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13 Dec 18. Airbus strategy review augurs clean break under new CEO. Airbus has launched a strategic review to outline changes under incoming chief executive Guillaume Faury as it faces industrial challenges and prepares for overdue modernisation, industry sources said. The “Airbus Next Chapter” review involves a team of planners working outside the normal strategy organisation in pursuit of a break from years of industrial problems, management feuds and an ongoing bribery scandal.
It is being led by investor relations chief Julie Kitcher in what one insider described as a signal to financial markets that profits will be embedded in strategy, as the once state-sponsored European project marks its 50th anniversary.
Planemaking boss Faury, who becomes CEO when Tom Enders retires next April, “wants to go fast and introduce a new state of mind; he wants to turn the page on the past,” a person familiar with the company said.
Airbus declined comment on the review, which is designed to war-game strategic decisions and possible structural changes.
Founded in 1969, Airbus (AIR.PA) has risen to compete on a par with Boeing and is one of Europe’s leading exporters.
But its growth has been punctuated by Franco-German tensions, personal rivalries and most recently a crippling bribery investigation that accelerated management departures.
The review may address how Airbus can meet demand by sharply ramping up production of jets like its A320. One previous taboo that may come up for discussion is a fragmented production system securing jobs in Britain, France, Germany and Spain.
The A320 is the lifeblood of Europe’s largest aerospace group, described by operations chief Tom Williams, who retires later this month, as the “golden goose”.
Executives are warning Airbus must not find itself lacking in proven technology for the A320’s successor after 2030, as it had been in wide-bodies when Boeing launched its 787.
For now, Airbus is winning a bigger slice of the market on the A320 but some analysts say it has fallen behind Boeing in manufacturing techniques – a gap that could grow if Boeing launches a mid-market jet with a new factory system.
The review may study how Airbus can compete with Silicon Valley for talents in the digital era, while handling a wave of departures through retirements and a board-driven clearout.
Spurning global firms that typically work for Airbus, Faury has brought in Zurich-based consultants Egon Zehnder who are better known as head-hunters. The roll-call of scheduled retirements continued this week as Alberto Gutierrez was named head of military aircraft as Fernando Alonso steps down after stabilising the troubled A400M. Programmes chief Didier Evrard, who led two of Europe’s most ambitious projects, the Storm Shadow/SCALP cruise missile and A350 jetliner, is due to retire this month and will be replaced by an internal candidate from services or engineering. Some changes are happening already, with Airbus switching its quality-control chief this week after a series of snags. (Source: Reuters)
13 Dec 18. Ultra, the international defence, security, transport and energy group, today issues a Trading Statement ahead of its year end on 31 December 2018. The Group’s full year trading performance remains in line with expectations set at Ultra’s interim results on 6 August 2018. Ultra continues to experience strong order inflow and remains focused on execution and delivery while continuing to win new business. As previously guided, the Group is experiencing increased working capital requirements arising mainly from the higher order book, underlying revenue growth and a constrained supply chain. This is currently expected to result in 2018 cash conversion in the 65%-75% range. The Group remains well positioned in areas of priority spend with significant exposure to the strengthening US defence budget; this gives continued confidence in the longer-term outlook. Ultra’s preliminary results for the year ending 31 December 2018 will be announced on 6 March 2019.
Investors Chronicle Comment: Ultra Electronics (ULE) continues to perform in line with management expectations, according to a trading update this morning. The company restated that a high order inflow is raising working capital requirements, with “underlying revenue growth and a constrained supply chain” also adding pressure. The result is that cash conversion is expected to sit between 65 per cent and 75 per cent. The shares, which are the fourth most-shorted in the UK, according to Castellain Capital, were down by as much as 6 per cent in morning trading. Under review.
13 Dec 18. Shares in Serco (SRP) are up a whopping 9 per cent after its pre-close trading statement was better than expected. The group revised up guidance for its trading profit to £90-95m in September, and reiterated its guidance today. More importantly, though, management now expects EPS to be a further 5-10 per cent ahead of the current guidance and net debt is expected to be lower. Analyst Peel Hunt upped its EPS forecast to 5.3p in response. This is a rare bit of good news from the outsourcing market, though we remain cautious. (Source: Investors Chronicle)
12 Dec 18. The Texelis management team, led by Charles-Antoine de Barbuat, has acquired the majority shareholding of the Group with the support of institutional investors Siparex, Bpifrance and Carvest, it is announced today. Phillippe Frantz, who has been the majority shareholder since 2009 when the company separated from Renault Trucks continues as a shareholder, to provide continuity as the company continues on its growth path. Based in Limoges, Texelis specialises in developing and producing drivetrains, including axles, and power transmission systems for heavy vehicles including metros, trams, armoured vehicles and heavy trucks. Over the last few years the company strategy has focused on developing innovative mobility solutions whilst diversifying its customer base with major global manufacturers such as Siemens, Bombardier, Volvo and Nexter. Amongst recent successes, the Group is supplying mobility systems for the Siemens Neoval people mover, the Serval 4×4 armoured vehicle for the French Direction Générale de l’Armement and the renovation of the Mexico Metro.
