line.
Laser weapon for the Royal Navy in 2027
Following the UK Government’s decision to accelerate
the deployment of this technology onto Royal Navy
warships in 2027, together with our partners we
have rapidly mobilised the next programme of work,
securing £58m of orders in the year.
Next Generation German
Aerial Target Services
We play a vital role supporting the operational
readiness of the German Armed Forces and secured
a 10-year €284m contract to deliver aerial training
services including close air support, maritime air
operations, and ground control intercept and ground
based air defence training.
Leading the Weapons Sector
Research Framework
Our enterprise approach on weapons research in the
UK will continue for a further two years and is worth
up to £160m. It will increase the pace at which next
generation weapons are being delivered to the front
line via a network of established prime contractors,
disruptive entrants and SMEs to advance state-of-the-
art technologies.
Driving efficiency gains and
operational benefits for UK
Armed Forces
Under the Engineering Delivery Partner programme we
continue to deliver advanced engineering services that
are critical to national programmes and operational
capability for the frontline including for E-7 Wedgetail,
Challenger 3 and Dreadnought. We lead a thriving
ecosystem of suppliers including more than 250 SMEs
to ensure we harness the very best solutions.
Expanding support for US customers
In the US we achieved more than 10% on-contract
growth, across our major 5-year programmes that
provide engineering services and mission support for
the Space Development Agency, Strategic Capabilities
Office and the Tethered Aerostat Radar System
programme for Homeland Security.
Further reading
 
Our KPIs
pages 36–37
 
Our sector review
pages 22–29
Operational highlights

Credit: Sven Adolf
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202504
Strategic framework
Strategic framework
Purpose-driven
approach
Our
purpose
Protecting lives by
serving the national
security interests of
our customers
Our
values
Integrity
Collaboration
Performance
Further reading
 
CEO review
pages 10–13
 
Business model
pages 18–19
 
Segmental
reporting
pages 20–21
Our strategy
Our customer-centric multi-national
growth strategy has four areas of focus
Invest in core capabilities
High-value and differentiated
1. Research & Development
2. Engineering Services
3. Test & Training
4. Mission Support & Operations
5. Cyber & Intelligence
Grow in core markets
Enable critical national priorities
1. Australia
2. United Kingdom
3. United States
Expand across markets
Deep multi-domain expertise
1. NATO and allies
2. AUKUS partnership
3. Leverage capabilities
Drive innovation and partnering
Co-create innovative solutions
1. Advanced technologies
2. Digital transformation
3. New business models
We deliver safely, securely and
sustainably for the benefit of
all our stakeholders

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Annual Report & Accounts 2025 | QinetiQ Group plc 05
Core capabilities
Our highly experienced scientists and engineers, with unique expertise, are committed to solving
some of the world's most challenging problems and deliver mission critical capabilities
Research & Development
Experimentation, prototyping, testing and innovation to develop new and
existing products, services and technologies for defence and security
applications. Collaborating with government, industry and academia to
create value from intellectual property.
Engineering Services
Systems definition, integration and assurance services to enable
efficient and effective acquisition and through-life support of Defence
and Security capability.
Test & Training
Using data-driven approaches to i) assure systems are fit for purpose
and safe to operate, and ii) enable effective training of users in live and/or
virtual operationally representative environments.
Mission Support & Operations
Deploying close to, and alongside, our defence and security users to
ensure that front line personnel have the situational awareness required to
complete their missions through delivering information gathering systems
and analysis services.
Cyber & Intelligence
Sensing, data processing, digital engineering, including advanced analytics
and artificial intelligence capabilities, to enhance the cyber and electronic
warfare mission. Supporting assured decision-making through multi-domain
mission data and intelligence services and solutions.
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202506
Investment case
Investment case
What makes
us different
Increasingly
threat-relevant
Aligned strategic
markets
We have unique mission critical
capabilities around the world, helping
to maintain national defence and
security for our customers:
— Unique position in the defence ecosystem, often in-between
and alongside the end-customer and the prime equipment
providers
— Involved across the lifecycle of defence systems, from
early-stage research and development, through engineering
services and support, complex test and evaluation
capabilities, provision of advanced mission rehearsal, cyber
security and data analytics and select niche defence and
security products
— Key partner to sovereign nations providing world-leading
technical expertise and state-of-the-art facilities, trusted by
national defence agencies, with decades of project history
and specialist capabilities
— A leader in advanced technologies with the ability to partner
across industry and academia to deliver innovation at pace
for our customers
Our business operates in global defence
and security markets which are seeing
significant spending increases. Our
capabilities are well aligned with those
areas that are growing faster than their
overall defence budgets:
— We are aligned to the higher-growth areas of defence
budgets, including sensors, communications, cyber,
electronic warfare, autonomy and artificial intelligence
— We are a key partner to nations with shared defence and
security interests, most significantly in the UK, Australia
and the US, known collectively as AUKUS; and increasingly
to European allies and wider NATO alliance
— Our total addressable market is worth more than £35bn
£2.8bn
backlog underpins long-
term revenue visibility
c.8,500
highly skilled employees
>£35bn
addressable market

2025
2021
2022
2023
2024
43
62
151
38
40
Key:
Dividend
Share Buyback
48
103
38
40
43
46 16
Shareholder Distributions (£m)
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Annual Report & Accounts 2025 | QinetiQ Group plc 07
Sustainable approachStrong cash generation
& clear capital allocation
QinetiQ has been committed to
driving ESG across our value chain
for many years, in our operations,
working with suppliers and supporting
our customers:
— No exposure to controversial weapons
— AA Rated by MSCI and Top-Rated ESG company by
Sustainalytics
— 36% reduction, of our Scope 1 and Scope 2 emissions
against our FY20 baseline (which is not on a like for like
accounting basis as it includes the impact of the sale
and leaseback of our Farnborough site). See page 42
for explanation
— Ideally placed to help our customers understand and
prepare for the specific defence and security implications
of the energy transition and changing environment
Our business has attractive financial
characteristics supported by a strong
balance sheet which enables us
to invest and realise our long-term
growth ambitions:
— Long-term contracts and repeatable business: predictable
and strong revenue visibility
— Asset-light and cash-generative business model supports
organic investment to drive future growth: organic
investment funded from operating cash flow
— Strong balance sheet and clear capital allocation policy –
investment to drive long-term growth
— Progressive dividend policy and buyback programme
90%+
cash conversion
22%
return on capital
employed
AA-rated
by MSCI
Top-rated
ESG company
by Sustainalytics
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202508
Group Chair’s statement
Group Chair’s statement
Neil Johnson
Non-executive
Group Chair
This has been a challenging year for the
Group with dynamic trading conditions
and geopolitical uncertainty impacting
performance.
Whilst there have been commitments from
governments to increase defence spending
in the near term, QinetiQ is operating in a
tough and competitive market.
The world continues to experience a rapidly changing threat
environment and there remains an enduring demand for strong
defence and security; with customers needing more innovation,
greater pace and better value for money. I am confident QinetiQ’s
unique capabilities are what our customers need and know
we have to work hard to be more competitive and to meet and
exceed their requirements.
The leadership team has been strengthened during the year and
has taken decisive and proactive action to address the performance
challenges, placing QinetiQ on a trajectory for sustainable future
growth. We have also further evolved our Board to improve its depth
of skills, experience and knowledge across our core global markets.
I am extremely proud of the dedication and commitment of our
highly skilled people who have continued to serve our customers,
delivering mission critical capabilities at a time of heightened threat.
Longer term, the underlying strength of the Group, coupled with our
vital role in supporting the national security needs of our customers
in the UK, US and Australia, as well as NATO allies, positions us well
for the future.
FY25 performance
The Group’s financial performance for FY25 was below the
expectations set out in the year, particularly on revenue and profit.
Tough trading conditions delayed order intake for short-cycle work in
our UK Intelligence and US Sectors, and our higher margin product
sales from the US were impacted by geopolitical uncertainty. As a
result, organic revenue growth was 2% at an underlying margin of
9.6%. Cash conversion was good and, despite the trading headwinds,
there was continued strength in order intake which reached £2bn for
the year.
The management team has taken proactive action to address
performance challenges in our US Sector. The performance and
outlook of our US business contributed significantly to the statutory
operating loss of £90.5m, both through a goodwill impairment of
£143.9m and other one-off charges predominantly related to legacy
US operations. As a consequence, whilst delivering an underlying
profit, these one-off exceptional charges have resulted in us
reporting a statutory operating loss of £90.5m.
Our UK Defence business which has greater exposure to longer
duration contracts has remained strong and secured in May 2025
a £1.5bn five-year contract extension to our Long Term Partnering
Agreement with the UK Ministry of Defence. This bolstered the
Group’s order backlog and visibility.
The leadership team have been driving an increased performance
focus across the Company. This approach, which continues into
FY26 and is supported by the Board, includes a resizing of parts
of the Group to support future profitable growth and to improve
effectiveness and efficiency.
QinetiQ is a highly cash generative business and, within our capital
allocation policy, we are focused on driving consistent organic
profitable growth, good cashflow generation, investment in the
business and value-accretive shareholder returns.
Consistent with this policy, in March we announced an additional
extension to the current share buyback programme of up to £200m,
which we expect to be executed over the following two years. We will
also maintain the growth rate of our progressive dividend at 7%.
Our strategy
As a Board we engage, review and refine the Company’s strategy
annually, and this year that review took account of the dynamic
market backdrop and rapidly evolving threat environment. As a
result, QinetiQ’s market-led strategy has evolved to ensure a greater
focus on building customer solutions and an improved performance
culture. As part of the Company’s five-year business plan there
will also be a commitment to increasing the investment in people,
capabilities, infrastructure and systems to make QinetiQ stronger,
more sustainable and better able to compete in the future.
Proud of the role we play
supporting our customers' mission

2025
2020
2021
2022
2023
2024
7.7p
8.25p
8.85p
6.6p
Key: Final Interim
6.9p
7.3p
2.8p
2.2p
6.05p
4.4p
2.2p 4.7p
2.3p
2.4p
2.6p
5.0p
5.3p
5.65p
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Annual Report & Accounts 2025 | QinetiQ Group plc 09
Our people
During this year the Board and I were delighted
to spend time with the talented employees who
are committed to serving our customers and their
national security needs. We have visited some of our
sites in our core markets in the UK and Australia and
from our interactions with employees, it was inspiring
to see how they are driven by such a clear sense of
purpose. We were also fortunate to spend time with
our colleagues and customers at RAF Waddington in
the UK.
The importance of defence and security in ensuring
we all live in a sustainable and safe world has never
been so clear and we are proud of the role we play
in supporting our customers’ mission in keeping us
all safe. Our sustainability programme is focused on
the most material issues for the Company including
looking after our people, our governance and a
deliverable Net-Zero plan. I’m pleased to note that
in the year we retained our rating as a top-rated
ESG company by Sustainalytics and our AA rating
from MSCI.
Board changes
In September, we were delighted to welcome
Martin Cooper, Group Chief Financial Officer to the
QinetiQ Board. Martin, together with Group CEO
Steve Wadey, have ensured a renewed focus on
performance and has been driving rapid progress
across a range of priorities, supported by the Board.
During the year, we also welcomed two new Non-
executive Directors to the Board, with the appointment
of Dr. Ezinne Uzo-Okoro in November and Roger Krone
in January.
Ezinne has had more than 20 years of US government
service, most recently as Assistant Director at the
White House Office of Science and Technology
Policy from 2021 to 2024, where she had overall
responsibility for Space Policy. Roger brings extensive
leadership and operational experience, including as
Chairman and CEO of Leidos Holdings, Inc. from 2014
until his retirement in 2023. He also held numerous
senior leadership roles at The Boeing Company and
General Dynamics.
Both appointments have significantly strengthened the
Board’s expertise and knowledge of the US market.
From April, and as part of a planned succession, Dina
Knight, assumed the role of Chair of the Remuneration
Committee as Susan Searle stepped down from
the Board having completed her full allowable term.
I would like to thank Susan for her commitment
and invaluable contribution to the Board and the
Group, and for her stewardship of the Remuneration
Committee as its Chair over a number of years.
We all wish her well in her future endeavours.
I would like to close by thanking our colleagues
across QinetiQ for the work they have done this year.
Whilst it has been a challenging year, I am confident
we have the right team in place, a strong strategy
and the capability to deliver long-term growth for
our shareholders.
Neil Johnson
Non-executive Group Chair
22 May 2025
Further reading
 
Stakeholder
engagement
pages 70–72
 
Board of Directors
pages 80–82
Historical dividend payments
Strategic Report

Steve Wadey
Group Chief
Executive
Officer
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QinetiQ Group plc | Annual Report & Accounts 202510
Group Chief Executive Officer’s review
We have taken decisive action and are
focused on reshaping the business for
growth, with a clear restructuring plan to
strengthen and capture the increasing
opportunities within our key markets.
Overview
This has been a difficult year for the Group and whilst we recorded
modest growth in revenue and generated good cashflow, our
financial performance was not what we anticipated. Tough near-term
external trading conditions and geopolitical uncertainty weighed on
our performance in two specific areas. In particular, this affected
short cycle work in our UK Intelligence and US Sectors, resulting in
delays to a number of contract awards. Notably, our weighting to
higher margin product sales from the US was impacted, contributing
to a downgrade in expectations for the full year.
Thanks to our highly skilled employees, we have continued to deliver
for our customers, ensuring they are able to respond to national
and global security needs at pace. I am proud of what our teams,
in partnership with our customers and industry, have successfully
delivered through our long-term framework contracts in the UK,
US and Australia to ensure frontline capabilities are supported.
Our deep technical and engineering expertise continues to advance
the development of new technologies with our world-leading beam
combining technology used to accelerate the adoption of laser
directed energy weapons by the UK military.
During the year, our teams continued to deliver training exercises
to prepare armed forces personnel for the wide range of evolving
threats they are likely to face on operational deployment. We are
seeing increasing demand for our services and are continuing to
invest in new capabilities and technologies to help our customers
maintain advantage on the battlefield.
Notwithstanding the short-term dynamics, commitments from
Governments in our key markets to increase defence and security
spending in the years ahead underpin our confidence in the mid-
to-longer term outlook for the business. In a rapidly changing
threat environment our customers need different capabilities, more
innovation, greater pace and better value for money, all of which are
inherent to QinetiQ. We are taking action to ensure we capitalise on
the opportunity, reshaping the business for sustainable growth by
setting in motion a clear and robust restructuring plan to adapt and
strengthen the Group.
Performance in the year
Our financial performance for the full year fell below our
expectations, particularly on revenue and profit. Revenue was
£1,931.6m, representing 2% organic growth on the prior year. Our
underlying profit was £185.4m, down 14% on the prior year and at a
margin of 9.6%. After largely one-off exceptional charges of £305.9m,
this resulted in a statutory operating loss of £90.5m. Encouragingly,
we ended the year with a record order intake of £1.95bn, highlighting
the relevance and demand for our core capabilities. We also achieved
healthy cash conversion of 105%. This, together with our continued
commitment to disciplined capital allocation, which includes
the recent announcement of a further £200m share buyback
programme, reflects our confidence in the underlying strengths
of the Group.
As part of improving our performance and accountability culture
throughout the company, I have recommended and have agreed
with the Remuneration Committee that I, and the members of the
QinetiQ Leadership Team, would not receive any annual bonus
payment for FY25 performance. In addition, I have also agreed that
any 2025 salary increase for myself would be deferred and subject
to in-year performance. Details are discussed in full in the Directors’
Remuneration Report.
EMEA Services
Within EMEA Services, order intake grew 21% on the prior year and
revenue was up 5% on an organic basis. This was predominantly
driven by a €284m ten-year order for the continuation of the threat
representation training contract that underpins our German business
and good growth in our UK Defence Sector. The UK Defence Sector
represents c.50% of Group revenue and has greater exposure
to long-term contracts from which we provide mission critical
solutions for our primary customers – MOD Defence Equipment &
Support, Submarine Delivery Agency and Front Line Commands.
The relevance of our core capabilities in UK Defence delivered
another year of impressive revenue growth, strong operating profit
and good cash conversion. This was partially offset by performance
in our UK Intelligence Sector, which represents c.25% of Group
revenue and experienced a slowdown in short cycle order awards,
especially in the second half of the year.
Group Chief Executive Officer’s review
Focused on delivering consistent
operational performance

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Annual Report & Accounts 2025 | QinetiQ Group plc 11
In May 2025, we were awarded a £1.5bn five-year contract extension
to our Long Term Partnering Agreement with the UK Ministry of
Defence. Partnerships through long-term contracts is central to how
we deliver customer value and this extension will see our teams
continue to provide mission critical test, trials, training and evaluation
capabilities that help to ensure the performance and effectiveness of
the UK Armed Forces, NATO and their allies until 2033.
Global Solutions
Global Solutions has been impacted by a challenging external
market environment and, specifically, the second half operational
result in our US Sector, which represents c.20% of Group revenue.
Here, we experienced both market challenges, following the change
in administration including export restrictions, and operational
issues. Orders decreased by 4%, driven by a reduction in US order
flow against a strong prior year comparator and a challenging
trading backdrop in the second half of the year. Overall, revenue for
Global Solutions reduced by 7%. Whilst Avantus revenue remained
flat, the market dynamics in the US impacted product sales from
our legacy operations.
Strategic response
To keep pace with the changing priorities within our core markets,
we have increased our strategic focus to leverage our strong UK
base including opportunities that better serve NATO and its allies,
whilst continuing to prioritise our customers in the AUKUS nations.
Within this environment, we are improving our competitiveness and
progressing plans to enhance our cost efficiency through reducing
our overheads, including reductions in management roles across
the Group.
In UK Intelligence, we have resized some of our capabilities whilst
protecting core skills for the future. In addition, we have taken action
to realign the business to emergent customer needs, so that we are
better positioned to support operations and digital transformation
in the UK Defence and Security markets. Whilst we forecast a stable
FY26, this business remains highly relevant to our customers’ needs
and is well positioned to return to growth in the following years.
In the US, we appointed Tom Vecchiolla as US President and
Chief Executive in January and undertook a review of our US
operations and subsequently launched a restructuring programme.
As a consequence, we have taken actions to improve operational
performance by resizing our cost base aligned to market priorities,
addressing labour rates and inventory management. These measures
resulted in in-year non-cash charges – predominantly due to our
legacy US operations – but put us on a stronger foundation from
which to move forward.
Aligned to the restructuring, and to be more resilient in the new
market environment, we are refining our strategy in the US to be
better aligned to current national security and defence priorities.
We are focused on four revenue streams where we have good long-
term incumbent positions and have delivered underlying growth in
the year; maritime systems, advanced sensors, space and missile
defence mission support and persistent surveillance systems. The
Avantus long-term contracts with Space Development Agency,
Strategic Capabilities Office and the Tethered Aerostat Radar System
programme are all high priority national programmes and all have
delivered significant on-contract growth in the year, providing a solid
base from which to execute our refined strategy.
Looking ahead, there continues to be demand for our mission-critical
capabilities and we are committed to maintaining financial discipline
and executing our restructuring activities to deliver sustainable growth.
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202512
Market relevance and opportunities for growth
Governments are increasingly looking to the defence industry to
help them build greater resilience, rapidly modernise and deliver
defence innovation at pace, so they can better address current and
future threats. Our mission critical capabilities are highly relevant and
aligned to enabling our customers to deliver their changing national
priorities, as evidenced by this year’s record order intake.
Advanced technology is disrupting how our armed forces deter and
fight but before it can be deployed, new equipment and technology
needs performance and safety assurance so users have confidence
it will operate how and when they need it. Our core skills and deep
expertise in research and development, engineering and Test,
Trials, Training and Evaluation (T3E) mean we are well positioned
to continue to be a critical enabler to mission success. Our people
experiment, innovate and develop new capabilities, drawing on a
range of existing, emerging and disruptive technologies, to enable the
safe performance of defence equipment and systems in service.
Our expertise in threat representation and in operating complex
ranges enables us to support our customers’ needs for improved
training and affordability. We design, develop and facilitate multi-
domain exercises that allow armed forces to be better prepared and
able to succeed in warfare scenarios including joint and multi-
national forces and human-machine teams.
We also provide our customers with advice, research, engineering,
integration, testing and analysis that enables them to operate with
confidence in increasingly contested environments and defend
against rapidly evolving cyber and electronic warfare.
Our record order backlog, including the LTPA extension, provides a firm
foundation for the company. Combined with our five-year qualified
and prudent pipeline of £10bn, we have good visibility of 8x our FY25
revenue, underpinning our confidence in creating long-term value.
Committed to being a responsible business
Our purpose of protecting lives by serving the national security
interests of our customers unites all who work for QinetiQ. Motivated
by the vital services they deliver for our customers, our people are
critical to our success and the execution of our strategy. Ensuring we
create an environment that is safe and secure, where our people are
inspired to deliver for our customers, have the opportunity to realise
their potential and feel recognised for their contribution, is a priority.
Listening to our people helps us improve the working environment
and provides opportunities for career development. We measure
employee engagement each quarter and closed the year with
consistent engagement to the prior year.
In delivering our sustainability programme we are focussed on what
matters most to our Company so that we meet the expectations
and needs of our stakeholders, ensuring we are addressing risks and
creating value for our shareholders and customers.
We have an ongoing commitment to improving workplace safety and
wellbeing. Our safety performance, measured by Lost Time Incident
rate has shown a consistent year-on-year improvement reflecting our
ongoing commitment to workplace safety and significant progress
made in creating a safer workplace environment. In FY25, we saw
an increase in our Total Recordable Incident Rate and while within
the typical range for the defence sector, we will renew our focus on
safety initiatives and proactive risk management.
We continue to focus on ensuring our business is resilient to the
changing climate. We are also committed to playing our part
in protecting the environment and have consistently recorded
reductions in our Scope 1 and 2 emissions since FY20.
Group Chief Executive Officer’s review continued

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Annual Report & Accounts 2025 | QinetiQ Group plc 13
£1.9bn
FY25 revenue
9.6%
FY25 operating
profit margin
105%
FY25 cash conversion
Focused on disciplined capital allocation
The Group continues to be highly cash generative and
in that context we continually assess the best risk
adjusted opportunities to deploy capital to support
shareholder returns.
In the year, we delivered record shareholder returns
through our progressive dividend with a year-on-year
growth rate of 7% and the return of excess cash to
shareholders via our buyback programme. In February,
we completed our £100m share buyback programme
and commenced an additional £50m share buyback
programme expected to complete in June. In March,
we subsequently announced an additional extension
to the share buyback programme of up to £200m
over the next two years, on completion of the
current programme.
Our priority remains on delivering value accretive
organic growth, with our strong cashflow enabling
investment in our people, technology and capability,
and delivering attractive shareholder returns.
Board and Leadership changes
Martin Cooper, our Group Chief Financial Officer
joined QinetiQ and the plc Board as an Executive
Director in September. During the year we also
welcomed two new Non-Executive Directors to the
Board with the appointment of Dr. Ezinne Uzo-Okoro
in November and Roger Krone in January. Both Ezinne
and Roger have extensive experience in US national
security and defence bringing additional strength and
depth to the plc Board.
We also strengthened our leadership team in the year
with the appointment of Iain Stevenson and Tom
Vecchiolla. Iain joined QinetiQ in July in the newly
created role of Chief Operating Officer and in January
we appointed Tom to lead our US Sector. All of these
appointments are providing positive improvements for
our long term performance.
FY26 outlook and summary
For the year ahead, we expect:
— Revenue growth expected to be c.3% for FY26,
supported by 75% revenue coverage.
— Margin expected to be c.11%.
— Cash conversion expected to be c.90%.
— EPS growth expected to be 15–20%.
The fundamentals of the Company remain strong
and we have a clear strategy to create value across
the Group, positioning us at the centre of defence
innovation for future warfare. With the £1.5bn LTPA
extension through to 2033, we now have a record
order backlog. This, combined with the strong pipeline
and alignment of our mission critical capabilities
to our customers’ needs, provides confidence and
visibility in delivering medium to long-term growth.
Steve Wadey
Group Chief Executive Officer
22 May 2025
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202514
Market themesStrategy and operating environment
Market themes
Customers need to experiment, develop and integrate
new technologies swiftly, safely and seamlessly into
existing capabilities.
Research, development, test and evaluation of technologies is
at the core of what we do. With an understanding of existing
and emerging threats, we experiment, innovate and develop
new capabilities. Drawing on a range of existing, emerging
and disruptive technologies, we enable safe performance of
military equipment in service.
Themes driving
market growth
Themes reshaping defence markets
around the world
The world order is increasingly characterised by greater instability,
polarising narratives, eroding trust and insecurity. The geopolitical
landscape will become even more complex as the technological
revolution, politicisation of trade and evolving allegiances make
the world a more contested place.
These factors are driving many states to increase defence
and security investment and strengthen relationships with
like-minded allies.
// Our customers seek to rapidly
modernise their defence and security
capabilities so they can better address
current and future threats. //
Demand for military equipment and
adoption of advanced technologies
The acceptance and operation of new military equipment in
service needs safety and performance assurance. Technology
is also transforming the character of warfare, creating new
vulnerabilities. Artificial Intelligence, Autonomous Systems,
Quantum Technologies, Hypersonics, Directed Energy and
other advanced technologies are affecting how militaries
deter and fight, now and in the future.
How QinetiQ
is responding

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Annual Report & Accounts 2025 | QinetiQ Group plc 15
Customers need to defend physical and information systems
against evolving cyber and electronic warfare threats across
all domains.
Using our knowledge, experience and understanding of
multi-domain networked systems, and evolving cyber and
electronic warfare threats we provide customers with advice,
research, engineering, integration, testing and analysis to
support their ability to operate with confidence in increasingly
contested environments.
Demand for secure, reliable
intelligence across all domains
Detecting and intercepting threats at speed requires reliable
situational awareness and decision-making based on secure
intelligence. With the application of Artificial Intelligence,
more sophisticated and frequent cyber and electronic
warfare threats are increasing the challenge to constrain
and defeat adversaries.
How QinetiQ
is responding
Customers need to train, rehearse, exercise and experiment
across all domains to succeed in contemporary operating and
warfare scenarios. This includes both individual and collective
training across both joint and multi-national forces as well as
with human-machine teams.
From designing distributed training architectures and
integrating human factors to delivering realistic threat
representation and operating complex ranges, we provide
technology-agnostic training and simulation solutions across
all domains. Integrating and developing emerging technologies,
we support our customers’ needs for improved training
realism and affordability.
Demand for affordable,
realistic training and simulation
Evolving threats, new technologies and rapidly changing
warfare tactics are driving the need to be better prepared
and more adaptable to deter, defend and defeat adversaries.
How QinetiQ
is responding
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202516
Trading environment
828
employees
8
sites
The UK, US and Australia are our
home countries and collectively
represent 94% of our revenue
Australia
>£1bn
Market opportunity
1
£148m
FY25 revenue
Trading environment
Australia’s strategic environment has continued to deteriorate
since the release of the 2023 Defence Strategic Review with
increasing risk of military miscalculation leading to major
conflict in the Indo-Pacific region
2
. The 2024 National Defence
Strategy (NDS) and 2024 Integrated Investment Programme
(IIP), published in April 2024, detailed defence capability
investments. The consolidated Defence and Australian Signals
Directorate funding for FY25/26 is estimated at AUD $58.4bn
3
.
$50.3 billion is being invested over the next decade, which will
see defence funding rise to 2.4% GDP by 2033–34
4
.
As Australia seeks to establish an integrated future force,
accelerating acquisition of critical capabilities with a focus on
minimum viable capability, we are well positioned to support
their needs.
2 2024 National Defence Strategy and 2024 Integrated
Investment Programme.
3 Portfolio Budget Statements 2024–25.
4 2024 National Defence Strategy – Budget.
Trading environment
Our >£35bn
addressable market
1 Autumn Budget 2024 (HTML) – GOV.UK.
>£6bn
Market opportunity
1
£1,311m
FY25 revenue
6,128
employees
34
sites
UK
Trading environment
In October 2024, the UK government increased the defence
budget by a further £2.9bn in FY24/25 and increased the
FY25/26 budget to £59.8bn. This is equivalent to an annual
average real-terms growth-rate of 2.3% between FY23/24
and FY25/26
1
. A Strategic Defence Review launched in July
2024 and is due to report in the first half of 2025. The UK
plans to increase defence spending to 2.5% GDP by 2027
with a longer-term ambition of increasing it to 3% between
2029 and 2034. In a dynamic security environment, the UK
is committed to European security and remaining the leading
NATO ally in Europe.
In the short term, trading has been challenging for some
parts of our business with greater exposure to short cycle
contracting. However, as the UK seeks to establish a
modernised integrated multi-domain defence capability,
we are well positioned to support this transformation.

UK
Australia
US
Rest of world
18%
23%
68%
77%
8%
6%
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Annual Report & Accounts 2025 | QinetiQ Group plc 17
EMEA Services
Global Solutions
Revenue by customer location Revenue by division
204
employees
4
sites
Rest of the world
Trading environment
During 2024 there has been a further increase in global
defence investment as many countries have re-evaluated
their defence and security environment as consequence of
the Russia-Ukraine war. The 2025 forecast for global defence
spending stands at $2.5Tn
6
.
Rapid spending increases among European NATO members
is driven by the ongoing Russian threat and concerns about
possible US disengagement within the alliance. All NATO
members increased their military expenditure in 2024. Total
military spending by NATO members amounted to $1,56bn,
or 55% of global military expenditure
7
.
While priority and investment focus is attached to the
implementation of our three home country strategies (UK,
US and Australia), we continue to conduct business in the
support of allied nations.
1,243
employees
12
sites
US
Trading environment
The Department of Defence funding request for FY25 is
$849.8bn
5
. As part of this, the research development test
and evaluation budget is $143.2bn. Investment in critical
technology areas aimed at strengthening technological
advantage include directed energy, hypersonics, integrated
sensing and cyber.
The U.S. administration is refocusing FY26 budget priorities
towards enhanced lethality whilst preserving priority funding
for areas such as border security and missile defence. In
parallel, the new Department of Government Efficiency (DOGE)
is tasked with improving efficiency through all US government
agencies including modernisation of software and IT systems.
These transformation activities may cause some short-term
uncertainty as well as emerging opportunities and threats for
US government service providers.
Our services and solutions are aligned to the US government’s
priorities and we continue to invest to support our customers’
needs.
6 Defence Tech: Shaping the Future of Global Security – Global X ETFs Europe.
7 Unprecedented rise in global military expenditure as European and Middle East
spending surges – SIPRI.5 FY2025_Budget_Request_Overview_Book.pdf
>£26bn
Market opportunity
1
£348m
FY25 revenue
> £1.5bn
Market opportunity
1
£125m
FY25 revenue
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202518
Business model
Business model
Delivering operational
advantage
S
o
u
r
c
e
o
f
v
a
l
u
e
V
a
l
u
e
w
e
c
r
e
a
t
e
U
s
e
i
t
T
e
s
t
i
t
C
r
e
a
t
e
i
t
Delivering
operational
advantage
Our customer relationships
• Understanding our customers’ mission We invest time in
gaining a broad and deep understanding of our customers’
mission, operations and challenges.
• Gaining insights from operations Through our training
and mission rehearsal activities and in-service support
experience, we gain unique and valuable insights into the
operational context.
• Collaborating and co-creating solutions We put the
customer at the heart of what we do. Collaborating with
our customers, we innovate at pace and co-create value
for money solutions.
Our skills and knowledge
• Deep technical expertise and know-how Our highly skilled
scientists and engineers apply their world-leading technical
and domain expertise to deliver evidence-based solutions,
services and intelligence to our customers.
• Understanding of threats and environments Our capability to
replicate realistic and dynamic threat environments enables us
to evaluate system performance across the domains of cyber
and information, land, maritime, air and space.
• Broad knowledge of existing and emerging technologies
Our world-leading experts apply their scientific and engineering
knowledge across existing and emerging technologies,
harnessing them for the benefit of our customers.
Our partner relationships
• Small to medium sized enterprises (SMEs) In all our home
countries, we have established relationships with a large
network of SMEs, drawing on their specialist expertise and
services to deliver value, agility and innovation.
• Universities and research institutions We actively engage and
partner with universities and research institutes to undertake
collaborative research and development of new operationally
relevant technologies.
• Large defence and non-defence technology enterprises
solutions We frequently form teaming relationships with
a variety of large defence and non-defence companies,
collaborating to deliver cutting-edge solutions to
our customers.
Our tools and techniques
We invest in and maintain specialist tools such as facilities,
aircraft, test ranges and software:
• Test facilities, aircraft and ranges We operate some of the
most advanced facilities and, sea and air ranges in the world and
manage live-fire exercises and rehearsals combined with digitally
enabled infrastructure.
• Datasets and models We maintain and create extensive
datasets and models to support the performance and evaluation
of defence and security capabilities.
• Digital engineering, innovation and transformation We apply
digital engineering techniques to accelerate innovation, improve
efficiency and create new defence and security capabilities for
our customers.
Developing
cutting-edge
technology and
rapidly turning it
into capability
Assuring a
capability will
work when it
is critically
needed
Ensuring our customers
are trained and
operationally ready

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Annual Report & Accounts 2025 | QinetiQ Group plc 19
Customers
Using our world-leading expertise,
we help our customers fulfil their
defence and security needs. We are
critical to the development, testing
and assurance of cutting-edge
systems and technologies essential
to our customers’ ability to maintain
operational advantage.
People
We foster a culture that promotes
strong performance by developing
a highly skilled workforce of world-
leading engineers, scientists and
technologists led by effective
leaders across our Global Business.
We empower our people to thrive
and deliver in a high-performance
environment. For the second year
we achieved record-high employee
engagement, reinforcing QinetiQ as
an employer of choice.
Partners
We forge partnerships with industry and
academia to address the challenges
of the current threat environment
with agility. We form complementary
partnerships to deliver the most
effective solutions for our customers,
often managing large networks of small
and medium-size enterprises.
Shareholders
By focusing on our customers’ needs
and ensuring a disciplined approach
to the management and governance
of the Company, we aim to deliver
sustainable and attractive returns to
our shareholders.
Communities
We aim to make a positive contribution
to the communities where we work.
Our people volunteer and we support
a number of charities across all our
markets. We work with armed forces
organisations and those which are
aligned with the development of
technology and STEM skills.
Environment
We play our part in tackling climate
change by reducing our greenhouse
gas emissions. We are also
developing and delivering solutions
for our customers to support their
sustainability ambitions.
Delivering value for our stakeholders
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202520
Segmental reporting
Reporting via EMEA Services
and Global Solutions segments
We manage the business through four operating sectors, each with their own Chief Executive and
Leadership Team. This outlines how the sectors correlate with our external reporting framework
and the financial results for each segment.
EMEA Services
EMEA (Europe, Middle East and Australasia) Services combines world-leading expertise with unique facilities to
generate and assure capability. We do this through capability integration, threat representation and operational
readiness, underpinned by long-term contracts that provide good revenue visibility and cash generation.
£1,478m
Total revenue
Financial performance
Orders increased 21%, including €284m for the
continuation of the threat representation training
contract that underpins our German business on a
long-term ten-year plus basis. The funded order
backlog excluding LTPA ended the year at £1.6bn,
with a book-to-bill ratio of 1.2x (FY24: 1.0x).
Revenue increased by 4% to £1,477.7m (FY24:
£1,417.4m), or 5% on an organic basis, as a result
of good growth in the UK, primarily in the UK
Defence sector.
At 31 March 2025, we had £1.1bn of EMEA Services’
FY26 revenue under contract, compared to £1.0bn (of
the FY25 revenue) at the same point last year.
Underlying operating profit grew by 3% to £169.0m
(FY24: £163.4m) in line with revenue growth.
Operating margin remained stable at 11.4%.
Approximately 66% of EMEA Services revenue is
derived from single-source contracts (FY24:
approximately 66%). By investing in our core contracts
and extending their duration, the high proportion of
single-source revenue contracted on a long-term
basis provides visibility and highlights the unique
capabilities that we bring.
FY25
£m
FY24
£m
Orders 1,441.7 1,193.1
Revenue 1,477.7 1,417.4
Underlying operating profit 169.0 163.4
Underlying operating margin 11.4% 11.5%
Book-to-bill ratio 1.2x 1.0x
Total funded order backlog 2,470.6 2,551.7
Further reading
 
UK Defence
pages 24–25
 
UK Intelligence
pages 26–27
 
Australia
pages 22–23
Segmental reporting
1 Book-to-bill (B2B) ratio is
orders won divided by revenue
recognised, excluding the LTPA
non-tasking services revenue
of £270m (FY24: £266m).
UK Defence
£903m
FY25 revenue
Our UK Defence sector provides test &
evaluation, engineering assurance services,
science & technology solutions, and enables
training and mission rehearsal for our air,
maritime and land customers in the UK. It is
a trusted partner throughout the acquisition
lifecycle and provides services to international
allies via our UK base capabilities.
UK Intelligence
£417m
FY25 revenue
The UK Intelligence sector helps government and
commercial customers respond to fast-evolving
threats based on its expertise in data and digital
engineering (including Artificial Intelligence (AI)/
Machine Learning (ML)), quantum, training and
simulation, secure communication networks
and devices, intelligence gathering, surveillance
sensors and cyber security.
Australia
£158m
FY25 revenue
Our Australia sector delivers advisory and
engineering services, threat representation and
capability assurance services to customers in
Australia and the rest of the world. This includes
target services used for live-fire training and weapon
systems test and evaluation, operational air to air
training and special mission service delivery.

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Annual Report & Accounts 2025 | QinetiQ Group plc 21
Further reading
 
United States
pages 28–29
Global Solutions
Global Solutions combines our world-leading technology-based products and services. Our strategy is to expand the
portfolio of solutions to win larger, longer-term programmes providing good visibility of revenue and cash flows.
Financial performance
Orders decreased by 6% to £513.1m (FY24: £547.3m),
4% organically. This was driven by a reduction in US
order flow against a strong prior year comparator and
more challenging market environment in the second
half of the year.
Revenue reduced 8% on a reported basis to £453.9m
(FY24: £494.7m). On an organic basis, revenue
declined 7%, primarily in the US driven our legacy
US business whilst Avantus remained flat.
At 31 March 2025, we have 67% of Global Solutions’
FY26 revenue under contract, compared to 52% (of
the FY25 revenue) at the same point last year. In
addition, we have a further $127m of US contract
awards in FY25, which are expected to be funded
during FY26. This would increase revenue cover to
89% in FY26.
Underlying operating profit decreased to £16.4m
(FY24: £51.8m), with a reduced underlying operating
profit margin of 3.6% (FY24: 10.5%), driven by
the second half operating result in the US. Our
US operations performed below expectations in
the year due to market conditions and some key
contract losses and slippages. The second half
of the financial year included the change in US
administration, together with the change in US
Sector CEO, re-alignment of strategy and start of
required restructuring plan along with a number of
one-off charges.
FY25
£m
FY24
£m
Orders 513.1 547.3
Revenue 453.9 494.7
Underlying operating profit 16.4 51.8
Underlying operating margin 3.6% 10.5%
Book-to-bill ratio 1.1x 1.1x
Total funded order backlog 374.6 321.3
Total US unfunded order backlog* 529.0 773.2
* Unfunded orders represents the value of contract awards for
which funding has not yet been appropriated or authorised.
£454m
Total revenue
United States
£346m
FY25 revenue
Our US Sector provides design, development,
rapid prototyping, systems engineering and
integration and manufacture of speciality defence
mission products and solutions related to
robotics, autonomy, maritime and sensors.
UK Defence, UK Intelligence
and Australia Products
£108m
FY25 revenue
The portfolio of our other Global Solutions
products provides research services and
bespoke technological solutions derived from
EMEA Services, and includes QinetiQ Target
Systems (QTS).
1 Book-to-bill (B2B) ratio is
orders won divided by revenue
recognised.
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202522
Sector review
Overview
Our Australia Sector comprises our specialist advisory
and engineering business in Australia and also includes
our threat representation business operating in the
Australian, UK, German and Canadian markets.
The Australia sector delivered good revenue growth in
the year, across a wide breadth of activities. Bolstered
by our new Advisory Board, the business is set for
continued strategic progress in Australia.
Operational and order highlights
Performance has been driven by a broad array of
offerings, generating £468.8m of orders including:
— Next Generation German Aerial Target Services:
In Germany, we secured an award of a minimum
10-year Aerial Target Services contract worth
€284 million, providing a range of tailored services
for the German Armed Forces, including close air
support, maritime air operations, ground control
intercept training, and target towing for ground
based air defence systems.
— Scalable High Powered Laser: Building on QinetiQ’s
established laser R&D expertise, in Australia we
successfully demonstrated a prototype of our
scalable high power laser, enhancing sovereign
defence capabilities against current and emerging
threats.
— Underwater Tracking System: We continued to
demonstrate our Test & Evaluation capabilities,
in Australia, supporting the Defence Science and
Technology Group in the Autonomous Warrior 2024
exercise by delivering a rapid deployable underwater
tracking range system for independent assessment
of Autonomous Underwater Vehicles.
— Aerial Targets: We continued to see success with
our training capabilities, including the significant
milestone of manufacturing our 10,000th Banshee
aerial target in the UK, as well as securing a $13.3m
USD contract in Canada to provide the United
States Government with uncrewed aerial target
support services.
Australia
— Defence Aviation Safety Authority: Demonstrating
our R&D capabilities, we were certified to
design and produce limited run parts across all
air platforms, making us the only non-original
equipment manufacturer in Australia to carry
both design and certification and manufacture
designation status with the Defence Aviation Safety
Authority (DASA). We were also awarded a DASA
Strategic Support Contract building on 25+ years
of delivering specialist engineering and technical
services across the Department of Defence.
— Team TECSA: Within T&E, we announced the
formation of Team TECSA (Test and Evaluation,
Certification and Systems Assurance), an industry
and academic collaborative enterprise for the
provision of T&E services in Australia.
Outlook
The coming year will present a range of opportunities
for the Australia sector that align with both QinetiQ’s
global offerings as well the strategic campaigns that
we have been pursuing in the Sector.
R&D opportunities will continue to include Directed
Energy, and support to the Defence Science and
Technology Group through both our Engineering
and Innovation Business Unit and our Advanced
Capabilities campaign team.
Engineering Services opportunities being actively
pursued include a number of Capability Acquisition
and Sustainment Group contracts and we are
developing our strategy and approach for the next
evolution of the Major Service Provider following the
loss of the Land Integrated Work Package contract.
Training opportunities are currently being pursued in
the Indo-Pacific, North America, Europe and NATO
regions. A number of adversarial air opportunities
have presented in all three regions and provide us with
the ability to showcase our crewed, uncrewed and
target towing capabilities.
Our campaign to position ourselves as the Enterprise
T&E Strategic Partner within Australia continues
and has been well supported by a series of senior
engagement meetings and a cross-enterprise
campaign. Concurrently we are pursuing opportunities
to bid and win discrete T&E programmes with a focus
on the Maritime Domain.
Sector review
£216m
Total Revenue
£468m
Total Orders

Enhancing defence aviation
QinetiQ was awarded an AUD $47m Defence Aviation Safety Authority
(DASA) Strategic Support Contract over five years, with a further five-year
extension option. This contract builds on QinetiQ’s more than 25 years of
experience in supporting Australia’s aviation needs and enables DASA to
access QinetiQ’s global resources, specialist skills and knowledge required
to promote and enhance defence aviation safety in collaboration with its
partners, including Muru Management Consulting – a 100% female and
Aboriginal-owned safety consultancy. Furthermore, QinetiQ now holds two
military approvals for all Australian Defence Force (ADF) aircraft by Defence
Aviation Safety Regulations (DASR). These include Subpart 21J Military
Design Organisation, authorising QinetiQ to design and certify structural
and mechanical systems for Defence aircraft; and Subpart 21G Military
Production Organisation, enabling QinetiQ to build and supply structural,
mechanical, and electronic parts and appliances across all ADF aircraft.
These certifications offer unparalleled flexibility and expertise in design
and production.
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Case study
Strategic Report
Annual Report & Accounts 2025 | QinetiQ Group plc 23
Strategic Report
23

Delivering Mission Rehearsal
activities for NATO allies
In June 2024, QinetiQ signed a three-year agreement with the NATO Support
& Procurement Agency (NSPA) for the provision of mission rehearsal
activities. This provides NATO nations with a simplified contracting route
to access the extensive Test, Trials, Training and Evaluation (T3E) services
provided by QinetiQ. Focused on the MOD Hebrides and MOD Aberporth
Air Ranges operated through the Long Term Partnering Agreement (LTPA),
together with target services to provide representative threat scenarios, we
provide an extensive array of capabilities that enable NATO allies to deliver
their mission rehearsal programme outcomes with live weapon firings.
The contract has proved very popular with the Spanish Air and Space Force,
Italian Air Force, and German Air Force conducting extensive campaigns
with us since the NSPA contracting framework has been in place.
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Case study
Sector review
continued
QinetiQ Group plc | Annual Report & Accounts 202524

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Annual Report & Accounts 2025 | QinetiQ Group plc 25
Overview
The UK Defence Sector performed strongly in
the year, with continued support from long-term
contracts providing mission critical solutions for our
Air, Maritime and Land customers’ advantage. The
relevance of our core offerings delivered another year
of impressive revenue growth with strong operating
profit and good cash conversion. Partnerships
through long term contracts remain central to how
we deliver customer value. The Engineering Delivery
Partner (EDP) has surpassed £2bn of orders since
its inception in 2018, we have worked closely with
the customer to extend the delivery of the LTPA test,
trials, training and evaluation (T3E) capabilities by five
years until 2033, and we have secured our leadership
of the Weapons Sector Research Contract (WSRF) for
a further two years until 2027.
Operational and order highlights
Key drivers of performance and £703.5m orders
over the course of the year included:
— Long Term Partnering Agreement (LTPA): The five-
year extension to the LTPA contract is an important
step in continuing our partnership with the MOD,
as it provides a firm foundation to invest in the
transformation of UK sovereign T3E capabilities
to enable armed forces personnel to respond at
pace to the threat environment. Examples of where
this journey to adapt T3E capabilities is already
underway includes securing a £16m order to build
one of the largest Anechoic Test Facilities in Europe
at MOD Boscombe Down in support of current and
future radio frequency anti-jamming requirements,
and c.£35m in orders to design new Maritime
Signature measurement capabilities.
— DragonFire: Following the customer’s decision to
accelerate the cutting-edge DragonFire laser Directed
Energy Weapon system into service on Royal Navy
warships, working in partnership with the MOD,
MBDA and Leonardo, we have rapidly mobilised this
programme of work securing £58m of orders to date.
— E-X Drive Technology: To enable the exploitation of
our electrification technology solutions, following
the licencing deal with Texelis for our Hybrid
Electric Hub Drive, we have secured a deal with
RENK for the sale of our E-X Drive technology for
the electrification and hybridisation of existing
and future land platforms.
— Engineering Delivery Partnership (EDP):
The Aurora partnership with AtkinsRealis and
BMT, delivering Engineering Services through
the EDP contract, continues to deliver very
strong operational performance across a
broad range of procurement programmes.
UK Defence
The partnership recently secured the highest
incentive fee to date based upon contractual key
performance indicators.
— NATO Support & Procurement Agency framework:
Separate air-to-air missile firing campaigns,
contracted through a NATO Support & Procurement
Agency framework, have been delivered for the
German, Spanish and Italian Air Force.
— Test, Trials, Training and Evaluation: Against the
backdrop of increasing threats, we continue to
support our customers so they can be mission
ready; supporting experimentation, accelerating
new capabilities, and delivering pre-operational
deployment evaluations and training. Recent
examples include:
– REPMUS: Supporting the UK Navy’s
participation in the recent NATO multi-
domain REPMUS (Robotic Experimentation
and Prototyping with Maritime Unmanned
Systems) operational exercise.
– Sea Venom and UAS: Successful firings of
the new Sea Venom missile from the Wildcat
helicopter and trialling a novel launch method
for an Uncrewed Air System (UAS) for the Air
Force Rapid Capability Office.
– Archer Artillery System and weapons
stockpile assurance: Evaluation activities for
the recently procured Archer Artillery System
to achieve initial operating capability prior
to deployment in support of NATO exercises
and environmental testing and an improved
risk based assurance approach to extend air
carriage hours for weapon stockpiles.
Outlook
The outlook is positive with our core engineering
services, T3E, research and development offerings
being well aligned to evolving customer demands
to enhance the capabilities of the UK armed forces,
drive innovation, develop industrial capacity, increase
integration and boost interoperability with allies.
Engineering Delivery Partner services are expected to
continue performing well, with the renewal of major
air platform contracts due next year. We are seeing
increasing opportunities in science and technology,
especially for Directed Energy Weapons. Integrated
Air & Missile Defence and the adoption of uncrewed
systems are opportunities to provide a broader
set of integration support services. We are also
seeing good opportunities for collective training and
mission rehearsal services for UK and allied forces.
The Defence Nuclear enterprise is also providing a
number of important future opportunities aligned
to our core offerings.
£935m
Total Revenue
£704m
Total Orders
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QinetiQ Group plc | Annual Report & Accounts 202526
UK Intelligence
Sector review continued
Overview
The UK Intelligence Sector utilises its unique domain
knowledge across C5ISTAR (Command, Control,
Communications, Computers, Cyber, Intelligence,
Surveillance and Reconnaissance) as well as research,
innovation and applied engineering skillsets to support
UK Government in the development, assurance,
integration and deployment of mission critical
capabilities at pace.
During the year it was impacted by a marked
slowdown in short cycle orders, most noticeably
in the second half of the year. As a result, a review
was undertaken and the business realigned to better
support the UK Government and ensure it remains
well-placed for the ongoing delivery of critical digital
change programmes to Defence Equipment and
Support (DE&S), Defence Digital (DD), Defence
Intelligence (DI) and Defence Science and Technology
Laboratory (DSTL).
Operational and order highlights
The sector recorded £387.7m of orders for our
distinctive capabilities across all of our markets:
— Defence Intelligence: The partnership with DI has
continued to grow strongly with orders of c.£70m
in the year. For example, the Engineering Delivery
Partnership (EDP) affords rapid access to a very
wide array of expert suppliers across the UK in the
fields of Mission Data Development and Exploitation,
Transformational Training and; Operational Services
to help DI drive its’ transformation strategy.
— Defence Digital: We have continued our strong
and enduring relationship with DD’s successful
New Style of IT (Deployed) NSOITD programme for
over five years, and secured another 12 months of
support for FY26. It is a critical enabler of a range
of Defence C4ISR capabilities on both exercises and
on operations.
— Borderwatch: QinetiQ’s Borderwatch system is
used to detect illegal migrants at several European
ports and in April 2024 we started work on a multi-
million pound technology refresh programme to
upgrade the systems.
— Q40 GNSS Receiver: FY25 saw the first two
commercial releases of our new Q40 GNSS (Global
Navigation Satellite System) receiver product.
Designed to military standards, Q40 has entered
the market at exactly the right time with the first
partner products already launched, with extensive
customer engagement in Europe, the US and Asia.
— TacSys Resource Partner: This contract, worth
up to £150m, delivers support to the Battlefield
Tactical Communication and Information Systems
(BATCIS) Delivery Team and is a critical enabler for
BATCIS to deliver the next generation of Tactical
Communication and Information Systems as
part of a Single Information Environment for UK
armed forces.
— Dreadnought Synthetic Environment: Whole boat
synthetic environment for Dreadnought to include
interactive Systems, Sub-systems, and components
for shore-based training and qualification prior to
deployment.
— Royal Navy Under Water capability: The Royal
Navy’s Under Water capability delivery is a critical
area for the UK, where continual improvement is
required to maintain operational advantage. Sensor
operators are presented with a significant challenge
to detect and classify contacts from highly complex
data. AI is providing significant opportunities and
our Accelerated Capabilities Environment (ACE) is
bringing diverse SMEs to explore this in partnership
with the MOD and AUKUS partners.
Outlook
Despite the near-term trading challenges, UK
Intelligence is well positioned over the medium-term
with offerings aligned to increasing customer demand.
EDP services are expected to continue performing
well, with increased demand for our digitally focused
offerings expected next year. We are seeing a good
pipeline of opportunities in science and technology,
especially in Artificial Intelligence, Data Science and
Electronic Warfare. Integrated Air & Missile Defence,
and the continued focus on Multi-Domain Integration
and the Digital Backbone are providing opportunities
to provide a broader set of digitally-focused integration
services. We are also seeing opportunities for
collective training and simulation services for both
UK and allied forces and for us to enhance our core
offerings into National and Homeland Security. We
continue to invest in and see long-term demand for
our product portfolio across North America, Europe
and NATO regions.
£435m
Total Revenue
£388m
Total Orders

Bright Corvus – Deep ISR/
Distributed Sensing Technology
QinetiQ have recently completed the delivery of four research projects
under the Spending Review 2020 'Bright Corvus' project delivering £8m+
of revenue over two years. Our main project developed and demonstrated
world-leading distributed radar and radio frequency sensing technologies via
field trials using drones detecting difficult targets in difficult environments.
These technologies use multiple small and low cost sensors acting as one to
deliver significant performance improvements over conventional approaches
that use single large and expensive sensors. Key achievements were the
use of the same sensors for multiple sensing techniques; demonstrating
foliage penetrating radar capability – detecting targets hidden beneath trees;
as well as collecting and processing 3D radar data. The work was highly
collaborative, including academic partners and SMEs, with our academic
collaborators publishing several papers on their novel passive radar work.
Whilst the other projects developed novel Position, Navigation and Timing
(PNT) fusion algorithms, and an architecture for PNT as a Service to support
the distributed sensing technologies. Bright Corvus culminated in a showcase
to military stakeholders in February 2025 that has already generated strong
interest and leads for exploiting the research for the benefit of UK Defence.
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Case study
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Annual Report & Accounts 2025 | QinetiQ Group plc 27
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Enhancing battlefield operations
through Advanced Sensor Integration
Modern military operations demand real-time data sharing across various
platforms to maintain situational awareness and decision superiority.
QinetiQ US provides mature Counter-Unmanned Aerial System (c-UAS) solutions
supported by robust hardware and software sensor integration capabilities
alongside cutting-edge Artificial Intelligence/Machine Learning (AI/ML) algorithm
development experience. The seamless, end-to-end integration of existing high-
performance sensors and processors, combined with the employment of AI/
ML algorithms, provides fused sensor output and automated threat mitigation
to protect our soldiers while minimising operator cognitive load.
Case study
Sector review
continued
QinetiQ Group plc | Annual Report & Accounts 202528

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Annual Report & Accounts 2025 | QinetiQ Group plc 29
Overview
Our US Sector provides design, development, rapid
prototyping, systems engineering and integration,
and manufacture of speciality defence mission
products and solutions related to robotics, autonomy,
maritime, sensors, and persistent surveillance, along
with mission enablement and operations services
to support U.S. Defense, Federal, Homeland, and
National Security customers.
Whilst legacy Avantus revenue was flat, the wider
US business was affected by delays in short cycle
product sales impacting performance in the second
half of the year. In January 2025, Tom Vecchiolla
was appointed US President and Chief Executive and
embarked upon a restructuring plan to enhance the
sectors’ ability to compete, win and execute larger
programmes as a mid tier prime. The change in US
administration, together with the change in US Sector
Chief Executive and resultant refinement of strategy
and start of necessary restructuring, led to a goodwill
impairment charge of £143.9m predominantly related
to legacy US operations. With a backdrop of new
leadership and restructured operations, our US Sector
is well-positioned as a leading mid-tier defence and
national security Company in the rapidly evolving
US market.
Operational and order highlights
In FY25, QinetiQ US generated £394.8m of orders,
delivering key solutions and capabilities that enhanced
our customers’ ability to execute their missions:
— Enhanced U.S. Border Security Operations:
Building on our TARS contract, we expanded
surveillance coverage and increased mission-critical
support personnel for U.S. Customs and Border
Protection, leading to expanded mission scope and
over 10% on-contract growth.
— Expanded Support for SDA and SCO: We increased
support for the Space Development Agency’s (SDA)
Proliferated Warfighter Space Architecture (PWSA)
to improve missile tracking and data transmission.
Additionally, our expanded role with the Strategic
Capabilities Office (SCO) accelerated the transition of
advanced capabilities to counter emerging threats.
— U.S. Navy Submarine Programme Deliveries:
QinetiQ US delivered three Electromechanical
Actuator Power Conditioner and Controller
(EPCC) shipsets for the Virginia-Class submarine
programme and began delivering Electronic
Grounding Unit (EGU) shipsets for the Columbia-
Class programme.
United States
— U.S. Navy Aircraft Carrier Support: We delivered
key systems for the Electromagnetic Aircraft
Launch System and Advanced Arresting Gear
on the USS Doris Miller.
— $42.2m U.S. Army DEVCOM Sensor Development:
Supporting the development of embedded
intelligent sensor processing and optics
technologies to improve targeting capabilities.
— $41.2m U.S. Army DEVCOM c-UAS: Technical and
software engineering expertise to advance sensor
technologies and data fusion capabilities aimed at
countering a rapidly evolving UAS threat landscape.
— $4.9m U.S. Army Research Laboratory (ARL):
Enhancing and integrating Artificial Intelligence/
Machine Learning to improve sighting capabilities
on combat vehicles for Project Linchpin.
— $31.5m U.S. Army PEO IEW&S: Advancing the
Integrated Sensor Architecture (ISA) for seamless
sensor data integration.
— FLRAA Strategic Partnership: Awarded a contract
by Integris Composites to provide systems
engineering and integration expertise for advanced
armour materials on the U.S. Army’s Future Long
Range Assault Aircraft (FLRAA).
— U.S. Army PD Aerostats: Awardee on a $4bn
multiple award task order contract to support
persistent surveillance systems globally.
Outlook
Going forward, QinetiQ US will be focusing on the
following key areas:
— Border Security and Persistent Surveillance: We
are operating and developing persistent surveillance
systems for U.S. border security as well as pursuing
expansion into the international market.
— Next Gen Sensor and ISR Systems: We are building
upon our core sensor and ISR system development
and integration and intelligent processing
algorithms and imaging technologies to address
next generation programme including counter UAS
and augmented reality systems.
— Space, Missile Defense, and Intelligence
Mission Enablement: We are expanding technical
and programmatic services that directly support
the mission for markets aligned to the US
market priorities.
— Maritime Systems: We are pursuing new
opportunities to provide additional content and
modernisation solutions in support of the U.S.
Navy’s shipbuilding plan.
£346m
Total Revenue
£395m
Total Orders

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Tethered Aerostat Radar
System Optimization
Image 7 of 7, by Debora
Henley, identified by
DVIDS. The appearance
of U.S. Department of
Defense (DoD) visual.
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QinetiQ Group plc | Annual Report & Accounts 202530
Group Chief Financial Officer’s review
Difficult market conditions
impacted in year profitability
Group Chief Financial Officer’s review
Overview of full year results
The Group has delivered organic order and revenue growth at
an underlying operating profit margin of approximately 10%.
Consistently strong cash generation of above 100% has contributed
to net debt to EBITDA falling to 0.4x (FY24: 0.5x) and enabled us
to continue and extend our share buyback programme, enhancing
returns to shareholders. We have also continued to grow the dividend
in line with our progressive dividend policy, increasing the distribution
by 7% to 8.85p per share (FY24: 8.25p).
The Group achieved a second successive year of record orders
totalling £1,954.8m (FY24: £1,740.4m), a year-on-year 12% increase
and a book-to-bill of 1.2x excluding LTPA non-tasking revenue. We
have secured major orders across both of our operating segments.
Within EMEA Services we secured £1,441.7m of orders, representing
organic growth of 21%. Within Global Solutions, FY25 orders were
£513.1m (FY24: £547.3m), a 4% decrease on an organic basis, which
was driven by the impacts to our US short cycle work. In the US,
the total value of contract awards was $589.6m. Of this, $506.8m
has been funded and is reported within the Global Solutions order
intake. The remaining $82.8m represents unfunded orders, which
are contract awards for which funding has not yet been appropriated
or authorised.
Funded order backlog remains strong at £2.8bn, or £3.4bn including
unfunded orders, providing good visibility going forward:
— In EMEA Services, the total funded order backlog was £2.5bn
(FY24: £2.6bn). The decrease in the backlog is due to the delivery
of non-tasking revenue (c.£270m per annum) within the LTPA,
offset by the long-term award in Germany. This is a large multi-
year contract that was booked in prior years and as we deliver, this
will naturally reduce the LTPA order backlog.
— In Global Solutions, the total funded order backlog grew from
£321.3m in FY24 to £374.6m in FY25. US unfunded order backlog
reduced from $974m to $772m as orders were booked and traded
in year.
On 31 March 2025 approximately 70% (£1.4bn) of the Group’s FY26
expected revenue was under contract, compared to 64% (£1.3bn) of
the forecast FY25 revenue at the same point last year.
We delivered organic revenue growth of 2% to £1,931.6m (FY24:
£1,912.1m), demonstrating continued demand for our mission
critical capabilities. We saw a 5% organic revenue increase in
EMEA Services primarily due to good growth in the UK Defence
sector. Global Solutions revenue reduced 8% on a reported basis to
£453.9m (FY24: £494.7m). On an organic basis, revenue declined
7%, primarily in the US driven our legacy US business whilst
Avantus remained flat.
Financial performance
(£m)
Underlying* results Statutory results
FY25 FY24 FY25 FY24
Revenue 1,931.6 1,912.1 1,931.6 1,912.1
Operating profit/(loss)
1
185.4 215.2 (90.5) 192.5
Profit after tax 147.0 169.6 (185.7) 139.6
Earnings/(loss) per share (p) 26.1 29.4 (33.0) 24.2
Full year dividend per share (p) 8.85 8.25 8.85 8.25
Funded order backlog 2,845.1 2,873.0
Orders 1,954.8 1,74 0.4
Net cash inflow from operations 316.2 320.2 287.6 29 4.1
Net debt (133.2) (151.2)
* Definitions of the Group’s Alternative Performance Measures’ can be found in the glossary.
1 Underlying operating profit refers to operating profit from segments. See note 3 for details.
Martin Cooper
Group Chief
Financial Officer

12% total growth 1% total growth 14% total decline
FY25 FY25 FY25Foreign
exchange
Foreign
exchange
Foreign
exchange
Global
Solutions
Global
Solutions
Global
Solutions
EMEA
Services
EMEA
Services
EMEA
Services
FY24 FY24 FY24
1,740.4
1,912.1
215.2
255.5 64.2
5.6
(22.2)
(33.7)
(35.2)
(18.9)
(10.9)
(0.2)
1,954.8
1,931.6
185.4
13% organic growth 2% organic growth 14% organic decline
Orders bridge
1
(£m) Underlying operating profit
from segments (£m)
Revenue growth (£m)
11.3%
margin
9.6%
margin
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Annual Report & Accounts 2025 | QinetiQ Group plc 31
1 Book-to-bill ratio is orders won
divided by revenue recognised,
excluding LTPA revenue of
£270m (FY24: £266m).
Operating profit from segments of £185.4m (FY24:
£215.2m) was down 14%. This represents a 9.6%
operating margin (FY24: 11.3%), consistent with our
March revised anticipated outturn of approximately
10%. EMEA Services delivered a stable operating
margin of 11.4% (FY24: 11.5%). Operating margins in
Global Solutions reduced from 10.5% in FY24 to 3.6%
in FY25, driven by the second half operating result in
the US and one-off charges.
To ensure consistency and clarity, our headline profit
figure remains as operating profit from segments
and excludes any benefit arising from RDEC income.
The statutory operating result was a loss of £90.5m
(FY24: profit of £192.5m), including the impact of
specific adjusting items and RDEC income, which
increased to £30.0m (FY24: £27.2m).
Underlying profit before tax decreased 13% to
£198.6m (FY24: £227.0m), in line with the reduction
in underlying operating profit, with underlying net
finance expense in line with the prior year at £16.8m
(FY24: £15.4m).
Specific adjusting items
The total impact of specific adjusting items (which are
excluded from underlying performance due to their
distorting nature) on operating profit was a £305.9m
cost (FY24: cost of £49.9m).
Our US operations performed below expectations for
orders, revenue, profit and cash flow in the year with
some key contract losses. The goodwill impairment
charge of £143.9m relates to the US Sector and is
driven by a combination of an increase in the discount
rate and a reduction in the forecast cash flows used to
calculate the recoverable amount predominately in our
legacy US operations. During the second half of the
financial year the change in administration, together
with the new US Sector Chief Executive’s perspective
on the US business performance and outlook led to
a material impact on the future projections of the
business and an associated restructuring plan. These
factors, together with the impact of the discount rate
which increased significantly in H2, has a knock-on
impact for future years’ profitability and cash flow and
hence an impairment.
Restructuring costs and other impacts of £64.5m
includes approximately £20m of costs relating to
restructuring to create efficiency and competitiveness
in our functions and sectors. The remaining £45m
relates to a number of one-off, largely non-cash
charges and provisions primarily relating to inventory
and cost recovery in our legacy US operations.
These items are predominantly a consequence of
the developments referred to above which happened
in the second half of the financial year, including the
restructuring of our US sector against the backdrop of
challenging US market conditions.
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QinetiQ Group plc | Annual Report & Accounts 202532
£1,932m
Total Revenue
£1,955m
Total Orders
FY25
£m
FY24
£m
Acquisition, integration and disposal costs (14.9) (9.2)
Digital investment (20.8) (16.9)
Restructuring costs and associated impacts (64.5) —
(Loss)/Gain on sale of property (36.6) 2.1
Impairment of property (1.0) (0.7)
Amortisation of intangibles assets arising from acquisitions (24.2) (25.2)
Impairment of Goodwill (143.9) —
Pension net finance income 1.0 5.6
Total specific adjusting items loss before tax (304.9) (44.3)
Acquisition, disposal and integration costs of £14.9m
(FY24: £9.2m) primarily comprise residual costs
associated with integrating the Avantus and Air
Affairs acquisitions into their respective sectors and
specific post-deal retention arrangements relating to
Avantus employees.
In FY25 the non-recurring cost of the discrete digital
investment programme is £20.8m (FY24: £16.9m).
We have continued the roll out to modernise the IT
infrastructure to support our future growth ambitions
which will continue over the next two to three years.
The non-recurring costs are reported as specific
adjusting items in the P&L, with ongoing recurring
operating costs (such as licence costs and overheads)
remaining within underlying operating costs.
The loss on sale of property of £36.6m relates to
the sale and leaseback of Cody Technology Park
which was announced in September 2024. A gross
cash receipt of £112m was received and a new 15
year lease was entered into. The sale and leaseback
accounting under IFRS16, results in a one-off, non-
cash, accounting loss, which is calculated based on
the varying values of assets which were sold and
those which are being leased back.
Also included within specific adjusting items are
net finance income from pensions of £1.0m (FY24:
£5.6m), impairment of right of use lease assets in
the US following space relocation of £1.0m, and
amortisation of acquisition intangibles of £24.2m
(FY24: £25.2m).
Tax
The total tax charge was £79.4m (FY24: £43.1m). The
underlying tax charge was £51.6m (FY24: £57.4m), on
a lower underlying profit before tax, with an underlying
effective tax rate of 26.0% for the year ending 31
March 2025 (FY24: 25.3%). The underlying effective
tax rate is slightly above the UK statutory rate of
25% (FY24: 25%) primarily as a result of prior year
adjustments to returns.
The total specific adjusting items tax charge was
£27.8m (FY24 credit: £14.3m). Although the pre-tax
specific adjusting items result in a loss, a tax charge
rather than a tax credit arises primarily due to the de-
recognition of US deferred tax assets (£45.0m, being
£29.6m brought forward and £15.4m arising in current
year), the significant non-tax deductible impairment
of goodwill, the non-recognition of US deferred
tax assets created by deductible restructuring
costs and the non-deductible loss on sale of Cody
Technology Park.
The underlying effective tax rate is expected to remain
marginally above the UK statutory rate, subject to
the impact of any tax legislation changes and the
geographic mix of profits. The Group has engaged
with advisers to assess any potential impact on the
tax charge by the UK's enactment of the OECD's
Global Anti-Base Erosion Model Rules (Pillar Two).
The Group performed an assessment of the potential
exposure to Pillar Two income taxes based on current
period data. The Group believes it qualifies for one of
the transitional safe harbours provided in the rules
in all territories in which it operates. The Group has
not accrued a Pillar Two top up tax for FY25. The
Group has applied the temporary exemption issued
by the International Accounting Standards Board from
the accounting for deferred taxes under IAS12 and
neither recognises nor discloses information about
deferred taxes related to Pillar Two income taxes.
The Group does not anticipate a material quantitative
impact from Pillar Two legislation, however, there are
expected to be significant compliance obligations.
Cash management and capital allocation policy
Working capital management and overall cash
performance has remained strong. Underlying net
cash flow from operations was £316.2m (FY24:
£320.2m). Our cash conversion definition reflects our
pre-capital expenditure cash flows as a proportion
of EBITDA to demonstrate how we convert our profit
(excluding interest, tax, depreciation and amortisation)
into cash flow. We achieved consistent underlying
cash conversion of 105% (FY24: 104%).
As at 31 March 2025, the Group had £133.2m net debt,
reduced from £151.2m as at 31 March 2024 due to
the strong operating cash conversion during the year
and the proceeds from the sale and leaseback of Cody
Technology Park, offset by c.£150m of shareholder
returns through dividend and share buyback. During
the year, we have successfully reduced leverage to 0.4x
(31 March 2024: 0.5x) and announced two extensions
of our share buyback programme.
Group Chief Financial Officer’s review continued

105% Cash conversion
185.4
Underlying
operating profit
from segments
30.0
RDEC
86.3
Depreciation
& amortisation
301.7
Underlying
EBITDA
Other
1
(108.4)
Capex Underlying net cash
inflow from operations
(post capex)
6.6
Underlying
working capital
movement
316.2
7.9
Underlying net cash
inflow from operations
207.8
Cash flow bridge (£m)
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Annual Report & Accounts 2025 | QinetiQ Group plc 33
Through FY25 we have demonstrated our capital
allocation policy in action:
— Invested in our organic growth – net capital
expenditure of £108.4m (FY24: £96.1m), focused
on contractual commitments (45% relating to
customer funded contracts including £43m into the
LTPA), sustainment of the portfolio and investment
to support future growth.
— Provided a progressive dividend to shareholders –
year-on-year growth rate of 7%.
— Completed sale and leaseback of Cody Technology
Park allowing for a £50m extension to the buyback.
— Returned of excess cash to shareholders –
c.£100m share buyback completed during the year,
extensions announced in November 2024 (£50m)
and March 2025 (£200m).
The Group is not subject to any externally imposed
capital requirements.
Committed facilities
The Group has a £335m Term Loan split into two
tranches: GBP Term Loan £273m (Tranche A); and,
USD Term Loan $80m (Tranche B), which will mature
on 27 September 2027. Participating banks have lent
on a 2-tier basis, 3-banks at £67m and 4-banks at
£35m. In line with Group policy, £270m (c.80%) of the
floating rate debt has been fixed using SONIA interest
rate swaps at a weighted average rate of 3.46%,
maturing on 27 September 2027.
The Group has a £290m bank revolving credit facility
with an ‘accordion’ facility to increase the limit up
to £400m. The facility which will mature on 22 April
2028 was undrawn at 31 March 2025 and has a one-
year extension option to extend the final maturity date
to 22 April 2029.
We adopt a strict policy on managing counterparty
risk through a combination of diversification of
investments and regular reviews of counterparty limits
using credit rating assessments. Our debt sits with
our key relationship banks who have strong credit
ratings and diverse portfolios. The banks have been
selected for their capabilities in our home countries to
support our business.
Return on Capital Employed (ROCE)
To help understand the overall return profile of the
Group, we continue to report our Return on Capital
Employed, using the calculation of: operating profit
from segments less underlying amortisation /
(average capital employed less net pension asset),
where average capital employed is defined as
shareholders’ equity plus net debt (or minus net cash).
For FY25, Group ROCE was 22% (FY24: 21%),
increased due to the impact of the Goodwill
impairment and other specific adjusting items relating
to the US. As we continue to invest in our business
to support sustainable long-term growth, our ROCE
is forecast to remain attractive, at or above the upper
end of the 15-20%+ range, excluding the impact of any
further acquisitions.
1 Other movements driven
by share based payments,
pensions impacts and
provision movements.
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QinetiQ Group plc | Annual Report & Accounts 202534
26.1p
Earnings per share
8.85p
Dividend per share
Further reading
 
Details of
the Group’s
tax strategy,
treasury policy
and approach to
managing currency
risk and liquidity
risk can be found
in the Additional
Information section
on page 199.
Group Chief Financial Officer’s review continued
Earnings per share
Underlying basic earnings per share decreased
by 13% to 26.1p (FY24: 29.4p) driven by the lower
underlying profit after tax. Basic earnings per share
for the total Group (including specific adjusting items)
were a loss of 33.0p (FY24: profit of 24.2p), driven
by the impairment of Goodwill relating to the US,
restructuring costs and other related items.
The average number of shares in issue during the
year, net of treasury shares and as used in the
basic earnings per share calculations, was 563.4m
(FY24: 577.0m). There were 551.8m shares in issue
at 31 March 2025, net of treasury shares, reduced
due to the ongoing share buyback.
Dividend
The Board proposes a final FY25 dividend per share
of 6.05p (FY24: 5.65p) making the full-year dividend
8.85p (FY24: 8.25p). The full-year dividend represents
growth of 7% in line with the Group’s progressive
dividend policy.
Subject to approval at the Annual General Meeting, the
final FY25 dividend will be paid on 21 August 2025 to
shareholders on the register at 25 July 2025.
Pensions
The net pension asset under IAS 19, before adjusting
for deferred tax, was £39.4m (31 March 2024:
£18.4m). The key driver for the increase in the net
pension asset during the year relates to the net
actuarial gain on the net scheme assets.
The key assumptions used in the IAS 19 valuation of
the Scheme are set out in note 27.
Net finance income and expense
The underlying net finance expense was £16.8m
(FY24: £15.4m), increased due to a higher expense
relating to leases following completion of the sale
and leaseback transaction. Net finance income
of £1.0m (FY24: £5.6m) in respect of the defined
benefit pension net surplus reduced due to the lower
opening net asset and is reported within specific
adjusting items.
Foreign exchange
The Group’s income and expenditure is largely
settled in the functional currency of the relevant
Group entity, mainly Sterling, US Dollar or Australian
Dollar. The Group has a policy to hedge all material
transaction exposure at the point of commitment
to the underlying transaction. Uncommitted future
transactions are not routinely hedged. The Group
does not hedge its exposure to translation of the
income statement.
The principal exchange rates affecting the Group were
the Sterling to US Dollar and Sterling to Australian
Dollar exchange rates.
FY25 FY24
£/US$ – opening 1.26 1.24
£/US$ – average 1.28 1.26
£/US$ – closing 1.29 1.26
£/A$ – opening 1.94 1.85
£/A$ – average 1.96 1.91
£/A$ – closing 2.07 1.94
Foreign exchange translation has provided a modest
headwind to revenue and operating profit in the year.
Most significantly, the US Dollar has strengthened
with the average exchange rate to Sterling increasing
from 1.26 to 1.28. In FY25, 18% of our total Group
revenue was generated in the US. As a result of the
strengthening US Dollar and other FX movements in
year, revenue decreased by £10.9m and operating profit
decreased by £0.2m. For every 1 cent move in the USD
FX rate this would impact Group revenue by c.£3m.
Martin Cooper
Group Chief Financial Officer
22 May 2025

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QinetiQ Group plc | Annual Report & Accounts 202536
Key Performance Indicators
£1,954.8m
26.1p
£185.4m
2%
£2,845.1m
£316.2m
FY25
FY25
FY25
FY25
FY25
FY25
£1,740.4m
29.4p
£215.2m
14%
£2,873.0m
£320.2m
FY24
FY24
FY24
FY24
FY24
FY24
£1,724.1m
26.5p
£178.9m
12%
£3,070.2m
£270.1m
FY23
FY23
FY23
FY23
FY23
FY23
* Definitions for the Group’s ‘Alternative Performance Measures’ can be found on page 202. Underlying operating profit refers to operating profit from segments. See note 3 for details.
Financial KPIs
Orders
£1,955m
Description
This is the level of new orders and amendments
to existing orders booked in the year.
Performance this year
Orders increased by 12%, including the €284m
long-term award in Germany, with a book-to-bill
of 1.2x.
Link to strategy
Enables us to assess the execution of our
strategy to grow the Group. Order intake is
used as a metric for the Annual Bonus Plan.
Description
The underlying earnings, net of interest and tax,
excluding all specific adjusting items, expressed
in pence per share.
Performance this year
Underlying basic earnings per share decreased
by 13% driven by the lower underlying profit
after tax.
Link to strategy
Provides a measure of the earnings generated
by the Group after deducting tax and interest.
Specific adjusting items are excluded because
their size and nature mask the true underlying
performance year-on-year.
Description
The earnings before interest and tax, excluding
all specific adjusting items.
Performance this year
Profit was down 14%, driven by the second
half operating results in the US.
Link to strategy
Used for performance analysis as a measure of
operating profitability. Specific adjusting items
are excluded because their size and nature
mask the true underlying performance.
Description
Calculated by taking the increase in revenue over
prior year, at constant exchange rates excluding
the impact of acquisitions and disposals.
Performance this year
Grew 2% on organic basis, with a 5%
increase in EMEA Services driven by the
UK Defence sector.
Link to strategy
Demonstrates the Group’s ability to grow
market share within its chosen markets.
Delivering long-term sustainable growth
reflects the successful execution our strategy.
Description
This represents the total future revenue currently
on contract.
Performance this year
Backlog remains stable at £2.8bn. As expected
the LTPA backlog naturally decreases over the
course of the contract, this was offset by a
strong order intake.
Link to strategy
Backlog allows us to assess the effectiveness
and execution of the Group strategy to move
towards larger longer-term contracts, increasing
confidence in our long-term revenue guidance.
Description
This represents net cash flow from operations
before cash flows of specific adjusting items
and capital expenditure.
Performance this year
Remained consistently strong, with an
operating cash conversion of 105%.
Link to strategy
A measure of the ability to generate cash
from operations. Gives an indication of the
ability to make discretionary investments
and pay dividends.
Underlying earnings
per share
26.1p
Underlying operating profit*
£185m
Organic revenue
growth
2%
Backlog
£2,845m
Underlying net cash
flow from operations
£316m
Key Performance Indicators
Measuring our
performance

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1.5 7.5 28,391FY25 FY25 FY25
1.6 7.5 29,904FY24 FY24 FY24
1.7 7.4 32,354FY23 FY23 FY23
Non-Financial KPIs
Health and safety
(LTI)
1.5
Description
The Lost Time Incident (LTI) rate is calculated
using the total number of accidents resulting
in at least one day taken off work, multiplied
by 1,000, divided by the average number of
employees in that year.
Performance this year
Our LTI decreased to 1.5 in FY25 from 1.6 in
FY24, supported by our Safety Strategy and
Safety Improvement Programme.

Read more on page 52
Link to strategy
It is imperative we operate with the highest
level of safety. This is the right thing to do
for our people and for our customers who
entrust us with safety-critical work. The safety,
health and wellbeing of our people is therefore
intrinsically linked to our success.
 
Safety is linked to our Leadership
Incentives (page 119)
Description
We use WorkDay Peakon, an employee
engagement measurement tool, which provides
regular insights into how our people feel about
working at QinetiQ, enabling us to identify
what we are doing well, but also where we
can improve and take action.
Performance this year
We continued to have good participation rates
and have maintained an overall score, of 7.5 in
FY25 compared with 7.5 in FY24.

Read more on page 53
Link to strategy
Employee engagement is a key part of
sustaining our strategy. Having an engaged
workforce delivers increased productivity and
retention. Improving employee engagement is
essential to creating a positive culture within
QinetiQ and aligns with our behaviour of ‘listen’.
 
Employee Engagement is linked to our
Leadership Incentives (page 119)
Description
Our Net-Zero plan includes a near-term target
of 50% reduction in Scope 1 and 2 emissions
by FY30 from a base year of FY20.
  
Near-term and long-term targets are
shown on page 41
Performance this year
We continued a downward trajectory for our
Scope 1 and Scope 2 emissions, equating to a
36% reduction, in FY25 against our FY20 base
year. This figure is not provided on a like for like
basis as it includes the impact of the sale and
leaseback of our Farnborough site, mid-year,
which has not yet been retrospectively applied
to our base year dataset.

Read more on pages 42–43
Link to strategy
We are committed to addressing our impact on
climate change. Actively tracking our emissions,
and striving to reduce these, is a critical part
of our Sustainability strategy, which underpins
and supports wider business performance.
 
