QinetiQ Group plc Share Incentive Plan An invitation to build up shares in your company Not for release, distribution or publication into or in the United States, Australia, Canada or Japan. This document is not an offer of securities for sale in the United States. The securities discussed herein have not been and will not be registered under the US Securities Act of 1933, as amended (the Securities Act ) or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as defined in Regulation S under the Securities Act) absent registration or in a transaction not subject to the registration requirements of the Securities Act. No public offering of the securities discussed herein is being made in the United States. The securities offered and sold outside the United States are being offered in reliance on Regulation S under the Securities Act. The securities discussed herein have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of securities. Any representation to the contrary is a criminal offence in the United States and re-offer or resale of any of the securities in the United States or to US persons may constitute a violation of US law or regulation.
QinetiQ Share Purchase is one of the elements in QinetiQCurrency that contributes to the value of your reward. Within there are a number of different arrangements, all of which are designed to offer you a stake in the company through share ownership. QinetiQ Currency Share Incentive Plan ( SIP or Plan ) Priority Free Dividend Partnership Matching As part of the Share Incentive Plan arrangements, QinetiQ Share Purchase offers you the opportunity to buy QinetiQ ordinary shares through monthly deductions from your pre-tax pay and have them held on your behalf in the Plan Trust.
QinetiQ Share Purchase...how does it work? You can join at any time. To invest in shares, deductions are taken from pre tax earnings which means that you save the income tax and National Insurance you would otherwise have paid on the amount you invest. To gain additional tax benefits, the shares you buy (known as Partnership ) must normally be kept in the Plan Trust for the full five-year qualifying period. Upon acquiring your Partnership, QinetiQ will award more shares to you free of charge (known as Matching ). You own the Partnership you buy and, as a shareholder, you will also be entitled to vote at annual general meetings. As a shareholder, any dividends you receive will be reinvested as Dividend. The price of shares and the income from them may go down as well as up and you may not get back the amount that you have invested. Joining QinetiQ Share Purchase Eligibility You can join if you work for QinetiQ (including participating companies) and you are a UK tax payer. When do I join? Providing you are eligible, you can join at any time. Please note: If you apply before the last working day of the month, the first deduction from your salary will normally be made in the following month. You can apply online at: www.shareview.co.uk/clients/qinetiq available 24 hours a day, 7 days a week or complete and return the enclosed application form in the reply paid envelope to the Plan Administrator. QinetiQ Share Purchase is made up of three elements: Partnership, Matching and Dividend Partnership purchased each month from pre-tax pay and held in a Plan Trust you choose how much to invest, between 10 and 150 a month (up to a maximum of 10% of pre-tax salary and 1,800 per tax year) shares belong to you from the day the Plan Trustee buys them shares can be taken from the Plan Trust at any time, but you may have to pay income tax and National Insurance Contributions (NIC) after five years, there will be no income tax or NIC payable you can keep your shares in the Plan Trust for as long as you are with the Company, sheltered from Capital Gains Tax (CGT) Matching for every three Partnership you buy QinetiQ will give you one Matching Share free. Only whole shares will be awarded if Partnership are sold or transferred within three years of the award date, you lose the corresponding Matching Matching must be held for three years before they can be sold after five years, there will be no income tax or NIC payable you can keep your shares in the Plan Trust for as long as you are with the Company, sheltered from CGT Dividend any cash dividends paid on Plan are used to buy Dividend. normally purchased twice a year and held in the Plan Trust cannot be taken out of the Plan Trust for three years after three years, there will be no tax payable you can keep your shares in the Plan Trust for as long as you are with the Company, sheltered from CGT
QinetiQ Share Purchase How QinetiQ Share Purchase works You decide an amount you can afford to invest each month: between 10 and 150 per month; must be in whole pounds; must not exceed 1,800 or 10% of your pre-tax salary earned in the current tax year. Company makes deductions from your salary and sends the money to the Plan Trustee. The Plan Trustee buys your Partnership at the market price normally on the 9th of the following month or on the next working day. The Company will pay the costs associated with buying Partnership. You own your Partnership as soon as they are bought. The purchase price will be shown on nucleus. Any money left over from the purchase of shares, ie less than the cost of one share, will be carried forward and used to buy shares in the next period. Matching will be awarded to you (one Matching Share will be awarded to you for every three Partnership you buy). As a shareholder, any dividend you receive will be reinvested as Dividend. Benefits of joining Share Purchase Tax and NIC savings This table illustrates savings that can be made through QinetiQ Share Purchase from investing pre-tax earnings. Example monthly deductions Basic rate tax payer (20% income tax and 12% NIC) Higher rate tax payer (40% income tax and 2% NIC) Take home pay reduced by Effective saving Take home pay reduced by Effective saving 10 6.80 3.20 5.80 4.20 25 17.00 8.00 14.50 10.50 50 34.00 16.00 29.00 21.00 100 68.00 32.00 58.00 42.00 150 102.00 48.00 87.00 63.00 These calculations are based on the income tax and maximum NIC rates for 2013/2014, and current legislation. The table provides a guide to income tax and NIC rates; the NIC rate may vary depending upon individual circumstances.
