|Public limited company|
|Traded as||LSE: QQ.|
Research and development
|Headquarters||Farnborough, Hampshire, United Kingdom|
Number of locations
|UK, North America and Australia|
Mark Elliott (chairman) |
Steve Wadey (CEO)
|Products||Defence, security, aviation and energy and environment|
|Revenue||£783.1 million (2017)|
|£116.3 million (2017)|
|£123.3 million (2017)|
Number of employees
Qinetiq (// as in kinetic; styled as QinetiQ) is a British multinational defence technology company headquartered in Farnborough, Hampshire. It is the world's 52nd-largest defence contractor measured by 2011 defence revenues, and the sixth-largest based in the UK.
It is the part of the former UK government agency, Defence Evaluation and Research Agency (DERA), which was privatised in June 2001. The remainder of DERA was renamed Dstl. It has major sites at Farnborough, Hampshire, MoD Boscombe Down, Wiltshire, and Malvern, Worcestershire, former DERA sites. It has made numerous acquisitions, primarily of United States-based companies.
In 2001, when defence minister Lewis Moonie announced the creation of QinetiQ, on privatisation of the Defence Evaluation and Research Agency, he said that it would remain a British business based in the UK. The Ministry of Defence would keep a 'special share' in the company, and safeguards would be in place to prevent conflicts of interest. In February 2003, the US private equity firm the Carlyle Group acquired a 33.8% share for £42m. Prior to stock market flotation, ownership was split between the MoD (56%), Carlyle Group (31%) and staff (13%). The Carlyle Group was expected to invest for three to five years, after which a stock exchange float would take place.
In September 2004 Qinetiq acquired the US defence companies Westar Corporation and Foster-Miller, maker of the Talon robot. Also in 2004 it acquired HVR Consulting Services a leading UK-based engineering consultancy. In early August 2005, the company announced it would acquire Apogen Technologies, Inc., pending regulatory approval. The Qinetiq website lists this merger as costing $288.0m (£162.7m). In September 2005, it acquired a 90% share of Verhaert Design and Development NV (VDD), a Belgian space systems integrator. In October that year, it acquired Broadreach Networks Limited, a supplier of Wi-Fi internet to the European rail industry, and in February 2006 it bought Graphics Research Corporation Ltd, developer of the Paramarine software suite of ship and submarine design tools.
The flotation of the company has been dogged with controversy. Ennobled in 2005, Lord Moonie, who handled the initial sale, said in 2006 that the government's 31 per cent stake should not have been sold when equity markets were languishing in 2002. He said that he had argued for the sale to be delayed but was over-ruled by the Treasury, which had convinced the Ministry of Defence to go ahead.
Qinetiq was floated on the London Stock Exchange in February 2006. The company had been valued at between £1.1bn and £1.3bn, with the MoD holding estimated to be worth £616m – £728m, the Carlyle Group's holding £341m – £403m, and staff/management's holding worth £143m – £169m. Controversy was generated by the very large returns for the Carlyle Group and senior managers, with figures of over £20m suggested in the media for Sir John Chisholm.
Financial press speculation concerning a stock exchange float increased in January 2006. On 12 January 2006 an announcement was made in parliament by Dr John Reid, Secretary of State for Defence. He said that the Carlyle Group 'will continue to retain a significant stake in the company', and that the government would continue to hold a 'Golden Share' to protect the UK's security and defence interests.
Controversy also arose around the fact that retail investors were excluded from the initial public offering (IPO) due to Qinetiq's complexity and that institutional investors would require less complicated marketing and financing. This led to contrasts with the 'Sid' campaign for British Gas plc in 1986, where retail investors were encouraged to buy shares, with discounts and a large advertising campaign. The issue was partially resolved by allowing some brokerage firms to place orders in the IPO as part of a combined order, allowing the firm to purchase as though an institutional investor but on behalf of clients. While this did not result in a public campaign or retail investor discounts, it did allow many investors to purchase shares. The company floated on 10 February 2006, with an IPO of 200p per share, which gave a market value of £1.3bn. On 13 February 2006 (the Monday after the Friday IPO) shares closed at 219.5p, valuing the company at over £1.4bn.
Speculation that a consortium including Qinetiq was about to win a £10bn MoD training contract helped push their share price back above 190p in early November 2006. It was announced on 17 January 2007 that the Qinetiq-led Metrix consortium was the preferred bidder for package one of the MoD's Defence Training Rationalisation programme, worth approx £16bn.