Scopes 1, 2, and elements of Scope 3 GHG
emissions are linked to our Leadership
Incentives (page 119)
Employee engagement
(score out of 10)
7.5
Greenhouse gas emissions
Scope 1 & 2
(tonnes CO
2
e)
28,391
Annual Report & Accounts 2025 | QinetiQ Group plc 37
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QinetiQ Group plc | Annual Report & Accounts 202538
ESG overviewSustainability
Highlights in FY25
We are pleased to have made progress against our three
non-financial KPIs and continue to perform well and
improve with key accreditations and ratings.
7.5/10
Employee engagement score maintained, with in year
improvements. See page 53.
1.5
Lost time Incident (LTI) rate decreased from 1.6 in FY24
to 1.5 in FY25. See page 52.
36%
Scope 1 & 2 GHG emissions decreased from FY20 baseline
(includes impact of sale and leaseback of our Farnborough
site). See page 42.
CDP – overall B rating
We are committed to being a responsible business
Sustainability
Sustainability: Environmental,
Social & Governance
Over the following pages we report progress on those areas of sustainability we consider most material (environment on page 40, social
on page 52 and governance on page 58) and those aspects that meet our regulatory reporting obligations (for example the Taskforce
for Climate-related Financial Disclosures on page 46). We also include aspects of ESG across this annual report:
 
Investment case (page 07)
 
Non-financial KPIs (page 37)
 
Risk management (page 62)
 
Stakeholders/Section 172 (page 70)
 
Non-financial and sustainability information statement (page 60)
 
Corporate Governance including ESG (page 74)
 
ESG in leadership remuneration (page 119)
Additional information is provided on our website:
www.qinetiq.com/en/our-company/sustainability
Key independent accreditations
and ratings
Sustainalytics: Top rated ESG Companies List for third year
MSCI AA rating

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Annual Report & Accounts 2025 | QinetiQ Group plc 39
Strategy and materiality
It is important that we are focused on those environmental, social
and governance (ESG) elements of sustainability that matter most to
our business as it evolves and that we meet the expectations and the
needs of our stakeholders. Delivering our sustainability strategy, based
on key ESG material factors, ensures we are addressing risks and
creating value for our shareholders and customers. It means we create
a great place to work for our people and future workforce, protect the
environment and have a positive impact in our communities.
Our ESG framework is driven by our business strategy, the external
landscape and stakeholder requirements and informed by best
practice frameworks such as the UN Sustainable Development Goals.
Based on this approach, we believe that the aspects of sustainability
that we are focusing on are the most material to our business and to
our stakeholders, and our approach is to embed ESG into strategy and
our business processes.
Stakeholder engagement
Our strategy is informed by needs and expectations of our
stakeholders, so regular engagement is important. Throughout the
year, we engage with shareholders, customers and our people about
ESG directly, and via reporting, surveys and questionnaires, so we are
able to listen, understand, and identify what matters most to them;
their focus tends to be on climate change, governance and inclusion.
We strive to be proactive, chairing a number of industry groups.
We actively collaborate with customers, peers, academic partners and
suppliers on topics such as climate change, ethics, modern slavery,
inclusion and skills.
External landscape
The external landscape continues to rapidly evolve: 2024 was
another record year for global temperatures, and there were social
and geo-political changes. We know it is important to proactively
seek to monitor and understand changes and trends so that we can
try and ensure that sustainability is an enabler for our business.
ESG reporting requirements
QinetiQ Group plc is subject to a growing number of regulatory
reporting requirements and we meet many of those obligations
within this Annual Report. There have been developments in ESG
reporting across all of our geographies in FY25 and a key evaluation
we have undertaken is relating to the European Union's Corporate
Sustainability Reporting Directive (CSRD). Following the EU Omnibus
Proposal in February 2025, we will continue to monitor developments
closely. We recognise the importance of the International
Sustainability Standards Board (ISSB) disclosure standards and
standards for transition plans, and will progress alignment of our
reporting so we are ready for when the UK guidance is in place.
Our ESG framework
Our purpose: Protecting lives by serving the national security interests of our customers
We have a clear framework and focus to deliver change in the three areas of ESG
Underpinned by our values, integrity, collaboration and performance, we deliver safely,
responsibly and sustainably for the benefit of all our stakeholders
Environmental
Material factors
— Climate change: decarbonisation
— Climate change: resilience
— Solutions for customers
— Environmental management
— Waste and resources
— Conservation and biodiversity
 
Read more on pages 40–51
Social
Material factors
— Safety and wellbeing
— Employee engagement
— Diversity, equity and inclusion
— Learning and development
— Reward and recognition
— Social and community impact
 
Read more on pages 52–57
Governance
Material factors
— Business ethics and Code of Conduct
— Anti-bribery and corruption
— Human rights (ethical trading)
and modern slavery
— Sustainable procurement
— Responsible tax management
 
Read more on pages 58–59
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QinetiQ Group plc | Annual Report & Accounts 202540
Environmental
Sustainability continued
Environmental
GHG emissions methodology
Our methodology for calculating our GHG emissions
is aligned to the GHG Protocol, and best practice
outlined by the SBTi. As part of our drive for
continuous improvement, we have a data programme
underway to review and refine our approach and
improve the accuracy of our Scope 3 emissions.
We are committed to being transparent about our
approach and have published our methodology for
Scope 1 and 2, and Scope 3 on our website.
Climate Transition Action Plan
We recognise the need for a clearly defined plan
to address the impact of climate change and the
steps we are taking to address this. Our Net-Zero
Plan (published in 2022) enabled us to set the
foundations for achieving our targets and ambitions.
We have worked hard to improve understanding of our
emissions, and our business has changed since then,
so we believe that now is the right time to evolve from
that foundational Net-Zero Plan to a Climate Transition
Action Plan (CTAP).
We have reviewed our GHG emissions data, and have
identified that four key contributors are responsible for
the significant majority of our total carbon footprint.
These comprise: our jet fuel consumption (Scope
1), our operational energy emissions (Scope 1 fuel
consumption and Scope 2 electricity); Procurement
of Goods and Services and Capital Goods (Scope 3,
Categories 1 and 2), and our Business Travel (Scope 3,
Category 6).
While we will continue to endeavour to reduce all
of our emissions, we believe that by prioritising our
focus on these four areas, we will see the greatest
and most rapid reduction in our footprint. We have
designed four decarbonisation workstreams to enable
focused planning and action against these sources
of emissions.
Through our experience of meeting the Taskforce
for Climate-Related Financial Disclosures (TCFD)
requirements, we have been evolving our approach
to both physical and transitional climate change risk.
This forms the fifth workstream.
These workstreams are underpinned by a series of
cross-cutting enabling programmes such as a focus
on improving data, processes and skills. A high-level
summary of our approach is outlined on page 41.
The frequency and severity of
climate-related events seen
in 2024 continues to highlight
the importance of focusing
on our environment, to ensure
our business is resilient to the
changing climate, and playing
our part in mitigation.
Climate change
Greenhouse Gas (GHG) emissions targets
We have set GHG emissions targets that cover
our full value chain, across all categories of
Scopes 1, 2 and 3 emissions. These have
been validated by the Science Based Targets
initiative (SBTi), which confirmed that they
were ambitious, and aligned to a 1.5°C global
temperature pathway. Within these targets, we have
made a commitment to at least a 90% reduction
in absolute emissions across our full value chain
by 2050 or sooner. We recognise that eliminating
all sources of emissions will be challenging with
current technologies, and with the pace of change
across the other sectors and industries that sit
within our value chain, therefore up to 10% of our
carbon footprint may need to be offset in some
form to enable us to reach Net-Zero.
Additional
information on
GHG Emissions
Methodology:
www.qinetiq.com/
en/our-company/
sustainability/
climate-change

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Annual Report & Accounts 2025 | QinetiQ Group plc 41

QinetiQ Group Climate Transition Action Plan overview
Net-Zero targets
-50%
Absolute reduction
Scopes 1 & 2 by FY30
Baseline year FY20
-30%
Absolute reduction
Scope 3 by FY30
Baseline year FY20
-33%
Absolute reduction
total by FY30
Baseline year FY20
Net-zero
by FY50 or sooner
The evolution and development of this plan was undertaken as part of our annual strategic planning process. Our goal was to integrate how
we address climate change within our business plan. The advantage of this approach is that it ensures it is embedded and owned by the key
sectors and functions, and also enables annual review and updates so that it adapts to our evolving business. Governance of the CTAP will be
overseen by the Climate Change Steering Group, chaired by our Group CFO.
Evolving workstreams driving reductions across wider carbon footprint; increased resilience
Climate Transition Action Planning – Building on strong foundations
2050 Target: 90% reduction in Scope 1, 2 & 3
Decarbonisation
2030 Target: 50% reduction in Scope 1 & 2 2030 Target: 30% reduction in Scope 3 Resilience/TCFD
Cross-cutting enabling programmes: data, tools, behaviours, forecasting
Workstream 1:
Jet fuel
Reducing Scope 1
emissions:
— Operational efficiency
— Platform efficiency
— Sustainable aviation
fuel
Reducing Scope 3
emissions:
— Efficiency programme
— Selection criteria
— Supplier engagement
Reducing Scope 1
and 2 emissions:
— Behavioural change
— Building consolidation
— Energy projects
Reducing Scope 3
emissions:
— Travel less
— Travel differently
— Policy and tools
Increasing climate
resilience:
— Financial modelling
— Business continuity
— Risk assessment
— Scenario analysis
Workstream 3:
Procurement
Workstream 2:
Operational energy
Workstream 4:
Business travel
Workstream 5:
Climate resilience
Risk management
Five key workstreams to reduce majority of emissions and improve operational resilience
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QinetiQ Group plc | Annual Report & Accounts 202542
Progress against targets
Scope 1 and Scope 2 emissions
For our Scope 1 and 2 emissions reporting, we have
adopted a financial control approach, and used the
GHG Protocol Corporate standard and UK Government
emission conversion factors. We collect relevant data
throughout the year via a dedicated team of energy
experts. PricewaterhouseCoopers LLP (PwC) carried
out a limited assurance engagement on selected GHG
emissions data for the year ended 31 March 2025, in
accordance with International Standard on Assurance
Engagements 3000 (revised) and 3410, issued by the
International Auditing and Assurance Standards Board.
The figures provided in the table below that are covered
by independent assurance are indicated by the following
symbol
. (It should be noted that the same metrics
were subject to limited assurance in prior years).
We have seen consistent reductions in our Scope 1
and 2 emissions since our FY20 base year. In FY25
we achieved a 36% reduction in our total Scope 1
and 2 emissions. It should be noted that in October
2024 we completed the sale and leaseback of
our UK Farnborough site which contained QinetiQ
offices and facilities but also a number of tenants.
This is a large site and so has contributed a
significant proportion of our Scope 1 and 2
emissions to date. From November 2024 onwards,
a proportion of these emissions migrated to Scope
3 (Category 8 Leased Assets), with the remainder
no longer attributable to QinetiQ. This has had a
significant contribution to the reduction of Scope
1 and 2. Under SBTi guidelines, as this change is
material, it will trigger a recalculation of our Scope
1 and 2 baseline, and we will undertake this in
FY26, as part of our wider methodology review and
associated changes and improvements under our
data programme.
To comply with the UK Government’s Streamlined
Energy and Carbon Reporting (SECR) requirements,
we present our Scope 1 and 2 emissions and energy
performance in the table below (indicating the
proportion for the UK).
Scope 1 and Scope 2 emissions FY25 FY24 FY23 FY22 FY21 FY20
Total Scope 1 emissions (tCO
2
e)
19,662
19,362 20,996 23,126 23,710 28,377
Total Scope 2 emissions (tCO
2
e)
8,729
10,542 11,35 8 12,222 13,555 16,281
Total Scope 1 and 2 emissions (tCO
2
e) 28,391 29,904 32,354 35,348 37,265 44,658
Intensity ratio (tCO
2
e per £m of revenue)
15
16 20 27 29 42
Energy consumption (kWh) resulting in the above emissions 124,902,749 132,659,501 146,600,802 154,759,131 156,719,332 176,376,247
Proportion of energy consumption arising from UK operations (%) 73% 73% 75% 80% 79% 77%
Proportion of emissions arising from UK operations (%) 71% 70% 72% 78% 78% 78%
28,391
tCO
2
e (Scope 1&2) FY25
Sustainability continued
Environmental continued
A copy of PwC’s
report is available on
our website: www.
qinetiq.com/en/
our-company/
sustainability/
climate-change

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The following are examples of energy and emissions reduction
projects:
— Continuation of the electrical sub-metering implementation
programme across our UK estate, to enable greater insight into
our energy consumption to directly support reductions.
— Ongoing use of digital energy monitoring and management
toolsets, enabling identification of energy saving opportunities.
— Implementation of upgraded automated Building Management
Systems across key UK sites, which enables energy saving
through automatic lighting and heating controls.
— 'Switch off' campaigns, encouraging people to switch off lighting,
heating and electrical equipment across extended holiday periods.
This raises employee awareness of how they can practically
contribute to energy saving and the impact theses actions have.
— Piloting of Senior Leader 'Energy Walk-around' visits to key UK
sites, to support identification of energy-saving opportunities and
to engage with people to encourage energy saving.
— Delivery of training for our Energy Champions which focuses
on supporting them in the identification and implementation of
energy-saving opportunities.
— Installation of new Photovoltaic (PV) arrays at our Portsdown
Technology Park (PTP) and Malvern sites in the UK, driving greater
availability of renewable power for emissions reduction and
business resilience.
— Completion of airworthiness certifications on all QinetiQ-owned
aircraft in the UK, to ensure compatibility with Sustainable Aviation
Fuel (SAF), in response to the implementation of the new UK
Government SAF Mandate.
— Working with an expert third-party to undertake a decarbonisation
assessment of our owned and leased estate in the UK, to identify
the decarbonisation projects to deliver in FY26.
In FY26 we plan to focus our efforts on reducing Scope 1 and 2
emissions by:
— Reviewing and assessing efficiency options across our aviation
operations in Australia and Germany, to reduce fuel consumption.
— Implement prioritised decarbonisation projects across our estate
including energy saving and renewable energy projects.
Scope 3 emissions
In contrast to Scope 1 and 2 emissions, where we have been
working for many years to understand our data and manage
emissions reductions, like many organisations, we are still evolving
and refining our approach to the far greater and more complex
challenge of Scope 3 emissions. The data capture and analysis takes
considerable effort and is on a different time-line from our Scope
1 and 2. During FY25 we finalised the capture and processing of
our FY24 Scope 3 data (312,629 tCO
2
e), and implemented a new
approach to data verification. While we have seen reductions in
some areas (for example in upstream leased assets) overall our
FY24 Scope 3 emissions are higher than the previous year, primarily
due to an increase in spend with our supply chain which increases
emissions in Category 1 (Procured Goods and Services) and
Category 2 (Capital Goods).
As part of our CTAP we will focus our efforts on the most material
emissions. Our largest contributor to our Scope 3 emissions remains
Categories 1 and 2 (which represented circa 83% of our FY24 Scope
3 emissions). It should be noted that we currently use spend-
based calculation (in line with the GHG protocol guidance), which
provides an indication but not an accurate representation of the true
emissions impact. During FY25 we have really focused our efforts
on understanding the contributing roles of the different categories
of spend within our supply chain (e.g. professional services,
vs. construction), and we are developing our strategy to obtain
meaningful product-level emissions data from our supply chain in
the longer-term. We have been investigating alternative calculation
methods to start refining our data.
Our next largest contributor to Scope 3 emissions is Category 6 –
Business Travel. As a business with international operations, travel
is an important enabler for collaboration and customer delivery. We
have been encouraging less travel and promoting how to use our
travel booking tools to choose lower emission options.
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QinetiQ Group plc | Annual Report & Accounts 202544
The following are examples of activities undertaken in FY25 to
improve our understanding of Scope 3 emissions and to drive
emission reductions in the short and longer-term:
— Implemented the Net-Zero contractual clause for UK supply chain
agreements that we developed in FY24, now applied to all new
supplier engagements, setting expectations for our supply chain
on setting targets and reducing emissions;
— Detailed analysis of supplier and procurement data, to enable
prioritisation of supplier engagement; Supply Chain Efficiency
Programme, to identify opportunities for cost savings across
the business;
— Continuation of global adoption of a single business travel booking
provider, to enable greater access to global travel data and
availability of low-emission transport options;
— Changes to our Business Travel guidance, to provide greater
clarity on allowances and entitlements for travel.
Our focus for FY26: will be to drive the two Scope 3 emission
workstreams in our CTAP – procurement and business travel. For our
supply chain we will be further investigating alternative calculation
methods to start refining our data. For business travel we will
continue to promote lower emissions options, review our policy and
guidance and we will also be rolling out new digital tools that will
enable greater remote collaboration.
Stakeholder engagement and awareness
We communicate regularly with our people on climate change and
wider aspects of sustainability through a range of routes including
campaigns on our Intranet, our dedicated online community of
interest (the Sustainability Knowledge NetworQ) with our 'Lets
Talk Sustainability' events and we have run dedicated sessions to
support our leaders.
In addition to the training for Energy Champions we also have climate
change as part of our mandatory training and this year developed a
new climate change e-learning module.
We continue to be active within our sector, chairing a number of
key networks for example our UK Trade Body ADS (Aerospace,
Defence and Security) Sustainability Network, and we are co-chair
of the MOD-Industry Sustainable Procurement Working Group.
These enable us to engage with our suppliers and customers.
We also run our Collaborate event for our suppliers (see page 59).
We are signatories to the ADS ESG Charter.
Environmental management
As part of our ongoing commitment to responsible environmental
management, we introduced the Environment Group Requirements
in early FY25. These requirements cover 22 key areas, which align
with the principles of the international standard ISO 14001:2015,
and represent a step forward in reinforcing QinetiQ’s governance
commitment to the environment across our products, services
and systems.
In FY25, 25 UK-based sites and one site in Canada successfully
achieved recertification to the ISO 14001:2015 standard for
environmental management systems, with no major non-
conformities identified by the certifying bodies involved.
We launched a new initiative aimed at enhancing our regulatory
compliance monitoring capabilities and are in the process of
implementing a formal regulatory compliance evaluation tool,
sourced from a leading business intelligence provider. This tool
is designed to systematically evaluate environmental compliance
performance across all operationally controlled sites, with the
results feeding directly into our risk management programmes.
Environmental continued
Sustainability continued

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Annual Report & Accounts 2025 | QinetiQ Group plc 45
We have been defining applicability criteria, and we
are moving towards broader deployment in FY26.
Our evaluation programme focuses on key areas
such as environmental management systems, and
compliance with regulations related to permits,
waste management, petroleum product storage, and
refrigerant gas management. We noted that there
were no enforcement actions, notices, or penalties
arising from these inspections in FY25.
As part of our broader environmental performance
monitoring, we also utilise an Incident Management
Reporting (IMR) tool to track safety and
environmental incidents. In FY25, environmental-
related concerns were primarily related to low-impact
issues such as vehicle leaks or burst hydraulic hoses,
which were promptly contained. We are actively
promoting awareness amongst our people about the
opportunities to report environmental issues through
the IMR tool.
Waste management
We continue to aim to deliver effective waste
management practices. While the proportion of
our business involved in electrical and electronic
equipment remains small, we deliver our compliance
obligations with regard to Waste Electrical
and Electronic Equipment (WEEE) regulations,
supported by membership of a WEEE Product
Compliance Scheme.
Conservation and biodiversity
QinetiQ continues to focus on conservation efforts
across our UK operations (the sites we own and
those we manage on behalf of the MOD). While
our Farnborough head office site was sold during
FY25 and is now a leased property, in FY26 we look
forward to celebrating the 30 year partnership with
Marwell Wildlife in support of the conservation of
Eelmoor Marsh Site of Special Scientific Interest
(SSSI). Furthermore, a number of sites operated
on behalf of the UK Ministry of Defence (MOD) are
located in areas of significant conservation value,
including SSSI, Special Areas of Conservation (SAC),
and Marine Protection Areas (MPA). These sites are
of both national and international importance, and
we are committed to ensuring that our operations
align with conservation standards, contributing
to the protection and sustainable management of
these vital ecosystems.
Customer solutions and innovation
Over the last year, our customers have increased their
focus on resilience to the impacts of climate change
and alignment to the international energy transition,
for example, the MOD held the 'Energy Transition by
Design' conference in January 2025 to bring industry
and wider stakeholders together. QinetiQ has been
proactive, with a customer-focused round table
at Farnborough International Air Show, provoking
discussion between start-ups, academia, the MOD and
industry on how to create sustainable and resilient
defence capability. We also published 'Sustainability
on the Edge', a thought leadership report on the same
topic, see QR code

.
Via our Internal Research and Development
(IRAD) funding we have invested to create a suite
of scenarios suitable to incorporate issues of
climate change into war-gaming, simulation and
experimentation. The work contributed to two small
successful bids to support the UK Government
Defence Science and Technology Laboratory (DSTL)
with operational analysis and further scenario work.
Through the Aurora Engineering Partnership,
between QinetiQ, AtkinsRealis and BMT (who
together deliver the Engineering Delivery Partnership),
we have continued to deliver a proof of concept
emissions management programme with the UK
MOD Defence Equipment and Support (DE&S)
creating the foundation for emissions monitoring
and management for the UK MOD.
Read our thought
leadership report
'Sustainability on
the Edge':
www.qinetiq.com/
insights
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202546
Taskforce on Climate-related Financial Disclosures
The Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD) recommends a reporting framework across four
themes: governance, strategy, risk management, and metrics & targets. In accordance with section 414CB of Companies Act and following the
TCFD all-sector guidance (there is no specific supplementary guidance for our sector) we provide our disclosures here (pages 46–51) aligned
to the four themes, providing material information against each requirement. We also outline our approach in our non-financial information
and sustainability statement on page 60. We provide links to where further information is provided in this Annual Report and Accounts and
on our website.
Compliance statement
In accordance with the UK Listing Rule 6.6.6R(8) we confirm we have considered the guidance and believe our approach is consistent with
the TCFD recommendations, save for, we recognise we need to do more on quantitative modelling as part of the strategy disclosures and we
continue to evolve our financial models to progress our quantitative financial assessment. We are committed to implementing this approach
to provide investors and other stakeholders with information on climate-related risks that are relevant and material to our business.
Governance
Disclose the organisation's governance around climate-related risks and opportunities
TCFD recommended
disclosures: Overview Additional information
a) Describe
the Board’s
oversight of
climate-related
risks and
opportunities
QinetiQ's Board sets the Company’s strategic priorities, including ESG and climate change, and has
regular oversight and input into our climate-change programme. It has oversight of the threats and
opportunities resulting from climate change, and this is considered as part of our strategy. Our Group
CFO is the Board Sponsor for climate change and wider ESG programme. The Group CFO, and our
Group Director of ESG provide regular reports and briefings on ESG and climate change to the Board
and Board Committees.
The Board reviews our company Strategic Plan, where climate change is integrated into functional/sector
plans and approves the annual budget (which contains Net-Zero targets and programmes). An update
on the CTAP was discussed at the November meeting. The Audit Committee reviews and monitors
QinetiQ’s financial and non-financial reporting requirements including TCFD. During FY25 the committee
moved to quarterly updates on non-financial reporting and are provided by the Group Director ESG.
The Remuneration Committee oversees leadership incentives, and at the May 2024 meeting, included
Net-Zero initiatives for leaders for the third year, as part of the Annual Bonus Plan. The Risk and Security
Committee has oversight of and provides assurance to the Board on QinetiQ’s risk management system.
This includes quarterly monitoring and review of all QinetiQ's principal risks, which includes climate
change. A deep dive on climate risk was provided by the Group Director ESG at the July 2024 meeting.
Board Directors
(see pages 80–82)
Board committees
(see page 83)
Board Responsibilities
(see page 84)
Audit Committee
(see page 100)
Remuneration Committee
(see page 110)
Risk and Security
Committee
(see page 106)
b) Describe
management’s
role in assessing
and managing
climate-related
risks and
opportunities
The Group CFO has oversight of the programme. Leadership and delivery of the Climate Change
Programme is the responsibility of the Group Director of ESG, reporting to the Group CFO. Our QinetiQ
Leadership Team (QLT) are responsible for managing climate-related risks and opportunities and
delivering the programmes through our operations and across our value chain. ESG and climate change
form an integral part of our strategic planning process, and so consideration of the role of individual
sectors and functions was undertaken in H2 during the planning process, with oversight by the Group
Director ESG and then reviewed by our executive team, the QLT.
Our Functional Councils support good governance across QinetiQ, where functional and sector leaders
come together to communicate, review and agree on issues, actions and standards of best practice
that are enterprise-wide and/or have operational significance. Key Functional Councils include the
Environment Council, Chaired by the Group Director ESG, and the Risk and Assurance Council, Chaired
by the Group Chief Risk Officer, attended by the Group Director ESG. The Climate Change Programme
includes leaders and subject matter experts from across the business, ensuring the necessary
multidisciplinary approach.
Climate change forms part of the Environment principal risk and the Group Director ESG is responsible for
identification, assessment and oversight of the risk and opportunities, undertaking regular reviews of the
programme and capturing those risks through the enterprise risk management governance process.
ESG Governance
(see page 59)
Non-financial information
and sustainability
statement
(see pages 60–61)
Environment principal risk
(see page 66)
Sustainability continued
Environmental continued

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Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation's business strategy and financial
planning where such information is material
TCFD recommended
disclosures: Overview Additional information
a) Describe the
climate-related risks
and opportunities
the organisation has
identified over the
short, medium and
long-term
We have reviewed and refined our climate-related risks and opportunities (see table) and assessed
that our business is exposed to both physical and transitional risks (before mitigation activities)
and opportunities, with impacts varying over the short (0–2 years), medium (2–5 years) and long-
term (5–20 years), depending on climate change scenarios. This aligns with our strategic planning
approach over a rolling five-year cycle.
Each risk was associated (qualitatively) with a financial impact, for example, an increase in costs or
in the case of opportunities, an increase in revenue.
We will continue to review our risks and opportunities as the external landscape and our business
evolves over time, and refine our approach, particularly focusing on quantifying the impacts, and we
will report further information as this develops.
Table of risks and
opportunities
(see page 49)
b) Describe the
impact of climate-
related risks and
opportunities on
the organisation's
business strategy
and financial
planning
We recognise the importance of integrating climate change and wider ESG into our company
strategy and planning and our wider governance and processes. While there is no requirement for a
fundamental shift in our overarching business strategy due to climate change, having assessed the
risks we understand it to be resilient to climate change (subject to the delivery of the CTAP plans and
programmes).
This is illustrated as follows:
— Our commitment to sustainability forms part of our investment case.
— Climate change forms part of our Environment principal risk.
— Scope 1 and Scope 2 GHG emissions are a core non-financial KPI.
— Net-Zero is integrated into our leadership incentives.
— We have committed funding to support our climate change programme.
ESG and climate change are embedded in our annual strategic planning process. During FY24
we planned for a number of actions which were implemented in FY25, including:
— Allocation of budget to deliver energy-saving projects.
— Internal research and development (IRAD) fund to support Net-Zero projects.
— Investment in access to third-party horizon scanning tools.
— Refinement of our investment approach including greater emphasis on Net-Zero.
— Development of a new climate change e-learning model, and resources and support for leaders.
During our strategic planning process in FY25 we further integrated climate change within our core
business plan. Working with each of our functions and sectors to identify their key areas of
responsibility in decarbonisation and climate resilience. This will be delivered through the CTAP.
In addition as part of the broader scenario impact assessment of our strategic plan, a climate
change event (a significant flood at a critical site) was selected as one scenario for financial
modelling. The findings inform the consideration of the recommended longer-term viability
statement and going-concern statement disclosures.
Investment case
(see page 07)
Environment principal risk
(see page 66)
Non-financial KPIs
(see page 37)
Leadership incentives
(see page 119)
Climate change
programme
(see pages 40–44)
Climate Transition
Action Plan
(see page 40)
Viability statement and
going-concern statement
(see page 67).
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QinetiQ Group plc | Annual Report & Accounts 202548
Taskforce on Climate-related Financial Disclosures continued
Strategy continued
TCFD recommended
disclosures: Overview Additional information
c) Describe the resilience
of the organisation's
strategy taking into
consideration different
climate-related
scenarios, including
2°C or lower scenario
Climate scenarios
The science is clear and it is unequivocal that the climate is changing. However, the precise
trajectory is dependent on:
— the influence of activities in the past,
— the global action taken now and in the coming years and
— the rate at which that action is taken.
To guide our strategy and planning, we consider different scenarios:
— <2°C strongly declining emissions: Intensification of decarbonisation action resulting
in increasing and rapid transition, with more limited physical impacts.
— 2–4°C stabilising/slowly declining emissions: Physical risks continue and transition risks
continue to increase.
— >4°C rising emissions: Failure to address climate change results in high physical risks with
more limited transition issues.
We used the scenarios above, based on the Representative Concentration Pathways (RCPs),
which are used by the Intergovernmental Panel on Climate Change (IPCC). We considered
horizons aligned with our Net-Zero targets and used a variety of data sources.
We have aligned our assessment with our risk management approach (see next section) so that
we are able to evaluate as low, medium or high. We review this approach regularly.
We have made a qualitative assessment of the financial impacts (see table on the next page) and
are currently continuing our work on modelling the quantitative impacts.
Climate change
programme and targets
(see pages 40–44)
Approach to risk
management
(see page 62)
Sustainability continued
Environmental continued

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Annual Report & Accounts 2025 | QinetiQ Group plc 49
Risk effect (unmitigated) Financial impact
Declining
emissions
Stabilising
emissions
Rising
emissions Mitigation/adaptation
Flooding Type of Risk: Physical (acute)
Direct damages to sites due to increase in severity and
frequency of flooding, resulting in damage to assets and
causing disruption to operations.
Reduced
revenue and
increased costs
— Risk assessment
— Climate resilience business
continuity planning
— Customer and supplier engagement
Extreme temperature fluctuations Type of Risk: Physical (chronic)
Increased need for cooling and heating to minimise
damage to high-value equipment within buildings.
Increased costs
— Risk assessment
— Climate resilience business
continuity planning
— Customer and supplier engagement
Wind and storms Type of Risk: Physical (acute)
Direct damage to operational sites due to wind and
associated storms, resulting in disrupted operations and
increased cost for building repairs.
Reduced
revenue and
increased costs
— Risk assessment
— Climate resilience business
continuity planning
— Customer and supplier engagement
Increased cost of energy Type of Risk: Transition (market)
Energy costs, such as those related to fossil fuels and
electricity derived from non-renewable sources, are
expected to increase.
Increased costs
— Improving forecasting
— Reduce reliance on energy through
Net-Zero programme
Carbon taxes Type of Risk: Transition (policy and legal)
Current and emerging regulations on carbon emissions
may result in carbon taxes.
Increased costs
— Legislative monitoring
— Energy reduction programmes
Cost of raw materials Type of Risk: Transition (market)
Potential for exposure to increases in prices of raw
materials directly or in supply chain.
Increased costs
— R&D investment
— Customer and supplier engagement
Access to capital Type of Risk: Transition (reputation)
Failure to meet shareholder expectations of Net-Zero
commitments, and resulting access to, or cost of capital.
Increased costs
— Reporting of progress
— Investor advocacy
— Customer and supplier engagement
Increased customer demand Type of Risk: Opportunity (product and service)
Growth in customer demand for more sustainable and
resilient solutions could result in increased sales/access
to new markets.
Increased
revenue
— R&D investment
— Customer and supplier engagement
Key: Scenarios (see page 48)
Impact: Timescale:
Low Short term Medium term Long termMedium High
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Taskforce on Climate-related Financial Disclosures continued
Risk management
Disclose how the organisation identified, assesses and manages climate-related risks
TCFD recommended disclosures: Overview Additional information
a) Desc ribe the
organisation's
processes for identifying
and assessing climate-
related risks
Identifying risk; Our risk assessment approach is in line with TCFD recommendations and
addresses both physical risks, including factors such as flooding and extreme weather
events and transition risks, which are related to the transition to a lower-carbon economy,
such as policy or regulation change and changing markets. It is important that we
understand where these risks are material to our business.
— For physical risks we considered these primarily by site, as well as the potential impact
on our supply chain and business delivery. A variety of potential risks have been identified
(e.g. where there may be increased flood risk or exposure to storm events). We recognise
that this needs to be a continuous process due to new emerging information or changes
to our business (e.g. use of site, supplier etc). As part of our day-to-day management
of our site operations, we have a good understanding of the physical risks posed and
suitable mitigations.
— To identify transition risks (such as market or regulatory changes) we undertake horizon
scanning to identify any relevant changes. We work with subject matter experts across
the business, and our industry networks and have invested in a third-party tool to support
our horizon scanning approach.
Assessing risk: As the global landscape changes and our business evolves, we recognise
the need to review and update our risks regularly. Risks and opportunities are scored
considering the potential impact, the likelihood of occurrence, and the velocity (proximity
of occurrence). Scenario analysis has been undertaken on our most material risks and
opportunities, and this has formed the foundation for the development of financial models
to quantify financial impacts (taking into account impact on revenue, costs, and asset
value).
Environment principal risk
(see page 66)
Summary table of risks
(see page 49)
Enterprise risk management
(see page 62)
b) Describe the
organisation's processes
for managing climate-
related risks
Our risk management and control framework enables us to effectively identify, assess,
monitor and manage risks. Ownership and management of individual risks are assigned
to members of the QinetiQ Leadership Team (QLT) who are responsible for ensuring the
operational effectiveness of internal control systems and for implementing risk mitigation
plans. Climate change is recognised as part of the Environment principle risk and the Group
CFO is accountable.
The Board Risk and Security Committee review and discuss principle risks quarterly and
the Board undertakes a twice-yearly assessment of the principal risks, including a deep
dive on climate risks in July 2024. The QLT is supported by our Chief Risk Officer and our
risk managers, who are able to have more tactical and operational oversight. All risks are
assigned owners.
Principal risks
(see page 64)
Risk and Security
Committee (see page 106)
c) Describe how processes
for identifying, assessing
and managing climate
related risks are
integrated into the
organisation's overall
risk management
We have based our approach to climate risks on our enterprise risk management
methodology, to ensure that we are embedding it into our existing processes. Managing
transition risks requires us to consider a range of factors. Any new changes (e.g. new
legislation) will be addressed in line with our standard processes.
Key to supporting the management of risks is raising awareness and engagement with
internal stakeholders. We also engage with key stakeholders such as our Environment
Council. Our Business Management System contains our Group policy, requirements and
instructions, to ensure that we have established and are maintaining robust and adequate
procedures, systems and controls.
Enterprise risk management
(see page 62)
Internal stakeholder
engagement
(see page 44)
Environment Council
(see page 60)
Sustainability continued
Environmental continued

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Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such
information is material
TCFD recommended disclosures: Overview Additional information
a) Disclose metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process
GHG absolute Scope 1 emissions
GHG absolute Scope 2 emissions
Intensity ratio (tCO
2
e per £m of revenue)
Energy consumption
GHG Scope 3 emissions
Non-financial KPI
(see page 37)
Summary of emissions,
intensity and energy
consumption (see page 42)
Scope 3 (see page 43)
b) Disclose Scope 1, 2, and if
appropriate, Scope 3 GHG
emissions and the related risks
We annually report our absolute GHG Scope 1 and 2 emissions and data are
subject to independent third-party limited assurance.
— Total FY25 Scope 1 emissions were 19,662 tCO
2
e
— Total FY25 Scope 2 emissions were 8,729 tCO
2
e
— Total FY25 Scope 1 and 2 emissions were 28,391 tCO
2
e
We have reported our total Scope 3 emissions for FY24 in this Annual Report and
Accounts and are finalising our FY25 scope 3 data which will be published on our
website during 2025:
— Total FY24 Scope 3 emissions were 312,629 tCO
2
e
Climate change forms part of our Environment principal risk.
Scope 1 and Scope 2 GHG
emissions (page 42)
Scope 3 GHG emissions
(see page 43)
c) Describe the targets used by the
organisation to manage climate-
related risks and opportunities
and performance against targets
We have committed to near-term and long-term science based targets across
our value chain, validated by SBTi in June 2022 (all from an FY20 baseline):
— 50% absolute reduction of Scope 1 and 2 by FY30
— 30% absolute reduction of Scope 3 by FY30
— 33% absolute reduction by FY30
— Net Zero by FY50 or sooner
Performance: We have achieved progress against our Scope 1 & 2 target and by
the end of FY25 we have achieved a reduction of 36% against our FY20 baseline
(which includes the impact of the sale and lease-back of our Farnborough site).
Scope 3 is currently more challenging and we saw an increase in FY24 compared
with FY23, driven primarily by an increase in procurement.
Net-Zero targets
(see page 41)
SBTi validation of targets
(see page 40)
Scope 1 and 2 performance
(see pages 42–43)
Scope 3 performance
(see page 43)
Plans for FY26
Our focus for FY26 will be to deliver our climate change programme, based on our evolved Climate Transition Action Plan. Under four
workstreams, we will be delivering projects that focus on reducing our key emissions. We will also be continuing to improve our resilience to
climate change through reviewing and managing our identified physical and transitional risks (Workstream 5).
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Social
Sustainability continued
Social
Our people: Investing in our people,
delivering for our customers.
It’s important to us that our people work in a
safe and secure environment where they are
inspired to deliver for our customers, have
the opportunity to realise their potential and
feel recognised for their contribution.
Safety and wellbeing
Our safety programme is managed across five
thematic workstreams. We have made a number
of improvements this year:
1. Risk management: A new framework for safety
cases provided a group-wide approach to safety
case structure and application. Actions arising from
the risk stabilisation programme over the past two
years continued to be completed meaning that we
are on track to complete this work in Q4, FY26.
2. Culture: A new Safety Strategy and embedding
of a safety culture maturity model.
3. People: A focus on wellbeing (see below).
4. Process: Our compliance assessment completed
its group-wide roll-out with legal registers in
all sectors and countries of operation and a
commitment to address identified gaps.
5. Technology: Safety was able to leverage artificial
intelligence (AI) for the first time.
Safety is a key non-financial KPI (page 37). Our
LTI performance has shown a consistent year-on-
year improvement, decreasing from 1.6 in FY24 to 1.5
in FY25. This sustained reduction reflects our ongoing
commitment to workplace safety and our focus on
hazardous work.
FY25: 1.5
FY24: 1.6
FY23: 1.7
Group Lost Time
Incident (LTI) rate
(The number of lost time
incidents where the employee is
away from work for one or more
days, multiplied by 1,000 divided
by the total number of employees)
1.5
Lost time
incident rate
Compared to typical LTI rates in the defence sector
(between circa 2.0 and 3.0), our performance
demonstrates significant progress in creating a safer
working environment.
Our total recordable incident rate (TRIR) has increased
from 2.5 in FY24 to 3.6 in FY25. While this remains
within the typical range for the defence sector,
(between circa 3.5 and 5), it reflects an upward trend.
In April 2025, QinetiQ Ltd was convicted for the
offence of breaching section 2(1) of the Health and
Safety at Work Act 1974 and fined £800k, in respect of
an incident during an ammunition trial in March 2021
at one of the ranges operated by the Company.
We recognise the need for continued focus on safety
initiatives and proactive risk management.
During FY25 we have evolved our approach to
wellbeing:
— A new group-wide and multidisciplinary wellbeing
steering group has been launched.
— A Group wellbeing manager was appointed.
— A new strategy developed with four focus areas:
thriving environments; culture; bodies; and minds.
— Our employee engagement survey indicates
sentiment around wellbeing has improved
since 2020.
— At the beginning of 2025 our new occupational
health partner launched their service in the UK.
Our safety and wellbeing roadmap for FY26 covers
our five themes. Risk management activity will
continue to focus on those activities with greatest
risk of hazard and includes our safety case
programme. Significant personal safety hazards
include activities involving heavy lifting, aviation, and
fire and explosion risks. The people theme includes
our wellbeing programme alongside a refreshed
approach to safety training that is planned for global
roll-out. Our culture theme is focused on improving
overall score against best practice benchmark the
'
DSS+ Bradley Curve' through a variety of targeted
activities. These include analysing a large amount of
new information collected this year when we asked
our leaders for their safety priorities and focus areas.
We continue work to simplify and enhance safety
processes via our Business Management System
and we continue the roll-out of our safety compliance
assessment. Safety made use of artificial intelligence
technology for the first time this year and we will
build on this work in FY26 to improve our service to
customers and stakeholders.

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Employee engagement: Listening, learning
and taking action
Listening to our people helps us improve our working
environment and we encourage feedback via:
— Global Employee Voice representatives act
on behalf of our colleagues to shape ideas
and initiatives.
— Peakon, our employee engagement platform,
provides quarterly feedback, informing our decision-
making at a Group, business and team level.
— Two-way communication channels encourage
colleagues to share thoughts, feedback
and experiences.
— Employee Roadshows are held group-wide, twice
a year, providing an opportunity to hear from our
leadership team about strategic progress and
priorities.
— Site Champions and Heads of Site bring people
together, building a community feel at a local level.
Employee engagement is a non-financial KPI, (see
page 37) and we measure it quarterly. While our
final quarter FY25 score (that we use for the KPI)
maintained at 7.5, for the first three quarters of the
year our score peaked at 7.6 out of 10; a significant
increase over a five-year period (compared with 6.9
in FY20). Our voluntary attrition was 11.8% compared
with 14.1% in FY24.
Employees provide valuable feedback on our
strengths, including improvements to workload,
reward and career path. We have also made progress
against key themes identified as needing attention:
— Improving our sites. This includes the sale of
Cody Technology Park, our head office, to Tristan
Capital Partners who are committed to improving
the working environment. In addition, our UK site
strategy will optimise our footprint, and will save
energy, reduce costs and enhance buildings.
— Engagement activities and resources, such as
templates and toolkits, have enabled our people to
connect their contribution to our strategy through
their own performance goals to those for their
team, sector and across the Group.
Looking ahead, we are creating a new approach to
employee engagement, bringing together our feedback
channels to create realistic and deliverable plans both
across the Company and at a local level. Delivery and
enhanced governance will be managed by a central
steering group, who will ensure we are balancing
business needs with employee feedback to create an
inclusive environment in which our people can thrive.
We are launching a Culture and Leadership
programme aimed at delivering the cultural change
required to successfully deliver our strategy and
improve performance.
Skills and development: investing in future
capability
Delivering for our customers is reliant on having the
right skills, where and when they are needed, both
now and in the future. Furthermore, by listening
to our people, we know that having opportunities
to develop their career matters. With a personal
development fund, formal programmes, fellowships
and digital platforms, we ensure our people have
the learning tools and resources they need to help
them succeed. We enable professional qualification
pathways, supported by mentoring and coaching from
experts and qualified professionals. Over the last three
years, we have more than doubled utilisation of the
Apprenticeship Levy in the UK, with 178 of our people
taking part in an apprenticeship in FY25, including
early careers (see table on next page) and colleagues
who are using the scheme to advance their skills.
We are proud of our group-wide Fellows scheme, which
recognises technical, scientific and engineering leaders.
We currently have 79 Fellows and Senior Fellows who
are nationally or internationally renowned experts in
fields such as Avionic Systems, Lasers and Adaptive
Optics, Target Acquisition & Tracking and Sustainability.
The scheme helps us attract and retain leading experts,
enabling us to win work and invest in our capability.
This financial year, we invested in learning
opportunities tailored to specific needs, such as
the Project Management Improvement Programme.
7.5/10
Employee
Engagement
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QinetiQ Group plc | Annual Report & Accounts 202554
Sustainability continued
Social continued
In the UK, we delivered two programmes for our mid-level technical
leadership teams – Leaders as Coaches and Leading in a Technical
Environment – developing capability in performance management
and technical delivery. Following successful pilots, we will continue
to improve and evolve them into FY26 and beyond.
As part of our commitment to developing talent from within, we are
building a new digital approach to talent management which will
provide personalised development plans for all our people, enhancing
our ability to plan skills development on a wide-scale; ensuring
delivery certainty for the future.
Other areas of focus include a new approach to succession planning
and management, ensuring effective utilisation of learning, exploring
the use of artificial intelligence within our People systems and
introducing a new performance management framework, designed
to ensure clarity and drive strong and consistent performance,
aligned to Company strategy.
Leadership expectations
With a focus on leveraging our group-wide capability and offerings,
this year we introduced the Leadership Expectations. They were
designed to provide a collective view of leadership in QinetiQ around
group-wide mindset, collaboration, performance and enterprise
leadership. They ensure our leaders understand what is expected
of them in order to focus their efforts where they matter the most,
whilst holding themselves and each other accountable. This in turn
creates an environment in which our customers, our people and our
stakeholders can succeed. The expectations have been introduced to
the QinetiQ Leadership Community (top 100+), who have been using
them to develop their own capability. As a result, we are already
seeing an improvement in our employee engagement feedback.
We are also using them to support us in performance assessments
aligned to leadership roles. From FY26, the expectations will
be introduced to all middle-level managers, as part of a new
Performance Framework process, whilst simultaneously forming
a fundamental part of our new Culture and Leadership programme.
Early Careers
We continued to invest in our Early Careers pipeline and in FY25
we maintained progress towards 5% of the UK workforce being part
of an Earn and Learn scheme, using apprenticeships as both an
entry route and upskilling opportunity for professional development.
Through deployment to customer work, research and trials, our Early
Careers community make a meaningful contributions which are
reflected in the feedback we receive via the employee engagement
activities. We continue to see good retention rates (circa 80%).
We saw a reduction in recruitment this year, in comparison to FY24
due to market forces creating some uncertainty in our key markets.
Commitment to The 5% Club
As a Patron and founding member of The 5% Club, we remain
committed to achieving 5% of our workforce being either part
of our Early Careers programmes or wider 'Earn and Learn'. The
breakdown of our UK Earn and Learn community is published each
year (see table below) including the percentage they comprise of
the UK workforce.
UK Earn and Learn community FY25 FY24 FY23 FY22
Apprentices 97 139 85 53
Graduate programme 106 105 128 105
Sponsored students
1
21 16 26 24
Reskilling (within first 5 years in QinetiQ) 64 48 25 8
Early Careers as % of UK workforce 3.7 4.2 4.2 3.4
Total Earn and Learn as % of UK workforce 4.7 5.0 4.7 3.5
1 Includes eight-week paid work experience and Year-in-Industry placements.
Looking ahead for FY26: We are focused on building a group-wide
learning capability that will develop skills for performance across
the business, providing consistency of approach whilst allowing for
regional contextualisation.
Flexibility and adaptability
Our adaptive working environment helps us to build an inclusive,
collaborative and customer-focused culture. This continues to evolve
and this year we have introduced in the UK:
— Paternity leave: now increased to four weeks paid leave.
— Pre-Retirement planning tool-kit: Providing advice on changing
working patterns when approaching retirement.
— Sabbatical leave: Enabling a temporary unpaid break for a
minimum of three months and a maximum of 12 months at
one time.
— Carers leave entitlement: Providing five days of unpaid leave in
any calendar year.
— Formal flexible working: Enhancements, following UK
government changes.
— Compressed working: In the UK this continues to be valued,
with 23% of UK employees taking part.

Female
Male
22%
78%
Female
Male
25%
75%
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Diversity, Equity & Inclusion (DEI): strengthening
representation and inclusion
We are committed to creating a culture where everyone is respected
and empowered. We create high performing and collaborative teams;
where everyone feels valued for their contribution.
We have delivered a number of initiatives, including:
— Strengthening our senior talent pipeline by investing in inclusive
recruitment practices, offering tailored development programmes
and creating opportunities for progression at every stage of a career.
— Mentorship and sponsorship initiatives participating in structured
programmes, such as reverse mentoring, Women in Defence
mentoring programme and the KPMG Cross Company Allyship
Programme.
— Through our people-led networks, fostering greater understanding
of the unique challenges people face, providing a platform for
discussion, learning and advocacy.
— Supporting awareness raising campaigns, such as International
Women in Engineering Day, Pride Month and Black History Month.
— As part of our Social Value commitments with UK customers, we
have delivered a military spouses programme (see next section).
— Creating long-term partnerships across industry and our supply
chain to share learning and best practices.
— We are signatories to the UK Women in Defence Charter and long-
term sponsors of the Innovation and Sustainability Award.
Gender balance data
The table below shows the breakdown by gender of our board, senior
managers and all employees. We have maintained the proportion of
women who are senior managers and seen a slight reduction in our
overall workforce.
In our latest UK Gender Pay Gap report (for the FY24 reporting
period) we report a mean gender pay gap of 11.6% which is a slight
reduction compared with the previous year (11.8% for the FY23
reporting period).
We also participate annually in the FTSE Women Leaders Review
which focuses on female representation at Executive level and their
direct reports. We reported 26.7% (at October 2024), compared with
27.6% in FY24. We remain committed to 30% females by 2030.
Our focus in FY26: inclusion will form a cornerstone of our Culture
and Leadership programme and we will be reinvigorating our
diversity, equity and inclusion strategy.
All employees (including leaders)Senior Managers
FY25 FY24 FY23 FY22
Female Male Female Male Female Male Female Male
Board Directors
1
4 (36%) 7 (64%) 4 (4 4%) 5 (56%) 3 (33%) 6 (67%) 4 (44%) 5 (56%)
Senior managers
2
65 (22%) 237 (78%) 69 (22%) 251 (78%) 57 (19%) 244 (81%) 59 (20%) 240 (80%)
Other employees
3
2,054 (25%) 6,036 (75%) 2,14 4 (26%) 6,152 (74%) 1,976 (25%) 5,989 (75%) 1,478 (22%) 5,136 (78%)
1 For more information on Board diversity, see page 97.
2 Senior managers are defined (in accordance with section 414C of the Companies Act 2006) as employees who have responsibility for planning, directing or controlling the activities of
the Group, or a strategically significant part of it. This includes Directors of subsidiary Companies. It includes our QinetiQ Leadership Team (QLT) but excludes our CEO and CFO who
are captured under Board Directors.
3 Excluding senior managers and the CEO and the CFO.
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Sustainability continued
Rewarding for Performance: Celebrating employee
contribution
Our approach to reward and recognition ‘Rewarding for
Performance’ ensures our people collectively share in our success
and that we recognise outstanding contributions. In FY25, we
continued to reward and recognise our people through our
established programme:
— A discretionary payment of £400 (or equivalent) to eligible
employees, in recognition for their outstanding contribution in a
challenging year.
— Pay & Progression, invested over £1.2m on developing employees
through in-year role changes and grade progression.
— Thank Q, our group-wide recognition scheme, celebrated 3,966
individual people and 6,125 teams, with 10,091 awards.
— Global Recognition Gala awarded 25 people in eight categories,
celebrating the attributes most important to us at QinetiQ.
In April 2024, we completed the second phase of our UK reward
strategy, providing increased pay transparency and implementing an
additional base salary increase for eligible employees, equivalent to an
average of 7.5% salary budget for FY25, addressing market relativity.
In addition, our Group Hardship fund and Employee Assistance
Programmes (EAP) continue to provide additional support to our
people who are experiencing challenging personal circumstances.
We also continue to be accredited as a Living Wage Employer.
Our focus in FY26: Having completed a reward benchmarking
exercise in our Australia sector, we will be implementing the reward
strategy for this sector. We will also be making recognition and
benefits enhancements, introducing a new recognition platform.
Aligned to our focus on performance, we will be adapting our
incentive programmes to ensure we are driving the results and
outcomes needed to ensure progress.
Our communities/social impact
We recognise the importance of giving back. At QinetiQ,
volunteering is a vital part of our social impact strategy enabling
our skilled workforce to dedicate their time and expertise to
deliver social, environmental and economic benefits within the
communities where we work. To support this, we’ve expanded
our volunteering efforts to include working more closely with
our defence charity partners, alongside our focus on Science,
Technology, Engineering, and Mathematics (STEM), environmental
initiatives, and skills-based volunteering. In the UK, we continue
to promote and drive our flagship events such as: International
Women in Engineering Day (INWED), Royal International Air
Tattoo (RIAT), Hands on Science Day and our Power Boat
Challenge, the latter receiving a spotlight segment on lunchtime
and early evening BBC South News Today.
After the successful launch of Social Impact Week in the USA, we
decided to bring the same campaign to the UK this year. Across
both geographies colleagues were given the opportunity to drive
awareness and give back to their local communities. The week
consisted of environmental clean-ups, mental health awareness
talks, inspiring the next generation of engineers, participating
in veterans' support initiatives and writing letters to our troops.
We continue to value the partnerships with organisations such as
the Jon Egging Trust (JET), where we’ve continued to roll out our
interactive apprentice workshops, and inspiring students to explore
the world of STEM through engaging workplace visits.
Our focus in FY26: is to strengthen our approach to social impact
by improving how we measure and report outcomes. This includes
aligning our efforts with a recognised social impact reporting
framework, and enhancing our data collection processes to ensure
more consistent and meaningful reporting. These improvements will
help us better demonstrate the value we create in the communities we
work in. We will continue to champion and grow engagement in our
flagship STEM outreach events. 2025 also marks the 30th anniversary
of our partnership with Marwell Wildlife who have been instrumental in
managing and maintaining the SSSI at our Farnborough site.
Social value
QinetiQ also delivers a range of 'Social Value' activities as part of
the contracts we deliver within the UK. This activity complements
and supports our Group ESG strategy and programmes, and sees
project teams working with, and on behalf of, our customers on
a range of areas; from positively growing the next generation of
suitably qualified and experienced personnel (SQEP), volunteering for
local good causes, or championing wellbeing. In FY25, we are proud
to have successfully delivered outreach and community projects
across the UK as part of our customer commitments. These projects
have not only met the expectations of our customers but have also
contributed to the social and economic wellbeing of the communities
we’re involved in. We understand that every project is an opportunity
to drive social value, and we have prioritised initiatives that foster
community job creation, inspiring the next generation of STEM
innovators and sustainability. During FY25, the QinetiQ Social Value
team have worked with projects to deliver a range of activities
supporting good causes. Examples include:
— Inspiring the next generation of women in cyber: project teams
have run targeted STEM outreach activities, 'Capture the Flag'
events, and virtual work experiences, introducing the wide range
of careers within the field and allowing them to work on real-world
problems with those working in the sector.
— Employability skills for military spouses: with our partner the
community interest company (CIC) 'Recruit for Spouses', the team
has supported the development of employability skills for military
spouses, through the delivery of a targeted 'Demystifying Defence'
programme. Eight sessions have been delivered, supporting
spouses to identify their transferable skills, find roles on LinkedIn,
prepare their CV and get ready for a mock interview.
Social continued

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Our focus in FY26: our social value work will continue at pace in FY26,
with the team focused on designing and delivering projects to drive the
skills agenda, empower under-represented communities and support
non-traditional Small to Medium Enterprises (SMEs) and Voluntary
Community and Social Enterprises (VCSEs) to enter the defence
supply chain.
Our commitment to the Armed Forces
We have always been passionate about supporting our Armed
Forces community, including veterans and reservists, as we believe
that within our company they greatly enhance how we connect with
our customers.
QinetiQ was an early adopter of the Armed Forces Covenant in the
UK and signatories of equivalent statements in Australia and in the
US. We go beyond these statements to express commitment that
matters. Specifically, we commit to honour and support the Armed
Forces Community. We recognise the value Serving Personnel, both
Regular and Reservists, Veterans and military families contribute to
our business and our country.
Partnerships with the Armed Forces
To demonstrate this, we choose partnerships that strategically
align with our business and reinforce our commitment to the
Armed Forces.
In FY25 our UK partnership with the Royal Air Forces Association
(RAFA) enabled QinetiQ employees the opportunity to volunteer in
RAFA’s community check-in calls, logging over 300 calls across the
year, and as a result of this a number of veterans are now accessing
the support they need.
Through our Social Value programme, we worked with our partner
Recruit for Spouses in the UK to host two ten-week placements
for military spouses, designed to help them regain confidence and
re-enter the workforce (see previous section). In the USA we’ve
supported Home Base, a Red Sox Foundation national non-profit
dedicated to supporting Veterans. In Australia we continue to
support Legacy, a defence charity who support partners and children
of veterans who gave their lives or health serving their country.
In FY26 in the UK we will partner with Combat Stress who
provide vital mental health treatment and support for veterans
and service personal.
Raising awareness and celebrating contribution
Each year we take time to celebrate the UK's Armed forces week,
recognising the contribution of QinetiQ's military community
of veterans, reservists, military families and cadet force adult
volunteers. Through this awareness raising activity, we encourage
our people to learn more about the Armed Forces, fly the Armed
Forces Day flags at our sites, participate in 'wear your uniform to
work' day and encourage our people to get involved in activities
taking place in their local communities.
As part of our approach to employee led networks, our Veteran's and
Reservist's Network helps to connect, support and value the QinetiQ
Military family. This year we have widened the network to be more
inclusive with the addition of Army Cadet Instructors, regional points
of focus for cadets and military spouses. We continue to support
this network in raising awareness, recognising the unique skills and
special contribution veterans and reservists make to our company.
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QinetiQ Group plc | Annual Report & Accounts 202558
Governance
Sustainability continued
Governance
Effective governance is a critical
pillar, underpinning our ethical
standards and supporting how we
work responsibly and sustainably.
Business ethics, doing business the right way
Our values
Our values of integrity, collaboration and performance
underpin all that we do. Our values form part of our
performance management framework, our leadership
expectations are part of our reward and recognition
framework and celebrated at our annual gala awards
(also see page 78).
Code of conduct
Our Code of Conduct defines our ethical standards,
providing clear direction and guidance on how we do
business. It contains information on ethical decision-
making and also how to seek help and advice. We
review the Code annually to reflect the evolving needs
of our business, the regulatory environment and best
practice. Our Code of Conduct is for our people but
we also make it available for customers, suppliers and
other partners. Our Code of Conduct is available on our
website (see link below).
Speak up
We strive to create an environment where our people
feel confident to speak up and we provide a number
of different ways for them to seek help or to raise
concerns. Employees can talk to a manager, use our
ethics email advice services, our global network of
Ethics Champions and our independently run, 24/7,
confidential reporting line.
For third parties, we provide our Speak Up contacts
via our website and in our supplier Code of Conduct.
Throughout the year we have promoted the importance
of speaking up and the various different contact
routes, via awareness campaigns, in the Code of
Conduct and in our mandatory business ethics training.
We promoted our Speak Up Guide for Managers,
supporting them in creating an open and inclusive
environment, where our people feel confident to raise
concerns, and managers know how to listen to and
support anyone who may come to them with an issue.
We have responded to all queries received via our
ethics email advice services and confidential reporting
line. Our Audit Committee oversees our approach to
confidential reporting (see page 91).
Our Business Ethics Committee, chaired by our Chief
Ethics Officer (Group Director Legal and Company
Secretary), oversees our ethics programme. We are
members of our trade association, ADS, Business
Ethics Network where members can share best
practice on ethics, human rights and anti-bribery.
Conduct and ethics training
Annual business conduct and ethics training is
mandatory and supports our people in understanding
and using the Code of Conduct. The training is
undertaken by our Board and is available to our suppliers
and customers. We provide a number of challenging
scenarios to help our people know what to do if they
were to come across issues such as bribery, fraud,
harassment, conflict of interest and modern slavery.
Our focus in FY26: will be to continue to promote
our Code of Conduct, training and raise awareness
on Speak Up.
Anti-bribery and corruption
The Company is required to comply with applicable
anti-bribery laws and regulations in the jurisdictions
around the world in which we operate. To that end, our
anti-bribery and corruption programme seeks to ensure
the adequate identification, assessment, monitoring
and mitigation of bribery and corruption risks.
We do not tolerate bribery or any other form of
corruption. The prevention of bribery and corruption
is a focus of our third-party risk management and
due diligence processes, as well as our monitoring
and audit programmes.
We reinforce our commitment to ethical business
conduct through our annual business conduct and
ethics training (see above), alongside anti-bribery
training for our people in certain high-risk roles,
helping them to identify and mitigate any potential
bribery risks that they may face.
Human rights and modern slavery
We operate and manage an action plan across
the Group to address the risk of forced labour
and modern slavery. Our annual modern slavery
statement is published on our website homepage.
We scored 82% on the UK Government Modern
Slavery Assessment Tool in FY25. Our supplier Code
of Conduct helps to ensure our suppliers have clarity
of their responsibilities on human rights, forced labour,
modern slavery and speaking up. We provide in-depth
training to our people in key roles and continue to
provide supporting resources for all employees
and suppliers, including industry engagement
events through our Collaborate Series.
Our Code of
Conduct is available
on our website:
www.qinetiq.com/
en/our-company/
sustainability/
business-ethics
Integrity
Trusted to do the
right thing at all times,
we take pride in our
decisions, and work to
create a sustainable and
responsible business.
Collaboration
The chosen partner for
customers and industry
colleagues, we are a
diverse and inclusive
community with a
common purpose; every
contribution is valued.
Performance
Customer focused
and highly responsive,
providing operational
excellence and assuring
safe and secure delivery.

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Responsible business practice underpins how we operate, and
we continue to anticipate, prevent and mitigate potential negative
human rights impacts through our policy and processes. These are
monitored through our business and supplier assurance processes
and regular self-assessment, with oversight by our Business Ethics
Committee. For example, we address salient human rights issues
through our Code of Conduct, our ethical trading policy, international
business risk management process, supply chain due diligence,
export controls process and grievance mechanisms. Our confidential
reporting approach provides routes for third parties to raise
concerns. During FY25 we have been developing our approach to
governance of AI, running workshops, and discussing with the Board.
Our focus in FY26: we will be reviewing and updating our Modern
Slavery action plan to reflect the evolving external requirements
and to continue to make progress. We will continue to evolve
our approach to ethical trading and further develop our AI
governance approach.
Responsible tax management
We make a significant tax contribution to the economies of the
countries where we operate. In alignment with our sustainability
and tax strategies, we strive to be responsible in all our business
dealings with zero tolerance of tax evasion. Our annual tax strategy
statement is published on our website. We apply our approach to tax
management in a consistent and transparent manner in our dealings
with tax authorities around the world.
As a UK-head-quartered Group we file our country-by-country report
with the UK tax authorities. Our policies, processes and controls are
regularly reviewed and risk assessed. Recognising the importance
of embedding the tax strategy as a Group-wide culture, we provide
relevant tax insights through our quarterly internal newsletter and
bespoke tax training. Our Audit Committee oversees our approach
to tax (see page 104).
Working with our supply chain
As an extension of our Company, we ensure that our suppliers are
committed to the same standards and values of safety, security,
sustainability and governance as we are. Working in collaboration
with wider industry, we foster and develop ecosystems which draw
together suppliers, academia and third-sector communities to solve
complex challenges in science, social and environmental, engineering
and technology to support our customer offering.
Through promoting inclusive procurement and removing barriers
to entry, we enable access to opportunities for diverse suppliers,
including Small to Medium Sized Enterprises (SMEs), minority
owned and non-traditional defence suppliers. We maintain
our support to the SME community through our various trade
associations and being an active prime contractor at the Defence
Procurement Research and Technology Exportability (DPRTE) trade
show. We have continued to enhance our Supplier and SME Hub
web-pages to make it easier for suppliers to engage and register their
interest with us. We are committed to paying suppliers promptly.
We continue to work with our third-party subcontractors on UK sites
as they progress towards compliance with our Real Living Wage
commitment. In support of our Climate programme, we developed
a new climate-conscious clause and successfully deployed it in
our UK supplier terms and conditions. In FY26 we will continue to
develop our approach to sustainable procurement and run further
Collaborate events.
We have our Supplier Code of Conduct and Sustainable Procurement
Guide documents available on our website: www.qinetiq.com/en/our-
company/suppliers-and-smes
Governance and leadership of our sustainable business
approach
Our approach to Sustainability is sponsored by our Group CFO and
actively supported by our Board. Our Group Director ESG leads our
sustainability strategy and programmes, working with leaders and
subject matter experts across the business.
Regular briefings and papers are provided to the Board and
key Board Committees. These cover all material aspects of our
sustainability programmes, including sustainability strategy, climate
change, non-financial reporting, ethics and community impact
(see page 89). Programmes such as anti-bribery and corruption,
confidential reporting, safety, and inclusion are updated to the Board
from key functional leaders. This provides the necessary oversight of
our approach, including progress and plans.
We have a global policy framework (our Business Management
System) which underpins how we operate. We have been reviewing
and refreshing key policies, group requirements and instructions.
Key aspects of governance are overseen by the Environment Council,
Business Ethics Committee and Risk and Assurance Council. These
multidisciplinary leadership fora provide governance and oversight
and also the opportunity to collaborate across our global functions
and sectors.
For more information on policy, due diligence, risk and KPI for key
sustainability aspects – see pages 60 and 61.
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Non-financial and sustainability
information statement
Non-financial and sustainability information statement
The non-financial and sustainability reporting requirements contained in sections 414CA and 414CB of the Companies Act 2006 are
addressed within this section by means of cross reference, in order to indicate where they are located within the strategic narrative and to
avoid duplication. We have a range of policy and guidance, some of which is published on our website: www.qinetiq.com. Certain of the non-
financial and sustainability information required pursuant to the Companies Act 2006 is provided by reference to the following locations:
Non-financial information Section Pages
Business model Business model

18
Policies Non-financial and sustainability information statement

60
Risk management and Principal risks Risk management

62
Key Performance Indicators Key performance indicators

37
Sustainability (ESG) Environmental Social Governance

38
Board Diversity Policy Corporate Governance

97
Environmental matters
Policy statement Description
Environmental
management
We are committed to embedding an environmentally sustainable approach to business (see page 44). The effectiveness of
our Environmental Group Requirement is governed through our assurance process and our six-monthly self-certification.
Environmental issues are part of a regular governance timetable, with oversight by the Environment Council and the Board Risk
and Security Committee. We are certified to ISO 14001 in the UK and Canada and so are subject to external audit as well as our
internal processes, which are overseen by the Risk and Assurance Committee.
Climate-related
financial disclosure
requirements
S414CB(2A)
The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 place requirements on QinetiQ to
incorporate climate disclosures in the annual report and accounts. We believe these have been addressed within our statement
on TCFD (pages 46 to 51), Climate related governance (page 46), Climate related risk management (page 52), climate related
strategy (page 49) and climate related metrics and targets (page 51).
Our people
Policy statement Description
Code of Conduct Our Code of Conduct lays out our ethical standards, providing our people with clear direction and guidance on how we do business
across the Company (page 58). There is guidance on our standards, on ethical decision-making and also how to seek help and raise
concerns. We review our Code of Conduct annually to reflect the needs of our business, regulations and best practice. Guidance
for our people and third parties on how to ‘speak up’ is provided within our Code of Conduct and our supplier Code of Conduct
(see page 59), both are available on our website. Speak up and the Code of Conduct form part of the Business Ethics Committee
agenda and updates are part of ESG papers for the Board. Confidential reporting is overseen by the Audit Committee; the process is
described on page 91.
Health and Safety Our Safety policy outlines our commitment to continuously improving standards of safety management and compliance. This is
supported by our Safety Strategy. The effectiveness of the policy is governed through our assurance process and our six-monthly
self-certification. Safety issues are part of a regular governance timetable, quarterly through the Technology and Operational
Excellence Council meetings, through QinetiQ Leadership Team (QLT) meetings and regularly as part of the Board Risk and Security
Committee (see page 106. Lost Time Incidents (LTI) are a key non-financial KPI (page 37), and have shown an improvement
compared with FY24. Safety programmes are described on page 52 and listed in our principal risks (page 66).
Diversity and
Inclusion
Diversity and Inclusion forms part of our Employee Engagement and Culture Group Requirement and underpins our approach to
supporting an inclusive workplace. The effectiveness is governed via our assurance processes and KPIs with monthly oversight
by our QLT as well as regular oversight by the Board. Our Inclusion, Diversity and Belonging Strategy and data on gender diversity
(against our 30% by 2030 target), is described on pages 55. Data and progress against the Board Diversity Policy is described
on page 97.
Non-financial and sustainability
information statement

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Community and society matters
Policy statement Description
Community Our instructions provide guidance for employees to use dedicated volunteering time to use their skills, which enable us to make
a positive difference in the community (page 56). The effectiveness is monitored by the ESG team. We ensure that there is
screening and due diligence of donations and we also undertake selection with oversight by the Sponsorship and Donations
Committee and our assurance process.
Tax Our tax strategy (available on our website) outlines our commitment to being compliant with tax legislation, wherever we do
business. We recognise our responsibility to pay the right amount of tax, at the right time and in the right jurisdiction. Oversight of
this commitment comes through external challenge, such as business risk reviews and audit questions from tax authorities and
external auditors and internal reviews such as quarterly tax updates with executive level reviews of process and procedure. The
tax strategy also has oversight by the Audit Committee (page 104).
Human rights
Policy statement Description
Human rights We seek to anticipate and prevent potential negative human rights impacts through our policy and processes and address salient
human rights issues through our Code of Conduct, ethical trading policy, international business risk management process and trade
compliance process. Our policies ensure we meet all statutory requirements. We monitor the application of these policies through
our business assurance processes and regular self assessment and with leadership oversight (ESG Steering Committee, Business
Ethics Committee and Board). We believe that this integrated approach is effective in ensuring our business acts responsibly and
respects human rights (see page 58). Our Supplier Code of Conduct helps ensure our suppliers have clarity on our expectations on
human rights issues. See page 59 and our website for more details.
Modern slavery We recognise our responsibility to comply with all relevant legislation, including The UK Modern Slavery Act 2015 and in accordance the
modern slavery laws of other locations in which QinetiQ operates. Our supporting policies focus on management of the supply chain
and the requirements for due diligence. In addition we include modern slavery in our resourcing policy. Our Modern Slavery and Human
Trafficking statement is updated annually, signed by our Board and published on the homepage of our website. The effectiveness is
monitored via our assurance programme and leadership oversight (QLT and Board). See page 58 for details of the programme.
Data protection Our Data Protection Group Requirement details how we manage the privacy and security of personal information. The effectiveness
is monitoring via our assurance programme and leadership oversight (QLT and Board).
Anti-bribery and anti-corruption
Policy statement Description
Anti-bribery
and corruption
Our anti-bribery and corruption (ABC) Group Requirement sets out our responsibilities in observing and upholding our zero-tolerance
approach to all forms of bribery and corruption. This ensures we meet applicable statutory requirements, has significant senior
oversight at QLT and Board level, is managed via our assurance processes and self-certification and there are regular internal audits.
Details of our ABC programme are provided on page 58. This is underpinned by a number of supporting requirements and instructions,
for example our approach to gifts and hospitality and for managing Commercial intermediaries. The foundation for all of this is our
Code of Conduct which lays out our ethical standards, and contains advice on anti-bribery and corruption (see page 58).
Sanction Screening It is key that we comply with applicable sanctions requirements so undertake various screenings. This is captured by our Sanctions
Screening Group Requirement, with Board and QLT oversight and subject to assurance processes and self certification.
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QinetiQ Group plc | Annual Report & Accounts 202562
Risk managementRisk
0105
04
03
02
Ongoing
communication
and feedback
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
Ongoing communication and feedback process
This diagram illustrates a continuous five-part cycle that supports
effective enterprise risk management throughout the year.
Risk factors against heightened
geopolitical and macroeconomic
threat landscape.
Shifting priorities and an ever-changing risk landscape bring new
challenges to our customers. QinetiQ’s established risk, governance
and assurance process aims to ensure we are well positioned to
deliver for our customers and protect lives by serving their national
security interests, while understanding and addressing the risks that
could impact the execution of our strategy.
The tough near-term trading conditions, market and geopolitical volatility
have caused realisation of some of our risks in the final quarter of the
year. As a result we have repositioned our mitigation strategies including
a review of our sector operations and are embarking on a restructure
to support future growth, building on our capabilities in our sectors,
with particular focus on the US, and leveraging them across the Group.
These strategies will enable more pace and efficiencies in delivering a
consistent operational performance.
Risk and assurance highlights
— Progressed the maturity of our risk management framework by
advancing our risk appetite and risk capacity methodology and
linking it to mitigations and residual risk levels.
— Completed Committee-level deep-dives on our principal risks
focusing on mitigations and exposure reduction.
— Matured our approach to our risk and assurance activities at the
first and second lines to ensure it demonstrates a proportionate
approach to risk and has coverage across our material risks.
— Completed a full risk review finalising the outcome with the
Board enabling us to 'ready, set, go' our risk strategy for the
forthcoming year.
Our Enterprise Risk
Management Framework
Our annual cycle consists of comprehensive identification,
monitoring and review of current and emerging risks material
to the Group which we conduct together with our Sectors and
Functions. We take into account industry insights, competitor
analyses, geopolitical, macro and microeconomic developments
and advancements in technology. There is a healthy level of cross-
functional challenge around principal risks and their collective
mitigation. This ensures we keep pace with a growing business
in a complex industry and manage our risks in line with our long-
term priorities.
On behalf of the Board, the Risk & Security Committee provides
oversight of the Company’s principal risks, reviewing and monitoring
them through the year. Risk owners are accountable for confirming
adequate controls are in place, that the necessary mitigation plans
are used to bring the risk within acceptable tolerance levels. Sectors
conduct bi-annual detailed reviews of their risks which are reported
to the Board and Risk and Security Committee.
We align our assurance activity to the identified risks in the context
of our business processes and how those risks may affect our
strategic goals and day-to-day operations. This is presented to the
Risk & Security Committee quarterly, ensuring adequate monitoring
to maintain the effectiveness of the Group’s risk management
activities and internal control processes.
Risk management
Risk
management

First Line
— Identify and evaluate risks
— Design and operate internal controls
and other mitigation measures
— Apply risk appetite, delegated authorities,
policies, procedures and codes of practice
— Report risks through relevant reporting
and escalation processes
— Manage day-to-day operational risks
— Report to the Board and QinetiQ
Leadership Team
Management
Second Line
— Independent of first line, perform
oversight of risk management and
other oversight functions, including
compliance
— Design and facilitate risk management
processes across the Group
— Provide risk expertise and support
— Responsible for continually improving
the risk management process across
the Group
— Report to the Board and the QinetiQ
Leadership Team
Third Line
— Internal Audit and other external
independent assurance providers
— Review and evaluate risk management
activity and provide assurance over the
effectiveness of the control environment
— Manage the confidential reporting
process
— Report to the Board and the QinetiQ
Leadership Team
Independent Assurance
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Annual Report & Accounts 2025 | QinetiQ Group plc 63
Further reading
 
Board of Directors
page 77
 
Audit Committee
Report page 100
 
Risk & Security
Committee Report
page 106
Risk management and assurance activity
The Three Lines Model
We have embedded the Three Lines Model for our risk management
and assurance activities. The first line is performed by operational
management who are responsible for managing risks and reports to
the QinetiQ Leadership Team. The second line is performed by teams
that provide expertise, framework design and oversight role but sit
outside of day-to-day management of the risks reporting through
the Chief Risk Officer to the QinetiQ Leadership Team and the Risk
& Security Committee. The third line is performed by internal or
external teams such as Internal Audit that provide independent
objective assurance reporting to the QinetiQ Leadership Team and
the Audit Committee.
The Board is responsible for effective risk management and internal
control across the QinetiQ Group, sets risk appetite and assesses
principal and emerging risks. The Audit Committee and Risk &
Security Committee receive reports from assurance functions,
monitor and review principal and emerging risks, undertake risk deep
dives, and monitor the effectiveness of internal controls.
The QinetiQ Leadership Team identifies and monitors principal and
emerging risks, as well as material risks reported from the Sectors
and Functions.
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QinetiQ Group plc | Annual Report & Accounts 202564
Principal risks FY25
Risk Executive Owner
Link to strategy
Global
leverage
Distinctive
offerings
Disruptive
innovation
1
Markets CGO
2
Competition CGO
3
Business winning CGO
4
Capability COO
5
Delivery COO
6
Business platform CESO
7
Acquisition & business Integration COO
8
Culture CPO
9
Environment CFO
10
Safety COO
11
Security CESO
Principal risks FY25
The Group Principal Risk Register consists of material risks that could affect the delivery of our strategic objectives and may have a material
impact on our stakeholders and environment. We accept that risk is an inherent part of doing business and our Principal Risk Register aims
to provide reasonable assurance that we understand, monitor and manage the effects of the main uncertainties that we face in delivering
our objectives.
As part of our continual cycle of review and improvement in risk management, we completed an annual identification of risks to our strategic
objectives followed by activities in sizing and handling those risks. The results were shared with the Risk & Security Committee who reviewed
and agreed the principal risks for the year.
Risk management continued

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Annual Report & Accounts 2025 | QinetiQ Group plc 65
Potential Impact Mitigation
1
Markets
Evolving customer priorities, spending
and terms of trade may lead to reduced
profitability, adverse investor perception and
decreased growth prospects and adverse
financial impacts.
We are enhancing our competitive position as an established player in the defence and technology sector
through our customer-centric approach, which includes engagement with the UK government as part
of our UK first strategy. We are also re-evaluating the strategy of the German business in the context of
EU/ NATO; and evaluating the changing EU/ NATO landscape and market context. We are augmenting
our diverse product portfolio and unique skill, capability and resource mix to align to our customer needs
in our home and priority markets. This will mitigate contract risk, optimise project delivery, ensuring
efficiency and customer satisfaction throughout capture and project delivery.
2
Competition
Failure to exploit emerging technologies (such
as AI) into our operations or custom offerings
as quickly or effectively or failure to respond
to changes in market landscape may result in
a decreased competitiveness in the market or
loss of market share.
The Group has established technical capability priorities delivering insight into future customer and
internal needs, including plans for embedding and exploiting new technologies. This includes creation
of an ethical trading policy in terms of artificial intelligence that carefully considers regulatory and legal
frameworks and potential future regulatory needs. We continue to carefully monitor developments in this
area. We are also augmenting our diverse product portfolio and unique skill, capability and resource mix
to align to our customer needs in our home and priority markets. This will mitigate contract risk, optimise
project delivery, ensuring efficiency and customer satisfaction throughout capture & project delivery. We
have strong collaborative and supporting processes that focus budgets, investment and resources on
our strategic priorities.
3
Business winning
Inadequate shaping of requirements and
bidding competitive solutions could lead to
adverse financial impacts and decreased
growth prospects.
We are enhancing our competitive position as an established player in the defence and technology
sector through our customer-centric approach to the digital transformation of our offerings. Company
performance will benefit from leveraging improved ‘win’ strategies which enhance through-life delivery
and optimised business operational costs.
4
Capability
Inadequate functional skills, processes and
tools to meet regulatory requirements and
standards, deliver consistent performance
and enable growth.
The effectiveness of our internal control environment continues to be assessed at both senior
management and Board level. Having implemented a joint strategy and People approach to strategic
capability planning which is supported by talent and demand management systems, we are
implementing a further set of actions to ensure performance excellence: Investing in our people to upskill
our management and leadership across the Company and reviewing our performance reward framework
to improve our individual and team performance impact. We are also reviewing our site location strategy
to improve our site occupancy and team building and improve our working environment by promoting an
effective and inclusive culture. We are also implementing a common set of tools and processes across
the Group that will promote one way of working on a standard platform.
5
Delivery
Varying levels of capability in Project,
Programme and Portfolio Management
(P3M) and Supply Chain Management
(SCM) community lead to poor delivery
performance and increased likelihood of
major programme failure.
Having updated and rolled out the Global P3M Competency Framework and the P3M Delegations
process, we are making further improvements to organisational alignment in P3M and SCM. P3M
and SCM competency assessments are used to build a capability baseline from which we can create
improvement plans. In addition, we are making improvements to the Operating Model and implementing
more effective governance.
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Potential Impact Mitigation
6
Business platform
Effectiveness and stability of our IT
infrastructure and business tools could affect
broader Company business operations and
ability to support revenue generating services.
Implementation of the Global Interoperable Infrastructure and Digital Workspace which enhances our
collaboration and enables us to leverage our skills globally is well underway and includes replacement
of some poorly-performing systems and introduction of new, more powerful tools. We have a robust
programme of deployment with continual upgrade of our cyber security detection and protective
capabilities and technologies. This includes a routine exercising and technical assessment of our
networks, enhanced requirements for IT architecture and security.
7
Acquisition and business integration
Failure to select and integrate value accretive
businesses to enable strategic ambition and
realise the maximum potential benefits.
Improved and synchronised Merger & Acquisition governance framework and the policies and procedures
that guide pre and post-acquisition activities have been produced. Enhanced due diligence process and
associated policies including ESG, and external advisory support, are in place to enable early warning,
monitoring and action where and when necessary.
8
Culture
Failure to define and build a single inclusive
and high-performing organisational culture and
leadership behaviour could impact achieving
our strategic goals and ambition.
Implementation of our QinetiQ Operating Model enables us to invest in developing our culture and focus
on embedding our approach to inclusion, diversity, and people management as well as align rewards, pay
and progression and other tools and processes that enable performance and help us to continuously
improve our ways of working. Examples include Peakon reviews and actions, and completion of
Organisational Network Analysis which inform our priorities in building and embedding a single
organisational culture.
9
Environment
Rapidly shifting macroeconomic uncertainty,
failure to meet our published climate change
targets and outbreak of diseases, could impact
stakeholder expectations and resilience needs,
resulting in operational disruption, loss of
new business, reduced investor confidence
and compromised reputation.
We have a mature and established set of controls and policies to manage and respond to volatile
economic and financial conditions including hedging, and counterparty limits, stress-testing and
specialised contractual clauses. We developed a Net-Zero Plan and are committed to science based
targets to drive our emissions to Net-Zero by 2050 or sooner. We have in place initiatives across the Group
to ensure that we are embedding our Net-Zero transition plan. These are: investment in energy efficiency
projects, development of programmes to deliver reductions in Scope 3 emissions, internal and industry-wide
enabling activities (e.g. engagement and remuneration incentives), and working with our customers to
develop sustainable solutions and protecting biodiversity. We are have a robust crisis management process in
place supported by business continuity plans and we continue to improve this approach.
10
Safety
Serious physical or mental health injury,
fatality of employee(s), third-party personnel,
or member(s) of the public; loss of assets or
significant regulatory enforcement action.
A global Safety Improvement Programme is in place enabling measurable improvements in the safety
culture maturity including more effective global safety processes to achieve overall risk reduction, aligned
and integrated three lines of safety assurance approach, enhanced competence and upskilling employees
to become better safety leaders and role models and inclusion of technology as an enabler for safety.
We have established local emergency preparedness and in-country safety teams and are focusing on
improving the engagement and training across the Group.
11
Security
A breach of physical, personnel or information
or cyber security could lead to the loss of
information or harm our people, customers and
broader stakeholders, exfiltrate or deny the use
of data, degrade or deny capabilities.
Information is protected through policy, procedural, physical and digital security controls, supported
by ongoing assurance activities, awareness campaigns and annual mandatory security training. We
are further investing in tooling to improve tracking of trends to inform improvement in our security
measures. We have a robust programme of deployment and continual upgrade of our cyber security
detection and protective capabilities and technologies. This includes a routine exercising and technical
assessment of our networks. Our changing and increasingly sophisticated threat environment is
continuously reviewed and handled as part of our overarching security strategy, ensuring it balances
the security, cost and flexibility required for any given solution. Our programme of continuous security
improvement is underpinned by annual strategic security reviews.
Risk management continued

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Annual Report & Accounts 2025 | QinetiQ Group plc 67
Viability statement
Assessing the prospects of the Group
This viability statement should be read in conjunction with the
Group’s growth strategy on pages 4 and 5.
The Group’s corporate planning processes involve the following
individual processes covering differing time frames:
— An annual Integrated Strategy-to-Perform Plan (ISP) process that
looks at the financial outlook for the following five years. This
process commences with an assessment of the orders pipeline
producing an order intake scenario. A review of the phased delivery
profile of that order intake as well as contracted order backlog,
and the cost base required to support this enables generation
of a base-case profit forecast. Capital expenditure and working
capital requirements are also collected, reviewed, approved and
an operating cash flow produced for the plan period. This is then
overlaid with inorganic growth assumptions as well as detailed tax,
interest, funding and other non-operating assumptions to produce
a five-year net debt/cash forecast including relevant covenant and
funding metrics;
— An annual budget process that covers the first year of the five-year
planning horizon in detail;
— A rolling monthly ‘latest best estimate’ process to assess significant
changes to the budget/forecast for the year in progress.
The corporate planning process is underpinned by assessing
scenarios and risks that encompass a wide spectrum of potential
outcomes, both favourable and adverse. The sensitivity analysis
undertaken by management explores the resilience of the Group to
the potential impact of each of the principal risks set out on pages
64 to 66, and a combination of those risks.
The scenarios are designed to be severe but plausible and take full
account of the availability and likely effectiveness of the mitigating
actions (as described on pages 65 and 66) that could be taken to
avoid or reduce the impact or occurrence of the underlying risks,
and that realistically would be open to them in the circumstances.
In considering the likely effectiveness of such actions, the
conclusions of the Board’s regular monitoring and review of risk
and internal control systems, as discussed on page 89 is taken
into account.
Alongside the annual review of risk scenarios applied to the strategic
plan, performance is rigorously monitored to alert the Board and
QinetiQ Leadership Team to the potential crystallisation of a key
risk. We consider that this stress-testing- based assessment of the
Group’s prospects is reasonable in the circumstances of the inherent
uncertainty involved.
Viability statement
The period over which we confirm
longer-term viability
The period over which the Directors consider it possible to form a
reasonable expectation as to the Group’s longer-term viability is the
five-year period to 31 March 2030. This period is deemed
appropriate as the Group has good visibility of revenue out to 2030
driven by long-term contracts and frameworks. This is also the
period covered by our strategic planning process and is subject to
stress-testing and scenario planning around potential risks. It has
been selected because it presents the Board and readers of the
Annual Report with a reasonable degree of confidence whilst still
providing an appropriate longer-term outlook.
The ISP base case assumed the renewal of the Long Term Partnering
Contract (LTPA) from 1 April 2028. The five-year extension was
signed by the UK MOD in May 2025.
Assessing the viability of the Group
The scenarios applied consider the key risks facing the Group,
as summarised in the Risks and Uncertainty section on page 62.
These include:
— Sensitivities on growth metrics in the plan such as margin
achievement and revenue growth
— Sensitivities based on our cash position including increased
working capital burden and the availability of debt financing
— An environmental risk focusing on a severe flooding event at
the Shoeburyness site
— Sensitivities linked to the economic environment including
revenue reduction and foreign exchange risk
The impact of each scenario is assessed in terms of revenue,
operating profit, net cash/(debt) and loan covenants (leverage and
interest cover ratio). They are considered individually and aggregated
through two combined stress-tests, covering financial pressures and
poor trading performance.
The Group has significant forecast growth resulting in a return to
positive net cash from FY29. The sensitivities assume that the Group
continues to have access to revolving credit facilities of £290m
(expiring April 2028 with a one-year extension option) and that the
term loan of £335m can be extended (expiring September 2027).
Viability
statement
Strategic Report

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QinetiQ Group plc | Annual Report & Accounts 202568
Viability statement continued
The financial impacts are inherently subjective and highly variable, but have provided an indicative assessment to the Board. None of the
risks applied individually, have a material impact on long-term viability (in terms of breaching our available facility headroom or associated
covenants). Despite being unlikely, the Directors have considered mitigations that could be put in place to offset the risks. The Group has a
number of cost-control levers that could immediately be drawn on to control cash outflows. In addition it continues to review its portfolio of
assets to ensure they remain relevant to the strategic ambition (through disposal of non-core assets). The revolving credit facility has the
option to increase further by an additional £110m, prior to considering the reduction of dividends. All of these options can be drawn on to
ensure the Group remains a going concern and does not breach covenants.
Confirmation of longer-term viability
As noted on page 62, the Directors confirm that their assessment of the principal risks facing the Group was robust. Based upon the robust
assessment of the principal risks facing the Group and their stress-testing based assessment of the Group’s prospects, all of which are
described in this statement, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period to 31 March 2030.
Scenarios modelled Links to Principal Risks
Scenario 1 – Profit margin downgrade
Profit margin is downgraded as a result of competitive pressure, project execution, inability to achieve
supply chain and organisational efficiency savings or a regulatory fine.
Assumptions:
A 2% reduction in profit margin, no impact on revenue.
— Market competition
— Business winning
— Delivery capability
— Business platform
— Security
— Environment
— Safety
Scenario 2 – Reduction in revenue growth
Revenue grows at a slower rate through the planning period driven by slow-down in orders as a
result of customer spending, macroeconomic pressures, a cyber incident, or failure to plan the future
resource and skillset needed.
Assumptions:
A 5% per annum reduction in revenue compared to the ISP base plan
— Markets
— Competition
— Business winning
— Security
— Environment
Scenario 3 – Reduced operating cash conversion
Economic environment causes delays in customer payments, high inventory levels driven by supplier
shortages, or IT system failure resulting in inability to raise invoices and receipt of supplier payments.
Assumptions:
Cash conversion restricted to 90%.
— Delivery
— Capability
— Business platform
Scenario 4 – Major environmental event
For the purposes of this scenario we have assumed a failure at the exposed area that would result in
significant flooding. This flooding would, despite mitigation measures, damage the equipment and
infrastructure resulting in significant remediation work to safely restore capability.
Assumptions:
There would be an immediate impact to our ability to deliver. The impact has been modelled
through lost backlog, pipeline revenue and reputational damage, together with lost recoveries
from people impacted.
— Environment
— Delivery
— Safety
— Security
Scenario 5 – Increased FX rates
Macro-economic trends, global events and government interventions may cause foreign exchange
rates to move in unfavourable directions (mainly an increase in the USD:GBP and AUD:GBP rates)
such that the returns of the US and Australia businesses are worth less in GBP terms.
Assumptions:
10% increase in FX (USD, CAD, EUR & AUD) rates.
— Markets

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Going Concern Disclosures
The Group’s activities, combined with the factors that are likely
to affect its future development and performance, are set out
on pages 1 to 29. The Group meets its day-to-day working
capital requirements through its available cash funds and its
bank facilities. The Chief Financial Officer’s review on pages 30
to 34 sets out details of the financial position of the Group, the
cash flows, drawn and committed borrowing facilities (including
associated covenants), liquidity, and the Group’s policies and
processes for managing its capital and financial risks.
This past year has seen continued unrest and growing conflict
across many regions of the world. The defence and security
context continues to elevate the market needs for our mission
critical capabilities. Both our addressable market and our
confidence in capitalising on that market opportunity continues
to grow. The Group enters the new financial year with a healthy
balance sheet and leverage position, and strong order backlog
and pipeline. After making enquiries, the Directors believe that
the Group is well positioned to manage its overall business risks
successfully and have a reasonable expectation that the Group
has adequate resources to continue in operational existence for
the foreseeable future. The Group therefore continues to adopt
the going-concern basis in preparing its financial statements.
The Group is exposed to various risks and uncertainties,
the principal ones being summarised in the ‘Principal risks
and uncertainties’ section on pages 64 to 66. In reaching its
conclusion on the going concern assessment, the Board also
considered the findings of the work performed to support the
statement on the long-term viability of the Company and the
Group. As noted below, this included assessing forecasts of
severe but plausible downside scenarios and further downside
stress testing related to the Company’s principal risks.
Crystallisation of such risks, to the extent not fully mitigated,
would lead to a negative impact on the Group’s financial results
but none are deemed sufficiently material to prevent the Group
from continuing as a going concern for the next 12 months from
22 May 2025.
Strategic Report

Primary stakeholders Other stakeholders
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QinetiQ Group plc | Annual Report & Accounts 202570
Key stakeholder groups and
Section 172 statement
Section 172 statement
Key stakeholder groups and Section 172 statement
Key Stakeholder groups
and Section 172 statement
Section 172 Statement
We are committed to our responsibilities to promote the success of
the Group. The Board of QinetiQ Group plc confirms that during the
year under review, it has acted in the way that it considers in good
faith, would be most likely to promote the Group’s success for the
benefit of its members as a whole, having due regard to the matters
set out in section 172(1)(a) to (f) of the Companies Act 2006.
QinetiQ Group plc is a public Company limited by shares, registered
in England and Wales No. 4586941.
Typically in large and complex companies such as QinetiQ, the
Directors partly fulfil their duties through a governance framework
that delegates day-to-day decision-making to the employees of the
Company. The Board recognises that such delegation needs to be
part of a robust governance structure which covers our values, how
we engage with our stakeholders, and how the Board assures itself
that the governance structure and systems of controls continue to
be robust.
The main methods used by the Directors to perform their duties
are outlined below.
This statement and the relevant disclosures referenced on this
page summarise how the Board has upheld and discharged its
duties to consider:
(a) The likely consequences of any decision in the long term;
(b) The interests of the Company’s employees;
(c) The need to foster the Company’s business relationships with
suppliers, customers and others;
(d) The impact of the Company’s operations on the community
and the environment;
(e) The desirability of the Company maintaining a reputation for
high standards of business conduct; and
(f) The need to act fairly as between members of the Company.
 
