22 Mar 19. Private Equity backs Australian defence SME sector. Sydney-based CHAMP Private Equity is poised to make a rare investment in Australia’s growing defence manufacturing SME sector, as industry growth provides attractive business opportunities.
In a first for Australia’s defence industry, CHAMP Private Equity will take a majority stake in Victorian-based Marand Precision Engineering, alongside the defence SME’s founding Ellul family. The terms of the transaction are confidential.
Established 50 years ago, Marand has evolved from a business focused on supporting Australia’s auto manufacturing industry to a world-leading exporter providing key components to a number of Australian and global defence projects, namely:
- Lockheed Martin’s F-35 Joint Strike Fighter – worth $17bn in Australia and an estimated US$1.4trn globally over the life of the program; and
- BAE Systems’ Hunter Class Future Frigate – worth $35bn to provide nine anti-submarine warfare frigates.
David Ellul, executive chairman of Marand, said, “Over five decades, Marand has evolved from a machine tools and equipment supplier to the automotive industry to being recognised as Australia’s leading precision engineering company and Australia’s largest supplier into the F-35 Joint Strike Fighter program. We consider CHAMP to be a fantastic custodian of the business, who will help ensure Marand maintains its innovative culture and reach its full potential.”
The company first became involved in the F-35 Program in 2002 and is now an established supplier of F-35 vertical tails, providing a range of specialised, precision machined components for the fifth-generation fighter aircraft. Australian-produced tails are now on the aircraft of several program partner nations, including Australia.
The company’s involvement with the F-35 program has seen an expansion of its Australia-based capabilities, with the opening of a state-of-the-art ‘vertical tail manufacturing facility’ in January 2018 that supports an additional 44 full-time positions.
By December 2016, Marand had received one-third of the Australian contracts in the F-35 program. Marand currently employs more than 250 people across Australia, 180 of whom are located at the company’s Moorabbin site, and 33 in the vertical tail team.
A stand-out example of Australian industry capability
Following the successful delivery of the company’s 50th vertical tail to schedule with no customer quality issues, Defence Minister Christopher Pyne said, “Through its partnership with BAE Systems PLC, and with the support of its Australian and European supply chain, Marand has delivered its 50 conventional take-off and landing vertical tails all to schedule and without a single customer quality issue.”
Marand’s implementation of a fully integrated F-35A vertical tail manufacturing capability culminated in the installation of a precision milling machine, which is used to machine products to meet strict quality and capability requirements.
Lockheed Martin Australia chief executive Vince Di Pietro, AM, CSC, told Defence Connect at the time, “Lockheed Martin is immensely proud of our partnership with Marand and we extend our congratulations on this terrific achievement. We are proud of our partnerships with Australian industry which continue to provide the opportunity to apply their best of breed technology on the world stage.”
Additionally, Marand will also be responsible for the design, manufacture and integration of a specialised integrated gas turbine enclosure system for the Rolls Royce MT30 gas turbine, MTU diesel generators on the Royal Australian Navy’s Hunter Class future frigates.
Rob Madders, general manager of Rolls-Royce Naval Marine Australia and New Zealand, echoed Di Pietro’s comments, telling Defence Connect in mid-2018, “We’re delighted to announce that Marand is our preferred industry partner for the manufacture of the integrated MT30 gas turbine enclosure. As the latest member of our global supply chain, Marand becomes an integral part of our rapidly growing MT30 market providing future export opportunities on worldwide naval programs.”
Rohan Stocker, CEO of Marand, welcomed the partnership, saying, “This is a wonderful opportunity to facilitate further growth in the business. Marand’s innovative engineering, advanced manufacturing and sustainment capabilities will continue to add value to our customers and we are excited by the prospect of working with CHAMP to take the business to the next-stage in its development.”
