qinetiq group plc annual report and accounts 2011
restoring strength 
building value division
us services
revenue
£5882m
2010 £6280m
underlying operating profit
£443m
2010 £526m
employees
4500
2010 5369
division
uk services
revenue
£6116m
2010 £6939m
underlying operating profit
£487m
2010 £591m
employees
5045
2010 5707
division
global  
products
revenue
£5028m
2010 £3035m
underlying operating profit
£524m
2010 £86m
employees
1663
2010 2002
2011  
£m
2010
£m
us services 5882 6280
uk services 6116 6939
global products 5028 3035
total 17026 16254
group overview
the group operates three divisions us services  
uk services and global products to ensure efficient 
leverage of expertise technology customer 
relationships and business development skills
our services businesses which account for more  
than 70 of total sales are focused on providing 
expertise and knowledge in national markets our 
products business provides the platform to bring 
valuable intellectual property into the commercial 
markets on a global basis

  definitions of underlying measures of performance are in the glossary on page 107 
35
36
29
revenue by business capabilities
• custom software 
• c4isr 
• cyber security 
• it infrastructure 
• program management 
• research  development 
• training and simulation
developments during year
• award to provide 
engineering services at nasa 
kennedy space center
•  five year contract for 
training development and 
delivery services to the  
us navy’s space and  
naval warfare system 
center atlantic 
• sale of sis
customers
• nasa
• us department of homeland 
security dhs
• us department of defense 
dod
• us department of state 
dos
building value
a strong position in growing 
market segments c4isr 
engineering services  
training and simulation  
and cyber security
capabilities
• air engineering
• c4isr
• cyber security
• technical information 
services
• test and evaluation
• training and simulation
• programme and 
procurement support
developments during year
• award of the £9m managed 
services contract to operate 
flight physiological centre  
in sweden
• increased test and 
evaluation capability 
demand from  
overseas customers
customers
• ministry of defence mod
• dstl
• the highways agency
• uk security agencies
• australian department  
of defence
building value
a strong position in test 
and evaluation cyber 
security c4isr acquisition 
and programme advice 
engineering services  
and training and  
simulation markets
capabilities
• survivability
• unmanned systems
• energy from waste
• vehicle power management
• sensor networks
developments during year
• significant contribution  
from qnet vehicle 
survivability products
• award of optasense®  
£265m contract with shell
• award of £12m 
contract for light protected 
patrol vehicle
• acquisition of  
sensoptics ltd
customers
•  us department of defense 
dod
• uk ministry of defence 
mod
•  uk and north american 
security agencies
• shell
• merck
• astrium
building value
through international 
expansion while capitalising  
on opportunities in  
adjacent markets  
such as oil and gas
2011  
£m
2010
£m
us services 443 526
uk services 487 591
global products 524 86
total 1454 1203
2011  
£m
2010
£m
north america 9492 8253
united kingdom 6237 7200
other 1297 801
total 17026 16254
36
33
31
underlying operang proﬁt by business
2011  
£m
2010
£m
us government 8943 7541
uk government 5265 6145
other 2818 2568
total 17026 16254
31
52
17
revenue by major customer type
56
37
7
revenue by geography who we are
qinetiq comprises teams of dedicated people experts in  
defence aerospace security and related markets we draw  
on our extensive technical knowledge and intellectual property  
to provide the knowhow and support to solve some of the  
world’s most challenging problems
what we do
our customers face challenges that define the modern world  
they know that we understand the increasingly global nature  
of science technology and engineering and they trust us to work 
alongside them to ensure the success of their mission we support 
space programmes we provide trusted technical services to the 
uk ministry of defence and the us department of defense we 
carry out secure monitoring services for a range of commercial and 
government customers globally – all vital support solutions requiring 
trust and integrity
how we create value
our people make the critical difference to customers by providing 
unique approaches to problem solving they supply answers 
requiring innovation deep domain knowledge rigorous independent 
thinking and technical expertise – answers which save lives protect 
assets and critical infrastructure reduce costs ensure competitive 
advantage – answers which make tomorrow work today qinetiq group plc annual report and accounts 2011
directors’ report business review
1
directors’ report corporate governance financial statements
performance highlights
1 performance highlights
2  chairman’s statement
3  chief executive officer’s review
6  operations overview
12  chief financial officer’s review
18 key performance indicators
20 risks and uncertainties
24 corporate responsibility review
26 board of directors
28 corporate governance report
36 remuneration report
45 other statutory information
48 statement of directors’ responsibilities
49 independent auditor’s report
50 consolidated income statement
51  consolidated statement of 
comprehensive income
   consolidated statement of  
changes in equity
52  consolidated balance sheet
53 consolidated cash flow statement
54 reconciliation of movement in net debt
55 notes to the financial statements
103  company balance sheet
104  notes to the company financial 
statements
106  fiveyear record for the years  
ended 31 march
107  glossary
108 additional information
109 where can you learn more
 definitions of underlying measures of performance are in the glossary on page 107 
†
 the gearing ratio is net debt to adjusted ebitda and the definition is in the glossary on page 107 
2011 £17026m
2010 £16254m
revenue
£17026m
2011 £1454m
2010 £1203m
underlying operang proﬁt
£1454m
2011 183
2010 145
2009 107
underlying operang cash 
conversion
183
2011 85
2010 74
underlying operang margin
85
2011 £2609m
2010 £4574m
net debt
£2609m
2011 142p
2010 111p
underlying earnings per share
142p
2011 14x
2010 25x
2009 22x
gearing rao
†
14x
2011 160p
2010 158p
dividend
160p qinetiq group plc annual report and accounts 2011 2
dear shareholder
i write this report having completed my first full year as chairman 
of qinetiq i am pleased to report that against a backdrop of 
challenging markets qinetiq’s performance in the last financial 
year was impressive 
these results were delivered in significant part because we took 
charge of our destiny and implemented a 24 month selfhelp 
programme to restore the business to strength and build value  
for the future our markets on both sides of the atlantic were  
under significant budgetary pressures as our customers responded 
to their need to reduce national deficits given however the 
increased global risks and threats our key markets of defence  
and security remain a priority for governments we have made 
rapid progress in reshaping our business this together with the 
reduction and refinancing of our debt contributed to a more  
agile and competitive qinetiq
results
group revenues were £17026m 2010 £16254m and underlying 
operating profit

 increased to £1454m 2010 £1203m up 21 
resulting in an underlying profit before tax

 for the group of 
£1146m up 34 on the previous year 2010 £857m the rigorous 
groupwide focus on debt reduction resulted in a strong underlying 
operating cash conversion

 of 183 2010 145 as underlying 
cash flow from operations

 increased to £2658m 2010 £1743m 
closing net debt at 31 march 2011 was £2609m 2010 £4574m  
an improvement of £1965m full year underlying earnings per 
share

 were 142p 2010 111p 
dividend
in may 2010 the board recommended a suspension of dividend 
payments during the first 12 months of the group’s programme  
to restore qinetiq to strength in line with its commitment at that 
time the board is recommending a return to the dividend list  
the board is also recommending the reinstatement of a progressive 
dividend policy which takes into account the profitability of 
qinetiq’s businesses and underlying growth as well as its capital 
requirements and cash flows while maintaining an appropriate 
level of dividend cover the final dividend will normally represent 
approximately twothirds of the full year dividend in future periods 
the proposed final dividend is 160p per share for the year ended 
31 march 2011 which will be paid on 2 september 2011 to 
shareholders on the register at 5 august 2011
our people 
qinetiq’s success rests on the skills and dedication of its people as 
we adapt to changing market conditions they have played an active 
role in the group’s progress during the year and we know they are 
deeply engaged in the selfhelp plan that we are implementing  
our teams embody a strong ethos of public service which provides 
a vital bond with our customers in delivery of their priorities  
may i take this opportunity to extend my thanks to our employees  
who have played such a vital role in our progress during the year
the board
just as our business is evolving so is the shape of the board during 
the course of the year nick luff and david langstaff both left the 
board due to growing executive management commitments outside 
of the group i thank them for their service to the company and 
wish them both well for the future in october 2010 paul murray 
joined as a nonexecutive director bringing a broad range of 
experience in finance and corporate governance from a cross 
section of industries i would like to welcome paul to the board  
and on behalf of my board colleagues look forward to working 
with him admiral ed giambastiani will step down as a non
executive director at this year’s annual general meeting i would 
like to thank him for his contribution to qinetiq over the past three 
years we will continue to review the structure of the board as 
qinetiq transitions and adapts to changing markets 
outlook
we are making significant progress in restoring qinetiq to strength 
our reshaping of the businesses together with the reduction 
and refinancing of the debt all contribute to a leaner and more 
agile group with a stronger balance sheet we are now able to 
fund future growth and reinstate the dividend for shareholders 
internally we have made significant changes which we will embed 
and extend this year to ensure that over the medium term we 
maximise value from both qinetiq’s inherent capabilities and 
emerging opportunities externally by working closely with its us 
and uk government customers qinetiq will be able to align its 
unique expertise with their priorities to achieve greater value and 
efficiency we are unlikely to see a repetition of last year’s level of 
qnet sales but the board believes that the programme underway 
to increase competitiveness will enable the group to perform in line 
with its expectations for the current financial year in what are likely 
to remain challenging market conditions 
mark elliott
chairman
27 may 2011
chairman’s  
statement
business review