See page 73 for relevant disclosures.
Our stakeholders and
approach to engagement
To deliver responsibly and for the benefit of our stakeholders we
must understand what matters to them. To do this we engage in a
variety of ways in an open and transparent manner, with the aim of
identifying common goals.
In some cases the Board will engage directly with certain
stakeholders, however, the relevant delivery teams will also
manage these relationships if they are better-placed to facilitate
meaningful engagement.
We consider our respective stakeholders and relevant issues to
ensure that engagement is led by those best-placed to affect any
necessary change and therefore expect that, to best benefit our
stakeholders, our approach to how we engage will continue to
evolve as we pursue further growth.
Board activity and principal decisions in FY25
The principal decisions taken by the Board in FY25 are detailed
on pages 87 and 88. These decisions cover a variety of topics
including, capital allocation, the Cody Technology Park Disposal and
business strategy. Due to the nature of these decisions, a variety of
stakeholders are considered as part of the Board’s discussions.

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Impact of stakeholder engagement
and how we create value
How we engage with our
key stakeholder groups
Customers
Our customers are at the heart of our purpose and we strive
to apply our strengths to their advantage to enable delivery of
mission-led innovation. Every QinetiQ customer has a delivery
team and we regularly invest time listening and understanding
our customers' views and needs via our formal customer
research systems. For more information see pages 18 and 19.
People
Our people are critical to the success of our business. To ensure
meaningful engagement the business continues to utilise its key
forms of engagement, the Global Employee Voice Group, Peakon
and the ‘Speak Up’ programme.
The business holds regular Global Employee Roadshows and
Q Talks to enable employees to engage directly with decision
makers and the QLT. The Board were also able to spend time this
year with employees during visits to UK sites such as the offices
of QinetiQ and Inzpire in Lincoln, and our Group Chair during visits
to a number of sites in the UK and Germany. Our site Champions
and Heads of Sites also provide feedback at a local level.
To see more about how we engage with our people see Employee
engagement on page 91 and Employee engagement: Listening,
learning and taking action on page 53.
Shareholders
We engage with our shareholders throughout the year via physical
and virtual roadshows, results presentations and at the AGM. We
seek to keep an open dialogue regarding business, our strategy,
and the management team. Our Group Chief Financial Officer has
met with a number of shareholders from the UK, US and Germany
during the year as part of his induction, and has attended a
number of industry specific investor conferences since his
appointment in September 2024. Our Group CEO and Group Chair
have also engaged directly with a number of major shareholders
throughout the year.
See page 76 for details on the 2025 AGM.
Customers
The formal feedback we receive from our customers allows
us to respond and adapt our approach when achieving their
objectives. It is reviewed at all levels of our organisation to
ensure we continuously improve and evolve our business
processes and delivery solutions. It enables us to deliver
mission-critical solutions and help customers address their
most pressing challenges. They benefit from a responsive
and agile approach and the ability to innovate at pace, while
delivering value for money.
People
Listening to our people through these various feedback
channels has enabled us to identify priority focus areas to
improve the employee experience by directing our efforts
to enhance areas highlighted by direct feedback. This year
we responded to feedback around site improvements and
engagement activities, making progress on resources such as
templates and toolkits, to enable our people to better connect
their contribution to our strategy.
Our people’s work makes a genuine difference to our customers
and we are committed to providing an employee experience
which fosters rewarding careers in highly skilled areas, giving
our people the opportunity to perform to their full potential.
Shareholders
Shareholder feedback and comments help shape our strategic
thinking and decision-making, and their ongoing support enables
us to invest in our business and execute our growth strategy for
the benefit of all stakeholders. In return we aim to deliver long-
term sustainable growth and attractive returns, and have sought
to keep both our investors and the financial markets up-to-date
with our progress and strategic decisions throughout the year.
Shareholder feedback this year helped shape the decision to
extend our share buyback programme of up to £200m over the
next two years and our ongoing engagement enables balanced
choices to be made on how and where we invest.
Strategic Report

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
QinetiQ Group plc | Annual Report & Accounts 202572
Suppliers
We occupy a unique position in the defence industry and
actively engage with our suppliers, working collaboratively
to ensure we treat them with integrity and take a fair and
sustainable approach. We hold strategic relationships across
organisations and engage with our supply chain through in
a variety of ways, including our QinetiQ Collaborate events
and industry working groups such as Aerospace Defence and
Security (ADS), techUK, Aerospace and Defence Procurement
Group (ADPG) and MOD Sustainable Procurement; see Working
with our supply chain on page 59 for more information.
Community
Environment
We strive to have a positive impact on our local communities
by engaging in community investment such as our outreach
programme, volunteering, supporting local charities and community
liaison. Our aim is to benefit the wider environmental and socio-
economic wellbeing of our communities and our community
investment is viewed positively where we operate. Volunteering is
a vital part of our social impact strategy and we enable our skilled
workforce to dedicate their time and expertise to deliver social,
environmental and economic benefits within the communities where
we work. We have also expanded our volunteering efforts to include
defence, as well as our usual Science, Technology, Engineering, and
Mathematics (STEM), environmental initiatives, and skills-based
volunteering. See pages 56 and 57 for more information.
We engage with shareholders, customers and our people on
environmental and ESG related matters throughout the year via
reporting, surveys and questionnaires. We also chair a number
of industry groups and actively collaborate with customers,
peers, academic partners and suppliers. This enables us to listen,
understand, and identify what matters most to our stakeholders
and over the last year our customers have increased their focus
on resilience to the impacts of climate change and alignment to
the international energy transition.
Our sustainability programme is focused on the most material
issues for the Company including a deliverable Net-Zero plan, and
the business is cognisant to the importance of ensuring its own
resilience to the changing climate and how it can contribute to its
mitigation. See pages 40 to 45 for more information.
Regulators
We engage with Regulators to understand changing regulations
and ensure we meet their requirements. This year our Audit
Committee oversaw planning to implement changes needed
to audit, risk and internal controls to comply with the recently
published 2024 UK Corporate Governance Code, as well as
the proposed changes in non-financial reporting. We have also
successfully submitted our 2024 Parker Review.
See page 76, Audit risk and internal control at pages 100 to 105
and Board activity at page 89.
Suppliers
We aim to bring down barriers for suppliers in defence and
emerging sectors. In the year under review we held a number of
QinetiQ Collaborates working group events, including 'Raising
Awareness of Modern Slavery in the Supply Chain' and 'Let’s
Talk Sustainability Climate Contracting'. Our engagement with
our supply chain gives us insight into industry partnering to
effectively support our customers.
Community
Environment
We provide services that promote the safety and security of
members of society and seek to drive social value from our
projects. This year we are proud to have successfully delivered
outreach and community projects cross the UK and continue to
engage in regular community liaison updates ensure local people
are aware of our outreach activity.
We have also delivered a range of ‘Social Value’ activities as part
of our contract delivery and have prioritised initiatives that foster
community job creation, inspiring the next generation of STEM
innovators. Early Careers and STEM in particular are communities
in which we are continually supporting and investing.
The Company has worked hard to improve its greenhouse gas
understanding of its emissions since the publication of its 2022
Net-Zero plan and in light of the Company’s evolution felt it was
appropriate to evolve from a foundational plan, to a Climate
Transition Action Plan (CTAP). The evolution and development
of this plan is intended to integrate climate change within the
Company’s business plan and will be overseen by the Climate
Change Steering Group, chaired by our CFO (see page 40).
The Company has also invested via IRAD in the creation of a suite
of scenarios suitable to incorporate issues of climate change
into war-gaming, simulation and experimentation and has been
proactive in provoking discussion this year between start-ups,
academia, the MOD and industry on how to create sustainable
and resilient defence capability by holding a customer-focused
round table at Farnborough International Air Show.
During the year in review the Company also retained its rating
as a top-rated ESG company by Sustainalytics and its AA rating
from MSCI.
Regulators
We take an active role in the defence industry through various forums
and industry networks. Our engagement supports us meeting the
high standards expected by our regulators. This year the UK tax
authorities provided an overall low risk rating across all measures of
systems and delivery, governance and approach to tax compliance
following their testing of the Group Tax policies. The Company is
also in the process of implementing a formal regulatory compliance
evaluation tool designed to systematically evaluate environmental
compliance performance across all operationally controlled sites.
Key stakeholder groups and Section 172 statement continued
Impact of stakeholder engagement
and how we create value
How we engage with our key
stakeholder groups

Contents Generation – Sub PageContents Generation - Section
Annual Report & Accounts 2025 | QinetiQ Group plc 73
Section 172 relevant disclosures
Section 172 relevant disclosures
Considering long-term consequences
s172 link (a)
The Board holds annual strategy meetings which assess the
long-term sustainable success of the Group and our impact on our
investors, customers, people, and local communities over a five
and ten-year outlook. Our Group Chair and Company Secretary
working with the Executive Directors, set a rolling agenda for each
Board meeting, including a two-day strategy review to consider the
Company’s overall purpose and strategy. This is supported by a
budget for the following year and both medium and long-term (five
and ten-year) financial planning informed by strategic assessments
such as SWOT analysis. These arrangements are supported by
external political, industrial and customer inputs. There are also risk
management processes that identify the potential consequences
of decisions in the short, medium and long term, so that mitigation
plans can be put in place to prevent, reduce or eliminate risks to
our business and wider stakeholders.
Relevant S172(a) disclosures
 
Pages 78 to 79 Significance of our purpose, values and strategy
 
Pages 18 to 19 Business model
 
Pages 4 to 7 Strategy
 
Pages 34 and 87 Dividend and Capital Allocation policy
 
Pages 67 to 69 Viability statement
 
Page 109 Frameworks for risk management and internal control
 
Pages 40 to 41 Climate Transition Action Plan (CTAP)
 
Page 88 Integrated Strategic Planning
Relevant S172 (e, f) disclosures
 
Pages 52 to 57 Social
 
Pages 78 and 79 Significance of our purpose, values and strategy
 
Page 109 Frameworks for risk management and internal controls
 
Page 76 Annual General Meeting
 
Pages 62 to 66 Risk Management
 
Page 83 Governance structure
 
Page 55 Diversity, Equity & Inclusion (DEI)
 
Pages 77 to 90 Board leadership and Company purpose
Setting culture and conduct
s172 link (e, f)
The Board sets the Group’s purpose, values and strategy, ensuring it
is aligned with our culture. To ensure section 172 requirements are
met, stakeholder factors are addressed in Board papers, and through
standing agenda matters presented at each Board meeting (for
example, the Group CEO presents updates on the financial overview,
strategic progress, investor relations, business development, and
operational progress) and the Company Secretary presents updates
on relevant corporate governance and compliance matters.
Relevant S172 (d) disclosures
 
Pages 40 to 51 Environmental
 
Pages 38 to 39 Sustainability: Environmental, Social & Governance
 
Pages 46 to 51 TCFD disclosures
 
Pages 60 and 61 Non-financial and sustainability information
statement
 
Pages 52 to 57 Social
 
Pages 58 and 59 Governance
Protecting communities and environment
s172 link (d)
The Group is committed to corporate responsibility oversight
including business ethics, anti-bribery and corruption, human rights,
modern slavery, environmental stewardship and use of resources,
sustainable solutions, greenhouse gas emissions and energy
management, investing in our local communities and the armed
forces. Any major decisions taken by the Board includes formal
consideration to these factors where relevant as well as regular
reviews through the Board risk management process and the Audit,
Risk and Security and Remuneration Committees.
Relevant S172 (b, c) disclosures
 
Pages 52 to 57 Social
 
Page 91 Employee engagement
 
Pages 53 to 54 Skills and development: investing in future capability
 
Page 56 Rewarding for performance: celebrating employee
contribution
 
Pages 60 to 61 Non-financial information statement
 
Pages 71 to 72 Stakeholder engagement
 
Page 55 Diversity, equity and inclusion
 
Page 39 ESG framework
 
Pages 78 to 79 Significance of our purpose, values and strategy
 
Page 71 Shareholders
Fostering stakeholder relationships
s172 links (b, c)
To encourage mutually beneficial stakeholder relationships, specific
training is provided for Directors and senior managers and we
ensure external assurance, through audits, stakeholder surveys
and reports from brokers and other advisers, and stakeholder
engagement. The Board receives regular presentations and reports
on customer engagement, risk, health and safety, confidential
reporting, defence process review, dividend policy, people and
culture strategy, and operational business updates. The Company
also made progress against the themes identified in previous years
as needing attention and are in the process of creating a new
approach to employee engagement to bring together our feedback
channels to create realistic and deliverable plans at a local level
and across the Company.
Strategic Report

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
75 Group Chair introduction to Governance
76 Governance framework
77 Board leadership and Company purpose
77 Board at a glance
78 The significance of our purpose, values and strategy
80 Board biographies
83 Governance structure
84 Division of responsibilities
85 Composition, succession and evaluation
87 Board decision-making
89 Board activity
90 Management and control of US subsidiaries
91 Employee engagement
92 Nominations Committee report
100 Audit Committee report
106 Risk & Security Committee report
110 Directors' Remuneration report
112 Remuneration at a glance
114 Directors’ Remuneration Policy Q&A
115 Summary Directors’ Remuneration Policy
117 Annual Report on Remuneration
130 Directors’ report and statutory information
134 Statement of Directors’ responsibilities in
respect of the financial statements
135 Independent auditor's report
QinetiQ Group plc | Annual Report & Accounts 2025
74
Corporate
Governance

Contents Generation – Sub PageContents Generation - Section Group Chair introduction to Governance
Introduction to
Governance
Group Chair introduction
Neil Johnson
Non-executive
Group Chair
Further reading
 
Board decision-
making page 87
  
Environmental,
Social and
Governance
pages 38–59
At a time of rapidly changing
threat environment, proportionate
and effective corporate
governance is a key enabler,
guiding how our business delivers
for our customers, partners
and shareholders.
The following corporate governance statement
provides an overview of the system of governance
adopted by the Company and will enable our
shareholders to evaluate the manner in which the
2018 UK Corporate Governance Code Principles and
Provisions have been applied by the Company for the
year ended 31 March 2025.
Key Board activities
During this reporting year, the Board welcomed a new
Chief Financial Officer, and further evolved the depth of
its skills and experience through the recruitment of two
new Non-executive Directors. The Company's Capital
Allocation Policy has also been effectively utilised,
supporting the extension of the current share buyback
programme to return value to our shareholders. The
Audit Committee has overseen planning to implement
changes needed to audit, risk and internal control
required by the recently published 2024 UK Corporate
Governance Code, as well as the proposed changes in
the non-financial reporting and audit environment.
A fuller summary of the Board’s activity during the
year can be found on page 89 and further information
about the Group’s stakeholder engagement can be
found on page 70.
I have already covered a number of areas in the
Group Chair Statement earlier in this Report, so rather
than repeat those comments, I set out below some
further additions.
Environmental, Social and Governance (ESG)
QinetiQ is committed to responsible and sustainable
business practice and is proud to be acting as a
catalyst, by driving and leading these important issues
within our sector. During the year, the Board has had
many discussions on how to best keep evolving our
approach to ESG matters including our climate change
programme and the evolution of non-financial reporting.
As part of our regular business review, we are able to
oversee and monitor management of ESG aspects and
we are proud of the significant progress made to date
on our ESG strategy and programmes. We continue
to support the business in its ambition to embed this
further into corporate strategy and decision-making.
Health, safety and wellbeing
Health, safety and wellbeing are a priority for the
Company and its leadership teams, across the breadth
of its varied operations and in all territories in which
it carries out its business. We remain committed to
looking after our people, customers and visitors while
ensuring the public is never harmed by the work we
do. This ethos is at the heart of our culture.
This year, investments have been made to enhance
the Company's expertise in safety compliance and
safety leadership, and to further strengthen its safety
culture. Further information on health, safety and
wellbeing can be found on page 52.
Culture
Promoting a culture of transparency, robust debate
and effective challenge in the Boardroom is one of
my key responsibilities as Group Chair. As a Board,
we have an important role in leading and promoting
the desired culture and identity of the organisation.
Through the time which I and my fellow Board
members have spent with the business and its
people, we have maintained a clear view on how the
Company's values of integrity, collaboration and high
performance are embedded and lived by its leadership
and employees. In QinetiQ, I have found a culture
that is both responsible and highly committed to
delivering the best support it can to its customers and
their key objectives. The Company's senior leaders
spend considerable time on engagement with our
people, to embed and harness the benefits of our
Company values.
75
Corporate Governance
Annual Report & Accounts 2025 | QinetiQ Group plc

Board succession and evaluation of the
Board’s performance
I have already set out in the Group Chair Statement, earlier in the
Report, the changes that have been made to the composition
of the Board and I will say more about this in the Nominations
Committee Report.
Central to setting the correct tone is the review of the Board’s own
performance. FY25 was the first year of our next three-year review
cycle, and an external assessment was carried out by Emma Bendon
of Bendon Advisory. Please see page 98 for details of the outcome of
the review.
Remuneration
During the year, the Board’s Remuneration Committee has focused
on ensuring that the Remuneration Policy approved at the 2023 AGM
continues to operate as intended, to appropriately reward, retain and
incentivise the Executive Directors who are driving the Company’s
success. It has done so by seeking to ensure that the Company’s
remuneration schemes and their outcomes for Executive Directors
continue to be transparent, aligned with the Company’s strategy and
also aligned with the interests of our shareholders and the returns we
deliver to them.
Meeting the revised 2024 UK Corporate Governance Code
(the '2024 Code')
During 2025, the Board and its Committees will oversee the
application of the revised 2024 Code which will apply to the
financial year beginning on 1 April 2025, with the exception of the
changes to Provision 29, which relate to the effectiveness of the
risk management and internal control framework. The changes to
Provision 29 will apply to the financial year beginning on 1 April 2026.
Significant time has been spent during the year planning for the
upcoming changes, see page 100 for more information.
Annual General Meeting
We are delighted this year to again welcome shareholders to our
AGM. The AGM will be held at 11:00 on Thursday 17 July 2025 at
the office of Ashurst LLP, London Fruit and Wool Exchange, Duval
Square, London E1 6PW. The Notice of AGM and related papers will,
unless otherwise noted, be sent to shareholders at least 20 working
days before the meeting. For those shareholders who have elected to
receive communications electronically, notice is given of the availability
of the documents via www.qinetiq.com.
Neil Johnson
Non-executive Group Chair
22 May 2025
Contents Generation – Sub PageContents Generation - Section Governance framework
Governance framework and Board at a glance
The Board is accountable to shareholders for its standards
of governance and as a UK-listed company our governance is
based on applying the principles and provisions of the 2018 UK
Corporate Governance Code (the 'Code').
Application of the provisions of the 2018 UK
Corporate Governance Code (the 'Code')
In respect of the year ended 31 March 2025, the Company
was subject to the Code. The Board confirms that it applied
the principles and complied with the provisions of the Code
throughout the year.
Further information on compliance with the Code can be found
as follows:
Board leadership and Company purpose
Provides an overview of the activities undertaken by the Board
in the year, how the Board has considered its section 172(1)
responsibilities and its governance framework.

Section 172(1) statement pages 70 to 73.

Board of Directors pages 80 to 82.

Company purpose page 78.

Social pages
55 to 57.

Stakeholder engagement pages 70 to 73.

Employee engagement page 91.
Division of responsibilities

Governance structure page 83.

Division of responsibilities page 84.

Board of Directors pages 80 to 82.

Time commitment page
85.

Board and Committee processes pages
85 and 86.
Composition, succession
and evaluation

Nominations Committee report pages 92 to 99.

Board of Directors pages 80 to 82.

Director effectiveness page 98.
Audit, risk and internal control

Audit Committee report pages 100 to 105.

Risk & Security Committee report pages 106 to 109.
Remuneration
 
Directors’ Remuneration Committee report pages
110 to 129.
76 QinetiQ Group plc | Annual Report & Accounts 2025
Group Chair introduction continued

41–50
51–60
61–7 0
71–80
18%
18%
55%
9%
36%
64%
Women
Men
Women
Men
22.2%
28.9%
77.8%
71.1%
Women
Men
Contents Generation - Section Board at a glanceBoard leadership and Company purpose
FY25 Board independence
80%
Independent
8
Independent
Non-executive
Directors
20%
Executive Directors
2
Executive Directors
FY25 Board ethnicity
80%
White
20%
Ethnic minority
Non-executive Director tenure*
2.4
Years average
Board members: Age Board members: Gender balance
QinetiQ Leadership Team:
Gender balance
Direct reports to the QLT:
Gender balance
Further reading
 
Composition of
the Board page 85
 
Board attendance
page 86
* as at 21 May 2025.
Neil Johnson
(Chair)
6 years
Steve
Mogford
2 years
Shonaid
Jemmett-Page
5 years
Dina Knight
1 year
Roger Krone
<1 year
Ross McEwan
1 year
Gordon
Messenger
4 years
Ezinne
Uzo-Okoro
<1 year
Board leadership and Company purpose
Board
at a glance
77
Corporate Governance
Annual Report & Accounts 2025 | QinetiQ Group plc

Contents Generation - Section The significance of our purpose,
values and strategy
Board leadership and Company purpose continued
The significance of our
purpose, values and strategy
Our Values
Protecting lives by serving the national security interests of our customers
Our purpose
The chosen partner around the world for mission-critical solutions, innovating for our customers’ advantage
Our vision
Applying our unique technical expertise across the product lifecycle, helping our customers to create,
test and use defence and security capabilities as needed to meet their mission requirements
Driven by mission-led innovation
Through our core values of Integrity, Collaboration and a High-Performance Culture,
and our Company behaviours of Listening, Focusing and Keeping Our Promises
Creating a safe and secure environment for us all to thrive
Global leverage – building an integrated global defence and security company to leverage our unique technical
capabilities and distinctive offerings – co-creating high-value differentiated solutions for our customers in
experimentation, test, training, information, engineering, disruptive innovation and autonomous systems
Delivered through a customer-focused growth strategy
We deliver safely, responsibly and sustainably for the benefit of all our stakeholders
Integrity
Trusted to do the right thing at all times,
we take pride in our decisions and work
to create a sustainable and responsible
business. We are responsible and
accountable for all our actions. We
take personal responsibility to do
the right thing, demonstrating this
individually and as an organisation in
our decisions, behaviour and day-to-
day actions. We actively support each
other to meet the highest ethical and
professional standards.
Collaboration
The chosen partner for customers and
industry partners, we are a diverse and
inclusive community with a common
purpose; every contribution is valued.
Delivering value through partnership
and teamwork, we actively collaborate
with our colleagues, customers and
industry partners to bring together the
best thinking, the smartest talent and
breadth and depth in capability to our
work, driving innovation. We know that
working together is the best way to
meet our stakeholders’ needs.
Performance
Customer-focused and highly responsive,
providing operational excellence and
assuring safe and secure delivery. Our
performance is measured by how we
deliver for our customers; meeting their
needs through flawless execution and
delivery of the mission-critical solutions
on which they depend. This includes
being accountable for getting things
right first time, safely, securely and in a
cost-effective way. Taking an innovative
and responsive approach to create
an outstanding customer experience,
we try to go the extra mile and act
with courage.
78 QinetiQ Group plc | Annual Report & Accounts 2025

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
79
Corporate Governance
Annual Report & Accounts 2025 | QinetiQ Group plc
The Board has supported the review and further refinement of the
Company’s purpose, to ensure it continues to capture the Board’s view
of the Company, its evolving global strategy and its role in society. Our
purpose communicates the Group’s strategic direction and intentions
to customers, employees, partners, investors, the local communities
we work in and its wider stakeholders. Our values make clear our
priorities and form the foundations of the Company’s culture.
While the Recognition Gala and Thank Q programmes raise
awareness of, and recognise and reward the behaviours that
demonstrate our values, there are many other actions which contribute
to the creation of a healthy corporate culture. These include:
— Our corporate policies, reviewed and approved by the Board,
which set a clear expectation, and mandate, for every member
of the workforce to perform the Company’s business with
integrity and in accordance with applicable laws, including anti-
bribery and corruption, anti-slavery and human trafficking, data
protection and ‘Speak Up’ policies and procedures.
— Fair and transparent employee policies and practices which
ensure that employees’ rights are respected in accordance with
applicable laws and employment contracts, together with a
number of programmes and initiatives which support the health
and wellbeing of our people, develop talent and promote diversity.
— Supplier protocols and procedures which seek to ensure that
our key suppliers operate their businesses and respect their
employees’ rights in the same way that we do.
— The application and monthly assessment by business and
functional executive teams and the QinetiQ Leadership Team of
safety and operational KPIs to enable management to monitor and
drive continuous improvements in safety, reliability and efficiency
of our services.
— Implement the work of Group support functions to advise on the
Group’s policies, procedures and standards at every level and
location of the business around the world, including dedicated
safety and operational excellence teams, finance, legal and
governance teams, procurement, the People function, and the
Group internal audit function.
In addition, we as a Board use a number of other methods to
understand and monitor the Company’s culture and assess whether
our people reflect our values. These include:
— Reviews, in the Boardroom, of the outcomes of the Company’s
employee Peakon surveys, customer satisfaction scores and
updates on confidential reporting ‘Speak Up’. These give us
insights into what the Company does well and what could be
improved, as well as any particular areas of concern.
— Employee interaction with the Global Employee Voice (GEV),
discussing the issues which matter most to our people.
— Directors’ attendance at Company events, such as the biannual
virtual Global Employee Roadshows.
Through feedback from all of these monitoring activities, the Board is
satisfied that the Company’s culture is aligned with our values.
Where the Peakon surveys, workforce engagement events or
other interactions between Directors and employees and other
stakeholders, have revealed matters that can be improved upon or
have flagged concerns, the Board has discussed these and assured
itself that management is putting action plans in place that are
designed to drive improvements or address those concerns.
Safety culture
QinetiQ’s Health and Safety Strategy sets the direction for how
we look after ourselves, each other and our partners. Our safety
culture journey is constantly progressing and adapting. The Safety
Improvement Programme, established by the Board and led by the
QLT, is driving a step-change in our safety culture. More information
on the Safety Improvement Programme can be found on page 66.
Stakeholder engagement
Engagement and collaboration through our value chain is essential.
Partnering with our stakeholders, understanding their challenges
and managing risks, we can find solutions to enable shared success,
sustain our business and benefit all our stakeholders. We have
aligned our strategic priorities with the requirements and needs of
our stakeholders to enable delivery of profitable, sustainable value.
The Board recognises that it has a duty to act in the best interests
of the Company for the benefit of its shareholders, as well as
considering other stakeholder interests.
In its decision-making, the Board considers all relevant factors, including:
— How the decision would align with the Group’s over-reaching
purpose.
— The likely short-, medium- and long-term consequences of the
decision.
— The value created for our investors.
— The enhancement of our performance created by the decision.
— The potential impacts on our people, local communities and
environment of making the decision.
— The need to create strong, mutually-beneficial customer and
supplier relationships.
— The Group’s commitment to business ethics.
The section 172(1) statement on pages 70 to 73 explains how the
Directors have adhered to the matters set out in section 172(1)
(a) to (f) of the Companies Act 2006, when performing their duty
under section 172. The Board aims to promote the success of the
Company for the benefit of its shareholders as a whole, taking into
account the long-term consequences of its decisions while giving
due consideration to the interests of the Company’s stakeholders
(including employees, customers, suppliers, shareholders, as well as
the environment and local communities which are impacted by our
operations), while also considering the importance of maintaining
our reputation for high standards of business conduct. Examples of
what that has looked like in practice over the past year can be found
as follows:
Shareholders page 71
Employees page 91
Customers/suppliers page 59
Environment pages 40 to 51
Social pages 52 to 57
Further information about how the Directors have accounted for
stakeholders in their decision-making is set out on pages 87 to 88.

Contents Generation – Sub PageContents Generation - Section Board biographies
Board leadership and Company purpose continued
Neil Johnson
Group Chair
Nationality: British
Appointed: April 2019
Martin Cooper
Group Chief Financial
Officer
Nationality: British
Appointed: September 2024
Steve Wadey
Group Chief
Executive Officer
Nationality: British
Appointed: April 2015
Steve Mogford
Senior Independent
Non-executive Director
Nationality: British
Appointed: August 2022
Depth and Diversity in experience
and strategic capabilities
Skills, competence
and experience
Martin has more than 25 years'
experience leading multi-disciplinary
teams in senior finance roles. He
brings valuable global experience
particularly in the UK, US and
Australia, coupled with deep
financial and operational expertise
and significant experience in
the capital markets. His detailed
understanding of our sector and
the markets we operate in will be
instrumental in helping the Group
perform and grow.
Martin is a Chartered
Accountant, having qualified at
PricewaterhouseCoopers. He
subsequently moved to Credit
Suisse and then to BAE Systems
where he held numerous finance
roles over a 22-year career.
These included UK Rest of World
Financial Controller, Divisional
Finance Director and Head of
Investor Relations.
Skills, competence
and experience
Steve has vast experience
in both executive and non-
executive roles across a range
of sectors. In particular, his long
and comprehensive international
defence and security sector
experience equip him to further
develop the skill sets of our Board.
Steve has a first class honours
degree in astrophysics, maths and
physics from London University.
Formerly the CEO of United Utilities
Group PLC, Steve started his career
at British Aerospace. During his long
career with them, he held a number
of senior positions before being
appointed COO and a member of
the BAE Systems plc Board. Steve
then joined Finmeccanica as Chief
Executive of SELEX Galileo. He also
served on the Board of G4S plc as
Senior independent Director up to
its acquisition in 2021.
Skills, competence
and experience
Steve’s proven track record
of driving growth and his in-
depth experience of defence
and technology industries is of
essential importance and benefit
to the Board.
Steve is a Fellow of the Institution
of Engineering and Technology, the
Royal Aeronautical Society, and
the Royal Academy of Engineering.
He was previously a member of
the Prime Minister’s Business
Advisory Group, Co-Chair of the
National Defence Industries Council
Research and Development Group,
and a Non-executive Director
of the UK MOD Research and
Development Board. He has held
various roles with MBDA, including
as Managing Director, MBDA UK.
Previously he held various roles with
Matra BAe Dynamics and British
Aerospace. He was also Chair
of the Defence Industry Liaison
Board of the UK Department for
International Trade, Defence and
Security Exports.
Skills, competence
and experience
Neil’s former CEO experience and
current roles as a plc Group Chair
and Non-executive Director brings
to the Board relevant knowledge,
challenge and leadership.
Starting his career at Sandhurst
and the army, Neil spent much of
his early career in the automotive
and engineering industries. He was
worldwide Sales and Marketing
Director at Jaguar before being
seconded to the UK Ministry of
Defence to command 4th Battalion
The Royal Green Jackets. He
returned to industry with British
Aerospace, initially with Land Rover
and then running all of its European
automotive operations. Neil was
later CEO of the RAC and is a
former Director General of the EEF
and was a Home Office-appointed
Independent Member of the
Metropolitan Police Authority. He
was previously Chair of Motability
Operations Group Plc, Synthomer
Plc and Electra Private Equity Plc.
Other appointments
Co-Chair of UK Defence Growth
Partnership with HMG.
Other appointments
N/A
Other appointments
Independent Non-executive
Director of Costain Group PLC
and Intertek Group plc.
Other appointments
Chair of Dialight plc, Trustee
and Council Member –
National Army Museum.
80 QinetiQ Group plc | Annual Report & Accounts 2025

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Shonaid Jemmett-Page
Independent
Non-executive Director
Nationality: British
Appointed: May 2020
Roger Krone
Independent
Non-executive Director
Nationality: USA
Appointed: January 2025
Dina Knight
Independent
Non-executive Director
Nationality: British
Appointed: March 2024
Ross McEwan
Independent
Non-executive Director
Nationality: New Zealand
Appointed: March 2024
Skills, competence
and experience
Roger served as the Chairman
and CEO of Leidos Holdings, Inc.
from 2014 until his retirement in
2023. Previously, he has served
as a Director of BorgWarner Inc.
and of Mercury Systems Inc.,
and as President of Network and
Space Systems for The Boeing
Company from 2006 to 2014. He
also held various senior programme
management and finance positions
at Boeing, McDonnell Douglas
Corporation and General Dynamics
Corporation.
Roger is a Certified Public
Accountant and has a bachelor’s
degree in Aerospace Engineering
from the Georgia Institute of
Technology, a master’s degree in
Aerospace Engineering from the
University of Texas at Arlington and
a Master of Business Administration
from the Harvard Graduate School
of Business.
Skills, competence
and experience
Ross has more than 30 years’
experience in the finance, insurance
and investment industries,
and brings a strong focus on
customers, business performance,
capital management, technology
transformation, risk management,
and people and culture. He holds a
Bachelor of Business Studies from
Massey University, New Zealand.
Ross was Chief Executive
Officer and Managing Director of
National Australia Bank Limited
between 2019 and 2024. He was
previously Group CEO of Royal
Bank of Scotland. He also held
the positions of Group Executive
for Retail Banking Services and
Executive General Manager at the
Commonwealth Bank of Australia,
as well as Managing Director of
First NZ Capital Securities and
Chief Executive Officer of National
Mutual Life Association of Australia
Limited/AXA New Zealand Limited.
Skills, competence
and experience
Dina is a highly experienced
HR leader with over 30 years’
experience gained across
both private and PLC business
environments. She has a strong
track record of working with
international workforces, building
high-performing teams to deliver
change and drive results, whilst
ensuring that strategic outcomes
are balanced with a continued focus
on people, culture and wellbeing as
a core priority. Dina read Business
Studies and gained a Post Graduate
Diploma in Personnel Management
from Teesside University.
Dina is Chief People Officer of
global technology provider Datatec
Group and Logicalis International,
accountable for its people
operations and strategy. Previously
she was Global HR Director at
Truphone, responsible for driving
a collaborative and innovation-
centred culture. She has also held
positions as Group HR Director
for Teledyne e2v and Northgate
Information Solutions.
Skills, competence
and experience
Shonaid has widespread experience
as an Executive and Non-executive
Director spanning a variety of
sectors, including industrial and
technology-based businesses
with international operations.
This, combined with her extensive
financial experience, is invaluable
in her role as Chair of the Audit
Committee. Shonaid is a Fellow
of the ICAEW.
Previously she was the Chief
Operating Officer of CDC Group plc,
the UK Government’s development
finance institution, having joined
from Unilever, where she was
Senior Vice-President Finance and
Information, Home and Personal
Care, originally in Asia and later
for the Group as a whole. Her
early career was spent at KPMG,
latterly as a partner. Her Board-level
experience includes Non-executive
Chair of Greencoat Wind plc,
MSAmlin plc and Non-executive
Director at GKN plc.
Other appointments
Chief People Officer of Datatec
Group.
Other appointments
Director of Lear Corporation
and the President and Chief
Executive Officer of the Boy
Scouts of America.
Other appointments
Chair of BHP Group Limited and
Lead Independent Director of
Reece Limited.
Other appointments
Non-executive Chair of Cordiant
Digital Infrastructure Limited
and ClearBank Limited and Non
executive Director of Aviva plc.
Committee membership key
Audit Nominations Remuneration Risk & Security Committee Chair
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
General Sir
Gordon Messenger
Independent Non-
executive Director
Ezinne Uzo-Okoro
Independent Non-
executive Director
James Field
Company Secretary
and Group Director Legal
Nationality: British
Appointed: October 2020
Nationality: USA
Appointed: November 2024
Nationality: British
Appointed: July 2022
Skills, competence
and experience
Ezinne has had more than 20 years
of U.S. government service, most
recently as Assistant Director at
the White House Office of Science
and Technology Policy from 2021
to 2024, where she had overall
responsibility for Space Policy. Her
career has included contributions
to U.S. national policy and more
than 60 NASA missions and
programmes, and her work has
resulted in strategies for U.S.
technological leadership and future
economic growth.
She earned an undergraduate
degree in Computer Science from
Rensselaer Polytechnic Institute,
and master’s degrees in Aerospace
Systems, Space Robotics and
Science & Technology Policy from
John Hopkins University, MIT and
Harvard University, respectively.
She also earned a doctorate degree
in Aeronautics and Astronautics
from MIT.
Skills, competence
and experience
James joined QinetiQ as an in-
house lawyer in 2004, progressing
through various roles to Head of
the Group Legal and Intellectual
Property team, before becoming
Group Director Legal and Company
Secretary. Prior to QinetiQ, James
worked as in-house Legal Counsel
at Transport for London, and has a
background in London-based private
legal practice.
Skills, competence
and experience
Gordon brings considerable
experience from the armed forces
having served for 37 years as a
Royal Marine. Throughout his
military career he served in key
appointments in various UK and
NATO headquarters, overseeing the
planning and execution of UK and
coalition military and humanitarian
relief operations worldwide. He
most recently served as Vice Chief
of the Defence Staff, a position
he held for three years until his
retirement in 2019.
His unique experience enables
him to provide invaluable insight in
his role as the Chair of the Risk &
Security Committee.
Committee membership key
Audit Nominations Remuneration Risk & Security Committee Chair
Board leadership and Company purpose continued
Other appointments
Senior Fellow of the Belfer Center
at Harvard University, a Partner
in SineWave Ventures, a venture
capital fund focused on early stage
technology and a General Partner
in Calthorp Group, a private equity
firm focused on mature critical
technology businesses.
Other appointments
N/A
Other appointments
A Board member of the UK Health
Security Agency, a member of the
Advisory Board of C3.ai Inc., Senior
Independent Advisor to BUPA,
Trustee of Historic Royal Palaces,
Trustee of the Kings Foundation,
and serves as Constable of His
Majesty’s Tower of London.
82 QinetiQ Group plc | Annual Report & Accounts 2025

Contents Generation – Sub PageContents Generation - Section Governance structure
Governance
structure
This is the structure through which the Company is managed. It has evolved over time, and continues to evolve to meet the needs of the
business and the Company’s stakeholders. Boards of large companies invariably delegate day-to-day management and decision-making
to Executive Management. Directors should maintain oversight of a company’s performance and ensure that management is acting in
accordance with the strategy and its delegated authorities. At QinetiQ, the culture, values and standards that underpin this delegation help
to ensure that when decisions are made, their wider impact has been considered. The Board has reserved certain matters (posted at www.
qinetiq.com) for its own consideration so that it can exercise judgement directly when making major decisions, and in doing so, promoting the
success of the Company.
Shareholders
Responsible for the leadership of the Board and for ensuring that it operates effectively through dynamic discussions and challenge.
Group Chair
The Board is responsible for leading the Group, by setting strategic priorities and overseeing the delivery of the strategy
in a way that promotes sustainable long-term growth, while cultivating a balanced approach to risk within a framework of
effective controls and taking into account the interests of a diverse range of stakeholders.
Board of Directors
The interaction between the Board and the QLT enables the Board to receive information first-hand about the Company and its operations and to give
guidance on strategy and oversight of the business directly to senior management. The QLT meets on a monthly basis. It is responsible for the day-to-
day management of the Group’s activities. The focus of the QLT includes managing the operational performance of the business, delivering the strategy,
managing risk, managing regulatory compliance, establishing financial and operational targets and monitoring performance against those targets.
QinetiQ Leadership Team (QLT)
Responsible for the day-to-day running of the Group’s business and performance, and the development and implementation of the Group strategy.
Group Chief Executive Officer
Audit
Committee
Reviews and monitors
the Group’s financial and
non-financial accounting
and reporting processes
and the integrity of
published financial
statements. Reviews
the Group’s system of
internal control, including
the effectiveness of its
internal audit function
and the independence
and effectiveness of its
external auditors.

See pages 100 to 105
Remuneration
Committee
Determines and
recommends to the Board
the framework for the
remuneration of the Group
Chair, Group CEO, Group
CFO and QLT. Oversees
workforce remuneration
and workforce policy.

See pages 110 to 129
Nominations
Committee
Considers the structure,
size and composition
of the Board and
Committees, and
succession planning.
It identifies and proposes
individuals to be Directors
and also for Executive
Management, and
establishes the criteria
for any new positions.

See pages 92 to 99
Risk & Security
Committee
Provides scrutiny and
assurance to the Board,
that the required standards
of risk management,
security, health, safety
and environment within
the UK, and internationally,
are achieved.

See pages 106 to 109
Disclosure
Committee
Considers and acts on the
need for disclosures to be
made to the market under
the requirements of the
Market Abuse Regulations.
The Committee comprises
all Board members, except
for when called at short
notice, when it comprises
the Group Chair, the
Group CEO, the Group
CFO and any one of the
Committee Chairs.
Committees
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Contents Generation – Sub PageContents Generation - Section Division of responsibilities
Board leadership and Company purpose continued
84 QinetiQ Group plc | Annual Report & Accounts 2025
Division of
responsibilities
Group Chair
Neil Johnson
— Provides overall leadership and ensures effectiveness
of the Board
— Sets the agenda, character and tone of the Board
meetings and discussions
— Maintains an effective working relationship with the
Group CEO
— Leads the annual performance evaluation of the Board
and its Committees and ensures that each Non-executive
Director makes an effective contribution
Group CEO
Steve Wadey
— Develops the Group’s strategy for consideration and
approval by the Board and provides effective leadership
of the QinetiQ Leadership Team (QLT) in its delivery
of strategy
— Develops the Group’s business model and manages the
Group’s operations
— Overseas the QLT's development and implementation
of corporate, safety and environmental policies and
standards
— Establishes and services relationships with key stakeholders
— Reinforces the Group’s values and sets expected
employee behaviours
— Communicates (alongside the Group CFO) the Group’s
financial performance and strategic progress to investors
and analysts
— Ensures the Board is kept fully appraised of the Group’s
operational and safety performance, risks and opportunities
Group CFO
Martin Cooper
— Responsible for the financial stewardship of the Group’s
resources through appropriate accounting, financial and
other internal controls
— Directs and manages the Group’s finance, tax, treasury,
risk management, ESG, legal and governance and
insurance functions
— Communicates (alongside the Group CEO) the Group’s
financial performance and strategic progress to investors
and analysts
Senior Independent
Non-executive Director
Steve Mogford
— Acts as sounding board for the Group Chair and a trusted
intermediary for the other Directors
— Available to shareholders to discuss any concerns that
cannot be resolved through the normal Group Chair or
Group CEO channels
— Leads the Board in the annual performance evaluation of the
Group Chair and in developing the long-term plans for the
Group Chair’s succession
— Meets with the Non-executive Directors without the Group
Chair present at least annually, and as required, to discuss
Board matters
Independent
Non-executive Directors
Shonaid Jemmett-Page,
Dina Knight,
Roger Krone,
Ross McEwan,
General Sir Gordon
Messenger,
Steve Mogford,
Ezinne Uzo-Okoro
— Monitor and scrutinise the Group’s performance against
its strategic goals and financial plans
— Provide an objective perspective on the Board’s
deliberations and decision-making, drawing on their
own broad collective experience and individual expertise
and insights
— Monitor and assess the Group’s culture, use appropriate and
effective means to engage with employees and acquire an
understanding of other stakeholders’ views
— Assess the effectiveness of, provide support to, and
constructively challenge, the Executive Directors
— Play a lead role in the functioning of the Board’s Committees
Company Secretary
James Field
— Provides advice and support to the Board, its
Committees, the Group Chair and other Directors
individually as required, primarily in relation to corporate
governance matters, and Non-executive Directors’
training and development needs
— Responsible, with the Group and Committee Chairs, for setting
the agenda for Board and Committee meetings and for high-
quality and timely information and communication between
the Board and its Committees, and between the Directors and
senior management as required
— Ensures that Board and Committee procedures are
complied with
Role of the Board
Underpinned by good corporate governance, the Board is focused
on delivering an effective and entrepreneurial Board which:
— Provides challenge, advice and support to management
— Drives informed, collaborative and accountable decision-making
— Creates long-term sustainable success and value for our
shareholders, having regard to the interests of all our stakeholders
Roles and responsibilities
The Board has agreed a clear division of responsibilities between the
Group Chair and the Group CEO. Other Directors and the Company
Secretary’s roles are also clearly defined to assist in enhancing the
effectiveness of the Board. A summary is set out below:

Contents Generation – Sub PageContents Generation - Section Composition, succession and evaluation
85
Corporate Governance
Annual Report & Accounts 2025 | QinetiQ Group plc
Composition, succession
and evaluation
Composition of the Board
The Board considers that its composition reflects the requisite
balance of skills, experience, challenge and judgement appropriate
for the requirements of the business and full Board effectiveness.
The skills and experience of the Board’s individual members,
particularly in the areas of UK defence and security, the
commercialisation of innovative technologies, corporate finance
and governance, international markets and risk management, have
brought both support and challenge to the Group CEO, Group CFO
and the QinetiQ Leadership Team during the year.
Independence
The majority of Board members are independent Non-executive
Directors. The independence of the Non-executive Directors is
considered annually by the Nominations Committee, using the
independence criteria set out in Provision 10 of the UK Corporate
Governance Code. The Group Chair was independent upon his
appointment in April 2019 and continues to use objective judgement
in his leadership of the Board. As part of this process, the Board
keeps under review the length of tenure of all Directors, as this is
a factor when assessing independence.
Time commitment
Each Non-executive Director must be able to devote sufficient
time to their role as a member of the Board to discharge their
responsibilities effectively. As part of the appointment process,
consideration is given to assess Non-executive Directors’ ability
to devote time to an additional directorship.
Prior to undertaking an additional external role or appointment, the
Non-executive Directors are asked to confirm that they will continue
to have sufficient time to fulfil their commitments to the Company.
This means not only attending and preparing for formal Board
and Committee meetings, but also making time to understand the
business of the Company. The Non-executive Directors’ commitment
is reviewed as part of the Board and Director evaluation process.
Board and Committee processes
The Board has a formal schedule of matters reserved for its
approval, which includes (but is not limited to): strategy; risk appetite
and review of Group-wide principal and emerging risks; major M&A,
contracts and bids; share capital, debt financing and other liquidity
matters; financial results and budgets; key policies; Board and
Committee membership; and governance.
Other matters, responsibilities and authorities have been delegated
by the Board to its standing Committees, comprising Nominations,
Audit, Risk & Security, Remuneration and Disclosure. Any matters
outside of the schedule and the responsibility of the Committees
fall within the authority of the Group CEO and/or Group CFO.
The schedule of matters reserved for the Board and the terms of
reference of each Committee, which are regularly reviewed and
approved by the Board, can be found on the Company’s website
at www.qinetiq.com.
The Group Chair and the Company Secretary are responsible, in
consultation with the Group CEO and the Chairs of the Committees,
for maintaining a scheduled 12-month programme of business
for the Board and its Committees, with flexibility for additional
business to be discussed as required. The programme ensures that
all necessary matters are covered and appropriate time is given for
discussion and, if thought fit, approval of relevant business. At each
scheduled Board meeting, the Board rigorously reviews updates
from the Executive Directors on Group and operational sector safety,
operating and financial performance, investor relations, and from the
Group Director Legal & Company Secretary on legal compliance and
corporate governance. Other regular Board agenda items include
strategic proposals (including those relating to major contract
bids and capital allocation), integrated change programmes, risk
management, people and culture updates (including on employee
relations, talent development and diversity promotion), and
stakeholder engagement. Senior management and external advisers
regularly attend both Board and Committee meetings, which allows
for detailed and informed discussions on specific matters on which
their input or advice is needed.
The Board also seeks to hear external viewpoints inside and outside
the Boardroom, including from customers, suppliers and experts in
areas relevant to the Company’s strategy.
In advance of each Board and Committee meeting, Directors receive,
via a secure web portal, high-quality briefings, prepared by the
Executive Directors, senior management, the Company Secretary
and/or external advisers where appropriate, on the agenda items to
be discussed. The secure web portal also gives Directors immediate
access to a range of other resources, including previous meeting
papers, minutes, financial reports, business presentations, investor
reports, Company policies and governance guidelines, and details of
Board and Committee procedures. If a Director is unable to attend
a meeting due to illness or exceptional circumstances, they will
still receive all supporting papers in advance of the meeting and
are directed to discuss with, and provide input, opinion and any
instructions to, the Group Chair or relevant Committee Chair on
the business to be considered at that meeting.

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
86 QinetiQ Group plc | Annual Report & Accounts 2025
The Board has access to the Company Secretary for support and
advice as required, and the Company operates a policy which
allows Directors to obtain, at the Company’s expense, independent
professional advice where required to enable them to fulfil their
duties effectively. In addition to Board and Committee meetings,
the Non-executive Directors hold private meetings without the
Executive Directors present, including to discuss Executive Director
performance. There are also opportunities during the year for
Directors to have informal discussions outside the Boardroom,
either between themselves or with senior management or
external advisers.
Conflict of interest
The Board operates a policy to identify and manage situations
declared by the Directors (in accordance with their legal duty to do so)
in which they or their connected persons have, or may have, an actual
or potential conflict of interest with the Company. In accordance with
the Companies Act 2006 and the Articles of Association, the Board
has the authority to authorise conflicts of interest. This ensures that
the influence of third parties does not compromise the independent
judgement of the Board. Directors are required to declare any potential
or actual conflicts of interest that could interfere with their ability to act
in the best interest of the Group.
The Company Secretary maintains a conflicts register, which is a
record of actual and potential conflicts, together with any Board
authorisation of the conflict. The authorisations are for an indefinite
period and are reviewed biannually by the Nominations Committee,
which also considers the effectiveness of the process for authorising
Directors’ conflicts of interest. The Board reserves the right to vary
or terminate these authorisations at any time. No Director conflict of
interest currently exists.
Board and Committee Meetings
During the year, the Board has seven meetings, each scheduled
over one or two days, for Board and Committee business. Additional
Board sub-Committee meetings and conference calls are held
between the scheduled meetings as required. The table below sets
out the Board and Committee membership and attendance by
members at meetings held in FY25.
Board leadership and Company purpose continued
Composition, succession and evaluation continued
NED board attendance FY25
Board and Committee attendance – 1 April 2024 to 31 March 2025
Members Board
Audit
Committee
Nominations
Committee
Remuneration
Committee
Risk & Security
Committee
Carol Borg
4
0/7 0/4 0/2 0/4 0/4
Martin Cooper
1,6
5/7 – – – 2/4
Shonaid Jemmett-Page
7
6/7 4/4 1/2 4/4 4/4
Neil Johnson
9
7/7 – 2/2 3/4 4/4
Dina Knight 7/7 4/4 2/2 4/4 4/4
Roger Krone
3
2/7 1/4 1/2 1/4 1/4
Ross McEwan 7/7 4/4 2/2 4/4 4/4
General Sir Gordon Messenger
8
6/7 4/4 2/2 4/4 4/4
Steve Mogford 7/7 4/4 2/2 4/4 4/4
Susan Searle
5
7/7 4/4 2/2 4/4 4/4
Ezinne Uzo-Okoro
2
3/7 2/4 1/2 2/4 2/4
Steve Wadey
6
7/7 – – – 4/4
1 Martin Cooper was appointed to the Board on 2 September 2024.
2 Ezinne Uzo-Okoro was appointed to the Board on 1 November 2024.
3 Roger Krone was appointed to the Board on 8 January 2025.
4 Carol Borg resigned from the Board on 16 April 2024.
5 Susan Searle resigned from the Board on 31 March 2025.
6 In compliance with the UK Corporate Governance Code, and the Committee Terms of Reference, Steve Wadey and Martin Cooper are not members of the Audit, Nominations, and
Remuneration Committees, and Neil Johnson is not a member of the Audit Committee.
7 Shonaid-Jemmett-Page was unable to attend the Board and Nominations Committee meetings on 19 September 2024 due to a prior commitment.
8 Gordon Messenger was unable to attend the Board meeting on 8/9 October 2024 due to a prior commitment.
9 Neil Johnson was unable to attend the Remuneration Committee meeting on 15 May 2024 due to a prior commitment.

Contents Generation – Sub PageContents Generation - Section Board decision-making
87
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Annual Report & Accounts 2025 | QinetiQ Group plc
Board
decision-making
In making decisions, the Board of Directors is cognisant of undertaking its legal duties, including its duty under section 172(1), in the way that
is most likely to promote the success of the Company for the benefit of its members as a whole, and the need to have regard to the factors
set out in section 172(1); see pages 70 to 73 for more information.
Examples of some important decisions taken by the Board during the year, and the factors which the Board had regard to when reaching
those decisions, are set out below.
1. Capital Allocation Policy
Background Throughout FY25 the Company maintained in place a share buyback programme, and kept under regular review with the Board
how its capital was balanced between shareholder returns, investment in its business and balance sheet leverage.
Board discussion Board review and discussions were held primarily in November 2024 and March 2025, and covered detailed consideration of the
options for deployment of the Company’s capital, and the associated pros and cons of each option, alongside the interests of
its various key stakeholder groups. These discussions, and the Board’s understanding of the various business and stakeholder
perspectives, were informed by direct feedback from shareholders; advice from the Company’s brokers; the views of equity
market analysts; and considering the application of the Company’s capital allocation policy in terms of its impact on the
Company’s long-term strategy and planned investments in its facilities and its employees.
Board stakeholder
considerations and
impact
The Board took account of the views of a number of its major shareholders, through direct engagement at investor roadshows
and one-to-one meetings held by the CEO, CFO and Group Chair. The Board considered the impact of capital allocation decisions
on its ability to invest in its facilities for the benefit of delivering to its customers; capital investment in its operations to enable
organic growth of its business; the returns on investment that its shareholders would receive; and the impact on planned
investments for the benefits of its employees.
Outcome and
next steps
The Board approved the extension of the Company’s existing share buyback programme by a further £50m within FY25 and the
commencement of a further £200m share buyback over a period of 2-years, to commence in FY26. This was based on balancing
the various considerations of all stakeholders, and concluding that the further share buyback was in the best interests of its
investors, including delivering returns on investment in the short term, and could be delivered without materially reducing the
Company’s ability to make planned investments in the medium to long term for the benefit of its customer delivery, its employees
and its planned organic growth, and without adversely affecting its balance sheet leverage position.
2. Evolution of Board to bring in new capability
Background FY25 saw a number of planned changes to the Board, driven by the implementation of its succession planning to ensure the skills
and experience of the Board remained best aligned to the Company’s strategy and its geographic focus areas, and to effectively
harness diversity of experience, culture and thinking.
Board discussion Succession planning during the year was supported by discussion at both Nominations Committee and at Board-level, which
included input from the Group CEO and Chief People Officer on the strategic focus of the Company, and the support and input
required from the Board to enable delivery of the Company strategy.
Board stakeholder
considerations and
impact
In setting its succession plans, the Board took consideration of the Company’s strategic focus on its core home markets of the
UK, US and Australia, the needs of its core government customers; its investors’ desire to see continued strong strategic input
and direction at Board level, with the right experience to guide the effective growth of the Company; and from an employee
perspective, support and guidance in driving process simplification and efficiency.
Outcome and
next steps
During the year, as a result of its succession planning, the Board saw the planned stepping down of Susan Searle at the
end of her completed term, the transition of Dina Knight into the role of Remuneration Committee Chair, and the appointments
of Roger Krone and Ezinne Uzo-Okoru to respectively bring deep and intimate U.S. defence sector and U.S. government
experience and knowledge.

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88 QinetiQ Group plc | Annual Report & Accounts 2025
3. Integrated Strategic Planning
Background Against the backdrop of a fast-changing and unpredictable macro environment, and rapid advances in technology brought by
new disruptive competitors in the market, the Board was engaged in discussion and decision-making on how the Company
should evolve its Integrated Strategy-to-perform Plan (ISP) in response.
Board discussion The Board’s considerations included the perspectives of political, customer, industrial and societal strategic influences, and the
opportunities and threats they could pose to the Company in delivering against its strategy. This informed debate and decision-
making on change needed to the Company’s ISP, and identification of both short-term/long-term actions that needed to be taken.
Board stakeholder
considerations
and impact
At its October Strategy meeting, the Board brought to bear its experience and understanding of customer requirements and
procurement strategy in the Company’s three core home markets of the UK, US and Australia; how the changing geopolitical
environment would likely impact the Company; and the threat and opportunity posed by the entry of new disruptive competitors
in the defence and security market. Employee perspectives included future ways of working and risks to talent retention
and attraction, particularly in relation to fast evolving new technology areas and skill sets important to performance of the
Company’s strategy. From an investor perspective, thought was given to the returns on investment that the Company’s current
and anticipated future shareholder base expected to see, and how the Company’s strategy and deployment of its resources
would best meet those expectations.
Outcome and
next steps
The ISP process was shaped based on the input and guidance given by the Board, based on a long-term strategic outlook, and
informed by key insights in to relevant political, customer and industrial perspectives across the UK, US and Australian markets.
The output of the Board discussion and decision making was fed into the process for constructing the Company’s latest five-year
ISP, which has been further reviewed and refined through regular engagement with the Board at meetings between November
2024 and March 2025.
4. Cody Technology Park Disposal
Background In FY25 the Company sold its Cody Technology Park site, in Farnborough, UK, to Tristan Capital Partners, following a strategic
decision to enter into a partnership with a property investor committed to investing in the site and developing its future as a
centre of excellence in defence, science and technology in the UK.
Board discussion The Board considered and debated the merits of the opportunity to partner with a property investor, and to sell the site, taking into
consideration the need for focus on the Company’s core business strategy; the benefits to the Company of the capital that would
be achieved from the transaction; mitigating future risks; reducing the Company’s ESG exposure; and the opportunity to create a
fit-for-purpose long-term occupational footprint for the Company’s Farnborough based operations.
Board stakeholder
considerations
and impact
The Board considered the short and long-term benefits for the employees of the Company, in terms of the facilities and working
environment that could be offered at the Cody Technology Park site. The Board also evaluated the opportunity created for
investment in facilities both at the Farnborough based site, and creating investment headroom for other facilities, which would
improve the Company’s ability to deliver to its customers. The Board also gave consideration to the potential to use capital raised
from the transaction to invest in the development of the Company consistent with its capital allocation policy, including the
potential for both short-term and longer-term returns for investors.
Outcome and
next steps
The Board gave its approval for the transaction to sell the Cody Technology Park site to Tristan Capital Partners, and partner
in the further development and modernisation of the site. An agreement for the sale of the site was consequently signed in
September 2024 and the transaction completed in October 2024.
Board decision-making continued
Board leadership and Company purpose continued

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The key business and activities of the Board during the year were as follows:
Topic: Key activities
Strategy and
operations
— Reviewed and considered the Company’s purpose, values and
strategy. See more on page 78
— Approved ISP-30, the Group’s five-year Integrated Strategy-to-
perform Plan (ISP). See more on page 67
— Undertook in-depth reviews of business strategy and
performance
— Reviewed and approved material bids, any potential divestments
and assessed performance against these
— Received updates from each of the Group’s Sectors and
Functions on their performance vs strategy and budget, and their
priorities and initiatives
— Oversaw evolution of Group's Capital allocation policy
— Received reports and discussed the Group’s Transformation
strategy and investments
— Reviewed progress of the Group’s Digital & Data improvement
programme
— Monitored the economic, environmental, legislative and
geopolitical landscape, particularly as regards the political
climate in Ukraine and Gaza and regarding other global
economic pressures
Financial
performance
— Approved the Company’s annual budget, business plan and KPIs,
and monitored performance against them. See more on page 36
— Reviewed and approved the Group’s full and half-year results and
interim trading updates
— Approved the full-year and half-year dividends
— Approved the Company’s Annual Report, including its fair,
balanced and understandable nature
— Reviewed and confirmed the Group’s viability statement and
going-concern status
— Reviewed the Group’s capital, debt and other liquidity
arrangements
— Approved the Group’s tax strategy and treasury policy
— Considered and approved expenditure and guarantees related
to material bids, acquisitions and contracts
Internal
control
and risk
management
— Reviewed and approved the Group’s risk appetite and reviewed
the Group’s principal and key risks, the processes for identifying
them, and actions to mitigate those
— Received reports from the Chair of the Risk & Security Committee
on its activities
— Received reports from the Chair of the Audit Committee on its
activities and assessments
— Reviewed and validated the effectiveness of the Group’s system
of internal control
— Reviewed and approved confidential reporting policy and
process
— Regularly monitored confidential reporting reports and actions
made within the Company (the process of which is described
further on page 91)
Leadership,
people and
culture
— Received recommendations from the Nominations Committee
on the appointment of new Directors, the re-election of Directors
and other advice regarding the structure, size and composition
of the Board
— Reviewed and actioned succession plans for the Board and senior
management, having regard to skills, experience and diversity
— Reviewed and approved amendments to the Board Diversity,
Equity & Inclusion Policy
— Received reports from the Chair of the Remuneration
Committee on its activities, recommendations regarding
remuneration strategy and decisions regarding the Group
Chair’s, Executive Directors’ and senior management's pay,
and reviewed and approved Non-executive Directors' fees
— Reviewed people reports, including updates on talent
development, retention and acquisition programmes and
diversity and inclusion programmes
Engagement,
environment
and
community
— Undertook an annual review of the Group’s stakeholders –
who they are, methods of engagement, outcomes and feedback.
See more on pages 70 to 73
— Reviewed feedback from investors and analysts and the output
of engagement with major shareholders and other stakeholders
— Reviewed workforce engagement activities and outcomes,
including the results of the Peakon surveys and received reports
on the Group Chair’s workforce engagement activities
— Reviewed regular reports on our approach to ESG issues.
See more on page 38
— Reviewed the activities of, and approved a financial
commitment to, the Company’s environmental programmes,
Net-Zero Plan and charitable and community initiatives
Governance
and legal
— Approved the Group’s section 172(1) statement. See more
on pages 70 to 73
— Approved the Notice of the AGM
— Undertook an annual compliance review of the UK Corporate
Governance Code and DTR7
— Undertook an annual review of the Group's Defence process
and vulnerability position
— Reviewed the results of the internal Board and Committee
effectiveness evaluations
— Reviewed and approved matters reserved for the Board and its
Committees’ terms of reference
— Reviewed and approved the Group’s annual Modern Slavery and
Human Trafficking statement, published on www.qinetiq.com
Board
activity

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US subsidiaries
90 QinetiQ Group plc | Annual Report & Accounts 2025
QinetiQ’s US Sector is comprised of QinetiQ Inc and its subsidiary
operating companies, including Foster Miller Inc and the Avantus
Federal group. These companies operate under a Special Security
Agreement (SSA) between QinetiQ and the U.S. Government, which
governs how the rest of the QinetiQ Group interfaces, collaborates
and works with the companies in the U.S. Sector. The controls
contained in the SSA are required by the U.S. National Industry
Security Programme rule governing contractor access to classified
information, to appropriately mitigate certain aspects of foreign
ownership, control and influence to the extent they might otherwise
adversely affect the interests of U.S. national security. QinetiQ
Group plc, QinetiQ Inc and the U.S. Government are parties to the
SSA, which establishes procedures that regulate the management
and operation of our US Sector to achieve that mitigation. Under
the SSA, the Board of Directors of QinetiQ Inc is comprised of three
types of Directors, all nominated by QinetiQ Group plc, as the foreign
owner of QinetiQ Inc., and approved by the U.S. Government. The
these are Outside Directors, Inside Directors and Officer Directors of
QinetiQ Inc.
Through the Inside Directors, QinetiQ maintains appropriate visibility
of the management and operations of the companies in the US
Sector. These positions are typically held by the Group CEO and
Group CFO of QinetiQ Group plc. The Inside Directors serve as a
minority representative of QinetiQ Group plc as the foreign owner,
to ensure there is no undue control or influence on the actions of
the US Sector. Inside Directors do not need to be U.S. citizens, and
are excluded from access to U.S. classified and export-controlled
information in possession of QinetiQ Inc and its subsidiaries.
Management and
control of US subsidiaries
Board leadership and Company purpose continued
Officer Directors are responsible for the day-to-day operations of
the US Sector, and serve as a liaison with the wider QinetiQ Group.
The Chief Executive & President of the U.S. Sector is the appointed
Officer Director of QinetiQ Inc. Officer Directors must ensure
that the procedures and requirements of the SSA are effectively
implemented, and have an obligation to maintain the security of
classified and export-controlled information entrusted to QinetiQ
Inc and its subsidiaries, as well its ability to perform on classified
contracts and participate in classified programmes. They must
be resident US citizens who either have, or are eligible to possess,
personal US security clearance.
Outside Directors must be resident U.S. citizens who are objective
individuals, who have no prior relationship with QinetiQ, and possess
personal U.S. security clearance. Our appointed Outside Directors
are currently John Hillen, Chair of the QinetiQ Inc Board and Pamela
Drew. The number of Outside Directors must outnumber the Inside
Directors. Presently, a process is underway to recruit an additional
Outside Director to ensure a minimum of three Outside Directors act
on the Board, and until such additional appointment has been made
only one Inside Director is acting on the Board. The Outside Directors
also form the Government Security Committee, which is in place to
ensure U.S. national security interests are upheld.

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Employee
engagement
We have experienced, diverse and dedicated people who are recognised as key assets to our business and who are critical to our success.
The Group has a long-standing commitment to the importance and value of employee engagement.
The Board recognises the value of engaging directly with employees to ensure an understanding of their views and inform its decision-making
in considering employee interests. The Board typically holds a number of its meetings at different Company sites and undertakes site visits
outside of scheduled board meetings, both in the UK and other home countries, to take the opportunity to meet with employees in person.
The engagement channels set out below describes how the Board continued to be able to effectively gain the views of employees throughout
the year.
How we engage with our people
Dedicated Non-Executive Director
The Group Chair, Neil Johnson, is the
dedicated Non-executive Director for
gathering the views of employees
— At least two meetings with the
Global Employee Voice (GEV)
each year
— Attends the Global Recognition
Gala and also Global Employee
Roadshows
— Reports back to the Board
Global Employee Voice (GEV)
The GEV is a global forum that acts as the collective voice
of all QinetiQ employees. Elected employees from across
QinetiQ sites in all home countries represent the employees
to the leaders of the Company
— Two meetings annually with Dina Knight, the Chair of the
Remuneration Committee
— Regular meetings with the Group Chief Executive Officer
and Chief People Officer, who reports to the Board on
culture, employee and people strategy, and employee
engagement
Monthly Q-Talks
Delivered by members of the QLC to their teams,
with the purpose of keeping employees up-to-
date with what is currently important across
QinetiQ
— A mechanism accessible for employees to
get a thorough understanding of what is
happening in the Company and also to provide
individual feedback
Regular QinetiQ Leadership
Community (QLC) events
– delivered by the QinetiQ
Leadership Team (QLT)
Providing updates to the direct
reports of the QLT on latest
operational, financial, strategic
and key stakeholder issues
— The members of the QLC feedback
to their teams at team meetings
sharing key messages on
company strategy
Global Employee Roadshows
Delivered biannually by the QinetiQ Leadership Team,
the Global Employee Roadshows give an update on the
progress we are making against our vision and strategy, and
provide an understanding of our key priorities for the future
— Employees have the opportunity to ask questions, either
in person or through a number of online mediums
— Reported on to the Board by the Group CEO
Peakon Employee Engagement surveys
Quarterly surveys enabling the Board and the
Leadership team to assess and understand
issues affecting employee-engagement
throughout the Group. See more on page 53
— After each survey, the Group Director
Employee Experience has a meeting with the
Group CEO where they discuss the results,
trends and any matters for concern
— The Group CEO feeds back to his fellow Board
members at each Board meeting
— QLC members interact directly with their team
to identify tangible actions in response to
feedback from each survey
Global Portal – our intranet
— A platform where all employees can
access our polices and be kept fully
informed of the latest Group news
through internal communications
and community groups
— Enables employees to ask
questions and discuss topics
internally
Confidential Reporting
QinetiQ has in place a Group-wide ‘Speak Up’ programme,
which includes an externally provided confidential reporting
process, as detailed on the Company’s intranet and in its
Code of Conduct. All concerns are passed by the external
third-party to the Group Director Internal Audit, who
ensures that they are held in strict confidence and properly
investigated
— Reports on confidential reporting activity and outcome
of investigations are reported to the Board at each of its
meetings
— The Board annually reviews the effectiveness of the
Group’s confidential reporting process, provides
challenge and advice on the issues raised, and remains
satisfied that the process in place is fit for purpose
More information on the Group’s 'Speak Up' programme
can be found on page 58
How does it work?
— By using a number of different employee
engagement mechanisms and accessibility
ensuring flexibility
— By having a direct link to the Board via the
designated Non-executive Director
— By way of a dedicated forum to relay the voice
of the employees
— By regularly reporting to the Board on culture,
people strategy and employee engagement
— By drawing on each individual Board
member’s accessibility and unique experience
as business leaders