CHAMP is believed to be attracted to the lucrative investment opportunity as a result of the government’s $200bn investment in Australia’s defence capabilities outlined in the 2016 Defence White Paper, Integrated Investment Plan and subsequent industry development plans, which establish Australian sovereign industrial content and capability as key drivers for supporting Australian defence capability.
In addition to the company’s involvement with Lockheed Martin and the F-35 program, Marand designs, manufactures and exports products to defence industry primes including Boeing and BAE Systems, with additional commercial contracts including mining giants BHP and Rio Tinto rounding out their portfolio of work. (Source: Defence Connect)
21 Mar 19. Chemring AGM – Trading Update. Chemring issues the following update on current trading and outlook for the year, to coincide with the Company’s Annual General Meeting taking place later today. The Company is also hosting an update presentation tomorrow, which will cover Chief Executive Michael Ord’s initial observations on the Group.
The Board’s full year expectations are unchanged, however as a result of operational disruption at some of the manufacturing sites the Group now expects a more significant second-half weighting to revenue, underlying operating profit (15%:85%) and cash. While there are a number of variables including increased operational execution risk, Brexit and associated international trade licensing, exchange rates and insurance recoveries in respect of the UK Countermeasures incident which occurred last August, expected deliveries in the second half are well covered by the Group’s current order book. Further updates will be provided as we progress throughout the year.
Countermeasures & Energetics sector
The financial performance of the sector in the first half is expected to be adversely affected by both planned and unplanned operational disruption at some sites.
The phased restart programme for the UK Countermeasures site remains on track with chaff and naval decoy lines now operational. Returning spectral and MTV lines to operation in the third quarter is progressing as planned, with the overall site scheduled to be at steady state manufacturing by the end of the current financial year.
As planned the Australian site has been off-line to enable the change-over to F-35 Lightning II countermeasures manufacturing. The Tennessee and Norwegian sites both experienced the failure of manufacturing equipment, the causes of which have been fully investigated and necessary rectification has taken place. Both sites are now operational and plans to recover lost production are in place for the remainder of the year.
The order book provides excellent short-term revenue coverage for the current financial year and the multi-year nature of some contracts provides good medium-term visibility.
Sensors & Information sector
Progress continues to plan on the long-term US DoD Programs of Record with the Group maintaining its position in the explosive hazard detection, chemical detection and biological detection major programs. During the period the Group was awarded a further delivery order for the next phase of the HMDS IDIQ, valued at $25m, and a $9m order for the second phase of Engineering and Manufacturing Development (EMD) for the Enhanced Maritime Biological Detector (EMBD) program. The Group also delivered six base EMD units to the customer for the Aerosol and Vapour Chemical Agent Detector (AVCAD) program. The Roke business continues to develop across its national security, defence and commercial activities, with robust market conditions across all.
The order book, which by the nature of the segment is shorter cycle, provides good visibility of current year revenue.
The Group is hosting an analyst and institutional investor presentation tomorrow, 22 March 2019, at which CEO Michael Ord will outline his initial observations on, and some medium-term plans for, the Group. The presentation will be webcast and a copy will be made available on the Group’s website www.chemring.co.uk
Interim results date
The Group will report its interim results for the six months ended 30 April 2019 on 5 June 2019.
20 Mar 19. RUAG unbundling plans take shape. The Swiss government has crystallised its plans for the future of defence firm RUAG, following a meeting of the country’s Federal Council. Under plans submitted by RUAG and approved by the government, RUAG Holdings will be split into two organisations: MRO Switzerland and RUAG International. This division is to become effective on 1 January 2020. The two businesses will operate completely independently of each other, which will include IT, legal, and administration systems. MRO Switzerland will comprise approximately 2,500 staff and will perform the work that RUAG undertook for the Swiss armed forces, ranging from cyber security to maintenance, repair, and overhaul (MRO) of equipment including fighter aircraft and helicopters. (Source: IHS Jane’s)
20 Mar 19. Profit from cyber security. The directors of Kape Technologies (KAPE:100p) a provider of cyber security software, were in very confident mood during our results call and justifiably so. The annual results for 2018 speak for themselves: recurring revenues more than trebled to $27.6m (£21m) to account for more than half of the total, thus vindicating the decision to improve the quality of earnings by adopting a subscription based model; underlying cash profit of $10.4m was up 28 per cent year-on-year, and beat market estimates; and cash profit margins rose by four percentage points to 20 per cent, driven by higher average revenue per user and lowering customer churn. Indeed, retention rate improved from 69 to 74 per cent, a reflection of the high levels of customer satisfaction.