The Texelis Group employs 350 people with a wide range of design, production and programme management skills on its 35,000 m2 production site. In addition to production it has an extensive refurbishment business especially in the rail market, for axle systems. It will report revenues of 110m Euros in 2018, a threefold increase since 2015, when the new strategy was adopted.
“We are committed to following the strategy that has proved to be so successful for Texelis. By maintaining our independence and the continuity of the management team and workforce, we are able to demonstrate our commitment to our clients and to our joint projects. The support of Siparex, Bpifrance and Carvest provides us with the opportunity to expand our development in France, as well as internationally. I welcome the continued presence of Philippe Frantz amongst our shareholders as he provides valuable stability for the business,” said Charles-Antoine de Barbuat, President of Texelis.
Guillaume Rebaudet, Director of Siparex commented, “We are very impressed by the Texelis Management Team’s motivation and ambition and we are delighted to support Charles-Antoine de Barbuat and the team in this acquisition.”
“This investment is in line with the strategy of our Siparex ETI 4 fund, whose objective is to support medium sized enterprises,” added Mr Rebaudet.
Siparex is investing via Siparex ‘ETI 4’, its fund focussed on medium sized companies, and the ‘Transatlantique’ fund to support the Texelis Group structure and its development projects in Canada, where it sees significant opportunities. Bpifrance, which is investing via the ‘Croissance Rail’ fund, will support the Group’s development via Bpi’s integration in the rail sector and the ‘Accélérateur ETI Nouvelle-Aquitaine’ innovation project which Texelis joined this year. Finally, Carvest, will expand the opportunities available to the Group as well as providing access to the best possible financing options to develop new projects.
12 Dec 18. Sparton Corporation to Be Acquired by Cerberus. Transaction Provides a Significant Premium to Shareholders and a Strong Partner to Support Future Growth. Sparton Corporation (“Sparton” or the “Company”) (NYSE:SPA) today announced that it has entered into a definitive agreement to be acquired by an affiliate of Cerberus Capital Management, L.P. (“Cerberus”), a global leader in alternative investing. Under the terms of the agreement, Cerberus will acquire all outstanding shares of Sparton’s common stock for $18.50 per share in cash. The $18.50 per share consideration represents a premium of approximately 41% over Sparton’s closing share price on December 11, 2018. The Sparton Board of Directors has unanimously approved the agreement and recommends that the Company’s shareholders approve the transaction.
“This transaction is the result of the significant time and effort the Company has invested in its previously announced process to explore strategic alternatives, including a potential acquisition of Sparton,” said Joseph J. Hartnett, Interim President and Chief Executive Officer of Sparton. “We are pleased to have successfully concluded our process with a transaction that delivers significant value to the shareholders of Sparton.”
Mr. Hartnett continued, “In addition to delivering immediate value to our shareholders, this transaction provides Sparton with a long-term partner that is focused on building upon our strong platform. Cerberus is recognized as a leading investor in global technology and manufacturing companies that brings significant operational expertise, in addition to its financial capital and acumen. Together, we will be able to capitalize on strategic growth opportunities, while continuing to meet the needs of our customers by delivering high-quality, innovative solutions and services.”
Tarek Ajouz, Managing Director of Cerberus, commented, “Sparton has a proven track record as a leading manufacturer of complex electromechanical devices for leading businesses and government agencies around the world. With its industry-leading solutions and strong customer relationships, we believe there is significant opportunity to further expand the Company’s leadership position in its markets. We look forward to partnering with Sparton’s talented employees to serve its customers with best-in-class solutions, build upon the foundation of excellent capabilities already in place, and help Sparton achieve its full potential for growth.”
The transaction, which is subject to the receipt of Sparton shareholder approval, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions, is expected to close in the first calendar quarter of 2019. Additional details regarding the transaction will be set forth in a proxy statement that will be sent by Sparton to its shareholders in advance of the special meeting at which Sparton’s shareholders will be asked to approve the transaction.
Debt financing for the transaction is being provided by accounts managed by TCW Asset Management Company, LLC and MSD Partners, L.P.
J.P. Morgan Securities LLC acted as financial advisor to Cerberus and Lowenstein Sandler LLP, Kirkland & Ellis LLP, and Blank Rome LLP acted as legal counsel to Cerberus. Wells Fargo Securities, LLC and Raymond James & Associates, Inc. acted as financial advisors to Sparton. Mayer Brown LLP acted as legal counsel to Sparton. (Source: BUSINESS WIRE)
12 Dec 18. Filtronic shares halve as it suffers antennas contract blow. Following the loss in orders, the antennas and telecoms firm has started a review of its options for this part of the group. Filtronic has made considerable efforts to diversify its customer base in recent years
Antennas and telecoms filters maker Filtronic PLC (LON:FTC) halved in value on Wednesday after one of its major customers said it would not be buying anywhere near as many Massive MIMO (mMIMO) antennas as it first thought. Filtronic had essentially built the antennas for this client and following the loss of orders has started a review of its options for this part of the group.