The Nominations Committee has overseen considerable change in
both the Board and the senior leadership of the Company, ensuring
diverse perspectives and experience are harnessed to best guide
the strategic and operational decisions required to drive the
Company’s growth.
This year I've been impressed and pleased with the developments
made in the senior leadership team, strengthening its capabilities,
including the creation of a new Chief Operating Officer role taken up
by Iain Stevenson, the recruitment of Martin Cooper as Group CFO
and the appointment of Tom Vecchiolla to lead the US sector. Which
has been mirrored by a number of changes in the Non-executive
Directors on the Board, especially in terms of bringing increased
sectorial experience in both the defence sector and broader
government contracting in the US. This is a further execution of our
succession plans to maintain the effectiveness of the Board and its
Committees, aligned with the Company’s strategic priorities.
Further details of the changes to the Board during the last year can
be found on page 9.
The Nominations Committee undertook its usual assessment
of Directors’ continued independence for the year in review, and
further information on the Committee’s effectiveness can be
found on page 98 and 99.
// QinetiQ has successfully evolved its Board
to bring new skills and experience, from a
diverse range of backgrounds, to support the
Company's strategic direction in delivering
world-class technology and engineering for
our customers in core national defence and
security of the countries we work with. //
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Nominations Committee report
FY25 activity highlights:
— Process to recruit two new Non-executive Directors
— Overseeing changes to the senior leadership team
— Review of Board and senior management succession
plans – improved internal succession bench strength
in leadership team
— Updates to Board Diversity Policy and the Company’s
inclusion initiatives
— Ensuring leadership succession plans enabled
FY26 Priorities:
— Progress towards meeting diversity targets under UK
Listing Rules
— Overseeing the setting of Parker Review targets for diversity
balance within Senior Management of the Company by 2027
— Building the experience of the Board in its leadership of
achieving the Company's Climate Change targets and goals
Nominations
Committee report
Neil Johnson
Nominations
Committee
Chair
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Defence and security market
Aerospace and aviation market
Government services market
International business
Strategy
M&A
Transformation
Technology/Digital
Cyber security
People*
ESG (including safety)
Risk management
Finance and financial reporting
Corporate governance
* e.g. culture, diversity & inclusion, succession, talent, reward.
Skills and experience
Our Board offers the obvious, expected strengths in governance, risk management and financial reporting. Equally impressive, however, are
the coverage and deep knowledge held by the Directors in various industrial fields and markets globally, particularly in defence and security,
government services and aerospace and aviation. This strength, when coupled with a broad diversity of age, gender, ethnicity and geographic
balance, affords our Company a robust and strategic influence to match our high delivery standards.
Principle responsibilities:
— Keeping the structure, size and composition of the Board under review
— Succession planning for Directors and other senior Executives
— Reviewing the leadership needs of the organisation, both Executive and Non-executive, to ensuring the continued ability of the
organisation to compete effectively in its core markets
— In accordance with the Board Diversity Policy, identifying and nominating for Board approval, appropriately diverse candidates to fill
Board and Committee vacancies when they arise
— Reviewing the time required from Non-executive Directors to sufficiently discharge their duties
— Evaluating the skills and experience of the Directors, to assess the Board's capability to support the execution of the Company's
strategy and delivery of its operations
— Reviewing the independence of the Non-executive Directors and any potential conflict of interest for all Directors
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Nominations Committee report continued
Case study
Martin Cooper:
Group Chief Financial Officer induction
As part of an extensive tailored induction programme, Martin received a number of briefings, including with the Chair, the Group Chief
Executive Officer, his fellow Non-executive Directors, members of the QLT and other key senior management personnel.
The induction programme involved visits to sites in each of our Sectors, and included briefings from the Chief Executive and CFO of
each sector. Martin also met with the Function Heads that support the Sectors, providing him with an invaluable introduction into the
capabilities of each area of the business. During his first six months he has visited a number of UK sites, as well as undertaking trips to
the United States, Australia and Germany. On many of these visits, Martin also met with a number of shareholders from the UK, US and
Germany, to gain a rounded investor perspective of the organisation and the key objectives of its shareholders.
Information provided, as for all new Directors, included a number of key corporate briefing documents relating to the Group, such as
the latest Annual Report and Accounts, strategy papers, the five-year plan, mergers and acquisitions pipeline, the internal audit plan
and governance documents such as the Articles of Association and Terms of Reference of the Committees. As well as a Directors’
responsibilities briefing to ensure awareness of the Company's governance approach and processes.
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Succession planning
Board and Committees
The Committee annually reviews the composition of the Board and its Committees and the Nominations Committee expects to continue to
implement its succession plans for the Board and its Committees in 2025/2026 and beyond. We use the process outlined below to ensure
that we continue to recruit only candidates of the highest standard, that we continue to make progress towards our diversity and inclusion
targets, and that we have the right balance of an appropriately experienced and skilled Board, yet maintaining a fresh perspective.
After this year’s review the Committee is satisfied that we have an appropriate mix of skills, knowledge and experience to operate effectively.
Process step Action Outcome/impact
Identifying current
and future needs
and skills gaps
The Committee maintains and regularly reviews a matrix of
the Directors’ experience and skills to ensure that the Board
and its Committees are composed of individuals who have
the right experience and skills to enable them to shape (and,
in the case of the Executive Directors, deliver) the Company’s
strategy, and to monitor and assess the effectiveness of the
Company’s control environment and management of risk.
The matrix considers:
— Diversity, including age, gender and ethnicity.
— Background, professional skills and experience.
— The number and balance of Executive and
Non-executive Directors.
— Length of tenure.
— Independence.
— The appointment of Martin Cooper as Group Chief
Financial Officer.
— The appointment of Ezinne Uzo-Okoro and Roger Krone
as Non-executive Directors with deep experience of U.S.
Government and the U.S. defence and security market.
— After Susan Searle stepped down as a Director and Chair
of the Remuneration Committee in March 2025, Dina
Knight assumed the role of Chair of the Remuneration
Committee as part of a planned succession.
Ensuring that we get
access to the best
candidates
Regularly reviewing the recruitment agencies that we use to
ensure that they are best placed to find QinetiQ the right mix
of candidates, capturing the clear benefits of greater diversity.
In addition, we pick the best-suited agency for the specific role
currently being recruited for.
Sciteb (who has no other connection to the Group or
any individual Director) was used for the recruitment
of Ezinne Uzo-Okoro. Roger Krone was appointed after
a direct recruitment process which did not involve a
recruitment agency.
Ensuring
accountability and
success of the
Board’s performance
Annual Board effectiveness and performance evaluation,
using an external provider at least every three years. See
more on page 98:
— Annual review of the Group Chair’s performance led by the
Senior Independent Director.
— Annual independence review of the Non-executive
Directors.
— Continued assessment of the Non-executive Directors’
time commitment.
— Policy on Board members’ appointments to other Boards
— Annual performance review of the CEO and CFO,
supplemented by the Group Chair’s and Non-executive
Directors’ continual assessment of their performance.
— A thorough induction programme for new Directors.
— Annual training for the Board as a whole and on an
individual basis.
— The FY25 Board effectiveness review concluded that
the Board has been effective, engaged with and was
helpful to the organisation.
— A summary of the Board’s decision-making, considering
section 172(1) can be found on pages 70 to 73.
The effectiveness of the Committee’s succession plans is demonstrated by the appointment in FY25 of Ezinne Uzo-Okoro and Roger Krone,
who have further enhanced the Board’s portfolio of experience. Ezinne has deep knowledge in technical leadership and a wealth of relevant
experience in US national government operations, while Roger has extensive transformational leadership experience in the defence industry,
combined with a great understanding of the US markets.
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A sub-Committee of the Nominations Committee is appointed to oversee the recruitment and appointment process
A tender process identifies the most suitable recruitment agency to conduct the search and prepare candidate specifications
The sub-Committee reviews the list of candidates and narrows down to a short-list of
those who best meet the Company’s requirements, considering the following:
Background, skills
and experience
Independence and
other commitments
Diversity
Other individual attributes
to widen the Board’s overall
knowledge, providing
challenge and further support
The sub-Committee conducts initial interviews with the candidates on the short-list and identifies preferred candidates
Other Board members, including the Group CEO and Group CFO, interview the preferred candidates
Nominations Committee recommends to the Board which of the preferred
candidates best fulfils the Board’s and its Committees’ needs
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Nominations Committee report continued
The process that the Committee has established, together with the particular considerations it takes into account, in identifying and
nominating Director candidates, is set out below:
Senior management succession planning programme
The Committee has undertaken its usual programme of senior
management succession planning. Senior management for this
purpose includes the members of the QinetiQ Leadership Team,
as well as those talented individuals who have demonstrated the
potential for promotion to higher or broader positions in the Group’s
senior management structure.
The programme includes an annual review of such senior managers’
experience and skills and their progress and notable achievements
to ascertain their potential for further career progression. The
Committee also keeps the performance of potential successors to
Executive Director roles under regular review throughout the year
during Board interactions and visits to the Company’s operations.
This gives Committee members the opportunity to observe
senior managers’ working practices and relationships with their
stakeholders first-hand. These reviews complement the Executive
Directors’ assessment of these individuals’ performance through
a formal process of annual reviews and continual feedback and
support. This enables the Committee to identify any gaps in
the senior management succession pipeline which may need to
be met externally, and any requirements for senior managers’
further development.
In light of FY25 performance, a significant programme of work will
take place in FY26 to revise the QinetiQ Operating Model to enable
the shift in business performance required. This will include changes
to the QLT structure.
This year has seen further focus on both promotion of internal talent
and the external strengthening of key aspects of the Executive
QinetiQ Leadership Team. This has resulted in leadership changes
announced in April 2024, including the recruitment of Martin Cooper
as a new Group CFO and Iain Stevenson in a newly created Chief
Operating Officer role, and subsequent changes announced in April
2025 to position the Company for future success to drive consistent
performance and growth.
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Board and Company commitment to diversity
The Board is committed to ensuring diversity in all aspects (including
as regards to gender, ethnic and social background), at Board and
senior management-level and throughout the Company’s employees.
This is because we believe diversity can:
— Improve decision-making at all levels of the business by ensuring
diverse perspectives.
— Ensure we can attract and retain the best talent with a culture
of inclusion where all individuals are respected and supported to
reach their full potential.
— Better serve our customers, other stakeholders and the
communities in which we operate by ensuring that the diversity
of our workforce demographic is representative of the diversity of
such stakeholders.
This commitment is aligned with our values, which in turn support
our strategy of growth by retaining and winning business through
having the best talent and delivering the best service for our
customers. See more on Diversity, Equity & Inclusion on page 55.
Board Diversity Policy
Our commitment is confirmed in the Board’s Diversity Policy, which
has been updated and strengthened again this year, and which
applies to the Board and all of its Committees – the main objectives
of which are:
— To achieve and maintain targets on gender and ethnic diversity on
the Board and its Committees.
— To ensure that the membership of the Board and its Committees
reflects the diversity of the geographies and communities we
operate in, and the customers that the Group serves.
— To respect the differences of its members, and value and
encourage the diversity of thought that such differences can
bring – in each case within the context of Board members having,
between them, the experience and skills required to support the
development, oversight and delivery of the Company’s strategy.
We are pleased to have seen the positive benefits to these initiatives,
which have resulted in improvements in both gender and ethnic
diversity at a number of levels of the business, including:
— Two members of the Board identify as coming from an ethnic
minority background.
— The Audit and Remuneration Committee Chairs are female
with Shonaid Jemmett-Page continuing as Chair of the Audit
Committee and Dina Knight replacing Susan Searle as Chair for
the Remuneration Committee as a result of succession planning.
— Female representations of the direct reports to the QLT has
increased to 28.9% (27% in 2024), and remains a key area of focus.
The Company has, as at 31 March 2025, met the following target,
as referenced in Listing Rule 6.6.6(9): that there should be a Director
from a minority ethnic background on the Board. The remaining
targets: that at least 40% of the Board are women, and that at least
one of the senior Board positions is held by a woman have not been
met, due to a change at executive director level which resulted in a
role held by a female being filled by a male following a recruitment
process. The Company’s mandatory requirement for a diverse
candidate pool ensures that we continue to have the opportunity to
recruit candidates from all gender, cultural and ethnic backgrounds,
while we remain focused on recruiting the best candidate for any
role based on merit.
Voluntary disclosures required under Listing Rule 6.6.6(10)R as at 31 March 2025
(a) Table for reporting on gender identity or sex
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
Men 7 64% 4 7 7 7.8%
Women 4 36% 0 2 22.2%
Not specified/prefer not to say N/A N/A N/A N/A N/A
(b) Table for reporting on ethnic background
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other white
(including minority-white groups) 9 81.82% 4 4 44.44%
Mixed/multiple ethnic groups N/A N/A N/A N/A N/A
Asian/Asian British 1 9.09% N/A N/A N/A
Black/African/Caribbean/Black British 1 9.09% N/A N/A N/A
Other ethnic group N/A N/A N/A N/A N/A
Not specified/prefer not to say N/A N/A N/A 5 55.56%
The above data was obtained on a voluntary self-reported basis. Participants were invited to provide information through a secure electronic
portal, wherein they were asked to share detail such as ethnic background. As part of our refreshed Engagement and Inclusion strategy
which will be launched in H1 FY26, we are focusing on increasing our ethnic minority representation within our Senior Management team
and are working through the process of setting the right target to support achievement of this. This will be achieved through creating diverse
recruitment and talent pipelines and through delivery of our culture change programme of work which will support creation of an inclusive
culture where everyone can feel they belong and thrive.
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Nominations Committee report continued
Areas for focus Action taken during the year
Supporting the further maturation of the
Company's Three Lines Model within its Group-
wide control and assurance framework, including
the embedding of defined roles and responsibilities
for the first and second lines of assurance.
The Board, led by the Chairs of the Risk & Security and Audit Committees, has been actively
engaged in giving guidance to the Company’s programme for strengthening and maturing its Three
Lines Model, with a particular focus on improvements to the definition and clarity of the roles and
responsibilities for its first line and second line assurance. This has been implemented through
workshops led by the Company's Chief Risk Officer designed to ensure that leaders and managers
within the organisation responsible for assurance understand and are aligned on the relevant roles
and responsibilities. That improved definition of roles and responsibilities will now be embedded
within the Company's assurance processes and working practices.
Undertaking re-assessment of the Board's skills
and experience, following a number of recent
changes in Board composition, to be reflected in
an update to the Board's skills matrix, aligned to
the Company's evolving strategy.
Following four new Non-executive Director appointments being made to the Board within the
last 18 months, a more detailed assessment of Board skills and experience has been undertaken
to understand strengths, and any experience gaps, relevant to the Company's current strategy,
opportunities and risks. This will be used by the Board and its Nominations Committee to inform
and guide its succession planning.
Achieving a deeper level of Board understanding
of material risks in the Company's supply chain
and how those risks are managed and mitigated
by its business.
The Company has undertaken an in-depth review of its supply chain, including achieving better
efficiencies in its operation and management of the supply chain, and also how supply chain risks
can be better managed and mitigated. This has been facilitated through an external consultancy,
Boston Consulting Group. The output of this activity will support enabling the Board to gain deeper
insight and understanding into the relevant risks in the different parts of the Company's supply
chains, and how material risks are managed.
Year 2
FY26 – Internal
evaluation to focus on reviewing
core effectiveness and areas
identified for development from
the Year 1 external evaluation
Year 1
FY25 – External
evaluation by selected independent
consultants Bendon Advisory, with an
agreed scope of review and approach
Year 3
FY27 – Internal
evaluation to focus on reviewing
progress made on areas identified
for development from the Year 2
internal evaluation and identify
any gaps where further action is
required to improve
Director effectiveness
Director effectiveness
A performance evaluation of the Board, its Committees and the individual Directors is conducted annually, with an externally facilitated review
required at least once every three years. As illustrated by the chart below, FY25 was the first in our latest three-year cycle and an external
evaluation was undertaken by Emma Bendon of Bendon Advisory. In FY26 and FY27 internal evaluations are anticipated to be carried out.
Neither Emma Bendon , nor Bendon Advisory has any other connection to the Group.
The principal sources of data used to assess the effectiveness of the Board and its Committees were questionnaires completed by each
Board member and a selection of members of the senior management team, followed by interviews to gain further insight into feedback given.
The Company Secretary, in consultation with the Group Chair and Committee Chairs, will review and analyse the results of the evaluation
by reference to the scores given, the specific observations made, and any conclusion made or recommendations given for improvements.
Following which, actions to be taken will be agreed in discussion with the Board and its Committees.
The actions taken by the Board and its Committees during the course of this year in response to the output of its effectiveness review are
shown below:
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Background reading material, including previous Board
and Committee packs, investor and strategy presentations,
relevant Company procedures and Board policies
Meetings with the Group Chair, Executive Directors
and members of senior management
Guidance on corporate governance arrangements,
including the Board and Committee agendas and
procedures, Board succession-planning and Board
evaluation – provided by the Company Secretary
Visits to Company sites, meetings with
senior local management
Meetings with the Chair of the Committees, external
auditors and external remuneration advisers
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The Group Chair’s individual performance
As part of our annual evaluation process, Steve Mogford, as
Senior Independent Director, led a review of the Group Chair’s
performance. At a private meeting, the Non-executive Directors,
with input from the Executive Directors and Company Secretary,
assessed the Group Chair’s ability to effectively fulfil his role. It was
concluded that he had showed effective leadership of the Board
and his actions continued to influence the Board and the wider
organisation positively.
Director induction
On joining the Board, whether in an Executive or Non-executive role,
each Director undertakes an induction programme covering subject
areas relevant to the requirements of their role. This programme is
designed to fast-track a new Director’s understanding of the Group’s
purpose, values, strategy and operations, thereby equipping them to
perform their role.
Details of the induction programme, organised by the Company
Secretary in conjunction with the Group Chair, for new Non-executive
Directors, is illustrated by the following diagram:
The Directors’ individual performances
The Group Chair, Neil Johnson, held performance meetings
with each Board member to discuss their individual contribution
and performance over the year, and their future training and
development needs. After these meetings, Neil Johnson confirmed
to the Nominations Committee that, during the year, all Directors
have demonstrated a clear commitment to their roles.
Meetings and Director site visits
Physical Board meetings and Director visits are scheduled
throughout the year at our sites, both in the UK and internationally.
Locations for meetings and site visits are agreed annually and are
arranged by the Company Secretary with assistance from the QLT
as appropriate.
During the year the Board held physical meetings in London and
Lincoln in the UK, as well as some Board meetings that continue to
be held virtually.
In October 2024, the QinetiQ Lincoln office hosted the Board for
their annual strategy meeting, which included a site visit to RAF
Waddington, where the Board received a briefing from Group
Captain Andy Ross on the work of the QinetiQ lead SOCIETAS
programme in the Joint Electronic Warfare Operational Support
Centre (JEWSOC). The Board were able to engage with Inzpire
at their business headquarters and with QinetiQ employees
over lunch.
In 2024 the Group Chair paid visits to our sites at MOD Aberporth,
MOD Pendine, Fort Halstead and Ashford, as well as two of our
sites in Germany.
Ongoing Director training
The Directors have the opportunity to participate in an ongoing
training programme organised by the Company Secretary. This
includes the Company Secretary keeping the Board briefed on
relevant regulatory changes, and arranging external training,
as required.
During the year PwC briefed the Board on forthcoming changes
to the external audit and governance environment and Ashurst
provided Directors with training on Directors duties, and gave an
overview of recent legal and regulatory updates. Further training on
safety and security as well as climate change is planned for FY26.
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Shonaid
Jemmett-Page
Audit
Committee
Chair
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Audit Committee report
Audit, risk and
internal control
In preparation for the upcoming changes in the UK Corporate
Governance code and declaration on the effectiveness of controls,
the Audit Committee has spent significant time during the year
guiding the ongoing work to identify the relevant material controls
and to plan for the testing and assurance strategy.
The US sector has been in a transitional year, now refocused with a
refreshed strategic clarity reflecting market dynamics and pipeline
opportunities. It continues to be an area of focus for the business
and therefore for the Committee. As the business resets and
continues to evolve and mature, the Committee will ensure that there
is a strengthened and more consistent system of internal control and
risk management which is appropriate for the portfolio of operations
in the US. The Committee maintains regular dialogue with the US
Special Security Arrangement (SSA) Audit Committee.
The internal audit function continues to be effective and
collaborative. It has been instrumental in informing the Committee’s
work on a range of topics including cash flow forecasting and the
associated target setting.
The key areas for focus for the Committee are addressed by the
internal audit plan, the scope of work of the external auditors and
scheduled deep-dive review sessions. The focus areas are set
and evolve based on the changing needs of the business and the
risks it faces, as it simplifies its strategy and investment case and
seeks to deliver more effectively for all stakeholders. The full terms
of reference of the Committee can be found at www.qinetiq.com.
The Committee is content that it meets the relevant responsibilities
set out in the FRC’s External Audit: Minimum Standard.
Looking ahead the Audit Committee is keen to oversee further
improvements and enhancements to the Group’s control environment
as it evolves through its performance focus and delivers against its
strong growth prospects in the near, medium and long term.
I hope you find the information in this report about the Committee’s
work helpful and I will be pleased to answer any questions you have
about it at this year’s AGM.
Shonaid Jemmett-Page
Audit Committee Chair
Dear Shareholder,
I am pleased to present this report which
sets out the work carried out by the Audit
Committee during the year, including the
key topics it has considered and how it has
discharged its responsibilities.
The Audit Committee continues to ensure the integrity of reporting,
including the Annual Report and Accounts. For FY25 the Committee
has reviewed and challenged the key accounting estimates and
judgements inherent within the financial results, particularly the
assumptions relating to the goodwill impairment testing, the
allocation of restructuring related adjustments and long-term
contract accounting.
The Committee welcomes the strength of the Group’s ESG
credentials and supports the evolving sustainability agenda, including
target-setting, assurance and reporting. Its work during the year in
this area has included the embedding of existing requirements and
the preparation and planning for future requirements.
The Committee provides oversight of the system of internal controls
and risk management across the business. This includes considering
both financial and non-financial risks.
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Activities during the year
Financial reporting
During the year the Committee spent significant time reviewing
the most critical accounting estimates and judgements inherent
within the annual and interim financial results. These include the
assumptions within the Goodwill impairment testing, judgements
relating to the future costs and risks within long-term contracts,
the quality of income and the allocation between underlying
performance and specific adjusting items. The quality of income
review includes considering one-off items within the underlying
results and their consequence on the overall sustainability of
earnings. We also reviewed the cut-off of income expenditure
between the current and prior year. This assessment informs
the Committee’s work on determining whether the accounts are
fair, balanced and understandable, and whether any adjustments
should be considered in remuneration calculations.
The Committee also paid close attention to the accounting for
the sale and leaseback transaction relating to Cody Technology
Park, given its materiality and the complexity of the accounting
under IFRS 16.
During the year, the Committee held deep-dive sessions into
various topics including the status and future strategy of the
pension scheme, debt financing and covenant management,
operating cash performance management and tax strategy
including OECD Pillar II compliance.
Fair, balanced and understandable
In accordance with the Code, the Board has established
processes to ensure that all reports and information it is
required to present in accordance with regulatory requirements,
represent a fair, balanced and understandable assessment of the
Company’s performance, position and prospects.
As such, the Audit Committee was requested to provide advice
to the Board on whether the FY25 Annual Report and Accounts,
taken as a whole, provide a fair, balanced and understandable
assessment of the Company’s financial position and future
prospects and provide all information necessary to a shareholder
to assess the Group’s performance, business model and strategy.
Following the established process, the Committee reflected on
the information it had received and its discussions throughout the
year. The review is a well-established and documented process
involving senior management and the core reporting team. The
assessment was assisted by an internal verification of the factual
content by management, a review at different levels of the Group
to ensure consistency and overall balance, and a comprehensive
review by the senior management team and the external auditors.
The Board considers that the FY25 Annual Report and Accounts,
taken as whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess
the company’s position, and performance, business model
and strategy.
Rigour over non-financial reporting (TCFD and other
sustainability metrics)
The Companies (Strategic Report) (Climate-related Financial
Disclosure) Regulations 2022 place requirements on QinetiQ
to incorporate climate disclosures in the Annual Report and
Accounts. Since FY22, we have included a section in this
report which addresses the four TCFD recommendation pillars
(Governance, Strategy, Risk and Metrics) and 11 disclosures.
We are committed to continuous improvement as guidance
and methodologies mature. The Committee has reviewed
the proposed disclosures and endorsed the assumptions
and judgements applied by management.
With the growing and evolving body of non-financial reporting
requirements, the Audit Committee charter includes Non-Financial
Reporting, to ensure that the Audit Committee has oversight of
non-financial reporting (including TCFD). The Committee has a
standing agenda item and is briefed quarterly. The Committee is
provided with a reporting tracker providing progress on all current
reporting, an update on how new requirements are being prepared
for and a horizon scanning summary to look further ahead.
The TCFD reporting, on page 46, has been reviewed and endorsed
by the Committee.
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Internal financial controls
Internal financial controls are the systems that the Group employs to support the Board in discharging its responsibilities for financial matters
and the financial reporting process.
During the year, the Audit Committee spent significant time understanding and validating management’s roadmap to prepare for the
upcoming required declaration relating to the effective operation of material controls. The Committee reviewed and challenged the
assessment of material processes, and is guiding the ongoing work to identify material controls within each process area and establish a
testing and assurance strategy.
The Committee maintains regular dialogue with the US Special Security Arrangement (SSA) Audit Committee, regarding scope and coverage
and the sharing of best practice. The Committee takes a keen interest in the ongoing evolution of the US Sector’s control environment as
integration of the underlying businesses continues.
Key issues and judgements impacting FY25 accounts
Issue Key uncertainties and judgements Review and challenge Conclusion
Impairment of
goodwill and
acquired intangibles
The Group holds goodwill on its balance
sheet in respect of various Cash Generating
Units (CGUs).
An impairment review has been undertaken
to assess the level of headroom (the
difference between the net present value of
future cash flows and the carrying value of
net operating assets) in respect of all CGUs.
An impairment charge has been recognised
in respect of the Group's combined US
sector CGU.
The Committee reviewed the outputs of
management’s annual impairment testing
exercise, noting the use of external advisors
to prepare the technical assumptions
(discount rates, long-term inflation) which
have also been verified as appropriate by the
external auditors.
The Committee held detailed discussions
with management and the external audit
team, specifically challenging revenue
and profit assumptions, as well as the
technical assumptions.
There are a wide range of
outcomes to the impairment
test which is very sensitive
to outer year cash flows. On
challenging management, the
Committee concluded that
management's estimates
were reasonable and that the
associated disclosures within
the financial statements
are adequate.
Long-term contract
accounting
Risk assessment on
key contracts
The Group has a large number of
contracts which span multiple periods
and are accounted for on a 'percentage
of completion’ basis in accordance with
IFRS 15.
Long-term contract accounting requires a
number of judgements and management
estimates to be made, particularly in
calculating the forecast costs to complete the
contract, and resultant contract profitability.
The Committee received commentary from
both management and the external auditors
in respect of the most significant contracts
being delivered by the Group and discussed
the main financial assumptions (including
level of risk reserves, assumed forecast
savings challenges and the use of Monte-
Carlo modelling).
The Committee concluded that
management’s best estimates
were reasonable.
Sale and leaseback
transaction
Cody Technology Park
During the year the Group entered into a sale
and leaseback transaction relating to Cody
Technology Park.
The transaction resulted in a loss on disposal
of £36.6m which is classified as a specific
adjusting item.
The Committee reviewed the calculation and
the key assumptions which related to the
allocation of both carrying and fair values to
the various portions of the site, noting the use
of specialist external advisers to assist with
the property and lease valuations.
The Committee concluded
that the methodology and key
assumptions were reasonable.
// We continue to strive for continuous improvement and,
whilst there have been some challenges in the second half
of the year, progress has been made in enhancing the internal
control environment and preparing for the upcoming changes
in the UK corporate governance code. //
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Issue Key uncertainties and judgements Review and challenge Conclusion
Specific adjusting
items
The Group reports underlying performance
which excludes the impact of specific
adjusting items.
The Committee receives an update on the
nature and quantum of specific adjusting items,
as well as management assessment as to their
appropriate use.
The Committee agreed with
management’s assessment
that the restructuring costs
and other such items are
distorting in nature and it
is therefore consistent and
helpful to the reader to
separate their impact.
Restructuring costs Specific adjusting items for FY25 includes
the impairment of Goodwill in the US as well
as the costs of restructuring and a number of
associated impacts in the US
Digital investment The ongoing one-off period of digital
investment continues to be included as a
specific adjusting item.
Acquisition and disposal
related costs
Specific adjusting items also include a number
of acquisition and disposal-related costs
including post-acquisition integration costs and
one-off post-acquisition remuneration costs.
Provisions and
contingent liabilities
The Group holds provisions in respect of
legal, regulatory and environmental issues.
Judgement is required in determining whether
provisions are required.
The key judgements considered by the
Committee were the quantum of the potential
costs involved, probability of economic
outflow, disclosure requirements, and in
relation to the Pendine incident, that insurance
will cover the cost of any civil damages (with a
provision of c£12.1m being recorded together
with an equally offsetting Other Receivable).
The Committee concluded that
management’s best estimates
were reasonable.
Restructuring and
other provisions
Specifically, a provision is held in respect of
the recently announced restructuring, various
obligations relating to the sale and leaseback
transaction and the incident at the MOD range
at Pendine in a previous financial year.
Pensions
Net pension
asset valuation
The Group’s net pension asset increased
during the year. The key assumptions relate
to inflation, discount rates, demographic
assumptions and liability experience data.
The Committee reviewed and challenged the
results of the valuation exercise, and the key
assumptions used, noting the use of external
advisers to prepare the calculations.
The Committee concluded that
the assumptions and outputs
made by management and
the external advisers were
reasonable.
Taxation
Key judgements
including recoverability
of losses
The key accounting assumptions relating to
tax include tax and RDEC provisioning and
the recoverability of deferred tax balances
relating to historical losses. During the year
the Group has derecognised the deferred
tax balance in respect of historical losses
in the US.
The Committee reviewed and challenged
the key judgements taken by management,
particularly relating to the future recoverability
of deferred tax relating to losses, which will
depend on the future financial results of
the relevant entities and has linkages to the
testing of Goodwill for impairment.
The Committee concluded
that the judgements made by
management were reasonable.
Going concern and long-term viability statements
The acquisition of Avantus during FY23 took the Group into a net
debt position. The Audit Committee continues to pay close attention
to the Group’s net debt and leverage positions, and their underlying
drivers including free cash flow generation, capital allocation
including the share buyback extension and one-off transactions
such as the sale and leaseback of the Cody Technology Park site.
The Committee has again reviewed the annual going concern and
long-term viability assessments, in particular considering the renewal
dates of key long-term customer contracts, forecast covenant
compliance, debt capacity and the implications of the ongoing
share buyback programme which was extended during the year.
After review of the available information and challenge of the
underlying assumptions, the Committee has concluded that the
Group will be able to continue in operation and meet its liabilities
as they become due through to 31 March 2030. The Committee
considered it appropriate that the long-term viability statement
continues to cover a five-year period. In reaching its conclusion,
the Committee reviewed the budget for the next financial year, the
five-year business plan, the stress-testing scenarios applied and the
mitigating actions available. The viability statement and the going
concern statement can be found in full on page 67, including the
detail on how the assessments were conducted.
Internal Audit
The Group Internal Audit function operates independently as part of
the third-line under QinetiQ’s adoption of the Three Lines Model (see
page 63 for further details). The function continues to provide an
independent input to help maintain a robust system of risk management
and internal control, and also to ensure there remains a collaborative
approach to assurance across the Group.
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Group Internal Audit have formally reported to the Audit Committee
four times during the year. The Committee approves the annual audit
plan, reviews the findings from the audit reviews, and assesses the
overall effectiveness of the internal audit process. A key aim for the
audit plan is to ensure that significant financial and non-financial
risks are reviewed on a rolling basis, with the plan built around a
number of priorities including core project management processes
and controls, controls over budgeting and forecasting, target setting
and safety improvement initiative progress. Fraud risk management
has also been a priority area in FY25 as well following the release
of new UK legislation that includes an offence of failure to prevent
fraud. The overall assessment following the audit and assurance
activity is that the control environment is considered effective,
with a culture conducive to improving internal controls and risk
management processes.
This year, to assess the overall effectiveness of the internal audit
process the Committee commissioned an external review by Grant
Thornton, a process that included interviewing members of the board
and, senior management, and reviewing artefacts. The result overall
was very positive, and whilst there were helpful recommendations
raised, it was reported that there was a high degree of compliance to
the new Global Internal Audit Standards and Code of Practice.
Looking forward into the next financial year the Committee
recognises the importance of addressing the new UK corporate
governance requirements whilst allowing sufficient time to provide
assurance over other key internal projects such as the business
systems upgrades in the UK and Australian businesses. Other
priority areas include financial reporting and core internal controls,
export controls, and risk management.
The team has remained stable, and as we progress in to the new
financial year the function is enhanced by being part of the graduate
programme and having a placement for part of the year.
Risk management
The Group Risk Management function operates independently within
the business, as part of the second line assurance under QinetiQ’s
adoption of the Three Lines Model (see page 63 for further details).
The function works closely and collaboratively with the business,
providing an independent input to help develop a robust system
of risk management and internal control, and is fully engaged with
the ongoing work to prepare for the upcoming required declaration
relating to the effective operation of material controls. The Committee
notes the continual activity to monitor the risk landscape and ensure
the principal risks to the business are mitigated effectively through
robust and transparent risk management activity.
Treasury strategy and compliance
The Group Treasury policies and procedures provide a robust
framework of internal controls for the management of treasury
risks faced in a net debt environment. These include; monitoring of
leverage and availability of liquidity through Group cash forecasting,
managing intra-Group loans and financing arrangements, meeting
our covenant compliance and legal requirements for our banking
partners, and managing our financial exposures to foreign
exchange and interest rate fluctuations. The Committee continues
to challenge and review this framework to ensure that it is fit
for purpose and robust enough to meet the changing nature of
financial and counterparty risks, the interest rate environments and
other macroeconomic factors, and the banking sector’s policies
on investing in the defence sector, which impact the availability
of liquidity.
Tax strategy and compliance
The Group Tax policies and procedures provide the framework of
internal controls for the management of tax risks for the growing
business in an ever-changing global regulatory environment, in
which tax transparency has increasing prominence. The Committee
reviews the Group’s tax affairs annually, which includes considering
the Group Tax Strategy, status of any tax audits and filings, tax
accounting judgements (including the recoverability of deferred
tax assets and any judgements relating to RDEC income) and
associated disclosures, the structuring of key transactions and
important regulatory changes, such as the adoption of global Pillar 2
compliance. The UK tax authorities tested the Group Tax policies and
procedures during last year’s business risk review and provided an
overall low risk rating across all measures of systems and delivery,
governance and approach to tax compliance.
External audit
PwC audit scope
QinetiQ Limited, QinetiQ Australia and the combined QinetiQ US sector
(comprising the Foster Miller Inc, MTEQ and Avantus entities) are 'full
scope'. This represents a change in scope for the US sector from the
prior year after the further integration of the underlying businesses,
move to a new single accounting system and a common control
environment. Consistent with the prior year, QinetiQ Target Systems
Limited is also in scope for inventory only. The Committee viewed it
appropriate for the audit scope to be enhanced for the US sector given
the underlying changes in the business and so as to provide greater
audit coverage over the consolidated financial statements.
Non-audit work and auditors’ independence
The Committee is responsible for the Group’s policy, the Code
of Practice on non-audit services and the approval of non-audit
services. The Code of Practice is applicable to all employees and
sets out the principles for regulating the award of non-audit work
to the external auditors.
To safeguard the auditor’s independence and objectivity, and
in accordance with the 2019 FRC’s ethical standard, the Group
does not engage PwC for any non-audit services except where it
is work that they must, or are clearly best-suited to perform.
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Accordingly, the Group’s policy for the engagement of the auditors
to undertake non-audit services broadly limit these to audit-related
services such as reporting to lenders and grant providers, where
there is a requirement by law or regulation to perform the work. All
other non-audit services are considered on a case-by-case basis in
light of the requirements of the ethical standards and in compliance
with the Group’s own policy.
The Committee approves the terms of all audit services as well as
permitted audit-related and non-audit services in advance. Pursuant to
the Code of Practice, any non-audit services conducted by the external
auditors require the prior consent of the Group Chief Financial Officer
or the Chair of the Audit Committee, and any services exceeding
£50,000 in value require the prior consent of the Committee as a whole.
For work that is permissible by type, the Committee will take into
consideration the size of the contract in proportion to the Group’s
revenue and profit, and also the total size when aggregated with
other contracts with PwC, noting that some non-auditing services
are subject to an annual regulatory 70% spending cap of the average
of the audit fees billed over the last three-year period.
It is also the Group’s policy that no former PwC employee may be
appointed to a senior position within the Group without the prior
approval of the Group Chief Financial Officer.
Review of non-audit work during the year
The Committee reviews the cost and nature of non-audit work
undertaken by the external auditors at three meetings during the
financial year as a standing item, with a fourth meeting considering
the auditor’s fees as part of the year-end review. The Committee
concluded, prior to engaging PwC for the provision of these services,
that there had not been any conflict of interest that might compromise
the independence of PwC’s audit. Fees paid to PwC are set out in note
8 to the Consolidated Financial Statements on page 148.
Non-audit related fees paid to the auditor during the year were
£0.17m (FY24: £0.16m), representing 10% (FY24: 9%) of the audit
fee. This included £0.12m (FY24: £0.12m) relating to the review
of the half-year results. Our annual review of the external auditors
takes into account the nature and level of all services provided.
Review of the effectiveness and the independence of the
external auditors
At its September meeting the Committee discussed the effectiveness of
the external audit for FY24. PwC continues to perform its audit work to a
high standard, with a deeper understanding of the Company’s business,
key contracts, control processes and the matters on which significant
accounting judgements or estimates are required. The Committee is
of the view that PwC provide a well-considered validation and robust
challenge of management’s views as appropriate. Following several
recommendations made in previous years the audit process is now in
a stable cycle of continuous improvement with no significant changes
made during FY24 or FY25.
Audit appointment and partner succession
PwC was appointed as auditor of the Group at the 2017 Annual
General Meeting (AGM) following a tender process. PwC are now
in their eighth year as auditor, with the external audit engagement
partner, John Ellis, in his third year, having taken the lead for the
FY23 audit cycle. The external audit contract will be put out to
tender at least every 10 years. During FY26 the Committee will start
planning for an external audit tender to take place in FY27 to ensure
that PwC are reappointed or new auditors are appointed for the
FY28 audit cycle. The Committee is of the view that the timing for
the audit tender strikes an appropriate balance between continuity
for the current audit firm and consideration of alternative firms.
The Committee and the Board will be recommending PwC’s
reappointment at the 2025 AGM for the FY26 cycle.
Governance
Audit Committee structure
The Audit Committee is comprised entirely of independent Non-
executive Directors and is chaired by Shonaid Jemmett-Page, who
is considered by the Board to fulfil the Code requirement of having
recent and relevant experience from the financial sector.
The Board considers the members of the Audit Committee to be
independent and, in accordance with the Code, the Board concludes
that the Committee as a whole possesses competence relevant
to the Group’s sector, having a range of financial and commercial
experience in the industry and the commercial environment in which
the Group operates. The Group Chief Executive Officer, Group Chief
Financial Officer, Group Financial Controller, Group Director Internal
Audit, Chief Risk Officer and representatives of the external auditor
attended all Committee meetings by invitation during the year. Twice
a year we also welcome the Chair of the US SSA Audit Committee to
update us specifically on the internal controls and risk management
across the US business. The Committee met with PwC and the
Group Director Internal Audit on two separate occasions, without
Executive Directors present, to discuss the audit process and assure
itself regarding resourcing, auditor independence and objectivity.
Audit Committee effectiveness review
The evaluation of the effectiveness of the Committee was conducted
alongside the Board effectiveness review, in the external evaluation
year of its three-year cycle for FY25. See more on pages 98 and 99.
The outcome of the evaluation confirmed that the Committee
continues to operate highly effectively and determined that
Committee members have good oversight of, and are able to raise
appropriate challenges in respect of, important financial matters,
such as the significant accounting judgements and estimates
relevant to the Group’s financial statements, and the implementation
of new accounting standards.
Statutory audit services compliance
The Company confirms that during the year under review it
applied and was in compliance with the Competition and Market’s
Authority’s Order on statutory audit and services, which relates to
the frequency and governance of external audit tenders and the
setting of a policy on the provision of non-audit services.
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Contents Generation – Sub PageContents Generation - Section Risk & Security Committee report
Risk & Security Committee report
Risk & Security
Committee report
// Effective risk management and security
oversight are not merely safeguards but
strategic imperatives in an era where
uncertainty is the only certainty. //
Dear Shareholder,
I am pleased to present our Risk &
Security Committee report for FY25,
which describes our activities and areas
of focus during the year.
Risk profile of the Group
In my view, risk management is ever more embedded in daily
operations and the culture of the organisation. We have robust
reviews and progress updates throughout the year and conducted
a deep-dive workshop on the Three Lines Model where we agreed
the clear linkage of material risks to assurance activities and
identification of assurance owners for each material risk. The
quarterly review of the Group Risk Register, which is described
further on pages 64 to 68 continues to be key for the Committee to
undertake its duties and understand details of the Group’s principal
risks, their impact on the Group and how they are managed.
Geostrategic challenges
Ongoing challenges including climate change, war, and malevolent
state actors highlight the need to be constantly on guard and
that at no point can the business be complacent in its approach
to managing and mitigating risk. Our role is to ensure that
potential threats are anticipated, mitigated and transformed into
opportunities for resilience and growth. When the business deploys
people to dangerous locations, a robust risk process is employed to
minimise risk and ensure safety.
Security profile of the Group
One of our core responsibilities is to oversee the Group’s physical
and non-physical security systems. As our future success is
dependent on our ability to exploit and operate technology at pace
while still retaining the rigorous levels of security required by our
customers and partners, the Committee members and I have,
together with the Chief Enterprise Services Officer, Group Director
Security, and Chief Risk Officer, developed a schedule of security-
related agenda items, ensuring that the Committee continues to
be able to oversee this key pillar. As a defence, technology and
engineering Company, we are set to remain continuously aware about
our risks and adapt our tools, processes, systems and people to
address increasing risks arising from changing cyber threats, climate
change and technological and geopolitical instability.
The Risk & Security Committee risk management
responsibilities
The Risk and Security Committee has a close relationship with the
Audit Committee which enhances the efficiency and effectiveness
of Board oversight. The Committee provides further scrutiny and
assurance to the Board that the required UK and international
standards in risk management, quality, security and health and
safety are achieved. This includes ensuring that the organisation
fulfils its statutory requirements and duty of care. This assists the
Board in setting the risk appetite and reviewing and assessing the
Group’s risk management systems.
I hope you find the information in this report about the Committee’s
work helpful and I will be pleased to answer any questions you have
about it at this year’s AGM.
General Sir Gordon Messenger
Risk & Security Committee Chair
General
Sir Gordon
Messenger
Risk & Security
Committee
Chair
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Further reading
 Risk management
pages 62–66
 Principal risks
pages 64–66
FY25 Key Highlights: FY26 Priorities:
— Focus on strategic mix of oversight,
resilience and adaptability
— Increase visibility of first line
compliance activities
— Improve linkage between risk and
resilience activities
— Demonstrate improvements to
assurance activities
— Continue preparations for compliance
with FRC UK Corporate Governance
Code changes
— Drive a risk culture that ensures we
stay on top of our material risks
— Enhance existing and embed new
GRC tools
— Transitioned Security transformation
project to Business as Usual/Continuous
Improvement after successful delivery
of key project outcomes, including
consistent Group-wide security risk and
assurance management
— Transitioned Group Cyber Security
Improvement Programme (GCSIP)
transformation project to Business
as Usual/Continuous Improvement
after successful delivery of key project
outcomes, including on-boarding of
several Governance Risk & Compliance
(GRC) tools
— Matured Security & Information
and Risk & Assurance Councils as
key governance bodies; the Risk &
Assurance Council has an overarching
role across all Councils to monitor
governance and adherence to policies
— Launched the Business Management
System, the single source for all
policies and requirements
— Developed QinetiQ’s Assurance Model,
providing an integrated and aligned
approach to delivery of compliance
and assurance activities
Key responsibilities
The Committee’s primary functions are:
— To oversee the sound operation of the Group’s
risk management systems
— The ongoing review of the Group’s principal and
emerging risks (see pages 64 to 66)
— To oversee the Group’s physical and non-physical
security systems, including monitoring security
exposures and security culture, and considering
emerging security issues
— To ensure that health and safety risks are being
effectively managed across the Group
— To oversee the Group’s second-line assurance
activity over the first-line compliance activity taking
place across the Group’s functions and businesses
— To monitor adherence to the generic MOD
compliance system
— To review the Group’s policies, processes and
controls for the detection and prevention of bribery,
corruption and modern slavery and compliance with
applicable laws, regulations and codes of conduct.
The Board assumes ultimate responsibility for the
effective management of risk across the Group,
determining its risk appetite and ensuring that each
operating sector implements appropriate internal
controls. The Group’s risk management systems are
designed to appropriately manage the risk of failure to
achieve business objectives, and thus can only provide
reasonable and not absolute assurance against
material misstatement or loss.
These systems are also designed to be sufficiently
agile to respond to changes in circumstances, such
as increased competition and disruptive business
models, technological advancements, economic
volatility and supply chain disruptions.
Risk & Security Committee structure
All members of the Board are members of the Risk
& Security Committee, which is chaired by General
Sir Gordon Messenger. The Chief Enterprise Services
Officer, the Group Director Security, the Chief Information
Officer, the Chief Information Security Officer, the Chief
Risk Officer and the Group Director. Internal Audit
attend Committee meetings by invitation.
To enable the Committee to get a comprehensive
understanding of how risk management processes
have been implemented and to ensure that these
are fully embedded within the business’s day-to-day
work, deep-dives are presented to the Committee by
employees who have first-hand knowledge of such
matters, i.e. perform the work on a daily basis.
Risk monitoring and reporting is incorporated into
the management of the business through the QinetiQ
Leadership Team and monthly performance reviews
feed into the Group strategy at the Executive and
Board level.
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Risk & Security Committee report continued
The risk management and risk monitoring processes are divided
as following:
Risk
management
— Review risk management structures and reporting lines
(i.e. effectiveness of control environment)
— Evaluate the effectiveness of risk reporting processes
including risk control assessment
— Review the effectiveness of risk identification processes
— Consideration of any security issues relating to the
appointment of external auditors
Risk
monitoring
— Review of risk register and key exposures
— Monitor Health, Safety and Environmental performance
— Scrutinise Internal Audit reports with respect to risk
and security issues
— Oversee international business governance
— Oversee application of applied anti-bribery and
corruption measures
Security management
The business employs a proactive threat assessment process
with effective horizon scanning for future and emerging threats
to the business to manage and mitigate risk. Security Incident
Management is achieved through a Security and Information
Governance process with a defined structure and escalation process
through Sectors, Group, Security and Information Council, Security
Steering Group and on to the Risk and Security Committee to ensure
visibility of current and emerging risks and their management.
The Committee is assured by the progress made by the Group in the
year, although, with the ever-increasing incidence and sophistication
of cyber-attacks and the consequent need for the Group to remain
vigilant, the Committee expects security to remain one of its key
areas of focus. As part of the drive to further control our risk
exposure, we are further refining our risk appetite definitions. The
Security Culture Survey, conducted by the Group Security team
covering the whole Group and aimed at understanding the security
maturity levels across four areas – information, physical, cyber and
personnel security – proved invaluable in identifying areas for focus.
Cyber security
Given the nature of our business, emergent security threats such
as the adoption of artificial intelligence and the broader geo-
political landscape, we continue to invest in our Digital and Cyber
Security Programmes.
In combination with our wider education and culture initiatives, we
continued to strengthen our policies, procedures and tooling to ensure
we can appropriately identify, assess and manage cyber security risks.
We have made further improvements to our protective monitoring
and response capability provided by Cyber Security Operations team.
Our strategy remains under constant review and our Cyber and
Information Security Operating Model ensures we best utilise our
technical expertise and knowledge across all business areas.
The Committee continues to receive regular reports from the
CIO and CISO on our cyber and information security risks, the
performance of protective controls and the progress of any ongoing
security improvement activities.
All employees must complete mandatory cyber, information,
physical and personnel security training each year, which focuses
on our policies, procedures, culture and behaviours aligned to
known threats. Our Group intranet also includes a comprehensive
Security Knowledge Library which is used both individually and by
leaders for regular security engagements at team level.
Business continuity and crisis management
Our business continuity and crisis management procedures have
been designed for flexible arrangements when responding to
incidents and emergencies. They are scalable and can be adapted to
work in a wide range of specific scenarios. We focus on resilience,
informed by our risk identification and assessment rather than
individual emergency scenarios. Our Crisis Management Plan
sets out a decision-making model and overarching management
response which supports the Leadership Team and ultimately the
Board in making effective decisions during an incident. This has
proved to be an effective approach with incidents managed well
without causing adverse effects on the business. Supplementary
training has been provided to the Leadership Team and we will
continue with this approach in FY26.
Self-certification process
An annual process of self-certification on the effectiveness of
internal controls has been established and embedded across
the Group. This process provides a documented and auditable
trail of accountability for the operation of the system of internal
controls and continues to be our preferred tool to tangibly assess
the effectiveness of those controls in all functions and sectors
across the Group. It is informed by a rigorous and structured self-
assessment that addresses compliance with Group policies and
processes, and provides a comprehensive level of assurance to be
given at higher levels of management and, finally, to the Board.
Each sector and functional Chief Officer are required to make a
declaration that their system of internal controls are effective, are fit
for purpose and are being monitored throughout the year. Any material
risks, control failures or non-compliance with the Group’s risk policies,
legislation and/or local delegations of authority must be highlighted
as part of this process. The outcomes of the self-certification process,
which is carried out at the full and half-year, is reported to the Risk and
Security Committee by the Chief Risk Officer.
Generic MOD compliance system
A key aspect of the Committee’s work is the oversight of the UK
Ministry of Defence’s (MOD) generic compliance system. This
is integral to the work of QinetiQ in its relationship with the UK
Government. The system is designed to give the MOD customer
confidence that QinetiQ is able to provide impartial advice during
any competitive evaluation of a procurement opportunity where the
Group wishes to operate on both the ‘buy’ and the ‘supply’ sides.
The aim is to achieve a balance between meeting the needs of
the procurement customers in the MOD (principally defence
equipment & support) and the need to allow QinetiQ the flexibility to
commercialise research into the supply chain and pursue its planned
business activities, without compromising the defence or security
interests of the UK. The Board nominates two senior managers to
act as Compliance Implementation Director (CID) and Compliance
Audit Director (CAD).
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Anti-bribery and corruption
The Committee oversees a zero-tolerance approach to bribery
and corruption, as confirmed by the Company’s anti-bribery and
corruption policy and the supporting local policies that apply to
members of its Group. The Group also has in place a range of
procedures, including regular training targeted at potentially risk-
exposed roles of our employees, Group and local gifts and hospitality
policies, and Group and divisional procurement, contracting and
partnering practices, which are designed to prevent bribery. See
more on page 61.
Data privacy
The Company respects the personal data privacy of its customers,
employees and other individuals in respect of whom it and members
of its Group process personal information. The Group therefore has
in place policies which mandate the lawful processing and protection
of such personal information in accordance with applicable laws
and procedures which are designed to achieve the same. A report
on GDPR compliance is presented to the Committee at each
Committee meeting.
Effectiveness review
A performance evaluation of the Committee is conducted annually.
This process is described further on page 98.
Frameworks for risk management and internal control
The Board is responsible for promoting the long-term success of the
Company for the benefit of shareholders, as well as taking account
of other stakeholders including employees and customers. To
discharge this responsibility, the Board has established frameworks
for risk management and internal controls using the Three Lines
Model, see page 63, and reserves for itself the setting of the
Group’s risk appetite. In-depth monitoring of the establishment and
operation of prudent and effective controls to assess and manage
risks associated with the Group’s operations is delegated to the
Audit Committee, complemented by the work of the Risk & Security
Committee. However, the Board retains ultimate responsibility for
the Group’s systems of internal controls and risk management and
has reviewed their effectiveness during the year. The frameworks
are regularly reviewed for prudency. They were in place throughout
the financial year under review and up to the date of this report.
They help ensure the Group complies with the Financial Reporting
Council’s (FRC) guidance on Risk Management, Internal Controls
and related financial and business reporting.
After discussions with the Audit Committee and the Risk & Security
Committee, the Board conducts a robust six-monthly assessment of
the Group’s emerging and principal risks and specifically considered
the principal risks facing the Company including the impacts to
the Group’s business model and future performance and therefore
require management prioritisation and action when approving the
Group business plan.
During the year, as part of the oversight process, the Board and the
Risk & Security Committee received updates on risks and associated
mitigating actions. Principal risks were also taken into account in the
design of scenarios which are intended to stress-test the Group’s
five-year strategic business plan, recovery plan, climate change
impacts, decisions on the return of capital to shareholders and
operational resilience.
Our risk management framework is designed to consistently identify,
evaluate, manage, monitor and report the principal risks to the
achievement of the Group’s strategic objectives and is embedded
throughout the Group. It is codified through risk policy and associated
processes and procedures which set out the risk appetite, requirements
and controls for the Group’s worldwide operations. This is further
described on pages 62 to 66.
The Group maintains a manual of financial reporting policies which
is compliant with International Financial Reporting Standards
(IFRS). An internal control framework is in place across the
Group which covers Group financial reporting and local statutory
reporting activity. The process follows a risk-based approach, with
management identification of key financial reporting-related controls.
Board oversight of risk management
The Board’s delegated responsibilities regarding oversight of risk
management and the approach to internal controls are set out on
pages 62 to 66. There are strong working relationships between
the Board Committees, which enable robust oversight of internal
controls and risk management. Committees provide regular reports
to the Board on their activities and escalate significant matters
where appropriate. The responsibilities and activities of each Board
Committee are set out in the Committee reports.
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Contents Generation – Sub PageContents Generation - Section Directors' Remuneration report
Directors’
Remuneration report
Dear Shareholder,
I am pleased to have been appointed as
Chair of QinetiQ’s Remuneration Committee
in April 2025, having joined the Committee
on appointment in March 2024.
I would like to express my sincere thanks to Susan Searle, former
Chair, for her diligent leadership and for supporting my transition
into the role. I look forward to working with the Board to deliver an
effective remuneration policy that reflects shareholder expectations
and recognises sustained business performance.
As noted by the Group Chair in his statement on page 8, FY25 was
a year in which financial performance, particularly revenue and
profit, fell below expectations, due to dynamic trading conditions
and geopolitical uncertainty. However, strong cash conversion and
order intake reflect the underlying resilience of the Company and the
strength of our strategy. With the Board’s support, management has
taken decisive action to strengthen the leadership team and to resize
and refocus the Company in response to the external environment.
This has resulted in one-off exceptional charges and the value of
certain assets being written down, which has also had an impact
on overall performance and shareholder returns. The Remuneration
Committee has carefully considered these factors in its decision-
making for FY25.
Reward decisions for FY25
While revenue was below expectations, our orders performance was
above the stretch level. Net cash flow and performance against the
common goals were above target. The formulaic FY25 Annual Bonus
Plan (ABP) outturn was 52.0% and 51.4% of the maximum for Steve
Wadey (CEO) and Martin Cooper (CFO) respectively.
Having considered the Company’s FY25 performance in the round,
with particular attention to the trading update issued in March
2025, and at the recommendation of the CEO, the Remuneration
Committee has exercised its discretion to reduce the ABP payment
to zero for FY25 for the Executive Directors and members of the
QinetiQ Leadership Team (QLT).
The second grant under the Long-term Performance Award (LPA)
was made in July 2024, with the same scorecard of performance
metrics as the FY24 award, comprising: cumulative underlying
operating profit; Return on Capital Employed (ROCE); and total
revenue growth. Stretch targets remain aligned to the Company’s
growth ambitions.
The contingent share award under the legacy Deferred Share Plan
(DSP) granted in FY22, based on performance, will vest in June 2025,
as the profit underpin (set in 2022) for that award was met. Subject to
the performance underpin, a final DSP award granted in FY23, based
on performance, may vest in June 2026. No further awards will be
made under the DSP as it has been replaced by the LPA.
// The Remuneration Committee has
carefully considered the alignment
of incentive outcomes with overall
company performance in its decision-
making for FY25. //
The Committee believes that the FY25 CEO single figure on page 113
reflects the performance achieved by the Company. It is approximately
53% of the value in FY24, as a result of the reduction to zero of the
FY25 bonus outturn and a lower value from the vesting legacy FY22
DSP compared to the prior year.
In assessing the remuneration outcomes, the Committee has
continued to consider carefully the potential impact on incentives of
the share buyback programme which commenced in February 2024,
involving the gradual purchase and cancellation of some £100m of
shares over 12 months.
The Committee confirms that no current incentive plans measure
performance on a ‘per share’ basis and that there has been no direct
financial performance boost from the share buyback. Therefore, the
Committee determined that no adjustment to incentives is necessary
in relation to the share buyback.
QinetiQ’s Gender Pay Gap data can be found on
our website at www.qinetiq.com
Dina Knight
Remuneration
Committee
Chair
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Directors' Remuneration report

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Leadership changes
As disclosed last year, Carol Borg stepped down from her role
as CFO on 16 April 2024 and has been succeeded by Martin Cooper
who joined on 2 September 2024. Details of their respective
termination and joining arrangements were disclosed in last year’s
remuneration report, however, in accordance with the regulations, full
details are also included on pages 122 and 123 of this year’s report.
Directors’ Remuneration Policy
In FY23 the Committee spent a significant amount of time reviewing
the current Policy and consulted widely with shareholders prior to its
introduction in 2023. The Policy received a 84.3% ‘For’ vote at the
2023 AGM and will remain in place until its full renewal at the 2026
AGM. During the year ahead we will be reviewing the Policy to ensure
it is operating effectively and remains aligned with our strategy. We
will consult with major shareholders in advance if any changes are
identified for introduction at that time, allowing reasonable notice to
consider and respond to feedback ahead of finalisation.
Salary Review
As disclosed in last year’s report, the CEO’s base salary was
reviewed in line with the Rewarding for Performance guidance used
for all UK employees. The CEO’s increase, effective 1 July 2024,
was 4.5%, below the 5% budget applied to UK employees. The CFO,
Martin Cooper, joined QinetiQ in September 2024.
For FY26, the overall salary review budget for UK employees is 4%,
with new salaries effective from 1 July 2025. At the request of the
CEO, the review of his salary will be deferred to the end of FY26. The
CFO’s salary will be increased by 3.3% with effect from 1 July 2025,
reflecting his performance and development in the role.
Implementation for FY26
The ABP for FY26 is based on the same financial metrics as in FY25
(orders, profit and cash) with stretch targets set against delivery of
the Integrated Strategy-to-perform Plan (ISP). Financial metrics carry
a 75% weighting (increased from 70%) and non-financial targets
have a 25% weighting (reduced from 30%). The non-financial targets
are a combination of personal and strategic goals, including selected
ESG metrics.
The Committee has reviewed the performance metrics for the FY26
LPA three-year performance period and decided that, as for FY25,
they will be cumulative underlying operating profit, ROCE and total
revenue growth designed to drive consistent profit performance,
robust investment selection and value creation for our customers
through collaboration. The Committee is cognisant that inclusion of
a relative Total Shareholder Return (TSR) metric is a preference for
at least one of the Company’s major shareholders and keeps the use
of TSR under review, most recently in March 2025. The Committee
continues to believe that relative TSR is strongly influenced by
market sentiment and remains mindful of the challenge in identifying
appropriate comparators for a company such as QinetiQ, given the
limited number of direct UK peers.
Employee engagement and reward
The Group CEO and the Chief People Officer have held regular
discussions with our Global Employee Voice (GEV) representatives
on reward matters. Members of the Board also met with the GEV
representatives twice in FY25. The social section on page 52
details our employee engagement activity.
QinetiQ’s employees are key to the delivery of our strategy. They have
performed strongly this year, demonstrating focus, collaboration and
drive to deliver for our customers. We have maintained employee
engagement levels and commitment through a challenging year.
The Company operates a range of incentive and reward programmes
throughout the organisation that align our people with our goals.
These arrangements are tailored to reflect employee levels and
specific market conditions. This includes an All Employee Incentive
Scheme (AEIS) under which every eligible employee can earn a
payment if the Company achieves a level of operating profit within
a predetermined range from target to stretch. The potential lump-
sum payment ranges from £500 to £1,250 per employee. In addition,
high-performing employees can earn up to an additional 5% of salary
based on personal performance rating. For FY25 the operating
profit threshold was not achieved, and therefore the Company
performance element of AEIS was not paid.
To recognise the contribution of our people, a discretionary ‘thank
you’ payment of £400 to each eligible employee was approved, with
individual payments of up to 2.5% of salary made to high performing
employees. Executive Directors and the QLT did not receive this
payment, in recognition of the Company’s overall performance and
the shareholder experience.
The AEIS is a key element of the Company’s Rewarding for
Performance framework aligning employees with shareholder
interests by incentivising and rewarding profitable growth. Looking
forward, the Company will continue to invest in its global reward and
benefits strategy to further strengthen the employee offering.
Our Group Hardship Fund and Employee Assistance Programme
(EAP) continue to provide vital support to our people experiencing
personal challenges.
Conclusion
Supporting leadership to drive the Company’s performance and
strategy through the implementation of the new Policy was a primary
focus for the Remuneration Committee in FY25. The Committee
believes the evolution of the QLT at the beginning of FY25, along with
the further changes made in April, positions the Company well for
future success to drive consistent performance and growth. We also
remain mindful of the highly competitive global talent environment
and the importance of ensuring incentives are appropriately aligned
at all levels of the organisation.
I hope that we can rely on your vote in support of the Directors’
Remuneration Report at the AGM on 17 July 2025. I would
welcome comments and questions from shareholders in relation
to this Directors’ Remuneration Report and I can be contacted
through companysecretariat@qinetiq.com. I also look forward to
engaging with many of you as the Committee reviews the Directors'
remuneration policy prior to its renewal at the 2026 AGM.
Dina Knight
Remuneration Committee Chair
22 May 2025
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Contents Generation – Sub PageContents Generation - Section Remuneration at a glance
Remuneration
at a glance
Components, alignment, application and changes
Annual fixed pay Link to strategy Application in FY26
Salary
Fixed pay is set at a level that enables us to
attract and retain high-quality Executive Directors
who are capable of successfully leading and
executing our strategy and delivering long-term
sustainable growth. Our Policy aims to ensure
that fixed pay remains attractive and competitive.
No change in prior-year implementation
of Policy for CFO. Salary review for CEO
deferred to end of the financial year.
Executive Directors’ base salaries are set on appointment
and reviewed annually, or when there is a change in
position or responsibility. Typically, base salaries will be
increased by a similar percentage to the average pay
increase for all employees of the Group.
Benefits
No change in prior-year implementation
of Policy.
Benefits include a car allowance, health insurance, life
assurance, income protection and taxable expenses.
Pension No change in prior-year implementation
of Policy.
Executive Directors receive 10.5% of base salary
allowance as cash in lieu of pension which is equivalent
to the UK workforce pension available to all employees.
Annual variable pay Link to strategy Application in FY26
The Annual Bonus Plan (ABP) introduced for FY24
onwards is as follows:
— 70% of any outcome is payable in cash at year end
and 30% will be deferred into shares, which vest after
two years
— The maximum incentive for Executive Directors is
200% of salary
— The performance measures used for the ABP are the
same as those used in prior years. For FY25 these
were orders, operating profit, cash flow, common goals
(which include ESG metrics) and personal goals. As
in FY24, a weighting of 70% financial and 30% non-
financial metrics was used
The ABP rewards strong sustainable financial
performance through a weighting of at least
70% on core financial metrics, driven by the
implementation of our strategy.
The ABP also rewards non-financial performance
through the delivery of key goals related to
environment (Net-Zero roadmap), employee
engagement and inclusion and safety in addition
to the achievement of personal goals.
The partial deferral of any ABP payment into
shares drives a long-term and sustainable focus
aligned to the interests of shareholders.
For FY26 the Remuneration Committee
increased the annual incentive financial
target weightings to 75% of the total award
with orders, cash and operating profit each
weighted at 25%. The remaining 25% will
be based on personal performance goals.
To drive consistent cash collection
throughout the year, 30% of the cash
goal (7.5% of the bonus weighting) will
be based on the achievement of H1
performance.
The revised weightings reflect the need to
drive profitable growth and strong cash
management and are closely aligned to
strategy.
Long-term variable pay Link to strategy Application in FY26
The Long-term Performance Award (LPA) introduced for
FY24 onwards is as follows:
— Three-year performance test with any shares vesting
subject to a further two-year holding period
— The maximum LPA award for Executive Directors
is 250% of salary for the delivery of truly stretching
financial targets
— The performance measures used for the LPA for FY26
will be earnings, ROCE and total revenue growth
— No more than 20% of each element of the award will
vest at threshold levels of performance
The LPA has a clear link to strategy and
incentivising growth:
— Cumulative earnings: To deliver consistent
operational performance over the longer term.
Understood, relevant and actionable for QinetiQ
senior leaders
— Returns: To drive robust investment selection
and delivery
— Total revenue growth: To drive value creation
through collaboration and market leverage
The payment of any LPA in shares which must
be held for a further two years drives a long-term
and sustainable focus aligned to the interests
of shareholders
No change in prior-year implementation of
Policy and financial targets
112 QinetiQ Group plc | Annual Report & Accounts 2025
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Timing
To create strong alignment between executive remuneration and the long-term interests of our shareholders, the ABP is paid partly in deferred
shares vesting two years after the award was earned. The LPA has a three-year performance period, after which any vested shares must be
retained by the Executive for a further two years.
Illustration of FY26 potential
(£’000)
TargetFY25FY25 TargetStretch Stretch+50% +50%MinFY24FY24 Min
Single figure FY25
(£’000)
Steve Wadey
Chief Executive Officer
Martin Cooper*
Chief Financial Officer
Key
Minimum – Fixed pay (base salary, plus taxable benefits and pension allowance)
Target – Fixed pay plus ABP at Target (100% of base salary) and LPA at Target (125% of base salary)
Stretch – Fixed pay plus ABP at Maximum (200% of base salary) and LPA at Maximum (250% of base salary)
+ 50% Share price appreciation – Stretch plus 50% share price appreciation (on 100% of LPA)
* FY24 single figure shown above is for Carol Borg, Former CFO, with FY25 not shown, but available in table on page 117.
FY25 single figure shown is for Martin Cooper, CFO, and is lower as is pro-rated based on mid-year start date.
Steve Wadey
Chief Executive Officer
Martin Cooper
Chief Financial Officer
Total
£889
Total
£1,308
Total
£2,929
Total
£534
Total
£2,526
Total
£304
Total
£1,567
Total
£1,581
Total
£4,161
Total
£2,628
Total
£5,070
Total
£3,209
Fixed pay
ABP
LPA
Pay at risk subject to performance conditions
Shares held, not subject to performance conditions
Minimum
Annual variable pay
Long-term variable pay
Year 1 Year 3Year 2 Year 4 Year 5
£909
£1,818
£2,726
£583
£1,166
£1,748
£727
£1,454 £1,454
£466
£933 £933
£901
£1,180
£848
£688
£880
£74 4
£564
£304
£889 £889 £889 £889
£535 £535 £535 £535
113
Corporate Governance
Annual Report & Accounts 2025 | QinetiQ Group plc

Contents Generation – Sub PageContents Generation - Section Directors’ Remuneration Policy Q&A
Directors’ Remuneration
Policy Q&A
Q
What are the principles of
QinetiQ’s Directors’
Remuneration Policy?
The principles of the Policy are:
— Ensure a clear and transparent approach
aligned to market practice with a distinct
separation between annual and long-term
incentives;
— Drive sustainable annual performance,
supporting our ambitious growth strategy
and long-term value creation;
— Maintain a balanced focus between
organic and inorganic growth;
— Drive collaboration across our teams; and
— Retain, attract and appropriately
incentivise top talent.
Q
How does the Policy
align Executive pay
with the interests
of shareholders?
QinetiQ’s annual incentive scheme and long-
term share plan deliver shares which must
be retained after any award is paid or vests.
In our ABP, 30% of the award is deferred
and held as shares and is therefore subject
to share price exposure. In our LPA there
is a three-year performance period before
any shares vest and then a further two-year
holding period.
In addition, the Executive Directors are
required to build and hold a significant
shareholding in the Company of 300%
of salary for the CEO and 200% for other
Executive Directors.
Q
How does your Policy
reward the implementation
of Company strategy?
Our strategy, as detailed in our five-year
Integrated Strategy-to-perform Plan (ISP),
aims to deliver sustainable and long-term
growth in our business and to increase value
to our shareholders.
The Policy supports this by focusing on the
achievement of stretching but sustainable
financial performance targets, both annually
and over three years, aligned to the ISP. These
are balanced with personal and strategic
goals to ensure alignment and reinforce the
Company's growth ambition.
Q
How does the Policy drive
corporate culture?
Our annual bonus scheme includes a
weighting towards non-financial metrics
focusing on personal goals. This is achieved
through our performance framework,
which has been designed to ensure strong
accountability and consistent performance
across the organisation, driving success and
enabling our people to achieve their potential.
A cornerstone of this framework are our
Leadership Expectations with a shared
commitment on Enterprise Leadership;
being a visible and responsible role model
measuring demonstrable improvements in
employee engagement, safety, security and
environmental leadership.
The personal goals measure the ‘what’
and the ‘how’ to ensure that key personal
deliverables are achieved through responsible
and collaborative behaviours.
Q
How do you avoid rewarding
for failure?
In line with best practice, Executive Directors’
contractual notice periods are 12 months
with termination payments normally limited
to salary, benefits and pension with a duty
to mitigate loss if they are terminated by
the Company.
Incentives have stretching performance
targets to ensure any payments are justified
with the Remuneration Committee retaining
discretion to adjust the formulaic outturn
to ensure that rewards are appropriate. In
addition, bonus deferral, holding periods and
shareholding requirements ensure a focus
on sustainable performance and long-term
shareholder value.
Q
How is ESG reflected within
the bonus plans?
ESG is measured through a standard
'Enterprise Leadership' goal which includes
measures on employee engagement, safety,
security, and Net-Zero. This goal is applied to
all leaders within the organisation and forms
part of the personal goals in the Annual
Bonus Plan (ABP).
Q
When and how do you apply
discretion?
The Remuneration Committee sets
challenging targets for incentive plans
which are aligned with shareholder
expectations. It plays a key role in
assessing overall company performance
when determining remuneration outcomes.
In FY25 the formulaic outcome of the
Annual Bonus would have resulted in a
payout around target. Taking account of
the company performance, the experience
of shareholders, and the recommendation
of the CEO, the Committee exercised its
discretion and reduced the bonus for FY25
to zero for the Executive Directors and the
QinetiQ Leadership Team.
Q
How have you supported
employees in FY25?
In April 2024, we completed the second
phase of our UK reward strategy,
providing increased pay transparency and
implementing an additional base salary
increase for eligible employees equivalent
to an average of 2% of the UK salary budget
addressing market relativity. In addition,
our Group Hardship Fund and Employee
Assistance Programmes continue to
provide additional support to our people
who are experiencing challenging personal
circumstances. We also continue to be
accredited as a Living Wage Employer.
Q
How do you focus on
employee engagement?
Our people share in the Company’s success
after the introduction of the AEIS in FY19
which pays up to £1,250 to all eligible
employees on the basis of the Company’s
annual operating profit performance. The
AEIS is important as a performance driver,
to support collaboration and to share the
success we create for shareholders.
Our Global Employee Voice (GEV),
representing our global employees, is
deeply engaged across the Company. We
listen to the views and level of engagement
of our people through a quarterly
survey using a market-leading dynamic
tool (Peakon).
114 QinetiQ Group plc | Annual Report & Accounts 2025
Directors' Remuneration report continued

Contents Generation – Sub PageContents Generation - Section Summary Directors’ Remuneration Policy
The Directors’ Remuneration Policy was approved by shareholders at the AGM on
20 July 2023.
The full Policy is provided in the Corporate Governance section on the Company’s website, and it will remain in effect until the 2026 AGM.
When considering the review of the Policy, the Committee was mindful of UK Corporate Governance Code provisions which state that the
Committee should address the issues as follows:
— Clarity is achieved by the simplification of the incentives and the better separation between the annual and long-term plans in the Policy
— Simplicity is delivered by a simple approach to incentives in the Policy, particularly the ABP
— Risk continues to be managed through the operation of a broad suite of performance measures and targets, the use of deferral, holding
periods and malus and clawback provisions, and the close interaction with the Audit and Risk & Security Committees
— Predictability is achieved by setting clear performance targets and outcomes for threshold, target and stretch levels of performance, with a
close link to Company strategy
— Proportionality is delivered through performance conditions, both financial and non-financial, with the clear link to strategy. The Committee
has the discretion to override formulaic outturns to ensure that they are appropriate and reflect overall performance
— Alignment to culture is supported by performance measures which are consistent with the Company’s purpose, values and strategy
A summary of the Policy is set out below:
Element Purpose and link to strategy Operation and performance measures Maximum opportunity
Base salary To attract and retain the talent
needed to lead our business.
An Executive Director’s base salary is set on
appointment and reviewed annually or when there
is a change in position or responsibility.
When determining an appropriate level of salary,
the Committee considers:
— general salary rises for employees;
— remuneration practices within the Group;
— any change in scope, role and responsibilities;
— the general performance of the Group;
— the experience of the relevant Director;
— the economic environment; and
— pay levels for similar roles among
appropriate comparators.
Individuals who are recruited or promoted to the
Board may, on occasion, have their salaries set
below the targeted policy level until they become
established in their role. In such cases subsequent
increases in salary may be higher than the general
rises for employees until the target positioning
is achieved.
Typically, the base salaries of Executive Directors in
post at the start of the Policy period and who remain
in the same role throughout will be increased by a
similar percentage to the average annual percentage
increase in salaries of all other employees in the Group.
The exceptions to this rule may be where:
— an individual is below market-level and a decision
is taken to increase base pay to reflect proven
competence in the role; or
— there is a material increase in scope or
responsibility to the Executive Director’s role.
The Committee ensures that maximum salary levels
are positioned in line with companies of a similar size
to QinetiQ and validated against other companies
in the industry, so that they are competitive against
the market.
Pension
allowance
To ensure that Executive Directors’
total remuneration remains
attractive and competitive.
The Company provides a pension contribution
allowance in line with practice relative to its
comparators to enable the Company to recruit and
retain Executive Directors with the experience and
expertise to deliver the Group’s strategy.
The maximum policy pension allowance is aligned
with the Company pension contribution paid to the
majority of UK pension scheme members (which is
currently 10.5% of salary).
Benefits To ensure that Executive Directors’
total remuneration remains
attractive and competitive.
Benefits include car allowance, health insurance,
life assurance, income protection, expenses
incurred which HMRC may deem taxable and
membership of the Group’s employee Share
Incentive Plan which is open to all UK employees.
Benefit values can vary year-on-year depending on
premiums and the maximum is the cost of providing
the relevant benefits.
Summary Directors’
Remuneration Policy
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Annual
Incentive Purpose and link to strategy Operation and performance measures Maximum opportunity
Annual Bonus
Plan (ABP)
The ABP provides an incentive
for the Executive Directors
to achieve targets that
are entirely aligned to the
Company’s strategy.
— The ABP is an annual incentive plan with a one-
year performance measurement period, with any
award paid partly in deferred shares;
— A maximum award of 200% of salary is available
each year;
— At the end of the first year 70% of the award is
paid as a cash bonus;
— The remaining 30% is deferred as an award of
deferred shares that must be held for two years,
and are subject to malus and clawback for up
to three years from the payment date; and
— Dividend equivalents will be paid on the
deferred shares.
Maximum = 200% of salary.
Target = 100% of salary.
Threshold = 0% of salary.
Long-term
Incentive Purpose and link to strategy Operation and performance measures Maximum opportunity
Long-term
Performance
Award (LPA)
The LPA provides an incentive
for the Executive Directors to
achieve long-term financial
targets that are entirely aligned
to the Company’s strategy and
the creation of shareholder
value.
The delivery of any LPA in
shares, which must be held
for a further two-years, drives
a long-term and sustainable
focus aligned to the interests
of shareholders.
Vesting of the LPA award will be determined by
performance against a scorecard of three-year
performance measures, the majority of which will be
financial (which will not duplicate those for the ABP).
Any vested shares must be held for a further two
years.
Malus and clawback provisions apply to the LPA.
The Committee will normally provide dividend
equivalents on vested shares under the LPA.
Maximum = 250% of salary.
Target = 125% of salary.
Threshold = 50% of salary.
No more than 20% of each element of the LPA
may vest at threshold levels of performance.
Element Purpose and link to strategy Operation and performance measures Maximum opportunity
Minimum
shareholding
requirements
– during
and after
employment
To align Executive Directors’
interests with those of
shareholders through the build-
up and retention of a personal
holding in QinetiQ shares.
Executives have five years to accumulate the
required shareholding.
300% of base salary for the CEO.
200% of base salary for other Executive Directors.
Executive Directors will have a post-employment
shareholding requirement of 100% of salary for the
first year post-cessation, then 50% of salary for the
second year post-cessation of employment.
The Committee reviews compliance on an annual
basis and adherence to these guidelines is a
condition of continued participation in the equity
incentive arrangements.
Chairman and
Non-executive
Directors
Fees To attract and retain Non-
executive Directors of the calibre
required to assist the Company
in setting and delivering its
strategy.
Fees are reviewed annually based on equivalent
roles in the comparator group used to review
salaries paid to the Executive Directors.
The fees for Non-executive Directors and the Group
Chair are broadly set at a competitive level against
the comparator group.
116 QinetiQ Group plc | Annual Report & Accounts 2025
Directors' Remuneration report continued
Summary Directors’ Remuneration Policy continued

Contents Generation – Sub PageContents Generation - Section Annual Report on Remuneration
The following section of this report details how the Directors’ Remuneration Policy has been implemented for the year ended 31 March 2025.
In the interests of clarity, CEO refers to Steve Wadey, CFO to Martin Cooper and Former CFO to Carol Borg.
Audited information
Executive Directors’ single total figure of remuneration:
Executive Director Year
Salary
£’000
Benefits
£’000
Pension
£’000
Total fixed
Pay
£’000
Annual
Bonus
Plan
£’000
Deferred
Share
Plan
£’000
Compensation
Share Plan
£’000
Total
variable
pay
£’000
Total
remuneration
£’000
Steve Wadey (CEO)
FY25 719 85 76 880 0 688 – 688
1,567
FY24 689 87 72 848 1,180 901 901 2,081 2,929
Martin Cooper (CFO)
(Appointed 2 September 2024)
FY25 265 11 28 304 0 – – —
304
FY24 — — — — — – – — —
Carol Borg (Former CFO)
1
(Left 16 April 2024)
FY25 19 3 2 24 0 162 836 998
1,022
FY24 448 69 47 564 744 – – 744 1,308
1 Details of Carol Borg's Deferred Share Plan and Compensation Share Plan awards are shown on page 120.
Benefits can include travel and subsistence expenses incurred in relation to the execution of their duties with the Company that are
considered by HMRC to be taxable. Where the Company settles the Director’s tax, the value disclosed is not grossed up for tax.
Salary
Salaries are reviewed effective 1 July, which is the same timing as for the rest of the UK employee population.
Salary as
1 April 2024
£'000
Increase in
the year
Salary as
1 July 2024
£'000
FY25 salary
actually paid
£'000
CEO 696 4.5% 727 719
CFO — — — 265
Former CFO 452 — — 19
Benefits (audited)
Benefits comprise a car allowance, travel allowance, private medical insurance, life assurance, income protection and taxable expenses.
Taxable
expenses
£'000
Travel & car
allowance
£’000
Insurance
benefit
£’000
Total
benefits
£’000
CEO 38 19 28 85
CFO 0 8 3 11
Former CFO 0 3 0 3
Pensions (audited)
The Executive Directors did not participate in the QinetiQ pension scheme for FY25. The pension figure is cash in lieu of pension equating to
10.5% of base salary.
Cash in lieu of
pension
£’000
Total in lieu of
pension
£’000
CEO 76 76
CFO 28 28
Former CFO 2 2
Annual Report
on Remuneration
117Annual Report & Accounts 2025 | QinetiQ Group plc
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Annual Bonus Plan (audited)
The Annual Bonus Plan (ABP) is an annual incentive with a one-year performance measurement period, with any award paid partly in deferred
shares. After the end of the first year, 70% of the award is paid as a cash bonus. The remaining 30% is made as a deferred share award that
must be held for two years and is subject to continued employment. Malus and clawback apply for up to three years from the payment date.
ABP award
£’000
June 2025
payment in cash
(70% value £’000)
Value of
share payment
(30% value £’000)
30-day average share
price to 31 March 2025
(p)
Estimated deferred
shares awarded
June 2025
CEO 0 0 0 443.6 0
CFO 0 0 0 443.6 0
Former CFO 0 0 0 443.6 0
On-target performance provides a payment equal to 100% of base salary, rising on a linear
scale to 200% of base salary for achievement of stretch performance. The scheme begins to
pay out once threshold performance measures have been achieved.
For the year ended 31 March 2025, the CEO and CFO were measured against the targets as
shown in the chart to the right. The target payment was 50% of maximum for financial and
non-financial objectives.
When setting performance targets the Remuneration Committee takes into account the
budget and the Company’s strategy set in relation to the ISP, shareholder expectations and
the external environment.
The aim is to set stretching targets which incentivise the Executive Directors to deliver annual
results which will exceed the expectations of investors, but which are also sustainable and do
not create undue profit risk. Financial performance measures exclude the contribution from
businesses acquired in the year.
Taking account of the company performance in the round, including the experience of
shareholders, and at the recommendation of the CEO, the Committee exercised its discretion
and reduced the bonus for FY25 to zero for the Executive Directors and the QLT.
Audited information
FY25 performance outcomes
Weighting % Threshold Target Stretch Actual
% of
maximum
reward
achieved
CEO
outturn
CFO
outturn
CEO/CFO financial performance measures
Orders
1
15% £1,675.0m £1,800.0m £1,925.0m £1,954.8m 100.0% £215,74 4 £78,908
Underlying operating profit
1
30% £220.0m £230.0m £240.0m £185.4m 0.0% £0 £0
Underlying net cash flow from operations
1
25% £250.0m £280.0m £325.0m £288.0m 58.9% £211,749 £7 7,4 47
CEO non-financial measures
— Common goals: performance against key
stretching objectives
2
17.5% 40% 50% 100% 7 7.4% 77.4% £194,745
— Personal goals: performance against
stretching objectives 12.5% 40% 50% 100% 70% 70% £125,851
CFO non-financial measures
— Common goals: performance against key
stretching objectives
2
17.5% 40% 50% 100% 66.7% 66.7% £61,364
— Personal goals: performance against
stretching objectives 12.5% 40% 50% 100% 80% 80% £52,605
CEO overall result
3
0.0% £0
CFO overall result
3
0.0% £0
1 Threshold payment was 0% and target payment was 50% for financial objectives. Definition of underlying measures and performance can be found in the glossary on page 202.
2 Common goals as detailed on page 119.
3 The formulaic award for the CEO and CFO respectively would have been £748,088 (52% of the maximum award of £1,438,293) and £270,325 (51.4% of the maximum award of £526,055).
Orders
Underlying net cash flow from operations
Underlying operating profit
Common goals
Personal goals
12.5%
15%
30%
25%
17.5%
% of maximum
118 QinetiQ Group plc | Annual Report & Accounts 2025
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Annual Report on Remuneration continued