Furthermore, Kape continues to pull in new subscribers, driven by the March 2017 acquisition of CyberGhost, a leading cyber security SaaS (software as a service) provider of secure virtual private networks (VPNs), which enable users to securely pass data traffic over public networks. That business has almost trebled its customer base to more than 400,000 subscribers since acquisition as digital privacy awareness has become mainstream due to the escalation of cyber crime targeting consumers’ data.
Indeed, chief executive Ido Erlichman revealed during our call that Cyberghost is attracting 20,000 new customers every month, representing a six-fold increase in the past couple of years. It’s highly profitable too as customer acquisition costs are recouped within 15 months and by the third year the company has earned double that sum. An annual subscription for the service is $71 (£53) and most customers signs up for between three to four years. Although not disclosed, the net profit earned by Cyberghost in 2018 was more than double the $1.5m (£1.1m) made in 2017, thus vindicating the decision to pay total consideration of €9.2m (£7.9m) for the business only 24 months ago.
Growth in Cyberghost was the key driver in last year’s surge in Kape’s subscriber numbers from 260,000 to 830,000, but there was solid growth too from more recent acquisitions including last summer’s $16m acquisition of Intego, a Mac and iOS cybersecurity and malware protection software-as-a-service (SaaS) business. Mr Erlichman says that Intego’s user base of 150,000 customers has increased significantly since acquisition, and Kape has made cost synergies too, not to mention cross-selling the product to its enlarged paying base of 1.1m customers.
The same is true of last autumn’s $5.6m acquisition of Berlin-based ZenMate, a digital privacy company focused on encrypting and securing internet connections and protecting individuals’ privacy and digital data through VPNs. It was losing €100,000 a month at the time of acquisition, and has since turned cash profitable following a short period of restructuring.
Reflecting the contribution from Zenmate and Intego, and ongoing growth from Cyberghost and Kape’s suite of other products – Reimage, a patented Microsoft-based product tool that clean ups computers, and DriverAgent, a device driver search and update service – analysts at house broker Shore Capital expect Kape to lift revenues by almost half to $77m in 2019 and deliver a 43 per cent increase in pre-tax profits to $12.6m. On this basis, expect earnings per share (EPS) of 6.8¢ (5p). Analysts have also introduced their 2020 forecasts which point to Kape’s revenues rising to $88m to produce pre-tax profits of $16.3m and EPS of 9.2¢ (7p).
This means that the shares are rated on cash-adjusted price/earnings (PE) ratio of 11 for the 2020 financial year after accounting for a net cash pile of $40.4m worth 22p a share. That’s hardly a high rating for a company which is successfully targeting a global cybersecurity market worth $153bn and one that is growing annually at 12 to 15 per cent. The global VPN market is now worth $21bn and is growing even faster at around 15 per cent per annum.