“Our predominant customer, with whom we had closely collaborated in the development of this product range, has now significantly lowered its forecast demand below that which it had previously provided, having itself been advised that its lead client is now looking to deploy different frequencies to those it had originally indicated, ”the company said in a statement.
“As a consequence of this lower demand and the uncertainty it brings, the board has decided to impair fully the net book value of the capitalised development costs of £0.5m relating to the development of mMIMO in its half year results.”
Filtronic said it had made considerable efforts to diversify its customer base in recent years and despite this setback to its mMIMO antennas business, it said it had recently approved as a supplier of a niche antenna product to a tier 1 mobile network operator in South Africa.
Filtronic said sales in the first half of its financial year were £10.4m – down from £12.8m a year ago. Shares in Filtronic were 54.7% down at 8.16p in mid-morning trade. (Source: proactiveinvestors.co.uk)
12 Dec 18. Cohort Plc. Half Year Results for the six months ended 31st October 2018. Cohort plc, the independent technology group, today announces its half year results for the six months ended 31 October 2018.
Financial and operational highlights
- Order intake of £45.6m (2017: £39.2m).
- Closing order book of £108.8m (30 April 2018: £102.5m).
- Revenue of £39.5m (2017: £44.0m).
- Adjusted* operating profit of £1.0m (2017: £3.3m).
- Adjusted* earnings per share of 1.99 pence (2017: 5.80 pence).
- Net funds of £4.7m (31 October 2017: £5.7m; 30 April 2018: £11.3m).
- Interim dividend increased by 12% to 2.85 pence per share (2017: 2.55 pence per share).
- Seasonally quieter first half in line with last five financial years mainly due to order timing.
- As announced today, the Group completed the acquisition of 81.84% of Chess Technologies Ltd (“Chess”) for total cash consideration of up to £41.9m.
- Historic second half weighting expected to be even greater this year.
- Key orders totalling over £100m already secured or down selected adding to the £45m of orders already won in H1.
- The 30 November order book of £135.4m underpins over £50m of revenue deliverable in the second half, which including revenue delivered to date, is 81% (2017: 83%) of consensus forecast revenue for the full year.
- Prospects for further orders in the second half to further underpin this year and next year are good.
- Performance for 2018/19, before the impact of Chess, is expected to be similar to last year.
- Five months’ contribution from 81.84% of Chess in the second half expected to be earnings enhancing.
Nick Prest, Chairman, commented: “Cohort’s result in the first half was lower than in the first half of the previous year, due to a combination of delivery slippage, some at customer request, and order delays. We previously referred to a number of key order opportunities which could have a major impact on our prospects for 2018/19 and beyond. These orders alone will total over £100m, on top of the £45m of orders won in the first half, and we expect 2018/19 to be a record year for order intake for Cohort. At 30 November our order book was £135.4m (30 April 2018: £102.5m), providing strong underpinning for the second half. We therefore expect, as seen in the last few years, a much stronger performance in the second half. Overall, allowing for the fact that we have proportionately more to do in the second half, the Board’s considered view is that Cohort’s overall performance in 2018/19, before taking account of the acquisition of Chess, will be similar to 2017/18 with the elements in place to deliver further progress in 2019/20. The acquisition of Chess represents a significant expansion, adding a profitable and growing fifth standalone business to Cohort’s portfolio. It furthers our strategy of expanding in defence products and export markets. We expect it to be earnings enhancing in the current year.”
* Adjusted figures exclude the effects of marking forward exchange contracts to market value, other exchange gains and losses, amortisation of other intangible assets and exceptional items.
* Where appropriate, the comparative figures have been restated in accordance with IFRS 15.
Investors Chronicle Comment: A rotten first half for Cohort (CHRT) delivered a £2m pre-tax loss, caused by delivery slippage and order delays. Contributions across the divisions were down, although over £100m worth of “key order opportunities” for the second half, on top of the £45m of orders won in the first half, places the company on track for a record order intake for the full-year. The company announced the acquisition of an 81.84 per cent stake in Chess Technologies, a technology supplier to the defence and security sectors, for a total cash consideration of £41.9m. Cohort will acquire the remaining shares after 30 April 2021. Shares were down 5p in early trading.
12 Dec 18. Cohort looks to a better second half. Shares in Cohort (CHRT) have suffered due to general concerns over Ministry of Defence (MoD) spending constraints in recent weeks. Yet with £55m of its £132m total order book deliverable in the second half, “83 per cent of the consensus forecast revenue for the full-year” should be recognised by April. A weighting towards the second half shouldn’t blind investors to an 8 per cent fall in adjusted operating profits. But a separately announced £10m two-year MoD contract extension, together with recent contract wins, demonstrates that the group’s high-end technologies remain in demand.