Matching In addition to the income tax/nic benefits of buying shares from pre tax pay the Company will award one free Matching Share for every three Partnership purchased. Matching Example This table illustrates the benefits to you from the Matching element of the Plan. Matching are awarded by QinetiQ in relation to the number of Partnership which are purchased from your monthly contribution. The example assumes a share price for illustrative purposes only of 1 a share. Contribution made by monthly deduction Number of Partnership purchased using contribution Number of Matching awarded by QinetiQ on a 1:3 basis Total number of shares awarded in this month 10 10 shares 3 shares 13 shares Further Information about your investment Keeping track of your Investment To view your QinetiQ Share Purchase shareholding simply register online at www.shareview.co.uk/clients/qinetiq and create a portfolio account. You can do this when you apply for QinetiQ Share Purchase or any time thereafter. QinetiQ ordinary shares are traded on the London Stock Exchange. The share price is available at www.qinetiq.com, nucleus & in most newspapers. You will receive a statement from the Plan Trustee every six months which shows the number of shares you hold in the Plan Trust, the date and the price at which the shares were bought or awarded and any cash balance held on your behalf at the time the statement is issued. Changes to your investment You can change, stop, or re-start your investment. If you stop investing in Partnership your shares can stay in the Plan Trust as long as you are an employee. To change your investment either log on to www.shareview.co.uk/clients/qinetiq or alternatively contact the Helpline for a changes form. ESP Portal What are the risks? As with any shares, the value of the shares that you own may fall as well as rise. If you are in any doubt as to whether this type of investment is appropriate for your individual circumstances, you should consult an independent financial adviser duly authorised under the Financial Services and Markets Act 2000. You may have to pay income tax and NIC if you do not keep your Partnership in the Plan Trust for the whole of the tax free qualifying period of five years. Purchasing Partnership will reduce the salary on which income tax and NIC are assessed. This may affect your and/or your spouse/civil partner s entitlement to certain benefits. See the HM Revenue & Customs guidance leaflet Share Incentive Plans and your entitlement to benefits (IR177) which can be obtained from the HM Revenue & Customs website: www.hmrc.gov.uk. Investments made under this agreement are in one company only and should, therefore, be considered as part of a balanced portfolio.
QinetiQ Share Purchase Changes in your circumstances Leaving QinetiQ/taking shares out of QinetiQ Share Purchase If you leave the Company or remain an employee but decide to take your shares out of the Plan Trust to sell or transfer them, it may have implications for your investment in QinetiQ Share Purchase. If you leave for one of the following reasons: disability injury death redundancy your Employing Company ceases to be part of the QinetiQ group QinetiQ transfers your employment to a non-group company (TUPE transfer) retirement What it means for you: Partnership Your shares must be taken out of the Plan Trust You receive shares free of income tax and NIC Matching Your shares must be taken out of the Plan Trust. You will not lose any of your Matching irrespective of how long you have held them You receive shares free of income tax and NIC Dividend You will receive your Dividend free of income tax and NIC irrespective of how long you have held them If you leave for one of the following reasons: resignation dismissal You remain employed by the Company but decide to withdraw your Partnership from the Plan Trust Income Tax & NIC Treatment 0 3 years from date of award Partnership Income tax and NIC is payable on the market value of your shares when you take them out of the Plan Trust 0 3 3 5 5+ What it means for you: Partnership Your shares must be taken out of the Plan Trust. You may have to pay income tax and NIC (see boxes below) Matching may be lost depending on how long you have held them (see boxes below). You may have to pay income tax and NIC (see boxes below) 0 3 Matching Corresponding Matching are forfeited Dividend Employees must keep Dividend in the Plan Trust for the three year Holding Period On leaving the Company, dividends used to buy Dividend may be taxed as a dividend in the year that you take them out of the Plan Trust 3 5 years from date of award Partnership & Matching may be taken out of the Plan Trust Income tax and NIC is payable on the lower of the market value of the shares at the date of award or the market value of the shares when taken out of the Plan Trust No dividend tax to pay 3 5 5+ 5+ years from date of award Partnership & Matching may be withdrawn free of income tax and NIC 0 3 3 5 5+