I included Kape’s shares, at 47.9p, in my 2017 Bargain Shares Portfoliowhen the company was previously known as Crossrider and they have more than doubled in the past year. The board have also paid out a special dividend of 3.55p a share. I last suggested buying the shares at 102p (‘Kape on course for bumper 2019’, 4 February 2019) and continue to feel that another leg up in the share price is warranted especially as I understand that the directors are looking to make a potentially large earnings-enhancing acquisition, thus providing scope for further earnings upgrades. Buy. (Source: Investors Chronicle)
19 Mar 19. The FT reported yesterday that Inmarsat is in $3.3bn takeover talks with private equity-led group. Interest in UK satellite company comes after EchoStar of US ditched takeover attempt Inmarsat has become attractive to buyout groups because the share price has reached historic lows. Inmarsat, the British satellite communications group, is considering a $3.3bn takeover bid from an investor group led by buyout firms Apax and Warburg Pincus, in a deal that would return it to private equity control. The approach comes as Inmarsat has been struggling to appeal to investors after a period of poor performance that has sent its shares to near-record lows for much of the past year. The London-based company said that it had received a non-binding offer from the consortium on January 31 to buy the company for $7.21 a share in cash, but only revealed the details after a leak on Wednesday. Inmarsat said that “the proposal remains under discussions between the company and the consortium”, which it said also included two Canadian pension funds, CPPIB and the Ontario Teachers’ Pension Plan. Inmarsat added: “There can be no certainty as to the terms on which any offer would be made. Nor is it certain that the discussions will lead to any firm offer for the company.” The offer equates to a 28.9 per cent premium to Inmarsat’s undisturbed US-listed share price of $5.59 before news of the group’s interest leaked on Wednesday. It climbed to $7.05, giving it a market value of $3.3bn.
Interest from the private equity group comes after US satellite company EchoStar ditched a takeover of its British rival last year. Rumours that EchoStar was considering another approach for the company in recent weeks have flooded the London market in recent weeks and have been used by some analysts to explain a recent rally in Inmarsat shares. Shares in the satellite company, based in London’s Old Street roundabout, have suffered in recent years crashing at regular intervals due to its uncertain outlook, its struggle to convert older users of traditional satellite phones to faster broadband services and high capital expenditure. The business has become attractive to buyout groups after its sluggish performance and troubles have knocked shares close to their historic lows in recent months. Inmarsat has been in private equity ownership before. Apax and Permira bought a majority stake in 2003 before floating it in 2005. It has also been regularly tipped as a consolidation target with EchoStar and SoftBank, which has backed OneWeb and tried to buy Intelsat, linked to the British company. Under UK Takeover Panel rules, the consortium has until April 16 to make a formal offer. The disclosure came after the blog site Betaville suggested Apax and Warburg Pincus were considering an approach for Inmarsat. The company’s shares are commonly quoted by its listing on the London market, but the offer was made in dollar terms because that is the currency it reports in. A sterling offer would also expose shareholders to exchange rate volatility as the UK’s discussions on leaving the European Union reach a climax, one person close to the situation said. (Source: FT.com)
19 Mar 19. Elbit Systems Reports Fourth Quarter and Full Year 2018 Results.
Backlog of orders at $9.4bn;
Revenues of $3.68bn;
Non-GAAP net income of $264.1m;
GAAP net income of $206.7m;
Non-GAAP net EPS of $6.18;
GAAP net EPS of $4.84
Elbit Systems Ltd. (the “Company”) (NASDAQ: ESLT) (TASE: ESLT), the international high technology company, reported today its consolidated results for the fourth quarter and full year ended December 31, 2018.
In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive understanding of the Company’s business results and trends. For a description of the Company’s non-GAAP definitions see page 7 below, “Non-GAAP financial data”. Unless otherwise stated, all financial data presented is US-GAAP financial data.
Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “I am pleased with our performance in 2018, in which we reported 9% revenue growth and positive cash flow of over $190m. The fourth quarter of 2018 was an unusual and important strategic quarter for Elbit Systems with a few one-time events impacting our results, primarily due to the fact that we closed the acquisition of IMI.”
Mr. Machlis added: “As we move into 2019, Elbit Systems is a much larger company with a revenue run rate of over $4 bn per year and backlog approaching the $10 bn mark. The integration of IMI into our organization is progressing, and we are excited about the potential it brings us. We have a long and successful track record of integrating acquisitions, and we look forward to an accelerated and fruitful process. We are confident that this acquisition will bring many synergies across the organization that will improve our position globally and will further increase value to our shareholders over the long term.”