That’s certainly reflected in the half-year performance of its MASS division, a specialist in electronic warfare, secure communications and cyber security. The business was the beneficiary of the aforementioned MoD contract and accounted for £2.5m of the £3.6m in adjusted operating profits through the period. It was a mixed bag elsewhere in the group, with the elimination of the losses incurred at technical defence and security consultancy SCS in the first half of 2016, set against poorer comparatives at the EID (electronic equipment and systems) and Marlborough Communications (electronic and surveillance technology) business segments.
Investec gives adjusted pre-tax profits of £15.5m for the April 2018 year-end, leading to EPS of 29p, against £14.5m and 27.6p in FY2017.
Numbers in the second half should benefit from increased equity, as the group has acquired the remaining minority interest in Marlborough, and in November bought upped its stake in EID from 57 to 80 per cent. MoD budgets remain tight, but this cash-generative and acquisitive group looks compelling value on an enterprise value-to-sales ratio of just one. Buy. Last IC view: Buy, 431p, 29 Jun 2017. (Source: Investors Chronicle)
12 Dec 18. Cohort acquires Chess Technologies. “A significant expansion, adding a profitable and growing fifth standalone business to Cohort’s portfolio.” Cohort plc, the independent technology group, is pleased to announce that it has acquired a majority stake in Chess Technologies Limited (“Chess”), a UK-based world leader in integrated fire control and tracking systems for military vehicles and naval ships, for an initial cash consideration of £20.1m.
- Acquisition of Chess Technologies, a world leader in integrated fire control and tracking systems for military vehicles and naval ships, as Cohort’s fifth standalone subsidiary
- Total cash consideration of up to £41.9m comprising
- Initial consideration of £20.1m for 81.84% of Chess, payable on completion
- Further earn out consideration of up to £12.7m payable in 2021 dependent on performance in the three years to 30 April 2021
- Acquisition of the remaining shares of Chess following the three years to 30 April 2021 for up to £9.1m depending on performance during this period
- Acquisition funded by existing cash resources and recently agreed new debt facility
- Chess shares complementary customers with SEA, EID and MCL. The acquisition also represents Cohort’s first foothold in US defence and provides opportunities to leverage complementary expertise and capabilities
- •Chess management retained and fully aligned with Cohort’s growth strategy through retention of significant 18.16% stake in the business
- Acquisition expected to be immediately earnings enhancing
Andrew Thomis, Chief Executive Officer of Cohort, said:
“The acquisition of Chess represents a significant expansion for Cohort, adding a profitable and growing fifth standalone business to our portfolio. It is highly complementary to our core capabilities in defence and security, underpinned by long term contracts with quality global customers and a strong order pipeline, including on long term programmes. We believe Chess has great potential and a clear and sustainable competitive advantage, and we are excited about the opportunities that the business can generate as part of the Cohort Group.
Overall, the acquisition strengthens and broadens the Group’s portfolio and is expected to be immediately earnings enhancing. We are looking forward to working with the Chess team to realise the exciting growth opportunities that this transaction will create.”
Overview of Chess
Founded in 1993, Chess is a world leader in advanced integrated systems and technologies for detecting, tracking, classifying and disrupting a wide range of potential naval, land and air threats. Through its two operating businesses, Chess Dynamics Ltd and Vision4ce Ltd, it provides a unique suite of innovative surveillance and fire control system capabilities that are fundamental to critical defence programmes and vital commercial infrastructure projects. One example is its highly capable military counter-UAV system, AUDS, that provides an effective defence against this growing threat.
Headquartered in Horsham, with additional facilities in Plymouth and Wokingham, Chess also has a US office in Denver, Colorado. In total the business employs over 140 people. Chess’s well-regarded management team will remain in place following the transaction, led by its founder and CEO Graham Beall.
Chess has a strong global customer base, primarily armed forces and defence prime contractors, and its products are critical to major defence programmes worldwide. UK customers have provided just over one third of Chess’s revenue during the 2018 financial year, a proportion of which has been for non-UK end users. The balance has been generated in Europe (its second largest market), North America, the Middle East, Asia-Pacific and South America. The customer base is well diversified with almost 100 active customers and no single one accounting for more than 15% of revenues. Customers included BAE Systems, QinetiQ, Thales, Lockheed Martin and the UK MOD.
Chess provides complete design, development, and manufacturing services for both standard products and bespoke engineered solutions. As well as its military sales, Chess also works with commercial customers to help protect civil and commercial infrastructure.
Chess’s integrated systems are built from a suite of core technical capabilities centred on electro-optics, stabilised platforms, digital video tracking and analytics and fire control system (FCS) software.
Several partners rely exclusively on Chess to deliver these comprehensive system capabilities and Chess is involved in their programmes from a very early stage. Multiple prime contractors partner with Chess when exploring new programme opportunities, relying on its distinct capability set, expertise and imagination.
Financial information on Chess
Chess has grown rapidly in recent years, with strong growth in its order book, revenues and profits.
In the year ended 30 April 2018 it generated revenues of £18.2m (2017: £16.5m) and EBIT of £2.4m (2017: £1.6m). The closing order book as at 30 April 2018 stood at £31.2m (2017: £28.2m). Net assets as at 30 April were £8.3m (2017: £6.2m) and gross assets were £17.0m (2017: £16.2m).
