QinetiQ Group Posts H1 Pre-tax Loss; Raises Interim Dividend

11/25/2009 5:46 AM ET

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(RTTNews) - Technology-based services and solutions provider QinetiQ Group Plc (QQ.L: News ) reported Wednesday a pre-tax loss for the first half of fiscal 2010, despite an 11% growth in revenues, reflecting chiefly hefty reorganization costs in Europe, Middle East and Australasia or EMEA region. The group also raised interim dividend by 5%.

For the first six months ended September 30, 2009, QinetiQ Group reported a pre-tax loss of GBP 1.3 million, compared with a pre-tax profit of GBP 36.6 million in the previous year.

The results of the latest two quarters included EMEA reorganization costs of GBP 40 million and a gain on business divestments and unrealized impairment of investments of GBP 6.5 million. Amortisation of intangible assets arising from acquisitions increased year-over-year to GBP 12.9 million from GBP 9.3 million.

Underlying profit before tax, which excludes the above mentioned items, decreased 2% to GBP 45.1 million from GBP 45.9 million.

Profit attributable to equity shareholders dropped steeply to GBP 0.8 million or 0.1 pence per share from GBP 28.2 million or 4.3 pence per share in the first half of fiscal 2009. Underlying profit edged up to GBP 36.9 million or 5.7 pence a share from GBP 36.5 million or 5.6 pence a share.

The group's six-month revenue rose 11% to GBP 806.3 million from GBP 727.4 million in the year-ago period. On a constant currency basis, organic revenue dipped 1% from the past year. Strengthening of the U.S dollar augmented revenue by GBP 69 million, QinetiQ noted.

QinetiQ's North America business recorded revenue of GBP 403.7 million, up 24% from GBP 326.6 million in the prior-year period. At constant currency rates, organic revenue declined 3%. Revenue from Mission Solutions surged to GBP 181.4 million from GBP 116.7 million, reflecting contract wins from several new customers, including the U.S Department of State, the U.S Federal Emergency Management Agency and the U.S Secret Service.

In the North American operations, Systems Engineering revenue went up to GBP 138.4 million from GBP 104 million, as demand on many contracts from customers across the US Army, Navy, Marines and Special Forces improved year-over-year. Revenue from Technology Solutions dipped to GBP 83.9 million from GBP 105.9 million, mainly due to the completion of key defense appointments by the new US Administration and strategy finalization related to the continued US involvement in the Afghanistan conflict.

In the EMEA region, revenue climbed to GBP 400.6 million from GBP 397.3 million, representing an organic growth of 1%. The company noted that the EMEA results reflected the seasonality in the UK business with a major proportion of revenues traditionally expected in the second half of the year.