Acquisition of IMI and Reorganization of Company Businesses
On November 25, 2018, the Company completed the acquisition of IMI Systems Ltd. (“IMI”) for a purchase price of approximately $495m (NIS 1.8 bn), with an additional payment of up to approximately $27m(NIS 100 m) contingent upon IMI meeting agreed performance goals. The financial results of IMI were included in the Company’s consolidated reports, commencing the date of the acquisition.
Following the completion of the acquisition of IMI and a reorganization in connection with the IMI acquisition, the Company recorded in the fourth quarter of 2018 expenses of $69.5m, of which $66.6 m were recorded in Cost of Revenues and the rest in Other Expenses, net. The expenses include mainly inventory write- offs and employees related costs. Those expenses were eliminated in the non-GAAP results due to the non-recurring nature of the expense.
The Company reorganized a number of its activities, in connection with the IMI acquisition. This reorganization included, among other measures, the establishment of two business divisions:
- The Land Systems Division focused on land-based systems, including military vehicle systems, artillery systems and the IMI activities; and
- The C4I and Cyber Division focused on command & control, radio, communication, homeland security and cyber intelligence activities.
This reorganization is intended to improve the synergy within the Company with respect to the acquired activities and better address market requirements and customer support. The Company believes that the acquisition of IMI and the reorganization will positively affect the future business of Elbit Systems.
Fourth quarter 2018 results:
Revenues in the fourth quarter of 2018 were $1,077.8m, as compared to $1,009.6m in the fourth quarter of 2017.
Non-GAAP(*) gross profit amounted to $306.7m (28.5% of revenues) in the fourth quarter of 2018, as compared to $293.8m (29.1% of revenues) in the fourth quarter of 2017. GAAP gross profit in the fourth quarter of 2018 was $234.9m (21.8% of revenues), as compared to $288.6m (28.6% of revenues) in the fourth quarter of 2017. The gross profit in the fourth quarter of 2018 reflects expenses of $66.6m related to the IMI acquisition.
Research and development expenses, net were $73.0m (6.8% of revenues) in the fourth quarter of 2018, as compared to $72.5m (7.2% of revenues) in the fourth quarter of 2017.
Marketing and selling expenses, net were $73.5m (6.8% of revenues) in the fourth quarter of 2018, as compared to $81.2m (8.0% of revenues) in the fourth quarter of 2017.
General and administrative expenses, net were $49.8m (4.6% of revenues) in the fourth quarter of 2018, as compared to $26.2m (2.6% of revenues) in the fourth quarter of 2017. The lower level of general and administrative expenses in the fourth quarter of 2017 resulted mainly from revaluation of liabilities related to assets and activities acquired in prior years.
Non-GAAP(*) operating income was $112.5m (10.4% of revenues) in the fourth quarter of 2018, as compared to $115.6m (11.5% of revenues) in the fourth quarter of 2017. GAAP operating income in the fourth quarter of 2018 was $38.6m (3.6% of revenues), as compared to $108.7m (10.8% of revenues) in the fourth quarter of 2017. GAAP operating income in the fourth quarter of 2018 was reduced by $66.6m in expenses related to the acquisition of IMI.
Financial expenses, net were $14.9m in the fourth quarter of 2018, as compared to $9.7m in the fourth quarter of 2017. The increase in financial expenses in the fourth quarter of 2018 was mainly a result of higher debt and interest rates.
Other expenses net were $6.4m in the fourth quarter of 2018, as compared to $5.1m in the fourth quarter of 2017. Other expenses includes mainly non-service cost components of pension plans that were reclassified from operating income in accordance with ASU 2017-07, “Compensation – Retirement benefits” that was adopted on January 1, 2018, retrospectively.