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Common goals (17.5% weighting) (audited)
Measures FY25 Performance
Outturn
(% maximum)
Net-Zero (5.0% weighting) Make demonstrable progress towards the QinetiQ Net-Zero plan by reducing Scope 1, 2 and some
elements of Scope 3 emissions.
The FY25 Net-Zero performance was achieved with a reduction of 1.2% against the target, predominantly due
to a reduction in business travel.
Engagement (5.0% weighting) Achieve Group Peakon (third-party employee engagement survey) improvement target above FY24 baseline.
The FY24 baseline engagement score was maintained in FY25 resulting in a payment at target (at 7.5),
with a peak of 7.6 achieved mid-year.
Safety (7.5% weighting)
Safety Maturity (3.75%)
Safety Individual Engagements
(3.75%)
Drive the overall safety maturity of the Group as measured by an independent process. Make specific
tangible safety interventions that improve underlying safety performance and controls.
For FY25 the safety maturity score was above Stretch, marking strong progress against this independent
process, with the CEO and CFO delivering the stretch and target requirement respectively for tangible
safety interventions.
CEO Total
77.4%
CFO Total
66.7%
Personal goals (12.5% weighting) (audited)
FY25 Performance
Outturn
(% maximum)
CEO
Deliver consistent operational performance in FY25.
— Measure: demonstrable consistent performance throughout the year evidenced by KPIs, with minimal programme performance issues.
Not achieved
Continue to develop organisation culture and leadership capability that enables sustainable growth to realise five-year ambition.
— Measure: demonstrable personal leadership and commitment in delivering an improved performance culture and enhanced leadership
capability development globally.
Partially
achieved
Enable growth through customer focus and delivering first year outcome of AUKUS roadmap.
— Measure: delivery of Year 1 outcomes of AUKUS and positive customer feedback.
Partially
achieved
Continue to embed safety and secure operations, and provide strategic leadership to the delivery and embedding digital transformation.
— Measure: continued safety and security performance, successful delivery of GII/DW in FY25 and maturation of digital engineering for
customer offerings.
Achieved
Total 70%
CFO
Deliver consistent operational performance in FY25.
— Measure: demonstrable consistent performance throughout the year evidenced by KPIs, with minimal programme performance issue.
Not achieved
Continue to mature Finance & Governance function consistent with five-year ambition and partner with the Chief Operating Officer to
embed a new Integrated Strategy-to-perform Plan (ISP) global approach.
— Measure: demonstrable progress in functional performance and capability enhancements globally and delivering of the ISP with positive
feedback from key stakeholders.
Achieved
Lead and mature the Business Systems Finance (BSF) programme of work ensuring there is a clear programme of work ready for
launch in FY26.
— Measure: delivery of a resourced and clear investment case on BSF to meet the needs of the global business.
Achieved
Deliver Year 3 of ESG plan.
— Measure: evidenced progress against Net-Zero plan in year with proactive leadership in support of the ESG development Company-wide.
Achieved
Total 80%
119
Corporate Governance
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Deferred Share Plan (audited)
The FY22 legacy DSP award achieved the performance underpin and, therefore, the shares ceased to be contingent, will vest in June 2025 and
are disclosed in the single figure for FY25.
FY22 Shares awarded Vesting % Shares vesting Estimated value £’000
CEO 159,198 100% 159,198 688
Former CFO 49,299 100% 37,4 8 9 162
The FY22 DSP award performance underpin required the FY25 profit to exceed that in FY22 (£137.4m). Profit for FY25 was £185.4m and,
therefore, the shares will be released on 10 June 2025. The 100% vesting refers to the shares which have passed the underpin of those initially
granted based on FY22 performance, which was 60.2% of the maximum available. If the underpin had not been met, 50% of the DSP award
would have lapsed. For the Former CFO, the shares vesting have been pro-rated based on her leaving arrangements, with 11,810 shares of the
original award having lapsed. The net shares vesting from the FY22 DSP must be retained for a further two years.
The value of this award is calculated as CEO £687,974 and Former CFO £162,009 based on the share amounts due to vest of 159,198 and 37,489
(pro-rata) respectively based on the three-month average to 31 March 2025 (408.4p). The estimated value includes CEO £37,810 and former CFO
£8,904 as dividend equivalent payments based on an aggregate dividend of 23.75p paid in FY23 to FY25 and a share price appreciation between
grant and vesting of £169,227 and £39,851 respectively (for the Former CFO this is based on her pro-rata award).
Following the approval of the new Directors’ Remuneration Policy at the 2023 AGM, the DSP was terminated with the final award (the FY23
award) granted in June 2024 and vesting following the end of FY26. Subsisting DSP awards as identified on page 122 will continue to be
available to vest on the basis of the relevant performance underpin.
Compensation Share Plan (audited)
The Compensation Share Plan (CSP) was awarded to Carol Borg in part compensation for share awards which were forfeited on resigning
from her former employer (page 122). The value of this award is calculated based on the actual share price on the date of vesting (409.5p). The
estimated value includes a dividend equivalent payment based on an aggregate dividend of 23.25p paid between date of grant and vesting.
Shares awarded Vesting % Shares vesting Estimated value £’000
Former CFO 193,199 100% 193,199 836
Long-term Performance Award (audited)
Performance targets for FY25 award granted in July 2024
The Committee maintained the same set of performances measures and weightings used in FY24 for the FY25 Long-term Performance
Award (LPA). These have a clear link to Company strategy and incentivising growth:
— Earnings: organic underlying operating profit on a three-year cumulative basis (35% weighting)
— Designed to deliver consistent operational performance over the longer term
— Understood, relevant and actionable for QinetiQ senior leaders
— Returns: ROCE (35% weighting)
— Average EBITA for the three-year period divided by average capital employed
— Designed to drive robust investment selection and delivery
— Total revenue growth (30% weighting)
— Designed to drive value creation through collaboration and market leverage
For the FY25 LPA the Committee agreed the following targets aligned with our growth ambition (20% of each element vests at threshold).
Cumulative earnings targets are deemed commercially sensitive at this time but are consistent with our growth ambition at 11–12% margin.
ROCE Threshold 15.0% Stretch 20.0%
FY27 Total revenue Threshold £2.0bn Stretch £3.0bn
The FY25 target level of performance is not calculated on a linear basis and the target is deemed commercially sensitive at this time as it
is aligned to confidential Group strategy. Subject to the targets no longer being commercially sensitive they will be disclosed in full at the
time of vesting.
FY25 LPA conditional share awards were granted based on a maximum of 250.0% of base salary at a share price of 448.8p for the CEO in
July 2024 and 410.4p for the CFO in December 2024 determined over a five-day period prior to grant. The three-year performance period
for the FY25 award ends on 31 March 2027. Any shares which vest must then be held until fifth anniversary after grant.
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Audited information
Statement of Directors’ shareholding and share interests
In relation to the shareholding requirement adopted on 1 April 2017, the Company requires Executive Directors to hold shares (beneficially
owned) equivalent to 300% (CEO) and 200% (CFO) of base salary. Executive Directors have five years from the adoption of the guideline to
achieve the required level through, at a minimum, retaining 50% of the after-tax shares vesting from Company incentive plans.
The CEO has achieved his shareholding requirement and currently holds shares equivalent to 537% of base salary using a share price of
408.4p (three-month average to 31 March 2025).
The CFO does not currently meet the minimum shareholding requirement, with a current holding equivalent to 21% of base salary using a
share price of 408.4p (three-month average to 31 March 2025). This reflects his recent appointment as CFO and the lack of any opportunity
for share-based awards to vest.
For the former CFO, the post-cessation shareholding requirement will continue to be applied following the termination of her employment as
per Policy.
The Remuneration Committee continues to monitor compliance with the shareholding requirement.
Shares
beneficially
owned
Shares subject
to performance
conditions
Shares not
subject to
performance
conditions
Total share
interests at
31 March 2025
Steve Wadey 955,382 1,398,361 488 2,354,231
Martin Cooper
1
23,359 496,465 — 519,824
Carol Borg
2
183,176 170,614 – 353,790
Shonaid Jemmett-Page 7,000 — — 7,000
Neil Johnson 100,000 — — 100,000
Dina Knight — — — —
Roger Krone
3
— — — —
Ross McEwan 20,000 — — 20,000
General Sir Gordon Messenger 11,958 — — 11,958
Steve Mogford — — — —
Susan Searle
4
48,300 — — 48,300
Ezinne Uzo-Okoro
5
— — — —
1 Martin Cooper – Appointed 2 September 2024.
2 Carol Borg – Departed 15 April 2024.
3 Roger Krone – Appointed 8 January 2025.
4 Susan Searle – Resigned 31 March 2025.
5 Ezinne Uzo-Okoro – Appointed 1 November 2024.
Shares beneficially owned comprise shares purchased under the Share Incentive Plan (SIP) and shares owned by the Director and any
connected persons. SIP matching shares are identified as shares not subject to performance conditions. On 9 April 2025 Steve Wadey
purchased 56 shares, then on 9 May 2025 he purchased a further 46 shares, through his participation in the SIP. Shares subject to
performance conditions comprise awards made under the Deferred Share Plan and Long-term Performance Award which remain contingent
subject to the relevant performance conditions as detailed on page 123.
Carol Borg’s scheme interests were adjusted on leaving the Company as detailed on page 123.
There have been no other changes to the shares shown above between 31 March 2025 and 22 May 2025.
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Payments to past Directors and payment for loss of office (audited)
As disclosed last year on 16 April 2024, Carol Borg stepped down from the role of CFO by mutual agreement. Full details of Carol
Borg's termination agreements were disclosed in accordance with s.430(2B) of the Companies Act 2006 and in the FY24 Directors’
Remuneration Report.
The Remuneration Committee exercised its discretion taking account of her contribution to determine that Carol should be treated as a Good
Leaver in respect of a number of her incentive arrangements. The details of her remuneration following the cessation of her employment are
as follows:
— Pay in lieu of her 12-month notice period, comprising salary, benefits and pension for the remainder of her notice period. This amounted to
£565,930 and was paid in quarterly instalments.
— As disclosed last year, an FY24 ABP payment based on actual results of £744k, 70% in cash and 30% in shares which will vest after two
years from payment in June 2024.
— The conditional share award termed the Compensation Share Plan, awarded in part compensation for share awards which were forfeited on
resigning from her former employer, was allowed to vest on the normal vesting date in January 2025 in accordance with the original terms
of the award.
— FY22 and FY23 DSP awards (shown in table on pages 122 and 123), reduced for time pro-rating, may also vest on the normal vesting date,
subject to the relevant performance underpin being met. Vested shares will remain subject to a two-year holding period.
— No incentive payments will be paid in respect of her service in FY25 and the FY24 LPA will lapse.
— Shares vesting will be subject to the post-cessation share ownership requirement as per Policy.
New Group CFO Terms of Appointment
As disclosed at the time of his appointment and in last year’s report, Martin Cooper joined QinetiQ on 2 September 2024 and on appointment
the key terms of his remuneration were as follows:
— A base salary of £455,000 subject to review in July 2025, benefits and pension allowance aligned to Policy.
— An ABP maximum annual payment of 200% of salary and an LPA maximum annual grant of 250% of salary, as per Policy.
— A cash allowance of 10.5% of salary per annum in lieu of a pension contribution (in line with the level of pension contribution paid to the
majority of QinetiQ’s UK pension scheme members).
— A car allowance of £13,000 per annum and other standard benefits.
— A shareholding requirement in QinetiQ of 200% of base salary, expected to be achieved within five years of appointment.
— A notice period of 12 months (by either party).
Audited information
Total scheme interests summary
Total scheme interests, including those awarded during the financial year ended 31 March 2025, are as follows.
Plan name Date of grant
Number
1 April 2024
Granted in year
(maximum
potential of
awards)
Vested
in year
3
Lapsed
in year
Number
31 March 2025
Share price on
date of grant Vest date
Steve Wadey
DSP 2021
25 Jun 21 232,746 — 232,746 — 0 321.9 25 Jun 24
DSP 2022 10 Jun 22 159,198 — — — 159,198 302.1 10 Jun 25
DSP 2023 20 Jun 23 251,444 — — — 251,444 330.2 20 Jun 26
LPA 2024 28 Sep 23 521,352 — — — 521,352 321.3 28 Sep 26
ABP 2024
1
1 Jul 24 — 78,911 — — 78,911 448.8 31 Mar 27
LPA 2025
2
1 Jul 24 — 387,4 56 — — 387,456 448.8 1 Jul 27
1,164,740 466,367 232,746 — 1,398,361
Martin Cooper
CSP Tranche 1
18 Dec 24 — 134,015 — — 134,015 410.4 31 Mar 26
CSP Tranche 2 18 Dec 24 — 85,282 — — 85,282 410.4 31 Mar 27
LPA 2025
2
18 Dec 24 — 277,168 — — 277,168 410.4 18 Dec 27
— 496,465 — — 496,465
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Plan name Date of grant
Number
1 April 2024
Granted in year
(maximum
potential of
awards)
Vested
in year
3
Lapsed
in year
Number
31 March 2025
Share price on
date of grant Vest date
Carol Borg
CSP
5 Jan 22 193,199 — 193,199 — 0 258.8 5 Jan 25
DSP 2022 14 Jun 22 49,299 — — 11,810 37,4 89 302.1 10 Jun 25
DSP 2023 20 Jun 23 163,256 — — 79,896 83,360 330.2 20 Jun 26
LPA 2024 28 Sep 23 338,489 — — 338,489 0 321.3 28 Sep 26
ABP 2024
1
1 Jul 24 — 49,765 — — 49,765 448.8 31 Mar 27
744,24 3 49,765 193,199 430,195 170,614
1 The FY24 ABP share award granted on 1 July 2024 is the share payment of the FY24 ABP award with a face value of £354,056 and £223,327 which is 30% of the total FY24 ABP award of
£1,180,186 and £744,423 for the CEO and former CFO respectively.
2 The FY25 LPA conditional shares granted on 1 July 2024 and 18 December 2024 at a share price of 448.8p and 410.4p (five-day average prior to grant) are calculated on the basis of 250.0%
of salary with a face value of £1,738,750 and £1,137,500 for the CEO and CFO respectively. The performance period for the FY25 LPA ends on 31 March 2027 based on the achievement of
earnings, ROCE and revenue targets. Any shares which vest must be retained for a further two years.
3 Vested shares include shares sold to cover tax and National Insurance contributions.
Martin Cooper (audited)
In December 2024, conditional awards were made to Martin Cooper as part compensation for the loss of a number of share option and
long-term incentive awards at his previous employer, BAE Systems. The Committee confirms that these were necessary to facilitate his
recruitment and compensate him for the forfeiture of certain benefits as a result of his employment at QinetiQ. In approving the grant of
the awards, the Committee understood the importance of recruiting Martin without delay and therefore the one-off awards were approved
by the Committee under the exemption to the requirement for prior shareholder approval to which Listing Rule 9.3.2(2) applies, and the
awards will be satisfied by the transfer of existing shares. No consideration was paid for the grant of these awards and no consideration is
due on the vesting of these awards.
The awards consisted of two time vested conditional share awards with a total value of £900,000 using a share price of 410.4p (five-day
average prior to grant) and will be disclosed in the single total figure at point of vest.
— Tranche 1 with a value of £550,000 as 134,015 shares will vest in March 2026; and
— Tranche 2 with a value of £350,000 as 85,282 shares will vest in March 2027.
In accordance with the approved policy, the value and structure of the awards fairly reflects the awards Martin forfeited on leaving his
previous employment in terms of value and timing of vesting and take account of the performance conditions applicable to some of his
forfeited awards at that time. Both vesting dates are a one-year extension on the awards surrendered and vesting is conditional on continued
employment and is subject to clawback and malus in certain circumstances.
In addition, and also in part compensation for the value of other awards forfeited at his previous employer, he received an FY25 LPA over
shares with a face value of £1,137,500, which is 250% of his base salary of £455,000.
There have been no other changes to the interests shown above between 31 March 2025 and 22 May 2025.
Carol Borg
As part of the package approved by the Remuneration Committee for Carol Borg at recruitment, she was granted a share award in part
compensation for share awards which were forfeited on resigning from her former employer. This was granted on 5 January 2022. As part of
her termination arrangements, these shares vested in January 2025.
Carol Borg was treated as a good leaver with respect to her FY22 and FY23 DSP awards which have been reduced for time pro-rated and
remain subject to the relevant performance underpin being met. Any DSP shares which vest will remain subject to a two-year holding period.
Her FY24 LPA award lapsed on leaving on 15 April 2024.
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Performance review
The 10-year chart shows the Company’s Total Shareholder Return (TSR) over the period from 31 March 2015 to 31 March 2025 compared
with the FTSE 250 (excluding investment trusts) over the same period based on spot values. The Committee has chosen to demonstrate the
Company’s performance against this index as it is the index in which the Company is listed.
TSR – Value of £100 investment
made on 31 March 2015
2022 2023 20252024
As at 31 March
2015 2016 2017 2018 2019 2020 2021
300
200
100
250
150
50
0
QinetiQ FTSE 250
Source: Refinitiv Eikon
CEO remuneration
The table below shows the CEO’s remuneration over the same performance period 31 March 2015 to 31 March 2025 as the TSR chart:
Financial Year ended 31 March CEO Salary/fees Single figure
Annual bonus
(% of maximum)
Long-term
incentives (% of
maximum vesting)
FY25 Steve Wadey 719,147 1,567,490 — 100.0%
FY24 Steve Wadey 689,160 2,928,669 85.6% 100.0%
FY23 Steve Wadey 664,126 2,164,306 98.2% —
FY22 Steve Wadey 639,121 2,477,069 71.4% 100.0%
FY21 Steve Wadey 511,550 2,695,414 95.7% 100.0%
FY20 Steve Wadey 610,357 1,978,247 87.5% 38.4%
FY19 Steve Wadey 596,422 2,339,474 94.4% 31.7%
FY18 Steve Wadey 582,167 1,522,460 66.7% —
FY17 (restated) Steve Wadey 568,166 1,829,470 86.4% —
FY16 Steve Wadey 520,219 1,654,546 85.4% —
FY16 David Mellors 455,885 1,423,382 82.9% —
CEO pay ratio
The calculation below is based on the FY25 single figure for the CEO of £1,567,490 and similar calculations for the UK workforce (i.e. ‘Option
A’ as defined by the Companies (Miscellaneous Reporting) Regulations 2018). The Remuneration Committee chose Option A as it is the
approach generally favoured by investors and GC100. The calculations for the UK workforce were performed as at 31 March 2025.
Total remuneration
Ratio of the CEO’s to the pay of UK employees
Year 25th percentile Median 75th percentile
FY25 33: 1 25: 1 20: 1
FY24 67: 1 50: 1 38: 1
FY23 53: 1 40: 1 31: 1
FY22 67: 1 49: 1 37: 1
FY21 70: 1 52: 1 39: 1
FY20 56: 1 41: 1 31: 1
The CEO pay ratios have decreased between FY24 and FY25 as a result of the lower CEO single figure for FY25 due to zero annual bonus
being paid in the year. The Company believes that the median pay ratio for FY25 is consistent with the pay, reward and progression policies for
the UK employees as the approach for all QinetiQ employees is monitored and reported to the Remuneration Committee on an annual basis.
Year-on-year movements in the CEO pay ratio are likely to be volatile due to the wide range of incentive outcomes for the CEO single figure,
but the Remuneration Committee does note the ratio and will monitor long-term trends.
10-year comparator chart
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Total pay of UK employees
25th percentile Median 75th percentile
Total pay and benefits £47,114 £62,423 £77,805
Salary component
1
£42,189 £55,241 £49,524
1 The base salary data is impacted by the fact that the employee identified at the 75th percentile on a total pay basis had significant overtime and allowances payments.
The Remuneration Committee welcomes the opportunity to provide this information to shareholders. The Company aims to reward all
employees fairly for the success and growth they create.
Remuneration policy for all employees
All employees of QinetiQ are entitled to base salary, benefits and pension. UK and Australia-based employees are entitled to participate
in the QinetiQ Share Incentive Plan. The maximum incentive opportunity available is based on the seniority and responsibility of the role.
Participation in the LPA is available to Executive Directors, senior leaders and selected employees throughout the organisation.
The All Employee Incentive Scheme (AEIS) provides every eligible employee the opportunity to earn a cash bonus based on Company and
personal performance. For FY25 the operating profit threshold was not achieved, and therefore the Company performance element of AEIS
was not paid. However, in recognition of the strong performance of our people this year, a discretionary ‘thank you’ payment of £400 to each
eligible employee was approved instead. The AEIS will be operated again in FY26 and thereafter.
The Committee reviews (but does not decide) the general reward policy for all employees and any significant changes proposed. Alignment
with the workforce is delivered through the Rewarding for Performance framework, including a transparent and consistent approach to the
annual salary review, the AEIS to drive Company and personal performance, recognition schemes and market competitive benefits in our
countries. For FY25 the Company agreed further investment in the employee offering across the Group including, in the UK, concluding the
work to address market relativity, providing an additional base salary increase to employees to ensure they receive a fair market level of pay.
The CEO and the Chief People Officer have held regular discussions with our Global Employee Voice (GEV) representatives on reward matters.
Members of the Board also met with the GEV representatives twice in FY25. Amongst other things, these meetings have discussed how
executive remuneration is aligned to the broader employee offering in support of Group strategy.
Audited information
Single figure total remuneration for the Chairman and each Non-executive Director
Non-executive Directors’ remuneration is shown as a single figure to provide an annual comparison between the remuneration awarded during
the financial year ended 31 March 2025 and the preceding year.
Non-executive Directors
Fees £’000 Benefits £’000 Single figure £’000
FY25 FY24 FY25 FY24 FY25 FY24
Shonaid Jemmett-Page
1
76 73 1 — 77 73
Neil Johnson 281 270 2 — 283 270
Dina Knight 62 5 2 — 64 5
Roger Krone
2
18 — 3 — 21 —
Ross McEwan 74 5 24 5 98 10
General Sir Gordon Messenger
1
76 73 1 — 77 73
Steve Mogford 74 67 3 — 77 67
Susan Searle
1,3
76 73 2 — 78 73
Ezinne Uzo-Okoro
4
26 — 5 — 31 —
1 Fees include Committee Chair fees.
2 Roger Krone – Appointed 8 January 2025.
3 Susan Searle – Resigned 31 March 2025.
4 Ezinne Uzo-Okoro – Appointed 1 November 2024.
The fees for Steve Mogford, Roger Krone and Ross McEwan include £12,000 as Senior Independent Director, Senior US (pro-rated based on
start date) and Australia resident Non-executive Director respectively.
Benefits include travel and subsistence expenses (grossed-up for tax) incurred in relation to the execution of their duties with the Company
that are considered by HMRC to be taxable. Attendance fees are also included in this number.
Roger Krone and Ezinne Uzo-Okoro as US residents received a $4,000 fee for attending UK meetings; as an Australian resident Ross McEwan
receives a UK meeting fee of AU$8,000. UK-based Non-executive Directors are entitled to receive a £2,500 fee for attending US meetings.
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Percentage change in Directors’ remuneration
The following table compares the percentage change in the Director’s salary/fees, bonus and benefits to the average percentage change
in salary, bonus and benefits for a comparison group (4,811 employees) in the UK business in service between 1 April 2024 and
31 March 2025. The analysis only includes Directors who served for FY25 and includes the temporary salary/fee sacrifice in FY21.
Fees £’000 Benefits £’000 Annual bonus £’000
FY25 FY24 FY23 FY22 FY21 FY25 FY24 FY23 FY22 FY21 FY25 FY24 FY23 FY22 FY21
Executive Directors
Steve Wadey 4.4% 3.8% 3.9% 24.9% -16.2% -1.2% 9.2% 21.5% -4.3% 35.9% -100.0% -10.5% 43.0% -22.7% 10.3%
Martin Cooper — — — — — — — — — — — – – – –
Carol Borg -95.8% 3.9% — — — -95.8% 1.8% — — — -100.0% -10.9% — — —
Non-executive
Directors
Shonaid Jemmett-Page 4.8% 8.2% 1.5% — — 123.9% -62.1% 0% — — — — — — —
Neil Johnson 4.2% 4.2% 3.6% 14.3% 17.1% 103.2% -7 7.2% 33.3% 100% -100% — — — — —
Dina Knight 1140% — — — — — — — — — — — — — —
Roger Krone — — — — — — — — — — — — — — —
Ross McEwan 1133% — — — — 422.3% — — — — — — — — —
General Sir Gordon
Messenger 4.8% 4.3% — — — 173.6% -76.8% — — — — — — — —
Steve Mogford 9.6% 82.4% — — — 589.5% -52.7% — — — — — — — —
Susan Searle 4.7% 8.2% 1.5% 21.2% -6.8% 75.5% 74.8% 0% 100% -100% — — — — —
Ezinne Uzo-Okoro — — — — — — — — — — — — — — —
Employees
Average UK employee
1
6.0% 7.8% 4.4% 2.9% 1.2% -1.0% -22.2% 5.7% 10.9% -1.2% -76.7% 3.0% 96.2% -38.2% 62.2%
1 UK employees were chosen to avoid the impact of exchange rate movements over the year. QinetiQ Group plc has no employees so QinetiQ Group Ltd employees were used.
The reduction in salary and fees which the Board implemented as a waiver for six months in FY21 impacted the analysis above, as did the
reduced travel and physical meeting attendance. The benefits paid to Non-executive Directors are largely travel and subsistence expenses
incurred in relation to the execution of their duties with the Company that are considered by HMRC to be taxable.
Relative importance of spend on pay
The graph below shows actual spend on all employee remuneration, shareholder dividends and buy-backs and any other significant use of
profit and cash within the previous two financial years.
2025
2025
2024
2024
+2.0%
Difference
+26.9%
Difference
Share-based profit distribution
Dividend cash payment plus purchase of own shares
(see CFO Review page 30).
Other significant profit distribution
There were no other significant profit distributions
in 2024 or 2025.
£707.1m2025
£122.8m2025
£693.0m2024
£96.7m2024
Total employee remuneration
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Gender related pay
QinetiQ is subject to gender pay reporting for UK employees and a copy of our latest report is available on the Company’s website.
Service contracts/letters of appointment
The Company’s policy is that Executive Directors have rolling contracts which can be terminated by either party giving 12 months’ notice.
The Group Chairman and the Non-executive Directors do not have service contracts but are appointed under letters of appointment.
All service contracts and letters of appointment are available for viewing at the Company’s registered office and at the AGM.
Non-executive Directors typically serve two three-year terms but may be invited by the Board to serve for an additional period (see table in the
Nominations Committee report on page 92).
Director Date appointed Arrangement Notice period
Steve Wadey 27 April 2015 Service contract 12 months
Martin Cooper 2 September 2024 Service contract 12 months
Shonaid Jemmett-Page 19 May 2020 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
Neil Johnson 2 April 2019 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
Dina Knight 1 March 2024 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
Roger Krone 8 January 2025 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
Ross McEwan 1 March 2024 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
General Sir Gordon
Messenger
12 October 2020 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
Steve Mogford 1 August 2022 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
Ezinne Uzo-Okoro 1 November 2024 Initial term of three years from date of appointment, subject to annual reappointment at the AGM —
Implementation of Policy for the year ended 31 March 2025
The Remuneration Policy operated as intended for the year ended 31 March 2025. Non-executive Directors’ fees reviewed effective 1 July
2024 were set as follows:
— Basic fee £62,500 (was £60,000)
— Committee Chair fee £14,000 (no change)
— Senior Independent Director fee £12,000 (no change)
The fee increase was based on a NED fee benchmarking report provided by Mercer, and having considered the workload and contribution of
the NEDs, the increase in base fee is 4.2%, less than the increases applied to the UK workforce in FY24.
The Non-executive Group Chair receives a fee of £284,000 per annum which was increased by 4.0% effective 1 July 2024, less than the
increases applied to the UK workforce in FY24.
Fees are reviewed in line with Policy.
Executive Directors are permitted to accept one external Non-executive Director position with the Board’s approval. Any fees received in
respect of these appointments may be retained by the Executive Director. The CEO and CFO do not hold any Non-executive Directorships in
other companies.
Fees effective
1 July 2024
£
Group Chairman 284,000
Basic fee for UK Non-executive Director 62,500
Additional fee for chairing a Committee 14,000
Additional fee to Deputy Chair/Senior Independent Non-executive Director 12,000
Additional fee for attendance at a Board meeting held in US by UK resident Non-executive Director 2,500
Additional fee for attendance at a Board meeting held in UK by US resident Non-executive Director $4,000
Additional fee for attendance at a Board meeting held in UK by Australia resident Non-executive Director AU$8,000
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Implementation of Policy for the year ending 31 March 2026
At the 14 May 2025 meeting of the Remuneration Committee and at the request of the CEO, the review of his salary will be deferred to the
end of FY26. The CFO’s salary will be increased by 3.3% (to £470,000p.a.) with effect from 1 July 2025, reflecting his performance and
development in the role. For FY26, the overall salary review budget for UK employees is 4%; with 3.5% for the July 2025 salary review plus
0.5% for in-year salary progression.
Incentives for Executives
The table below shows the measures and relative weighting for the Annual Bonus Plan for the CEO and CFO:
Annual Bonus Plan Performance measure Relative weighting(%)
Orders 25.0%
Target performance 100% of base salary Underlying operating profit 25.0%
Stretch performance 200% of base salary Underlying net cash flow from operations 25.0%
Personal and strategic goals, including selected ESG metrics 25.0%
For FY26 the Remuneration Committee agreed to maintain the same financial metrics as in FY25 (orders, profit and cash), however, have
adjusted the percentage from 70% to 75%, adjusting the weightings on orders and profit to 25% each (from 15% and 30% respectively) having
equal weighting across all three financial metrics. To drive consistent cash collection performance, 30% of this element will be based on the
achievement of meeting H1 performance targets, with 70% based on performance over the full financial year. The personal and strategic goals
will provide greater emphasis on personal leadership, performance standards and ESG metrics (safety, security and environmental leadership).
In-line with the Directors' Remuneration Policy, target performance results in 50% of the maximum being paid. Details of specific performance
targets for the ABP have not been provided as they are deemed commercially sensitive. The targets will be disclosed retrospectively in next
year’s Annual Report on Remuneration.
For FY26 the Committee has maintained the performance measures and weightings for the LPA with a clear link to Company strategy and
incentivising growth:
— Earnings: organic underlying operating profit on a three-year cumulative basis (35% weighting)
— Designed to deliver consistent operational performance over the longer term
— Understood, relevant and actionable for QinetiQ senior leaders
— Returns: ROCE (35% weighting)
— Average EBITA for the three-year period divided by average capital employed
— Designed to drive robust investment selection and delivery
— Total revenue growth (30% weighting)
— Designed to drive value creation through collaboration and market leverage
For the FY26 LPA the Committee agreed the following targets aligned with our growth ambition (20% of each element vests at Threshold).
Cumulative earnings targets are deemed commercially sensitive at this time but are consistent with our growth ambition at 11–12% margin.
ROCE Threshold 20.0% Stretch 25.0%
FY28 Total revenue Threshold £2.2bn Stretch £2.7bn
The FY26 target level of performance is not calculated on a linear basis and the target is deemed commercially sensitive at this time as it is
aligned to confidential Group strategy. Subject to the targets no longer being commercially sensitive they will be disclosed in full at the time
of vesting.
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Remuneration Committee meetings, activities and decisions FY25
The following table provides a summary of all the key activities during the year. The attendance at each meeting is detailed on page 86.
The membership of the Remuneration Committee for the whole of FY25 was Susan Searle (Chair), Dina Knight (Chair-designate), Neil
Johnson, General Sir Gordon Messenger, Shonaid Jemmett-Page, Steve Mogford, Ross McEwan. Ezinne Uzo-Okoro and Roger Krone joined
the Committee on 1 November 2024 and 8 January 2025 respectively.
Date Incentives Share awards Governance Salaries and resourcing
May 2024 Review of FY24
Company performance
Review FY24
LPA performance
Confirm FY25
LPA targets
Approve FY25 Directors’ Remuneration Report
2023 Directors’ Remuneration Policy
Review share plan equity dilution
QLT base salary reviews
July 2024 AGM preparation
November 2024 FY25 half-year forecast Review of QLT shareholdings
Review of all-employee remuneration to ensure, inter
alia, alignment of incentives and reward with culture
March 2025 FY25 provisional results
FY26 target setting Mercer review of independence
Remuneration Committee effectiveness review
A performance evaluation of the Committee is conducted annually. This process is described further on page 98.
Remuneration consultants
Mercer were appointed as independent adviser to the Committee to provide advice on market practice, corporate governance and investors’
views. Mercer were selected by the Committee after providing ad-hoc advice in support of the design of the Directors’ Remuneration Policy
and prior experience of working with them. Fees paid to Mercer during the year for services provided were £91,000 calculated on a time-spent
basis at pre-agreed rates.
Statement of voting
Directors’ Remuneration Report – 2024
Votes for 393,316,096 (87.7%)
Votes against 55,380,160 (12.3%)
Total votes cast 448,696,256 (78.4% of share capital)
Abstained 3,385,130
Directors’ Remuneration Policy – 2023
Votes for 406,828,507 (84.3%)
Votes against 75,547,245 (15.7%)
Total votes cast 482,375,752 (83.4% of share capital)
Abstained 26,105
Details on the voting on all resolutions at the 2025 AGM will be
announced via the RNS and posted on the QinetiQ website
after the AGM.
Dina Knight
Remuneration Committee Chair
22 May 2025
Votes for Votes against
Directors’ Remuneration
Report 2024 % of votes (%)
Directors’ Remuneration
Policy 2023 % of votes (%)
12.3% 15.7%
84.3%87.7%
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Contents Generation – Sub PageContents Generation - Section Directors’ report and statutory information
Directors’ report and
statutory information
Directors’ report
In accordance with Section 415 of the Companies Act 2006 (the 'Act'), the Directors present their report together with the audited
consolidated financial statements for the year ended 31 March 2025. Other sections of the Annual Report and Accounts have been
deemed to be incorporated into the Directors’ report by reference and the table below details where the required disclosures can be found.
Information Page
Corporate governance statement 75
Culture 75
Directors’ details 80–82
Directors’ conflicts of interest 86
Directors’ interests in shares 121
Dividends 34
Engagement with employees 91
Engagement with suppliers, customers and others 59
Employment of disabled people 132
Financial instruments: Information on the Group’s financial risk management objectives and
policies, and its exposure to credit risk, liquidity risk, interest rate risk and foreign currency risk 166
Future developments 1–73
Greenhouse gas emissions 40–51
Results 30–34
Section 172 Statement 70 –7 3
Subsidiaries, joint ventures and associates 172
Publication of the ratio of the CEO’s remuneration to the median, 25th and 75th quartile pay
remuneration of their UK employees in the Directors’ Remuneration report 124
Illustration of the effect of future share price increases on executive pay outcomes in the Directors’ Remuneration Report 113
Management report
The Strategic report, Corporate governance statement and Directors’ Report together are the management report for the purposes of DTR
4.1.5(2) and DTR 4.1.8R.
Corporate governance statement
The Corporate governance statement, including the Directors’ Remuneration Report, fulfils the requirement of a corporate governance
statement under DTR 7.2.1.
Disclosures in accordance with Listing Rule 6.6.1
For the purposes of the UK Listing Rules, the information required to be disclosed by UKLR 6.6.1R can be found as follows:
Section Information Page
(1) Interest capitalised n/a
(2) Publication of unaudited financial information n/a
(3) Details of long-term incentive schemes 116
(4) Waiver of emoluments by a Director n/a
(5) Waiver of future emoluments by a Director n/a
(6) Non pre-emptive issues of equity for cash n/a
(7) Non pre-emptive issue by major subsidiary undertakings n/a
(8) Listed subsidiary n/a
(9) Contracts of significance n/a
(10) Provision of services by a controlling shareholder n/a
(11) Shareholder waivers of dividends n/a
(12) Shareholder waivers of future dividends n/a
(13) Compliance with controlling shareholder rules n/a
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Research and development
One of the Group’s distinct business capabilities is the provision of funded research and development (R&D) to customers. The Group also
invests in the commercialisation of promising technologies across all areas of business.
In the financial year, the Group recorded £344.9m (FY24: £328.2m) of total R&D-related expenditure, of which £332.7m (FY24: £315.4m) was
customer-funded work and £12.0m (FY24: £12.8m) was internally funded. Additionally, £3.7m (FY24: £4.0m) of late-stage development costs
were capitalised and £6.2m (FY24: £3.3m) of capitalised development costs were amortised in the year.
Political donations
QinetiQ’s policy is that it does not make what are commonly regarded as donations to any political party. QinetiQ does undertake legitimate
interactions with MPs and others in the political world, to make them aware of key industry issues and matters that affect QinetiQ, and to
make an important contribution to their understanding of QinetiQ, the markets in which it operates and the work of their constituents.
Branches
The Company and its subsidiaries have established branches in a number of different countries; their results are, however, not material to the
Group’s financial results.
Share capital
As at 31 March 2025, the Company had an allotted and fully paid up-share capital of 553,530,455 ordinary shares of 1p each with an
aggregate nominal value of £5.5m and one Special Share with a nominal value of £1. The ordinary share total includes 1,711,349 shares held
by employee share trusts.
Details of the shares in issue during the financial year are shown in note 28 on page 177.
Acquisition of own shares
On 31 January 2025, the Company completed a £100 million share buyback programme, which was originally announced on 16 January 2024.
In total 23,860,262 ordinary shares of £0.01 were repurchased and subsequently cancelled as part of this programme.
A further £50 million share buyback programme commenced on 3 February 2025, and is expected to complete by the end of May 2025. As at
21 May 2025, the Company has repurchased 11,174,309 ordinary shares of £0.01 under this programme.
Pursuant to the above-mentioned buyback programmes, in the year ended 31 March 2025, the Company repurchased, and subsequently
cancelled 23,865,436 Ordinary Shares of £0.01, which represents approximately 4.3% of the Company’s issued share capital.
Further details on the share buyback programme can be found on our website www.qinetiq.com.
Rights of ordinary shareholders
The holders of ordinary shares are entitled to receive the Company’s Reports and Accounts, to attend and speak at general meetings of the
Company, to exercise voting rights in person or by appointing a proxy, and to receive a dividend where declared or paid out of profits available
for that purpose.
Rights of special shareholder
The Special Share is held by HM Government through the Secretary of State for Defence (the Special Shareholder) and it may only be held by
and transferred to HM Government. It confers certain rights to protect UK defence and security interests. These include:
— The promotion and reinforcement of the MOD compliance principles which require QinetiQ to be an impartial, ethical and responsible
contractor by avoiding conflicts of interest in its dealings with the MOD
— The protection of defined strategic assets of the Group, such as certain testing facilities, by providing the Special Shareholder with an option
to purchase those assets in certain circumstances
— The right to require certain persons with a material interest in QinetiQ to dispose of some or all of their ordinary shares on the grounds of
national security or conflict of interest
— A provision whereby at least the Non-executive Chairman or Chief Executive Officer must be a British citizen
The Special Share carries no financial and economic value and the Special Shareholder is not entitled to vote at a general meeting of the
Company. At any time the Special Shareholder may require QinetiQ to redeem the share at par and, if wound up, the Special Shareholder would
be entitled to be repaid at its nominal value before other shareholders. Any variation of the rights attached to the Special Share requires the
written approval of the MOD. Further details can be found in note 28 on page 177.
Restrictions on the transfer of shares
As detailed above, the special share requires certain persons with an interest in QinetiQ’s shares that exceed certain prescribed thresholds to
dispose of some or all of their ordinary shares on the grounds of national security or conflict of interest.
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Employee share schemes
The QinetiQ Group plc Employee Benefit Trust (the Trust) holds shares in connection with QinetiQ’s employee share schemes, excluding the
Share Incentive Plan. As at 31 March 2025, the Trust held 1,711,349 ordinary shares of 1p each (the Trust Shares). The Trustees of the Trust
have agreed to waive their entitlement to dividends payable on the Trust Shares.
Equiniti Share Plan Trustees Limited acts as Trustee in respect of all ordinary shares held by employees under the QinetiQ Group plc Share
Incentive Plan (the Plan). Equiniti Share Plan Trustees Limited will vote on all resolutions proposed at general meetings in accordance with
voting instructions received from participants in the Plan.
Corporate sponsored nominee
In circumstances where ordinary shares are held by the corporate sponsored nominee service, Equiniti Corporate Nominees Limited will vote
on all resolutions proposed at general meetings in accordance with voting instructions received from shareholders using such corporate
nominee service.
Major shareholdings
In accordance with DTR 5, the Company has been notified of the following from holders representing 3% or more of the issued ordinary share
capital of the Company.
Name of shareholder
As at 31 March 2025
% of issued
share capital*
As at 21 May 2025
% of issued
share capital*
Klear Kite LLC 12.63% 12.63%
Schroders 9.98% 9.98%
Franklin Mutual Advisers LLC 5.07% 5.07%
* As notified by the shareholder and based on the issued ordinary share capital at the time of the notification.
Employees
The Group is committed to the fair treatment of people with disabilities in relation to applications, training, promotion and career development.
If an existing employee becomes disabled, the Company makes every effort to enable them to continue their employment and career
development and to arrange appropriate training, wherever practical.
Directors’ interests in contracts
At the date of this report, there is no contract or arrangement with the Company or any of its subsidiaries that is significant in relation to the
business of the Group as a whole in which a Director of the Company is materially interested.
Indemnities
The Company has entered into indemnity deeds with all its current Directors containing qualifying indemnity provisions, as defined in Section
234 of the Companies Act 2006, under which the Company has agreed to indemnify each Director in respect of certain liabilities, which may
be attached to them as Directors or as former Directors of the Company or any of its subsidiaries. The qualifying third-party indemnity was in
force during the financial year and also at the date of approval of the financial statements.
Articles of Association
Changes to the Articles must be submitted to shareholders for approval save in respect of the rights attaching to the Special Share, the
Company has not adopted any special rules relating to the appointment and replacement of Directors or the amendment of the Company’s
Articles of Association, other than as provided under UK corporate law.
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Change of control – significant agreements
The following significant agreements contain provisions entitling the counterparties to require prior approval, exercise termination, alteration or
other similar rights in the event of a change of control of the Company, or if the Company ceases to be a UK company:
— The Combined Aerial Target Service contract is a 20-year contract awarded to QinetiQ Target Services Limited by the MOD on 14 December
2006. The terms of this contract require the Company to remain a UK company which is incorporated under the laws of any part of the
UK, or an overseas company registered in the UK, and that at least 50% of the Board of Directors are UK nationals. The terms also contain
change of control conditions and restricted share transfer conditions which require prior approval from HM Government if there is a material
change in the ownership of the Company’s share capital, unless the change relates to shares listed on a regulated market; ‘material’ is
defined as being 10% or more of the share capital. In addition, there are restrictions on transfers of shares to persons from countries
appearing on the restricted list as issued by HM Government.
— The Long Term Partnering Agreement (LTPA) is a 25-year contract (with an option to extend for a further five year period), which QinetiQ
Limited signed on 28 February 2003, to provide test, evaluation and training services to the MOD. This contract contains conditions under
which the prior approval of HM Government is required if the contractor, QinetiQ Limited, ceases to be a subsidiary of the QinetiQ Group,
except where such change in control is permitted under the Shareholders Agreement to which the MOD is a party.
— The Maritime Strategic Capabilities Agreement Future Arrangement contract is a 10-year contract awarded by the MOD which came into
effect on 1 April 2023. The contract terms include a provision requiring that any change of control of QinetiQ Limited requires prior approval
from HM Government (with control being defined as the ability to control the Company’s affairs by reason of the holding of shares or by
means of voting or other powers). If such approval is not obtained, the MOD reserves the right to terminate the agreement.
— The Engineering Delivery Partner Agreement placed with QinetiQ Limited by the MOD came into force on 5 October 2018 and has a 10-year
duration. The contract contains a provision under which any change of control of QinetiQ Limited requires prior approval from HM Government
(with control being defined as the ability to control the Company’s affairs by reason of the holding of shares or by means of voting or other
powers). The MOD is entitled to terminate the contract where a change of control has occurred without such approval having been obtained.
— The Group is party to funding agreements, provided by a consortium of banks: a £290m multi-currency revolving credit facility which was
due to mature on 22 April 2028; with a one-year option to extend the final maturity to 22 April 2029; a multi-currency floating rate term loan
of £335m which matures on 27 September 2027, and interest rate derivative contracts maturing on 27 September 2027 to fix the floating
rate bank borrowings in line with Treasury policy. Under the terms of the agreements, in the event of a change of control of the Company,
any lender may give notice to cancel its commitment and require all outstanding amounts to be repaid.
The Directors’ contracts contain no provisions for compensation for loss of office on a change of control of the Company.
Appointment and replacement of Directors
According to the Articles of Association, all Directors are subject to election by shareholders at the first AGM after their appointment,
and must stand for re-election at intervals of no more than three years thereafter. In line with best practice reflected in the UK Corporate
Governance Code, however, the Company requires each serving member of the Board to stand for election or re-election on an annual basis at
each AGM.
Powers of the Directors: allotment/purchase of own shares
At the Company’s AGM held in July 2024, the shareholders passed resolutions which authorised the Directors to allot relevant securities up
to an aggregate nominal value of £1,901,553 (£3,803,105 pursuant only to a rights issue) and to disapply pre-emption rights (up to 5% of the
issued ordinary share capital). The authorities will remain valid until the 2025 AGM.
Resolutions in respect of the allotment of relevant securities, the disapplication of pre-exemption rights and the purchase of own shares will
be laid before the 2025 AGM.
Annual General Meeting
The Company’s AGM will be held on Thursday 17 July 2025 at 11:00 at the office of Ashurst LLP, London Fruit and Wool Exchange, Duval
Square, London E1 6PW.
Independent auditors
A resolution to confirm the reappointment of PricewaterhouseCoopers ('PwC') as auditor of the Company will be proposed at the 2025 AGM.
The reappointment has been recommended to the Board by the Audit Committee and PwC has expressed its willingness to continue in office.
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Contents Generation – Sub PageContents Generation - Section Statement of Directors’ responsibilities in respect
of the financial statements
The Directors are responsible for preparing the Annual Report
and Accounts including the Directors’ Remuneration Report and
the Financial Statements in accordance with applicable law
and regulations.
UK company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have prepared the Group financial statements in accordance
with International Accounting Standards in conformity with the
requirements of the Companies Act 2006 and the Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure Framework’, and applicable
law). Additionally, the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules require the Directors to prepare
the Group Financial Statements in accordance with UK-adopted
International Accounting Standards.
Under UK company law, Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. In preparing the financial
statements, the Directors are required to:
— Select suitable accounting policies and apply them consistently
— State whether applicable international accounting standards in
conformity with the requirements of the Companies Act 2006
and UK-adopted International Accounting Standards have been
followed for the Group financial statements and United Kingdom
Accounting Standards, comprising FRS 101 have been followed
for the Company financial statements, subject to any material
departures disclosed and explained in the financial statements;
— Make reasonable and prudent judgements and accounting
estimates; and
— Prepare the financial statements on the going-concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The Directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and
Company’s transactions, and disclose with reasonable accuracy
at any time, the financial position of the Group and Company
and enable them to ensure that the financial statements and
the Directors’ Remuneration report comply with the Companies
Act 2006.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Directors’ confirmations
The Directors of the Company who served during the financial
year ending 31 March 2025:
Neil Johnson
Steve Wadey
Carol Borg (resigned 16 April 2024)
Martin Cooper (appointed 2 September 2024)
Steve Mogford
Shonaid Jemmett-Page
Dina Knight
Roger Krone (appointed 8 January 2025)
Ross McEwan
General Sir Gordon Messenger
Susan Searle (resigned 31 March 2025)
Ezinne Uzo-Okoro (appointed 1 November 2024)
Each of the Directors confirm that, to the best of their knowledge:
— The Group financial statements, which have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and international
financial reporting standards, adopted pursuant to UK-adopted
International Accounting Standards, give a true and fair view of the
assets, liabilities, financial position and profit of the Group
— The Company Financial Statements, which have been prepared
in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets,
liabilities, financial position and profit of the Company
— The going-concern statement on page 69 includes a fair review
of the development and performance of the business and the
position of the Group and Company, together with a description of
the principal risks and uncertainties that it faces
In the case of each Director in office at the date the Directors’ report
is approved.
Scope of the reporting in this Annual Report
The Board has prepared a Strategic report which provides an
overview of the development and performance of the Group’s
business in the year ended 31 March 2025.
For the purposes of DTR 4.1.5R(2) and DTR 4.1.8 the Directors confirm
that, so far as they are aware, there is no relevant audit information of
which the Company’s auditor is unaware, and that they have taken all
steps that they ought to have taken as Directors to make themselves
aware of any relevant audit information and to establish that the
Company’s auditor is aware of that information.
By order of the Board.
James Field
Company Secretary
22 May 2025
Statement of Directors’
responsibilities in respect
of the financial statements
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Contents Generation – Sub PageContents Generation - Section Independent auditor's report
Independent auditors’ report
to the members of QinetiQ Group plc
Report on the audit of the financial statements
Opinion
In our opinion:
— QinetiQ Group plc’s group financial statements and company financial statements (the 'financial statements') give a true and fair view of
the state of the group’s and of the company’s affairs as at 31 March 2025 and of the group’s loss and the group’s cash flows for the year
then ended;
— the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied
in accordance with the provisions of the Companies Act 2006;
— the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 101 'Reduced Disclosure Framework', and applicable law); and
— the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report & Accounts 2025 (the 'Annual Report'), which comprise:
the Consolidated and Company balance sheets as at 31 March 2025; the Consolidated income statement, Consolidated statement of
comprehensive income, Consolidated and Company statements of changes in equity and Consolidated cash flow statement for the year then
ended; and the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ('ISAs (UK)') and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in Note 8, we have provided no non-audit services to the company or its controlled undertakings in the period
under audit.
Our audit approach
Overview
Audit scope
— We conducted full scope audit work in the United Kingdom over QinetiQ Limited, in the United States over QinetiQ US, and in Australia
over QinetiQ Pty Ltd based on their size. This provides significant coverage over all financial statement balances, except inventory and
intangible assets;
— We performed a full scope financial statement line item audit over inventory and intangible assets balances at QinetiQ Target Systems
Limited to provide sufficient overall group coverage;
— We performed procedures over goodwill, acquired intangible assets, share-based payments, the defined benefit pension scheme,
IFRS 16 lease accounting, taxation, borrowings and the consolidation at a group level.
Key audit matters
— Long-term contract accounting (group)
— Impairment of goodwill related to the US CGU (group)
— Impairment of investments in subsidiary undertakings (parent)
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Report on the audit of the financial statements continued
Our audit approach continued
Overview continued
Materiality
— Overall group materiality: £10,000,000 (2024: £11,300,000) based on 5% of underlying profit before tax.
— Overall company materiality: £5,400,000 (2024: £5,300,000) based on 1% of total assets.
— Performance materiality: £7,500,000 (2024: £8,475,000) (group) and £4,050,000 (2024: £3,975,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon,
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Long-term contract accounting (group)
Refer to page 102 (Audit Committee report) and page 184
(note 35, Basis of preparation and material accounting
policies - Revenue from contracts with customers) and page
148 (note 2, Revenue from contracts with customers and
other income).
QinetiQ Group plc has a large number of contracts which
span multiple periods and are accounted for on a percentage
of completion (POC) basis in accordance with IFRS 15. Long
term contract accounting requires a number of judgements
and management estimates to be made, particularly in
calculating the forecast costs to complete the contract. These
judgements drive revenue and profit recognition, and together
with cash paid by the customer, impact the balance sheet
position at the year end.
We evaluated the contract governance policies and controls in place within the
business and tested the design and operating effectiveness of certain key controls
over long-term contracts.
For long term contracts within the UK, the Group team performed risk assessment
procedures over the portfolio of contracts to identify contracts to subject to detailed
audit procedures. These detailed contract audits involved meeting with key financial
and non-financial personnel throughout the year and at year end to discuss contract
performance, as well as challenging management to provide evidence to support the
estimates taken on each contract in the financial statements.
Specifically, our procedures included the following (across the full population of contracts):
— We assessed the basis of revenue recognition to ensure it is in line with applicable
accounting standards.
— We agreed overall anticipated revenue to the underlying contract and validated a
sample of customer invoices through to cash receipt.
— We recalculated revenue recognised and agreed revenue, costs and associated
balance sheet positions to the underlying general ledger.
— We obtained evidence to corroborate management estimates and judgements,
particularly around forecast costs to complete and risk contingencies, including:
— Performing risk assessment sensitivity to identify those cost categories that are
most sensitive and require further review;
— Comparing forecasts to established run rate obtaining evidence for movements
outside of our expectation, where applicable; and
— Obtaining contract risk registers and obtaining support for significant movements.
— We validated costs incurred allocated to contracts (across the full population of
contracts) during the year to supporting documentation.
For the remaining population of contracts, we selected a sample and performed testing
over revenue and costs, agreeing to supporting documentation including customer
contracts and validating a sample of customer invoices to cash receipts. Additional
testing was performed, where not sufficiently covered by the above, over the contract
asset and liability balance sheet positions to gain assurance over the accuracy of these
balances. These have been sample tested and agreed to supporting documentation.
Component teams in the US and Australia, stratify their contracts into risk categories
and perform the above procedures as relevant. No material exceptions were found.
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Key audit matter How our audit addressed the key audit matter
Impairment of goodwill related to the US CGU (group)
Refer to page 102 (Audit Committee report), page 188 (note
35, Basis of preparation and material accounting policies –
Impairment of goodwill and tangible, intangible and held for
sale assets) and page 155 (note 13, Goodwill). The group has
a material amount of goodwill (£249.8m at 31 March 2025)
with £181.1m of this relating to the US cash- generating unit
('CGU'). As required by IAS 36, management performed
an impairment assessment, determining the recoverable
amount of each CGU as the higher of the value in use or
fair value less cost to sell. This assessment is underpinned
by the Board-approved five-year strategic plan. This annual
impairment review was performed as at 31 March 2025.
During the year there was a material impairment recorded of
£143.9m wholly relating to the US CGU. After this impairment,
the remaining carrying value of the US CGU is material and
hence there is a significant estimate as to the value of the
impairment recorded, as well as the remaining value held on
the balance sheet.
Our audit focused on the risk that the impairment recorded and the consequent carrying
value of goodwill in the US CGU could be materially misstated.
We assessed the design and implementation of the goodwill impairment processes
and related controls; however, we concluded that we would not rely on the controls over
financial reporting and therefore we performed only substantive procedures in this area.
We reviewed management's assessment of value in use and fair value less cost to sell for
the US CGU to verify that the recoverable amount reflected the higher of the two measures.
We tested the principles and mathematical integrity of the group’s discounted cash
flow model. With the assistance of our valuation specialists, we assessed the long-term
growth rates and discount rate used in the impairment calculation, by comparing the
group’s assumptions to external data.
We confirmed that cash flows for the next 5 years were consistent with internal
budgeting and strategic planning processes and the long term viability assessment and
that the underlying budgets and strategic plans have been approved by the Board.
Within the US CGU, we challenged the cash flow projections of future revenue growth
used within the model by reference to future market growth and contract opportunities,
obtaining third party evidence where possible. We held discussions with financial
and non-financial personnel, corroborating explanations to supporting evidence.
We challenged assumptions regarding forecast margin with reference to historical
performance and evidence of strategic plans supported by external advisors. We
concluded that the group’s assumptions were reasonable and supportable, and we did
not identify any indication of management bias.
We assessed the related disclosures in the annual report, including sensitivity of the
impairment calculations to changes in the underlying assumptions, and consider them to
be appropriate.
Impairment of investments in subsidiary undertakings (parent)
Refer to page 196 (Accounting policies – Investments
and note 2, Investments in subsidiary undertakings).
The company has investments of £540.1m in its subsidiary
undertakings.
Annually, the Directors consider whether any events or
circumstances have occurred that could indicate that the
carrying amount of the investment in subsidiaries may not
be recoverable. If such circumstances are identified, an
impairment review is undertaken to establish whether the
carrying amount of the investments exceeds its recoverable
amount, being the higher of fair value less costs to sell or
value in use.
Impairment assessments of this nature require significant
judgement and there is a risk that a potential impairment
trigger may not be identified by management and in the
event that there is an impairment trigger identified, there
is a risk that the calculation of the recoverable amount
of the investment is incorrect and therefore the value of
the investment may be misstated. No such indicators of
impairment have been identified.
We have evaluated management’s consideration of impairment triggers through
performing our own independent assessment, which has included:
— Considering the market capitalisation of the group at year end and comparing this to
the carrying value of the investment.
— Assessing the overall financial performance of the group to identify any indicators of
impairment as a result of poor financial performance.
— Considering other information gathered during the course of our audits of components
and assessing whether there are any other indicators of impairment.
— Comparing the carrying value of the investment to the carrying value of the underlying
net assets.
We found that management’s conclusion, that there are no impairment triggers in the
investments in subsidiaries carrying value, was reasonable.
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Report on the audit of the financial statements continued
Our audit approach continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate.
We conducted full scope audit work over QinetiQ Limited, QinetiQ US and QinetiQ Pty Ltd, with QinetiQ Limited being the only component
considered significant to the group. The audit of QinetiQ Limited is performed in the United Kingdom and the audits of QinetiQ US and QinetiQ Pty
Ltd are performed by our local PwC component teams based in the United States and Australia, respectively. This provides sufficient coverage
over all financial statement balances, except inventory, intangible assets and central balances audited by the group team.
We performed additional procedures over inventory and intangible assets balances at QinetiQ Target Systems Limited to ensure sufficient
coverage over that financial statement line item. QinetiQ Target Systems Limited is located within the UK and work was performed by the
group audit team.
In addition to the above, we performed risk assessment analytical procedures on the remaining entities, other than those considered
inconsequential, to understand key balances and transactions in the year. This was performed by the group audit team and did not result in
any further balances being brought into scope.
The audit procedures performed over the financial information of full scope components, QinetiQ Limited, QinetiQ US and QinetiQ Pty Ltd,
accounted for 91% of consolidated group revenue and 77% of underlying profit before taxation (on an absolute basis, excluding holding
companies and consolidation entities).
The full scope audits plus the additional audit procedures over inventory and intangible assets in QinetiQ Target Systems, resulted in coverage
of 84% of total group assets.
The combination of the work referred to above, together with additional procedures performed at a group level, including testing of significant
journals posted within the consolidation, significant adjustments made to the financial statements, goodwill, acquired intangible assets, share-
based payments, pensions, IFRS 16 lease accounting, taxation and borrowings gave us the evidence required for our opinion on the financial
statements as a whole.
The group engagement leader discussed and agreed the audit plan with our component audit teams, in addition to agreeing the format and
content of communications. We determined that the level of involvement we were able to have in the audit work at our reporting entities
was sufficient, and appropriate audit evidence had been obtained, to enable us to form our opinion on the financial statements as a whole.
The group engagement leader visited our local PwC component team and the local management team in the United States as part of our
planning procedures. We maintained regular dialogue throughout the audit process with our component audit teams through the use of video
conferencing. We also supervised the work performed by all component teams through the review of component team working papers and we
concluded that sufficient and appropriate procedures have been performed.
The company audit was performed by the group audit team. The parent company is principally a holding company and there are no branches
or other locations to be considered when scoping the audit. There are no financial statement line items in scope for the group audit. The
company is audited on a stand-alone basis and hence testing has been performed on all material financial statement line items.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the group’s and
company’s financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of climate
risk. In particular, when carrying out our work over long term contracts we challenged management over the impact of climate change (e.g.
flooding at exposed areas) on the forecasted costs to complete as well as any potential risks arising from physical and environmental issues.
Our procedures did not identify any material impact as a result of climate risk on the group’s and company’s financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
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Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £10,000,000 (2024: £11,300,000). £5,400,000 (2024: £5,300,000).
How we determined it 5% of underlying profit before tax 1% of total assets
Rationale for
benchmark applied
Underlying profit before tax is one of the primary measures
used by the shareholders in assessing the performance of the
group, and is a generally accepted auditing benchmark. It is
considered appropriate to exclude specific adjusting items due
to the nature of these balances as disclosed in note 4 of the
financial statements.
We believe that total assets is the primary measure used by
shareholders in assessing the performance of this entity,
and is a generally accepted auditing benchmark for a holding
company. This materiality relates to the audit of the parent
company only, as the parent company was not in scope for
the group audit.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of
materiality allocated across components was between £6,000,000 and £9,500,000. Certain components were audited to a local statutory
audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our
performance materiality was 75% (2024: 75%) of overall materiality, amounting to £7,500,000 (2024: £8,475,000) for the group financial
statements and £4,050,000 (2024: £3,975,000) for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £500,000 (group
audit) (2024: £525,000) and £270,000 (company audit) (2024: £265,000) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors' assessment of the group's and the company’s ability to continue to adopt the going concern basis of
accounting included:
— Obtaining the board-approved strategic plan. We held discussions with management to understand the budgeting process and the key
assumptions made over management’s going concern assessment period
— Performing a comparison of the cash flow forecasts used in the going concern assessment to those in the strategic plan and, where
applicable, compared these forecasts for consistency to those used elsewhere in the business, including for long term contract accounting
and impairment assessments
— Assessing whether the stress testing performed by management appropriately considered the principal risks facing the business, and were
adequate
— Using our own knowledge from the audit and assessment of previous forecasting accuracy we have assessed management's sensitivities
applied to cash flow forecasts. These procedures confirmed liquidity and covenant headroom in management’s forecasts when performing
severe but plausible sensitivities
— Evaluating the feasibility of management’s mitigating actions in response to the severe stress testing scenarios; and
— We assessed the adequacy of disclosures in the Going Concern statement on page 69, the Audit Committee report on page 103 and
statements in Note 35 of the Financial Statements and found these appropriately reflect our understanding of the process undertaken
and the conclusion reached.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's and the company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of
the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and the company's
ability to continue as a going concern.
In relation to the directors' reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors' statement in the financial statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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Report on the audit of the financial statements continued
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act
2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ Report for the
year ended 31 March 2025 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies
Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors' statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified
for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the
Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to
add or draw attention to in relation to:
— The directors' confirmation that they have carried out a robust assessment of the emerging and principal risks;
— The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
— The directors' statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material uncertainties to the group’s and company’s ability to continue to do so
over a period of at least twelve months from the date of approval of the financial statements;
— The directors' explanation as to their assessment of the group's and company’s prospects, the period this assessment covers and why the
period is appropriate; and
— The directors' statement as to whether they have a reasonable expectation that the company will be able to continue in operation and
meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors' statement regarding the longer-term viability of the group and company was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors' process supporting their statement; checking that the statement
is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with
the financial statements and our knowledge and understanding of the group and company and their environment obtained in the course of
the audit.
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In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
— The directors' statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the group’s and company's position, performance, business model and strategy;
— The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
— The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors' statement relating to the company’s compliance
with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by
the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, the directors are responsible
for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and
fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations
related to Single Source Contracting Regulations, the Health and Safety Executive and anti-bribery and corruption legislation, and we
considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the Companies Act 2006 and relevant tax legislation. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls),
and determined that the principal risks were related to posting inappropriate journal entries to increase revenue as well as considering
management bias in accounting estimates. The group engagement team shared this risk assessment with the component auditors so that
they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement
team and/or component auditors included:
— Discussions with management at multiple levels across the business, internal audit and the group’s legal counsel throughout the year, as
well as at year end. These discussions have included consideration of known or suspected instances of non-compliance with laws and
regulations and fraud;
— Evaluation of management’s controls designed to prevent and detect irregularities, in particular their anti-bribery controls;
— Assessment of matters reported on the group’s whistleblowing helpline and the results of management’s investigation of such matters;
— Reviewing correspondence with and reporting to relevant regulatory authorities;
— Challenging assumptions and judgements made by management in their significant accounting estimates and judgements, particularly in
relation to the key audit matters above;
— Designing risk filters to search for journal entries, such as those posted with unusual account combinations, and testing those journals
highlighted (if any); and
— Incorporating elements of unpredictability into the audit procedures performed.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance
with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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Report on the audit of the financial statements continued
Responsibilities for the financial statements and the audit continued
Responsibilities of the directors for the financial statements continued
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek
to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to
draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by
our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
— we have not obtained all the information and explanations we require for our audit; or
— adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from
branches not visited by us; or
— certain disclosures of directors' remuneration specified by law are not made; or
— the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 22 June 2017 to audit the financial statements
for the year ended 31 March 2018 and subsequent financial periods. The period of total uninterrupted engagement is 8 years, covering the
years ended 31 March 2018 to 31 March 2025.
Other matter
The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these financial
statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed on the
National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over whether the structured
digital format annual financial report has been prepared in accordance with those requirements.
John Ellis (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Southampton
22 May 2025
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Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Financial
Statements
144 Consolidated income statement
145 Consolidated statement of comprehensive income
145 Consolidated statement of changes in equity
146 Consolidated balance sheet
147 Consolidated cash flow statement
147 Reconciliation of movements in net debt
148 Notes to the Consolidated Financial Statements
194 Company balance sheet
195 Company statement of changes in equity
196 Notes to the Company Financial Statements
Additional Information
198 Five-year financial summary
199 Additional financial information
200 Glossary
202 Alternative performance measures (APMs)
203 Shareholder information
206 Company information and advisers
Financial Statements
143
Annual Report & Accounts 2025 | QinetiQ Group plc

Contents Generation – Sub PageContents Generation - Section Consolidated income statement
Consolidated income statement
For the year ended 31 March
Consolidated income statement
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
144
*
Alternative performance measures are used to supplement the statutory figures. These are additional financial indicators used by management internally to assess the
underlying performance of the Group. Definitions can be found on page 202. Also refer to note 4 for details of ‘specific adjusting items’.
FY25
FY24
Specific
Specific
All figures in £ million
Note
Underlying
*
Items
Total
Underlying
*
Items
Total
Rev enue
2, 3
1,931.6
-
1,931.6
1,912.1
-
1,912.1
O perating costs excluding depreciation and amortisation
(1,669.1)
(136.8)
(1,805.9)
(26.1)
(1,670.4)
Other income
39.2
-
39.2
40.1
2.1
42.2
EBITDA (earnings before interest, tax, depreciation
and amortisation)
301.7
(136.8)
164.9
(24.0)
Depreciation
and impairment of property, plant and equipment
(71.6)
(0.7)
(58.8)
Impairment of goodwill
13
-
(143.9)
(143.9)
-
-
-
Amortisation and impairment of intangible assets
3, 4, 14
(15.7)
(24.2)
(39.9)
(7.4)
(25.2)
(32.6)
O
perating profit/(loss)
3
215.4
(305.9)
(90.5)
242.4
(49.9)
192.5
Finance income
7
6.6
1.0
7.6
5.3
5.6
10.9
Finance expense
7
(23.4)
-
(23.4)
(20.7)
-
(20.7)
Profit
/(loss) before tax
198.6
(304.9)
(106.3)
227.0
(44.3)
182.7
Taxation (expense)/income
9
(27.8)
(79.4)
(57.4)
14.3
(43.1)
Profit
/(loss) for the year
147.0
(332.7)
(185.7)
169.6
(30.0)
139.6
Earnings /(loss) per share for profit/(loss) attributable to
the
owners of the parent company
FY25
FY24
All figures in pence
Note
Underlying
*
Total
Underlying
*
Total
Basic
(33.0 )
29.4
24.2
Diluted
10
25.8
(33.0)
29.0
23.8
* *
QinetiQ Group plc | Annual Report & Accounts 2025144
Financial Statements

Contents Generation - Section Consolidated statement of changes
in equity
Consolidated statement of
comprehensive income
Consolidated statement of comprehensive income
For the year ended 31 March
Consolidated statement of comprehensive income
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
145
Financial Statements
Consolidated statement of changes in equity
For the year ended 31 March
All figures in £ million
Share
capital
Capital
redemption
reserve
Share
premium
Hedge
reserve
Translation
reserve
Retained
earnings
Total
Note
28
At 1 April 2024
5.7
40.8
147.6
6.4
(16.7)
742.3
926.1
Total comprehensive expense
Loss for the year
-
-
-
-
-
(185.7)
(185.7)
Other comprehensive (expense)/income for the year, net of tax
-
-
-
(3.2)
(10.9)
13.3
(0.8)
Total comprehensive expense for the year
-
-
-
(3.2)
(10.9)
(172.4)
(186.5)
Purchase of own shares
(0.2)
0.2
-
-
-
(74.9)
(74.9)
Share-based payment
-
-
-
-
-
8.9
8.9
Tax on share-based payments (note 9)
-
-
-
-
-
0.8
0.8
Dividends
-
-
-
-
-
(47.9)
(47.9)
At 31 March 2025
5.5
41.0
147.6
3.2
(27.6)
456.8
626.5
At 1 April 2023
5.8
40.8
147.6
6.3
(4.2)
772.0
968.3
Total comprehensive income/(expense)
Profit for the year
-
-
-
-
-
139.6
139.6
Other comprehensive income/(expense) for the year, net of tax
-
-
-
0.1
(12.5)
(81.7)
(94.1)
Total comprehensive income/(expense) for the year
-
-
-
0.1
(12.5)
57.9
45.5
Purchase of own shares
(0.1)
-
-
-
-
(51.0)
(51.1)
Share-based payments
-
-
-
-
-
8.8
8.8
Tax on share-based payments (note 9)
-
-
-
-
-
0.2
0.2
Dividends
-
-
-
-
-
(45.6)
(45.6)
At 31 March 2024
5.7
40.8
147.6
6.4
(16.7)
742.3
926.1
All figures in £ million
Note
FY25
FY24
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) recognised in defined benefit pension schemes
27
17.7
(108.9)
Tax on items that will not be reclassified to profit and loss
17
(4.4)
27.2
Total items that will not be reclassified to profit or loss
13.3
(81.7)
Items that may be reclassified to profit or loss:
Movement in deferred tax on foreign currency translation
0.7
0.1
(Decrease)/increase in the fair value of hedging derivatives
(4.3)
0.1
Movement in deferred tax on hedging derivatives
1.1
-
Other comprehensive expense for the year, net of tax
(0.8)
(94.1)
Consolidated statement of comprehensive income
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
145
Financial Statements
Consolidated statement of changes in equity
For the year ended 31 March
Capital
Share
Hedge
Translation
reserve
earnings
Total
Note
28
5.7
40.8
147.6
6.4
(16.7)
742.3
926.1
Total comprehensive
expense
Loss for the year
-
-
-
-
(185.7)
(185.7)
Other comprehensive (expense)/income for the year, net of tax
-
-
-
(3.2)
(10.9)
13.3
(0.8)
Total comprehensive expense for the year
-
-
-
(3.2)
(10.9)
(172.4)
(186.5)
Purchase of own shares
(0.2)
0.2
-
-
-
(74.9)
(74.9)
Share-based payment
-
-
-
-
-
8.9
8.9
Tax on share-based payments (note 9)
-
-
-
-
-
0.8
0.8
Dividends
-
-
-
-
-
(47.9)
(47.9)
5.5
41.0
147.6
3.2
(27.6)
456.8
626.5
At 1 April 2023
5.8
40.8
147.6
6.3
(4.2)
772.0
968.3
Total comprehensive income/(expense)
-
-
-
-
-
139.6
Other comprehensive income/(expense) for the year, net of tax
-
-
-
0.1
(12.5)
(81.7)
(94.1)
-
-
-
0.1
(12.5)
57.9
45.5
Purchase of own shares
(0.1)
-
-
-
-
(51.0)
(51.1)
Share-based payments
-
-
-
-
-
8.8
8.8
Tax on share-based payments (note 9)
-
-
-
-
-
0.2
0.2
Dividends
-
-
-
-
-
(45.6)
(45.6)
At 31 March 2024
5.7
40.8
147.6
6.4
(16.7)
742.3
926.1
All figures in £ million
Note
FY25
FY24
(Loss)/profit for the year
(185.7)
139.6
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) recognised in defined benefit pension schemes
27
17.7
(108.9)
Tax on items that will not be reclassified to profit and loss
17
(4.4)
27.2
Total items that will not be reclassified to profit or loss
13.3
(81.7)
Items that may be reclassified to profit or loss:
Foreign currency translation losses on foreign operations
(11.6)
(12.6)
Movement in deferred tax on foreign currency translation
0.7
0.1
(Decrease)/increase in the fair value of hedging derivatives
(4.3)
0.1
Movement in deferred tax on hedging derivatives
1.1
-
Total items that may be reclassified to profit or loss
(14.1)
(12.4)
Other comprehensive expense for the year, net of tax
(0.8)
(94.1)
Total comprehensive (expense)/income for the year
(186.5)
45.5
Consolidated statement of changes in equity
For the year ended 31 March
Financial Statements
Annual Report & Accounts 2025 | QinetiQ Group plc 145

Contents Generation – Sub PageContents Generation - Section Consolidated balance sheet
Consolidated balance sheet
As at 31 March
QinetiQ Group plc Annual Report and Accounts 2025
146
The financial statements on pages 144 to 196 were approved by the Board of Directors and authorised for issue on 22 May 2025 and were
signed on its behalf by:
Steve Wadey Martin Cooper
Group Chief Executive Officer Group Chief Financial Officer
31 March
31 March
All figures in £ million
Note
Non-current assets
Goodwill
13
249.8
401.4
Intangible assets
14
293.9
321.8
Property, plant and equipment
15
473.3
531.8
Other financial assets
23
3.0
4.9
Equity accounted investments
16
2.1
2.2
Net pension asset
27
39.4
18.4
Deferred tax asset
17
10.7
36.7
1,072.2
1,317.2
Inventories
19
70.7
89.2
Other financial assets
23
4.9
6.2
Trade and other receivables
20
388.4
456.8
Current tax asset
18
1.6
5.8
Cash and cash equivalents
23
290.6
231.0
756.2
789.0
1,828.4
2,106.2
Trade and other payables
21
(597.5)
(654.7)
Current tax payable
18
(3.6)
Provisions
22
(56.2)
Other financial liabilities
23
(15.1)
(9.2)
(672.4)
(685.8)
Non-current liabilities
Deferred tax liability
17
(101.0)
(94.4)
Provisions
22
(3.5)
Borrowings and other financial liabilities
23
(416.6)
(384.1)
Other payables
21
(8.4)
(11.6)
Total liabilities
(1,201.9)
(1,180.1)
Net assets
626.5
926.1
Ordinary shares
28
5.5
5.7
Capital redemption reserve
41.0
40.8
147.6
147.6
Hedging reserve
3.2
6.4
Translation reserve
(27.6)
Retained earnings
456.8
742.3
626.5
926.1
Consolidated balance sheet
As at 31 March
QinetiQ Group plc | Annual Report & Accounts 2025146
Financial Statements continued

Contents Generation - Section Reconciliation of movements in net debtConsolidated cash flow statement
Consolidated cash flow statement
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
147
Financial Statements
Reconciliation of movement in net debt for the year ended 31 March
All figures in £ million
Note
FY25
FY24
Underlying net cash inflow from operations
24
316.2
320.2
Less: specific adjusting items
24
(29.5)
(26.1)
Net cash inflow from operations
24
286.7
294.1
(48.6)
Interest received
6.6
5.3
(23.4 )
221.3
243.1
Purchases of intangible assets
14
(12.7)
Purchases of property, plant and equipment
15
(96.1)
(85.4)
Proceeds from sale of property
108.5
0.3
-
Acquisition of businesses
12
-
(5.1)
Net cash inflow/(outflow) from investing activities
0.4
(99.1)
Purchase of own shares
(108.9)
(17.1)
Dividends paid to shareholders
11
(47.9)
(10.8)
Cash flow relating to intercompany loan hedges
9.2
6.3
(158.4 )
Increase in cash and cash equivalents
63.3
80.8
Effect of foreign exchange changes on cash and cash equivalents
(3.7
)
Cash and cash equivalents at beginning of the year
231.0
151.2
290.6
231.0
All figures in £ million
Note
FY25
FY24
Increase in cash and cash equivalents in the year
63.3
80.8
Add back net cash flows not impacting net debt
12.4
7.3
Movement in net debt resulting from cash flows
75.7
88.1
Net increase in lease obligations
(50.8)
(31.2)
Net movement in derivative financial instruments
(4.7)
(0.5)
Other movements including foreign exchange
(2.2)
(0.7)
Movement in net debt as defined by the Group
18.0
55.7
Net debt as defined by Group at the beginning of the year
(151.2)
(206.9)
Net debt as defined by the Group at the end of the year
23
(133.2)
(151.2)
Less: borrowings
23
335.0
336.3
Less: total net derivative financial instruments, capitalised borrowing costs and lease liabilities
23
88.8
45.9
Total cash and cash equivalents
23
290.6
231.0
Consolidated cash flow statement
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
147
Financial Statements
Reconciliation of movement in net debt for the year ended 31 March
All figures in £ million
Note
FY25
FY24
Underlying net cash inflow from operations
24
316.2
320.2
Less: specific adjusting items
24
(29.5)
(26.1)
Net cash inflow from operations
24
286.7
294.1
Tax paid
(48.6)
(36.9)
Interest received
6.6
5.3
Interest paid
(23.4)
(19.4)
Net cash inflow from operating activities
221.3
243.1
Purchases of intangible assets
14
(12.7)
(10.9)
Purchases of property, plant and equipment
15
(96.1)
(85.4)
Proceeds from sale of property
108.5
2.1
Proceeds from sale of plant and equipment
0.4
0.2
Dividends from joint ventures and associates
0.3
-
Acquisition of businesses
12
-
(5.1)
Net cash inflow/(outflow) from investing activities
0.4
(99.1)
Purchase of own shares
(108.9)
(17.1)
Dividends paid to shareholders
11
(47.9)
(45.6)
Capital element of lease payments
(10.8)
(6.8)
Cash flow relating to intercompany loan hedges
9.2
6.3
Net cash outflow from financing activities
(158.4)
(63.2)
Increase in cash and cash equivalents
63.3
80.8
Effect of foreign exchange changes on cash and cash equivalents
(3.7)
(1.0)
Cash and cash equivalents at beginning of the year
231.0
151.2
Cash and cash equivalents at end of the year
23
290.6
231.0
All figures in £ million
Note
FY25
FY24
Increase in cash and cash equivalents in the year
63.3
80.8
Add back net cash flows not impacting net debt
12.4
7.3
Movement in net debt resulting from cash flows
75.7
88.1
Net increase in lease obligations
(50.8)
(31.2)
Net movement in derivative financial instruments
(4.7)
(0.5)
Other movements including foreign exchange
(2.2)
(0.7)
Movement in net debt as defined by the Group
18.0
55.7
Net debt as defined by Group at the beginning of the year
(151.2)
(206.9)
Net debt as defined by the Group at the end of the year
23
(133.2)
(151.2)
Less: borrowings
23
335.0
336.3
Less: total net derivative financial instruments, capitalised borrowing costs and lease liabilities
23
88.8
45.9
23
290.6
231.0
Consolidated cash flow statement
For the year ended 31 March
Reconciliation of movements in net debt
for the year ended 31 March
Financial Statements
Annual Report & Accounts 2025 | QinetiQ Group plc 147

Contents Generation – Sub PageContents Generation - Section Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
148
1. Significant changes in the current reporting period
The financial position and performance of the Group was particularly affected by the following events and transactions during the reporting
period:
1) A £151.6m decrease in Goodwill predominantly due to an impairment charge against the US Sector CGU (note 13)
2) A £74.9m reduction in equity due to the ongoing purchase to acquire own shares as part of the share buy back programme
3) The sale and leaseback transaction of Cody Technology park which generated net proceeds of £108.5m, created new lease liabilities of
£39.1m and had a net impact on the net book value of property, plant and equipment of £85.1m
4) A £59.7m increase in the balance of cash and cash equivalents following strong operating cash performance and the sale and
leaseback transaction, offset by capex, tax, dividends and share buy back.
For a detailed discussion of the Group’s performance and financial position refer to the Strategic Report on pages 1 to 73.
2. Revenue from contracts with customers and other income
Revenue and other income is analysed as follows:
Revenue by category
For the year ended 31 March
* Alternative performance measures are used to supplement the statutory figures. These are additional financial indicators used by management internally to assess the
underlying performance of the Group. Definitions can be found on page 202.
Other income
Revenue and profit after tax of associates and joint ventures was £5.9m and £0.3m respectively (FY24: revenue of £5.9m and profit after
tax of £1.0m). The figures in the table above represent the Group share of this profit after tax.
Other income is in respect of property rentals and the recovery of other related property costs.
Revenue by customer geographic location
All figures in £ million
FY25
FY24
Services contracts with customers
1,810.9
1,811.2
Sale of goods contracts with customers
110.6
95.7
Royalties and licences
10.1
5.2
Total revenue
1,931.6
1,912.1
Adjust to constant prior year exchange rates
10.9
-
Total revenue on an organic, constant currency basis
*
1,942.5
1,912.1
Organic revenue growth at constant currency
*
2%
14%
All figures in £ million
FY25
FY24
Share of joint ventures’ profit after tax
0.3
0.8
Research and development expenditure credits (RDEC)
30.0
27.2
Other income
8.9
12.1
Underlying other income
39.2
40.1
-
2.1
Total other income
39.2
42.2
All figures in £ million
FY25
FY24
United Kingdom (UK)
1,311.0
1,265.8
United States of America (US)
348.4
401.9
Australia
147.9
130.6
Home countries
1,807.3
1,798.3
Europe
64.7
52.8
59.6
61.0
1,931.6
1,912.1
Home countries revenue %
94%
94%
International (non-UK) revenue %
32%
34%
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc | Annual Report & Accounts 2025148
Financial Statements continued

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Notes to the Consolidated Financial Statements
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149
Financial Statements
Revenue by major customer type
‘Other’ does not contain any customers with revenue in excess of 10% of total Group revenue.
The following table shows the aggregate amount of revenue allocated to performance obligations that are unsatisfied (or partially satisfied)
as at the end of the reporting period:
Management expects that 49% (£1,393.3m) of revenue allocated to un-satisfied contracts as of 31 March 2025 will be recognised as revenue
during the next reporting period.
The following table shows the aggregate amount of revenue allocated to performance obligations that were unsatisfied (or partially
satisfied) as at the end of the prior reporting period:
Revenue of £212.6m was recognised during the year that was previously unrecognised as at the previous year end and reported as a
contract liability.
3. Segmental analysis
The analysis by business segment is presented in accordance with IFRS 8 Operating Segments, on the basis of those reportable segments
whose operating results are regularly reviewed by the Board (the Chief Operating Decision Maker as defined by IFRS 8) and are aligned with
the Group’s strategic direction, determined with reference to the products and services they provide, as follows:
EMEA Services provides technical assurance, test and evaluation and training services, underpinned by long-term contracts. EMEA Services
comprises the following business units which are not considered reportable segments as defined by IFRS 8: UK Defence, UK Intelligence
and the Australia sector.
Global Solutions combines all other business units not aggregated within EMEA Services, including the QinetiQ US Sector and Other
Products (which includes QinetiQ Target Systems). Generally these business units (which are not considered reportable segments as
defined by IFRS 8) deliver innovative solutions and products which includes contract-funded research and development and developing
intellectual property in partnership with key customers and through internal funding with potential for new revenue streams.
Operating segments
1 The measure of profit presented to the Chief Operating Decision Maker is Operating profit from segments, stated before specific adjusting items and research and
development expenditure credits. The specific adjusting items are detailed in note 4.
2 Definitions of the Group’s ‘Alternative performance measures’ can be found on page 202.
All figures in £ million
FY25
FY24
UK government
1,205.3
1,184.9
US government
338.1
389.3
Other
388.2
337.9
Total revenue
1,931.6
1,912.1
All figures in £ million
FY26
FY27
FY28
FY29+
Total
All figures in £ million
FY25
FY26
FY27
FY28+
Total
1,304.6
621.0
401.9
545.5
2,873.0
FY25
FY24
Revenue
Underlying
Revenue
Underlying
from external
operating
from external
All figures in £ million
customers
profit
1,2
customers
profit
1,2
EMEA Services
1,477.7
169.0
1,417.4
163.4
Global Solutions
453.9
16.4
494.7
51.8
Revenue/Operating profit from segments
1,2
1,931.6
185.4
1,912.1
215.2
Research and development expenditure credits (RDEC)
30.0
27.2
Underlying operating profit
2
215.4
242.4
Operating profit margin from segments
2
9.6%
11.3%
Financial Statements
Annual Report & Accounts 2025 | QinetiQ Group plc 149

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
150
3. Segmental analysis (continued)
No measure of segmental assets and liabilities is reported as this information is not regularly provided to the Chief Operating Decision
Maker. Transactions between segments are included within the operating profit and revenue of each segment as appropriate.
Reconciliation of segmental results to total (loss)/profit
1 The measure of profit presented to the Chief Operating Decision Maker is Operating profit from segments, stated before specific adjusting items and research and
development expenditure credits. The specific adjusting items are detailed in note 4.
2 Definitions of the Group’s ‘Alternative performance measures’ can be found on page 202.
Non-current assets* by geographic location
* Excluding deferred tax, financial instruments, equity accounted investments and net pension asset.
Depreciation and amortisation by business segment – excluding specific adjusting items
For the year ended 31 March 2025
For the year ended 31 March 2024
All figures in £ million
Note
FY25
FY24
Operating profit from segments
1,2
185.4
215.2
Research and development expenditure credits (RDEC)
30.0
27.2
UUnnddeerrllyyiinngg ooppeerraattiinngg pprrooffiit
2
215.4
242.4
Specific adjusting items operating loss
4
(305.9)
(49.9)
(90.5 )
Net finance expense
7
(15.8)
(9.8)
(106.3
)
Taxation expense
9
(79.4
)
(43.1)
(Loss)/profit for the year
(185.7)
139.6
Rest of
All figures in £ million
UK
US
Australia
Germany
world
Total
508.3
392.1
65.8
11.0
1,017.0
As at year ended 31 March 2024
576.1
572.8
46.5
46.3
13.3
1,255.0
EMEA
Global
Solutions
Total
Underlying depreciation and impairment of property, plant and equipment
63.1
7.5
70.6
Underlying amortisation and impairment of purchased or internally developed intangible assets
7.5
8.2
15.7
70.6
15.7
86.3
EMEA
All figures in £ million
Services
Solutions
Total
Underlying depreciation and impairment of property, plant and equipment
50.8
7.3
58.1
Underlying amortisation and impairment of purchased or internally developed intangible assets
4.2
3.2
7.4
55.0
10.5
65.5
Financial Statements continued
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Notes to the Consolidated Financial Statements
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151
Financial Statements
4. Specific adjusting items
In the income statement, the Group presents specific adjusting items separately. In the judgement of the Directors, for the reader to obtain a
proper understanding of the financial information, specific adjusting items need to be disclosed separately because of their size and nature.
Further explanation of this rationale is provided in note 35 (Accounting Policies). Underlying measures of performance exclude specific
adjusting items. The following specific adjusting items have been (charged)/credited in the consolidated income statement:
Reconciliation of underlying profit for the year to total (loss)/profit for the year
The total impact of specific adjusting items (which are excluded from underlying performance due to their distorting nature) on operating
profit was a £305.9m cost (FY24: cost of £49.9m).
Our US operations performed below expectations for orders, revenue, profit and cash flow in the year with some key contract losses. The
goodwill impairment charge of £143.9m relates to the US Sector and is driven by a combination of an increase in the discount rate and a
reduction in the forecast cash flows used to calculate the recoverable amount predominately in our legacy US operations. During the second
half of the financial year the change in administration, together with the new US Sector CEO’s perspective on the US business performance
and outlook led to a material impact on the future projections of the business and an associated restructuring plan. These factors, together
with the impact of the discount rate which increased significantly in H2, has a knock-on impact for future years’ profitability and cash flow
and hence an impairment.
Restructuring costs and other impacts of £64.5m includes approximately £20m of costs relating to restructuring to create efficiency and
competitiveness in our functions and sectors. The remaining £45m relates to a number of one-off, largely non-cash charges and provisions
primarily relating to inventory and cost recovery in our legacy US operations. These items are predominantly a consequence of the
developments referred to above which happened in the second half of the financial year, including the restructuring of our US sector against
the backdrop of challenging US market conditions.
Acquisition, disposal and integration costs of £14.9m (FY24: £9.2m) primarily comprise residual costs associated with integrating the Avantus
and Air Affairs acquisitions into their respective sectors and specific post-deal retention arrangements relating to Avantus employees.
In FY25 the non-recurring cost of the discrete digital investment programme is £20.8m (FY24: £16.9m). We continue to roll out this project
to modernise the IT infrastructure to support our future growth ambitions which will continue over the next two to three years. The non-
recurring costs are reported as specific adjusting items in the P&L, with ongoing recurring operating costs (such as licence costs and
overheads) remaining within underlying operating costs.
The loss on sale of property of £36.6m relates to the sale and leaseback of Cody Technology Park which was announced in September 2024.
A gross cash receipt of £112m was received and a new 15 year lease was entered into. The sale and leaseback accounting under IFRS16,
results in a one-off, non-cash, accounting loss, which is calculated based on the varying values of assets which were sold and those which
are being leased back.
Also included within specific adjusting items are net finance income from pensions of £1.0m (FY24: £5.6m), impairment of right of use lease
assets in the US following space relocation of £1.0m, and amortisation of acquisition intangibles of £24.2m (FY24: £25.2m).
All figures in £ million
Note
FY25
FY24
Acquisition and disposal costs
(10.7)
(2.7)
Acquisition integration costs
(4.0)
(5.3)
Acquisition related remuneration costs
(0.2)
(1.2)
One-off period of digital investment
(20.8)
(16.9)
Restructuring costs and associated impacts
(64.5)
--
(Loss)/g
ain on sale of property
(36.6)
Specific adjusting items loss before interest, tax, depreciation and amortisation
(136.8)
(24.0)
Impairment of property
Impairment of goodwill
13
(143.9)
Amortisation of intangible assets arising from acquisitions
Specific adjusting items operating loss
Defined benefit pension scheme net finance income
27
1.0
5.6
Specific adjusting items loss before tax
(304.9)
(44.3)
Tax impact of the above specific adjusting items
9
17.2
14.3
De-recognition of US deferred tax asset
9
(45.0)
-
Total specific adjusting items loss after tax
(332.7)
(30.0)
All figures in £ million
FY25
FY24
Underlying profit after tax
147.0
169.6
Total specific adjusting items loss after tax
(332.7)
(30.0)
Total
(loss)/profit for the year
Annual Report & Accounts 2025 | QinetiQ Group plc 151
Financial Statements