  definitions of underlying measures of performance are in the glossary on page 107 
mark elliott
chairman qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
3
chief executive officer’s review  
summary of priorities
we are now 12 months into our 24 month selfhelp 
programme to restore value to strengthen our 
foundations and build a path to future sustainable 
and profitable growth the following priorities 
have been put in place
focus
– extracting value from the portfolio
cultural transformation
– building a more competitive culture
strengthen the balance sheet
– enable longerterm options
for more information go to  
wwwqinetiqcom qinetiq group plc annual report and accounts 2011 4
chief executive 
officer’s review
business review
update on priorities
in may 2010 qinetiq set out a 24 month selfhelp programme with 
three priorities to refocus the businesses to transform the culture 
and to strengthen the balance sheet 
focus
the group’s new structure of three divisions – us services uk 
services and global products – aligns its expertise and technology 
efficiently with customers’ needs each division made progress  
on implementation in the period
• full integration of the us services businesses is underway to 
reduce duplicated overhead improving the ability of the division 
to compete effectively
• the realignment of uk services with specific customer segments 
was completed in the first half with further refinements likely  
to reflect evolving customer requirements
• the global products framework is now in place and delivering 
a common approach to development of the product portfolio 
for example the development of exdrive® for the us ground 
combat vehicle programme
the portfolio is reviewed on an ongoing basis to address both 
performance issues and key focus areas during the year
•  the group completed the disposal of the sis business and 
acquired sensoptics ltd to support development of the 
optasense® business
•  existing uk synthetic training and simulation capabilities were 
brought together as one business within uk services
•  a common usuk cyber platform is under development to 
globalise the group’s cyber capabilities 
cultural transformation
the worldclass domain expertise and innovation of qinetiq’s 
scientists and engineers together with its deep customer 
relationships in both the uk and us provide the potential for 
longerterm profitable growth delivering this requires the right 
leadership measurement and processes to enable empowerment 
and accountability as well as a more flexible and competitive cost 
base the following steps were taken to achieve this
• more than 80 of the group’s executive team has been 
upgraded as well as approximately half of senior management 
in the uk and a third in the us new performancerelated 
remuneration was introduced for the uk leadership team  
to replace legacy terms and conditions
the group made significant progress in the year its programme  
of selfhelp resulted in increased competitiveness and a strong 
foundation for the future throughout what was a difficult period 
in the markets all our businesses have worked closely with their 
customers to ensure that qinetiq is wellpositioned to create value 
over the medium term
through a relentless focus on our key priorities we rebased  
the business and put it on a strong foundation for the future  
i am particularly pleased that we achieved a number of our goals 
ahead of schedule principally the refinancing this major milestone 
completed 12 months ahead of schedule culminated in a 
strengthened balance sheet and the confidence to reinstate the 
dividend in addition the group has no debt maturity until 2016 
providing a strong foundation to fund future growth while we are 
making good progress we remain focused on the next 12 months 
to build on our progress and deliver a more agile commercial and 
efficient business for the future 
trading environment 
qinetiq’s principal markets remain challenging with defence 
budgets on both sides of the atlantic under pressure in light of 
government programmes to reduce fiscal deficits 
in the us after six months operating under a continuing resolution 
president obama signed the defense appropriation bill on 15 april 
2011 which funds the department of defense for the remainder  
of the us government 2011 fiscal year work within the us 
government now turns to the budget for the 2012 fiscal year 
accompanied by a review by the department of defense dod to 
evaluate longterm spending plans over the medium term budget 
reductions are expected in order to generate efficiency savings 
against this backdrop of fiscal austerity customer behaviours  
are changing as they look ‘to do more with less’ 
in the uk it is anticipated that budgets will be reduced to meet 
the government’s target of an 8 cumulative reduction in 
defence spending over the next four years in december 2010 the 
government published its consultation paper ‘equipment support 
and technology for uk defence and security’ on the role which 
industry will play in future defence programmes and the resulting 
white paper is scheduled for this summer in april 2011 the 
mod also implemented its comprehensive commitment control 
regime which requires the approval of senior civil servants for new 
expenditure except in key categories such as those which support 
current operations the strategic deterrent and safety overall  
the imperative for change within the mod is likely to continue  
to restrict and delay the authorisation of new contracts
leo quinn
chief executive officer
  definitions of underlying measures of performance can be found in the glossary  
the gearing ratio is adjusted net debt ebitda calculated in accordance with the  
group’s credit facility ratios  qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
5
• in february 2011 the group signed a new fiveyear revolving 
credit facility totalling £275m denominated in sterling and 
dollars which is currently undrawn
• in may 2011 the us135m private placement note due to 
mature in 2013 was repaid from surplus cash
as a result of these actions the group has no debt maturity until 
2016 providing a strong foundation to fund future growth
ongoing priorities
over the next 12 months the group’s key goal is to complete its  
24 month programme to build a leaner more agile qinetiq focused 
on – and competitive in – its areas of core capability the initiatives 
which are transforming the group’s culture and processes must  
be sustained and embedded improvements in productivity will  
be extended as will the drive to strengthen the balance sheet  
the portfolio will continue to be aligned with customers’ needs 
both through noncore disposals and by funding carefully selected 
areas in which qinetiq has a clearly established position and 
therefore a base for value creation over the medium term
leo quinn
chief executive officer
27 may 2011
• common business review processes have been implemented 
across the group to ensure transparency and the ability to 
manage outcomes and react quickly
• two programmes – my contribution and fit 4 growth – have 
been introduced together these engage all employees in raising 
performance and provide a single endtoend process from bid 
to project delivery driving ongoing improvements in productivity 
and value delivered to customers
• in the uk a more commercial way of working was needed to 
improve performance sales leadership was upgraded new 
incentive plans introduced and over 3000 employees trained 
in valuebased selling negotiation and project delivery during 
the year the business saw a 9 improvement in mod customer 
satisfaction scores while a recent employee survey showed 
higher engagement levels and a 14 rise in the leadership  
score since 2009
• changes to uk employee terms and conditions including revised 
redundancy arrangements came into effect on 1 july 2010 after 
a 75 favourable vote by union members the combination 
of introducing a new performance management system 
restructuring the uk businesses and rationalising the technology 
portfolio resulted in a 15 reduction in uk headcount a 
reduction in layers of management and in overhead costs and 
addressed areas of systemic underutilisation with minimal loss  
of key capability further reductions to the uk cost base have 
been achieved through structured procurement of goods and 
services – including it and facilities management – and the 
streamlining of uk suppliers
balance sheet
a key goal for the 24 month programme was to restore 
qinetiq’s balance sheet to strength through selfhelp significant 
improvement was made in the first 12 months
• rigorous groupwide processes and the engagement of 
employees at all levels drove strong underlying operating cash 
conversion of 183 2010 145
• the group’s net debt at 31 march 2011 improved to £2609m  
31 march 2010 £4574m
• the gearing ratio was reduced to 14x net debt ebitda
†
  
31 march 2010 25x
us services
• aerospace operations
• engineering 
management
• information services
• mission solutionscyber
• software and systems 
engineering
uk services
• air engineering 
• test and evaluation
• training and simulation
• cyber security and c4isr
• programme and 
procurement support
global products
• survivability
• unmanned systems
• energy from waste
• vehicle power 
management
• optasense®
†
  the gearing ratio is adjusted net debt to editda calculated in accordance with the 
group’s credit facilities qinetiq group plc annual report and accounts 2011 6
delivery of technical services  
in aerospace operations and  
systems engineering and lifecycle 
management information solutions 
mission solutions cyber and software 
and systems engineering
operations overview
us services
maximising operational and business effectiveness
identifying missioncritical factors and controlling assets
our command control communications computers intelligence 
surveillance and reconnaissance c4isr teams offer worldleading 
expertise technical advice and practical endtoend solutions  
our services resolve the most complex issues in the intelligence  
command and control c2 and information domains they manage 
information gathered from different sources on the battlefield to  
improve a commander’s situational awareness and decisionmaking 
business review
revenues declined by 7 on an organic basis at constant currency 
impacted by us government insourcing around last year end as 
well as the switching of some work to small business preference 
contracts the protracted continuing resolution led to a further 
lack of clarity around contract funding this resulted in new and 
incremental orders being delayed and the cancellation of some 
recompetes with shorter term extensions awarded in their place 
also during the latter part of the year the successful iraqi flight 
training project completed
in this environment bidding for existing services and larger 
programmes is very competitive necessitating a higher investment 
in business development this coupled with the volume impact 
on revenue contributed to underlying operating profit

 falling to 
£443m 2010 £526m delivering an underlying margin

 of 75 
2010 84
as part of the programme to exit noncore capabilities the sale 
was agreed of sis an access control business for a total cash 
consideration of us60m before tax the yearonyear revenue 
variance as a result of this disposal was £16m
the strength of ongoing relationships with key customers was 
evidenced by an award to provide engineering services at the 
kennedy space center in florida leveraging existing nasa support 
contracts at the site as well as at the glenn research center in  
ohio and the goddard spaceflight center in maryland the new 
service at the kennedy space center began on 1 march 2011 for  
an expected base period of five years with three oneyear options
during the year the us services business was awarded seven new 
contracts for missioncritical services by key intelligence customers 
totalling us25m building on its track record in providing training 
services to the us army marine corps navy and joint communities 
us services was also awarded a fiveyear us36m contract to 
provide a full range of training development and delivery services 
to the tactical c2 engineering division by the us navy’s space and 
naval warfare system center atlantic ssca
as competition intensifies the decision to create a fully 
integrated us services business will reduce duplicated overhead 
and deliver further efficiency savings improving the division’s 
ability to compete effectively significant progress has also been 
made in developing a common usuk cyber platform to exploit 
opportunities – principally in ‘five eyes’ markets uk us canada 
australia new zealand – generated by government commitments 
to additional cyber security funding
us services
2011  
£m
2010 
£m
orders 5611 5776
revenue 5882 6280
underlying operating profit