Based on the order book and prospects, continued growth is expected for the year to 30 April 2019.
Background to and reasons for the acquisition:
The acquisition of Chess is in line with Cohort’s stated strategy to accelerate its growth by making targeted acquisitions, complementing organic growth, whether as standalone members of the Group or as “bolt-in” acquisitions to existing subsidiaries. The Board believes that this strategy of investing the Group’s cash resources partly in acquisitions will provide enhanced returns to shareholders.
Chess meets the Group’s criteria for stand-alone acquisitions, which are focused on agile, innovative businesses that have reached a stage of development where there will be mutual benefit in joining Cohort. Chess operates in a complementary market and technology space, has clear and sustainable competitive advantage and sees strong growth prospects.
The Board believes that the acquisition of Chess will provide a number of benefits, including:
- The addition of specialist products and technologies in the areas of electro-optics, tracking and fire control, with market leading positions in high growth markets
- A first foothold for the Group in US defence – an important growth opportunity
- A complementary and well diversified customer base including strong export exposure with opportunities to introduce Cohort’s other subsidiaries to Chess’s customers and vice versa
- Complementary positions on significant defence programmes, including the Type 26 frigate
- Access to a highly skilled and experienced defence engineering workforce.
Terms of the acquisition:
Chess is being acquired from management and funds managed by Beringea LLP. Consideration for the acquisition will be satisfied by the initial payment of £20.1m in cash for 81.84% of Chess’s issued share capital on a cash free/debt free basis funded from Cohort’s existing cash resources and banking facility. The shares not being acquired by Cohort will be retained by members of Chess’s management.
Further consideration of up to £12.7m is payable in 2021 in cash dependent on the revenue performance of Chess in the three years to 30 April 2021.
Cohort has also agreed to acquire the remaining Chess shares following 30 April 2021. The price will be determined by Chess’s order book and EBIT performance for the three years ended on that date and will not exceed £9.1m.
Jeff Perrin, a non-executive director of Cohort is also the non-executive Chairman of Chess and, prior to the acquisition, held approximately 4.5% of the issued share capital in Chess. In line with good governance, he has not taken part in the Board’s consideration of the acquisition and will in future take no part in Cohort discussions concerning the transaction or the ongoing earn-out process. The terms on which Mr Perrin will sell his shares, including his entitlement to receive any future consideration, are the same as all other selling shareholders.
BATTLESPACE Comment: Its hard to see the synergies championed here and although it has US orders this is through its US partner Liteye and not direct with the DoD. It’s a good deal for Chess as it relives it of its shackles to its VC investor. Although Cohort supremo Nick Prest had considerable expertise and strength in the EO/IR market when with Avimo, Cohort has little exposure in this filed and thus will have to inject considerable marketing skills into Chess to win orders. If this acquisition does not work and MoD orders fail to come through, this could put Cohort itself under the spotlight.
10 Dec 18. Brazil Court Overturns Injunction Blocking Boeing-Embraer Deal. A Brazilian federal court has overturned a provisional injunction that blocked a proposed tie-up between plane-makers Embraer and Boeing, Embraer said on Monday in a securities filing. Brazil’s Embraer announced in July its intention to sell 80 percent of its commercial aviation business to Chicago-based Boeing for $3.8bn. Embraer has said the deal is crucial for its survival. The injunction emerged from a class action brought by four congressmen from Brazil’s left-wing Workers Party and had been granted on Thursday. Brazil’s solicitor general’s office confirmed the injunction that halted Embraer’s negotiations with Boeing had been thrown out. (Source: defense-aerospace.com/Reuters)
11 Dec 18. Thales and Gemalto are granted regulatory clearance by the European Commission. Thales and Gemalto announce today that they have been granted merger control Regulatory Clearance by the European Commission, following Thales’s commitment to divest its general purpose hardware security modules (GP HSM) business globally to a suitable purchaser. This clearance is effective immediately.