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
152
5. Analysis of employee costs and numbers
The largest component of operating expenses is employee costs. The year-end and average monthly number of persons employed by the
Group, including Executive Directors, analysed by business segment, were:
The aggregate payroll costs of these persons were as follows:
6. Key management personnel
The Key management personnel of the Group during the year to 31 March 2025 comprise the Board of Directors and the QinetiQ
Leadership
Team. Their remuneration and benefits are summarised below:
Short-term employee remuneration and benefits include salary, bonus and benefits. Post-employment benefits relate to pension amounts.
The highest paid director is the Group Chief Executive Officer, details of whose remuneration is provided on page 113 of the Directors’
Remuneration Report.
Payments to past Directors and payment for loss of office are set out on pages 117 and 122 of the Directors’ Remuneration Report.
7. Finance income and expense
As at 31 March
Monthly average
2025
2024
FY25
FY24
Number
Number
Number
Number
EMEA Services
6,903
6,936
6,955
6,735
Global
Solutions
1,500
1,652
1,575
1,724
Total employees
8,403
8,588
8,530
8,459
A
ll figures in £ million
Note
FY25
FY24
Wages and salaries
569.4
562.1
Social security costs
54.5
55.7
Other pension costs
73.4
65.0
Share-based payments costs
29
9.8
10.2
Total employee costs
All figures in £ million
FY25
FY24
Short-term employee remuneration including benefits
6.9
9.1
Post-employment benefits
0.1
0.1
Share
-based payments costs
3.3
2.1
Total
10.3
11.3
All figures in £ million
FY25
FY24
Bank interest receivable
6.6
5.3
Finance income before specific adjusting items
Amortisation of deferred financing costs
Bank interest and commitment fees
(17.8
)
Lease expense
Unwinding of discount on financial liabilities
-
(0.1)
Finance expense
(23.4)
(20.7)
Underlying net finance expense
(16.8)
(15.4)
Specific adjusting item: defined benefit pension scheme net finance income
1.0
5.6
Net finance expense
(15.8)
(9.8)
Financial Statements continued
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153
Financial Statements
8. Profit/(loss) before tax
The following auditors’ remuneration has been charged in arriving at profit/(loss) before tax:
The following items have also been charged in arriving at profit/(loss) before tax:
All figures in £ million
FY25
FY24
Cost of inventories expensed - underlying
53.8
59.4
Cost of inventories written down - specific adjusting item (restructuring costs and associated impacts)
18.5
-
57.2
10.9
Foreign exchange loss
0.4
0.6
Research and development expenditure – customer funded contracts
332.9
315.4
Research and development expenditure – Group funded
12.0
12.8
9. Taxation charge
The total tax charge was £79.4m (FY24: £43.1m). The underlying tax charge was £51.6m (FY24: £57.4m), on a lower underlying profit before
tax, with an underlying effective tax rate of 26.0% for the year ending 31 March 2025 (FY24: 25.3%). The underlying effective tax rate is slightly
above the UK statutory rate of 25% (FY24: 25%) primarily as a result of prior year adjustments to returns.
All figures in £ million
FY25
FY24
Audit of the Group’s annual accounts
1.0
Total audit fees
1.9
1.8
Audit-related assurance services (Interim financial statements)
0.1
0.1
Other assurance services
0.1
0.1
Total non-audit fees
0.2
0.2
Total auditors’ remuneration
2.1
2.0
FY25
FY24
All figures in £ million
Underlying
Specific
adjusting
items
Total
Underlying
Specific
adjusting
Items
Total
Analysis of charge
Current UK tax expense/(income)
51.0
(6.2)
44.8
41.9
(4.1)
37.8
Current UK tax in respect of prior years
2.2
-
2.2
(0.8)
(0.7)
(1.5)
Overseas corporation tax
Current year
3.5
(0.9)
2.6
1.7
-
1.7
In respect of prior years
1.0
-
1.0
0.6
(0.6)
-
Current tax expense/(income)
57.7
(7.1)
50.6
43.4
(5.4)
38.0
Deferred tax (income)/expense
(5.0)
5.3
0.3
17.2
(7.6)
9.6
Deferred tax impact of change in rates
-
-
-
0.1
0.2
0.3
Deferred tax impact of de-recognition of prior year US deferred tax
asset
-
29.6
29.6
-
-
-
Deferred tax in respect of prior years
(1.1)
-
(1.1)
(3.3)
(1.5)
(4.8)
Deferred tax (income)/expense
(6.1)
34.9
28.8
14.0
(8.9)
5.1
Taxation expense/(income)
51.6
27.8
79.4
57.4
(14.3)
43.1
Factors affecting tax expense in the year
Principal factors reducing the Group’s current year tax charge
below the UK statutory rate are explained below:
Profit/(loss) before tax
198.6
(304.9)
(106.3)
227.0
(44.3)
182.7
Tax on profit/(loss) before tax at 25% (FY24: 25%)
49.7
(76.2)
(26.5)
56.8
(11.1)
45.7
Effect of:
Expenses not deductible for tax purposes and non-taxable items
0.8
1.2
2.0
3.5
0.1
3.6
De-recognition of US deferred tax asset
-
45.0
45.0
-
-
-
Non-deductible US goodwill impairment
-
36.0
36.0
-
-
-
Non-recognition of deductible restructuring impacts
-
13.1
13.1
-
-
-
Non-deductible loss on sale of property
-
9.1
9.1
-
-
-
Tax in respect of prior years
2.0
-
2.0
(3.5)
(2.8)
(6.3)
Deferred tax impact of change in rates
-
-
-
0.1
0.2
0.3
Different tax rates in overseas jurisdictions
(0.9)
(0.4)
(1.3)
0.5
(0.7)
(0.2)
Taxation expense/(income)
51.6
27.8
79.4
57.4
(14.3)
43.1
Effective tax rate
26.0%
(74.7)%
25.3%
23.6%
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
153
Financial Statements
8. Profit/(loss) before tax
The following auditors’ remuneration has been charged in arriving at profit/(loss) before tax:
The following items have also been charged in arriving at profit/(loss) before tax:
All figures in £ million
FY25
FY24
Cost of inventories expensed - underlying
53.8
59.4
Cost of inventories written down - specific adjusting item (restructuring costs and associated impacts)
18.5
-
Owned assets: depreciation
57.2
49.3
Leased assets: depreciation
10.9
8.8
Foreign exchange loss
0.4
0.6
Research and development expenditure – customer funded contracts
332.9
315.4
Research and development expenditure – Group funded
12.0
12.8
9. Taxation charge
The total tax charge was £79.4m (FY24: £43.1m). The underlying tax charge was £51.6m (FY24: £57.4m), on a lower underlying profit before
tax, with an underlying effective tax rate of 26.0% for the year ending 31 March 2025 (FY24: 25.3%). The underlying effective tax rate is slightly
above the UK statutory rate of 25% (FY24: 25%) primarily as a result of prior year adjustments to returns.
All figures in £ million
FY25
FY24
Fees payable to the auditors and its associates:
Audit of the Group’s annual accounts
1.0
1.0
Audit of the accounts of subsidiaries of the Company
0.9
0.8
Total audit fees
1.9
1.8
Audit-related assurance services (Interim financial statements)
0.1
0.1
Other assurance services
0.1
0.1
Total non-audit fees
0.2
0.2
Total auditors’ remuneration
2.1
2.0
FY25
FY24
Specific
Specific
Underlying
Underlying
Analysis of charge
Current UK tax expense/(income)
51.0
(6.2)
44.8
41.9
(4.1)
37.8
Current UK tax in respect of prior years
2.2
-
2.2
(0.8)
(0.7)
(1.5)
Overseas corporation tax
Current year
3.5
(0.9)
2.6
1.7
-
1.7
In respect of prior years
1.0
-
1.0
0.6
(0.6)
-
Current tax expense/(income)
57.7
50.6
43.4
38.0
Deferred tax (income)/expense
(5.0)
5.3
0.3
17.2
(7.6)
9.6
Deferred tax impact of change in rates
-
-
-
0.1
0.2
0.3
deferred tax
-
29.6
29.6
-
-
-
asset
(1.1)
-
(1.1)
(3.3)
(1.5)
(6.1)
34.9
28.8
14.0
(8.9)
5.1
Taxation expense/(income)
51.6
27.8
79.4
57.4
(14.3)
43.1
198.6
(304.9)
(106.3
)
227.0
(44.3)
182.7
Tax on profit/(loss) before tax at 25% (FY24: 25%)
49.7
(76.2)
(26.5)
56.8
(11.1)
45.7
Effect of:
Expenses not deductible for tax purposes and non-taxable items
0.8
1.2
2.0
3.5
0.1
3.6
De-recognition of US deferred tax asset
-
45.0
45.0
-
-
-
Non-deductible US goodwill impairment
-
36.0
36.0
-
-
-
Non-recognition of deductible restructuring impacts
-
13.1
13.1
-
-
-
Non-deductible loss on sale of property
-
9.1
9.1
-
-
-
Tax in respect of prior years
2.0
-
2.0
(3.5)
(2.8)
(6.3)
Deferred tax impact of change in rates
-
-
-
0.1
0.2
0.3
Different tax rates in overseas jurisdictions
(0.9)
(0.4)
(1.3)
0.5
(0.7)
(0.2)
51.6
27.8
79.4
57.4
(14.3)
43.1
Effective tax rate
26.0%
(74.7)%
25.3%
23.6%
Annual Report & Accounts 2025 | QinetiQ Group plc 153
Financial Statements

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
154
9. Taxation charge (continued)
Tax on specific adjusting items
The total specific adjusting items tax charge was £27.8m (FY24 credit: £14.3m). The tax charge primarily arises on the de-recognition of the
brought forward US deferred tax asset (£29.6m). It is a charge rather than a credit primarily due to the de-recognition of US deferred tax
assets (£45.0m, being £29.6m brought forward and £15.4m current year), the significant non-tax deductible impairment of goodwill (£36.0m),
the non-recognition of deferred tax assets created by deductible restructuring costs (£13.1m) and the non-deductible loss on sale of Cody
Technology Park (£9.1m).
Amounts recognised directly in equity
Current and deferred tax not recognised in net profit or loss or other comprehensive income but directly credited to equity was £0.8m (FY24:
£0.2m).
Factors affecting future tax charges
The underlying effective tax rate is expected to remain marginally above the UK statutory rate, subject to the impact of any tax legislation
changes and the geographic mix of profits. The Group has engaged with advisers to assess any potential impact on the tax charge by the
UK's enactment of the OECD's Global Anti-Base Erosion Model Rules (Pillar Two). The Group performed an assessment of the potential
exposure to Pillar Two income taxes based on current period data. The Group believes it qualifies for one of the transitional safe harbours
provided in the rules in all territories in which it operates. The Group has not accrued a Pillar Two top up tax for FY25. The Group has applied
the temporary exemption issued by the International Accounting Standards Board from the accounting for deferred taxes under IAS12 and
neither recognises nor discloses information about deferred taxes related to Pillar Two income taxes. The Group does not anticipate a material
quantitative impact from Pillar Two legislation, however, there are expected to be significant compliance obligations.
Tax risk management and tax cash
For details of the Group’s approach to tax risk management and discussion of tax cash-flows in the year see ‘Additional Financial Information’.
10. Earnings/(loss) per share
Basic earnings/(loss) per share (EPS)
is calculated by dividing the profit attributable to equity shareholders by the weighted average number
of ordinary shares in issue during the year. The weighted average number of shares used excludes those shares bought by the G
roup and
held as own shares (see note 28). For diluted earnings (but not losses)
per share the weighted average number of shares in issue is adjusted
to assume conversion of all potentially dilutive ordinary shares arising from unvested share-based awards including share options.
Weighted average and diluted number of shares
Underlying basic earnings per share figures are presented below, in addition to the basic and diluted earnings per share, bec
ause the Directors
consider this gives a more relevant indication of underlying business
performance and reflects the adjustments to basic earnings per share
for the impact of specific adjusting items (see note 4) and tax thereon.
Underlying EPS
Basic and diluted EPS
FY25
FY24
Effect of dilutive securities
Million
Diluted number of shares
Million
570.8
585.7
(Loss)/profit attributable to the owners of the Company
£ million
(185.7)
139.6
Remove loss after tax in respect of specific adjusting items
£ million
332.7
30.0
Underlying profit after taxation
147.0
169.6
Weighted average number of shares
Million
563.4
577.0
Underlying basic EPS
Pence
26.1
29.4
Diluted number of shares
Million
570.8
585.7
Underlying diluted EPS
Pence
25.8
29.0
FY25
FY24
(Loss)/profit attributable to the owners of the Company
£ million
(185.7 )
Weighted average number of shares
Million
563.4
577.0
(33.0 )
Diluted number of shares
Million
563.4
585.7
Diluted EPS
Pence
(33.0)
23.8
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
154
9. Taxation charge (continued)
Tax on specific adjusting items
The total specific adjusting items tax charge was £27.8m (FY24 credit: £14.3m). The tax charge primarily arises on the de-
recognition of the
brought forward US deferred tax asset (£29.6m). It is a charge rather than a credit primarily due to the de-
recognition of US deferred tax
assets (£45.0m, being £29.6m brought forward and £15.4m current year), the significant non-tax deductible impairment of goodwill (£36.0m),
the non-recognition of deferred tax assets created by deductible restructuring costs (£13.1m) and the non-deductible loss on
sale of Cody
Technology Park (£9.1m).
Amounts recognised directly in equity
Current and deferred tax not recognised in net profit or loss or other comprehensive income but directly credited to equity
was £0.8m (FY24:
£0.2m).
Factors affecting future tax charges
The underlying effective tax rate is expected to remain marginally above the UK statutory rate, subject to the impact of any tax
legislation
changes and the geographic mix of profits. The Group has engaged with advisers to assess any potential impact on the ta
x charge by the
UK's enactment of the OECD's Global Anti-
Base Erosion Model Rules (Pillar Two). The Group performed an assessment of the potential
exposure to Pillar Two income taxes based on current period data. The Group believes it qualifies for one of
the transitional safe harbours
provided in the rules in all territories in which it operates. The Group has not accrued a Pillar Two top up tax for FY25.
The Group has applied
the temporary exemption issued by the International Accounting Standards Board from the accounting for deferred taxes under I
AS12 and
neither recognises nor discloses information about deferred taxes related to Pillar Two income taxes
. The Group does not anticipate a material
quantitative impact from Pillar Two legislation, however, there are expected to be significant compliance obligations.
Tax risk management and tax cash
For details of the Group’s approach to tax risk management and discussion of tax cash-flows in the year see ‘Additional Financial Information’.
10. Earnings/(loss) per share
Basic earnings/(loss) per share (EPS) is calculated by dividing the profit attributable to equity shareholders by the weighted average number
of ordinary shares in issue during the year. The weighted average number of shares used excludes those shares bought by the Group and
held as own shares (see note 28). For diluted earnings (but not losses) per share the weighted average number of shares in issue is adjusted
to assume conversion of all potentially dilutive ordinary shares arising from unvested share-based awards including share options.
Weighted average and diluted number of shares
Underlying basic earnings per share figures are presented below, in addition to the basic and diluted earnings per share, because the Directors
consider this gives a more relevant indication of underlying business performance and reflects the adjustments to basic earnings per share
for the impact of specific adjusting items (see note 4) and tax thereon.
Underlying EPS
Basic and diluted EPS
FY25
FY24
Weighted average number of shares
Million
563.4
577.0
Effect of dilutive securities
Million
7.4
8.7
Diluted number of shares
Million
570.8
585.7
FY25
FY24
(Loss)/profit attributable to the owners of the Company
£ million
(185.7)
139.6
Remove loss after tax in respect of specific adjusting items
£ million
332.7
30.0
Underlying profit after taxation
£ million
147.0
169.6
Weighted average number of shares
Million
563.4
577.0
Underlying basic EPS
Pence
26.1
29.4
Diluted number of shares
Million
570.8
585.7
Underlying diluted EPS
Pence
25.8
29.0
FY25
FY24
(Loss)/profit attributable to the owners of the Company
£ million
(185.7)
139.6
Weighted average number of shares
Million
563.4
577.0
Basic EPS
Pence
(33.0)
24.2
Diluted number of shares
Million
563.4
585.7
Diluted EPS
Pence
(33.0)
23.8
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025154

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
155
Financial Statements
11. Dividends
An analysis of the dividends paid and proposed in respect of the years ended 31 March 2025 and 31 March 2024 is provided below:
The proposed final dividend in respect of the year ending 31 March 2025 will be paid on 21 August 2025. The ex-dividend date is 24 July
2025 and the record date is 25 July 2025
.
12. Business combinations
There were no acquisitions in the year ended 31 March 2025. In the year ended 31 March 2024, £5.1m of deferred consideration payments
were made in respect of the Air Affairs acquisition and legacy acquisitions within Avantus. The specific adjusting items operating result for
the year includes various acquisition related items as set out in note 4.
13. Goodwill
Goodwill analysed by cash-generating unit (CGU)
Goodwill is allocated across six cash-generating units within the EMEA Services segment and two CGUs within the Global Solutions segment.
During the year, the Group determined that the US CGU is more appropriately defined at the Sector level. This avoids the need to allocate
goodwill on an increasingly arbitrary basis and represents the lowest level at which business performance is now monitored by management.
This followed the completion of post-acquisition integration activities, a market-led strategic review and new restructuring programme.
Increasing numbers of new customer contracts and opportunities deliver capabilities and use resources which span the three legacy CGUs
(Avantus, C5ISR and Technology Solutions).
The full list of CGUs that have goodwill allocated to them is as follows:
Pence
Date paid/
per share
£m
payable
Interim 2025
2.80
15.7
Feb 2025*
Final 2025 (proposed)
6.05
33.4
Aug 2025
8.85
49.1
Interim 2024
2.60
15.0
Feb 2024
Final 2024
5.65
32.2
Aug 2024*
Total for the year ended 31 March 2024
8.25
47.2
* Total cash paid in the year to 31 March 2025 was £47.9m (FY24: £45.6m).
All figures in £ million
31 March
2025
31 March
2024
Cost
At 1 April
551.7
562.7
Foreign exchange
(10.7)
(11.0)
At 31 March
541.0
551.7
Accumulated impairment
At 1 April
(150.3)
(153.7)
Impairment charge
(143.9)
-
Foreign exchange
3.0
3.4
At 31 March
(291.2)
(150.3)
Net book value at 31 March
249.8
401.4
All figures in £ million
Primary reporting segments
31 March
2025
31 March
2024
US Sector (previously Avantus, C5ISR and Technology Solutions)
Global Solutions
181.1
331.6
Target Systems
Global Solutions
24.0
24.4
Germany
EMEA Services
2.6
2.7
Naimuri
EMEA Services
14.8
14.8
Inzpire
EMEA Services
11.7
11.7
QinetiQ Training & Simulation
EMEA Services
7.8
7.8
QinetiQ Australia PTY
EMEA Services
5.2
5.6
Air Affairs Australia
EMEA Services
2.6
2.8
Net book value at 31 March
249.8
401.4
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
155
Financial Statements
11. Dividends
An analysis of the dividends paid and proposed in respect of the years ended 31 March 2025 and 31 March 2024 is provided below:
The proposed final dividend in respect of the year ending 31 March 2025 will be paid on 21 August 2025. The ex-dividend date is 24 July
2025 and the record date is 25 July 2025
.
12. Business combinations
There were no acquisitions in the year ended 31 March 2025. In the year ended 31 March 2024, £5.1m of deferred consideration payments
were made in respect of the Air Affairs acquisition and legacy acquisitions within Avantus. The specific adjusting items operating result for
the year includes various acquisition related items as set out in note 4.
13. Goodwill
Goodwill analysed by cash-generating unit (CGU)
Goodwill is allocated across six cash-generating units within the EMEA Services segment and two CGUs within the Global Solutions segment.
During the year, the Group determined that the US CGU is more appropriately defined at the Sector level. This avoids the need to allocate
goodwill on an increasingly arbitrary basis and represents the lowest level at which business performance is now monitored by management.
This followed the completion of post-acquisition integration activities, a market-led strategic review and new restructuring programme.
Increasing numbers of new customer contracts and opportunities deliver capabilities and use resources which span the three legacy CGUs
(Avantus, C5ISR and Technology Solutions).
The full list of CGUs that have goodwill allocated to them is as follows:
Pence
per share
£m
Date paid/
payable
Interim 2025
2.80
15.7
Feb 2025*
Final 2025 (proposed)
6.05
33.4
Aug 2025
Total for the year ended 31 March 2025
8.85
49.1
Interim 2024
2.60
15.0
Feb 2024
Final 2024
5.65
32.2
Aug 2024*
Total for the year ended 31 March 2024
8.25
47.2
* Total cash paid in the year to 31 March 2025 was £47.9m (FY24: £45.6m).
All figures in £ million
31 March
2025
31 March
2024
Cost
At 1 April
551.7
562.7
Foreign exchange
(10.7)
(11.0)
At 31 March
541.0
551.7
Accumulated impairment
At 1 April
(150.3)
(153.7)
Impairment charge
(143.9)
-
Foreign exchange
3.0
3.4
At 31 March
(291.2)
(150.3)
Net book value at 31 March
249.8
401.4
All figures in £ million
Primary reporting segments
31 March
2025
31 March
2024
US Sector (previously Avantus, C5ISR and Technology Solutions)
Global Solutions
181.1
331.6
Target Systems
Global Solutions
24.0
24.4
Germany
EMEA Services
2.6
2.7
Naimuri
EMEA Services
14.8
14.8
Inzpire
EMEA Services
11.7
11.7
QinetiQ Training & Simulation
EMEA Services
7.8
7.8
QinetiQ Australia PTY
EMEA Services
5.2
5.6
Air Affairs Australia
EMEA Services
2.6
2.8
Net book value at 31 March
249.8
401.4
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
155
Financial Statements
11. Dividends
An analysis of the dividends paid and proposed in respect of the years ended 31 March 2025 and 31 March 2024 is provided below:
The proposed final dividend in respect of the year ending 31 March 2025 will be paid on 21 August 2025. The ex-dividend date is 24 July
2025 and the record date is 25 July 2025
.
12. Business combinations
There were no acquisitions in the year ended 31 March 2025. In the year ended 31 March 2024, £5.1m of deferred consideration payments
were made in respect of the Air Affairs acquisition and legacy acquisitions within Avantus. The specific adjusting items operating result for
the year includes various acquisition related items as set out in note 4.
13. Goodwill
Goodwill analysed by cash-generating unit (CGU)
Goodwill is allocated across six cash-generating units within the EMEA Services segment and two CGUs within the Global Solutions segment.
During the year, the Group determined that the US CGU is more appropriately defined at the Sector level. This avoids the need to allocate
goodwill on an increasingly arbitrary basis and represents the lowest level at which business performance is now monitored by management.
This followed the completion of post-acquisition integration activities, a market-led strategic review and new restructuring programme.
Increasing numbers of new customer contracts and opportunities deliver capabilities and use resources which span the three legacy CGUs
(Avantus, C5ISR and Technology Solutions).
The full list of CGUs that have goodwill allocated to them is as follows:
Pence
per share
£m
Date paid/
payable
Interim 2025
2.80
15.7
Feb 2025*
Final 2025 (proposed)
6.05
33.4
Aug 2025
Total for the year ended 31 March 2025
8.85
49.1
Interim 2024
2.60
15.0
Feb 2024
Final 2024
5.65
32.2
Aug 2024*
Total for the year ended 31 March 2024
8.25
47.2
* Total cash paid in the year to 31 March 2025 was £47.9m (FY24: £45.6m).
All figures in £ million
31 March
31 March
2025
At 1 April
551.7
562.7
Foreign exchange
(10.7)
(11.0)
541.0
551.7
Accumulated impairment
At 1 April
(150.3)
(153.7)
Impairment charge
(143.9)
-
3.0
3.4
(291.2 )
(150.3)
249.8
401.4
All figures in £ million
Primary reporting segments
31 March
31 March
US Sector (previously Avantus, C5ISR and Technology Solutions)
Global Solutions
Target Systems
Global Solutions
Germany
EMEA Services
2.6
2.7
Naimuri
EMEA Services
14.8
14.8
Inzpire
EMEA Services
11.7
11.7
QinetiQ Training & Simulation
EMEA Services
7.8
7.8
QinetiQ Australia PTY
EMEA Services
5.2
5.6
Air Affairs Australia
EMEA Services
2.6
2.8
Net book value at 31 March
249.8
401.4
Annual Report & Accounts 2025 | QinetiQ Group plc 155
Financial Statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
156
13. Goodwill (continued)
Goodwill is attributable to the excess of consideration over the fair value of net assets acquired and includes expected synergies, future growth
prospects and employee knowledge, expertise and security clearances. The Group tests each CGU for impairment annually, or more frequently
if there are indications that goodwill might be impaired. Impairment testing is dependent on management’s estimates and judgements,
particularly as they relate to the forecasting of future cash flows, the discount rates selected and expected long-term growth rates.
During the year an impairment charge has been recognised in respect of the combined US Sector CGU. Given that this resets the amount of
headroom to nil, any downward revision to the key assumptions (which would be reasonably possible) would result in a further impairment.
There are no likely variations in the key assumptions used for any of the other CGUs which would lead to an impairment being recognised.
Key assumptions
Cash flows
The value-in-use and fair value less costs to dispose calculations generally use discounted future cash flows based on financial plans approved
by the Board covering a five-year period (aligned with the Group’s Integrated Strategic Plan process and the longer-term viability assessment
period). These are generally ‘bottom-up’ forecasts based on detailed analysis by contract for the revenue under contract and by opportunity
for the pipeline, or with growth rates assumed based on market benchmarks. Pipeline opportunities are categorised as ‘base case’ and ‘high
case’ by management and only ‘base case’ opportunities are included in the financial plans used for the value-in-use calculations.
Cash flows beyond these periods are extrapolated based on the last year of the plans, with a terminal growth-rate assumption applied. Whilst
the Group will likely be impacted by climate change in the future to an extent, the impacts on future cash flows used in the value-in-use
calculations are not considered to be material.
Terminal growth rates and discount rates
The specific plans for each of the CGUs have been extrapolated using the terminal growth rates as detailed in the following table. Growth
rates are based on management’s estimates which take into consideration the long-term nature of the industry in which the CGUs operate
and external forecasts as to the likely growth of the industry in the longer term. The discount rates used are calculated based on the weighted
average cost of capital of a portfolio of comparable companies, adjusted for risks specific to the market characteristics of each CGU, and
converted to a pre-tax basis where relevant. This is considered an appropriate estimate of a market participant discount rate.
*All discount rates stated are on a pre-tax basis, except for the US which is on a post-tax basis per the fair value less costs to dispose calculation. To aid comparability the prior year
discount rate has been re-presented on a consistent post tax basis. The pre-tax discount rate used in the calculation as at 31 March 2024 was 10.7%.
Sensitivity analysis shows that the value of the terminal year cash flow, the discount rate and the terminal growth rates have a significant
impact on the value of the discounted cash flows. Sensitivities are provided below for each of the CGUs.
Results of impairment testing by CGU
US Sector
The carrying value of the goodwill for the US Sector CGU as at 31 March 2025 was £325.0m (2024: £331.6m) prior to the impairment charge.
The recoverable amount of this CGU as at 31 March 2025 is based on a fair value less costs to dispose calculation which is derived from the
latest cash flow projections. This better reflects the transaction structure and tax treatment of the historical acquisitions and hence gives a
higher value than the equivalent value in use calculation. The calculation uses the assumptions noted above and is lower than the carrying
value of the net operating assets (of £581.4m), and hence an impairment of £143.9m has been recognised. Our US operations performed
below expectations for orders, revenue, profit and cash flow in the year with some key contract losses. During the second half of the financial
year the change in US administration, together with the change in US Sector CEO and resultant change in strategy and start of required
restructuring, has had a material impact on the future projections of the business. These factors, together with the impact of the discount
rate which increased significantly in H2, has a knock-on impact for future years’ profitability and cash flow and hence an impairment.
The key sensitivity impacting on the recoverable amount calculations is the terminal year cash flows. The key assumptions impacting those
terminal year cash flows are the revenue growth rate applied over the period of the calculation, which is based on market growth rates for the
high growth segments in which the business operates in, and the operating profit margin applied. A 400 basis point reduction in the compound
annual revenue growth rate, or a 100 basis point reduction in operating margins, over the plan period which are considered reasonably possible
changes, would further reduce the recoverable amount and result in an additional impairment of £48.9m and £45.9m respectively. An increase
in the discount rate of 1% or a decrease in the terminal growth rate of 0.5%, both of which are also reasonably possible changes, would cause
a further impairment of £53.3m and £22.1m respectively.
US Sector*
Target
Inzpire
QinetiQ
Air Affairs
Terminal growth rate
2.3
(2.3)
2.3
(2.2)
2.3
(2.2)
2.3
(2.4)
2.3
(2.4)
2.4
(2.2)
2.3
(2.2)
2.3
(2.2)
Discount rate*
9.4
(9.0)
12.2
(11.1)
12.1
(11.1)
13.8
(13.0)
13.6
(12.8)
9.4
(8.8)
12.2
(11.1)
12.1
(11.0)
Financial Statements continued
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Financial Statements
Target Systems
The carrying value of the goodwill for the Target Systems CGU as at 31 March 2025 was £24.0m (2024: £24.4m). The recoverable amount
of this CGU as at 31 March 2025, based on value in use and calculated using the assumptions noted above, is higher than the carrying value
of net operating assets (of £76.4m). The key sensitivity impacting on the value in use calculations is the terminal year cash flows. An increase
in the discount rate of 1%, a decrease in the terminal growth rate of 0.5% or a decrease in the terminal year cash flows of £2.0m, all of which
are reasonably possible changes, would not cause the net operating assets to exceed their recoverable amount.
Germany
The carrying value of the goodwill for the Germany CGU as at 31 March 2025 was £2.6m (2024: £2.7m). The recoverable amount of this CGU
as at 31 March 2025, based on value in use and calculated using the assumptions noted above, is higher than the carrying value of net
operating assets (of £64.5m). The key sensitivity impacting on the value in use calculations is the terminal year cash flows. An increase in
the discount rate of 1%, a decrease in the terminal growth rate of 0.5% or a decrease in the terminal year cash flows of €2.0m, all of which are
reasonably possible changes, would not cause the net operating assets to exceed their recoverable amount.
Naimuri
The carrying value of the goodwill for the Naimuri CGU as at 31 March 2025 was £14.8m (2024: £14.8m). The recoverable amount of this
CGU as at 31 March 2025, based on value in use and calculated using the assumptions noted above, is higher than the carrying value of net
operating assets (of £20.8m). The key sensitivity affecting on the value in use calculations is the terminal year cash flows. An increase in the
discount rate of 1%, a decrease in the terminal growth rate of 0.5% or a decrease in the terminal year cash flows of £1.0m, all of which are
reasonably possible changes, would not cause the net operating assets to exceed their recoverable amount.
Inzpire
The carrying value of the goodwill for the Inzpire CGU as at 31 March 2025 was £11.7m (2024: £11.7m). The recoverable amount of this CGU
as at 31 March 2025, based on value in use and calculated using the assumptions noted above, is higher than the carrying value of net
operating assets (of £20.5m). The key sensitivity impacting on the value in use calculations is the terminal year cash flows. An increase in
the discount rate of 1%, a decrease in the terminal growth rate of 0.5% or a decrease in the terminal year cash flows of £1.0m, all of which are
reasonably possible changes, would not cause the net operating assets to exceed their recoverable amount.
QinetiQ Training & Simulation
The carrying value of the goodwill for the QinetiQ Training and Simulation CGU as at 31 March 2025 was £7.8m (2024: £7.8m). The recoverable
amount of this CGU as at 31 March 2025, based on value in use and calculated using the assumptions noted above, is higher than the carrying
value of net operating assets (of £11.8m). The key sensitivity impacting on the value in use calculations is the terminal year cash flows. An
increase in the discount rate of 1%, a decrease in the terminal growth rate of 1% or a decrease in the terminal year cash flows of £1.0m, all of
which are reasonably possible changes, would not cause the net operating assets to exceed their recoverable amount.
QinetiQ Australia PTY
The carrying value of the goodwill for the QinetiQ Australia PTY CGU, as at 31 March 2025 was £5.2m (2024: £5.6m). The recoverable amount
of this CGU as at 31 March 2025, based on value in use and calculated using the assumptions noted above, is higher than the carrying value
of net operating assets (of £7.2m). The key sensitivity impacting on the value in use calculations is the terminal year cash flows. An increase
in the discount rate of 1%, a decrease in the terminal growth rate of 0.5% or a decrease in the terminal year cash flows of A$2.0m, all of which
are reasonably possible changes, would not cause the net operating assets to exceed their recoverable amount.
Air Affairs Australia
The carrying value of the goodwill for the Air Affairs Australia CGU as at 31 March 2025 was £2.6m (2024: £2.8m). The recoverable amount
of this CGU as at 31 March 2025, based on value in use and calculated using the assumptions noted above, is higher than the carrying value
of net operating assets (of £29.2m). The key sensitivity impacting on the value in use calculations is the terminal year cash flows. An increase
in the discount rate of 1% or a decrease in the terminal growth rate of 0.5% or a decrease in the terminal year cash flows of A$1.0m, all of
which are reasonably possible changes, would not cause the net operating assets to exceed their recoverable amount.
Annual Report & Accounts 2025 | QinetiQ Group plc 157
Financial Statements

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
158
14. Intangible assets
For the year ended 31 March 2025
1
Includes Assets In Course Of Construction of closing net book value of £31.7m as at 31 March 2025 (2024: £22.6m).
2
Additions per the table above are different to the capital expenditure included in the cash flow statement due to the relative timing of cash payments compared to the
recognition of balance sheet assets.
'Other acquired
’ consists primarily of intellectual property and existing technology arising on past acquisition of businesses. Significant
individual assets from past acquisitions include: customer relationships associated with US Avantus, US C5ISR, Germany and QinetiQ
Training
& Simulation Limited (NBV: £157.7m; £9.6m; £16.2m; £2.2m respectively) with remaining amortisation periods of approximately 1
4 years, 5
years, 8 years and 6 years respectively, and acquired technology associated with US Avantus, US
C5ISR, Germany, and QinetiQ Training &
Simulation Limited (£1.1m; £8.2m; £2.8m; £1.3m respectively) all with remaining amortisation periods of approximately 6 years.
For the year ended 31 March 2024
* Additions per the table above are different to
the capital expenditure included in the cash flow statement due to the relative timing of cash payments compared to the
recognition of balance sheet assets.
Acquired intangibles
Other
A
ll figures in £ million
generated
1
Cost
At 1 April 2024
303.8
92.6
51.1
80.4
527.9
Reclassifications from PPE
-
-
8.1
0.6
8.7
Reclassifications between categories
-
-
0.1
(0.1)
-
Additions – internally developed
2
-
-
2.5
9.0
11.5
Additions – purchased
2
-
-
1.2
0.4
1.6
Disposals
-
-
(0.7)
(14.3)
(15.0)
Foreign exchange
(1.7)
At 31 March 2025
297.9
90.9
61.9
75.3
526.0
Accumulated a
mortisation and impairment
At 1 April 2024
(79.6)
(65.6)
(24.1)
(36.8)
(206.1)
Amortisation charge for year
(18.6)
(5.6)
(6.2)
(5.5)
(35.9)
Disposals
-
-
0.6
10.2
10.8
Impairment
-
-
(4.0)
-
(4.0)
Foreign exchange
1.6
1.4
0.1
-
3.1
At 31 March 2025
(96.6)
(69.8)
(33.6)
(32.1)
(232.1)
Net book value at 31 March 2025
201.3
21.1
28.3
43.2
293.9
Acquired intangibles
Other
A ll figures in £ million
generated
Total
Cost
At
1 April 2023
308.5
96.0
37.3
82.5
524.3
Reclassifications from PPE
Reclassifications between categories
-
-
1.5
(1.5)
-
Additions – internally developed*
-
-
6.1
1.1
7.2
Additions – purchased*
-
-
0.8
3.3
4.1
Disposals
-
-
(2.0)
(4.1)
(6.1)
Foreign exchange
(4.7)
(3.4)
-
(0.7)
(8.8)
At 31 March 2024
303.8
92.6
51.1
80.4
527.9
Accumulated amortisation and impairment
At 1 April 2023
(59.4)
(63.1)
(22.3)
(36.5)
(181.3)
Amortisation charge for year
Reclassifications between categories
-
-
-
-
-
Disposals
-
-
1.7
3.5
5.2
Foreign exchange
(1.2)
3.7
-
0.1
2.6
At 31 March 2024
Net book value at 31 March 2024
224.2
27.0
27.0
43.6
321.8
Financial Statements continued
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Notes to the Consolidated Financial Statements
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159
Financial Statements
15. Property, plant and equipment
For the year ended 31 March 2025
* Additions per the table above are different to the capital expenditure included in the cash flow statement due to the relative timing of cash payments compared to the
recognition of balance sheet assets.
During the year a £36.6m loss (£2.1m gain) was recognised on the sale and leaseback of Cody Technology Park, this is included within
operating costs as a specific adjusting item (see note 4). Whilst the Group will likely be impacted by climate change in the future to an extent,
the impact on the carrying value of property, plant and equipment is not considered to be material.
For the year ended 31 March 2024
Owned assets
Right of use assets
Computers
Computers
Land and
and office
Assets under
Land and
and office
Total
Cost
At 1 April 2023
365.7
309.3
124.3
115.5
68.7
6.5
0.4
990.4
Reclassifications to intangibles
-
-
0.2
(7.4)
-
-
-
(7.2)
Reclassifications/transfers
7.3
14.6
20.6
(42.5)
-
-
-
-
Additions – purchased*
4.2
3.8
6.5
79.5
31.4
-
-
125.4
(1.3)
(1.2)
(10.4)
(2.4)
(5.6)
(3.1)
(24.0)
Foreign exchange
(0.2)
(2.1)
(0.3)
(0.4)
(2.1)
-
-
(5.1)
At 31 March 2024
375.7
324.4
140.9
142.3
92.4
3.4
0.4
1,079.5
At 1 April 2023
(215.6)
(177.7)
(70.8)
-
(41.9)
(6.2)
(0.4)
(512.6)
(12.9)
(18.3)
(18.1)
(8.7)
(0.1)
(58.1)
Disposals
1.3
1.1
10.4
-
5.6
3.1
-
Impairment
-
-
-
-
(0.7)
-
-
(0.7)
Foreign exchange
0.2
0.6
0.1
-
1.3
-
-
2.2
At 31 March 2024
(227.0)
(194.3)
(78.4)
-
(44.4)
(3.2)
(0.4)
(547.7)
Net book value at 31 March 2024
148.7
130.1
62.5
142.3
48.0
0.2
-
531.8
* Additions per the table above are different to the capital expenditure included in the cash flow statement due to the relative timing of cash payments compared to the
recognition of balance sheet assets.
Owned assets
Right of use assets
Plant,
Land and
Plant,
Computers
machinery
Assets under
machinery
and office
All figures in £ million
buildings
and vehicles
equipment
construction
and vehicles
equipment
Total
At 1 April 2024
375.7
324.4
140.9
142.3
92.4
3.4
0.4
1,079.5
Reclassifications to intangibles
-
-
(0.9)
(7.8)
-
-
-
(8.7)
Reclassifications/transfers
29.7
23.7
15.4
(68.8)
-
-
-
-
Additions – purchased*
5.9
24.8
5.6
67.5
23.9
2.3
-
130.0
Disposals
(240.6)
(25.0)
(4.7)
(3.6)
(14.5)
-
-
(288.4)
Foreign exchange
(0.8)
(2.7)
(0.6)
(0.2)
(1.9)
-
-
(6.2)
169.9
345.2
155.7
129.4
5.7
0.4
906.2
At 1 April 2024
(227.0)
(194.3)
(78.4)
-
(44.4)
(3.2)
(0.4)
(547.7)
Charge
(13.7)
(22.7)
(20.8)
-
(10.6)
(0.3)
-
(68.1)
Disposals
149.3
16.5
4.0
-
14.5
-
-
184.3
Impairment
-
(2.5)
-
-
(1.0)
-
-
(3.5)
Foreign exchange
0.1
0.9
0.3
-
0.8
-
-
2.1
At 31 March 2025
(91.3)
(202.1)
(94.9)
-
(40.7)
(3.5)
(0.4)
(432.9)
Opening Net Book Value
148.7
130.1
62.5
142.3
0.2
-
531.8
78.6
143.1
60.8
129.4
2.2
-
473.3
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Financial Statements

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
160
16. Equity accounted investments
As at 31 March
The profit from the Group’s share of joint ventures for the year ended 31 March 2025 was £0.3m (FY24: £0.8m).
17. Deferred tax
For the year ended 31 March 2025
Deferred tax asset
Deferred tax liability
Deferred tax has been calculated at the rate at which the timing difference is expected to reverse using enacted future statutory rates. Deferred
tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred
tax balances relate to the same taxation authority.
At 31 March 2025 the Group had unused tax losses and carried forward interest expense of £305.3m (2024: £212.3m) which are available
for offset against future taxable profits.
With our US operations performing below-expectations in the year, the change in the administration and the change in US Sector CEO, re-
alignment of strategy and required restructuring, there has been a material impact on the future projections of the business. As a result, the
Group de-recognised the deferred tax assets previously recognised in respect of net operating losses. No deferred tax asset is recognised in
respect of £183.8m (2024: £109.8m) of US net operating losses and £85.9m (2024: £71.5m) of US interest deductions. There is also no
deferred tax asset recognised in respect of £8.8m (2024: nil) of UK capital losses due to uncertainty over the timing and extent of their
utilisation. Full recognition of the US and UK losses would increase the deferred tax asset by £72.7m. Of the £183.8m (2024:109.8m) of US
net operating losses, £31.1m (2024: £32.4m) are time-limited of which £22.0m will expire in 2035 and £9.1m in 2036.
Deferred tax assets are recognised on the balance sheet of £6.9m (2024: £29.0m), being £4.1m in respect of £17.8m of Canadian net
operating losses and excess interest, and £2.8m in respect of £9.0m of German trade losses and excess interest.
The Group made overseas losses in the period ended 31 March 2025 and recognition of deferred tax assets is dependent on future forecast
taxable profits. The Group has reviewed the latest forecasts for these businesses which incorporate the unsystematic risks of operating in
the defence business. In the period beyond the 5 year forecast we have reviewed the terminal period profits and based on these and our
expectations for these businesses. We believe it is probable the losses, with the exception of the US and UK, will be fully utilised.
31 March 2025
31 March 2024
Joint
Group net
Joint
Group net
Non-current assets
0.9
0.5
1.1
0.6
Current assets
3.4
2.4
5.9
3.7
4.3
2.9
7.0
4.3
Current liabilities
(0.3)
(0.1)
(0.3)
(0.1)
Non-current liabilities
(1.5)
(0.7)
(4.1)
(2.0)
(1.8)
(0.8)
(4.4)
(2.1)
Net assets of joint ventures
2.5
2.1
2.6
2.2
All figures in £ million
Short-term
timing
differences
Carried
forward
interest
expense
Lease
liabilities
Tax
losses
Total
At 1 April 2024
20.1
1.0
8.9
35.9
65.9
Charged to income statement
(8.8)
1.1
-
(30.7)
(38.4)
Credited to other comprehensive income
1.8
-
-
-
1.8
Foreign exchange
(1.0)
-
(0.1)
(0.4)
(1.5)
Gross deferred tax asset at 31 March 2025
12.1
2.1
8.8
4.8
27.8
Less: liability available for offset
(17.1)
Net deferred tax asset at 31 March 2025
10.7
All figures in £ million
Pension
surplus
Owned
property,
plant &
equipment
Right of use
assets
Acquisition
intangibles
Total
At 1 April 2024
(9.6)
(80.4)
(7.6)
(26.0)
(123.6)
Credited to income statement
(0.6)
(2.4)
-
12.6
9.6
Charged to other comprehensive income
(4.4)
-
-
-
(4.4)
Foreign exchange
-
-
(0.2)
0.5
0.3
Gross deferred tax liability at 31 March 2025
(14.6)
(82.8)
(7.8)
(12.9)
(118.1)
Less: asset available for offset
17.1
Net deferred tax liability at 31 March 2025
101.0
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
160
16. Equity accounted investments
As at 31 March
The profit from the Group’s share of joint ventures for the year ended 31 March 2025 was £0.3m (FY24: £0.8m).
17. Deferred tax
For the year ended 31 March 2025
Deferred tax asset
Deferred tax liability
Deferred tax has been calculated at the rate at which the timing difference is expected to reverse using enacted future statutory rates. Deferred
tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred
tax balances relate to the same taxation authority.
At 31 March 2025 the Group had unused tax losses and carried forward interest expense of £305.3m (2024: £212.3m) which are available
for offset against future taxable profits.
With our US operations performing below-expectations in the year, the change in the administration and the change in US Sector CEO, re-
alignment of strategy and required restructuring, there has been a material impact on the future projections of the business. As a result, the
Group de-recognised the deferred tax assets previously recognised in respect of net operating losses. No deferred tax asset is recognised in
respect of £183.8m (2024: £109.8m) of US net operating losses and £85.9m (2024: £71.5m) of US interest deductions. There is also no
deferred tax asset recognised in respect of £8.8m (2024: nil) of UK capital losses due to uncertainty over the timing and extent of their
utilisation. Full recognition of the US and UK losses would increase the deferred tax asset by £72.7m. Of the £183.8m (2024:109.8m) of US
net operating losses, £31.1m (2024: £32.4m) are time-limited of which £22.0m will expire in 2035 and £9.1m in 2036.
Deferred tax assets are recognised on the balance sheet of £6.9m (2024: £29.0m), being £4.1m in respect of £17.8m of Canadian net
operating losses and excess interest, and £2.8m in respect of £9.0m of German trade losses and excess interest.
The Group made overseas losses in the period ended 31 March 2025 and recognition of deferred tax assets is dependent on future forecast
taxable profits. The Group has reviewed the latest forecasts for these businesses which incorporate the unsystematic risks of operating in
the defence business. In the period beyond the 5 year forecast we have reviewed the terminal period profits and based on these and our
expectations for these businesses. We believe it is probable the losses, with the exception of the US and UK, will be fully utilised.
31 March 2025
31 March 2024
All figures in £ million
Joint
Ventures’
financial
results
Group net
share of
Joint
Ventures
Joint
Ventures’
financial
results
Group net
share of
Joint
Ventures
Non-current assets
0.9
0.5
1.1
0.6
Current assets
3.4
2.4
5.9
3.7
4.3
2.9
7.0
4.3
Current liabilities
(0.3)
(0.1)
(0.3)
(0.1)
Non-current liabilities
(1.5)
(0.7)
(4.1)
(2.0)
(1.8)
(0.8)
(4.4)
(2.1)
Net assets of joint ventures
2.5
2.1
2.6
2.2
Carried
Short- term
forward
timing
interest
losses
Total
At 1 April 2024
20.1
1.0
8.9
35.9
65.9
Charged to income statement
(8.8)
1.1
-
(30.7)
(38.4)
Credited to other comprehensive income
1.8
-
-
-
1.8
Foreign exchange
(1.0)
-
(0.1)
(0.4)
(1.5)
Gross deferred tax asset at 31 March 2025
12.1
2.1
8.8
4.8
27.8
Less: liability available for offset
(17.1)
Net deferred tax asset at 31 March 2025
10.7
Owned
property,
plant &
Acquisition
Total
At 1 April 2024
(9.6)
(80.4)
(7.6)
(26.0)
(123.6)
Credited to income statement
(0.6)
(2.4)
-
12.6
9.6
Charged to other comprehensive income
(4.4)
-
-
-
(4.4)
Foreign exchange
-
-
(0.2)
0.5
0.3
Gross deferred tax liability at 31 March 2025
(14.6)
(82.8)
(7.8)
(12.9)
(118.1)
Net deferred tax liability at 31 March 2025
101.0
Financial Statements continued
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Notes to the Consolidated Financial Statements
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161
Financial Statements
Based on the current forecasts the losses will be fully utilised over the next 2-5 years. A 10% change in the forecast profits would alter the
utilisation period by 2 years.
There are no material temporary differences associated with investments in subsidiaries or interests in joint ventures for which deferred tax
liabilities have not been recognised.
For the year ended 31 March 2024
Deferred tax asset
Deferred tax liability
18. Current tax
As at 31 March
19. Inventories
As at 31 March
Carried
Short-
term
forward
timing
interest
Lease
Tax
At 1 April 2023
17.5
-
7.4
30.6
55.5
Credited to income statement
6.4
1.0
1.5
6.0
14.9
Charged to other comprehensive income
0.1
-
-
-
0.1
Reclassification to right of use assets
(3.2)
-
-
-
(3.2)
(0.7)
-
-
(0.7)
(1.4)
1.0
8.9
35.9
65.9
(29.2)
Owned
property,
plant &
Right of use
Acquisition
Total
At 1 April 2023
(35.4)
(65.7)
(9.7)
(24.1)
(134.9)
Charged to income statement
(1.4)
(14.8)
(1.4)
(2.4)
(20.0)
Credited to other comprehensive income
27.2
-
-
-
27.2
Reclassification from short-term timing differences
-
-
3.2
-
3.2
Foreign exchange
-
0.1
0.3
0.5
0.9
(80.4)
(7.6)
(26.0)
(123.6)
Less: asset available for offset
29.2
(94.4)
31 March
31 March
Current tax receivable
1.6
5.8
Current tax payable
(3.6 )
(2.0)
(0.8)
31 March
31 March
Raw materials
28.7
46.2
Work in progress
8.7
6.5
33.3
36.5
70.7
89.2
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
160
16. Equity accounted investments
As at 31 March
The profit from the Group’s share of joint ventures for the year ended 31 March 2025 was £0.3m (FY24: £0.8m).
17. Deferred tax
For the year ended 31 March 2025
Deferred tax asset
Deferred tax liability
Deferred tax has been calculated at the rate at which the timing difference is expected to reverse using enacted future statutory rates. Deferred
tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred
tax balances relate to the same taxation authority.
At 31 March 2025 the Group had unused tax losses and carried forward interest expense of £305.3m (2024: £212.3m) which are available
for offset against future taxable profits.
With our US operations performing below-expectations in the year, the change in the administration and the change in US Sector CEO, re-
alignment of strategy and required restructuring, there has been a material impact on the future projections of the business. As a result, the
Group de-recognised the deferred tax assets previously recognised in respect of net operating losses. No deferred tax asset is recognised in
respect of £183.8m (2024: £109.8m) of US net operating losses and £85.9m (2024: £71.5m) of US interest deductions. There is also no
deferred tax asset recognised in respect of £8.8m (2024: nil) of UK capital losses due to uncertainty over the timing and extent of their
utilisation. Full recognition of the US and UK losses would increase the deferred tax asset by £72.7m. Of the £183.8m (2024:109.8m) of US
net operating losses, £31.1m (2024: £32.4m) are time-limited of which £22.0m will expire in 2035 and £9.1m in 2036.
Deferred tax assets are recognised on the balance sheet of £6.9m (2024: £29.0m), being £4.1m in respect of £17.8m of Canadian net
operating losses and excess interest, and £2.8m in respect of £9.0m of German trade losses and excess interest.
The Group made overseas losses in the period ended 31 March 2025 and recognition of deferred tax assets is dependent on future forecast
taxable profits. The Group has reviewed the latest forecasts for these businesses which incorporate the unsystematic risks of operating in
the defence business. In the period beyond the 5 year forecast we have reviewed the terminal period profits and based on these and our
expectations for these businesses. We believe it is probable the losses, with the exception of the US and UK, will be fully utilised.
31 March 2025
31 March 2024
All figures in £ million
Joint
Ventures’
financial
results
Group net
share of
Joint
Ventures
Joint
Ventures’
financial
results
Group net
share of
Joint
Ventures
Non-current assets
0.9
0.5
1.1
0.6
Current assets
3.4
2.4
5.9
3.7
4.3
2.9
7.0
4.3
Current liabilities
(0.3)
(0.1)
(0.3)
(0.1)
Non-current liabilities
(1.5)
(0.7)
(4.1)
(2.0)
(1.8)
(0.8)
(4.4)
(2.1)
Net assets of joint ventures
2.5
2.1
2.6
2.2
All figures in £ million
Short-term
timing
differences
Carried
forward
interest
expense
Lease
liabilities
Tax
losses
Total
At 1 April 2024
20.1
1.0
8.9
35.9
65.9
Charged to income statement
(8.8)
1.1
-
(30.7)
(38.4)
Credited to other comprehensive income
1.8
-
-
-
1.8
Foreign exchange
(1.0)
-
(0.1)
(0.4)
(1.5)
Gross deferred tax asset at 31 March 2025
12.1
2.1
8.8
4.8
27.8
Less: liability available for offset
(17.1)
Net deferred tax asset at 31 March 2025
10.7
All figures in £ million
Pension
surplus
Owned
property,
plant &
equipment
Right of use
assets
Acquisition
intangibles
Total
At 1 April 2024
(9.6)
(80.4)
(7.6)
(26.0)
(123.6)
Credited to income statement
(0.6)
(2.4)
-
12.6
9.6
Charged to other comprehensive income
(4.4)
-
-
-
(4.4)
Foreign exchange
-
-
(0.2)
0.5
0.3
Gross deferred tax liability at 31 March 2025
(14.6)
(82.8)
(7.8)
(12.9)
(118.1)
Less: asset available for offset
17.1
Net deferred tax liability at 31 March 2025
101.0
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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
162
20. Trade and other receivables
As at 31 March
Trade and other receivables includes assets that are realised as part of the business’s normal operating cycle, including amounts of £nil
(2024: £0.8m) that are not expected to be realised within 12 months of the year end. Credit risk is limited as a result of the high percentage
of revenue derived from UK and US government agencies. Accordingly, the Directors believe that no credit provision in excess of the allowance
for doubtful debts is required. As at 31 March 2025 the Group carried a loss allowance in respect of expected credit risk of £1.4m (2024:
£1.7m).
Contract assets decreased during the year due to the timing of invoicing. Contract assets represents unbilled amounts recoverable under
customer contracts (refer to accounting policies note 35).
Ageing of receivables and associated loss allowance for expected credit risk
As at 31 March 2025
As at 31 March 2024
Movements in the provision for expected credit loss
The maximum exposure to credit risk in relation to trade and other receivables at the reporting date is the fair value of trade and other
receivables. The Group does not hold any collateral as security.
31 March
Trade receivables
148.9
179.5
Contract assets
154.5
171.6
Other receivables
48.1
58.1
Prepayments
36.9
47.6
388.4
456.8
Current
Up to 30 days
>120 days
Gross carrying amount - trade receivables (£m)
120.1
23.1
2.4
4.7
150.3
Gross carrying amount - contract assets (£m)
154.5
-
-
-
154.5
Expected loss rate (%)
0.0%
0.0%
0.0%
29.8%
0.5%
Loss allowance (£m)
-
-
-
1.4
1.4
Current
Up to 30 days
>120 days
past due
past due
past due
Gross carrying amount - trade receivables (£m)
141.9
24.8
9.6
4.9
181.2
Gross carrying amount - contract assets (£m)
171.6
-
-
-
171.6
Expected loss rate (%)
-
-
-
34.7%
0.5%
Loss allowance (£m)
-
-
-
1.7
1.7
FY25
Contract
At 1 April
1.7
-
1.6
-
Increase in loss allowance recognised in income statement
0.2
-
0.1
-
Unutilised amount reversed through income statement
(0.1)
-
-
-
Utilised (receivables written off)
(0.4)
-
-
-
1.4
-
1.7
-
Financial Statements continued
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Financial Statements
21. Trade and other payables
As at 31 March
Accrued expenses and other payables includes £nil at 31 March 2025 (31 March 2024: £34.0m) relating to an irrevocable contract to purchase
shares as part of the ongoing share buyback programme. This liability related to financing activities and was settled via a financing cash flow
during FY25.
Contract liabilities, which are influenced by the timing of revenue recognition and invoicing on contracts, were broadly consistent with the prior
year.
22. Provisions
For the year ended 31 March 2025
Property provisions relate to obligations relating to the sale and leaseback transaction, dilapidations and under-utilised properties. The under-
utilised property provision is affected by the timing of when properties can be sub-let and the proportion of space that can be sub-let. Other
provisions includes £12.1m (2024: £12.8m) in respect of a civil liability for the Pendine incident. There is an equivalent balance in Other
Receivables for an insurance recoverable. There is uncertainty around the timing of the utilisation of this balance although this will not impact
cash or the P&L. Other provisions also includes £14.3m relating to the group-wide restructuring programme, the cost of which is included as
a specific adjusting item. The remaining balance relates to environmental and other liabilities, the magnitude and timing of utilisation of which
are determined by a variety of factors.
For the year ended 31 March 2024
31 March
31 March
Trade payables
152.1
Other tax and social security
56.7
50.4
Contract liabilities
207.0
597.5
654.7
Contract liabilities
6.4
Other payables
2.0
8.4
11.6
Property
Other
Total
2.5
17.0
19.5
Created in year
24.3
21.7
46.0
-
(1.2
)
(1.2
)
Utilised in year
(2.0 )
(4.5 )
Foreign exchange
-
(0.1)
(0.1)
24.8
34.9
59.7
Current liability
23.0
33.2
56.2
1.8
1.7
3.5
24.8
34.9
59.7
Property
Other
Total
6.6
20.2
26.8
Created in year
0.4
0.8
1.2
(3.2)
(0.2)
(3.4)
Unwinding of discount
0.1
-
0.1
(0.9)
(0.9)
(0.5)
(3.7)
(4.2)
Foreign exchange
-
(0.1)
(0.1)
2.5
17.0
19.5
Current liability
-
15.3
15.3
Non-current liability
2.5
1.7
4.2
2.5
17.0
19.5
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Financial Statements

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
164
23. Net debt
As at 31 March
At 31 March 2025 the Group held £0.7m (2024: £1.5m) of cash which is restricted in its use. The term loan was issued at floating rates as
Tranche A £273.3m and Tranche B USD 79.6m. A proportion of Tranche A has been converted to fixed rate using interest rate swaps. Further
analysis of the terms and maturity dates for financial liabilities are set out in note 26.
24. Cash flows from operations
The working capital movements in the cash flow statement do not agree directly to the balance sheet due to impact of foreign exchange
movements, deferred consideration, accrued interest, share buyback liability and the timing of capex payments.
31 March 2025
31 March 2024
All figures in £ million
Assets
Liabilities
Net
Assets
Liabilities
Net
Current financial assets/(liabilities)
Deferred financing costs
1.3
-
1.3
1.0
-
1.0
Lease liabilities
-
(13.3)
-
(8.1)
Derivative financial instruments
3.6
(1.8)
1.8
5.2
(1.1)
Total current financial assets/(liabilities)
4.9
(15.1)
6.2
(9.2)
Non
-current assets/(liabilities)
Deferred financing costs
1.0
-
1.0
1.1
-
1.1
Borrowings – Term loan
-
(335.0)
(335.0)
-
(336.3)
(336.3)
Lease liabilities
-
(80.6)
(80.6)
-
(47.4)
(47.4)
Derivative financial instruments
2.0
(1.0)
1.0
3.8
(0.4)
3.4
Total non -current financial assets/(liabilities)
3.0
(416.6)
4.9
(384.1)
Total financial assets/(liabilities)
7.9
(431.7)
11.1
(393.3)
Cash
120.2
-
120.2
109.5
-
109.5
Cash equivalents
170.4
-
170.4
121.5
-
121.5
Total cash and cash equivalents
290.6
-
290.6
231.0
-
231.0
Total net
debt as defined by the Group
All figures in £ million
FY25
FY24
(Loss)/
profit after tax for the year
(185.7
)
Adjustments for:
Taxation expense
79.4
43.1
Net finance expense
15.8
9.8
Impairment of Goodwill
143.9
-
Loss/(gain) on sale of property
36.6
(2.1)
Loss on disposal of plant and equipment
4.6
-
Loss on disposal of intangibles
4.2
0.9
Impairment of property
1.0
0.7
Amortisation of purchased or internally developed intangible assets
15.7
7.4
Amortisation of intangible assets arising from acquisitions
24.2
25.2
Depreciation of property, plant and equipment
70.6
58.1
Share of post-tax profit of equity accounted entities
(0.3)
(0.8)
Share-based payments charge
9.8
9.4
Retirement benefit contributions in excess of income statement expense
(2.3)
(1.9)
Net movement in provisions
19.4
(5.1)
236.9
284.3
Decrease/(increase) in inventories
16.5
(21.4)
Decrease/(increase) in receivables
56.3
(10.0)
(Decrease)/increase in payables
(23.0)
41.2
Changes in working capital
49.8
9.8
Net cash inflow from operations
286.7
294.1
Financial Statements continued
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165
Financial Statements
Reconciliation of net cash flow from operations to underlying net cash flow from operations to free cash flow
Underlying cash conversion ratio
FY25
FY24
Underlying EBITDA – £ million
301.7
307.9
Underlying net cash flow from operations – £ million
316.2
320.2
Underlying cash conversion ratio – %
25. Leases
Group as a lessor
The Group receives rental income on certain properties. Primarily these are properties partially occupied by Group companies, with vacant
space sub-let to third-party tenants. There was £0.7m (FY24: £nil) of sublease income which related to right of use assets, following the sale
and leaseback transaction of Cody Technology Park. The Group had contracted with tenants for the following future minimum lease payments:
Group as a lessee
Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets (included within Property, Plant & Equipment – see note 15)
Lease liabilities (included within Net debt – see note 23)
Additions to the right-of-use assets during FY25 were £26.2m (FY24: £31.4m). The total cash outflow for leases in FY25 was £15.0m (FY24:
£9.6m). The Group had no expense relating to variable lease payments not included in the measurement of lease liabilities.
All figures in £ million
FY25
FY24
Net cash flow from operations
286.7
294.1
Specific adjusting items:
Add back specific adjusting item: digital investment
20.8
16.9
Add back specific adjusting item: restructuring costs
3.4
-
Add back specific adjusting item: acquisition integration and remuneration costs
4.2
6.5
Add back specific adjusting item: acquisition and disposal costs
1.1
2.7
Total specific adjusting items
29.5
26.1
Underlying net cash flow from operations
316.2
320.2
Less: tax and net interest payments
(65.4)
(51.0)
Less: net purchases of intangible assets and property plant and equipment
(108.4)
(96.1)
142.4
173.1
31 March
All figures in £ million
2025
2024
Within one year
1.0
5.2
In the second to fifth years inclusive
2.3
6.6
Greater than five years
0.4
Total future minimum lease payments
3.7
13.5
31 March
31 March
All figures in £ million
2025
2024
Plant, machinery and vehicles
2.2
0.2
Total right of use assets net book value
61.4
48.2
31 March
31 March
All figures in £ million
2025
2024
Current
13.3
8.1
Non-current
80.6
47.4
93.9
55.5
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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
166
25. Leases (continued)
Amounts recognised in the consolidated income statement
The consolidated income statement includes the following amounts relating to leases:
Minimum lease payment commitments
The Group has the following total future minimum lease payment commitments:
Lease payments represent capital and interest payable by the Group on certain property, plant and equipment. Principal leases are negotiated
for a term of approximately 10 years.
26. Financial risk management
The Group’s international operations expose it to financial risks that include the effects of changes in foreign exchange rates, interest rates,
credit risks and liquidity risks.
Treasury and risk management policies, which are set by the Board, specify guidelines on financial risks and the use of financial instruments
to manage risk. The instruments and techniques used to manage exposures include foreign currency and interest rate swap derivatives. Group
treasury monitors financial risks and compliance with risk management policies during the year. There have been no changes in any risk
management policies during the year or since the year end. For details of the Group’s Treasury policy and management of financial
instruments see ‘Additional Financial Information’ on page 199.
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to
stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, cash and cash
equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in
the consolidated statement of changes in equity. The Group has a revolving credit facility and floating rate term loan with its relationship
banks with a requirement for the half yearly testing period that the ratio of Net Debt to EBITDA will not exceed 3.5:1 and the ratio of EBITDA
to net finance charges will not be less than 4:1. The Group complied with both covenants during the year. As at 31 March 2025, the ratio of
Net Debt to EBITDA was 0.4:1 and the ratio of EBITDA to net finance charges was 20:1. The revolving credit facility is undrawn at the year end
and matures in 2028. The floating rate term loan is repayable in 2027.
A) Fair values of financial instruments
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1 – measured using quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices). Level 2 derivatives comprise forward foreign exchange contracts which have been fair
valued using forward exchange rates that are quoted in an active market; and interest rate swaps which have been fair valued using interest
rates that are quoted in an active market
Level 3 – measured using inputs for the assets or liability that are not based on observable market data (i.e. unobservable inputs).
All figures in £ million
FY25
FY24
Depreciation charge
Land and buildings
10.6
8.7
Plant, machinery and vehicles
0.3
0.1
Total depreciation charge (see note 15)
10.9
8.8
Interest expense (included in finance cost - see note 7)
4.2
2.8
Expense relating to short-term leases (included in operating costs)
0.8
0.6
Expense relating to low value leases (included in operating costs)
0.4
0.3
Total lease expense charged to profit before tax
16.3
12.5
31 March
31 March
Within one year
13.3
8.1
In the second to fifth years inclusive
54.8
25.4
Greater than five years
25.8
22.0
Total future minimum lease payment commitments
93.9
55.5
Financial Statements continued
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QinetiQ Group plc Annual Report and Accounts 2025
167
Financial Statements
The following table presents the Group’s assets and liabilities that are measured at fair value as at 31 March 2025:
The following table presents the Group’s assets and liabilities that are measured at fair value as at 31 March 2024:
For cash and cash equivalents, trade and other receivables and bank and current borrowings, the fair value of the financial instruments
approximate to their carrying value as a result of the short maturity periods of these financial instruments. For trade and other receivables,
allowances are made within the carrying value for credit risk. For other financial instruments, the fair value is based on market value, where
available. Where market values are not available, the fair values have been calculated by discounting cash flows to net present value using
prevailing market-based interest rates translated at the year-end rates. There have been no transfers between levels.
All financial assets and liabilities had a fair value that is identical to book value at 31 March 2025 and 31 March 2024, other than lease liabilities
where the book value is not reflective of changes in interest rates. Detailed analysis is provided in the following tables:
As at 31 March 2025
All figures in £ million
Note
Level 1
Level 2
Level 3
Total
Current derivative financial instruments
23
-
3.6
-
3.6
Non-current derivative financial instruments
23
-
2.0
-
2.0
Liabilities
Current derivative financial instruments
23
-
(1.8)
-
(1.8)
Non-current derivative financial instruments
23
-
(1.0)
-
(1.0)
2.8
2.8
All figures in £ million
Note
Level 1
Level 2
Level 3
Total
Current derivative financial instruments
23
-
5.2
-
5.2
Non-current derivative financial instruments
23
-
3.8
-
3.8
Current derivative financial instruments
23
(1.1)
(1.1)
Non-current derivative financial instruments
23
(0.4)
(0.4)
7.5
7.5
Financial
Financial
Financial
Total
assets at fair
liabilities at
value profit
amortised
All figures in £ million
Note
and loss
cost
cost
hedges
Other
fair value
Financial assets
Derivative financial instruments
23
-
-
-
2.0
-
2.0
Deferred financing costs
23
-
1.0
-
-
-
1.0
Current
Trade receivables and similar items
-
161.0
-
-
-
161.0
Derivative financial instruments
23
-
-
-
3.6
-
3.6
Deferred financing costs
23
-
1.3
-
-
-
1.3
Cash and cash equivalents
23
290.6
-
-
-
-
290.6
290.6
163.3
-
459.5
Non-current
Bank borrowings
23
-
-
(335.0)
-
-
(335.0)
Derivative financial instruments
23
-
-
-
(1.0)
-
(1.0)
Lease liabilities
23
-
-
-
-
(80.6)
(80.6)
Trade payables and similar items
-
-
(302.5)
-
-
(302.5)
Derivative financial instruments
23
-
-
-
(1.8)
-
(1.8)
Lease liabilities
23
-
-
-
-
(13.3)
(13.3)
Total financial liabilities
-
-
(637.5)
(2.8)
(93.9)
(734.2)
Total
(637.5)
2.8
(93.9)
(274.7)
Annual Report & Accounts 2025 | QinetiQ Group plc 167
Financial Statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
168
26. Financial risk management (continued)
As at 31 March 2024
A
ll figures in £ million
Note
hedges
Other
Financial assets
Non-current
Derivative financial instruments
23
-
-
-
3.8
-
3.8
Deferred financing costs
23
-
1.1
-
-
-
1.1
Current
Trade receivables and similar items
-
192.3
-
-
-
192.3
Derivative financial instruments
23
-
-
-
5.2
-
5.2
Deferred financing costs
23
-
1.0
-
-
-
1.0
Cash and cash equivalents
23
231.0
-
-
-
-
231.0
Total financial assets
231.0
194.4
-
9.0
-
Financial liabilities
Non -current
Bank borrowings
23
-
-
(336.3)
-
-
(336.3)
Derivative financial instruments
23
-
-
-
(0.4)
-
(0.4)
Lease liabilities
23
-
-
-
-
(47.4)
(47.4)
Current
Trade payables
and similar items
-
-
(322.5)
-
-
(322.5)
Irrevocable share buyback
-
-
(34.0)
-
-
(34.0)
Derivative financial instruments
23
-
-
-
(1.1)
-
(1.1)
Lease liabilities
23
-
-
-
-
(8.1)
(8.1)
Total financial
liabilities
-
-
(1.5)
(749.8)
Total
194.4
(315.4)
B) Interest rate risk
The Group’s objective is to manage its exposure to interest rate fluctuations on borrowings through varying the proportion of fixed rate debt
relative to floating rate debt with debt-related derivative financial instruments, including interest rate and cross-currency swaps.
The Group operates an interest rate policy designed to optimise interest costs and to reduce volatility in reported earnings. The Group’s current
policy is to require rates to be fixed for 30%–80% of the level of borrowings, which is achieved primarily through fixed-rate borrowings or debt-
related derivative financial instruments. Where there are significant changes in the level and/or structure of debt, the policy permits borrowings
to be 100% fixed, with regular Board reviews of the appropriateness of this fixed percentage.
At 31 March 2025, the Group had 80% (2024: 80%) of fixed rate debt and 20% (2024: 20%) of floating rate debt based on gross debt of
£335.0m (2024: £336.3m) after including the impact of debt-related derivative financial assets (interest rate swaps).
Financial assets/(liabilities)
As at 31 March 2025
As at 31 March 2024
Financial assets
Financial liabilities
All figures in £ million
Fixed or
capped
Floating
Non-interest
bearing
Fixed or
capped
Floating
Non-interest
bearing
Sterling
4.2
226.9
1.4
(63.8)
(273.3)
(2.6)
US dollar
-
45.2
-
(19.5)
(61.7)
-
Euro
-
3.0
-
(1.8)
-
-
Australian dollar
-
13.2
-
(8.8)
-
-
Other
-
2.3
-
(0.2)
-
-
Total
4.2
290.6
1.4
(94.1)
(335.0)
(2.6)
Financial assets
Financial liabilities
All figures in £ million
Fixed or
capped
Floating
Non-interest
bearing
Fixed or
capped
Floating
Non-interest
bearing
Sterling
8.5
173.6
0.5
(24.0)
(273.3)
(35.5)
US dollar
-
37.4
-
(19.5)
(63.0)
-
Euro
-
1.3
-
-
-
-
Australian dollar
-
14.9
-
(11.6)
-
-
Other
-
3.8
-
(0.4)
-
-
Total
8.5
231.0
0.5
(55.5)
(336.3)
(35.5)
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
168
26. Financial risk management (continued)
As at 31 March 2024
All figures in £ million
Note
Financial
assets at fair
value profit
and loss
Financial
assets at
amortised
cost
Financial
liabilities at
amortised
cost
Derivatives
used as
hedges
Other
Total
carrying
value and
fair value
Financial assets
Non-current
Derivative financial instruments
23
-
-
-
3.8
-
3.8
Deferred financing costs
23
-
1.1
-
-
-
1.1
Current
Trade receivables and similar items
-
192.3
-
-
-
192.3
Derivative financial instruments
23
-
-
-
5.2
-
5.2
Deferred financing costs
23
-
1.0
-
-
-
1.0
Cash and cash equivalents
23
231.0
-
-
-
-
231.0
Total financial assets
231.0
194.4
-
9.0
-
434.4
Financial liabilities
Non-current
Bank borrowings
23
-
-
(336.3)
-
-
(336.3)
Derivative financial instruments
23
-
-
-
(0.4)
-
(0.4)
Lease liabilities
23
-
-
-
-
(47.4)
(47.4)
Current
Trade payables and similar items
-
-
(322.5)
-
-
(322.5)
Irrevocable share buyback
-
-
(34.0)
-
-
(34.0)
Derivative financial instruments
23
-
-
-
(1.1)
-
(1.1)
Lease liabilities
23
-
-
-
-
(8.1)
(8.1)
Total financial liabilities
-
-
(692.8)
(1.5)
(55.5)
(749.8)
Total
231.0
194.4
(692.8)
7.5
(55.5)
(315.4)
B) Interest rate risk
The Group’s objective is to manage its exposure to interest rate fluctuations on borrowings through varying the
proportion of fixed rate debt
relative to floating rate debt with debt-related derivative financial instruments, including interest rate and cross-currency swaps.
The Group operates an interest rate policy designed to optimise interest costs and to reduce volatility in reported earnings.
The Group’s current
policy is to require rates to be fixed for 30%–80% of the level of borrowings, which is achieved primarily through fixed-rate borrowings or debt-
related derivative financial instruments. Where there are significant changes in the level and/or structure of debt, the poli
cy permits borrowings
to be 100% fixed, with regular Board reviews of the appropriateness of this fixed percentage.
At 31 March 2025, the Group had 80% (2024: 80%) of fixed rate debt and 20
% (2024: 20%) of floating rate debt based on gross debt of
£335.0m (2024: £336.3m) after including the impact of debt-related derivative financial assets (interest rate swaps).
Financial assets/(liabilities)
As at 31 March 2025
As at 31 March 2024
Financial assets
Financial liabilities
All figures in £ million
capped
Floating
bearing
capped
Floating
bearing
Sterling
4.2
226.9
1.4
(63.8)
(273.3)
(2.6)
US dollar
-
45.2
-
(19.5)
(61.7)
-
Euro
-
3.0
-
(1.8)
-
-
Australian dollar
-
13.2
-
(8.8)
-
-
Other
-
2.3
-
(0.2)
-
-
Total
4.2
290.6
1.4
(94.1)
(335.0)
(2.6)
Financial assets
Financial liabilities
Floating
Non-interest
All figures in £ million
capped
Floating
Sterling
8.5
173.6
0.5
(24.0)
(273.3)
(35.5)
US dollar
-
37.4
-
(19.5)
(63.0)
-
Euro
-
1.3
-
-
-
-
Australian dollar
-
14.9
-
(11.6)
-
-
Other
-
3.8
-
(0.4)
-
-
Total
8.5
231.0
0.5
(55.5)
(35.5)
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025168

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
169
Financial Statements
Floating rate financial assets attract interest based on the relevant reference rate. Floating rate financial liabilities bear interest at the
relevant reference rate. Trade and other receivables/payables and deferred finance costs are excluded from this analysis.
For the fixed or capped rate financial assets and liabilities, the average interest rates (including the relevant marginal cost of borrowing) and
the average period for which the rates are fixed are:
Sterling assets consist of debt-related derivative financial instruments. Sterling liabilities consist primarily of finance leases with the
weighted average interest rate reflecting the internal rate of return of those leases.
Interest rate risk management
The revolving credit facility (note 26E) is floating-rate and undrawn as at 31 March 2025.
As at 31 March 2025, the majority of the Group’s floating rate bank borrowings were fixed through interest rate swaps which swap the
Sterling floating rate interest payable into fixed rate Sterling. The notional principal amount of the outstanding interest rate swap contracts
as at 31 March 2025 is £310m (2024: £270m), of which £40m (2024: nil) is effective from September 2025 replacing two £20m maturing
contracts. The swaps have the economic effect of converting floating rate borrowings into fixed rate borrowings and are accounted for as
cash flow hedges.
C) Currency risk
Transactional currency exposure
The Group is exposed to foreign currency risks arising from sales or purchases by businesses in currencies other than their functional currency.
It is Group policy that when such a sale or purchase is certain, the net foreign exchange exposure is hedged using forward foreign exchange
contracts. Hedge accounting documentation and effectiveness testing are undertaken for all the Group’s transactional hedge contracts.
The currency and notional amount of the designated hedging instruments match the currency and principal amounts of the transactions
being hedged, therefore the hedging instruments and hedged items have values which will generally move in opposite directions because of
the same hedged risk. As the critical terms of the hedging instruments match those of the hedged items, an economic relationship can be
demonstrated on an ongoing basis.
The hedge ratio is 1:1 on the basis that the notional amount of the designated hedging instruments matches the principal amount of the
foreign currency sales/purchases designated as the hedged items. The Group does not designate groups of items with offsetting risk positions
as hedged items.
The Group considers the potential sources of hedge ineffectiveness to be:
• valuation adjustments for credit risk made to derivative hedging instruments at each hedge effectiveness measurement date;
• changes to the timing and amount of transactions; and
• non-occurrence of the designated hedged items.
Ineffectiveness due to foreign currency basis was highly immaterial.
The table below shows the Group’s currency exposures (based on functional currency of the operating company), being exposures on
currency transactions that give rise to net currency gains and losses recognised in the income statement. Such exposures comprise the
monetary assets and liabilities of the Group that are not denominated in the functional currency of the operating company involved.
31 March 2025
31 March 2024
Weighted
average
Weighted
Fixed or
Weighted
interest rate
average years
average years
£m
%
to maturity
£m
%
to maturity
FFiinnaanncciiaall aasssseettss::
Sterling
4.2
3.5
2.4
8.5
3.1
2.2
F i n a n c i a l l i a b i l i t i
i
e s :
Sterling
(63.8)
7.0
8.0
(24.0)
5.4
2.0
US dollar
(19.5)
5.1
5.1
(19.5)
5.9
11.4
Euro
(1.8)
2.6
4.7
-
-
-
Australian dollar
(8.8)
4.7
4.4
(11.6)
4.7
5.2
Other
(0.2)
4.6
1.9
(0.4)
4.8
2.8
Total financial liabilities
(94.1)
6.3
7.0
(55.5)
4.9
6.2
:
Net foreign currency monetary assets/(liabilities)
All figures in £ millions
US$
Euro
A$
Other
Total
31 March 2025 – Sterling
14.4
(2.3)
2.8
7.6
22.5
31 March 2024– Sterling
0.6
(0.3)
1.1
(0.5)
0.9
Annual Report & Accounts 2025 | QinetiQ Group plc 169
Financial Statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
170
26. Financial risk management (continued)
The amounts shown in the table take into account the effect of the forward contracts entered into to manage these currency exposures. The
Group enters into forward foreign currency contracts to hedge the currency exposures that arise on sales and purchases denominated in
foreign currencies, as the transaction occurs. The principal contract amounts of the outstanding forward currency contracts as at 31 March
2025 against Sterling are net US dollars sold of £105.7m (USD 136.1m), net Euros sold £32.5m (EUR 40.5m), net Canadian dollars sold £5.4m
(CAD 12.2m), net Swiss Francs bought of £3.6m (CHF 3.6m), net Swedish Krona sold of £0.1m (SEK 0.8m), and net Australian dollars sold
£33.7m (AUD 68.7m).
Translational currency exposure
The Group has significant investments in overseas operations, particularly in the US. As a result, the Sterling value of the Group’s balance
sheet can be affected by movement in exchange rates. The Group does not hedge against translational currency exposure to overseas net
assets.
D) Financial credit risk
The Group is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments, but does not currently
expect any counterparties to fail to meet their obligations. Credit risk is mitigated by a Board-approved policy of only selecting counterparties
with a strong investment grade long-term credit rating for cash deposits and setting a utilisation credit limit based on the credit rating. The
cash and cash equivalents of the Group are invested in non-speculative financial instruments which are usually highly liquid, such as short-
term deposits. Therefore, the Group believes it has reduced its exposure to counterparty credit risk through this process.
The cash and cash equivalents balance is subject to review for impairment, and due to the high credit ratings of the counterparties set out
below, no impairment has been recognised within the year:
The Group uses 3 year cumulative default rate metrics to determine the estimated credit-rated losses on our financial instruments. Based on
the expected default rates, the financial instruments have an immaterial risk of credit impairment.
In the normal course of business the Group operates notional cash pooling systems and master netting agreements for derivatives, where a
legal right of set-off applies.
The maximum credit-risk exposure in the event of other parties failing to perform their obligations under financial assets, excluding trade and
other receivables, totals £296.2m (2024: £240.0m). This balance includes cash and cash equivalents and derivative financial assets. The cash
and cash equivalents of £290.6m at 31 March 2025 (2024: £231.0m) represents the maximum credit exposure on these assets. The cash
and cash equivalents were held with different financial institutions which were rated single A or better. Cash equivalents comprise £170.4m
(2024: £121.5m) invested in AAA-rated money market funds. The Group’s assessment is that credit risk is limited as a result of the high
percentage of revenue derived from UK and US government agencies. Therefore the provision for expected credit losses is immaterial in
respect of receivables from these customers.
E) Liquidity risk
Borrowing facilities
As at 31 March 2025 the Group had a revolving credit facility (RCF) of £290.0m (2024: £275.0m) and a floating rate term loan of £335.0m
(2024: £336.3m). The RCF, which is unutilised, was refinanced in April 2024 and will mature on 22 April 2028. The term loan will mature on
27 September 2027. Total available funds, comprising the RCF, term loan and the Group’s freely available cash and cash equivalents, are
shown in the table below:
* Reference rate refers to SONIA for GBP and SOFR for USD.
Counterparty credit rating
31 March 2025
31 March 2024
78%
69%
A+ to A-
22%
30%
BBB+ to BBB-
-
1%
Interest rate:
Reference
rate* plus
Total
£m
Drawn
£m
Undrawn
£m
As at 31 March 2025
Committed facilities – RCF
0.60%
290.0
-
290.0
Committed facilities – term loan
1.00%
335.0
335.0
-
Freely available cash and cash equivalents
289.9
Available funds 31 March 2025
579.9
As at 31 March 2024
Committed facilities – RCF
0.53%
275.0
-
275.0
Committed facilities – term loan
1.00%
336.3
336.3
-
Freely available cash and cash equivalents
229.5
Available funds 31 March 2024
504.5
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
170
26. Financial risk management (continued)
The amounts shown in the table take into account the effect of the forward contracts entered into to manage these currency exposures. The
Group enters into forward foreign currency contracts to hedge the currency exposures that arise on sales and purchases denominated in
foreign currencies, as the transaction occurs. The principal contract amounts of the outstanding forward currency contracts as at 31 March
2025 against Sterling are net US dollars sold of £105.7m (USD 136.1m), net Euros sold £32.5m (EUR 40.5m), net Canadian dollars sold £5.4m
(CAD 12.2m), net Swiss Francs bought of £3.6m (CHF 3.6m), net Swedish Krona sold of £0.1m (SEK 0.8m), and net Australian dollars sold
£33.7m (AUD 68.7m).
Translational currency exposure
The Group has significant investments in overseas operations, particularly in the US. As a result, the Sterling value of the Group’s balance
sheet can be affected by movement in exchange rates. The Group does not hedge against translational currency exposure to overseas net
assets.
D) Financial credit risk
The Group is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments, but does not currently
expect any counterparties to fail to meet their obligations. Credit risk is mitigated by a Board-approved policy of only selecting counterparties
with a strong investment grade long-term credit rating for cash deposits and setting a utilisation credit limit based on the credit rating. The
cash and cash equivalents of the Group are invested in non-speculative financial instruments which are usually highly liquid, such as short-
term deposits. Therefore, the Group believes it has reduced its exposure to counterparty credit risk through this process.
The cash and cash equivalents balance is subject to review for impairment, and due to the high credit ratings of the counterparties set out
below, no impairment has been recognised within the year:
The Group uses 3 year cumulative default rate metrics to determine the estimated credit-rated losses on our financial instruments. Based on
the expected default rates, the financial instruments have an immaterial risk of credit impairment.
In the normal course of business the Group operates notional cash pooling systems and master netting agreements for derivatives, where a
legal right of set-off applies.
The maximum credit-risk exposure in the event of other parties failing to perform their obligations under financial assets, excluding trade and
other receivables, totals £296.2m (2024: £240.0m). This balance includes cash and cash equivalents and derivative financial assets. The cash
and cash equivalents of £290.6m at 31 March 2025 (2024: £231.0m) represents the maximum credit exposure on these assets. The cash
and cash equivalents were held with different financial institutions which were rated single A or better. Cash equivalents comprise £170.4m
(2024: £121.5m) invested in AAA-rated money market funds. The Group’s assessment is that credit risk is limited as a result of the high
percentage of revenue derived from UK and US government agencies. Therefore the provision for expected credit losses is immaterial in
respect of receivables from these customers.
E) Liquidity risk
Borrowing facilities
As at 31 March 2025 the Group had a revolving credit facility (RCF) of £290.0m (2024: £275.0m) and a floating rate term loan of £335.0m
(2024: £336.3m). The RCF, which is unutilised, was refinanced in April 2024 and will mature on 22 April 2028. The term loan will mature on
27 September 2027. Total available funds, comprising the RCF, term loan and the Group’s freely available cash and cash equivalents, are
shown in the table below:
* Reference rate refers to SONIA for GBP and SOFR for USD.
Counterparty credit rating
31 March 2025
31 March 2024
AAA to AA-
78%
69%
A+ to A-
22%
30%
BBB+ to BBB-
-
1%
Interest rate:
rate* plus
£m
£m
£m
Committed facilities – RCF
0.60%
290.0
-
290.0
Committed facilities – term loan
1.00%
335.0
335.0
-
Freely available cash and cash equivalents
289.9
Available funds 31 March 2025
579.9
Committed facilities – RCF
0.53%
275.0
-
275.0
Committed facilities – term loan
1.00%
336.3
336.3
-
Freely available cash and cash equivalents
229.5
Available funds 31 March 2024
504.5
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025170