443 526
underlying operating margin

 75 84
  definitions of underlying measures of performance can be found in the glossary  
on page 107
†  the gearing ratio is adjusted net debt ebitda calculated in accordance with the  
group’s credit facility ratios qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
7
a global challenge – cyber intelligence solutions and services
a situational awareness approach
our track record in the field of security 
positions qinetiq to develop a comprehensive 
assessment of the threats an organisation or 
business faces in cyber space 
our technologyneutral approach leads to 
solutions that meet a customer’s specific 
challenges we have global experience  
to design individual security plans and the 
ability to implement them our intelligence
led approach to security addresses the full 
scope of today’s risks including the evolving 
demands of cyber space 
from threats to facilities enterprise 
infrastructure malware identity theft 
phishing and loss of intellectual property  
we cover the entire spectrum of cyber risks 
our excellent record in the provision of virtual 
and onsite managed security services for 
critical national infrastructures governments 
and commercial companies all around the 
world makes qinetiq a global asset for  
cyber security  qinetiq group plc annual report and accounts 2011 8

  definitions of underlying measures of performance can be found in the glossary  
on page 107
provision of technical services in 
aerospace engineering test and 
evaluation training and simulation  
cyber security information and 
intelligence and procurement 
consultancy
air worthiness safety assurance test and evaluation certainty
independent technical expertise
qinetiq provides a turnkey capability to design simulate instrument 
certificate and evaluate aircraft and equipment assuring safety and 
effectiveness for a broad crosssection of government and private sector 
customers our experts provide test and evaluation logistics and 
management and research and development support as well as  
aerospace engineering expertise
business review
operations overview continued
revenues declined 10 on an organic basis principally due to 
pressure on customers’ budgets and delays in spending approvals 
budget uncertainties had the greatest impact on the provision of 
technical and information services where manpower utilisation has 
a direct correlation with profitability in addition the prior period 
included some passthrough revenues on certain contracts which 
did not recur this year and a contribution from the underwater 
systems business sold in 2009 orders in the comparator period 
were also enhanced by approximately £40m of multiyear orders 
and a £31m contract associated with the ministry of defence’s 
defence training rationalisation dtr programme
underlying operating profit

 declined from £591m to £487m 
principally due to falling revenue and hence utilisation although 
project margins remained strong this was exacerbated by the 
combined impact of approximately £5m in respect of higher 
pension service costs and reduced property income following a 
major tenant vacating premises last year the underlying margin

 
for the full year was 80 2010 85 an improvement on the 
first half margin of 73 as cost reductions began to take effect 
headcount was reduced by 662 in the year largely as a result  
of the restructuring programme
uk services continues to deliver value to its customers derisking 
the procurement of technology for core defence programmes 
predominantly in the uk but increasingly overseas new 
opportunities came to fruition in scandinavia including a £9m 
managed services contract to operate the flight physiological  
centre for the swedish defence administration and a £4m order  
for the norwegian andoya range system the year also saw an 
increase in funding for the weapons technology centre managed 
by qinetiq in support of the future pipeline of complex weapons  
at the end of the period uk services won a £11m contract to 
provide technical and information services for a national police unit
in response to customers’ requirements to reduce the cost of 
training existing uk synthetic training and simulation capabilities 
have been brought together as one business this will enable the 
leveraging of qinetiq’s unique technologyagnostic position to 
deliver operational and mission training for force preparation 
using commercialofftheshelf cots technology reductions 
in government and agency size also provide an opportunity 
for qinetiq as a trusted advisor to deliver acquisition and 
procurement support
uk services
2011  
£m
2010 
£m
orders
1
3716 4938
revenue 6116 6939
underlying operating profit

487 591
underlying operating margin

 80 85
1
  orders excludes remaining £39bn 31 march 2010 £41bn in respect of ltpa contract
uk services qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
9
providing offtheshelf capability to address  
training challenges
technologyagnostic trusted and transformational
the military is faced with ever more complex 
operational situations against this backdrop 
qinetiq is offering a new approach to the 
use of synthetics to make training more agile 
more uptodate more relevant more cost 
effective and more accessible 
we already lead in the design and delivery  
of open architecture enabling customers  
to select the most effective combinations  
of software and hardware in a ‘plug and  
play’ approach to synthetics – or to select  
a bespoke solution if needed our unique 
skillset is capable of delivering a much wider 
range of mission training solutions across  
the simulation spectrum from application  
for handheld devices at one end to full 
mission simulations at the other 
our competitive advantage lies in our deep 
domain knowledge our close working 
relationship with the military our research 
into the technologies available and our 
understanding of customer needs 
qinetiq’s teams are therefore drawn from a 
wide range of disciplines including specialists 
in training simulation modelling software 
engineering and design systems integration 
and human factors qinetiq group plc annual report and accounts 2011 10
focuses on the exploitation of  
intellectual property through the rapid 
development of concepts into proven 
products and solutions complemented 
by contractfunded research and 
development to support the creation  
of the next generation of products for 
the international market
meeting the highest military standards for equipment
lifesaving equipment making a difference
ground forces in operational urban and rural environments are  
faced with continuous threat having situational awareness capabilities  
and survivability products which enables them to operate in extreme 
situations is a priority qinetiq developed swats in response to concerns 
about the high toll of sniper fire on military forces
the us army and the us marine corps have selected swats as their 
individual gunfire detection system of choice it is quickly becoming the 
global standard for wearable gun shot detection weighing less than one 
pound it is a versatile solution for combat troops around the world
business review
operations overview continued
revenues were £5028m 2010 £3035m a 66 organic increase  
at constant currency this includes a us288m contribution from 
the new qnet vehicle survivability product and illustrates the 
lumpy profile of the global products revenue qnet deliveries 
during the year were primarily for the mrap lite vehicle – although 
initial orders were also received for navistar maxxpro and the 
stryker vehicle – and demonstrate the ability of the business 
to develop and deploy a technology in a timeframe that meets 
customers’ demands contributions also came from talon
tm
 robots 
and shoulderworn acoustic targeting system swats individual 
gunfire detection systems with contract awards continuing in 
support of current operations despite wider budgetary pressures 
and the continuing resolution
underlying operating profit increased to £524m 2010 £86m  
and an underlying margin of 104 2010 28 with a significant 
contribution from the volume of qnet deliveries more than 
offsetting a disappointing performance in the uk 
in the uk the trading environment was impacted by further 
contract delays and cancellations from the mod during the  
year the uk business was reorganised changes were made  
to the leadership team and management layers were removed  
total uk headcount was reduced by 346 largely as a result of the 
restructuring programme and a business that lacked customer 
demand and funding was closed
the optasense® fibreoptic sensing business continues to make 
strong progress in the energy sector with a threeyear £265m 
contract with shell followon orders for security and condition 
monitoring included a project for cairn energy plc to protect 
the 700km mangala development pipeline in india in december 
2010 the acquisition of sensoptics ltd was completed for an initial 
consideration of £23m net of cash acquired sensoptics designs 
and manufactures the fibreoptic sensing hardware used  
by optasense®
towards the end of the period the uk business received a £12m 
contract from force protection europe to design optimise and 
supply the modular armour kits for the light protected patrol 
vehicle lppv
a new global products framework has been put in place enabling  
a common approach to developing and marketing the product 
portfolio focused on businesses with growth strategies the 
development of exdrive® as part of a consortium bidding into  
the us ground combat vehicle programme is an early example  
of this approach
global products
2011  
£m
2010 
£m
orders 6270 3296
revenue 5028 3035
underlying operating profit

