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QinetiQ sees H2 to be in line with H1 as order delays continue

Defence spaecialist and FTSE 250 constituent QinetiQ Group (LSE: QQ) said it was still seeing delays in orders from government customers in both the UK and US as conditions in its main geographic markets were slow to improve and the short term uncertainties noted in its interim report released in late November remained.

Due to these factors, the group does not expect a seasonally stronger second half performance to occur in this financial year, projecting it to be in line with the first half.

One of the main reasons for that is the position of the US government on orders for the group’s survivability products and unmanned ground vehicles within Technology Solutions, which have been pending throughout the year and are not expected to be realised during the current financial year following the announcement of the US Administration’s policy for the campaign in Afghanistan.

The group’s net debt amounted to £509 million at the end of last year, marking an increase over the half year figure due to the impact of cash restructuring, payment of £12 million deferred consideration for the acquisition of DTRI last year and other outflows.

Shares in the company tumbled 10% on the announcement.

QinetiQ also announced that chairman Sir John Chisholm will be retiring from the board at the AGM in February, as already flagged last year. As anticipated Mark Elliott, who joined the QinetiQ board in May 2009 as an independent non executive director, will become chairman of with effect from 1 March 2010.

Disclosure: The author holds no positions in the company