If I leave the Company (or wish to take my shares out of the Plan Trust), what happens? Your shares must be taken out of the Plan Trust. The Company payroll will notify the Plan Administrator, including any leaving date and reason. The Plan Administrator will write to you at your home address giving you all the information and forms you need. You must complete and return the forms to the Plan Administrator. Instructions are only valid when they have been received by the Plan Administrator in writing and cannot subsequently be altered. If you are taking your Partnership out of the Plan Trust before the end of the tax-free qualifying period of five years, you may have to repay any income tax and NIC saving. The Plan Administrator will calculate any income tax and NIC due on your Partnership. Partnership bought first must come out of the Plan Trust first. Sufficient shares will be sold by the Plan Trustee to cover any income tax and NIC due and a sale advice notice will be posted to you. You have to pay the dealing cost of selling your Partnership. The Company payroll will transfer the money to repay the income tax and NIC to HM Revenue & Customs (HMRC) on your behalf. The sale proceeds/any cash balance in your account with the Plan Trustee will be returned to you via payroll, as appropriate. Capital Gains Tax CGT will be calculated on the increase in the value of your shares based on the price on the day they are taken from the Plan Trust and the price when they are sold. If the shares are sold on the same day as they are taken from the Plan Trust, there will be no gain and therefore no CGT liability. If you take your shares out of the Plan Trust and sell them at a later date, you may be liable for CGT if the value of your shares has increased since leaving the Plan Trust. It is your responsibility to declare any CGT to HMRC. What about implications for my personal tax position? This brochure is for guidance only. Personal circumstances may affect your tax position and if in any doubt you should contact your tax or independent financial adviser. The Company, the Plan Administrator and the Plan Trustees are not permitted to give investment advice.
QinetiQ Share Purchase Contacts and information The Plan Administrator Equiniti Limited carry out the day-to-day administration of the SIP. If you have an enquiry about your shareholding, the Plan Trust, the operation of the SIP, in the first instance contact: Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, United Kingdom BN99 6DA Telephone helpline: 0871 384 2051* (or +44 121 415 7583 if calling outside the United Kingdom) www.shareview.co.uk/clients/qinetiq * Calls to this number are charged at 8p per minute plus network extras. Call centre opening hours 8.30am to 5.30pm, Monday to Friday. The Plan Trustee Plan will be held in a trust by Equiniti Share Plan Trustees Limited. Equiniti Share Plans Trustees Limited, Aspect House, Spencer Road, Lancing, West Sussex, United Kingdom BN99 6DA If you would like this guide in an alternative format, large print, Braille or audio tape, please contact our UK helpline on 0871 384 2051*. A textel/minicom service is available on 0871 384 2255* (or +44 121 415 7028 if calling outside the United Kingdom). The following additional information is being provided in order for the offering under the QinetiQ Share Incentive Plan ( the Plan ) to fall within Article 4:1(e) of the Prospectus Directive (2003/71/EC), which is the employee share schemes exemption from producing a prospectus. Additional information on QinetiQ ( the issuer ), including the current share price, can be found on the Company s website www.qinetiq.com The reason for the 2006 offering under the Plan is set out in the letter from QinetiQ s Chief Executive which accompanies this booklet. The maximum number of ordinary shares in the capital of QinetiQ that is subject to the offering under the Plan, assuming all conditions are satisfied in their entirety, on or around the date on which Partnership are purchased each month is such number of shares as may be purchased with employees contributions up to 150 a month per employee and the minimum number, if the conditions are not satisfied, is nil. Precise details of the rights attaching to the shares, which are ordinary shares, are set out in the QinetiQ Articles of Association. If you would like a copy of the Articles of Association, please contact the Company Secretary s Department who will provide you with a copy. Similarly, if you do not have a copy of the rules of the QinetiQ Share Incentive Plan and would like one, please contact the Company Secretary s Department. Where can I get help? Your line manager HR nucleus For information on making an application, your account number or to obtain an application form contact the UK Helpline on: 0871 384 2051* This explanatory booklet is a guide to the Share Incentive Plan and does not constitute the QinetiQ Share Incentive Plan Rules. In the event of a dispute, the Trust Deed and Rules and the legislation in force at the time will apply.