524 86
underlying operating margin

104 28
  definitions of underlying measures of performance can be found in the glossary  
on page 107
global products qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
11
applying technology to new market applications
using distributed fibre sensing to provide value enhancing 
information to multiple industries
distributed fibre sensing is enabling our 
customers to monitor their strategic assets 
cost effectively and in some cases  
to measure the unmeasurable 
our optasense® business is leading 
commercial change in multiple industries 
through the application of distributed fibre 
sensing dxs to gather information from 
large or complex linear assets at the heart 
of its success is its ability to convert existing 
fibre optic assets into thousands of sensors 
and then to apply advanced signal processing 
algorithms to disseminate the data in real 
time this dual approach enables customers 
to leverage an existing fibre asset and receive 
important and timely information this in 
turn enables them to make valueenhancing 
business decisions whether these are to 
change a well completions process or  
to dispatch security to prevent theft from  
an oil pipeline 
optasense® delivers value in a range of 
markets from the oil and gas industry through 
defence and security to transport and many 
others these markets require a truly global 
business focus during this year optasense® 
opened offices in houston and calgary 
and delivered projects in new geographies 
including india and nigeria among others  qinetiq group plc annual report and accounts 2011 12
chief financial 
officer’s review
business review
the excellent cash flow across the group in 
the year has significantly strengthened the 
balance sheet 
david mellors chief financial officer
group results overview
revenue
2011  
£m
2010 
£m
us services 5882 6280
uk services 6116 6939
global products 5028 3035
total 17026 16254
group revenues increased by £873m 5 organically excluding 
a £197m benefit from the strengthening of the us dollar 
exchange rate and the impact of £298m in revenue contribution 
from divested businesses
global products revenue increased by £1993m 66 largely as 
a result of the considerable demand for the new qnet product 
whilst demand for the robot family of products remained strong 
both of these products are supporting operations in afghanistan 
both uk and us services businesses suffered from pressures 
on government spending in the uk governmental customers’ 
spending approvals have slowed due to the uncertainty around 
priorities and budget levels the drop in revenue within the us 
services business reflects the volumes of government insourcing 
around the previous year end exacerbated by the continuing 
resolution being in effect for much of the period 

  definitions of underlying measures of performance are in the glossary on page 107 
underlying financial measures are presented as the board believes these provide  
a better representation of the group’s longterm performance trend
revenue by customer 
mod     
dod     
dhs     
commercial defence   
civilother government agencies  
2011
£17026m
2010
£16254m
30
35
5
8
22
36
28
8
5
23
david mellors
 chief financial officer qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
13
group summary
2011 2010
revenue £m 17026 16254
organic change at constant currency 5 3
underlying operating profit

 £m 1454 1203
underlying operating margin

85 74
underlying profit before tax
 
£m 1146 857
net finance expense £m 308 346
underlying effective tax rate 190 150
basic earnings per share 08p 97p
underlying earnings per share 142p 111p
dividend per share 160p 158p
underlying net cash from operations post capex £m 2658 1743
underlying operating cash conversion 183 145
net debt £m 2609 4574
net debt ebitda 14x 25x
average us£ exchange rate 156 159
closing us£ exchange rate 160 152
underlying operating profit

underlying operating profit
2011  
£m
2010  
£m
us services 443 526
uk services 487 591
global products 524 86
total 1454 1203
the increase in underlying operating profit

 reflects the  
increased demand for the qnet product which more than  
offset a disappointing result from the uk within the global  
products business 
the uk services underlying operating margin

 decreased to 80 
2010 85 and the us services underlying operating margin

 fell 
to 75 2010 84 the reduction in underlying operating profit

 
and underlying operating profit margin

 within both uk and us 
services businesses reflects the revenue volume impacts  
mentioned above as well as increased pension service costs  
and decreased rental income in the uk and investment in  
business development in the us cost savings in the uk have 
contributed to the margin increasing in the second half of  
the year h1 uk services margin 73
the increase in underlying operating margin

 from 74 to 85  
is a result of the higher mix of revenues from product sales 
finance costs
net finance costs reduced to £308m 2010 £346m a component 
of this decrease was the net pension finance credit of £91m  
2010 cost of £25m from the improvement in opening market 
value of scheme assets outweighing the negative impact of a  
lower discount rate applied to scheme liabilities a lower level  
of debt also contributed to the reduction in net finance costs  
these impacts were partially offset by accelerated interest costs  
of £88m resulting from the election to make early repayment of  
a us135m private placement debt the early repayment  
was concluded during may 2011
taxation
the group’s underlying effective tax rate

 was 190 2010 150 
the increase was due primarily to the additional us profits earned 
on sales of qnet survivability products the group continues  
to benefit from the availability of research and development  
relief in the uk  qinetiq group plc annual report and accounts 2011 14
business review
chief financial officer’s review continued
acquisition amortisation and specific nonrecurring items

the performance of the group after allowing for nonrecurring 
events and amortisation of acquired intangible assets is  
shown below
2011  
£m
2010  
£m
underlying profit for the year attributable to equity shareholders of the parent company 928 728 
uk restructuring 335 441
pension curtailment gain 49 20 
contingent payments on acquisition treated as remuneration 61 – 
net inventory writeoffs in respect of capitalised dtrprogramme bid costs 238 – 
impairment of property plant and equipment 59 240
amortisation of intangible assets arising from acquisitions 263 261
impairment of intangible assets – 534
gain on business combinations and divestments 27 51 
unrealised impairment of investments – 113
tax impact of items above 02 157 
profitloss for the year attributable to equity shareholders of the parent company 50 633
the resulting statutory profit after tax was £50m  
2010 loss of £633m
the uk restructuring costs of £335m 2010 £441m relate to  
headcount reductions announced in july and august 2010 the 
majority of the cash outflow associated with this charge occurred 
in the second half of the year the restructuring formed part of the 
programme to restore qinetiq to strength by ensuring the group 
has a competitive cost base appropriately sized for the market  
a pension curtailment gain of £49m 2010 £20m arose as a 
consequence of the restructuring 
†
  the gearing ratio is adjusted net debt ebitda calculated in accordance with the group’s 
credit facility ratios

  definitions of underlying measures of performance are in the glossary on page 107 
underlying financial measures are presented as the board believes these provide  
a better representation of the group’s longterm performance trend
the contingent acquisition payments of £61m and the gain  
in respect of negative goodwill of £02m relate to the acquisition  
of sensoptics the discounted fair value of the contingent  
purchase price was treated as remuneration in accordance  
with ifrs 3 revised 
on 19 october 2010 the uk mod terminated the defence  
training rationalisation dtr programme for which qinetiq  
was preferred bidder as a 5050 equity partner in the metrix joint 
venture £238m has been written off previously capitalised bid 
costs within nonrecurring items

  qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
15
a charge of £59m 2010 £240m was taken in the year against 
the group’s owned properties and impairment of assets these 
properties are no longer occupied and as no external tenant has 
been found the assets are no longer generating a return
the gain on business divestments in the year relates to the disposal 
of sis a noncore security operations and access control business 
within qinetiq’s us services operation
earnings per share
underlying earnings per share

 was 142p compared with 111p  
for the year ended 31 march 2010 basic earnings per share 
increased to 08p 2010 97p
dividend
the group did not pay an interim dividend for the year and the 
board is recommending a final dividend of 160p per share  
the record date for the final dividend will be 5 august 2011  
subject to approval at the annual general meeting the final 
dividend will be paid on 2 september 2011 to shareholders  
on the register at 5 august 2011
other financials
cash flow
the group’s cash flow from operations before restructuring  
costs but after capital expenditure was £2658m 2010 £1743m 
the underlying operating cash conversion ratio

 was 183 2010 
145 as a result of relentless focus on cash generation assisted  
by deferred contract capital spend in the uk services business  
the cash outflow in the year on restructuring the uk business  
was £318m 2010 £354m 
acquisition expenditure net of cash acquired totalled £158m 
2010 £456m £23m of which was due to the acquisition of 
sensoptics ltd in december 2010 and the remainder was deferred 
consideration in respect of dtri acquired in a prior year proceeds 
received from the disposal of businesses totalled £382m  
2010 £211m largely from disposal of the sis business
at 31 march 2011 net debt reduced substantially to £2609m 
compared with £4574m at 31 march 2010
the group’s borrowings remained comfortably within its  
financial covenants with a gearing ratio
†
 of 14x compared to  
the covenant maximum level of 35x a significant improvement 
from 25x last year
the group refinanced its existing credit facility with a new  
fiveyear revolving credit facility provided by the group’s six global 
relationship banks the new multicurrency facility which matures 
in february 2016 includes a £118m tranche and a us250m 
tranche and was undrawn at 31 march 2011 the group’s cash 
performance also allowed it to make early repayment of a us135m 
private placement debt which was repaid during may 2011 from 
surplus cash 
net finance costs were impacted by an accelerated interest 
payment of £88m related to the early repayment of the 2013 
private placement debt
total committed facilities available to the group at year end 
amounted to £625m following the early repayment of the 
us135m private placement debt in may 2011 total committed 
facilities amount to £540m with no maturity before 2016
committed facilities maturity profile as at 31 march 2011
2011
£625m
14
86
maturity within two years
1
     
maturity aer four years
1
  the committed facilities maturing within two years reflect a us135m private placement 
debt repaid in may 2011 qinetiq group plc annual report and accounts 2011 16
business review
chief financial officer’s review continued

