QinetiQ Group plc ('QinetiQ'), the international defence and security technology company, today issues the following Interim Management Statement.
* Strong organic revenue growth in North America of 19% on a constant currency basis
* Sodexo named new equity partner in the Metrix consortium
* Successful $300m US private debt placement completed diversifying the source, maturity and currency profile of the Group's debt.
Trading in the third quarter remained in line with expectations and as set out in the interim results announcement made on 26 November 2008.
Group revenue increased 17.4% in the nine months to 31 December 2008 with organic growth at constant foreign exchange rates of 8.1%. The strengthening US dollar increased reported revenues by £51.1m over the same period last year.
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31 Dec 2008
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31 Dec 2007
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31 Mar 2008
|QinetiQ North America
QinetiQ North America (QNA)
QNA achieved strong organic revenue growth of 19% at constant currency for the nine months to 31 December 2008.
The Technology Solutions business received its first orders for our newly developed Dragonrunner robot variant, and for the EARS sniper detection system which represents our first large-scale deployment of such a soldier wearable product.
Our service based businesses, Systems Engineering and Missions Solutions, continued to exploit their offerings under the increased profile of the QinetiQ brand. In October 2008 the Mission Solutions business completed the acquisition of Dominion Technology Resources, Inc. (DTRI), announced on 4 August 2008. We are pleased with the post-acquisition performance of DTRI which operates within the US intelligence market.
Europe, Middle East and Australasia (EMEA)
EMEA revenues are in line with the prior year on an organic basis for the nine months to date. Consistent with prior years, the EMEA results reflect the seasonality in the UK business with revenues weighted towards the final quarter of the year.
The business transformation from pure research and development into a technology based solutions and services business continues. We are well placed to respond to the changing priorities of the MOD, our largest customer, including the support of existing operations and the provision of value for money solutions. We expect the research budgets to tighten further and continue to see delays in the award of contracts by the MOD. EMEA will monitor its cost base carefully to seek opportunities for efficiencies and to protect margins during this transition. The planned disposals of certain non core assets are progressing where we believe we can deliver greater value from divestment than retention. We expect some relatively small scale realisations will occur within the next few months.
The DTR programme progresses well. The Metrix consortium is undertaking a number of key activities with the support of the MOD including public consultation in Wales and the maturing of the Defence Technical Academy construction proposal in order to meet planning application requirements. At the beginning of February Sodexo was selected as our new 50/50 equity partner in the Metrix consortium, following Land Securities Trillium's withdrawal. Sodexo has considerable experience of PFI projects and of working as a partner with the MOD and is an existing member of the consortium.
During October 2008, the Group completed the acquisitions of DTRI and Commerce Decisions. These were funded through an increase in bank borrowings, which are primarily drawn in US dollars.
In order to diversify the source, maturity and currency profile of the Group's debt facilities, in February 2009 the Group completed a private debt placement with US financial institutions totalling $300m. The placement comprises $62m debt with a 7 year maturity at a coupon of 7.13% and $238m over 10 years at a coupon of 7.62%.
The total of the committed facilities available to the group is now £886m, when translated at an exchange rate of $1.45/£, the earliest maturity date of which is August 2012.
The 30 June 2008 triennial pension scheme funding valuation is proceeding to plan and we expect to conclude this exercise in the next few months. As previously announced, any annual recovery payments resulting from a likely past service deficit will be partially offset by lower future service contributions as a result of the changes in terms implemented this financial year.
With trading performance in line with expectations, the Board remains confident about the outlook for the Group.
QinetiQ's preliminary results for the year ended 31 March 2009 will be announced on 21 May 2009.