12 Dec 18. Rolls Royce profits glide to top end of guidance range. FTSE 100 group had been grappling with supply problems. Rolls-Royce, the UK aero-engine group, sought to reassure investors its trading was in line with expectations on Wednesday, as it reconfirmed its guidance for profit and free cash flow for the year. The FTSE 100 group said in a trading update it expected its profit and cash flow for 2018 to be in the “upper half” of its previous guidance. Specifically, it expects group operating profit to be around £400m, plus or minus £100m, with free cash flow expected at £450m, plus or minus £100m. The company, which has been struggling with performance issues on some of its new engines, said that, as previously indicated on October 26, it still expected to deliver around 500 large engines this year but lower than the 550 large engines it had previously projected in March. Rolls-Royce has been battling problems supply problems with its Trent 7000 engine which power the A330neo. On Wednesday, the company said that “as we move into 2019 we are confident that Trent 7000 production and delivery volumes will increase significantly to meet our customer commitments”. It has faced bigger challenges with the Trent 1000 engine which powers Boeing’s 787 and accounts for 11 per cent of its commercial fleet. The company has had to embark on a programme of checks and repairs, and redesign some components after turbine blades on certain variants of the engine were corroding faster than expected. Remedial measures will cost more than £1bn. The issue has also strained relations with aerospace and airline customers. Rolls-Royce on Wednesday said work with regulatory authorities “on the certification of the newly-designed intermediate pressure compressor blades for the Trent 1000 Package C engines” was continuing well. However, it admitted that “the number of aircraft on ground remains at a high level”. “We sincerely regret the disruption that this has caused our customers. We are determined and confident that as we execute our plans we will see a significant improvement in aircraft on ground as we progress through the first half of 2019,” it added. The company is in the midst of a restructuring under chief executive Warren East that will see 4,600 back-office and middle-management jobs go. Mr East has made free cash flow a key measure of performance and promised to deliver more than £1bn by 2020. The company generated £273m in 2017 from underlying revenues of £15bn. Rolls-Royce on Wednesday said the restructuring “remains on track”. “We are confident that the end result will be a simpler, leaner and more agile organisation that drives culture change through pace, simplicity, efficiency and empowerment,” it added. The company said it noted the decision by the government to delay its vote on the proposed withdrawal agreement from the European Union. It said it was continuing to implement its contingency plans for a no-deal Brexit “until we are certain that a deal and transition period has been agreed”. It is working with the European aviation safety agency to transfer design approval for large aero engines to Germany, where it already carries out this process for business jets. “This is a precautionary and reversible technical action which we do not anticipate will lead to the transfer of any jobs,” it said. It has also begun to build inventory as contingency measure. (Source: FT.com)
11 Dec 18. Microdrones Merges with Schübeler Technologies. As part of ongoing global expansion, Microdrones has announced a merger with Schübeler Technologies. Since its founding in 1997, Schübeler has built a global business by providing advanced fan propulsion jets and lightweight composite materials fabrication. Offering a full product lineup of robust turbo fans, jets, compressors, pumps, electric motors, carbon fiber and aluminum composites, Schübeler products are designed to withstand extreme conditions and demanding field use. These components provide thrust power and lightweight durability to high tech applications including UAVs, professional motorsports and heavy duty outdoor equipment.
Microdrones, founded in 2005, has enjoyed rapid growth, evolving from the world’s first manufacturer of commercial grade unmanned VTOL aircraft, to a provider of fully integrated systems for surveying, mapping, LiDAR and inspection applications. These systems are being put to use worldwide by professionals in the construction, mining, energy, agriculture and infrastructure trades.
According to Microdrones President Vivien Heriard-Dubreuil, “We make life easier for professionals by offering the full solution; it has proven to be a successful strategy. Perfectly integrated drones, sensors, software, workflow, training and support is what the market needed. Welcoming the Schübeler team, talent and capabilities to Microdrones delivers new aviation technology and capabilities to our customers in the form of next generation unmanned aircraft.”
As the preferred provider of VTOL solutions to Trimble Dealers worldwide, Microdrones adds a global sales force and distribution network as well as technical centers and production sites spanning 7 countries and 3 continents. Daniel Schübeler, founder and CEO of Schübeler Technologies explains, “Merging with Microdrones empowers us to develop and deliver systems where we can best support customers locally. This is a happy homecoming for me and the team that we’ve built over the past twenty years.”
Daniel was an original founding partner in Microdrones and helped develop the pioneering technology that helped Microdrones gain global recognition as the first professional VTOL UAVs. He adds, “Both of these companies have enjoyed global growth and impressive technological advancements independently– merging our talents and teams will yield amazing solutions in the years to come.”
Francois Gerner, SVP of Corporate Affairs at Microdrones explains, “This is a strategic growth initiative. We are adding technology, IP, talent, strong leadership and investment capabilities that are complementary to both brands. This deal brings us to more than 150 highly skilled employees worldwide, which translates to better products, service and support.”
In addition to expanding the Microdrones team and family of products, the merged companies will also retain the Schübeler Technologies brand, which commands a niche’ audience of serious aeromodelling enthusiasts. Schübeler Technologies will continue to serve these markets as well as tackle large scale custom R&D projects related to propulsion and materials. (Source: UAS VISION)
09 Dec 18. Rheinmetall eyes majority in defence group KNDS – report. German tank maker and auto supplier Rheinmetall (RHMG.DE) aims to take a majority stake in Franco-German KMW + Nexter Defence Systems (KNDS), German daily Welt am Sonntag reported. Rheinmetall’s executive board told analysts that is aiming for a stake that could go up to 75 percent if the company merges its own activities into KNDS, the paper said, adding that alternatively a cooperation agreement between the companies was an option. The companies were not available for comment. Rheinmetall said last month that it was in talks about buying a stake in KNDS, adding that the transaction depended on a variety of political, economic and regulatory factors. (Source: Reuters)
10 Dec 18. WhiteFox Raises Additional $12m in Funding. WhiteFox Defense Technologies, Inc., announced that it has raised a further $12,000,000 in a Series Seed round led by JAM Capital, LLC bringing the total investment to date to $14,000,000. WhiteFox will leverage the funding to scale its operations, prepare to launch new product lines into the market and continue to develop its proprietary technology to advance its mission of safely ushering in the integration of drones into the airspace.