  definitions of underlying measures of performance are in the glossary on page 107 
underlying financial measures are presented as the board believes these provide  
a better representation of the group’s longterm performance trend
pensions
the net pension deficit under ias 19 after deducting deferred tax 
was £922m 2010 £1061m the decrease in net pension deficit is 
primarily driven by the increase in market value of scheme assets 
partially offset by the input of assumed increase in life expectancy
the key assumptions used in the ias 19 valuation of the scheme are
assumption
31 march  
2011
31 march  
2010
discount rate 56 56
inflation 36 36
salary increase 46 46
life expectancy – male currently aged 40 90 89
life expectancy – female currently aged 40 91 90
each assumption is selected by the group in consultation with the 
company actuary and takes account of industry practice amongst 
comparator listed companies the sensitivity of each of the key 
assumptions is shown in the table below
assumption
change in  
assumption
indicative effect on scheme  
liabilities before deferred tax
discount rate increasedecrease by 01 decreaseincrease by £24m
inflation increasedecrease by 01 increasedecrease by £25m
salary increase increasedecrease by 01 increasedecrease by £6m
life expectancy increase by one year increase by £22m
the market value of the assets at 31 march 2011 was £9811m  
31 march 2010 £9159m and the present value of scheme 
liabilities was £11057m 31 march 2010 £10632m
the investment principles of the qinetiq pension scheme were 
revised during the year by the trustees in consultation with qinetiq 
a shift from the historical weighting towards equity investments  
to a more balanced portfolio was considered appropriate by the 
trustees to reflect the relative age of the scheme and changes to 
the membership profile the next triennial full actuarial valuation  
of the qinetiq pension scheme is due to be undertaken as at  
30 june 2011
capital risk
the group funds its operations through a mixture of equity  
funding and debt financing including bank and capital market 
borrowings at 31 march 2011 the group’s total equity was £4575m 
2010 £4737m net debt as defined by the group was £2609m 
2010 £4574m
the capital structure of the group reflects the judgement of the 
directors of an appropriate balance of funding required the 
group’s target is to maintain its gearing ratio below 2xebitda 
treasury policy
the group treasury department works within a framework of 
policies and procedures approved by the audit committee as part 
of these policies and procedures there is strict control on the use of 
financial instruments speculative trading in financial instruments is 
not permitted the policies are established to manage and control 
risk in the treasury environment and to align the treasury goals 
objectives and philosophy of the group
funding and debt portfolio management
the group seeks to obtain certainty of access to funding in the 
amounts and maturities required to support the group’s medium  
to longterm forecast financing requirements group borrowings 
are arranged by the group treasury function 
interest risk management
the group seeks to reduce the volatility in its interest charge 
caused by rate fluctuations a significant portion of the group’s 
borrowings are fixed in the short to medium term through  
fixedrate debt qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
17
foreign exchange risk management
the principal exchange rate affecting the group was the sterling  
to us dollar exchange rate
2011 2010
£us – average rate 156 159
£us – closing rate 160 152
£us – opening rate 152 144
the group’s income and expenditure is largely settled in the 
functional currency of the relevant group entity mainly sterling 
or us dollar the group has a policy in place to hedge all material 
transaction exposure at the point of commitment to the underlying 
transaction uncommitted future transactions are not routinely 
hedged the group continues its practice of not hedging income 
statement translation exposure to minimise the impact of currency 
depreciation of the net assets on its overseas subsidiaries the 
group seeks to borrow in the currencies of those subsidiaries 
but only to the extent that its gearing covenant within its loan 
documentation as well as its facility headroom are likely to  
remain comfortably within limits
tax risk management
the central principle of qinetiq’s tax strategy is to manage effective 
and cash tax rates whilst fully complying with relevant legislation 
tax is managed in alignment with the corporate strategy and with 
regard to qinetiq’s core value of integrity in all business dealings 
these principles are applied in a responsible and transparent 
manner in pursuing the group’s tax strategy and in all dealings  
with tax authorities around the world
credit risk
credit risk arises when a counterparty fails to perform its 
obligations the group is exposed to credit risk on financial 
instruments such as liquid assets derivative assets and trade 
receivables credit risk is managed by investing liquid assets and 
acquiring derivatives from highcredit quality financial institutions 
trade receivables are subject to credit limits control and approval 
procedures across the group the nature of the group’s operations 
leads to concentrations of credit risk on its trade receivables 
the majority of the group’s credit risk is with the uk and us 
governments and is therefore considered minimal
insurance
the group continually assesses the balance of risk arising from the 
operations undertaken against the insurance cover available for 
such activities and associated premiums payable for such cover 
a prudent and consistent approach to risk retention and scope of 
cover is applied across the group the group has a policy of self
insurance through its captive insurance company on the first layer 
of specific risks with insurance cover above these levels placed in 
the external market with thirdparty insurers
employees
yearend employee numbers have decreased by 14 to 11208  
at 31 march 2011 the decline primarily reflects normal inyear 
attrition as well as departures under the restructuring programme 
in the uk and the impact of government insourcing and the 
disposal of sis in the us
employees by sector
2011
11208
40
45
15
us services     
uk services     
global products 
2010
13078
41
15
44
accounting standards
as a uklisted company the group is required to adopt eu 
endorsed ifrss and comply with the companies act 2006 the 
effect of changes to financial reporting standards in the year and 
critical accounting estimates and judgements are disclosed in note  
1 to the financial statements
critical accounting estimates and judgements in applying  
accounting policies
a description and consideration of the critical accounting estimates 
and judgements made in preparing these financial statements is set 
out in note 1 to the group financial statements
david mellors 
chief financial officer
27 may 2011 qinetiq group plc annual report and accounts 2011 18
business review
nonfinancial kpis
description
the losttime injury rate is calculated using 
the total number of work related losttime 
incidents x1000 divided by the average 
number of employees in that year the  
2009 figures exclude australia 
description
the underlying earnings per share

 eps 
expressed in pence per share
description
the group’s organic revenue growth is 
calculated by taking the increase in 2011 
revenue over 2010 pro forma revenue at 
constant exchange rates 
description
the underlying earnings before interest  
and tax

 
underlying operating profit

 for fy2009 has 
been restated to show the finance elements  
of the ias 19 pension cost in the finance 
income and expense lines there is no  
impact on reported profit before tax from  
this restatement 
comment
health and safety performance is monitored 
to drive continual improvement in 
minimising the risk to employees 
comment
eps provides shareholders with a measure 
of the earnings generated by the business 
after deducting tax and interest eps 
performance also determines the level of 
payout for certain of the group’s longterm 
incentive plans
comment
organic revenue growth demonstrates 
the group’s capability to expand its core 
operations within its chosen markets before 
the effect of acquisitions disposals and 
currency translation impacts 
comment
underlying operating profit

 is used by the 
group for internal performance analysis as 
a measure of operating profitability that is 
tracked over time 
key performance indicators
the group’s strategy is underpinned by focusing on a number of performance indicators the key indicators that the 
board utilises to assess group performance are set out below similar indicators are used to review performance in 
each of the group’s businesses
financial kpis

  definitions of underlying measures of performance are in the glossary on page 107 underlying financial measures are presented as the board believes these provide a better 
representation of the group’s longterm performance trend 
†
  the gearing ratio is net debt to adjusted ebitda and the definition is in the glossary on page 107 
underlying eps pence
2011 142
2010 111
2009 159
underlying operang proﬁt £m 
2011 1454
2010 1203
2009 1516
health and safety lostme injury 
rate per 1000 emplo yees
2011 328
2010 378
2009 300
2011 5
2010 3
2009 7
organic revenue growth  directors’ report business review directors’ report corporate governance financial statements
qinetiq group plc annual report and accounts 2011 19
description
a measure of employee engagement 
on a scale of 01000 based on the best 
companies employee survey through  
this channel qinetiq employees share  
their views of working at qinetiq under  
the headings of management leadership 
my company personal growth my team 
giving back to the community fair deal  
and wellbeing 
description
the group’s calculation of underlying 
operating margin

 is consistent with prior 
years underlying operating margin is 
calculated by taking the earnings before  
tax and interest as a percentage of revenue 
description
the ratio of our net cash flow from 
operations excluding reorganisations 
less outflows on the purchase of intangible 
assets and property plant and equipment 
to underlying operating profit

 excluding the 
share of posttax results of equity accounted 
joint ventures and associates 
description
the group’s gearing ratio
†
 is calculated as 
net debt divided by ebitda as calculated in 
accordance with the terms of the group’s 
credit facilities and is comfortably within 
our banking covenant limit of 35x 
comment
the survey forms part of the sunday times 
best companies to work for an annual 
survey run in the sunday times newspaper 
that ranks uk employers based on their 
employees’ feedback and allows comparison 
between qinetiq and other uk companies 
comment
underlying operating margin

