QinetiQ, the defence research business in which the chairman and chief executive made more than £35 million on the flotation of the business, will eliminate 400 jobs across the UK.

The defence research group, which was the subject of a critical report from the National Audit Office last week, will cut the administrative and support jobs as part of a reorganisation of its business intended to focus on growth areas.

The defence company, which has had strong growth in its business in the United States, will reorganise its Europe, Middle East and Australasia divisions, leading to a charge of up to £35 million in the second half of the year.

It plans to put more than 100 separate business units into four large divisions focused on managed services, technology solutions, consulting and products – a move that it believes will improve operating profit by £10 million a year after it has cut out duplication and unnecessary overheads.

Graham Love, the chief executive, said that the reorganisation would put the company in a stronger position to address growth markets and would eliminate duplicated overheads. “It is not clear who will go yet, but we will run a restructuring and redundancy programme,” Mr Love said.

The company said that it intended to be a net recruiter of scientists over the year, taking on about 400.

“We are restructuring this business so that we can accelerate the growth. We are certainly upskilling the organisation,” Mr Love said.

QinetiQ has established a venture fund within its own business with a dedicated executive team, which will aim to exploit QinetiQ’s successful research more aggressively. Building on the success of the emerging American business, QinetiQ wants to accelerate the growth of its business in Australia, where it has won its first contract, and the Middle East.

News of the reorganisation came as the company announced strong results for the first half of the year and said that the results for the full year were likely to be ahead of expectations. Underlying operating profit at the group rose by 34.5 per cent to £46 million, with organic growth of 21.6 per cent in the six months that ended on September 30. Pretax profits rose by 9.3 per cent to £25.9 million.

QinetiQ was the subject of a National Audit Office (NAO) report last week, which criticised the way in which it was partially sold in 2003 to Carlyle, the United States-based private equity group.

The NAO was also critical of an incentive scheme devised at the time of the sale, which led to senior executives achieving a 19,900 per cent return on their investment in shares in the business when it was floated in 2006.

QinetiQ said that there had been a 12.9 per cent increase in the value of orders won in the first six months of the year, up to £592.2 million. Revenue from North America has increased by 54.8 per cent to £256.6 million, with organic growth of 24 per cent. The company has raised its interim dividend by 10.8 per cent to 1.33p.

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