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Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
171
Financial Statements
Gross contractual cash flows for borrowings and other financial liabilities
The following are the undiscounted contractual maturities of financial liabilities, including interest payments. The cash flows associated with
derivatives that are cash flow hedges are expected to have an impact on profit or loss in the periods shown.
The £335.0m term loan is repayable on 27 September 2027, with interest periods set to three months. The loan bears interest at a variable
margin over the relevant reference rate of between 1.00% and 2.50% dependent on the ratio of Net Debt to EBITDA.
As at 31 March 2025
As at 31 March 2024
Contractual
1 year
More than
All figures in £ million
Book value
cash flows
or less
1–2 years
2–5 years
5 years
Non-derivative financial liabilities
Term loan
(336.3)
(356.8)
(7.4)
(8.8)
(340.6)
-
Revolving credit facility
-
-
-
-
-
-
Trade payables and similar items
(322.5)
(322.5)
(322.5)
-
-
-
Irrevocable share buyback
(34.0)
(34.0)
(34.0)
-
-
-
Leases
(55.5)
(70.4)
(10.8)
(9.7)
(23.0)
(26.9)
Derivative financial liabilities
Forward foreign currency contracts – cash flow hedges
(1.5)
(1.5)
(1.1)
(0.1)
(0.3)
-
Interest rate swaps
-
-
-
-
-
-
Total
(749.8)
(785.2)
(375.8)
(18.6)
(363.9)
(26.9)
F) Derivative financial instruments
The Group has the following derivative financial instruments on the balance sheet, reported within the ‘Other financial assets’ line items.
The maturity of these derivative financial instruments is as follows:
Contractual
More than
All figures in £ million
Book value
cash flows
or less
1–2 years
2–5 years
5 years
Non-derivative financial liabilities
Term loan
(335.0)
(375.8)
(15.7)
(15.7)
(344.4)
-
Revolving credit facility
-
-
-
-
-
-
(302.5
)
(302.5
)
-
-
-
Leases
(93.9)
(120.0)
(18.7)
(18.1)
(39.6)
(43.6)
Derivative financial liabilities
Forward foreign currency contracts – cash flow hedges
(2.6)
(2.6)
(1.8)
(0.6)
(0.2)
-
Interest rate swaps
(0.2)
(0.2)
-
(0.1)
(0.1)
-
Total
(734.2)
(801.1)
(338.7)
(34.5)
(384.3)
(43.6)
31 March 2025
31 March 2024
Liability
Liability
All figures in £ million
gains
losses
Net
gains
losses
Net
Forward foreign currency contracts – cash flow hedges
1.4
(2.6)
(1.2)
0.5
(1.5)
(1.0)
Interest rate swaps
4.2
(0.2)
4.0
8.5
-
8.5
Derivative assets/(liabilities) at the end of the year
5.6
(2.8)
2.8
9.0
(1.5)
7.5
31 March 2025
31 March 2024
Liability
Liability
All figures in £ million
gains
losses
Net
gains
losses
Net
Expected to be recognised:
In one year or less
3.6
(1.8)
1.8
5.2
(1.1)
4.1
Between one and two years
1.3
(0.7)
0.6
2.7
(0.1)
2.6
More than two years
0.7
(0.3)
0.4
1.1
(0.3)
0.8
Derivative assets/(liabilities) at the end of the year
5.6
(2.8)
2.8
9.0
(1.5)
7.5
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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
172
26. Financial risk management (continued)
The effects of these derivatives on the Group’s financial position and performance are as follows:
* The weighted average hedged rate for the year for cash flow hedges is based on GBP:USD, being the most significant currency pair. The Group also has cash flow hedges
relating to a number of other currency pairs aligned to its global operations.
G) Maturity of financial liabilities
The contractual maturity of the Group’s financial liabilities is shown below:
As at 31 March 2025
As at 31 March 2024
* Trade payables and other similar items includes £nil (FY24: £34.0m) irrevocable share buyback liability
H) Sensitivity analysis
The Group’s sensitivity to changes in foreign exchange rates and interest rates on financial assets and liabilities as at 31 March 2025 is set
out in the following table. The impact of a weakening in Sterling on the Group’s financial assets and liabilities would be more than offset
in equity and income by its impact on the Group’s overseas net assets and earnings respectively. Sensitivity on Group’s assets other than
financial assets and liabilities is not included in this analysis.
As at 31 March 2025
* This relates to the impact on items charged directly to equity and excludes the impact on profit/loss for the year flowing into equity.
Cash flow
Interest rate
Cash flow
Interest rate
swaps
Total
Notional amount (gross)
515.8
310.0
825.8
410.3
270.0
680.3
Carrying value (current and non-current assets and (liabilities))
(1.2)
4.0
2.8
(1.0)
8.5
7.5
Maturity date
2025-2028
2025-2027
2025-2028
2024-2027
2025-2027
2024-2027
Hedge ratio
1:1
1:1
1:1
1:1
1:1
1:1
(4.5)
(4.7)
0.6
(0.5)
Change in value of hedged item used to determine hedge effectiveness
(0.2)
(4.5)
(4.7)
0.6
(0.5)
Weighted average hedged rate for the year*
1.29%
3.5%
1.26%
3.1%
Trade
Bank
liabilities
Total
Due in one year or less
302.5
-
1.8
13.3
317.6
Due in more than one year but not more than two years
-
-
-
335.0
-
-
Total
302.5
335.0
2.8
93.9
734.2
Trade
Bank
liabilities
Total
Due in one year or less
356.5
-
1.1
8.1
365.7
Due in more than one year but not more than two years
-
-
0.1
7.4
7.5
Due in more than two years but not more than five years
-
336.3
0.3
18.0
354.6
Due in five years or more
-
-
-
22.0
22.0
Total
356.5
336.3
1.5
55.5
749.8
1% decrease in
interest rates
10% weakening
in Sterling
All figures in £ million
Equity
*
Profit before
tax
Equity
Profit before
tax
Sterling
-
0.5
-
-
US dollar
-
0.2
(4.0)
0.9
Other
-
(0.2)
0.7
-
1% increase in
interest rates
10% strengthening
in Sterling
All figures in £ million
Equity
*
Profit before
tax
Equity
Profit before
tax
Sterling
-
(0.5)
-
-
US dollar
-
(0.2)
3.2
0.1
Other
-
0.2
(0.4)
-
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
172
26. Financial risk management (continued)
The effects of these derivatives on the Group’s financial position and performance are as follows:
* The weighted average hedged rate for the year for cash flow hedges is based on GBP:USD, being the most significant currency pair. The Group also has cash flow hedges
relating to a number of other currency pairs aligned to its global operations.
G) Maturity of financial liabilities
The contractual maturity of the Group’s financial liabilities is shown below:
As at 31 March 2025
As at 31 March 2024
* Trade payables and other similar items includes £nil (FY24: £34.0m) irrevocable share buyback liability
H) Sensitivity analysis
The Group’s sensitivity to changes in foreign exchange rates and interest rates on financial assets and liabilities as at 31 March 2025 is set
out in the following table. The impact of a weakening in Sterling on the Group’s financial assets and liabilities would be more than offset
in equity and income by its impact on the Group’s overseas net assets and earnings respectively. Sensitivity on Group’s assets other than
financial assets and liabilities is not included in this analysis.
As at 31 March 2025
* This relates to the impact on items charged directly to equity and excludes the impact on profit/loss for the year flowing into equity.
31 March 2025
31 March 2024
All figures in £ million
Cash flow
hedges
Interest rate
swaps
Total
Cash flow
hedges
Interest rate
swaps
Total
Notional amount (gross)
515.8
310.0
825.8
410.3
270.0
680.3
Carrying value (current and non-current assets and (liabilities))
(1.2)
4.0
2.8
(1.0)
8.5
7.5
Maturity date
2025-2028
2025-2027
2025-2028
2024-2027
2025-2027
2024-2027
Hedge ratio
1:1
1:1
1:1
1:1
1:1
1:1
Change in fair value of outstanding hedging instruments in the year
(0.2)
(4.5)
(4.7)
(1.1)
0.6
(0.5)
Change in value of hedged item used to determine hedge effectiveness
(0.2)
(4.5)
(4.7)
(1.1)
0.6
(0.5)
Weighted average hedged rate for the year*
1.29%
3.5%
1.26%
3.1%
All figures in £ million
Trade
payables and
similar items
payables
Bank
borrowings
and loan
notes
Derivative
financial
instruments
Lease
liabilities
Total
Due in one year or less
302.5
-
1.8
13.3
317.6
Due in more than one year but not more than two years
-
-
0.7
13.5
14.2
Due in more than two years but not more than five years
-
335.0
0.3
41.3
376.6
Due in five years or more
-
-
-
25.8
25.8
Total
302.5
335.0
2.8
93.9
734.2
All figures in £ million
Trade
payables and
similar items
payables*
Bank
borrowings
and loan
notes
Derivative
financial
instruments
Lease
liabilities
Total
Due in one year or less
356.5
-
1.1
8.1
365.7
Due in more than one year but not more than two years
-
-
0.1
7.4
7.5
Due in more than two years but not more than five years
-
336.3
0.3
18.0
354.6
Due in five years or more
-
-
-
22.0
22.0
Total
356.5
336.3
1.5
55.5
749.8
Profit before
Profit before
All figures in £ million
Equity
*
tax
Equity
tax
Sterling
-
0.5
-
-
US dollar
-
0.2
(4.0)
0.9
Other
-
(0.2)
0.7
-
1% increase in
10% strengthening
interest rates
in Sterling
Profit before
Profit before
All figures in £ million
Equity
*
tax
Equity
tax
Sterling
-
(0.5)
-
-
US dollar
-
(0.2)
3.2
0.1
Other
-
0.2
(0.4)
Financial Statements continued
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Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
173
Financial Statements
As at 31 March 2024
* This relates to the impact on items charged directly to equity and excludes the impact on profit/loss for the year flowing into equity.
The amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming that certain market conditions
occur. Actual results in the future may differ materially from those projected as a result of developments in global financial markets that may
cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the previous tables, which should not,
therefore, be considered to be a projection of likely future events and losses.
The estimated changes for interest rate movements are based on an instantaneous decrease or increase of 1% (100 basis points) in the
specific rate of interest applicable to each class of financial instruments from the levels effective at 31 March 2025, with all other variables
remaining constant. The estimated changes for foreign exchange rates are based on an instantaneous 10% weakening or strengthening in
Sterling against all other currencies from the levels applicable at 31 March 2025, with all other variables remaining constant. Such analysis is
for illustrative purposes only – in practice market rates rarely change in isolation. The impact of transactional risk on the Group’s monetary
assets/liabilities that are not held in the functional currency of the entity holding those assets/liabilities is minimal.
27. Post-retirement benefits
Defined contribution plans
The Group operates a number of defined contribution pension arrangements, the largest of which is in the UK and provided by the Mercer
Master Trust. A defined contribution plan is a pension plan under which the Group and employees pay fixed contributions to a third-party
financial provider. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets
to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as an employee
benefit expense when they are due. The expense incurred during the year was £73.4m (FY24: £65.0m). Prepaid contributions are recognised
as an asset to the extent that a cash refund or a reduction in the future payments is available.
Defined benefit pension plan
In the UK the Group operates the QinetiQ Pension Scheme (‘the Scheme’) for approximately 15% of its UK employees. The Scheme closed to
future accrual on 31 October 2013 and there is no on-going service cost. After this date, defined active benefit members transferred to a defined
contribution section of the Scheme. The Scheme is a final salary plan, which provides benefits to members in the form of a guaranteed level of
pension payable for life.
The level of benefits provided depends on the members’ length of service and their final pensionable earnings at closure to future accrual. In
the Scheme, pensions in payment are generally updated in line with the Consumer Price Index (CPI). The benefit payments are made from
Trustee-administered funds.
Plan assets held in trusts are governed by UK regulations as is the nature of the relationship between the Group and the Trustees and their
composition. Responsibility for the governance of the Scheme – including investment decisions and contribution schedules – lies with the
Scheme Trustee with consultation with the Company as needed. Dalriada, one of the largest professional trustee firms in the UK, act as
Professional Corporate Sole Trustee (PCST) for the Scheme. Being governed by a PCST is well suited to an ever-changing and highly regulated
pension landscape.
The asset recognised in the balance sheet in respect of the defined benefit pension plan is the fair value of plan assets less the present value
of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated bi-annually by independent
actuaries using the projected unit credit method. Future cash flows of the Scheme which are subject to inflation are calculated using a CPI
inflation assumption for the majority of the cash flows, with a small proportion of cash flows linked to RPI. IAS 19 requires the inflation
assumptions to be market-based assumptions, as opposed to being based on economic forecasts.
1% decrease in
10% weakening
interest rates
in Sterling
Profit before
Profit before
All figures in £ million
Equity
Sterling
(0.1)
1.0
-
-
US dollar
-
0.3
1.6
0.4
Other
-
(0.2)
1.1
-
*
interest rates
in Sterling
Profit before
Profit
before
All figures in £ million
Equity
Sterling
0.1
(1.0)
-
-
US dollar
-
(0.3)
(1.2)
(0.4)
Other
-
0.2
(1.0)
-
*
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Financial Statements

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
174
27. Post-retirement benefits (continued)
The present value of the defined benefit obligation is determined by discounting the estimated, inflated future cash outflows using interest
rates of high quality corporate bonds and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in
other comprehensive income in the period in which they arise.
Triennial funding valuation
The most recent completed full actuarial valuation of the Scheme was undertaken as at 30 June 2023 and resulted in an actuarially assessed
surplus of £11.4m (relative to the technical provisions i.e. the level of assets agreed by the Trustee and the Company as being appropriate to
meet member benefits, assuming the Scheme continues as a going concern). The next triennial valuation will be performed as at 30 June
2026. Under the new schedule of contributions agreed at the conclusion of the recent triennial valuation, and reflecting the Scheme being in
surplus, there are no employer contributions required. Separately to the schedule of contributions the Company does have a cash commitment
to the Scheme in respect of an asset-backed funding arrangement established in 2012, see QinetiQ Pension Funding Partnership below.
QinetiQ’s Pension Funding Partnership (PFP) structure
On 26 March 2012 QinetiQ established the QinetiQ PFP Limited Partnership (the ‘Partnership’) with the Scheme. Under this arrangement,
properties to the capitalised value of £32.3m were transferred to the Partnership. The transfers were effected through a 20-year sale and
leaseback agreement. The Scheme’s interest in the Partnership entitles it to annual distributions from 2012. The annual distribution in the
year to 31 March 2026 will be £3.6m, which will increase thereafter, indexed by reference to CPI, until 2032.
The Partnership is controlled by QinetiQ and its results are consolidated by the Group. Under IAS 19, the interest held by the Scheme in the
Partnership does not qualify as a plan asset for the purposes of the Group’s consolidated financial statements and is, therefore, not included
within the fair value of plan assets. As a result, the Group’s consolidated financial statements are unchanged by the Partnership. In addition,
the value of the property transferred to the Partnership and leased back to QinetiQ remains on the balance sheet. QinetiQ retains the operational
flexibility to substitute properties of equivalent value within the Partnership and has the option to settle outstanding amounts due under the
interest before 2032 if it so chooses.
Other UK schemes
In the UK the Group has a small number of employees for whom benefits are secured through the Prudential Platinum Scheme (‘PPS’). The
PPS scheme is always fully funded and has a very small surplus at year end. QinetiQ also offers employees access to a Group Self Invested
Personal Pension Plan, but no Company contributions are paid to this arrangement.
Defined benefit pension plan (‘Scheme’) net pension asset
The Scheme is in a net asset position with the market value of assets in excess of the present value of Scheme liabilities. These have the
values set out below as at 31 March of each year end.
The balance sheet net pension asset is a snapshot view which can be significantly influenced by short-term market factors. The calculation
of the net asset depends on factors which are beyond the control of the Group – principally the value of the various categories of assets in
which the Scheme has invested and long-term interest rates and inflation rates used to value the Scheme’s liabilities. This is particularly
pertinent at times when markets are volatile. Sensitivities and risks are described on page 176.
The key driver for the increase in the net pension asset since the March 2024 year end was a net actuarial gain on the net pension asset.
Total expense recognised in the income statement
31 March
31 March
1,176.7
1,316.2
Present value of Scheme liabilities
(1,137.3)
(1,297.8)
Net pension asset before deferred tax
39.4
18.4
Deferred tax liability
(14.6)
(9.6)
Net pension asset after deferred tax
24.8
8.8
All figures in £ million
FY25
FY24
Net finance income
1.0
5.6
Administrative expenses
(1.2)
(1.5)
Total net (expense)/income recognised in the income statement (excluding tax)
(0.2)
4.1
Financial Statements continued
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Notes to the Consolidated Financial Statements
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175
Financial Statements
Movement in the net pension asset
The movement in the net pension asset (before deferred tax) is set out below:
Fair value of Scheme assets by type of asset
The fair value of the Scheme’s assets, which are not intended to be realised in the short term and may be subject to significant changes
before they are realised, were:
1
Primarily private market debt investments.
2
Includes unlisted corporate bonds with commercial property held as security.
3
The fair value of equity derivative financial instruments is -£0.9m. This reflects the marked to market valuation of all equity derivatives held by the Scheme. Therefore, the
Scheme has a significantly larger exposure to equities through the use of equity derivative contracts. The notional value of the quoted equity exposure was £180.0m as at
31 March 2025. The economic exposure (notional exposure + MTM) was £179.1m as at 31 March 2025.
4
The fair value of corporate credit derivative financial instruments is £1.8m. This is in respect of various credit default swap financial instruments held by the Scheme.
These instruments provide the Scheme with significantly greater exposure to corporate bonds. The notional value of the credit default swap contracts was £97.9m as at
31 March 2025. The economic exposure (notional exposure +MTM) was £99.7m as a 31 March 2025.
5
The fair value of other derivative financial instruments is £10.0m. This is in respect of various foreign exchange contracts held by the Scheme. The exposure to foreign
exchange risk is significantly greater than the £10.0m marked to market value of the forward contracts. The notional value of these financial instruments was £311.1m as
at 31 March 2025, with a total economic exposure value of £321.1m.
6
The £125m loan (arranged in September 2023 to facilitate an increase in liquidity to support increased levels of hedging) was partly repaid in the year. A further £25m is
due to be repaid by 30 September 2025 with the final £70m due by 30 September 2026.
The Scheme’s assets do not include any of the Group’s own transferable financial instruments, property occupied by, or other assets used
by the Group.
The insurance policies obtained by the pension scheme can only be used to pay or fund employee benefits under the Company’s defined
benefit plan. They are not available to the Company’s own creditors and cannot be paid to another entity. These are the requirements of IAS
19 paragraph 7 and hence the Company’s determination is that the insurance policies are qualifying insurance policies and require
classification as a plan asset. The policies were issued by insurers that are not a related party.
Per the Scheme rules the Company has an unconditional right to a refund of any surplus, assuming gradual settlement of all liabilities over
time. Such surplus may arise on cessation of the Scheme in the context of IFRIC 14 paragraphs 11(b) and 12 and therefore the full net
pension asset can be recognised on the Group’s balance sheet and the Group’s minimum funding commitments to the Scheme do not give
rise to an additional balance sheet liability.
Changes to the fair value of Scheme assets
All figures in £ million
FY25
FY24
Opening net pension asset
18.4
119.8
Net finance income
1.0
5.6
Net actuarial gain/loss & asset re-measurement gain/loss
17.7
(108.9)
Administrative expenses
(1.2)
(1.5)
Contributions by the employer
3.5
3.4
Closing net pension asset
39.4
18.4
31 March 2025
31 March 2024
in
in
an active
an active
All figures in £ million
Quoted
market
Total
Quoted
market
Total
Equities
-
11.2
11.2
-
21.8
21.8
Liability Driven Investment
351.1
-
351.1
414.9
-
414.9
Asset backed security investments
75.0
-
75.0
35.5
-
35.5
Alternative bonds
1
-
228.1
228.1
-
253.8
253.8
Corporate bonds
2
-
98.6
98.6
31.1
120.6
151.7
Cash and cash equivalents
-
46.1
46.1
-
36.5
36.5
Equity derivative financial instruments
3
(0.9)
-
(0.9)
15.8
-
15.8
Corporate credit derivative financial instruments
4
1.8
-
1.8
2.2
-
2.2
Other derivatives (forward FX contracts)
5
10.0
-
10.0
1.6
-
1.6
Insurance buy-in policies
-
450.7
450.7
-
507.4
507.4
Borrowings
6
-
(95.0)
(95.0)
-
(125.0)
(125.0)
Total market value of assets
437.0
739.7
1,176.7
501.1
815.1
1,316.2
All figures in £ million
FY25
FY24
Opening fair value of Scheme assets
1,316.2
1,355.2
Interest income on Scheme assets
62.0
62.6
Re-measurement loss on Scheme assets
(149.0)
(49.6)
Contributions by the employer
3.5
3.4
Net benefits paid out and transfers
(54.8)
(53.9)
Administrative expenses
(1.2)
(1.5)
Closing fair value of Scheme assets
1,176.7
1,316.2
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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
176
27. Post-retirement benefits (continued)
Changes to the present value of Scheme liabilities
The present value of the Scheme’s liabilities, which are derived from cash flow projections over long periods, and thus inherently uncertain,
were:
All figures in £ million
FY25
FY24
Opening present value of Scheme liabilities
(1,297.8)
(1,235.4)
Interest cost
(61.0)
(57.0)
Actuarial gain/(loss) on Scheme liabilities based on:
Change in demographic assumptions
17.4
(9.5)
Change in financial assumptions
149.6
28.1
Experience losses
(0.3)
(77.9)
Net benefits paid out and transfers
54.8
53.9
Cl osing present value of Scheme liabilities
(1,137.3 )
Assumptions
The major assumptions used in the IAS 19 valuation of the Scheme’s liabilities were:
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, becau
se of the
timescale covered, may not necessarily be borne out in practice. It is important to note that these assumptions are long
term and, in the case
of the discount rate and the inflation rate, are measured by reference to external market indicators.
The discount rate is based on observable yields on corporate bonds but there is no direct, observable market rate for CPI. A
‘market approach’
to deriving CPI involves adjusting a market-based RPI rate downward by an ‘inflation risk premium’ and an RPI-CPI
adjustment factor
(determined from relevant market yield curves). This market-
based approach is required by IAS 19 and results in a CPI inflation rate in excess
of the Bank of England long term target and also in excess of a consensus view of CPI (based o
n surveys of economists). However, adopting
an economic consensus approach to setting CPI inflation is not acceptable under accounting standards.
The mortality assumptions for both the current and prior year were based on the S3 Normal Lives base tables, with various sca
ling factors
based on sex and status. Allowance was made for improvements in mortality in line with CMI_2023 core projections (31 March 2024
:
CMI_2022 projections) and a long-term rate of improvement of 1.0% per annum (31 March 2024: 1.25%).
The funding of the Scheme is based on long-
term trends and assumptions relating to market growth, as advised by qualified actuaries and
investment advisors. The Scheme ‘duration’, calculated using discounted future cash flows, is an indicator of the weighted-
average time until
benefits are paid and is approximately 13 years for non-insured liabilities and 10 years for insured liabilities.
The sensitivity of the Scheme liabilities to each of the key assumptions is shown in the following table.
Sensitivity analysis of the principal assumptions
The impact of movements in Scheme liabilities will, to an extent, be offset by movements in the value of Scheme assets as the
Scheme has
assets invested in a Liability Driven Investment Portfolio. As at 31 March 2025 this portfolio hedged against approximately 100%
of the interest
rate risk and also approximately 100% of the inflation rate risk, as measured on the actuarial funding valuation basis.
31 March 2025
31 March 2024
Insured
Uninsured
Insured
Uninsured
A ll figures in £ million
Discount rate applied to Scheme liabilities
5.70%
5.75%
4.80%
4.80%
CPI inflation assumption
2.45%
2.50%
2.55%
2.60%
Net rate (discount rate less inflation)
3.25%
3.25%
2.25%
2.20%
Assumed life expectancies in years:
At 60 for males currently aged 40
n/a
27.8
n/a
28.3
At 60 for females currently aged 40
At 60 for males currently aged 60
n/a
26.5
n/a
26.7
At 60 for females currently aged 60
n/a
n/a
At 65 for males currently aged 65
22.1
n/a
22.3
n/a
At 65 for females currently aged 65
24.6
n/a
24.8
n/a
Assumption
Indicative impact on Scheme assets
Indicative impact on Scheme liabilities
Indicative impact on net pension asset
De crease discount rate by 0.25%
Increase by £10.2m
Increase by £33.1m
I ncrease rate of inflation by 0.25%
Increase by £9.9m
Increase by £32.6m
Increase life expectancy by one year
Increase by £10.9m
Increase by £26.8m
Decrease by £15.9m
Financial Statements continued
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Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
177
Financial Statements
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this
is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit
obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating
the pension liability recognised within the statement of financial position. The methods and types of assumption did not change.
In addition to the sensitivity of the liability side of the net pension asset (which will impact the value of the net pension asset) the net pension
asset is also exposed to significant variation due to changes in the fair value of Scheme assets. A specific sensitivity on assets has not been
included in the above table but any change in valuation of assets flows straight through to the value of the net pension asset e.g. if equities
fall by £10m then the net pension asset reduces by £10m. The values of unquoted assets assume that an available buyer is willing to purchase
those assets at that value. For the Group’s portfolio of assets, the unquoted alternative bonds of £228.1m; the unquoted corporate bonds of
£98.6 and the unquoted equities of £11.2m are the assets with most uncertainty as to valuation as at 31 March 2025.
The accounting assumptions noted are used to calculate the year end net pension asset in accordance with the relevant accounting standard,
IAS 19 (revised) ‘Employee Benefits’. Changes in these assumptions have no impact on the Group’s cash payments into the Scheme. The
payments into the Scheme are reassessed after every triennial valuation. The triennial valuations are calculated on a funding basis and use a
different set of assumptions, as agreed with the pension Trustees. The key assumption that varies between the two methods of valuation is
the discount rate. The funding basis valuation uses the risk-free rate from UK gilts as the base for calculating the discount rate, whilst the IAS
19 accounting basis valuation uses corporate bond yields as the base.
Risks
Through its defined benefit pension plan, the Group is exposed to a number of risks, the most significant of which are detailed below:
In June 2023, in Virgin Media Limited v NTL Pension Trustees II Limited, the UK High Court ruled that specific historical amendments to
contracted-out defined benefit schemes in the period from 6 April 1997 to 5 April 2016 were invalid as they lacked a confirmation under
section 37 of the Pension Schemes Act 1993 from the scheme’s actuary. Following a review of the equivalent documentation by the Scheme’s
lawyers, we consider that there is no need for any further investigation at this stage and that the probability of a significant financial impact
is remote.
28. Share capital and other reserves
Shares allotted, called up and fully paid:
During the year, the Group continued its share buyback programme. £102.9m was completed in cash in FY25 (FY24: £16.0m), which is shown
in the table above as the 20,865,436 cancelled shares (FY24: 4,361,230). As at 31 March 2024 a further £34m (31 March 2025: £nil) had been
committed to and was recognised as a liability.
Except as noted below all shares in issue at 31 March 2025 rank pari-passu in all respects.
Volatility in market conditions
Results under IAS 19 can change dramatically depending on market conditions. The present value of Scheme liabilities
is linked to yields on corporate bonds, while many of the assets of the Scheme are invested in various forms of assets
subject to fluctuati
ng valuations. Changing markets in conjunction with discount rate volatility will lead to volatility in
the net pension asset on the Group’s balance sheet and in other comprehensive income. To a lesser extent this will
also lead to volatility in the IAS 19
pension net finance income in the Group’s income statement.
Choice of accounting
The calculation of the present value of Scheme liabilities involves projecting future cash flows from the Scheme many
assumptions
years into the future. This means that the assumptions used can have a material impact on the balance sheet position
and profit and loss c harge. In practice future experience within the Scheme may not be in line with the assumptions
adopted. For example, members could live longer than foreseen or inflation could be higher or lower than allowed for in
the calculation of the liabilities.
of 1p each (equity)
of £1 (non-equity)
Total
£
Number
£
Number
£
Number
As at 1 April 2024
5,743,959
574,395,891
1
1
5,743,960
574,395,892
Cancellation of shares
(208,654)
(20,865,436)
-
-
(208,654)
(20,865,436)
At
31 March 2025
553,530,455
1
5,535,306
553,530,456
Ordinary shares
Special Share
of 1p each (equity)
of £1 (non-equity)
Total
£
Number
£
Number
£
Number
As at 1 April 2023
5,787,571
578,757,121
1
1
5,787,572
578,757,122
Cancellation of shares
(43,612)
(4,361,230)
-
-
(43,612)
(4,361,230)
At 31 March 2024
5,743,959
574,395,891
1
1
5,743,960
574,395,892
Annual Report & Accounts 2025 | QinetiQ Group plc 177
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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
178
28. Share capital and other reserves (continued)
Rights attaching to the Special Share
QinetiQ carries out activities which are important to UK defence and security interests. To protect these interests in the context of the ongoing
commercial relationship between the MOD and QinetiQ, and to promote and reinforce the Compliance Principles, the MOD holds a Special
Share in QinetiQ. QinetiQ obtained MOD consent to changes in its Special Shareholder rights, which were approved by shareholders at the
2012 AGM. The changes to the Special Share were disclosed in the 2012 Annual Report. Subsequent to the changes approved at the 2012
AGM the Special Share confers certain rights on the holder:
a) to require the Group to implement and maintain the Compliance System (as defined in the Articles of Association) so as to make at all
times effective its and each member of QinetiQ Controlled Group’s application of the Compliance Principles, in a manner acceptable to
the Special Shareholder
b) to refer matters to the Board for its consideration in relation to the application of the Compliance Principles
c) to require the Board to obtain Special Shareholder’s consent:
i) if at any time when the chairman is not a British citizen, it is proposed to appoint any person to the office of chief executive, who is
not a British citizen
ii) if at any time when the chief executive is not a British citizen, it is proposed to appoint any person to the office of chairman, who is
not a British citizen
d) to require the Board to take action to rectify any omission in the application of the Compliance Principles, if the Special Shareholder is of
the opinion that such steps are necessary to protect the defence or security interests of the United Kingdom
e) to demand a poll at any of QinetiQ’s meetings (even though it may have no voting rights except those specifically set out in the Articles).
The Special Shareholder has an option to purchase defined Strategic Assets of the Group in certain circumstances. The Special Shareholder
has, inter alia, the right to purchase any Strategic Assets which the Group wishes to sell. Strategic Assets are normally testing and research
facilities (see note 30 for further details).
The Special Share may only be issued to, held by and transferred to HM Government (or as it directs). At any time the Special Shareholder
may require QinetiQ to redeem the Special Share at par. If QinetiQ is wound up the Special Shareholder will be entitled to be repaid the capital
paid up on the Special Share before other shareholders receive any payment. The Special Shareholder has no other right to share in the capital
or profits of QinetiQ and the Special Shareholder must give consent to a general meeting held on short notice.
The Special Share entitles the Special Shareholder to require certain persons who hold (together with any person acting in concert with them)
a material interest in QinetiQ to dispose of some or all of their ordinary shares in certain prescribed circumstances on the grounds of national
security or conflict of interest. The Directors must register any transfer of the Special Share within seven days.
Other reserves
The translation reserve includes the cumulative foreign exchange difference arising on translation. Movements on hedging instruments, where
the hedge is effective, are recorded in the hedge reserve until the hedge ceases.
The capital redemption reserve, which was created following the redemption of preference share capital and the bonus issue of shares, cannot
be distributed.
Own shares
Own shares represent shares in the Company that are held by independent trusts and include treasury shares and shares held by the employee
share ownership plan. Included in retained earnings at 31 March 2025 are 3,442,435 shares (2024: 2,767,125 shares).
29. Share-based payments
The Group operates a number of share-based payment plans for employees. The total share-based payment expense in the year was £9.8m,
all relating to equity-settled schemes (FY24: £10.2m, all relating to equity-settled schemes). The share-based payment charged to equity is
£8.9m consisting of the £9.8m charge to the income statement offset by a £0.9m charge to equity in respect of dividends accruing on
unvested awards.
Valuation of share-based awards
Share-based awards that vest based on non-market performance conditions have been valued at the share price at grant date and are
equity-settled.
Group Share Incentive Plan (SIP)
Under the QinetiQ SIP the Group offers UK employees the opportunity of purchasing up to £150 worth of shares a month at the prevailing
market rate. The Group will make a matching share award of a third of the employee’s payment. The Group’s matching shares may be
forfeited if the employee ceases to be employed by QinetiQ within three years of the award of the shares. There is no exercise price for these
SIP awards.
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025178

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Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
179
Financial Statements
SIP matching shares are equity-settled awards; those outstanding at 31 March 2025 had an average remaining life of 1.5 years (2024
: 1.5
years). There is no exercise price for these SIP awards. Of the shares outstanding at the end of the year nil were exercisable (2024: nil).
Bonus Banking Plan (BBP)
During previous years the Group granted BBP awards to certain senior executives in the UK and US.
The BBP is a remuneration scheme that runs in three-year performance cycles, with each cycle vesting over a four-year period.
Under the
BBP a contribution will be made by the Company into the participant’s Plan account following the end of each Plan year. 50% of th
e value
of a participant’s Plan
account will be paid out annually for three years with 100% of the residual value paid out at the end of year four. 50%
of the unpaid balance of a participant’s bonus account will be at risk of forfeiture.
Refer to the Directors’ Remuneration Report for further
details.
At 31 March 2025 the awards had an average remaining life of nil year (2024: 0.7 years). There is no exercise price for these awards. The
fair value of the awards at 31 March 2025 was £nil (2024: £3.67) being the Group’s 30 day average on 31 March.
The weighted average
share price at date of exercise was nil (2024: £nil). Of the awards outstanding at the end of the year nil were exercisable.
Deferred Share Plan (DSP)
During the year, the Group did not provisionally award any DSP awards as this share scheme has been replaced by the LTIP share scheme.
The number of awards is dependent on the Group’s performance during the year (specifically with respect to the Group revenue growth). This
is provisionally quantified at year end based on Group performance and also the number of eligible employees in employment as at
31 March.
Actual awards are made in the following June and the final number awarded will be slightly different to the number provisionally calculated.
Awards are then subject to a three-year vesting period and a further two-year holding period. V
esting of the awards is contingent upon Group
operating profit in the year prior to vesting being maintained at the level reported during the year prior to award. Refer to the Directors’
Remuneration Report for further details.
At 31 March 2025 the awards had an average remaining life of 0.6 years (2024: 1.3 years). There is no exercise price for these awards. The
weighted average share price at date of exercise was £4.47 (2024: nil). Of the awards outstanding at the end of the year nil were exercisable.
FY25
FY24
Number of
matching
Outstanding at start of the year
753,447
745,986
Awarded during the year
256,966
295,731
Exercised during the year
(262,526)
(243,681)
(40,053)
707,834
753,447
FY25
Number of
awards
awards
Outstanding at start of the year
892,416
892,416
Granted during the year
-
-
Exercised during the year
(833,623)
-
Forfeited during the year
(58,793)
-
-
FY25
FY24
Outstanding at start of the year
6,274,618
6,968,721
Granted during the year
9,795
-
Lapsed during the year
(502,662)
(142,194)
Exercised during the year
(2,021,364)
(551,909)
Outstanding at end of the year
3,760,387
6,274,618
Annual Report & Accounts 2025 | QinetiQ Group plc 179
Financial Statements

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Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
180
29. Share-based payments (continued)
Long Term Incentive Plan (LTIP)
During the year the Group granted LTIP awards to replace the DSP awards.
At 31 March 2025 the awards had an average remaining life of 2.0 years (2024: 2.5 years). There is no exercise price for these awards.
The
weighted average fair value of grants made during the year was £4.44 (2024: £3.22). The weighted
average share price at date of exercise
was nil. Of the options outstanding at the end of the year nil were exercisable.
Restricted share plan (RSP)
RSP is a share award made to senior executives on a discretionary basis. For example, to offset a new senior executive joiner
on a loss of
stock options from their previous employer and it is a fixed number of shares. During the year the Group granted RSP
awards to certain senior
executives in the UK and US.
At 31 March 2025 the awards had an average remaining life of 0.7 years (2024: 1.3 years). There is no exercise price for these awards.
The
weighted average fair value of grants made during the year was £4.11 (2024: £3.28
). The weighted average share price at date of exercise
was £4.02 (2024: £3.12). Of the options outstanding at the end of the year nil were exercisable (2024: nil).
Value Creation Plan (VCP)
VCP is a share award made on a discretionary basis with unique performance conditions. In FY23, the Group granted awards
under a Value
Creation Plan to certain senior executives in the US.
During the current year, all the awards were forfeited as the performance conditions were
not met.
At 31 March 2025 the awards had an average remaining life of nil year (2024: nil). There is no exercise price for these awards. The weighted
average fair value of grants made during the year was £nil (2024: nil).
High Performance Share Award (HPSA)
In a prior year, as one of eight initial measures in response to the COVID-19 pandemic, the senior leaders agreed to, on average, a temporary
base salary reduction of 15%. To both recognise the senior leaders for their sacrifice and to incentivise them to lead the Group through the
crisis as quickly and effectively as possible, the Group adopted a new award called High Performance Share Award (HPSA). The HPSA was
awarded in November 2020 as a ‘Thank Q’ to senior leaders for their sacrifice and enormous efforts to lead their teams out of unprecedented
crisis. The fair value of QinetiQ shares on grant date was £2.70 and the awards vest in June 2023. At 31 March 2025 the awards had an
average remaining life of nil year (2024: nil year). The weighted average share price at date of exercise was £nil (2024: £3.54).
FY25
Number of
Outstanding at start of the year
7,306,172
-
Granted during the year
6,519,447
7,556,268
Exercised during the year
-
-
Lapsed during the year
(1,693,863 )
(250,096)
Outstanding at end of the year
12,131,756
7,306,172
Number of
Outstanding at start of the year
797,371
941,348
Granted during the year
263,186
213,277
Exercised during the year
(488,374)
(135,292)
Lapsed during the year
(98,127
)
(221,962)
474,056
797,371
FY25
Number of
awards
FY24
Number of
awards
Outstanding at start of the year
-
175,099
Forfeited during the year
-
(175,099)
Outstanding at end of the year
-
-
FY25
Number of
awards
FY24
Number of
awards
Outstanding at start of the year
-
1,323,331
Granted during the year
-
13,041
Exercised during the year
-
(1,336,372)
Lapsed during the year
-
-
Outstanding at end of the year
-
-
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
180
29. Share-based payments (continued)
Long Term Incentive Plan (LTIP)
During the year the Group granted LTIP awards to replace the DSP awards.
At 31 March 2025 the awards had an average remaining life of 2.0 years (2024: 2.5 years). There is no exercise price for these awards. The
weighted average fair value of grants made during the year was £4.44 (2024: £3.22). The weighted average share price at date of exercise
was nil. Of the options outstanding at the end of the year nil were exercisable.
Restricted share plan (RSP)
RSP is a share award made to senior executives on a discretionary basis. For example, to offset a new senior executive joiner on a loss of
stock options from their previous employer and it is a fixed number of shares. During the year the Group granted RSP awards to certain senior
executives in the UK and US.
At 31 March 2025 the awards had an average remaining life of 0.7 years (2024: 1.3 years). There is no exercise price for these awards. The
weighted average fair value of grants made during the year was £4.11 (2024: £3.28). The weighted average share price at date of exercise
was £4.02 (2024: £3.12). Of the options outstanding at the end of the year nil were exercisable (2024: nil).
Value Creation Plan (VCP)
VCP is a share award made on a discretionary basis with unique performance conditions. In FY23, the Group granted awards under a Value
Creation Plan to certain senior executives in the US. During the current year, all the awards were forfeited as the performance conditions were
not met.
At 31 March 2025 the awards had an average remaining life of nil year (2024: nil)
. There is no exercise price for these awards. The weighted
average fair value of grants made during the year was £nil (2024: nil).
High Performance Share Award (HPSA)
In a prior year, as one of eight initial measures in response to the COVID-
19 pandemic, the senior leaders agreed to, on average, a temporary
base salary reduction of 15%. To both recognise the senior leaders for their sacrifice and to incentivise them to lead the Gr
oup through the
crisis as quickly and effectively as possible, the Group adopted a new award called High Performance Share Award (HPSA). The
HPSA was
awarded in November 2020 as a ‘Thank Q’ to senior leaders for their sacrifice and enormous effo
rts to lead their teams out of unprecedented
crisis. The fair value of QinetiQ shares on grant date was £2.70 and the awards vest in June 2023. At 31 March 2025 the awards ha
d an
average remaining life of nil year (2024: nil year). The weighted average share price at date of exercise was £nil (2024: £3.54).
FY25
Number of
awards
FY24
Number of
awards
Outstanding at start of the year
7,306,172
-
Granted during the year
6,519,447
7,556,268
Exercised during the year
-
-
Lapsed during the year
(1,693,863)
(250,096)
Outstanding at end of the year
12,131,756
7,306,172
FY25
Number of
awards
FY24
Number of
awards
Outstanding at start of the year
797,371
941,348
Granted during the year
263,186
213,277
Exercised during the year
(488,374)
(135,292)
Lapsed during the year
(98,127)
(221,962)
Outstanding at end of the year
474,056
797,371
FY25
Number of
awards
awards
Outstanding at start of the year
-
175,099
Forfeited during the year
-
(175,099)
-
-
FY25
Number of
awards
awards
Outstanding at start of the year
-
1,323,331
Granted during the year
-
13,041
Exercised during the year
-
(1,336,372)
Lapsed during the year
-
-
-
-
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025180

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Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
181
Financial Statements
Annual Bonus Plan (ABP)
ABP is a share award made to senior executives. This award replaced the BBP.
At 31 March 2025 the awards had an average remaining life of 1.3 years (2024: nil years). There is no exercise price for these awards. The
weighted average fair value of grants made during the year was £4.49 (2024: £nil). The weighted average share price at date of exercise was
£nil (2024: £nil). Of the options outstanding at the end of the year nil were exercisable (2024: nil).
30. Transactions with the Ministry of Defence (MOD)
The MOD continues to own its Special Share in QinetiQ which conveys certain rights as set out in note 28. Transactions between the Group
and the MOD are disclosed as follows:
Freehold land and buildings and surplus properties
Under the terms of the Group’s acquisition of part of the business and certain assets of DERA from the MOD on 1 July 2001, the MOD
retained certain rights in respect of the freehold land and buildings transferred.
Restrictions on transfer of title
The title deeds of those properties with strategic assets (see below) include a clause that prevents their transfer without the approval of the
MOD. The MOD also has the right to purchase any strategic assets in certain circumstances.
MOD’s generic compliance regime
Adherence to the generic compliance system is monitored by the Risk & Security Committee. Refer to the Committee’s report within the
Corporate Governance Statement on page 108.
Strategic assets
Under the Principal Agreement with the MOD, the QinetiQ controlled Group is not permitted without the written consent of the MOD, to:
i) dispose of or destroy all or any part of a strategic asset; or
ii) voluntarily undertake any closure of, or cease to provide a strategic capability by means of, all or any part of a strategic asset.
The net book value of assets identified as being strategic assets as at 31 March 2025 was £1.3m (2024: £2.1m).
Long Term Partnering Agreement
On 27 February 2003 QinetiQ Limited entered into a Long Term Partnering Agreement (LTPA) to provide test and evaluation (T&E) facilities
and training support services to the MOD. This is a 25-year contract with a total revenue value of up to £5.6bn, dependent on the level of usage
by the MOD, under which QinetiQ Limited is committed to providing T&E services with increasing efficiencies through cost saving and
innovative service delivery. Following an amendment to the LTPA contract on 5 April 2019 this contract is no longer subject to re-pricing every
five years and is now contracted at a fixed price to 31 March 2028.
Other contracts with MOD
The LTPA is the most significant contract QinetiQ has with the MOD. In total approximately 57% (FY24: 57%) of the Group’s revenue comes
directly from contracts with the MOD.
31. Contingent liabilities and assets
Subsidiary undertakings within the Group have given unsecured guarantees of £49.7m at 31 March 2025 (2024: £56.7m) in the ordinary
course of business, typically in respect of performance bonds and rental guarantees. The Company has on occasion been required to take
legal action to protect its intellectual property rights, to enforce commercial contracts or otherwise and similarly to defend itself against
proceedings brought by other parties, including in respect of environmental and regulatory issues. Provisions are made for the expected costs
associated with such matters, based on past experience of similar items and other known factors, taking into account professional advice
received, and represent management’s best estimate of the likely outcome. The timing of utilisation of these provisions is uncertain pending
the outcome of various court proceedings, ongoing investigations and negotiations. However, no provision is made for proceedings which
have been or might be brought by other parties unless management, taking into account professional advice received, assesses that it is more
likely than not that such proceedings may be successful. Contingent liabilities associated with such proceedings have been identified but the
Directors are of the opinion that any associated claims that might be brought can be resisted successfully and therefore the possibility of any
outflow in settlement is assessed as remote.
FY25
Number of
awards
FY24
Number of
awards
Outstanding at start of the year
292,067
-
Difference between actual awards in year and amount provisionally awarded in prior year
(64,891)
-
Lapsed during the year
-
-
Exercised during the year
-
-
Provisionally awarded during the year
-
292,067
Outstanding at end of the year
227,176
292,067
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
181
Financial Statements
Annual Bonus Plan (ABP)
ABP is a share award made to senior executives. This award replaced the BBP.
At 31 March 2025 the awards had an average remaining life of 1.3 years (2024: nil years). There is no exercise price for these awards. The
weighted average fair value of grants made during the year was £4.49 (2024: £nil). The weighted average share price at date of exercise was
£nil (2024: £nil). Of the options outstanding at the end of the year nil were exercisable (2024: nil).
30. Transactions with the Ministry of Defence (MOD)
The MOD continues to own its Special Share in QinetiQ which conveys certain rights as set out in note 28. Transactions between the Group
and the MOD are disclosed as follows:
Freehold land and buildings and surplus properties
Under the terms of the Group’s acquisition of part of the business and certain assets of DERA from the MOD on 1 July 2001, the MOD
retained certain rights in respect of the freehold land and buildings transferred.
Restrictions on transfer of title
The title deeds of those properties with strategic assets (see below) include a clause that prevents their transfer without the approval of the
MOD. The MOD also has the right to purchase any strategic assets in certain circumstances.
MOD’s generic compliance regime
Adherence to the generic compliance system is monitored by the Risk & Security Committee. Refer to the Committee’s report within the
Corporate Governance Statement on page 108.
Strategic assets
Under the Principal Agreement with the MOD, the QinetiQ controlled Group is not permitted without the written consent of the MOD, to:
i) dispose of or destroy all or any part of a strategic asset; or
ii) voluntarily undertake any closure of, or cease to provide a strategic capability by means of, all or any part of a strategic asset.
The net book value of assets identified as being strategic assets as at 31 March 2025 was £1.3m (2024: £2.1m).
Long Term Partnering Agreement
On 27 February 2003 QinetiQ Limited entered into a Long Term Partnering Agreement (LTPA) to provide test and evaluation (T&E) facilities
and training support services to the MOD. This is a 25-year contract with a total revenue value of up to £5.6bn, dependent on the level of usage
by the MOD, under which QinetiQ Limited is committed to providing T&E services with increasing efficiencies through cost saving and
innovative service delivery. Following an amendment to the LTPA contract on 5 April 2019 this contract is no longer subject to re-pricing every
five years and is now contracted at a fixed price to 31 March 2028.
Other contracts with MOD
The LTPA is the most significant contract QinetiQ has with the MOD. In total approximately 57% (FY24: 57%) of the Group’s revenue comes
directly from contracts with the MOD.
31. Contingent liabilities and assets
Subsidiary undertakings within the Group have given unsecured guarantees of £49.7m at 31 March 2025 (2024: £56.7m) in the ordinary
course of business, typically in respect of performance bonds and rental guarantees. The Company has on occasion been required to take
legal action to protect its intellectual property rights, to enforce commercial contracts or otherwise and similarly to defend itself against
proceedings brought by other parties, including in respect of environmental and regulatory issues. Provisions are made for the expected costs
associated with such matters, based on past experience of similar items and other known factors, taking into account professional advice
received, and represent management’s best estimate of the likely outcome. The timing of utilisation of these provisions is uncertain pending
the outcome of various court proceedings, ongoing investigations and negotiations. However, no provision is made for proceedings which
have been or might be brought by other parties unless management, taking into account professional advice received, assesses that it is more
likely than not that such proceedings may be successful. Contingent liabilities associated with such proceedings have been identified but the
Directors are of the opinion that any associated claims that might be brought can be resisted successfully and therefore the possibility of any
outflow in settlement is assessed as remote.
FY25
FY24
Number of
awards
awards
Outstanding at start of the year
292,067
-
(64,891)
Lapsed during the year
-
-
Exercised during the year
-
-
Provisionally awarded during the year
-
292,067
Outstanding at end of the year
227,176
292,067
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
181
Financial Statements
Annual Bonus Plan (ABP)
ABP is a share award made to senior executives. This award replaced the BBP.
At 31 March 2025 the awards had an average remaining life of 1.3 years (2024: nil years). There is no exercise price for these awards. The
weighted average fair value of grants made during the year was £4.49 (2024: £nil). The weighted average share price at date of exercise was
£nil (2024: £nil). Of the options outstanding at the end of the year nil were exercisable (2024: nil).
30. Transactions with the Ministry of Defence (MOD)
The MOD continues to own its Special Share in QinetiQ which conveys certain rights as set out in note 28. Transactions between the Group
and the MOD are disclosed as follows:
Freehold land and buildings and surplus properties
Under the terms of the Group’s acquisition of part of the business and certain assets of DERA from the MOD on 1 July 2001, the MOD
retained certain rights in respect of the freehold land and buildings transferred.
Restrictions on transfer of title
The title deeds of those properties with strategic assets (see below) include a clause that prevents their transfer without the approval of the
MOD. The MOD also has the right to purchase any strategic assets in certain circumstances.
MOD’s generic compliance regime
Adherence to the generic compliance system is monitored by the Risk & Security Committee. Refer to the Committee’s report within the
Corporate Governance Statement on page 108.
Strategic assets
Under the Principal Agreement with the MOD, the QinetiQ controlled Group is not permitted without the written consent of the MOD, to:
i) dispose of or destroy all or any part of a strategic asset; or
ii) voluntarily undertake any closure of, or cease to provide a strategic capability by means of, all or any part of a strategic asset.
The net book value of assets identified as being strategic assets as at 31 March 2025 was £1.3m (2024: £2.1m).
Long Term Partnering Agreement
On 27 February 2003 QinetiQ Limited entered into a Long Term Partnering Agreement (LTPA) to provide test and evaluation (T&E) facilities
and training support services to the MOD. This is a 25-year contract with a total revenue value of up to £5.6bn, dependent on the level of usage
by the MOD, under which QinetiQ Limited is committed to providing T&E services with increasing efficiencies through cost saving and
innovative service delivery. Following an amendment to the LTPA contract on 5 April 2019 this contract is no longer subject to re-pricing every
five years and is now contracted at a fixed price to 31 March 2028.
Other contracts with MOD
The LTPA is the most significant contract QinetiQ has with the MOD. In total approximately 57% (FY24: 57%) of the Group’s revenue comes
directly from contracts with the MOD.
31. Contingent liabilities and assets
Subsidiary undertakings within the Group have given unsecured guarantees of £49.7m at 31 March 2025 (2024: £56.7m) in the ordinary
course of business, typically in respect of performance bonds and rental guarantees. The Company has on occasion been required to take
legal action to protect its intellectual property rights, to enforce commercial contracts or otherwise and similarly to defend itself against
proceedings brought by other parties, including in respect of environmental and regulatory issues. Provisions are made for the expected costs
associated with such matters, based on past experience of similar items and other known factors, taking into account professional advice
received, and represent management’s best estimate of the likely outcome. The timing of utilisation of these provisions is uncertain pending
the outcome of various court proceedings, ongoing investigations and negotiations. However, no provision is made for proceedings which
have been or might be brought by other parties unless management, taking into account professional advice received, assesses that it is more
likely than not that such proceedings may be successful. Contingent liabilities associated with such proceedings have been identified but the
Directors are of the opinion that any associated claims that might be brought can be resisted successfully and therefore the possibility of any
outflow in settlement is assessed as remote.
FY25
Number of
awards
FY24
Number of
awards
Outstanding at start of the year
292,067
-
Difference between actual awards in year and amount provisionally awarded in prior year
(64,891)
-
Lapsed during the year
-
-
Exercised during the year
-
-
Provisionally awarded during the year
-
292,067
Outstanding at end of the year
227,176
292,067
Annual Report & Accounts 2025 | QinetiQ Group plc 181
Financial Statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
182
32. Capital commitments
The Group had the following capital commitments for which no provision has been made:
Capital commitments at 31 March 2025 include £47.2m (2024: £49.7m
) in relation to property, plant and equipment that will be wholly funded
by a third-party customer under long-term contract arrangements. These primarily relate to investments under the LTPA contract.
33. Related parties
During the year ended 31 March 2025 there were sales to joint ventures of £0.2m (FY24: £3.1m). At the year-end there were outstanding
receivables from joint ventures of £0.2m (FY24: £2.8m).
34. Subsidiaries and other related undertakings
In accordance with section 409 of the Companies Act 2006, a full list of subsidiaries and other related undertakings as at 31 March 2025 is
detailed below. Unless stated otherwise, the Group’s holding comprises ordinary shares which are held indirectly by QinetiQ Group plc, with
the exception of QinetiQ Group Holdings Limited which is held directly by QinetiQ Group plc.
31 March
31 March
All figures in £ million
2025
2024
Total c
ontracted
51.3
57.8
Name of company
Country of incorporation
Registered office
Subsidiaries
1,6
Aerospace Training Services Pty Ltd*
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Affairs (Australia) Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Affairs Aviation Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Target Services Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Astra Aerospace Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Avantus Federal LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Avantus Federal Services LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Avantus National Security Solutions LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
cueSim Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
E3 Federal Solutions PR LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Far Ridgeline Engagements LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Foster-Miller Inc
2
USA
350 2
nd
Avenue, Waltham, Massachusetts, MA 02451, USA
Hirose Holdings Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Inzpire Group Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Inzpire Holdings Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Inzpire Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Lucid Perspectives LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Metrix UK Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Naimuri Limited
England & Wales
Farnborough
3
Occam’s Razor Technologies LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Operational Intelligence LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Precis (2187) Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Qinetic Limited
England & Wales
Farnborough
3
QinetiQ Aerostructures Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Australia Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Consulting Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Estates Limited
England & Wales
Farnborough
3
QinetiQ GmbH
Germany
Flughafenstraße 65, 41066, Mönchengladbach, Germany
QinetiQ GP Limited
Scotland
50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, Scotland
QinetiQ Group Canada Inc.
2
Canada
5300 Commerce Court West, 199 Bay Street, Toronto ON M5L 1A9,
Canada
QinetiQ Group Holdings Limited
England & Wales
Farnborough
3
QinetiQ Holdings Limited
England & Wales
Farnborough
3
QinetiQ Inc
2,
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
QinetiQ Insurance PCC Limited
Guernsey
Mill Court, La Charroterie, St Peter Port, GY1 4ET Guernsey
QinetiQ Limited
England & Wales
Farnborough
3
QinetiQ Novare Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Overseas Holdings Limited
England & Wales
Farnborough
3
QinetiQ Overseas Trading Limited
England & Wales
Farnborough
3
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
182
32. Capital commitments
The Group had the following capital commitments for which no provision has been made:
Capital commitments at 31 March 2025 include £47.2m (2024: £49.7m) in relation to property, plant and equipment that will be wholly funded
by a third-party customer under long-term contract arrangements. These primarily relate to investments under the LTPA contract.
33. Related parties
During the year ended 31 March 2025 there were sales to joint ventures of £0.2m (FY24: £3.1m). At the year-
end there were outstanding
receivables from joint ventures of £0.2m (FY24: £2.8m).
34. Subsidiaries and other related undertakings
In accordance with section 409 of the Companies Act 2006, a full list of subsidiaries and other related undertakings as at 31 March 2025 is
detailed below. Unless stated otherwise, the Group’s holding comprises ordinary shares which are held indirectly by QinetiQ Group plc, with
the exception of QinetiQ Group Holdings Limited which is held directly by QinetiQ Group plc.
All figures in £ million
31 March
2025
31 March
2024
Total contracted
51.3
57.8
Name of company
Country of incorporation
Registered office
Subsidiaries
1,6
Aerospace Training Services Pty Ltd*
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Affairs (Australia) Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Affairs Aviation Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Target Services Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Astra Aerospace Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Avantus Federal LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Avantus Federal Services LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Avantus National Security Solutions LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
cueSim Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
E3 Federal Solutions PR LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Far Ridgeline Engagements LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Foster-Miller Inc
2
USA
350 2
nd
Avenue, Waltham, Massachusetts, MA 02451, USA
Hirose Holdings Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Inzpire Group Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Inzpire Holdings Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Inzpire Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Lucid Perspectives LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Metrix UK Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Naimuri Limited
England & Wales
Farnborough
3
Occam’s Razor Technologies LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Operational Intelligence LLC
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Precis (2187) Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Qinetic Limited
England & Wales
Farnborough
3
QinetiQ Aerostructures Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Australia Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Consulting Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Estates Limited
England & Wales
Farnborough
3
QinetiQ GmbH
Germany
Flughafenstraße 65, 41066, Mönchengladbach, Germany
QinetiQ GP Limited
Scotland
50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, Scotland
QinetiQ Group Canada Inc.
2
Canada
5300 Commerce Court West, 199 Bay Street, Toronto ON M5L 1A9,
Canada
QinetiQ Group Holdings Limited
England & Wales
Farnborough
3
QinetiQ Holdings Limited
England & Wales
Farnborough
3
QinetiQ Inc
2,
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
QinetiQ Insurance PCC Limited
Guernsey
Mill Court, La Charroterie, St Peter Port, GY1 4ET Guernsey
QinetiQ Limited
England & Wales
Farnborough
3
QinetiQ Novare Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Overseas Holdings Limited
England & Wales
Farnborough
3
QinetiQ Overseas Trading Limited
England & Wales
Farnborough
3
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
182
32. Capital commitments
The Group had the following capital commitments for which no provision has been made:
Capital commitments at 31 March 2025 include £47.2m (2024: £49.7m) in relation to property, plant and equipment that will be wholly funded
by a third-party customer under long-term contract arrangements. These primarily relate to investments under the LTPA contract.
33. Related parties
During the year ended 31 March 2025 there were sales to joint ventures of £0.2m (FY24: £3.1m). At the year-end there were outstanding
receivables from joint ventures of £0.2m (FY24: £2.8m).
34. Subsidiaries and other related undertakings
In accordance with section 409 of the Companies Act 2006, a full list of subsidiaries and other related undertakings as at 31 March 2025 is
detailed below. Unless stated otherwise, the Group’s holding comprises ordinary shares which are held indirectly by QinetiQ Group plc, with
the exception of QinetiQ Group Holdings Limited which is held directly by QinetiQ Group plc.
All figures in £ million
31 March
2025
31 March
2024
Total contracted
51.3
57.8
Name of company
Country of incorporation
Registered office
Subsidiaries
1,6
Aerospace Training Services Pty Ltd*
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Affairs (Australia) Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Affairs Aviation Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Air Target Services Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Astra Aerospace Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Avantus Federal LLC
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Avantus Federal Services LLC
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Avantus National Security Solutions LLC
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
cueSim Limited
C/O
FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
E3 Federal Solutions PR LLC
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Far Ridgeline Engagements LLC
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Foster-Miller Inc
2
USA
350 2
nd
Avenue, Waltham, Massachusetts, MA 02451, USA
Hirose Holdings Pty Ltd.
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
Inzpire Group Limited
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Inzpire Holdings
Limited
England & Wales
C/O
FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Inzpire
Limited
England & Wales
C/O
FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Lucid Perspectives LLC
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Metrix UK Limited
C/O
FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Naimuri Limited
Farnborough
3
Occam’s Razor Technologies LLC
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Operational Intelligence LLC
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Precis (2187) Limited
England & Wales
C/O FRP Advisory Trading Limited Kings Orchard, 1 Queen Street,
Bristol, BS2 0HQ
Qinetic Limited
England & Wales
Farnborough
3
QinetiQ Aerostructures Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Australia Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Consulting Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Estates Limited
England & Wales
Farnborough
3
QinetiQ GmbH
Flughafenstraße 65, 41066, Mönchengladbach, Germany
QinetiQ GP Limited
50 Lothian Road,
Festival Square, Edinburgh, EH3 9WJ, Scotland
QinetiQ Group Canada Inc.
2
5300
Commerce Court West, 199 Bay Street, Toronto ON M5L 1A9,
Canada
QinetiQ Group Holdings Limited
England & Wales
Farnborough
3
QinetiQ Holdings Limited
England & Wales
Farnborough
3
QinetiQ Inc
2,
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
QinetiQ Insurance PCC Limited
Guernsey
Mill Court, La Charroterie, St Peter Port, GY1 4ET Guernsey
QinetiQ Limited
England & Wales
Farnborough
3
QinetiQ Novare
Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Overseas Holdings Limited
England & Wales
Farnborough
3
QinetiQ Overseas Trading Limited
Farnborough
3
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025182

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
183
Financial Statements
* Aerospace Training Services Pty Ltd was renamed QinetiQ Training Australia Pty Ltd on 30 April 2025.
1
As at 31 March 2025 the Group owned 100% of the ordinary shares of all subsidiary undertakings.
2
The class of shares is ‘common share’.
3
Cody Technology Park, Ively Road, Farnborough, Hampshire, GU14 OLX.
4
Limited partnership. The partners are all wholly-owned Group companies.
5
As at 31 March 2025 the Group owned 90% of Avantus CTA, LLC, 49% of Federal Mission Solutions, LLC, LLC, 49% of Houbara Defence & Security LLC, 49% of QinetiQ Dar
Massader QDM Limited, and 49% of Quick Services LLC.
6
The financial year end of each undertaking is 31 March other than Houbara Defence & Security LLC (31 December) and QinetiQ Dar Massader QDM Limited (31
December).
35. Basis of preparation and material accounting policies
QinetiQ Group plc (‘the Company’) is a public limited company, which is listed on the London Stock Exchange and is incorporated and
domiciled in England, United Kingdom. The consolidated financial statements of the Group comprise statements for the Company and its
subsidiaries, together referred to as ‘the Group’.
Accounting policies
The following accounting policies have been applied consistently to all periods presented in dealing with items that are considered material in
relation to the Group’s financial statements. In the income statement, the Group presents ‘specific adjusting items’ separately. In the
judgement of the Directors, for the reader to obtain a proper understanding of business performance, specific adjusting items need to be
disclosed separately. Underlying measures of performance exclude specific adjusting items.
Specific adjusting items
Specific adjusting items include the following:
The financial impact of each item is reported in note 4 to these financial statements.
Name of company
Country of incorporation
Registered office
Name of company
Country of incorporation
Registered office
QinetiQ Pension Scheme Trustee Limited
England & Wales
Farnborough
3
QinetiQ PFP Limited Partnership
4
Scotland
50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, Scotland
QinetiQ Philippines Company, Inc
Philippines
22
nd
Floor Corporate Centre, 139 Valero Street, Salcedo Village,
Makati City, Philippines
QinetiQ Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Services Holdings Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Solutions Sdn. Bhd.
Malaysia
Suite 6.01, 6
th
Floor, Plaza See Hoy Chan, Jalan Raja Chulan 50200,
Kuala Lumpur, W.P. Kuala Lumpur, Malaysia
QinetiQ Sweden AB
Sweden
c/o MAQS Advokatbyra, Stureplan 19, 111 45 Stockholm Sweden
QinetiQ Target Services Limited
England & Wales
Farnborough
3
QinetiQ Target Systems Limited
England & Wales
Farnborough
3
QinetiQ Training and Simulation Limited
England & Wales
Farnborough
3
QinetiQ US Holdings, Inc.
USA
5885
Trinity Parkway, Suite 130, Centreville, Virginia 20120-1969, USA
RubiKon Group Pty Limited
Australia
Level 33, 101
Collins Street, Melbourne, Victoria 3000, Australia
TSG International LLC
USA
350 2
nd
Avenue, Waltham, Massachusetts 02451, USA
Name of company
Country of incorporation
Registered office
Joint ventures
6
Avantus CTA, LLC
5
USA
1800
Tysons Blvd, Ste 750, McLean, VA 22102, USA
Federal Mission Solutions, LLC
5
USA
58 W Main Street, Suite B, Luray, VA 22835 USA
Houbara Defence & Security LLC
5,6
United Arab Emirates
Emirates, PO Box 128220
Unit 3, Zone 4, Tawazun Industrial Park, Abu Dhabi, United Arab
QinetiQ Dar Massader QDM Limited
5,6
Saudi Arabia
Al Nakhla Tower, 3026-Prince Saud Bin Mohamed Bin Muqin Road, PO
Box 2985,
Riyadh 13321,
Kingdom of Saudi Arabia
Quick Services LLC
5
USA
409
Chicago Drive Suite 103 in Fayetteville, NC 28306
Item
Distorting due to
irregular nature
year on year
Distorting due to
fluctuating nature
(size and sign)
Does not reflect in-year
operational performance
of continuing business
Amortisation of intangible assets arising from acquisitions
P
Pension net finance income
P
P
Gains/losses on disposal of businesses, property and investments
P
P
P
Transaction, integration and on-off remuneration costs in respect of business
acquisitions and disposals
P
P
Impairment of property and goodwill
P
One-off period of digital investment
P
P
P
Costs and other impacts of group-wide restructuring programmes
P
P
The tax impact of the above
P
P
P
Other significant non-recurring tax and RDEC movements
P
P
P
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
183
Financial Statements
* Aerospace Training Services Pty Ltd was renamed QinetiQ Training Australia Pty Ltd on 30 April 2025.
1
As at 31 March 2025 the Group owned 100% of the ordinary shares of all subsidiary undertakings.
2
The class of shares is ‘common share’.
3
Cody Technology Park, Ively Road, Farnborough, Hampshire, GU14 OLX.
4
Limited partnership. The partners are all wholly-owned Group companies.
5
As at 31 March 2025 the Group owned 90% of Avantus CTA, LLC, 49% of Federal Mission Solutions, LLC, LLC, 49% of Houbara Defence & Security LLC, 49% of QinetiQ Dar
Massader QDM Limited, and 49% of Quick Services LLC.
6
The financial year end of each undertaking is 31 March other than Houbara Defence & Security LLC (31 December) and QinetiQ Dar Massader QDM Limited (31
December).
35. Basis of preparation and material accounting policies
QinetiQ Group plc (‘the Company’) is a public limited company, which is listed on the London Stock Exchange and is incorporated and
domiciled in England, United Kingdom. The consolidated financial statements of the Group comprise statements for the Company and its
subsidiaries, together referred to as ‘the Group’.
Accounting policies
The following accounting policies have been applied consistently to all periods presented in dealing with items that are considered material in
relation to the Group’s financial statements. In the income statement, the Group presents ‘specific adjusting items’ separately. In the
judgement of the Directors, for the reader to obtain a proper understanding of business performance, specific adjusting items need to be
disclosed separately. Underlying measures of performance exclude specific adjusting items.
Specific adjusting items
Specific adjusting items include the following:
The financial impact of each item is reported in note 4 to these financial statements.
Name of company
Country of incorporation
Registered office
Name of company
Country of incorporation
Registered office
QinetiQ Pension Scheme Trustee Limited
England & Wales
Farnborough
3
QinetiQ PFP Limited Partnership
4
Scotland
50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, Scotland
QinetiQ Philippines Company, Inc
Philippines
22
nd
Floor Corporate Centre, 139 Valero Street, Salcedo Village,
Makati City, Philippines
QinetiQ Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Services Holdings Pty Ltd
Australia
Tower 4, Level 10, 727 Collins Street, Melbourne, VIC 3008 Australia
QinetiQ Solutions Sdn. Bhd.
Malaysia
Suite 6.01, 6
th
Floor, Plaza See Hoy Chan, Jalan Raja Chulan 50200,
Kuala Lumpur, W.P. Kuala Lumpur, Malaysia
QinetiQ Sweden AB
Sweden
c/o MAQS Advokatbyra, Stureplan 19, 111 45 Stockholm Sweden
QinetiQ Target Services Limited
England & Wales
Farnborough
3
QinetiQ Target Systems Limited
England & Wales
Farnborough
3
QinetiQ Training and Simulation Limited
England & Wales
Farnborough
3
QinetiQ US Holdings, Inc.
USA
5885 Trinity Parkway, Suite 130, Centreville, Virginia 20120-1969, USA
RubiKon Group Pty Limited
Australia
Level 33, 101 Collins Street, Melbourne, Victoria 3000, Australia
TSG International LLC
USA
350 2
nd
Avenue, Waltham, Massachusetts 02451, USA
Name of company
Country of incorporation
Registered office
Joint ventures
6
Avantus CTA, LLC
5
USA
1800 Tysons Blvd, Ste 750, McLean, VA 22102, USA
Federal Mission Solutions, LLC
5
USA
58 W Main Street, Suite B, Luray, VA 22835 USA
Houbara Defence & Security LLC
5,6
United Arab Emirates
Unit 3, Zone 4, Tawazun Industrial Park, Abu Dhabi, United Arab
Emirates, PO Box 128220
QinetiQ Dar Massader QDM Limited
5,6
Saudi Arabia
Al Nakhla Tower, 3026-Prince Saud Bin Mohamed Bin Muqin Road, PO
Box 2985, Riyadh 13321, Kingdom of Saudi Arabia
Quick Services LLC
5
USA
409 Chicago Drive Suite 103 in Fayetteville, NC 28306
Distorting due to
Distorting due to
Does not reflect in-year
irregular nature
fluctuating nature
operational performance
Item
year on year
(size and sign)
of continuing business
Amortisation of intangible assets arising from acquisitions
Pension net finance income
Gains/losses on disposal of businesses, property and investments
acquisitions and disposals
Impairment of property and goodwill
One-off period of digital investment
P
Costs and other impacts of group-wide restructuring programmes
P
P
The tax impact of the above
Other significant non-recurring tax and RDEC movements
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
184
These ‘specific adjusting items’ are of a ‘non-operational’ nature and do not include all significant, irregular items that are of an operational
nature, for example contract risk provisions and gains/losses on disposal of plant and equipment.
35. Basis of preparation and material accounting policies (continued)
Basis of preparation
The Group’s financial statements, approved by the Directors, have been prepared on a going concern basis as discussed in the Strategic
Report on page 69 in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006
as applicable to companies reporting under those standards. The Company has elected to prepare its parent company financial statements
in accordance with UK GAAP (FRS 101); these are presented on page 194. The financial statements have been prepared under the historical
cost convention, except for certain financial assets and liabilities (such as derivative financial instruments) measures at fair value. The Group’s
reporting currency is Sterling and unless otherwise stated the financial statements are rounded to the nearest £100,000.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiary undertakings to 31 March 2025.
The purchase method of accounting has been adopted. Those subsidiary undertakings acquired or disposed of in the period are included in
the consolidated income statement from the date control is obtained to the date that control is lost (usually on acquisition and disposal
respectively). An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. This is the IFRS 10 definition of ‘control’.
The Group comprises certain entities that are operated within the terms of a Special Security Arrangement (‘SSA’). Details of the SSA and
QinetiQ’s management of US subsidiaries are set out in the Corporate Governance section of this Annual Report (on page 90). IFRS 10 is the
accounting standard applicable in respect of consolidation of entities. This does not specifically deal with SSA’s. However, having considered
the terms of the SSA, the Directors consider that the Group meets the requirements of IFRS 10 in respect of control over such affected entities
and, therefore, consolidates these entities in the consolidated accounts. The impact of this specific judgement is full consolidation as opposed
to treatment as a 100% associated undertaking.
An associate is an undertaking over which the Group exercises significant influence, usually from 20%–50% of the equity voting rights, in
respect of financial and operating policy. A joint venture is an undertaking over which the Group exercises joint control. Joint ventures are
accounted for using the equity method from the date of acquisition to the date of disposal. The Group’s investments in Joint ventures are
held at cost including goodwill on acquisition and any post-acquisition changes in the Group’s share of the net assets of the joint venture less
any impairment to the recoverable amount. Where a joint venture has net liabilities, full provision is made for the Group’s share of liabilities
where there is a constructive or legal obligation to provide additional funding to the joint venture.
The financial statements of subsidiaries, joint ventures and associates are adjusted where necessary to ensure compliance with Group
accounting policies.
Consideration of climate change
In preparing the financial statements, the Board have considered the impact to the organisation and its activities of climate change, particularly
those risks highlighted on page 61 in line with the recommendations by the Task Force for Climate-related Disclosures (TCFD). The Board
recognises its responsibilities for oversight of climate-related risks and opportunities. The QinetiQ Leadership Team support the Board through
the implementation of a strategic led approach to monitor, assess and address climate transition risks and opportunities, which includes
refining our capability to quantify, forecast and model financial statement impacts due to climate change.
Specific aspects of the financial statements that could potentially be impacted by climate change are the carrying value and useful economic
lives of tangible assets and goodwill, future capability development and the financial performance of customer contracts.
Whilst the Group will likely be impacted by climate change in the future, the impacts on the financial statements as at 31 March 2025 are not
considered to be material.
Recent accounting developments
Developments adopted by the Group for the year ended 31 March 2025 with no material impact on the Group’s financial statements
The following standards, interpretations and amendments to existing standards became effective on 1 January 2024 and have not had
a material impact on the Group:
• Amendments to IAS 1 Presentation of Financial Statements – Non-current Liabilities with Covenants and Deferral of Effective Date of
the Amendment Classification of Liabilities as Current, effective from 1 January 2024;
• Amendments to IFRS 16 Lessee Lease – Liability in a Sale and Leaseback, effective from 1 January 2024; and
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements, effective
from 1 January 20024
Developments expected in future periods of which are not expected to have a material impact on the Group’s financial statements
The following other standards, interpretations and amendments to existing standards have been issued but were not mandatory for
accounting periods beginning on 1 April 2024. These either have been, or are expected to be endorsed by the UK Endorsement Board and are
not expected to have a material impact on the Group:
Annual Report & Accounts 2025 | QinetiQ Group plc 183
Financial Statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
185
Financial Statements
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, effective from 1 January 2025.
Material accounting policies
Revenue from contracts with customers
The Group recognises revenue primarily from the following major sources:
• Through combining world-leading expertise with unique facilities to provide technical assurance, test and evaluation and training services
underpinned by long-term contracts;
• Through delivering innovative solutions and products to meet customer requirements by undertaking contract-funded research and
development, developing intellectual property and by internal funding with potential for new revenue streams.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third
parties. The Group recognises revenue when it transfers control of a product or service to a customer. The Group’s revenue contracts are
accounted for under IFRS 15 ‘Revenue from Contracts with Customers’ taking into account the requirement to distinguish between the various
performance obligations within a contract and treating these separately. The Group’s methodology applies IFRS 15 on a contract-by-contract
basis which includes considerations for contract modifications, variable consideration, the determination of distinct performance obligations,
determination of agency and principal relationships and licences.
Service contracts
The Group’s long-term service contracts are generally ‘test and evaluation’ or advice-based contracts where control of the service is
transferred over a period of time as the Group performs. At contract inception the Group undertakes an assessment to determine how many
distinct performance obligations exists within a contract. As part of the assessment the Group obtains an understanding of the overall
deliverable to the customer through discussions with business units and project leads. Each individual deliverable in the contract is then
assessed to determine if it is an input into the overall deliverable, and therefore part of a single performance obligation, or if it is a stand-alone
separable deliverable with its own transaction price and therefore a distinct performance obligation in its own right. Each distinct performance
obligation identified within a contract is accounted for separately.
Certain service contracts have a similar pattern of transfer of control to the customer where each year is effectively the same from a
performance obligation perspective. The Group has applied the series guidance as permitted within the Standard to these contracts and
accounts for these as a series of distinct service performance obligations satisfied annually over the contract term.
The transaction price for a contract is determined at contract inception based on a fixed-margin applied to the total forecast costs to complete
the deliverable. Some long-term contracts include an excess profit clause which is a variable consideration factor that could impact the
transaction price. Excess profits are estimated at contract inception and at the end of each reporting period to ensure that the transaction
price is not under or over stated. Any required adjustment will be made against the transaction price in the period in which it occurred. The
Group does not offer any right of return or refunds which could impact transaction price at inception.
Certain contracts attract bonuses and/or penalties which are variable and will have an impact on transaction price at contract inception. The
Group assesses variable consideration in relation to bonuses and penalties at contract inception using the most-likely method and this forms
part of the transaction price and recognised over time as costs are incurred. The Group only includes bonuses and penalties into the
transaction price to the extent that it is highly probable that a significant reversal of revenue will not occur in future periods. Historical evidence
and experience shows that even where a reduction has been required, that reduction has been immaterial to the Group.
The transaction price is allocated between each distinct performance obligation identified in a contract based on the stand-alone selling price
of each performance obligation. Each performance obligation will be costed and the transaction price will be cost plus margin. This amount
would be the stand-alone selling price of each performance obligation if contracted with a customer separately.
Long-term service contracts allow for modifications to the original order. If a contract modification is determined to be distinct and the price
of the contract increases by an amount of consideration that reflects the entity's stand-alone selling prices for the additional promised goods
or services, the Group accounts for this as a separate contract. If a contract modification is not distinct, the Group accounts for this as if it
were part of the existing contract. A cumulative catch-up adjustment to revenue is then recognised to disclose the effect that the contract
modification has on the transaction price and the Group’s measure of progress towards complete satisfaction of the performance obligation.
Long-term service contracts also sometimes allow for extensions to the original order. A contract extension is determined to include either
additional goods or services or no additional goods or service. If a contract extension with additional goods or services is determined to be
distinct and the price of the contract increases by an amount of consideration that reflects the entity’s stand-alone selling prices for the
additional promised goods or services, the Group accounts for this as a separate performance obligation.
If a contract extension with additional goods or services is not distinct, the Group accounts for this as if it were part of the existing contract.
A cumulative catch-up adjustment to revenue is then recognised to disclose the effect that the contract extension has on the transaction
price and the Group’s measure of progress towards complete satisfaction of the performance obligation.
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
184
These ‘specific adjusting items’ are of a ‘non-operational’ nature and do not include all significant, irregular items that are of an operational
nature, for example contract risk provisions and gains/losses on disposal of plant and equipment.
35. Basis of preparation and material accounting policies (continued)
Basis of preparation
The Group’s financial statements, approved by the Directors, have been prepared on a going concern basis as discussed in the Strategic
Report on page 69 in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006
as applicable to companies reporting under those standards. The Company has elected to prepare its parent company financial statements
in accordance with UK GAAP (FRS 101); these are presented on page 194. The financial statements have been prepared under the historical
cost convention, except for certain financial assets and liabilities (such as derivative financial instruments) measures at fair value. The Group’s
reporting currency is Sterling and unless otherwise stated the financial statements are rounded to the nearest £100,000.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiary undertakings to 31 March 2025.
The purchase method of accounting has been adopted. Those subsidiary undertakings acquired or disposed of in the period are included in
the consolidated income statement from the date control is obtained to the date that control is lost (usually on acquisition and disposal
respectively). An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. This is the IFRS 10 definition of ‘control’.
The Group comprises certain entities that are operated within the terms of a Special Security Arrangement (‘SSA’). Details of the SSA and
QinetiQ’s management of US subsidiaries are set out in the Corporate Governance section of this Annual Report (on page 90). IFRS 10 is the
accounting standard applicable in respect of consolidation of entities. This does not specifically deal with SSA’s. However, having considered
the terms of the SSA, the Directors consider that the Group meets the requirements of IFRS 10 in respect of control over such affected entities
and, therefore, consolidates these entities in the consolidated accounts. The impact of this specific judgement is full consolidation as opposed
to treatment as a 100% associated undertaking.
An associate is an undertaking over which the Group exercises significant influence, usually from 20%–50% of the equity voting rights, in
respect of financial and operating policy. A joint venture is an undertaking over which the Group exercises joint control. Joint ventures are
accounted for using the equity method from the date of acquisition to the date of disposal. The Group’s investments in Joint ventures are
held at cost including goodwill on acquisition and any post-acquisition changes in the Group’s share of the net assets of the joint venture less
any impairment to the recoverable amount. Where a joint venture has net liabilities, full provision is made for the Group’s share of liabilities
where there is a constructive or legal obligation to provide additional funding to the joint venture.
The financial statements of subsidiaries, joint ventures and associates are adjusted where necessary to ensure compliance with Group
accounting policies.
Consideration of climate change
In preparing the financial statements, the Board have considered the impact to the organisation and its activities of climate change, particularly
those risks highlighted on page 61 in line with the recommendations by the Task Force for Climate-related Disclosures (TCFD). The Board
recognises its responsibilities for oversight of climate-related risks and opportunities. The QinetiQ Leadership Team support the Board through
the implementation of a strategic led approach to monitor, assess and address climate transition risks and opportunities, which includes
refining our capability to quantify, forecast and model financial statement impacts due to climate change.
Specific aspects of the financial statements that could potentially be impacted by climate change are the carrying value and useful economic
lives of tangible assets and goodwill, future capability development and the financial performance of customer contracts.
Whilst the Group will likely be impacted by climate change in the future, the impacts on the financial statements as at 31 March 2025 are not
considered to be material.
Recent accounting developments
Developments adopted by the Group for the year ended 31 March 2025 with no material impact on the Group’s financial statements
The following standards, interpretations and amendments to existing standards became effective on 1 January 2024 and have not had
a material impact on the Group:
• Amendments to IAS 1 Presentation of Financial Statements – Non-current Liabilities with Covenants and Deferral of Effective Date
of the Amendment Classification of Liabilities as Current, effective from 1 January 2024;
• Amendments to IFRS 16 Lessee Lease – Liability in a Sale and Leaseback, effective from 1 January 2024; and
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements, effective
from 1 January 2024
Developments expected in future periods of which are not expected to have a material impact on the Group’s financial statements
The following other standards, interpretations and amendments to existing standards have been issued but were not mandatory for
accounting periods beginning on 1 April 2024. These either have been, or are expected to be endorsed by the UK Endorsement Board and are
not expected to have a material impact on the Group:
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025184