The latest financing round was made up of institutional and strategic investors that share WhiteFox’s mission of advancing drone technology to benefit society. They included JAM Capital, LLC, a capital fund supporting entrepreneurial businesses specializing in technology; Stage Venture Partners, a seed venture capital fund that invests in emerging technology for B2B markets; Okapi Venture Capital, a fund that provides long-term capital and management support to startups, Serra Ventures, a venture firm consisting of former entrepreneurs serving the current best-of-breed entrepreneurs catalyzing midwest and west coast innovation, and OCA Ventures, an early stage venture capital firm that invests in companies with dramatic growth potential.
Users of WhiteFox’s technology receive continuous, automatic protection of vulnerable facilities and critical infrastructure through a customizable geofence around a restricted airspace. The system requires no training or human intervention and is fully integratable with existing security systems.
Luke Fox, CEO of WhiteFox Defense Technologies said: “This is an enormous step forward for safely ushering drones into the national airspace system. We’re inspired by what drones offer society, from aiding emergency response teams and conservation efforts, to improving internet access – but to unlock their maximum potential for good, we must first protect their airspace. It’s a mission we tirelessly work toward realizing, but like any major undertaking, it can’t be achieved without the necessary resources, which is why we’re grateful to our investors for supporting the development of our industry-leading technology and sharing our vision of advancing drone technology to benefit society.”
John Schmidt, Managing Partner at JAM Capital, LLC said: “We are thrilled to be a part of the WhiteFox team and mission to provide drone airspace security. We are very pleased with the work that WhiteFox has done. They are taking their technology to new heights and are providing a needed solution in the marketplace. With the combination of their team, intellectual property, and drive; we have no doubt that they will be successful. It has been a pleasure to work with Luke Fox and the rest of the team and we look forward to the future.”
Jeff Bocan, Partner at Okapi Venture Capital said:“We are very excited about our investment in WhiteFox, because they have built the best solution available for anyone tasked with maximizing security and safety of public spaces, critical infrastructure, and military operations. WhiteFox’s customers are armed with a highly robust and scalable-for-deployment technology platform that addresses the increased threat of hostile drones and enables greater control of their airspace. Crucially, the WhiteFox’s technology also offers customers the ability to protect against reckless drone use, while enabling “friendly” drones to fly freely – all without any human intervention.”
Steve Beck, Managing Director of Serra Ventures said: “WhiteFox has assembled a rock star team of drone experts, invented deep intellectual property that confounds even drone junkies, and has the passion and drive to bring their platform to our skies, making the promise of drone security and commercial profitability a part of our daily lives.”
Alex Rubalcava, Partner at Stage Venture Partners said: “Stage has considered investments in dozens of drone technology companies, and nearly half a dozen drone defense startups before WhiteFox. Only in WhiteFox did we see an amazing team, a significant technological lead, and an urgent customer need. As the adoption of consumer drones increases, we believe it is vital for an ambitious and effective defense platform to emerge. We believe WhiteFox is this platform. We are delighted to support Luke and the rest of the WhiteFox team.”
Tamim Majid, Principal at OCA Ventures said: “WhiteFox has developed a holistic drone defense platform that will be critical to drone proliferation across different use cases. We are excited to be a part of that journey.”
Launched in 2015, WhiteFox has attracted strong interest and validation from many Fortune 500 and U.S. government customers. The core WhiteFox technology offers critical infrastructure and personnel the ability to protect against reckless drone use, whilst enabling “friendly” drones to fly freely and continue the work they’re doing to positively impact society. In September 2018, the team was invited to participate in the prestigious Black Dart counter-UAS event, the largest Counter UAS exercise in the world, to showcase their technology. The company has also received wide industry recognition for its innovative products, recently winning first place for ‘Counter UAS and Security’ by the Association for Unmanned Vehicles Systems International (AUVSI) at the Xponential Awards in May 2018. (Source: UAS VISION)
10 Dec 18. Small businesses to receive boost from BAE pension fund. Lending programme with ThinCats aims to transform the way SMEs get financing. BAE’s pension fund has £13bn in assets and 108,000 members. One of the UK’s biggest pension funds is to lend to small businesses through online platform ThinCats, in a move that could transform the way they are financed. BAE Systems Pensions on Monday announced a £200m programme with ThinCats, a peer-to-peer lender that targets fast-growing small and medium-sized businesses. UK SMEs remain far more reliant on bank lending than those in many other developed countries and the government has been encouraging pension funds to provide finance to them. John Mould, chief executive of ThinCats, said there were signs banks were retrenching, anticipating a financial shock after Britain leaves the EU in March. “I am worried about the banks pulling back because of Brexit and having money to fund company growth is vital to the UK