In 2007, the National Audit Office conducted an inquiry into the privatisation to determine whether UK taxpayers got good value for money. The inquiry looked at the following issues:
In November 2007, the NAO reported that taxpayers could have gained "tens of millions" more and was critical of the incentive scheme given to Qinetiq managers, the 10 most senior of whom gained £107.5m on an investment of £540,000 in the company's shares. The return of 19,990% was described as "excessive" by the NAO. The role of Qinetiq's management in negotiating terms with the Carlyle Group while the private equity company was bidding for the business was also criticised by the NAO. Carlyle bought a third of the business for £42m, which grew in value to £372m in less than four years. However, the Ministry of Defence defended the sale:
In January 2007 the company bought Analex, a US corporation providing high technology professional services and solutions, principally to the US government and its agencies. It was incorporated in 1964 under the name Biorad and evolved into Hadron, a US government systems consulting firm. On 9 February 2007, the Carlyle Group sold its remaining 10.3% stake at 205p per share, giving it a £290m return on its original investment.
In February 2007 the acquisition of ITS Corporation, a provider of IT services to the US government and its agencies, was announced. The disposal of Aerospace Filtration Systems (formerly part of Westar) was announced at the same time. In June, Qinetiq announced that its US subsidiary Apogen Technologies Inc. had completed the acquisition of 3H Technology LLC, a specialist IT company with US government and commercial clients. In October, the company completed the acquisition of Boldon James Holdings Limited, a UK-based provider of software solutions for high end secure messaging, primarily for military, government and security customers worldwide.
In March 2007 Qinetiq spun off a new company, Omni-ID, Ltd, for commercialising passive UHF radio-frequency identification (RFID) tags. The MoD sold its remaining 18.9% holding in September 2008 at 206p per share, raising £254m. The government retained its 'special share', giving it control over any potential takeover.
Chinese hackers are understood to have compromised research at QinetiQ in North America. The Pentagon still entrusts QinetiQ with sensitive defence technology. It was reported that between 2007 and 2010, QinetiQ's North American business was the subject of a cyber-attack. At the time of the incidents, the company said it disclosed all of its breaches to the responsible government agencies and these were resolved to their satisfaction. Cyber security continues to be an issue with a recent Pentagon report saying that government agencies had been victims of attacks.
Qinetiq provides technology-based products and services to government and commercial customers. More than 2,000 of Qinetiq subsidiary Foster-Miller's Talon robots have been deployed to Iraq and Afghanistan, most used to remotely locate and disable roadside bombs. Qinetiq's SPO stand-off threat detection system has been sold to the US Transportation Security Administration for railway stations and airports. Qinetiq's Zephyr, a solar powered unmanned aerial vehicle, recently flew non-stop for 14 days – a world record for longest duration unmanned flight.
Qinetiq has a 25-year Long Term partnering Agreement (LTPA) with the UK Ministry of Defence (MoD) to provide test and evaluation services and manage military ranges. It is a major stakeholder in the UK Defence Technology Centre, which places military research contracts on behalf of the MoD.
Qinetiq has a 15-year Maritime Strategic Facilities Agreement (MSCA) with the MoD to provide strategic maritime facilities and capabilities, including hydromechanic facilities at Haslar, biomedical facilities on the UK's South Coast, and submarine structures, survivability and shock testing facilities at Rosyth.
The QinetiQ Group comprises QinetiQ EMEA (Europe, Middle East and Australasia) and Qinetiq North America. Qinetiq North America, which was set up after the takeover of Foster-Miller, is a wholly owned subsidiary of QinetiQ, but remains independent and separated from the QinetiQ group by a proxy agreement with the US to comply with US laws that prevent sensitive technology coming under the control of a foreign venture that takes over a US company. The major UK sites are at Farnborough, Hampshire (the historical Royal Aircraft Establishment) and Malvern, Worcestershire (the historical RSRE/RRE/TRE).
Qinetiq is one of the top ten largest UK employers of science and engineering graduates, recruiting around 150 a year. Between 2002 and 2006, it has appeared in the Times Top 100 Graduate Employers list. It has since been accused by unions of exhibiting higher than average levels of stress-related depression among employees, which is strongly denied by the company.
The company's services and products are as follows:
Former Central Intelligence Agency Director George Tenet was an independent non-executive director between October 2006 and January 2008. David Sharp was a mechanical engineer who worked for the company until 2005 when he resigned. The next year he died in Tibet, China on Mount Everest at over 8000 m altitude; his death triggered an international media storm because the other climbers didn't rescue him.
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