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
185
Financial Statements
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, effective from 1 January 2025.
Material accounting policies
Revenue from contracts with customers
The Group recognises revenue primarily from the following major sources:
• Through combining world-leading expertise with unique facilities to provide technical assurance, test and evaluation and training services
underpinned by long-term contracts;
• Through delivering innovative solutions and products to meet customer requirements by undertaking contract-funded research and
development, developing intellectual property and by internal funding with potential for new revenue streams.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third
parties. The Group recognises revenue when it transfers control of a product or service to a customer. The Group’s revenue contracts are
accounted for under IFRS 15 ‘Revenue from Contracts with Customers’ taking into account the requirement to distinguish between the various
performance obligations within a contract and treating these separately. The Group’s methodology applies IFRS 15 on a contract-by-contract
basis which includes considerations for contract modifications, variable consideration, the determination of distinct performance obligations,
determination of agency and principal relationships and licences.
Service contracts
The Group’s long-term service contracts are generally ‘test and evaluation’ or advice-based contracts where control of the service is
transferred over a period of time as the Group performs. At contract inception the Group undertakes an assessment to determine how many
distinct performance obligations exists within a contract. As part of the assessment the Group obtains an understanding of the overall
deliverable to the customer through discussions with business units and project leads. Each individual deliverable in the contract is then
assessed to determine if it is an input into the overall deliverable, and therefore part of a single performance obligation, or if it is a stand-alone
separable deliverable with its own transaction price and therefore a distinct performance obligation in its own right. Each distinct performance
obligation identified within a contract is accounted for separately.
Certain service contracts have a similar pattern of transfer of control to the customer where each year is effectively the same from a
performance obligation perspective. The Group has applied the series guidance as permitted within the Standard to these contracts and
accounts for these as a series of distinct service performance obligations satisfied annually over the contract term.
The transaction price for a contract is determined at contract inception based on a fixed-margin applied to the total forecast costs to complete
the deliverable. Some long-term contracts include an excess profit clause which is a variable consideration factor that could impact the
transaction price. Excess profits are estimated at contract inception and at the end of each reporting period to ensure that the transaction
price is not under or over stated. Any required adjustment will be made against the transaction price in the period in which it occurred. The
Group does not offer any right of return or refunds which could impact transaction price at inception.
Certain contracts attract bonuses and/or penalties which are variable and will have an impact on transaction price at contract inception. The
Group assesses variable consideration in relation to bonuses and penalties at contract inception using the most-likely method and this forms
part of the transaction price and recognised over time as costs are incurred. The Group only includes bonuses and penalties into the
transaction price to the extent that it is highly probable that a significant reversal of revenue will not occur in future periods. Historical evidence
and experience shows that even where a reduction has been required, that reduction has been immaterial to the Group.
The transaction price is allocated between each distinct performance obligation identified in a contract based on the stand-alone selling price
of each performance obligation. Each performance obligation will be costed and the transaction price will be cost plus margin. This amount
would be the stand-alone selling price of each performance obligation if contracted with a customer separately.
Long-term service contracts allow for modifications to the original order. If a contract modification is determined to be distinct and the price
of the contract increases by an amount of consideration that reflects the entity's stand-alone selling prices for the additional promised goods
or services, the Group accounts for this as a separate contract. If a contract modification is not distinct, the Group accounts for this as if it
were part of the existing contract. A cumulative catch-up adjustment to revenue is then recognised to disclose the effect that the contract
modification has on the transaction price and the Group’s measure of progress towards complete satisfaction of the performance obligation.
Long-term service contracts also sometimes allow for extensions to the original order. A contract extension is determined to include either
additional goods or services or no additional goods or service. If a contract extension with additional goods or services is determined to be
distinct and the price of the contract increases by an amount of consideration that reflects the entity’s stand-alone selling prices for the
additional promised goods or services, the Group accounts for this as a separate performance obligation.
If a contract extension with additional goods or services is not distinct, the Group accounts for this as if it were part of the existing contract.
A cumulative catch-up adjustment to revenue is then recognised to disclose the effect that the contract extension has on the transaction
price and the Group’s measure of progress towards complete satisfaction of the performance obligation.
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
185
Financial Statements
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, effective from 1 January 2025.
Material accounting policies
Revenue from contracts with customers
The Group recognises revenue primarily from the following major sources:
• Through combining world-leading expertise with unique facilities to provide technical assurance, test and evaluation and training services
underpinned by long-term contracts;
• Through delivering innovative solutions and products to meet customer requirements by undertaking contract-funded research and
development, developing intellectual property and by internal funding with potential for new revenue streams.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third
parties. The Group recognises revenue when it transfers control of a product or service to a customer. The Group’s revenue contracts are
accounted for under IFRS 15 ‘Revenue from Contracts with Customers’ taking into account the requirement to distinguish between the various
performance obligations within a contract and treating these separately. The Group’s methodology applies IFRS 15 on a contract-by-contract
basis which includes considerations for contract modifications, variable consideration, the determination of distinct performance obligations,
determination of agency and principal relationships and licences.
Service contracts
The Group’s long-term service contracts are generally ‘test and evaluation’ or advice-based contracts where control of the service is
transferred over a period of time as the Group performs. At contract inception the Group undertakes an assessment to determine how many
distinct performance obligations exists within a contract. As part of the assessment the Group obtains an understanding of the overall
deliverable to the customer through discussions with business units and project leads. Each individual deliverable in the contract is then
assessed to determine if it is an input into the overall deliverable, and therefore part of a single performance obligation, or if it is a stand-alone
separable deliverable with its own transaction price and therefore a distinct performance obligation in its own right. Each distinct performance
obligation identified within a contract is accounted for separately.
Certain service contracts have a similar pattern of transfer of control to the customer where each year is effectively the same from a
performance obligation perspective. The Group has applied the series guidance as permitted within the Standard to these contracts and
accounts for these as a series of distinct service performance obligations satisfied annually over the contract term.
The transaction price for a contract is determined at contract inception based on a fixed-margin applied to the total forecast costs to complete
the deliverable. Some long-term contracts include an excess profit clause which is a variable consideration factor that could impact the
transaction price. Excess profits are estimated at contract inception and at the end of each reporting period to ensure that the transaction
price is not under or over stated. Any required adjustment will be made against the transaction price in the period in which it occurred. The
Group does not offer any right of return or refunds which could impact transaction price at inception.
Certain contracts attract bonuses and/or penalties which are variable and will have an impact on transaction price at contract inception. The
Group assesses variable consideration in relation to bonuses and penalties at contract inception using the most-likely method and this forms
part of the transaction price and recognised over time as costs are incurred. The Group only includes bonuses and penalties into the
transaction price to the extent that it is highly probable that a significant reversal of revenue will not occur in future periods. Historical evidence
and experience shows that even where a reduction has been required, that reduction has been immaterial to the Group.
The transaction price is allocated between each distinct performance obligation identified in a contract based on the stand-alone selling price
of each performance obligation. Each performance obligation will be costed and the transaction price will be cost plus margin. This amount
would be the stand-alone selling price of each performance obligation if contracted with a customer separately.
Long-term service contracts allow for modifications to the original order. If a contract modification is determined to be distinct and the price
of the contract increases by an amount of consideration that reflects the entity's stand-alone selling prices for the additional promised goods
or services, the Group accounts for this as a separate contract. If a contract modification is not distinct, the Group accounts for this as if it
were part of the existing contract. A cumulative catch-up adjustment to revenue is then recognised to disclose the effect that the contract
modification has on the transaction price and the Group’s measure of progress towards complete satisfaction of the performance obligation.
Long-term service contracts also sometimes allow for extensions to the original order. A contract extension is determined to include either
additional goods or services or no additional goods or service. If a contract extension with additional goods or services is determined to be
distinct and the price of the contract increases by an amount of consideration that reflects the entity’s stand-alone selling prices for the
additional promised goods or services, the Group accounts for this as a separate performance obligation.
If a contract extension with additional goods or services is not distinct, the Group accounts for this as if it were part of the existing contract.
A cumulative catch-up adjustment to revenue is then recognised to disclose the effect that the contract extension has on the transaction
price and the Group’s measure of progress towards complete satisfaction of the performance obligation.
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
186
When the outcome of a distinct performance obligation in delivering services can be reliably estimated, revenue associated with the
performance obligation is recognised over time using the input method. The input method recognises revenue over time on the basis of costs
incurred to date to the satisfaction of a performance obligation relative to the total forecast costs to complete the performance obligation.
35. Basis of preparation and material accounting policies (continued)
The Group has determined the input method to be appropriate as it best depicts the Group’s performance in transferring control of the service
to the customer as it incurs costs on a particular contract.
No profit is recognised on contracts until the outcome of the contract can be reliably estimated. When it is probable that total contract costs
will exceed total contract revenue, the expected loss is recognised immediately as an expense.
Goods sold
The Group recognises revenue on the sale of products at a point in time once control has been transferred to the customer. Control is generally
transferred to customers on delivery of products or when the customer has the significant risks and rewards of ownership of the product.
Payment is typically due within 30 days of invoice (within the UK) and customers typically do not have a right of return or refund. The
transaction price for sale of products is agreed at contract inception. When the Group develops a bespoke product for a customer with no
alternative use to the Group, revenue is recognised over time using the input method.
Licence revenue
Licence revenue is attributed to either ‘right to use’ or ‘right to access’ licences. ‘Right to use’ licence revenue is recognised at a point in time
when the Group sells a licence to a customer and does not undertake significant further activities or involvement in developing the licence
after the sale. ‘Right to access’ licence revenue is recognised over time when the Group maintains a significant level of involvement in
developing and enhancing the licence after the sale. The level of involvement goes beyond general support, bug-fixing and upgrades which
generally only maintain the current operating level. The transaction price for intellectual property is agreed at contract inception. The Group
does not offer any right of return or refunds which could impact transaction price at inception.
The Group recognises licence revenue through the supply of a range of security, messaging and connectivity software products. A licence fee
is paid for each computer that uses the software and the customer can also purchase a support service contract for a fixed period. The sale
of these types of licences is recognised at a point in time as a distinct performance obligation because the Group does not undertake any
further activities in developing the licence after the sale. The support service contract is recognised over time as a separate performance
obligation as this is an optional extra and is not integral into the functionality of the licence. The support service contract offers general support
and maintenance of the licence to the customer over a fixed period.
Contract assets
Contract assets represent revenue recognised in excess of amounts invoiced. Revenue is recognised on service contracts by using a
‘percentage complete’ method, applying the proportion of contract costs incurred for work performed to date relative to the estimated total
contract cost, after making suitable allowances for technical and other risks related to performance milestones yet to be achieved, and
applying that proportion to total contract price. Payment for service contracts are not always due from the customer until certain milestones
have been reached and, therefore, a contract asset is recognised over the period in which the services are performed representing the Group’s
right to consideration for services performed to date, to the extent that the customer has not yet been invoiced for those services.
Contract liabilities
The Group, on occasion, bills customers in advance of performing certain types of work which results in the Group recognising contract
liabilities. Once the work has been performed these amounts will be reduced and recognised as revenue. For sale of goods, revenue is
recognised in the income statement when control of the goods has been transferred to the customer; being at the point when the goods are
delivered. Any transaction price received by the Group prior to that point is recognised as a contract liability.
Principal-agent arrangements
The Group enters into certain arrangements which involve a consortium of service providers. The Group acts as a ‘Prime’ contractor in certain
contracts with customers and utilises sub-contractors to undertake the work. Under these contracts the Group is considered to be primarily
responsible for fulfilling the service to the customer. The Group performs a technical assessment of the work before it is delivered to the
customer and is responsible for quality and performance of the sub-contractor. As such the Group is considered to be the principal to the
arrangement with the customer and includes sub-contractor costs within revenue. However, where the Group is merely acting as an agent of
a sub-contractor then no revenue is recognised in respect of sub-contractor costs.
All consortium arrangements are assessed by the Group to determine if it is the principal or agent.
Contract bidding costs
The Group recognises the ‘incremental costs of obtaining a contract’ with a customer as an asset if the Group expects to recover those costs.
The ‘incremental costs of obtaining a contract’ are those costs that the Group incurs to obtain a contract with a customer that it would not
have incurred if the contract had not been won. Costs to obtain a contract that would have been incurred regardless of whether the contract
was won or lost shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer.
Annual Report & Accounts 2025 | QinetiQ Group plc 185
Financial Statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
186
When the outcome of a distinct performance obligation in delivering services can be reliably estimated, revenue associated with the
performance obligation is recognised over time using the input method. The input method recognises revenue over time on the basis of costs
incurred to date to the satisfaction of a performance obligation relative to the total forecast costs to complete the performance obligation.
35. Basis of preparation and material accounting policies (continued)
The Group has determined the input method to be appropriate as it best depicts the Group’s performance in transferring control of the service
to the customer as it incurs costs on a particular contract.
No profit is recognised on contracts until the outcome of the contract can be reliably estimated. When it is probable that total contract costs
will exceed total contract revenue, the expected loss is recognised immediately as an expense.
Goods sold
The Group recognises revenue on the sale of products at a point in time once control has been transferred to the customer. Control is generally
transferred to customers on delivery of products or when the customer has the significant risks and rewards of ownership of the product.
Payment is typically due within 30 days of invoice (within the UK) and customers typically do not have a right of return or refund. The
transaction price for sale of products is agreed at contract inception. When the Group develops a bespoke product for a customer with no
alternative use to the Group, revenue is recognised over time using the input method.
Licence revenue
Licence revenue is attributed to either ‘right to use’ or ‘right to access’ licences. ‘Right to use’ licence revenue is recognised at a point in time
when the Group sells a licence to a customer and does not undertake significant further activities or involvement in developing the licence
after the sale. ‘Right to access’ licence revenue is recognised over time when the Group maintains a significant level of involvement in
developing and enhancing the licence after the sale. The level of involvement goes beyond general support, bug-fixing and upgrades which
generally only maintain the current operating level. The transaction price for intellectual property is agreed at contract inception. The Group
does not offer any right of return or refunds which could impact transaction price at inception.
The Group recognises licence revenue through the supply of a range of security, messaging and connectivity software products. A licence fee
is paid for each computer that uses the software and the customer can also purchase a support service contract for a fixed period. The sale
of these types of licences is recognised at a point in time as a distinct performance obligation because the Group does not undertake any
further activities in developing the licence after the sale. The support service contract is recognised over time as a separate performance
obligation as this is an optional extra and is not integral into the functionality of the licence. The support service contract offers general support
and maintenance of the licence to the customer over a fixed period.
Contract assets
Contract assets represent revenue recognised in excess of amounts invoiced. Revenue is recognised on service contracts by using a
‘percentage complete’ method, applying the proportion of contract costs incurred for work performed to date relative to the estimated total
contract cost, after making suitable allowances for technical and other risks related to performance milestones yet to be achieved, and
applying that proportion to total contract price. Payment for service contracts are not always due from the customer until certain milestones
have been reached and, therefore, a contract asset is recognised over the period in which the services are performed representing the Group’s
right to consideration for services performed to date, to the extent that the customer has not yet been invoiced for those services.
Contract liabilities
The Group, on occasion, bills customers in advance of performing certain types of work which results in the Group recognising contract
liabilities. Once the work has been performed these amounts will be reduced and recognised as revenue. For sale of goods, revenue is
recognised in the income statement when control of the goods has been transferred to the customer; being at the point when the goods are
delivered. Any transaction price received by the Group prior to that point is recognised as a contract liability.
Principal-agent arrangements
The Group enters into certain arrangements which involve a consortium of service providers. The Group acts as a ‘Prime’ contractor in certain
contracts with customers and utilises sub-contractors to undertake the work. Under these contracts the Group is considered to be primarily
responsible for fulfilling the service to the customer. The Group performs a technical assessment of the work before it is delivered to the
customer and is responsible for quality and performance of the sub-contractor. As such the Group is considered to be the principal to the
arrangement with the customer and includes sub-contractor costs within revenue. However, where the Group is merely acting as an agent of
a sub-contractor then no revenue is recognised in respect of sub-contractor costs.
All consortium arrangements are assessed by the Group to determine if it is the principal or agent.
Contract bidding costs
The Group recognises the ‘incremental costs of obtaining a contract’ with a customer as an asset if the Group expects to recover those costs.
The ‘incremental costs of obtaining a contract’ are those costs that the Group incurs to obtain a contract with a customer that it would not
have incurred if the contract had not been won. Costs to obtain a contract that would have been incurred regardless of whether the contract
was won or lost shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer.
Financial Statements continued
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Financial Statements
35. Basis of preparation and material accounting policies (continued)
Segmental information
Segmental information is presented according to the Group’s internal management reporting structure and the markets in which
it operates. Segmental results represent the contribution of the different segments to the profit of the Group. Corporate expenses are allocated
to the corresponding segments. Unallocated items mainly comprise Research and Development Expenditure Credits (RDEC) and specific
adjusting items. Specific adjusting items are referred to in note 4. Segmental assets and liabilities information is not regularly provided to the
Chief Operating Decision Maker.
Research and development expenditure
Research and development (R&D) costs incurred in respect of specific contracts placed by customers are recognised within operating costs
and revenue is recognised in respect of the R&D services performed. Internally funded development expenditure is capitalised in the balance
sheet where there is a clearly defined project, the expenditures are separately identifiable, the project is technically and commercially feasible,
all costs are recoverable by future revenue and the resources are committed to complete the project. Such capitalised costs are amortised
over the forecast period of sales resulting from the development. All other R&D costs are expensed to the income statement in the period in
which they are incurred. If the research phase cannot be clearly distinguished from the development phase, the respective project-related
costs are treated as if they were incurred in the research phase only and expensed.
Borrowings and financing
The Group has a term loan and access to a revolving credit facility with its relationship banks. Borrowings are initially recognised at fair value.
Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as non-current liabilities where the group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or
all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. The Group pays in advance finance costs in
relation to the multi-currency facility which are recognised as a deferred finance cost asset and amortised over the period of the facility, where
it is probable that some or all of the facility will be drawn down. Costs of letters of credit are also charged to finance expense.
Exchange differences on financial assets and liabilities and the income or expense from interest hedging instruments that are recognised in
the income statement are included within finance income and finance expense. Financing also includes the net finance income or expense in
respect of defined benefit pension schemes.
Taxation
The income tax expense or credit for the period is the tax payable on the current period’s taxable income, based on the applicable income tax
rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax
losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period in the countries where the company and its subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Group measures its
tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the
resolution of the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise
from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting
period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences
and losses. Deferred tax assets are derecognised when that probability assessment changes. Deferred tax liabilities and assets are not
Notes to the Consolidated Financial Statements
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recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company
is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and
where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
35. Basis of preparation and material accounting policies (continued)
The Group has applied the temporary exemption issued by the International Accounting Standards Board from the accounting for deferred
taxes under IAS12 and neither recognises nor discloses information about deferred taxes related to OECD's Global Anti-Base Erosion Model
Rules (Pillar Two) income taxes.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Research and Development Expenditure Credits (RDEC) are recognised within other operating income.
Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered primarily through a sales transaction rather than
through continuing use. This condition is regarded as met only when the sale is highly probable and expected to be completed within a year
of the balance sheet date. The assets should be available for immediate sale in their present condition and actively marketed at a price that
is reasonable in relation to their current fair value.
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Any write-down
to fair value less costs to sell shall be recognised directly through profit and loss as an impairment loss. No further depreciation is charged in
respect of assets classified as held for sale.
Goodwill
Goodwill on acquisitions of subsidiaries is included in non-current assets. Goodwill on acquisitions of joint ventures is included in the carrying
value of equity accounted investments. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold.
Intangible assets
Intangible assets arising from business combinations are recognised at fair value and are amortised over their expected useful lives, typically
between 1 and 16 years. Internally generated intangible assets are recorded at cost, including labour, directly attributable costs and any third-
party expenses.
The ‘multi-period excess earnings’ method and the ‘relief-from-royalty’ method are both used for fair valuing intangible assets arising from
acquisitions. The multi-period excess earnings method considers the present value of net cash flows expected to be generated by customer
relationships, by excluding any cash flows related to contributory assets. The relief-from-royalty method considers the discounted estimated
royalty payments that are expected to be avoided as a result of the patents or trademarks being owned. Purchased intangible assets are
recognised at cost less amortisation. Intangible assets are amortised over their respective useful lives on a straight-line basis as follows:
Intellectual property rights 2–10 years
Customer relationships 1–16 years
Development costs 1–5 years
Other 1–14 years
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation. Freehold land is not depreciated. Other tangible non-current assets are
depreciated on a straight-line basis over their useful economic lives to their estimated residual value as follows:
Freehold buildings 20–25 years
Leasehold land and buildings Shorter of useful economic life and the period of the lease
Plant and machinery 3–15 years
Motor vehicles 3–5 years
Aircraft 10–20 years
Computers 3–5 years
Office equipment 5–10 years
Assets under construction are included in property, plant and equipment on the basis of expenditure incurred at the balance sheet date. In
the case of assets constructed by the Group, the value includes the cost of own work completed, including directly attributable costs and
interest. The useful lives, depreciation methods and residual values applied to property, plant and equipment are reviewed annually and, if
appropriate, adjusted accordingly.
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For the year ended 31 March
Notes to the Consolidated Financial Statements
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recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company
is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and
where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
35. Basis of preparation and material accounting policies (continued)
The Group has applied the temporary exemption issued by the International Accounting Standards Board from the accounting for deferred
taxes under IAS12 and neither recognises nor discloses information about deferred taxes related to OECD's Global Anti-Base Erosion Model
Rules (Pillar Two) income taxes.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Research and Development Expenditure Credits (RDEC) are recognised within other operating income.
Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered primarily through a sales transaction rather than
through continuing use. This condition is regarded as met only when the sale is highly probable and expected to be completed within a year
of the balance sheet date. The assets should be available for immediate sale in their present condition and actively marketed at a price that
is reasonable in relation to their current fair value.
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Any write-down
to fair value less costs to sell shall be recognised directly through profit and loss as an impairment loss. No further depreciation is charged in
respect of assets classified as held for sale.
Goodwill
Goodwill on acquisitions of subsidiaries is included in non-current assets. Goodwill on acquisitions of joint ventures is included in the carrying
value of equity accounted investments. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold.
Intangible assets
Intangible assets arising from business combinations are recognised at fair value and are amortised over their expected useful lives, typically
between 1 and 16 years. Internally generated intangible assets are recorded at cost, including labour, directly attributable costs and any third-
party expenses.
The ‘multi-period excess earnings’ method and the ‘relief-from-royalty’ method are both used for fair valuing intangible assets arising from
acquisitions. The multi-period excess earnings method considers the present value of net cash flows expected to be generated by customer
relationships, by excluding any cash flows related to contributory assets. The relief-from-royalty method considers the discounted estimated
royalty payments that are expected to be avoided as a result of the patents or trademarks being owned. Purchased intangible assets are
recognised at cost less amortisation. Intangible assets are amortised over their respective useful lives on a straight-line basis as follows:
Intellectual property rights 2–10 years
Customer relationships 1–16 years
Development costs 1–5 years
Other 1–14 years
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation. Freehold land is not depreciated. Other tangible non-current assets are
depreciated on a straight-line basis over their useful economic lives to their estimated residual value as follows:
Freehold buildings 20–25 years
Leasehold land and buildings Shorter of useful economic life and the period of the lease
Plant and machinery 3–15 years
Motor vehicles 3–5 years
Aircraft 10–20 years
Computers 3–5 years
Office equipment 5–10 years
Assets under construction are included in property, plant and equipment on the basis of expenditure incurred at the balance sheet date. In
the case of assets constructed by the Group, the value includes the cost of own work completed, including directly attributable costs and
interest. The useful lives, depreciation methods and residual values applied to property, plant and equipment are reviewed annually and, if
appropriate, adjusted accordingly.
Financial Statements continued
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Financial Statements
Impairment of goodwill and tangible, intangible and held for sale assets
At each reporting date the Group assesses whether there is an indication that an asset may be impaired. If the carrying amount of any asset
exceeds its recoverable amount an impairment loss is recognised immediately in the income statement. In addition, goodwill is tested for
impairment annually irrespective of any indication of impairment. If the carrying amount exceeds the recoverable amount, the respective asset
or the assets in the cash-generating unit (CGU) are written down to their recoverable amounts. The recoverable amount of an asset or CGU
is the higher of its fair value less costs to sell and its value in use. The value in use is the present value of the future cash flows expected to
be derived from an asset or CGU calculated using an appropriate pre-tax discount rate. Impairment losses are expensed to the income
statement.
Leases
Leases – as a lessor
Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term (note
25). Initial direct costs incurred in obtaining an operating leases are added to the carrying amount of the underlying asset and recognised as
expense over the lease term on the same basis as lease income. The respective leased assets are included in the balance sheet based on
their nature.
Leases – as a lessee
The Group leases various offices, aircraft, equipment and vehicles. Rental contracts are typically made for fixed periods of 6 months to 25
years, but may have extension options as described below.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-
lease components based on their relative stand-alone process. Lease terms are negotiated on an individual basis and contain a wide range
of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leases assets
that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and corresponding liability at the date at which the leased asset is available for use by the
Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments based on an index or a rate, initially measured using the index or rate as at the commencement date;
• amounts expected to be payable by the Group under residual value guarantees;
• the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If the rate cannot be readily determined, which is generally the
case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate the individual lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security
and conditions. To determine the incremental borrowing rate, the Group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in
financing conditions since third party financing was received;
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by QinetiQ Plc, which does
not have recent third party financing, and
• makes adjustments specific to the lease, for example to term, country, currency and security.
The exposure by the Group to potential future increases in variable lease payments based on an index or rate, which are not included in the
lease liability until they take effect is not considered material. When adjustments to lease payments based on an index or rate take effect, the
lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
Notes to the Consolidated Financial Statements
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• any initial direct costs, and
• restoration costs.
35. Basis of preparation and material accounting policies (continued)
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. The Group does
not revalue its land and buildings that are presented within property, plant and equipment and has chosen to do the same for right-of-use
buildings by the Group. Payments associated with short-term leases of offices, equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-
value assets comprise lease assets under £5,000.
Lease extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise
operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held
are exercisable only by the Group and not by the respective lessor.
Judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension
option or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated).
For leases of offices and equipment, the following factors are normally the most relevant:
• if there are significant penalties to terminate (or extend), the group is typically reasonably certain to end (or not to terminate);
• if any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend
(or not terminate);
• Otherwise, the Group considers other factors including historical lease durations and the costs and business disruptions required
to replace the leased asset.
Most extension options in office and vehicles leases have not been included in the lease liability, because the Group could replace the assets
without significant cost or business disruption.
As at 31 March 2025 no (undiscounted) potential future cash outflows have been included in the lease liability for extension or termination.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise)
it. The assessment of reasonable certainty is only revised if a significant event of significant change in circumstance occurs, which affects
this assessment, and that is within the control of the lessee. During the current financial year, the financial effect of revising lease terms to
reflect the effect of exercising extension or termination options was nil (FY24: nil) in recognised lease liabilities and right-of-use assets.
Sale and leaseback transactions
The Group accounts for sale and leaseback transactions according to IFRS 16 "Leases", only recognising a sale if the criteria under IFRS 15
"Revenue from Contracts with Customers" are met. Upon meeting these criteria, the asset is derecognised from the balance sheet, and any
resultant gain or loss is recognised immediately in the profit or loss statement, adjusted for any off-market terms present in the transaction.
For the leaseback component, the Group recognises a lease liability based on the present value of future lease payments, typically using the
lessee’s incremental borrowing rate unless the rate implicit in the lease is readily determinable. Concurrently, a right-of-use asset is recognised,
reflecting the portion of the asset’s value retained through control or benefit. This asset is initially measured using the proceeds from the sale
relative to the asset's fair value.
Subsequently, the lease liability is adjusted to account for payments and finance charges, applying the effective interest method. The right-of-
use asset is depreciated over the lesser of the asset’s useful life or the lease term.
Investments in debt and equity securities
Investments held by the Group are classified as either a current asset or as a non-current asset. These are investments in debt and equity
instruments that are classified as at fair value through other comprehensive income. When these investments are derecognised, the
cumulative gain or loss previously recognised directly in equity is recognised in the income statement.
The fair value of quoted financial instruments is their bid price at the balance sheet date. The fair value of unquoted equity investments is
based on the price of the most recent investment by the Group or a third party, if available, or derived from the present value of forecast future
cash flows.
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Notes to the Consolidated Financial Statements
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Financial Statements
Inventories
Inventory and work-in-progress are stated at the lower of cost and net realisable value, using the first-in-first-out cost formula. Work-in-progress
and manufactured finished goods are valued at production cost. Production cost includes direct production costs and an appropriate
proportion of production overheads. A provision is established when the net realisable value of any inventory item is lower than its cost. A
‘market comparison’ technique is used to fair value inventories acquired through a business combination. The fair value is determined based
on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit
margin based on the effort required to complete and sell the inventories.
Trade and other receivables
Trade and other receivables are measured at amortised cost less any impairment losses. Amounts recoverable on contracts are included in
trade and other receivables and represent revenue recognised in excess of amounts invoiced. Other receivables will also include insurance
recoveries where we are virtually certain of recovery.
Impairment of trade and other receivables
The Group applies the simplified approach when using the expected credit loss (ECL) impairment model for trade and other receivables.
Under the simplified approach the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses for
trade receivables. The Group measures the expected credit losses of trade and other receivables in a way that reflects a probability-weighted
amount that is determined by evaluating a range of possible outcomes, the time value of money and supportable information that is readily
available at each reporting date about past events, current condition and forecasts of future economic conditions. The ECL’s are updated
each reporting period to reflect changes in credit risk since initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term, highly liquid investments that are readily convertible into a known amount
of cash and which are subject to an insignificant risk of changes in value. The Group holds various short-maturity money market funds (see
note 23) across numerous financial institutions which meet the IAS 7 criteria to be classified as cash equivalents. In the cash flow statement
overdraft balances are included in cash and equivalents. Cash and cash equivalents includes an element that is restricted in use (note 23).
Current and non-current liabilities
Current liabilities include amounts due within the normal operating cycle of the Group. Deferred income, or ‘contract liabilities’, is included in
trade and other payables and represents amounts invoiced in excess of revenue recognised. Interest-bearing current and non-current liabilities
are initially recognised at fair value and then stated at amortised cost with any difference between the cost and redemption value being
recognised in the income statement over the period of the borrowings on an effective interest rate basis. Costs associated with the
arrangement of bank facilities or the issue of loans are held net of the associated liability presented in the balance sheet. Capitalised issue
costs are released over the estimated life of the facility or instrument to which they relate using the effective interest rate method. If it becomes
clear that the facility or instrument will be redeemed early, the amortisation of the issue costs will be accelerated.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event which
can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where appropriate,
provisions are determined by discounting the expected cash flows at an appropriate discount rate reflecting the level of risk and the time value
of money. Where an exposure is highly likely to be covered by insurance an offsetting receivable is recorded.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument at the trade date. The de-recognition of a financial instrument takes place when the Group no longer controls the
contractual right that comprise the financial instrument, when the instrument expires, or when the instrument is sold, terminated or exercised.
Financial assets and liabilities
Financial assets are classified on the Group’s balance sheet as subsequently measured at amortised cost, fair value through other
comprehensive income or fair value through profit or loss. This classification is made on the basis of both the Group’s business model for
managing the financial assets and the contractual cash flow characteristics of the financial asset.
Financial liabilities are classified on the Group’s balance sheet as subsequently measured at amortised cost except for financial liabilities at
fair value through profit and loss. The Group may at initial recognition irrevocably designate a financial liability as measured at fair value
through profit or loss if a contract contains one or more embedded derivatives and the host is not an asset within the scope of IFRS 9, or
when doing so results in more relevant information.
Derivative financial instruments
Derivative financial instruments are initially recognised and thereafter held at fair value, being the market value for quoted instruments or
valuation based on models and discounted cash flow calculations for unlisted instruments.
Fair value hedging
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group
uses foreign exchange contracts and interest rate swap contracts to hedge these exposures. The use of financial derivatives is governed by
the Group’s Treasury Policies as approved by the Board of Directors, which provides written principles on the use of derivatives. The Group
does not use derivative instruments for speculative purposes.
Notes to the Consolidated Financial Statements
For the year ended 31 March
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• any initial direct costs, and
• restoration costs.
35. Basis of preparation and material accounting policies (continued)
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. The Group does
not revalue its land and buildings that are presented within property, plant and equipment and has chosen to do the same for right-of-use
buildings by the Group. Payments associated with short-term leases of offices, equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-
value assets comprise lease assets under £5,000.
Lease extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise
operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held
are exercisable only by the Group and not by the respective lessor.
Judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension
option or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated).
For leases of offices and equipment, the following factors are normally the most relevant:
• if there are significant penalties to terminate (or extend), the group is typically reasonably certain to end (or not to terminate);
• if any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend
(or not terminate);
• Otherwise, the Group considers other factors including historical lease durations and the costs and business disruptions required
to replace the leased asset.
Most extension options in office and vehicles leases have not been included in the lease liability, because the Group could replace the assets
without significant cost or business disruption.
As at 31 March 2025 no (undiscounted) potential future cash outflows have been included in the lease liability for extension or termination.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise)
it. The assessment of reasonable certainty is only revised if a significant event of significant change in circumstance occurs, which affects
this assessment, and that is within the control of the lessee. During the current financial year, the financial effect of revising lease terms to
reflect the effect of exercising extension or termination options was nil (FY24: nil) in recognised lease liabilities and right-of-use assets.
Sale and leaseback transactions
The Group accounts for sale and leaseback transactions according to IFRS 16 "Leases", only recognising a sale if the criteria under IFRS 15
"Revenue from Contracts with Customers" are met. Upon meeting these criteria, the asset is derecognised from the balance sheet, and any
resultant gain or loss is recognised immediately in the profit or loss statement, adjusted for any off-market terms present in the transaction.
For the leaseback component, the Group recognises a lease liability based on the present value of future lease payments, typically using the
lessee’s incremental borrowing rate unless the rate implicit in the lease is readily determinable. Concurrently, a right-of-use asset is recognised,
reflecting the portion of the asset’s value retained through control or benefit. This asset is initially measured using the proceeds from the sale
relative to the asset's fair value.
Subsequently, the lease liability is adjusted to account for payments and finance charges, applying the effective interest method. The right-of-
use asset is depreciated over the lesser of the asset’s useful life or the lease term.
Investments in debt and equity securities
Investments held by the Group are classified as either a current asset or as a non-current asset. These are investments in debt and equity
instruments that are classified as at fair value through other comprehensive income. When these investments are derecognised, the
cumulative gain or loss previously recognised directly in equity is recognised in the income statement.
The fair value of quoted financial instruments is their bid price at the balance sheet date. The fair value of unquoted equity investments is
based on the price of the most recent investment by the Group or a third party, if available, or derived from the present value of forecast future
cash flows.
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025190

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
191
Financial Statements
Inventories
Inventory and work-in-progress are stated at the lower of cost and net realisable value, using the first-in-first-out cost formula. Work-in-progress
and manufactured finished goods are valued at production cost. Production cost includes direct production costs and an appropriate
proportion of production overheads. A provision is established when the net realisable value of any inventory item is lower than its cost. A
‘market comparison’ technique is used to fair value inventories acquired through a business combination. The fair value is determined based
on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit
margin based on the effort required to complete and sell the inventories.
Trade and other receivables
Trade and other receivables are measured at amortised cost less any impairment losses. Amounts recoverable on contracts are included in
trade and other receivables and represent revenue recognised in excess of amounts invoiced. Other receivables will also include insurance
recoveries where we are virtually certain of recovery.
Impairment of trade and other receivables
The Group applies the simplified approach when using the expected credit loss (ECL) impairment model for trade and other receivables.
Under the simplified approach the Group always measures the loss allowance at an amount equal to the lifetime expected credit losses for
trade receivables. The Group measures the expected credit losses of trade and other receivables in a way that reflects a probability-weighted
amount that is determined by evaluating a range of possible outcomes, the time value of money and supportable information that is readily
available at each reporting date about past events, current condition and forecasts of future economic conditions. The ECL’s are updated
each reporting period to reflect changes in credit risk since initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term, highly liquid investments that are readily convertible into a known amount
of cash and which are subject to an insignificant risk of changes in value. The Group holds various short-maturity money market funds (see
note 23) across numerous financial institutions which meet the IAS 7 criteria to be classified as cash equivalents. In the cash flow statement
overdraft balances are included in cash and equivalents. Cash and cash equivalents includes an element that is restricted in use (note 23).
Current and non-current liabilities
Current liabilities include amounts due within the normal operating cycle of the Group. Deferred income, or ‘contract liabilities’, is included in
trade and other payables and represents amounts invoiced in excess of revenue recognised. Interest-bearing current and non-current liabilities
are initially recognised at fair value and then stated at amortised cost with any difference between the cost and redemption value being
recognised in the income statement over the period of the borrowings on an effective interest rate basis. Costs associated with the
arrangement of bank facilities or the issue of loans are held net of the associated liability presented in the balance sheet. Capitalised issue
costs are released over the estimated life of the facility or instrument to which they relate using the effective interest rate method. If it becomes
clear that the facility or instrument will be redeemed early, the amortisation of the issue costs will be accelerated.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event which
can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where appropriate,
provisions are determined by discounting the expected cash flows at an appropriate discount rate reflecting the level of risk and the time value
of money. Where an exposure is highly likely to be covered by insurance an offsetting receivable is recorded.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument at the trade date. The de-recognition of a financial instrument takes place when the Group no longer controls the
contractual right that comprise the financial instrument, when the instrument expires, or when the instrument is sold, terminated or exercised.
Financial assets and liabilities
Financial assets are classified on the Group’s balance sheet as subsequently measured at amortised cost, fair value through other
comprehensive income or fair value through profit or loss. This classification is made on the basis of both the Group’s business model for
managing the financial assets and the contractual cash flow characteristics of the financial asset.
Financial liabilities are classified on the Group’s balance sheet as subsequently measured at amortised cost except for financial liabilities at
fair value through profit and loss. The Group may at initial recognition irrevocably designate a financial liability as measured at fair value
through profit or loss if a contract contains one or more embedded derivatives and the host is not an asset within the scope of IFRS 9, or
when doing so results in more relevant information.
Derivative financial instruments
Derivative financial instruments are initially recognised and thereafter held at fair value, being the market value for quoted instruments or
valuation based on models and discounted cash flow calculations for unlisted instruments.
Fair value hedging
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group
uses foreign exchange contracts and interest rate swap contracts to hedge these exposures. The use of financial derivatives is governed by
the Group’s Treasury Policies as approved by the Board of Directors, which provides written principles on the use of derivatives. The Group
does not use derivative instruments for speculative purposes.
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
192
Certain derivative instruments do not qualify for hedge accounting. These are categorised as “fair value through profit or loss” and are stated
at fair value, with any resultant gain or loss recognised in the income statement.
35. Basis of preparation and material accounting policies (continued)
The Group designates certain hedging instruments in respect of foreign currency risk as cash flow hedges. At the inception of the hedge
relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management
objectives and strategy for undertaking various hedging transactions. The Group also documents, both at hedge inception and on an ongoing
basis, whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair values or cash
flows of the hedged item.
For the Group’s cash flow hedges of highly probable forecast transactions in foreign currencies, the hedge ratio is 100%, subject to a £100k
de Minimis threshold. If the underlying exposure changes over time, either due to commercial factors or timing differences, the hedging
instruments will be rebalanced to ensure that the hedge ratio of 100% is maintained.
Cash flow hedging
Changes in the fair value of derivatives designated as a cash flow hedge that are regarded as highly effective are recognised in equity. The
ineffective portion is recognised immediately in the income statement. Where a hedged item results in an asset or a liability, gains and losses
previously recognised in equity are included in the cost of the asset or liability. Gains and losses previously recognised in equity are removed
and recognised in the income statement at the same time as the hedged transaction.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities
in foreign currencies are translated at period-end rates. Any resulting exchange differences are taken to the income statement. Gains and
losses on designated forward foreign exchange hedging contracts are matched against the foreign exchange movements on the underlying
transaction.
The individual financial statements of each Group company are presented in its functional currency. On consolidation, assets and liabilities of
overseas subsidiaries, associated undertakings and joint ventures, including any related goodwill, are translated to Sterling at the rate of
exchange at the balance sheet date. The results and cash flows of overseas subsidiaries, associated undertakings and joint ventures are
translated to Sterling using the average rates of exchange during the period. Exchange adjustments arising from the re-translation of the
opening net investment and the results for the period to the period-end rate are taken directly to equity and reported in the statement of
comprehensive income.
Post-retirement benefits
The Group provides both defined contribution and defined benefit pension arrangements. The liabilities of the Group arising from defined
benefit obligations are determined using the projected unit credit method. Valuations for accounting purposes are carried out bi-annually.
Actuarial advice is provided by external consultants. For the funded defined benefit plans, the excess or deficit of the fair value of plan assets
less the present value of the defined benefit obligation are recognised as an asset or a liability respectively.
Per the Scheme rules the Company has an unconditional right to a refund of any surplus that may arise on cessation of the Scheme in the
context of IFRIC 14 paragraphs 11(b) and 12 and, therefore, the full net pension asset can be recognised on the Group’s balance sheet and
the Group’s minimum funding commitments to the Scheme do not give rise to an additional balance sheet liability.
For defined benefit plans the cost charged to the income statement consists of administrative expenses and the net interest income. There
is no service cost due to the fact the plans are closed to future accrual. The net interest income is reported within finance income and the
administration cost element is charged as a component of operating costs in the income statement. Actuarial gains and losses and re-
measurement gains and losses are recognised immediately in full through the statement of comprehensive income. Contributions to defined
contribution plans are charged to the income statement as incurred.
Share-based payments
The Group operates share-based payment arrangements with employees. The fair value of equity-settled awards for share-based payments
is determined on grant and expensed straight line over the period from grant to end of the service period. The charges for equity settled share-
based payments are updated annually for non-market-based vesting conditions.
Share capital
Ordinary share capital of the Company is recorded as the proceeds received. Company shares held by the employee benefit trusts are held at
the consideration paid. They are classified as own shares within equity. Any gain or loss on the purchase, sale or issue of Company shares is
recorded in equity.
Non-controlling interests
Annual Report & Accounts 2025 | QinetiQ Group plc 191
Financial Statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements continued
For the year ended 31 March
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
193
Financial Statements
The Group recognises non-controlling interest in an acquired entity either at fair value or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis. For non-controlling interests that
the Group holds, the Group elected to recognise the non-controlling interests at its proportionate share of the acquired net identifiable assets.
36. Critical accounting estimates and judgments in applying accounting policies
Critical accounting estimates
The following commentary is intended to highlight key sources of estimation uncertainty that have a significant risk of resulting in a material
adjustment to the financial statements in the next financial year.
Estimated goodwill impairment
The Group tests annually whether goodwill has suffered any impairment. This process relies on the use of estimates of the future profitability
and cash flows of its cash generating units which may differ from the actual results delivered. In addition, the Group reviews whether identified
intangible assets have suffered any impairment. Further details on the sensitivity of the carrying value of goodwill to changes in the key
assumptions are set out in note 13.
Estimation of the Group’s defined benefit pension net surplus
The Group’s defined benefit pension obligations (and hence the net surplus) are based on key assumptions, including discount rates, mortality
and inflation. Management exercises its best judgement, in consultation with actuarial advisors, in selecting the values for these assumptions
that are the most appropriate to the Group. Small changes in these assumptions at the balance sheet date, individually or collectively, may
result in significant changes in the size of the net surplus/deficit. Further details of these assumptions and the sensitivity of the net pension
surplus to changes in these assumptions are set out in note 27.
In addition to the sensitivity of the liability side of the net pension surplus (which will impact the value of the net pension surplus) the net
pension surplus is also exposed to significant variation due to changes in the fair value of Scheme assets. A specific sensitivity on assets has
not been included in note 27 but any change in valuation of assets flows straight through to the value of the net pension surplus e.g. if equities
fall by £10m then the net pension surplus reduces by £10m. The values of unquoted assets assume that an available buyer is willing to
purchase those assets at that value. For the Group’s portfolio of assets, the unquoted alternative bonds of £228.1m; the unquoted corporate
bonds of £98.6m and the unquoted equities of £11.2m are the assets with most uncertainty as to valuation as at 31 March 2025.
Estimates of costs to complete on long-term contracts
The Group has a large number of contracts which span multiple years and are accounted for on a percentage of completion basis in
accordance with IFRS 15. Long-term contract accounting requires a number of estimates to be made, particularly in calculating the forecast
costs to complete the contract. These forecast costs will be impacted by various factors including numerous risks that could crystallise in
the future (with a range of cost outcomes), particularly on contracts of a developmental nature. Across the Group’s portfolio of long-term
contracts there is a risk that the actual out-turn of these contracts could be different than assumed in the year end contract forecasts,
impacting both revenue and operating profit.
For firm price contracts the impact of actual costs being above or below estimated costs would generally impact the contract profitability and
the timing of revenue recognition. Costs could increase or decrease based on the level of inflation and the outcome of assumed risk and
identified savings positions. As an example, an increase in total forecast costs to complete of 1% in one of the Group’s most significant
contracts, would reduce profit by approximately £1m to £2m per annum, on average over the remaining contract duration. Depending on the
timing of such cost increases there would be an adjustment to the timing of revenue recognition, which would have no impact on total contract
revenue but could impact an individual years revenue by £2m to £3m. In many cases fixed price contracts include inflation uplift clauses, such
that inflation of costs would create additional contract value and revenue, thus resulting in increased profit.
Critical accounting judgements
Specific, material judgements made by the Directors in applying the Group’s accounting policies are set out below:
Basis of consolidation
The Group comprises certain entities that are operated within the terms of a Special Security Arrangement (‘SSA’). Details of the SSA and
QinetiQ’s management of US subsidiaries are set out in the Corporate Governance section of this Annual Report. IFRS 10 is the accounting
standard applicable in respect of consolidation of entities.
This does not specifically deal with SSA’s. However, having considered the terms of the SSA, the Directors consider that the Group meets the
requirements of IFRS 10 in respect of control over such affected entities and, therefore, consolidates these entities in the consolidated
accounts. The impact of this specific judgement is full consolidation as opposed to treatment as a 100% associated undertaking. Treatment
as a 100% associated undertaking would reduce Group revenue by a material amount (c.£350m per annum) but would have no impact on
reported profit, which would include an equivalent amount of profit reported within Other Income as ‘Share of profits of joint ventures’.
Notes to the Consolidated Financial Statements
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
192
Certain derivative instruments do not qualify for hedge accounting. These are categorised as “fair value through profit or loss” and are stated
at fair value, with any resultant gain or loss recognised in the income statement.
35. Basis of preparation and material accounting policies (continued)
The Group designates certain hedging instruments in respect of foreign currency risk as cash flow hedges. At the inception of the hedge
relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management
objectives and strategy for undertaking various hedging transactions. The Group also documents, both at hedge inception and on an ongoing
basis, whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair values or cash
flows of the hedged item.
For the Group’s cash flow hedges of highly probable forecast transactions in foreign currencies, the hedge ratio is 100%, subject to a £100k
de Minimis threshold. If the underlying exposure changes over time, either due to commercial factors or timing differences, the hedging
instruments will be rebalanced to ensure that the hedge ratio of 100% is maintained.
Cash flow hedging
Changes in the fair value of derivatives designated as a cash flow hedge that are regarded as highly effective are recognised in equity. The
ineffective portion is recognised immediately in the income statement. Where a hedged item results in an asset or a liability, gains and losses
previously recognised in equity are included in the cost of the asset or liability. Gains and losses previously recognised in equity are removed
and recognised in the income statement at the same time as the hedged transaction.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities
in foreign currencies are translated at period-end rates. Any resulting exchange differences are taken to the income statement. Gains and
losses on designated forward foreign exchange hedging contracts are matched against the foreign exchange movements on the underlying
transaction.
The individual financial statements of each Group company are presented in its functional currency. On consolidation, assets and liabilities of
overseas subsidiaries, associated undertakings and joint ventures, including any related goodwill, are translated to Sterling at the rate of
exchange at the balance sheet date. The results and cash flows of overseas subsidiaries, associated undertakings and joint ventures are
translated to Sterling using the average rates of exchange during the period. Exchange adjustments arising from the re-translation of the
opening net investment and the results for the period to the period-end rate are taken directly to equity and reported in the statement of
comprehensive income.
Post-retirement benefits
The Group provides both defined contribution and defined benefit pension arrangements. The liabilities of the Group arising from defined
benefit obligations are determined using the projected unit credit method. Valuations for accounting purposes are carried out bi-annually.
Actuarial advice is provided by external consultants. For the funded defined benefit plans, the excess or deficit of the fair value of plan assets
less the present value of the defined benefit obligation are recognised as an asset or a liability respectively.
Per the Scheme rules the Company has an unconditional right to a refund of any surplus that may arise on cessation of the Scheme in the
context of IFRIC 14 paragraphs 11(b) and 12 and, therefore, the full net pension asset can be recognised on the Group’s balance sheet and
the Group’s minimum funding commitments to the Scheme do not give rise to an additional balance sheet liability.
For defined benefit plans the cost charged to the income statement consists of administrative expenses and the net interest income. There
is no service cost due to the fact the plans are closed to future accrual. The net interest income is reported within finance income and the
administration cost element is charged as a component of operating costs in the income statement. Actuarial gains and losses and re-
measurement gains and losses are recognised immediately in full through the statement of comprehensive income. Contributions to defined
contribution plans are charged to the income statement as incurred.
Share-based payments
The Group operates share-based payment arrangements with employees. The fair value of equity-settled awards for share-based payments
is determined on grant and expensed straight line over the period from grant to end of the service period. The charges for equity settled share-
based payments are updated annually for non-market-based vesting conditions.
Share capital
Ordinary share capital of the Company is recorded as the proceeds received. Company shares held by the employee benefit trusts are held at
the consideration paid. They are classified as own shares within equity. Any gain or loss on the purchase, sale or issue of Company shares is
recorded in equity.
Non-controlling interests
Financial Statements continued
QinetiQ Group plc | Annual Report & Accounts 2025192

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Consolidated Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
193
Financial Statements
The Group recognises non-controlling interest in an acquired entity either at fair value or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis. For non-controlling interests that
the Group holds, the Group elected to recognise the non-controlling interests at its proportionate share of the acquired net identifiable assets.
36. Critical accounting estimates and judgments in applying accounting policies
Critical accounting estimates
The following commentary is intended to highlight key sources of estimation uncertainty that have a significant risk of resulting in a material
adjustment to the financial statements in the next financial year.
Estimated goodwill impairment
The Group tests annually whether goodwill has suffered any impairment. This process relies on the use of estimates of the future profitability
and cash flows of its cash generating units which may differ from the actual results delivered. In addition, the Group reviews whether identified
intangible assets have suffered any impairment. Further details on the sensitivity of the carrying value of goodwill to changes in the key
assumptions are set out in note 13.
Estimation of the Group’s defined benefit pension net surplus
The Group’s defined benefit pension obligations (and hence the net surplus) are based on key assumptions, including discount rates, mortality
and inflation. Management exercises its best judgement, in consultation with actuarial advisors, in selecting the values for these assumptions
that are the most appropriate to the Group. Small changes in these assumptions at the balance sheet date, individually or collectively, may
result in significant changes in the size of the net surplus/deficit. Further details of these assumptions and the sensitivity of the net pension
surplus to changes in these assumptions are set out in note 27.
In addition to the sensitivity of the liability side of the net pension surplus (which will impact the value of the net pension surplus) the net
pension surplus is also exposed to significant variation due to changes in the fair value of Scheme assets. A specific sensitivity on assets has
not been included in note 27 but any change in valuation of assets flows straight through to the value of the net pension surplus e.g. if equities
fall by £10m then the net pension surplus reduces by £10m. The values of unquoted assets assume that an available buyer is willing to
purchase those assets at that value. For the Group’s portfolio of assets, the unquoted alternative bonds of £228.1m; the unquoted corporate
bonds of £98.6m and the unquoted equities of £11.2m are the assets with most uncertainty as to valuation as at 31 March 2025.
Estimates of costs to complete on long-term contracts
The Group has a large number of contracts which span multiple years and are accounted for on a percentage of completion basis in
accordance with IFRS 15. Long-term contract accounting requires a number of estimates to be made, particularly in calculating the forecast
costs to complete the contract. These forecast costs will be impacted by various factors including numerous risks that could crystallise in
the future (with a range of cost outcomes), particularly on contracts of a developmental nature. Across the Group’s portfolio of long-term
contracts there is a risk that the actual out-turn of these contracts could be different than assumed in the year end contract forecasts,
impacting both revenue and operating profit.
For firm price contracts the impact of actual costs being above or below estimated costs would generally impact the contract profitability and
the timing of revenue recognition. Costs could increase or decrease based on the level of inflation and the outcome of assumed risk and
identified savings positions. As an example, an increase in total forecast costs to complete of 1% in one of the Group’s most significant
contracts, would reduce profit by approximately £1m to £2m per annum, on average over the remaining contract duration. Depending on the
timing of such cost increases there would be an adjustment to the timing of revenue recognition, which would have no impact on total contract
revenue but could impact an individual years revenue by £2m to £3m. In many cases fixed price contracts include inflation uplift clauses, such
that inflation of costs would create additional contract value and revenue, thus resulting in increased profit.
Critical accounting judgements
Specific, material judgements made by the Directors in applying the Group’s accounting policies are set out below:
Basis of consolidation
The Group comprises certain entities that are operated within the terms of a Special Security Arrangement (‘SSA’). Details of the SSA and
QinetiQ’s management of US subsidiaries are set out in the Corporate Governance section of this Annual Report. IFRS 10 is the accounting
standard applicable in respect of consolidation of entities.
This does not specifically deal with SSA’s. However, having considered the terms of the SSA, the Directors consider that the Group meets the
requirements of IFRS 10 in respect of control over such affected entities and, therefore, consolidates these entities in the consolidated
accounts. The impact of this specific judgement is full consolidation as opposed to treatment as a 100% associated undertaking. Treatment
as a 100% associated undertaking would reduce Group revenue by a material amount (c.£350m per annum) but would have no impact on
reported profit, which would include an equivalent amount of profit reported within Other Income as ‘Share of profits of joint ventures’.
Annual Report & Accounts 2025 | QinetiQ Group plc 193
Financial Statements

Contents Generation – Sub PageContents Generation - Section Company balance sheet
Company balance sheet
As at 31 March
QinetiQ Group plc Annual Report and Accounts 2025
194
Financial Statements
The profit for the year ended 31 March 2025 was £146.9m (FY24: profit of £44.0m).
The financial statements of QinetiQ Group plc (company number 4586941) on pages 194 to 197 were approved by the Board of Directors
and authorised for issue on 22 May 2025 and signed on its behalf by:
Steve Wadey Martin Cooper
Group Chief Executive Officer Group Chief Financial Officer
All figures in £ million
Note
31 March
2025
31 March
2024
Non-current assets
Investments in subsidiary undertakings 2 540.1 530.6
540.1
530.6
Current liabilities
Creditors: amounts falling due within one year
3
(107.8)
(131.3)
Net current liabilities
(107.8)
(131.3)
Total assets less current liabilities
432.3
399.3
Net assets
432.3
399.3
Equity
Share capital
4
5.5
5.7
Capital redemption reserve
41.0
40.8
Share premium
147.6
147.6
Retained earnings
238.2
205.2
Total equity
432.3
399.3
Company balance sheet
As at 31 March
QinetiQ Group plc | Annual Report & Accounts 2025194
Financial statements

Contents Generation – Sub PageContents Generation - Section Company statement of changes in equity
Company statement of changes in equity
For the year ended 31 March
QinetiQ Group plc Annual Report and Accounts 2025
195
Financial Statements
The capital redemption reserve is not distributable and was created following redemption of preference share capital.
All figures in £ million
S
hare
capital
Capital
redemption
reserve
Share
premium
Retained
earnings
Total
equity
At 1 April 2024
5.7 40.8 147.6 205.2 399.3
Profit for the year
-
-
-
146.9
146.9
Purchase of own shares
(0.2)
0.2 - (74.9
)
(74.9
)
Dividend paid - - -
(47.9)
(47.9)
Share-based payments - - - 8.9 8.9
At 31 March 2025
5.5 41.0 147.6 238.2 432.3
At 1 April 2023
5.8 40.8 147.6 249.0 443.2
Profit for the year
-
-
-
44.0
44.0
Purchase of own shares
(0.1)
-
-
(51.0)
(51.1)
Dividend paid
-
-
-
(45.6)
(45.6)
Share-based payments
-
-
-
8.8
8.8
At 31 March 2024
5.7 40.8 147.6 205.2 399.3
Company statement of changes in equity
For the year ended 31 March
Financial Statements
Annual Report & Accounts 2025 | QinetiQ Group plc 195

Contents Generation – Sub PageContents Generation - Section Notes to the Company Financial Statements
Notes to the Company Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
196
1. Accounting policies
The Company is a public limited company and is incorporated and domiciled in Farnborough, United Kingdom.
The accounting policies below have been applied consistently in dealing with items which are considered material in relation to the
Company’s financial statements.
Basis of preparation
The financial statements have been prepared on a going concern basis under the historical cost convention and in accordance with applicable
UK Accounting Standards. As permitted by section 408 of the Companies Act 2006, a separate profit and loss account dealing with the results
of the Company has not been presented.
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework. In preparing
these financial statements, the Company is in accordance with International Accounting Standards in conformity with the requirements of
the Companies Act 2006 and the International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies
in the EU but makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of
the FRS 101 disclosure exemptions has been taken.
• A cash flow statement and related notes
• Disclosures in respect of capital management
• The effects of new but not yet effective IFRSs
• Disclosures in respect of the compensation of key management personnel
• IAS 24 in respect of related party transactions entered into between two or more members of a group
• IFRS 2 Share Based Payments in respect of Group-settled share-based payments
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7.
Investments
In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less any impairment in value.
Share-based payments
The cost of share-based payments in respect of employees of Group subsidiaries is charged to those subsidiary undertakings. In the Company
financial statements the recoverable from subsidiaries is credited directly to equity as a capital contribution. The fair value of equity-settled
awards for share-based payments is determined on grant and expensed in subsidiary undertakings (and credited to equity in the Company)
on a straight line basis over the period from grant to the date of earliest unconditional exercise. The charges for equity-settled share-based
payments are updated annually for non-market-based vesting conditions. Further details of the Group’s share-based payment charge are
disclosed in note 29 to the Group financial statements.
Current liabilities
Current liabilities include amounts due within the normal operating cycle of the Company. Costs associated with the arrangement of bank
facilities or the issue of loans are held net of the associated liability presented in the balance sheet.
Share capital
Ordinary share capital of the Company is recorded as the proceeds received. Company shares held by the employee benefit trusts are held at
the consideration paid. They are classified as own shares within equity. Any gain or loss on the purchase, sale or issue of Company shares is
recorded in equity.
2. Investments in subsidiary undertakings
The increase in investments in subsidiary undertakings in FY25 mainly relates to equity-settled schemes during the year.
A list of all subsidiary undertakings of QinetiQ Group plc is disclosed in note 34 to the Group financial statements.
All figures in £ million
31 March
2025
31 March
2024
Subsidiary undertaking – 100% of ordinary share capital of QinetiQ Group Holdings Limited
424.3
424.3
Capital contributions arising from share-based payments to employees of subsidiaries
102.2
92.7
Capital contributions arising from share-settled liabilities
13.6
13.6
Total investment in subsidiary undertakings
540.1
530.6
Notes to the Company Financial Statements
QinetiQ Group plc | Annual Report & Accounts 2025196
Financial statements

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Notes to the Company Financial Statements
QinetiQ Group plc Annual Report and Accounts 2025
197
Financial Statements
3. Creditors: amounts falling due within one year
Amounts owed to Group undertakings are unsecured, repayable on demand and bear no interest, with the exception of a £23.3m intercompany
loan which bears interest at a margin of 1.39% over SONIA.
4. Share capital
The Company’s share capital is disclosed in note 28 to the Group financial statements.
5. Share-based payments
The Company’s share-based payment arrangements are set out in note 29 to the Group financial statements.
6. Parent company guarantees
The Company has provided guarantees to various customers of subsidiaries to the value of £21.0m as at 31 March 2025 (2024: £21.0m) in
the ordinary course of business. The company has also provided a guarantee of £332.7m as at 31 March 2025 (2024: £336.3m) in respect
of the term loan.
7. Other information
Directors’ emoluments, excluding Company pension contributions for the year to 31 March 2025 were £4.1m (FY24: £4.4m). These
emoluments were all in relation to services provided on behalf of the QinetiQ Group with no amount specifically relating to their work for the
Company. Details of the Directors’ emoluments, share schemes and entitlements under money purchase pension schemes are disclosed on
page 112 in the Directors’ Remuneration Report.
The remuneration of the Company’s auditors for the year to 31 March 2025 was £0.6m (FY24: £0.6m), which was for audit of the Group
financial statements and Company financial statements and audit related assurance services. No other services were provided by the auditors
to the Company.
The monthly average number of employees for the year to 31 March 2025 was nil (FY24: nil).
All figures in £ million
31 March
2025
31 March
2024
Amounts owed to Group undertakings
107.8
97.3
Irrevocable share buyback liability
-
34.0
Creditors: amounts falling due within one year
107.8
131.3
Financial Statements
Annual Report & Accounts 2025 | QinetiQ Group plc 197

Contents Generation – Sub PageAdditional Information Five-year financial summary
Five-year financial summary
Five Year Financial Summary
QinetiQ Group plc Annual Report and Accounts 2025
198
1
Underlying measures are stated before specific adjusting items. Definitions of underlying measures of performance are provided on page 202. Underlying financial
measures are presented because the Board believes these provide a better representation of the Group’s long-term performance trend. For details of specific adjusting
items refer to note 4 and note 35 of the financial statements.
2
FY22 was restated in FY23 due to a change in accounting policy for Research and Development Expenditure Credits (RDEC).
3
FY21 was restated in FY22 due to a change in accounting policy in respect of software implementation costs.
For the years ended 31 March (unaudited)
FY25
FY24
FY23
FY22
2
FY21
3
EMEA Services £m 1,477.7 1,417.4 1,179.3 1,059.2 939.9
Global Solutions £m 453.9 494.7 401.4 261.2 338.3
Revenue
£m
1,931.6 1,912.1 1,580.7 1,320.4 1,278.2
EMEA Services
£m
169.0
163.4
137.1
135.6
118.6
Global Solutions
£m
16.4
51.8
41.8
1.8
33.2
Operating profit from segments
1
£m
185.4
215.2
178.9
137.4
151.8
Operating
profit margin from segments
1
%
9.6
11.3 11.3 10.4 11.9
Statutory operating (loss)/profit
£m
(90.5)
192.5
172.8
123.7
108.7
Underlying operating profit
1
£m
215.4
242.4
196.3
143.6
151.8
Underlying profit before tax
1
£m
198.6
227.0
189.7
142.2
149.9
(Loss)/profit before tax
£m
(106.3)
182.7
192.0
125.9
142.6
(Loss)/profit attributable to owners of the Company
£m
(185.7)
139.6
154.4
90.0
121.9
Underlying basic EPS
1
Pence
26.1
29.4
26.5
20.6
22.1
Basic EPS
Pence
(33.0)
24.2
26.8
15.7
21.4
Diluted EPS Pence (33.0
)
23.8 26.5 15.5 21.1
Dividend per share Pence
8.85 8.25 7.7 7.3 6.9
Underlying net cash flow from operations
1
£m 316.2 320.2 270.1 220.7 199.0
Net (debt)/cash
1
£m
(133.2)
(151.2)
(206.9)
225.1
164.1
Average number of employees
8,502
8,459
7,443
6,911
6,874
Orders excluding LTPA amendments £m 1,954.8 1,740.4 1,724.1 1,226.6 1,149.4
QinetiQ Group plc | Annual Report & Accounts 2025198
Additional information

Contents Generation – Sub PageContents Generation - Section Additional financial information
Foreign exchange
The principal exchange rates affecting the Group were the Sterling to
US Dollar exchange rate and the Sterling to Australian Dollar rate.
12 months to
31 March 2025
12 months to
31 March 2024
£/US$ – opening 1.26 1.24
£/US$ – average 1.28 1.26
£/US$ – closing 1.29 1.26
£/A$ – opening 1.94 1.85
£/A$ – average 1.96 1.91
£/A$ – closing 2.07 1.94
Treasury policy
The Treasury policy is approved by the Audit Committee. There is
a structured approach to financial risk management, mitigating
exposures to currency, liquidity, counterparty and credit risks as
outlined in note 26. The policy allows the use of financial instruments
to manage and hedge business operational risks that arise on
movements in financial, credit or money markets. There is strict
control on the use of financial instruments. Speculative trading in
financial instruments is not permitted.
— Currency risk – The Group’s income and expenditure is largely
settled in the functional currency of the relevant entity. Where cash
flows are denominated in currencies other than the functional
currency of the relevant trading entity, the policy is to hedge all
material transaction exposure at the point of commitment to the
underlying transaction. Uncommitted future transactions are not
routinely hedged. Where the timing of cash flows differ from the
original expectation, currency swaps will be used to realign the
hedge maturity. The maximum permitted hedge period is five
years. Translation exposures arising from the consolidation of
overseas subsidiaries in foreign currencies are not hedged.
— Interest rate risk – The Group’s funding is largely in floating rate
debt and subject to the adverse effects of changes in interest
rates. The Group has a policy to fix no less than 30% and no
more than 80% of the debt and spread the risk of fluctuations in
interest rates. Options and similar open-ended instruments are not
permitted to manage interest rate exposures.
— Financial credit and liquidity risk – Liquidity risk is managed to
ensure funds are available to meet business needs and maximise
return subject to counterparty and credit risks. Investments are
permitted with institutions on an Approved Counterparty list and
must not exceed the counterparty credit limit. Investments must
be held in the currency of the reporting entity except currency
deposits or borrowings specifically placed to hedge assets or
liabilities with related hedge documentation. Group funding is
established to meet the Group’s medium and long-term financing
requirements. Facilities are agreed with a number of financial
institutions such that no single institution exerts undue influence
on the Group. At the year end the Group had an undrawn revolving
credit facility of £290m,with an with an accordion option to
increase the facility size to £400m, maturing on 22 April 2028
and a term loan of £335m maturing on 27 September 2027. The
revolving credit facility has a one-year extension option exercisable
in 2026 to extend the maturity to 22 April 2029.
— The policies manage and control treasury risk in alignment with
the Group strategy.
Tax risk management
QinetiQ’s tax strategy, as published on its corporate website, is to
ensure compliance with all relevant tax legislation, wherever we
do business, while managing our effective tax rates and tax cash
flows. Tax is managed in alignment with our corporate responsibility
strategy in that we strive to be responsible in all our business
dealings with a zero-tolerance of tax evasion. These principles are
applied in a consistent and transparent manner in pursuing the tax
strategy and in all dealings with tax authorities around the world.
— Tax planning – QinetiQ manages both effective tax rate (ETR) and
cash tax impacts in line with the Board-endorsed tax strategy.
External advice and consultation are sought on potential changes
in tax legislation in the UK, the US and elsewhere as necessary,
enabling the Group to plan for and mitigate potential changes.
QinetiQ does not make use of ‘off-shore’ entities or tax structures
to focus taxable profits in jurisdictions that legislate for low tax
rates. QinetiQ has a low risk appetite for tax planning.
— Relationships with tax authorities – QinetiQ is committed to
building constructive working relationships with tax authorities
based on a policy of full disclosure in order to remove uncertainty
in its business transactions and allow the authorities to review
possible risks. In the UK, QinetiQ seeks to be open and transparent
in its engagement with the tax authorities by sharing with HMRC
the methodologies adopted in its tax returns.
— Transfer pricing – QinetiQ does not have a significant level of
cross-border activity but this will increase as it pursues its policy
of expanding around the globe. Where there is cross-border
activity, controls are in place to ensure pricing reflects ‘arm’s
length’ principles in compliance with the OECD Transfer Pricing
Guidelines and the laws of the relevant jurisdictions. The Group
does not, therefore, have a significant exposure to transfer pricing
legislation. QinetiQ submits its ‘Country by Country’ report to the
UK tax authorities in line with the OECD rules providing insight for
tax authorities into its global tax affairs.
— Governance – The Board has approved this approach. The Audit
Committee oversees the tax affairs and risks through periodic
reviews. The governance framework is used to manage tax risks,
establish controls and monitor their effectiveness. The Group
Director of Tax is responsible for ensuring that appropriate policies,
processes and systems are in place and that the tax team has the
required skills and support to implement this approach.
QinetiQ’s corporate tax contribution – QinetiQ is liable to pay tax
in its home countries. Changes in tax legislation in these countries
would impact the level of tax paid on profits generated by the Group.
A significant majority of the Group’s profit before tax is generated in
the UK where the majority of the Group’s business is undertaken and
employees are based. Total corporation tax payments in the year to
31 March 2025 were £48.6m (2024: £36.9m).
The differential between the taxation expense and the tax paid in
the year relates primarily to the impact of deferred tax movements,
whereby the income statement bears tax charges and credits (e.g.
on fixed assets or losses) but for which there is no corporation
tax paid or recovered in the year. Together, these result in the cash
paid being £30.8m less than the total expense charged to the
income statement.
Additional financial information
Additional Information
Annual Report & Accounts 2025 | QinetiQ Group plc 199

Contents Generation – Sub PageContents Generation - Section Glossary
AAG Advanced Arresting Gear
ABP Annual Bonus Plan
ACE Accelerated Capability Environment
ADPG Aerospace and Defence Procurement Group
ADS Aerospace, Defence and Security
AEIS All Employee Incentive Scheme
AGM Annual General Meeting
AUKUS A tri-lateral security agreement between Australia,
United Kingdom and the United States
BATCIS Battlefield and Tactical Communications
& Information Systems
BBP Bonus Banking Plan
C5ISTAR Command, Control, Computers, Communications, Cyber,
Intelligence, Surveillance and Reconnaissance
CAGR Compound Annual Growth Rate
CBP Customs and Border Protection
CCSG Climate Change Steering Group
CDDC Combat Capabilities Development Command’s
CDP Carbon Disclosure Project
CGU Cash Generating Unit
CHACR Centre for Historical Analysis and Conflict Research
CMI Continuous Mortality Investigation
CPI Consumer Price Index
CR Corporate Responsibility
CRS-I Common Robotic system – Individual
DE&S MOD’s Defence, Equipment and Support organisation
DHS U.S. Department of Homeland Security
DIDS Defence Industry Development Strategy
DSEI Defence and Security Equipment International
DSF Defence Suppliers Forum
DSP Deferred Share Plan
DoD US Department of Defense
DRDC Defence Research and Development Canada
Dstl UK Defence Science and Technology Laboratories
EAP Employee Assistance Programmes
EBITDA Earnings before interest, tax, depreciation and amortisation
ECL Expected credit loss
ED&I Equality, diversity and inclusion
EDP Engineering Delivery Partner
EMALS Electromagnetic Aircraft Launch System
EMEA Europe, Middle East and Australasia
EPCC Electromechanical Actuator Power Conditioner and
Controller
EPS Earnings per share
ERG Employee Resource Groups
ESG Environmental, Social, Governance
FCA Financial Conduct Authority
FCAS Future Combat Air system
FRC Financial Reporting Council
FY Financial year (ending 31 March)
GEV Global Employee Voice
GHG Greenhouse gas
GII Global Interoperable Infrastructure
GVSC Ground Vehicle Systems Centre
HPSA High Performance Share Award
HVO Hydrotreated Vegetable Oil
IAS International Accounting Standards
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
IRAD Internal research and development
ISP Integrated Strategy-to-perform Plan
JATTS Joint Adversarial Training and Testing Services
JOSCAR Joint Supply Chain Accreditation Register
KPI Key Performance Indicator
LDEW Laser Directed Energy Weapons
LPA Long-term Performance Award
LTI Lost time incident
LTPA Long Term Partnering Agreement – 25-year contract
established in 2003 to manage the UK MOD’s Test and
Evaluation ranges
M&A Mergers and acquisitions
MOD UK Ministry of Defence
MSCA Maritime Strategic Capability Agreement
NGABS Next Generation Advanced Bomb Suits
NGCV CFT Next Generation Combat Vehicle Cross Functional Team
NGERS National Greenhouse and Energy Reporting Scheme
O&M Operations & Maintenance
OMFV Optionally Manned Fighting Vehicle
PBT Profit before tax
PV Photovoltaic
PPE Property, plant and equipment
PPS Prudential Platinum Scheme
QAA QinetiQ Air Affairs
QLT QinetiQ Leadership Team
QTEC QinetiQ Technology and Engineering Centre
QTS QinetiQ Target Systems
R&D Research and development
RCV Robotic Combat Vehicle
Glossary
Additional information continued
QinetiQ Group plc | Annual Report & Accounts 2025200

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
RDEC Research and development expenditure credit
RDT&E Research, Development, Test & Evaluation
REPMUS Robotic Experimentation Prototyping Augmented by
Maritime Unmanned Systems
ROCE Return on Capital Employed
RPI Retail price Index
RSP Restricted Share Plan
SAF Sustainable Aviation Fuel
SBTi Science Based Targets initiative
SECR Streamlined Energy and Carbon Reporting
SIP Share Incentive Plan
SME Small to medium sized enterprises
SONIA Sterling Overnight Index Average
SOFR Secured Overnight Financing Rate
SSA Special Security Arrangement
SSRO Single Source Regulations Office
SSSI Site of Special Scientific Interest
STEM Science, Technology, Engineering and Maths
T&E Test and Evaluation
T3E Test, Trials, Training & Evaluation
TARS Tethered Aerostat Radar System
TECSA Test and Evaluation, Certification and Systems Assurance
TCFD Taskforce on Climate-related Financial Disclosures
TMR Training, Mission and Rehearsal
TRIR Total Recordable Incident Rate
TSR Total shareholder return
VCP Value Creation Plan
UK Corporate
Governance
Code
Guidelines of the Financial Reporting Council to address
the principal aspects of corporate governance in the UK
UK GAAP UK Generally Accepted Accounting Practice
Additional Information
Annual Report & Accounts 2025 | QinetiQ Group plc 201

Contents Generation – Sub PageContents Generation - Section Alternative performance measures (APMs)
Alternative performance measures (APMs)
The Group uses various non-statutory measures of performance, or APMs. Such APMs are used by management internally to monitor and
manage the Group’s performance and also allow the reader to obtain a proper understanding of performance (in conjunction with statutory
financial measures of performance). The APMs used by QinetiQ are set out below:
Measure Explanation Note
Organic growth The level of year-on-year growth, expressed as a percentage, calculated at constant prior year
foreign exchange rates, adjusting for business acquisitions and disposals to reflect equivalent
composition of the Group
Note 2
Underlying operating profit Operating profit as adjusted to exclude ‘specific adjusting items’ Note 3
Underlying operating margin Underlying operating profit expressed as a percentage of revenue Note 3
Underlying operating profit
from operating segments
Total operating profit from segments which excludes ‘specific adjusting items’ and research
and development expenditure credits (‘RDEC’)
Note 3
Underlying operating margin
from operating segments
Operating profit from segments expressed as a percentage of revenue Note 3
Underlying net finance
income/expense
Net finance income/expense as adjusted to exclude ‘specific adjusting items’ Note 7
Underlying profit before/ after tax Profit before/after tax as adjusted to exclude ‘specific adjusting items’ Note 4
Underlying effective tax rate The tax charge for the year excluding the tax impact of ‘specific adjusting items’ expressed as a
percentage of underlying profit before tax
Note 9
Underlying basic and diluted EPS Basic and diluted earnings per share as adjusted to exclude ‘specific adjusting items’ Note 10
Orders The level of new orders (and amendments to existing orders) booked in the year N/A
Backlog, funded backlog or order book The expected future value of revenue from contractually committed and funded customer orders N/A
Book-to-bill ratio Ratio of funded orders received in the year to revenue for the year, adjusted to exclude revenue
from the 25-year LTPA contract due to significant size and timing differences of LTPA order and
revenue recognition which distort the ratio calculation
N/A
Underlying net cash flow from operations Net cash flow from operations before cash flows of specific adjusting items Note 24
Underlying operating cash
conversion or cash conversion ratio
The ratio of underlying net cash from operations to underlying EBITDA. Note 24
Free cash flow Underlying net cash flow from operations less net tax and interest payments less purchases of
intangible assets and property, plant and equipment plus proceeds from disposals of plant and
equipment
Note 24
Net debt Net debt as defined by the Group combines cash and cash equivalents with borrowings, deferred
financing costs, derivative financial instruments and lease liabilities. Net debt does not include
liabilities relating to irrevocable share buyback obligations.
Note 23
Return on capital employed Calculated as: Underlying EBITA/(average capital employed less net pension asset), where
average capital employed is defined as shareholders equity plus net debt
CFO Review
Specific adjusting items Amortisation of intangible assets arising from acquisitions; impairment of property and goodwill;
gains/losses on disposal of property, investments and businesses; net pension finance income;
transaction, integration and acquisition-related remuneration costs in respect of business
acquisitions and disposals; digital investment; costs and associated impacts of group-wide
restructuring programmes; tax impact of the preceding items and significant non-recurring tax
and RDEC movements
Note 4
Additional information continued
QinetiQ Group plc | Annual Report & Accounts 2025202

Contents Generation – Sub PageContents Generation - Section Shareholder information
Registrar: Equiniti Limited
www.shareview.co.uk
Tel: 0371 384 2021
Shareholding enquiries
The Company’s registrar is Equiniti. Enquiries regarding your shareholding, including the following administrative matters, should be addressed
to Equiniti:
— Change of personal details such as change of name or address
— Lost share certificates
— Dividend payment enquiries
— Direct dividend payments. You can have your dividends paid directly into a UK bank or building society account by completing a dividend
mandate form. The associated dividend confirmation will still be sent to your registered address. If you live outside the UK, Equiniti offers a
global payments service which is available in certain countries and could enable you to receive your dividends direct into your bank account
in your local currency
Contact details for registrar
By post:
Equiniti Limited, Aspect House, Spencer Road Lancing,
West Sussex BN99 6DA
By telephone:
+44 0371 384 2021*
* Lines are open 8.30am to 5.30pm (UK time), Monday to Friday (excluding public holidays in England and Wales).
By email:
You can send an email enquiry securely from Equiniti’s website, at help.shareview.co.uk
Online:
Equiniti’s website at help.shareview.co.uk (Shareview) includes answers to frequently asked questions and provides key forms for download.
Shareview also offers online access to your shareholding where you can manage your account, register for electronic communications, see
details of balance movements and complete certain amendments online, such as changes to dividend mandate instructions. You can register
at www.shareview.co.uk, click on ‘Register’ and follow the steps.
Electronic communications
The Company will now only make documentation and communication available electronically via the Company’s website, unless direct
requests have been made otherwise. In addition, communications electronically, via the wider use of electronic communications enables
fast receipt of documents, reduces the Company’s printing, paper and postal costs and reduces the Company’s environmental impact.
Shareholders can register for electronic communications at www.shareview.co.uk and may also cast their vote for the 2024 Annual General
Meeting online quickly and easily using the Shareview service by visiting www.shareview.co.uk
Donating shares to charity – ShareGift
Small parcels of shares, which may be uneconomic to sell on their own, can be donated to ShareGift, the share donation charity (registered
charity no. 1052686). ShareGift transfers these holdings into their name, aggregates them, and uses the proceeds to support a wide range of
UK charities based on donor suggestion. If you would like further details about ShareGift, please visit www.sharegift.org, email help@sharegift.
org or telephone them on 020 7930 3737.
Shareholder information
Additional Information
Annual Report & Accounts 2025 | QinetiQ Group plc 203

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Share price
Details of current and historical share prices can be found on the Company’s website at www.qinetiq.com/investors
Analysis of share register at 31 March 2025
By type of holder
Total number
of holdings
Percentage
of holders
Total number
of shares
Percentage
issued
Capital
Individual 5,106 88.29% 4,603,901 0.83%
Institutions and others 677 11.71% 548,926,554 99.17%
Total 5,783 100% 553,530,455 100%
By size of holding
1–500 3,860 66.75% 714,260 0.13%
501–1,000 442 7.6 4% 351,774 0.06%
1,001–2,500 524 9.06% 917,087 0.17%
2,501–5,000 290 5.01% 1,041,033 0.19%
5,001–10,000 162 2.80% 1,182,415 0.21%
10,001–100,000 241 4.17% 8,539,715 1.54%
Over 100,000 264 4.57% 540,784,171 97.7%
Total 5,783 100% 553,530,455 100%
Share fraud reporting: www.fca.org.uk/scams
FCA Consumer Helpline: 0800 111 6768
Beware of share fraud
Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to be worthless
or non-existent, or to buy shares at an inflated price in return for an upfront payment. While high profits are promised, if you buy or sell shares
in this way you will probably lose your money.
How to avoid share fraud
1. Keep in mind that firms authorised by the FCA are unlikely to contact you out of the blue with an offer to buy or sell shares.
2. Do not get into a conversation, note the name of the person and firm contacting you and then end the call.
3. Check the Financial Services Register from www.fca.org.uk to see if the person and firm contacting you is authorised by the FCA.
4. Beware of fraudsters claiming to be from an authorised firm, copying its website or giving you false contact details.
5. Use the firm’s contact details listed on the Register if you want to call it back.
6. Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date.
7. Search the list of unauthorised firms to avoid at www.fca.org.uk/scams.
8. Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or
Financial Services Compensation Scheme.
9. Think about getting independent financial and professional advice before you hand over any money.
10. Remember: if it sounds too good to be true, it probably is.
Additional information continued
Shareholder information continued
QinetiQ Group plc | Annual Report & Accounts 2025204

Contents Generation – Page Contents Generation – Sub PageContents Generation - Section
Report a scam
If you are approached by fraudsters please tell the FCA using the share fraud reporting form at www.fca.org.uk/scams, where you can find out
more about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040.
Key dates
17 July 2025 Trading update
17 July 2025 Annual General Meeting
30 September 2025 Half-year financial period-end
13 November 2025 Half-year results announcement
20 January 2026 Trading update
31 March 2026 Financial year-end
May 2026 Preliminary results announcement
Cautionary statement
All statements other than statements of historical fact included in this Annual Report, including, without limitation, those regarding the
financial condition, results, operations and businesses of QinetiQ and its strategy, plans and objectives and the markets and economies in
which it operates, are forward-looking statements. Such forward-looking statements, which reflect management’s assumptions made on the
basis of information available to it at this time, involve known and unknown risks, uncertainties and other important factors which could cause
the actual results, performance or achievements of QinetiQ or the markets and economies in which QinetiQ operates to be materially different
from future results, performance or achievements expressed or implied by such forward-looking statements. Nothing in this Annual Report
should be regarded as a profit forecast.
This Annual Report is intended to provide information to shareholders and is not designed to be relied upon by any other party. The Company
and its Directors accept no liability to any other person other than under English law.
Additional Information
Annual Report & Accounts 2025 | QinetiQ Group plc 205

Contents Generation – Sub PageContents Generation - Section Company information and advisers
Registered office
Cody Technology Park
Ively Road, Farnborough,
Hampshire, GU14 0LX, England
Tel: +44 (0) 1252 392000
Company Registration
Number: 4586941
Independent auditors
PricewaterhouseCoopers LLP,
Savannah House,
3 Ocean Way, Ocean Village,
Southampton, SO14 3TJ
Registrar
Equiniti Limited, Highdown House,
Yeoman Way, Worthing,
West Sussex, BN99 3HH
Corporate brokers
Barclays, 1 Churchill Place,
London, EC14 5HP
Deutsche Bank Numis, 45 Gresham St
London, EC2V 7BF
Principal legal adviser
Ashurst LLP, London Fruit and
Wool Exchange, 1 Duval Square,
London, E1 6PW
Company information and advisers
Additional information continued
QinetiQ Group plc | Annual Report & Accounts 2025206

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are recycled for further use and, on average 99% of any waste associated with this production will be
recycled and the remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an international conservation charity, who offset
carbon emissions through the purchase and preservation of high conservation value land. Through
protecting standing forests under threat of clearance, carbon is locked-in that would otherwise be released.

QinetiQ Group plc
Cody Technology Park
Ively Road
Farnborough
Hampshire
GU14 0LX
Tel: +44 (0) 1252 392000
Company Registration Number: 4586941