 can be used  
to show the underlying profitability of the 
revenues delivered by the group it can  
also be used to compare the group’s 
performance with that of our peers 
providing the definition of underlying 
operating profit is consistent 
comment
provides a measure of the group’s ability 
to generate cash from normal operations 
and gives an indication of its ability to pay 
dividends service its debt and to make 
discretionary investments 
comment
net debt to ebitda provides a  
measure of the strength of the  
group’s balance sheet 
2011 85
2010 74
2009 94
underlying operang margin   
2011 183
2010 145
2009 107
underlying operang 
cash conversion   
2011 14
2010 25
2009 22
gearing rao
† 
x 
employee engagement score 
uk only on a scale of 01000  
2011 5693
2010 5541 20 qinetiq group plc annual report and accounts 2011
risks and uncertainties
the understanding and effective management of the risks that face qinetiq is 
fundamental to its success and is an integral part of managing the business 
the identification assessment mitigation and reporting of risks 
are processes carried out at a group business and project level 
and are included as part of the business performance review 
process risks are assessed according to the likelihood of the 
event’s occurrence and its impact both from a financial and 
nonfinancial standpoint the group risk register includes an 
analysis of the potential exposures and severity of each risk as a 
function of the likelihood and impact of the risk the assumptions 
underlying each risk and the mitigating actions required to 
manage the risk
the group risk register is reviewed by the executive team on  
a monthly basis and considers
• the authority resources and coordination of those involved in 
the identification assessment and management of significant 
risks faced by the organisation 
• the response to the significant risks which have been identified 
by management and others 
• the monitoring of reports from group management and 
• the maintenance of a control environment directed towards the 
proper management of risk
the risk register is reviewed by the board and in addition the risk 
owners present an update of current status and mitigating actions 
by rotation throughout the year
a change in demand 
from reduced military 
operations in iraq  
and afghanistan
current plans of both us and uk governments 
are to reduce involvement in afghanistan in the 
coming years a significant shift in policy by either 
the administration in the us or the government 
in the uk which results in a significant reduction 
in the number of forces personnel present in iraq 
and afghanistan may have a materially adverse 
impact on the group’s financial performance 
qinetiq has capitalised on increased uk and us 
government spending on technology in support 
of operations in iraq and afghanistan notably 
qinetiq has experienced strong demand for 
unmanned ground vehicles and survivability 
products across the duration of both campaigns 
however the focus on operational support in 
defence on both sides of the atlantic has given 
rise to a decline in defence expenditure in other 
areas such as services to improve procurement 
efficiency and innovative research the group 
mitigates this by maintaining a market focus  
and competitive positioning in adjacent  
markets including defence services which  
are not directly conflictrelated aerospace 
security and intelligence providing a degree  
of portfolio diversification
a change in either us 
or uk government 
spending on defence  
and security
the strategic defence and security review in the 
uk and the financial burden on both uk and us 
government budgets from the recent economic 
downturn will lead to reduced spending in the 
markets in which the group operates in particular 
the uk is reducing its defence budget by 8 in 
real terms by fy2015 and additionally seeking to 
remove significant overheating in its equipment 
programme any reduction in government 
defence and security spending in either the uk 
or the us could have an adverse impact on the 
group’s financial performance
the group is focused on a range of markets in 
defence security and intelligence providing a 
degree of portfolio diversification the group will 
continue to review trends in defence aerospace 
and security expenditure in order to align the 
business with those trends the uk government is 
investing an additional £650m in cyber capability 
which offers some opportunity to the group
risk potential impact m itig a ti o n
business review qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
21
changing in the timing 
of contracts
the amounts payable under some government 
contracts can be significant and the timing of 
receiving orders could have a material impact  
on the group’s performance in a given  
reporting period
the contract and orders pipeline is regularly 
reviewed by senior operational management
funding of the defined 
benefit pension scheme
the group operates a defined benefit pension 
scheme in the uk presently there is a deficit 
between the projected liability of the scheme  
and the value of the assets held by the scheme  
the size of the deficit may be materially affected 
by a number of factors including inflation 
investment returns changes in interest rates  
and improvements in life expectancy an increase 
in the deficit may require the group to increase  
the cash contributions to the scheme which  
would reduce the group’s available cash for  
other purposes
the performance of the pension scheme is 
reviewed regularly by group management in 
conjunction with the scheme’s independent 
trustees external actuarial and investment advice 
is also taken on a regular basis to ensure that the 
scheme is managed in the best interests of both 
the group and the scheme’s members the most 
recent triennial funding valuation of the scheme 
as at 30 june 2008 resulted in a deficit of 
£1113m the group and trustees have agreed a 
tenyear recovery period to make up this deficit 
the next funding valuation of the scheme is at  
30 june 2011
policies or attitudes 
may change towards 
organisational conflicts 
of interest oci
the group provides services to defence customers  
that meet their needs as part of the defence 
supply chain and also as technical advisor through 
its consultancy services the future growth of 
the business could be compromised should the 
current attitudes to policies adopted by our key 
customers change
the group takes proactive steps to manage any 
potential oci and to maintain its ability to provide 
independent advice through its consulting and 
systems engineering activities in the uk a formal 
compliance regime operates with the mod to 
monitor and assess potential oci as part of the 
sales acceptance process
tax liabilities may 
change as a result 
of changes in tax 
legislation
qinetiq is liable to pay tax in the countries in 
which it operates principally in the uk and the us 
changes in the tax legislation in these countries 
could have an adverse impact on the level of tax 
paid on the profits generated by the group
external advice and consultation is sought on 
potential changes in tax legislation in both the 
uk and the us this enables us to plan for and 
mitigate potential changes in legislation
fixedprice contracts some of the group’s revenue is derived from 
contracts which have a fixed price there is a risk 
that the costs required for delivery of a contract 
could be higher than those agreed in the contract 
due to the performance of new or developed 
products operational overruns or external 
factors such as inflation any significant increase 
in costs which cannot be passed on to a customer 
may reduce the profitability of a contract or even 
result in a contract becoming lossmaking
the nature of much of the services provided  
under such fixedprice arrangements is often  
for a defined amount of effort or resource rather 
than firm deliverables and as such the risk of cost 
escalation is mitigated the group ensures that 
its fixedprice bids and projects are reviewed for 
early detection and management of issues which 
may result in cost overrun
highlycompetitive 
marketplace
the aerospace defence and security markets 
overall are highly competitive the group’s 
financial performance may be adversely affected 
should it not be able to compete in the markets  
in which it aims to operate
qinetiq seeks to focus on areas within these markets 
in which its deep customer understanding domain 
knowledge technical expertise and platform 
independence provide a strong proposition and  
a significant advantage in competitive bidding
risk potential impact m itig a ti o n 22 qinetiq group plc annual report and accounts 2011
inherent risks from 
trading in a global 
marketplace
qinetiq operates internationally the risks 
associated with having a large geographical 
footprint may include regulation and 
administration changes changes in taxation 
policy political instability civil unrest and cultural 
and terms of reference differences leading to lack 
of common understanding with customers any 
such events could disrupt some of the group’s 
operations and have a material impact on the 
group’s future financial performance
while the core activities of the group are confined 
to the uk and the us the group continues to 
explore potential client relationships across the 
globe these new relationships are assessed 
for their inherent risks using our international 
business opportunity management process 
before being formally entered into
a material element  
of the group’s revenue 
and operating profit  
is derived from  
one contract
the longterm partnering agreement ltpa  
is a 25year contract to provide a variety of 
evaluation testing and training services to the 
mod the original contract was signed in 2003 
the ltpa operates under fiveyear periods with 
specific programmes targets and performance 
measures set for each period on 3 march 
2008 the group signed up to a second fiveyear 
period of the ltpa with the mod the first break 
point is in 2013 in the current year the ltpa 
directly contributed 11 of the group’s revenue 
and supported a further 6 through tasking 
services using ltpa managed facilities the loss 
cancellation or termination of this contract would 
have a material adverse impact on the group’s 
future reported performance
the group continues to achieve customer 
performance and satisfaction levels and 
significantly exceeded the agreed minimum 
performance rating of 80 in 20102011
failure to comply with 
laws and regulations 
particularly trading 
restrictions and  
export controls
the group operates in a highlyregulated 
environment and the majority of its revenues 
are generated from sales within the uk and the 
us the group is subject to numerous domestic 
and international laws including import and 
export controls financial and fiscal laws health 
and safety environmental money laundering 
antibribery etc failure to comply with particular 
regulations could result in a combination of 
fines penalties civil or criminal prosecution 
and suspension or debarment from government 
contracts as well as reputational damage  
to the qinetiq brand any one of these  
could have a material impact on the group’s 
financial performance
the group has procedures and where 
appropriate training in place to ensure that it 
meets all current regulations local management 
continuously monitors local laws and regulations 
and policies are in place for the appointment 
of advisors to support business development 
professional advice is sought when engaging in 
new territories to ensure that the group complies 
with local and international regulations and 
requirements in the us the group undertakes 
work that is deemed to be of importance to us 
national security and arrangements are in place 
to insulate these activities from undue foreign 
influence as a result of foreign ownership the 
group has procedures in place to ensure that 
these arrangements remain effective and to 
respond to any changes that might occur in us 
attitudes to foreign ownership of such activities 
the terms of reference of the compliance 
committee have been expanded to review the 
effectiveness of the compliance risk frameworks
failure of information 
technology systems 
and breaches of  
data security
the group operates in a highlyregulated 
information technology environment the data 
held by qinetiq is highly confidential and needs  
to be totally secure a failure of systems could 
impact contract delivery leading to a loss in 
the information systems are designed with 
consideration to single points of failure and 
the removal of risk through minor and major 
system failures the business maintains business 
continuity plans covering both geography eg sites 
risk potential impact m itig a ti o n
business review
risks and uncertainties continued qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
23
failure of information 
technology systems 
and breaches of  
data security
continued
customer satisfaction a breach of data security 
could impact our customer’s operations and 
have a significant reputational impact as well as 
the possibility of exclusion from some types of 
government contracts with a detrimental impact 
on the group’s financial performance
and business units as well as technical capability 
of staff these plans cover a range of scenarios 
which include loss of access to information 
technology systems the plans are tested at 
appropriate intervals data security is assured 
through a multilayered approach providing a 
hardened environment including robust physical 
security arrangements data resilience strategies 
the application of security technologies as well as 
comprehensive internal and external testing of 
potential vulnerabilities in addition the systems 
are monitored and managed on a 24x7 basis
exchange rate 
movement
the group is exposed to volatility in exchange 
rates due to the international nature of its 
operations this includes a translational impact 
on the key financial statements as a result of the 
group reporting its financial results in sterling  
the group has limited transaction exposure as  
its revenues and related costs are often borne  
in the same currency principally us dollars  
or sterling 
the group actively hedges all significant 
transactional foreign exchange exposure as 
described in the notes to the financial statements 
and has adopted hedge accounting the group’s 
objective is to reduce mediumterm volatility to 
cash flow margins and earnings the group 
protects its balance sheets and reserves from 
adverse foreign exchange movements by financing 
acquisitions in north america with us dollar
denominated borrowings partially mitigating the 
risk as us dollar earnings are used to service and 
repay us dollardenominated debt
raising external 
funding and volatility  
in interest rates
the group relies on the proper functioning of 
the credit markets which could have an impact 
on both the availability and associated costs of 
financing the group is exposed to interest rate 
risk derived mainly from longterm indebtedness 
and related to borrowings which have been issued 
at floating interest rates
the group maintains a prudent level of committed 
funding facilities a new fiveyear multicurrency 
facility totalling £275m was signed in february 
2011 provided by its relationship banks the 
group also uses fixedrate debt instruments 
issued to us private placement investors with 
maturity dates up to 2019
realisation of value 
from intellectual 
property may  
be delayed
the funded research and development work  
that the group undertakes for defence and other 
customers creates intellectual property that the 
group retains and can utilise for commercial 
applications the uncertainty that exists over new 
technologies and markets may result in delays 
failure to realise value from intellectual property 
or the need for a higher level of investment for 
the opportunity to be realised the additional 
investment requirements may have to be funded 
from the group’s own capital resources which  
may have an adverse impact on the group’s 
financial performance
the group invests in the development of 
intellectual property only where it believes 
there is a realistic market opportunity for the 
technology the performance of intellectual 
property realisation programmes is monitored 
to increase support for successful prospects and 
reduce expenditure where realisation appears 
less likely the group uses external experts 
and financial backers as partners in a variety of 
structures to enhance the performance of certain 
intellectual property realisation projects
acquisition of 
businesses
the group has the ability to acquire other 
businesses and companies these acquisitions  
may not perform in line with expectations  
thereby having a detrimental impact on the  
group’s financial performance
the risks are mitigated through the due diligence 
and internal approvals processes in addition the 
usual contractual protections are included in the 
purchase agreements signed with the vendors
risk potential impact m itig a ti o n qinetiq group plc annual report and accounts 2011 24
corporate responsibility review
business review
performance overview
progress in the year
 iso 14001 for uk sites maintained following audits
 7 reduction in co
2 emissions achieved in the uk
 uk waste recycling at 72
 progress on delivery of uk conservation management plans
  achieved mod sustainable procurement target
  uk riddor