economy. Pension fund money is long-term patient capital and they won’t be grabbing it back like the banks can,” he said. Mr Mould said he hoped other pension funds would follow BAE’s lead. They have traditionally favoured assets such as property and corporate bonds. ThinCats offers a higher rate of return at a lower risk than if the fund lends directly, he said. “We do the due diligence and have the systems to manage risk,” said Mr Mould. It lends between £100,000 and £15m for terms of three to five years. Interest rates range from 5 to 14 per cent. ThinCats was established in 2011, after the big banks called in bns in loans and overdrafts from SMEs after the financial crash, sending many into bankruptcy. It receives funding from big institutions and wealthy individuals. It has lent £360m to date and now has £800m to deploy. Based in Ashby-de-la-Zouch, Leicestershire, it is majority-owned by ESF Capital, which is in turn controlled by BAE’s pension fund, and employs a network of staff across the UK. “This money will be lent all over the country, we are very regional,” said Mr Mould. David Adam, chief investment officer of BAE Systems Pensions, said: “Our partnership with ThinCats enables us to invest on behalf of our members in an asset class that offers a highly attractive risk-return profile while also making a contribution to UK SMEs, by providing much needed funding to medium-sized SMEs as key participants in the UK economy.” The defence company’s pension fund has £13bn in assets and 108,000 members. The peer-to-peer lending sector continues to grow. Funding Circle, the leading small business loans platform in the UK, on Friday received £1bn from Waterfall Asset Management to lend. Funding Circle, which has 85,000 individuals as well as institutions as lenders, facilitated £377m of SME loans in the third quarter of the year. Banks still provide more than 75 per cent of business lending and the banking sector advanced £7bn as a whole to SMEs in the third quarter of 2018. However, SMEs paid back more than they borrowed. (Source: FT.com)
07 Dec 18. Facing uncertain future, Piaggio Aerospace gets new management. Two weeks after its Gulf owners placed it into receivership, Piaggio Aerospace has a new manager appointed by the Italian government who is seeking a buyer for the historic Italy-based firm. The company’s prospects are however gloomy after its former owner Mubadala, the UAE investment fund, cancelled its planned order for eight Piaggio Aero P1.HH drones, just as Italy is dragging its heels over its own order of drones from the company. On Tuesday, the Italian government appointed a lawyer, Vincenzo Nicastro, as administrator of the firm, whose first task was to pay November’s wages to staff.
An Italian industry source said he would then be responsible for devising a plan to relaunch the firm, before seeking a new buyer, with Italy’s Leonardo being touted in Italy as a candidate.
Leonardo CEO Alessandro Profumo has not ruled out taking a stake in the firm.
“We need to understand how the situation evolves and then we will evaluate the case,” he said last week.
Profumo noted that Piaggio Aerospace handles maintenance for the MB-339 training aircraft supplied by the firm to the Italian Air Force, adding the work was “very important to our customer and to us.”
A spokesman for Piaggio Aerospace declined to comment.
Piaggio Aerospace’s request to the Italian government to be put into receivership due to “the state of insolvency of the company,” was the latest chapter in the firm’s rocky recent history.
Taken over by Mubadala Development Company in 2014, the firm signed to sell the UAE in 2016 eight of its P.1HH aircraft, dubbed the Hammerhead, an unmanned variant of its P180 business aircraft, which flies with two pusher propellers.
After delays in developments, six were almost ready for delivery. But Mubadala has not only put the firm into receivership, it has also cancelled the order, the source said.
After initially agreeing to also buy the P.1HH, the Italian Air Force opted for a longer endurance version, the P.2HH, and earlier this year Italy’s ministry of defense sent an acquisition request to the Italian parliament’s defense commission for 20 aircraft at a cost of €766m (U.S. $874m). But parliament has not yet voted on the program as Italy’s new government seeks cuts in defense spending. Decision makers in Italy are meanwhile concerned that the P2.HH will overlap with the Euromale drone that European partners, including Italy, are now developing. In Italy, the UAE’s decision to pull out of the firm and cancel the P.1HH has been attributed both to the delay in the program and Italy’s sluggishness in committing to the P.2HH.
Now, the future of the P.2HH is even more in doubt, said Michele Nones, head of the security and defense department at the Istituto Affari Internazionali, a Rome think tank. “The termination of the P.1HH leaves the future production of the P.2HH highly unlikely,” he said. “It’s time to market was also problematic given the investment already being made by Italy in the Euromale,” he added.
A second analyst, who declined to be named, said Leonardo’s share price would take a hit if it was asked by the Italian government to buy Piaggio Aerospace. “What the firm could do is buy its aircraft maintenance activity and hire the staff who have worked on the UAV program,” he said.
Leonardo has its own UAV expertise thanks to management of programs like the Falco, and announced this week that the European Union’s Frontex border control agency was to use the extended range Falco EVO for monitoring flights in the Mediterranean. The UAV will fly with Leonardo’s Gabbiano TS Ultra Light radar, an electro-optical sensor and a beyond-line-of-sight (BLOS) satellite data-link system. (Source: Defense News)
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