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QinetiQ Acquisition of Inzpire Opens Interesting Growth Opportunities By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

 

 

 

The £23.5 million acquisition by QinetiQ of 85% of the Lincoln based defence technology firm Inzpire is in my view nothing short of inspirational. Inzpire not only makes an excellent strategic fit for QinetiQ but will also allow the company to further enhance its defence training activities, an area that is quite rightly considered to be one that offers huge opportunities for growth.

QinetiQ has agreed to acquire 85% of Inzpire shares immediately and will acquire the remaining 15% in two years. Inzpire revenue is anticipated to have been £13.3 million in the year ended 31st August 2018 with adjusted EBITA (Earnings before interest, tax, and amortisation) estimated to be £2 million.

Announcing the acquisition yesterday, QinetiQ CEO Steve Wadey said that the investment in Inzpire “enhances our overall offer in defence operational training and mission systems, both in the UK and internationally” and that “Defence operational training represents an area of significant growth as customers around the world increasingly recognise the need to enhance their training capabilities cost-effectively. The combination of Inzpire and QinetiQ capabilities, complemented by our previous acquisitions, creates a leading provider of critical defence training”.

Formation of QinetiQ’s growth strategy over the past year has been particularly interesting to observe. Inzpire brings to QinetiQ not only an important element of additional skillsets, value and military based relationships, but the company also provides the enlarged group with excellent new opportunities to continue the stated mission for growth.

Other recent acquisitions announced by QinetiQ have been that of the German based airborne training provider E.I.S Aircraft Operations in April for £70 million. Considered to be a high growth business and with revenue of EUR20.1 million in the year ended December 2017 producing underlying earnings of EUR5.4 million, QinetiQ confirmed last week that the purchase of E.I.S. had now been completed.

So what does this very interesting specialist company called Inzpire that QinetiQ has acquired actually do? Inzpire provides a mix of training and blended mission systems support operation for military customers. Interpreted this means that Inzpire provides a range of sophisticated combat proven mission systems, managed services and training for the UK armed forces and also for military overseas.

Examples of what Inzpire provides includes training of Army Apache pilots at the Middle Wallop base, providing the Defence Synthetic Air-Land Training at RAF Waddington, supply of mission system products including full mission support systems integrated with aircraft avionics and that also includes supply of certain critical embedded Typhoon fast-jet capability at RAF Coningsby. In March Lockheed Martin contracted Inzpire to provide aircrew instruction and technical support for the new simulator training facility being built at RAF Odiham. With the UK MOD’s Air Support to Defence Operational Training (ASDOT) competition now moving into the final negotiation decision phase, of interest here is that Inzpire is currently teamed with Leonardo while QinetiQ is partnered on the same competition with Thales and Textron.

Formed thirteen years ago by a group of like-minded individuals whose Royal Air Force military careers had been drawing to a close, I have long taken the view that the strong military ethos that runs deep throughout all that Inzpire does sets the company apart from its peers.

From the outset setting out to lead a revolution in the military-industrial relationship Inzpire moved forward on the back of determination and ambition to be one of the most respected defence companies in the world. I am in little doubt that in its field of operation Inzpire has achieved those objectives.

Led by founder and current CEO Hugh Griffiths, a former Royal Air Force Panavia Tornado F3 flight commander, Qualified Weapons and Electronic Warfare Instructor and a past leader of the Royal Air Force analysis team at the Defence Science and Technical Laboratory (DSTL) and who will remain with the acquired company, Inzpire brings to QinetiQ an additional and very interesting mass of air power related experience.

Having observed Inzpire for several years past and known senior management, I would say that the success of Inzpire has been built on a strategy of developing a new defence/industry relationship approach, one that could deliver ‘on-budget’ and ‘on-time’ and also one that in the process of providing what the customer wants, has been able to draw on real-world experience. The reality is perhaps that having designed the perspective of becoming ‘an integrated and proud partner’ one that through what it set out to achieve could help save lives through complete training, reduce costs whilst at the same time promoting prosperity through a process of passion, agility and always being seen to be willing, Inzpire has become hugely respected across defence.

Examples of what Inzpire does include the Mission Systems operation which produces products used in 15 attack, support and search and rescue helicopters plus fast jet fighter platforms. For instance, Inzpire provides Qualified Helicopter Flying Instructors (QHFI’s) to the British Army teaching aspects of the UK Apache Attack Helicopter Conversion-to-Type course operation at the Army Aviation Centre at Middle Wallop. Built on software capability development, products include the GECO family of tablet-based mission systems for both airborne and land applications and GECO (Air) which provides a proven digital cockpit for almost any platform, enhancing existing on-board avionic systems on legacy aircraft right through to the latest 5th generation aircraft. This includes digital moving maps navigation, performance planning, safety of flight, datalinks or high resolution satellite imagery and tactical overlays. These ‘apps’ can be knee mounted or integrated into the aircraft and are aimed to enhance safety, increase situational awareness and increase mission performance.

Worth noting that GECO is combat proven through use on UK MoD aircraft in Afghanistan and Libya.  It is in use with the British Army Apache helicopters, RAF Tornado GR4 and Typhoon jets and that it was selected by Joint Helicopter Command (JHC) for use in nearly all UK MoD helicopters. Internationally, GECO has been purchased by the Jordanian Armed Forces for use in its F16 fast jets and across its military helicopter fleet.

Inzpire Managed Services included helicopter services, synthetic training, human factors and safety, air-land integration, integrated sensors and systems, remotely piloted air systems expertise and also in regard of ISTAR. The division is responsible for training the British Army to fly Apache helicopters, instructing RAF pilots in cockpit skills, for supporting UK Typhoon operations in the form of providing technical subject matter expertise and also for providing expertise in simulation and synthetic environments. Together, they design, produce and deliver a very comprehensive range of products and services through seamlessly integrating with military colleagues.

As far as I am aware Inzpire is the only external provider of Human Factors training to the Royal Air Force and British Army and has been delivering this form of training for the past nine years. Worth noting here that all UK military pilots, Royal Air Force, Royal Navy and Army are required to receive Human Factors training. Inzpire also has team of senior personnel engaged in Unmanned Air System (UAS) activities.

CHW (London – 23rd October 2018)

Howard Wheeldon FRAeS

hwheeldon@wheeldonstrategic.com

Tel: 07710-779785

Skype: chwheeldon

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