 rates reduced 169 down from 369
  action plans put in place following employee  
engagement survey
future goals
• reduction in reportable uk incidents to zero by 2014
•  10 reduction in uk carbon emissions by 2012
• attainment of iso 18001 in the uk by 2013
•  continue to improve waste management in the uk
•  continue to work proactively with customers and suppliers  
on sustainable procurement issues
•  use of the employee engagement survey to  
make improvements
a responsible and sustainable business
leadership and management
with a wide network of domain experts across the uk australia and 
the us corporate responsibility cr is embedded in the business 
overseen by the head of cr the cr committee comprising the 
qinetiq executive team continues to review and support the cr 
strategy and projects 
the group business ethics policy provides a framework for how 
the group operates however regional differences in stakeholder 
requirements and law require priorities to be finetuned locally 
qinetiq responds promptly to changing legislation by adapting local 
policies such as health and safety environment business ethics 
and equality 
business ethics
progress on the business ethics programme is now reported 
quarterly to the compliance committee the group is committed 
to the highest standards of ethical conduct and in the forthcoming 
year a groupwide code of conduct will replace separate uk and 
us documents all employees are required to complete regular 
training in business ethics more indepth training is provided for 
employees who are involved in international business qinetiq 
engages with third parties such as trace to conduct due diligence 
associated with engaging representatives overseas all employees 
have access to an independent whistleblowing line 
sustainable procurement 
an important part of developing a sustainable and responsible 
business is managing how and what we buy to ensure best value 
for money taking into account environmental and socioeconomic 
issues in the uk qinetiq is a signatory to the mod’s sustainable 
procurement charter and an active member of the modindustry 
sustainable procurement working group qinetiq has been active 
in raising employee awareness of sustainable procurement through 
training employee campaigns and leadership team briefings and 
through the corporate induction for uk employees 
engaging our people
employee communications
our people play a crucial role in enabling the group to achieve 
its goals particularly in realising the significant change embarked 
upon within the group engaging employees begins with keeping 
our people informed through a range of channels the uk qinetiq 
employee forum continues to provide a way by which employee 
engagement is enhanced the ‘my contribution’ programme gives 
employees a forum to voice ideas for business improvements and 
convert them quickly into projects that benefit the company’s 
bottom line 
once again the uk and australian business took part in the best 
companies survey giving employees an opportunity to share  
their views on working in qinetiq a 775 response rate was 
achieved along with a higher score than in 2010 employee 
engagement has been a key part of qinetiq north america’s  
qna programme of bringing many separate companies together 
into one business and an engagement survey is also undertaken
people development
the group is an equal opportunities employer upholds the 
principles of the uk employment service’s ‘two ticks’ symbol  
and is accredited by investors in people 
qinetiq continues to support the development and employability 
of our people from apprentices and graduates to our current 
and future leaders the personal success plan psp qinetiq’s 
performance management process was introduced last year  
in the uk and australia and has been successfully rolled out  
and embedded it is a key mechanism for the identification of top 
talent as well as addressing any employee performance issues
employee wellbeing
uk and australian employees have access to an employee wellbeing 
programme providing information and support on financial legal 
and family matters and counselling uk employees also have 
a benefits package through ‘qinetiq currency’ qna provides 
an excellent package of healthcare benefits for employees an 
employee assistance programme and a purchase discount scheme 

