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QinetiQ posts annual profit rise, reaffirms trading expectations

By Li-mei Hoang

LONDON (Reuters) - (This version of the story was refiled to correct spelling of "year" in third paragraph)

British defence technology company QinetiQ Group reaffirmed full-year expectations in line with analysts' estimates after reporting a 7 percent rise in annual underlying profit due to its EMEA services business.

The company, which was part of Britain's Ministry of Defence before being spun off in 2002, reported underlying profit before tax of 107.8 million pounds in the 12 months ended March 31.

It had been expected to report profit of 99.95 million pounds, according to a Thomson Reuters poll of nine analysts. For the new financial year, it is expected to report profit of around 101.93 million pounds, according to an average estimate of analysts polled by Thomson Reuters.

Shares in the company jumped by more than 8 percent in early trading, making it one of the biggest gainers on Britain's midcap index <.FTMC> and were 7 percent higher at 230 pence by 0906 GMT.

The company said its Europe, Middle East and Africa (EMEA) services business -- which accounts for around 85 percent of revenue -- had performed well, particularly in the air, weapons and maritime segments.

But it was cautious about the outlook for Britain's defence industry, and said that further fiscal austerity and a new five-year Strategic Defence and Security Review (SDSR) was a concern.

"We've got to balance the market uncertainties, so in EMEA services for example, the forthcoming spending review SDSR and the impacts on UK defence," Chief Financial Officer David Mellors told Reuters.

QinetiQ, whose military equipment includes drones and bomb detection robots, said it would look to overseas markets like Canada, Australia and the Middle East to drive further growth as governments pursue similar defence programmes.

"There are governments around the world in a similar position to the UK government with financial pressures ... so that may well be one opportunity," Mellors said.

The company also said it was targeting new civilian customers with its technology products to help offset declines in defence spending in the U.S. and Britain.

QinetiQ, which helped invent radar and night vision goggles, said it had secured 77 percent of its revenue for the new financial year, a similar level to a year ago.

It posted full-year revenue of 763.8 million pounds and raised its full-year dividend per share by 17 percent to 5.4 pence.

(Reporting by Li-mei Hoang and Sarah Young; editing by Kate Holton)