  riddor reporting of injuries diseases and dangerous occurrences regulations 1995 qinetiq group plc annual report and accounts 2011
directors’ report business review directors’ report corporate governance financial statements
25
environmental management and conservation
the uk business continues to maintain iso 140012004 
certification confirming evidence of effective controls as part 
of company environmental management systems which cover 
a broad range of activities the australian business has also 
established a small group responsible for developing environmental 
initiatives a responsible and proactive approach is taken to the 
stewardship of the many sites of special scientific interest sssi 
that are managed in the uk conservation management plans in 
place where required
waste
as part of qinetiq uk’s wastemanagement programme data 
collection has been extended to the majority of qinetiq sites 
and those managed on behalf of the mod in qna recycling 
programmes operate across much of the business
uk wastemanagement 
data
1
2007 2008 2009 2010 2011
general waste to landfill 
tonnes
2472 1911 1924 1230 926
recycled waste tonnes 1338 1533 1802 2641 2355
percentage recycled 
waste
35 45 48 68 72
1
  in previous years only data for major sites was reported this year reporting is for all sites 
where qinetiq has control of the waste additional waste streams are now incorporated 
including operational waste
making a positive contribution to the community
science for society 
in 2010 two uk employees visited laos as part of qinetiq’s 
unexploded ordnance uxo science for society programme  
which has been running for six years the team uses its expertise  
to support local capability building to reduce the threat of uxo 
recently our qna business provided specialist unmanned vehicle 
equipment and associated training to aid in japan’s fukushima 
recovery efforts this enabled response teams to accomplish critical 
and complex recovery tasks while remaining a safe distance from 
hazardous debris and other dangerous conditions
education outreach 
for the fourth year running qinetiq uk collected an award from 
stemnet a uk national body leading all science technology 
engineering and maths stem educational outreach student 
placements are provided through ‘year in industry’ as well as 
sponsorship of degrees 
charity and community programmes 
employees across the group undertook a range of volunteering 
activities in the community total charitable giving from the 
business across the group was £196900 see page 45
safe and sustainable delivery
safety is a priority of the business a review of our uk health safety 
and environment hse provision during 2010 highlighted the 
need to further develop our hse and assurance management to 
improve leadership and focus in august 2010 a director of hse 
was appointed and two lead roles for occupational safety and for 
environment and sustainability were created they head up a new 
and invigorated hse function aligned with the business and with 
a strategy focused on developing a strong hse and assurance 
culture and competencies 
group health  
and safety data 2007 2008 2009 2010 2011
uk
1
na 761 466 532 473
qna
1
na 157 109 212 185
australia
1
na na na 388 395
qinetiq group
1
na 507
2
300
2
378 328
1
 lost time incidents per 1000 employees
2
 total for qna and uk only
environmental focus 
uk carbon management
the uk carbon management group promotes energy efficiency 
and awareness sets strategy and plans and monitors targets it is 
supported by a new network of energy champions across uk sites 
and the lowcarbon message is reinforced during ‘environment 
week’ the annual employee awareness campaign we report 
annually to the carbon disclosure project and will be participating 
in the uk government’s carbon reduction commitment energy 
efficiency scheme gaining the carbon trust standard demonstrates 
our commitment to energy efficiency
uk carbon  
management data 2007 2008 2009 2010 2011
uk gas use gwh 696 686 668 647 630
uk oil use gwh 225 214 217 206 203
uk electricity use gwh 1369 1136 1027 993 942
total co
2 from  
energy use
1
924 793 732 707 676
total co 2 from 
transport
1
na na 260 198 166
1
  co
2
 emissions are calculated using the defra 2010 greenhouse gas conversion factors 
these factors change regularly so to show actual reductions the same factors have  
been used for all years consequently there are some differences from the data reported 
last year qinetiq group plc annual report and accounts 2011 26
board  
of directors
appointment to board
appointed nonexecutive chairman in march 2010 
nonexecutive director between june 2009 and 
february 2010
committee memberships
member of the remuneration committee 
compliance committee and nominations 
committee
expertise
mark was previously general manager of ibm 
europe middle east and africa and sat on ibm’s 
worldwide management council mark currently 
serves as a nonexecutive director on the boards 
of reed elsevier group plc in respect of which he 
is also chairman of the remuneration committee 
reed elsevier nv and g4s plc the board considers 
that mark’s extensive experience in the technology 
services sector both in the us and europe coupled 
with his exposure to a variety of industry sectors on 
the boards of ftse listed companies is a valuable 
asset to the group in terms of leadership and 
addressing the strategic issues affecting the group 
appointment to board
appointed chief executive officer in  
november 2009
committee memberships
member of the compliance committee 
nominations committee and security committee
expertise
leo was chief executive officer of de la rue plc 
between 2005 and 2009 before that he was chief 
operating officer of invensys plc’s production 
management division prior to that time he spent 
16 years with honeywell inc in a variety of senior 
management roles in the usa europe the middle 
east and africa leo was formerly a nonexecutive 
director of tomkins plc
appointment to board
appointed chief financial officer in august 2008
committee memberships
member of the security committee
expertise
david was previously deputy chief financial officer 
of logica plc david has also held the position of 
chief financial officer of logica’s international 
division covering operations in north america 
australia the middle east and asia and prior to 
that he was the group financial controller earlier 
experience included various other roles with cmg 
plc rio tinto plc and price waterhouse david is a 
member of the institute of chartered accountants  
in england  wales
appointment to board
appointed deputy chairman and sid in august 2005
committee memberships
chairman of the compliance committee and 
nominations committee member of the audit 
committee and security committee
expertise
sir david is currently chairman of the court of the 
bank of england he has also been a member of 
the uk panel on takeovers and mergers since june 
2001 sir david joined gkn plc in 1970 and had 
held the position of group finance director chief 
executive and executive chairman before becoming 
nonexecutive chairman in 1997 until his retirement 
in may 2004 other notable roles include being a 
member of the national defence industries council 
between 1995 and 2004 chairman of courtaulds 
plc from 1996 to 1998 a nonexecutive director of 
the bank of england between 1991 and 1999 and 
chairman of tate  lyle plc from 1999 until 2009 
from 2001 to 2006 he was nonexecutive joint 
deputy chairman of brambles industries plc and 
bramble industries limited sir david is a fellow of 
the institute of chartered accountants in england  
wales the board considers that sir david’s detailed 
understanding of corporate governance and the city 
and its institutions and his industrial experience 
significantly enhance the operation of the board 
for more information go to  
wwwqinetiqcom
mark elliott
nonexecutive 
chairman – 62
leo quinn
chief executive 
officer – 54
david mellors
chief financial 
officer – 42
sir david lees
deputy chairman 
and senior 
independent  
nonexecutive 
director – 74
governance directors’ report  corporate governance directors’ report business review financial statements
qinetiq group plc annual report and accounts 2011 27
appointment to board
appointed nonexecutive director in february 2003
committee memberships
chairman of the security committee member of the 
compliance committee nominations committee 
and remuneration committee
expertise
colin served as managing director of the cabinet 
office from 2003 until his retirement in 2006 
previously he was finance director of the mod 
with responsibility for qinetiq’s privatisation and 
the subsequent investment by carlyle as part of the 
ppp transaction colin has extensive experience 
across the mod and has been a member of the 
foreign and commonwealth office’s audit and 
risk committee he is currently on the board of the 
royal mint chairing its audit committee the board 
considers that colin’s extensive knowledge of the 
development of qinetiq throughout its public
private partnership and his indepth understanding 
of the working of government particularly the uk 
mod provides the board with a unique insight 
into the issues facing government in delivering 
its procurement objectives and partnering with 
industry suppliers
appointment to board
appointed nonexecutive director in october 2005
committee memberships
chairman of the remuneration committee  
member of the audit committee
expertise
noreen sits on the board of credit suisse group 
zurich and is a nonexecutive director of newmont 
mining corporation denver where she is chair 
of the audit committee and rexam plc where 
she is chair of the finance committee prior to her 
appointment in 2001 as first vice president of the 
european bank for reconstruction and development 
ebrd noreen was head of risk management 
previously noreen had a distinguished career at 
bankers trust company now deutsche bank in 
corporate finance and leveraged financing with 
a concentration in oil gas and mining the board 
considers that noreen’s extensive international 
business experience particularly in the areas of 
corporate finance risk management and banking  
is of significant benefit to the board
appointment to board
appointed nonexecutive director in february 2008
committee memberships
member of the compliance committee
expertise
between 2005 and 2007 ed was the second – 
highest ranking military officer in the united states 
having served as the seventh vice chairman of 
the joint chiefs of staff a career nucleartrained 
submarine officer ed’s distinguished service has 
also included assignments as special assistant to 
the cia’s deputy director for intelligence senior 
military assistant to the us defense secretary and 
commander us joint forces command he also 
served as nato’s first supreme allied commander 
transformation after retirement and until october 
2009 he served as the nonexecutive chairman 
of the board of directors for alenia north america 
inc he currently is a nonexecutive director of 
the boeing company sra international inc and 
monster worldwide inc and serves in a probono 
capacity on a number of us government advisory 
boards and panels the board considers that ed’s 
extensive knowledge of the us defence and security 
domain significantly enhances the operation of the 
board as qinetiq continues to pursue its strategy 
of developing its us platform in the defence and 
security technology sector
appointment to board
appointed nonexecutive director in april 2010
committee memberships
member of the compliance committee 
remuneration committee and security committee
expertise
sir james commanded the aircraft carrier hms 
invincible and three other ships and submarines 
during a 37year career in the royal navy which 
culminated in his appointment as commanderin
chief fleet in between operational duties he served 
in several appointments in the mod and gained 
crosswhitehall experience while on secondment 
to hm treasury the board considers that sir james’ 
expertise in the government contracting domain 
particularly with the uk mod and hm treasury 
is highly beneficial in the context of qinetiq’s 
government sourced operations
appointment to board
appointed nonexecutive director in october 2010
committee memberships
chairman of the audit committee and member  
of the compliance committee
expertise
paul is currently a nonexecutive director and 
audit committee chair at royal mail holdings plc 
he is also a director at knowledge peers plc and 
is a trustee of pilotlight he was previously senior 
independent director of taylor nelson sofres plc a 
nonexecutive director of thomson sa and tangent 
communications plc and has also been group 
finance director of carlton communications plc and 
lasmo plc the board considers that paul brings a 
broad range of experience in finance and corporate 
governance from a cross section of industries all of 
which leverage technology
appointment 
appointed as company secretary and group 
general counsel in january 2011
expertise
jon joined qinetiq from chloride group where he 
held a similar role he has a background in legal 
private practice as well as company secretarial 
experience in other ftse250 companies
colin balmer
nonexecutive 
director – 64
admiral edmund  
p  giambastiani jr  
us navy retired
nonexecutive 
director – 63
noreen doyle
nonexecutive 
director – 62
admiral sir james 
burnellnugent 
nonexecutive 
director – 61
paul murray
nonexecutive 
director – 49
jon messent
company secretary 
and group general 
counsel – 47 corporate governance 
corporate  
governance report  
28 qinetiq group plc annual report and accounts 2011 
9 board 
directors
2
7
execu

Summary:
 qinetiq group plc annual report and accounts 2011
directors’ report business review
1
directors’ report corporate governance financial statements
performance highlights
1 performance highlights
2  chairman’s statement
3  chief executive officer’s review
6  operations overview
12  chief financial officer’s review
18 key performance indicators
20 risks and uncertainties
24 corporate responsibility review
26 board of directors
28 corporate governance report
36 remuneration report
45 other statutory information
48 statement of directors’ responsibilities
49 independent auditor’s report
50 consolidated income statement
51  consolidated statement of 
comprehensive income
   consolidated statement of  
changes in equity
52  consolidated balance sheet
53 consolidated cash flow statement
54 reconciliation of movement in net debt
55 notes to the financial statements
103  company balance sheet
104  notes to the company financial 
statements
106  fiveyear record for the years  
ended 31 march
107  glossary
108 additional information
109 where can you learn more
 definitions of underlying measures of performance are in the glossary on page 107 
†
 the gearing ratio is net debt to adjusted ebitda and the definition is in the glossary on page 107 
2011 £17026m
2010 £16254m
revenue
£17026m
2011 £1454m
2010 £1203m
underlying operang proﬁt
£1454m
2011 183
2010 145
2009 107
underlying operang cash 
conversion
183
2011 85
2010 74
underlying operang margin
85
2011 £2609m
2010 £4574m
net debt
£2609m
2011 142p
2010 111p
underlying earnings per share
142p
2011 14x
2010 25x
2009 22x
gearing rao
†
14x
2011 160p
2010 158p
dividend
160p