Taxes on income were $3.9m (effective tax rate of 22.5%) in the fourth quarter of 2018, as compared to $25.4m (effective tax rate of 27.1%) in the fourth quarter of 2017. Taxes in the fourth quarter of 2017 included a $10.9m adjustment to deferred tax assets as a result of the tax reform in the U.S.
Equity in net earnings (losses) of affiliated companies and partnerships was a net loss $11.4m in the fourth quarter of 2018, as compared to net earnings of $1.4m in the fourth quarter of 2017. The loss in the fourth quarter of 2018 was mainly a result of a fair value re-evaluation of holdings in an affiliated company.
Net income attributable to non-controlling interests was $0.9m in the fourth quarter of 2018, as compared to $0.5 m in the fourth quarter of 2017.
Non-GAAP(*) net income attributable to the Company’s shareholders in the fourth quarter of 2018 was $81.8m (7.6% of revenues), as compared to $86.1 m (8.5% of revenues) in the fourth quarter of 2017. GAAP net incomeattributable to the Company’s shareholders in the fourth quarter of 2018 was $1.1m(0.1% of revenues), as compared to $69.4m (6.9% of revenues) in the fourth quarter of 2017. The net income in the fourth quarter of 2018 reflects expenses (net of taxes) of $64.8m related to the IMI acquisition.
Non GAAP(*) diluted net earnings per share attributable to the Company’s shareholders were $1.91 for the fourth quarter of 2018, as compared to $2.01 for the fourth quarter of 2017. GAAP diluted earnings per share attributable to the Company’s shareholders in the fourth quarter of 2018 were $0.03, as compared to $1.62 in the fourth quarter of 2017. GAAP diluted earnings per share in the fourth quarter of 2018 were reduced by $1.52 as a result of the net expenses related to the IMI acquisition.
Full year 2018 results:
Revenues for the year ended December 31, 2018 were $3,683.7m, as compared to $3,377.8m in the year ended December 31, 2017.
For distribution of revenues by areas of operation and by geographic regions see the tables on page 16.
The leading contributors to our revenues were the airborne systems and C4ISR systems areas of operation. The increase in revenues in the airborne systems area of operation was primarily due to increased sales of commercial avionics equipment in the U.S. of a new subsidiary that was acquired in the second quarter of 2018. Revenues from land systems increased primarily due to an increase in sales of land electronic warfare systems and armored vehicle systems in Europe and the revenues of IMI that was acquired in November 2018.
On a geographic basis, the increase in North America was mainly a result of higher sales of airborne systems and revenues of a new U.S. subsidiary acquired in April 2018 in the area of commercial avionics. The increase in Asia-Pacific was mainly a result of higher sales of tank fire control systems and UAS. The increase in the “Other” geographical region was mainly due to an increase in sales of UAS, artillery and command and control systems.
Cost of revenues for the year ended December 31, 2018 was $2,707.5m (73.5% of revenues), as compared to $2,374.8m (70.3% of revenues) in the year ended December 31, 2017. Cost of revenues in 2018 included $66.6m in expenses related to the acquisition of IMI.
Non-GAAP(*) gross profit for the year ended December 31, 2018 was $1,061.9m (28.8% of revenues), as compared to $1,025.3m (30.4% of revenues) in the year ended December 31, 2017. GAAP gross profit in 2018 was $976.2m (26.5% of revenues), as compared to $1,003.1m (29.7% of revenues) in 2017. The gross profit in 2018 reflects expenses of $66.6m related to the IMI acquisition.
Research and development expenses, net for the year ended December 31, 2018 were $287.4m (7.8% of revenues), as compared to $265.1m (7.8% of revenues) in the year ended December 31, 2017.
Marketing and selling expenses, net for the year ended December 31, 2018 were $281.0m (7.6% of revenues), as compared to $280.2m (8.3% of revenues) in the year ended December 31, 2017.
General and administrative expenses, net for the year ended December 31, 2018 were $160.3m (4.4% of revenues), as compared to $133.3m (3.9% of revenues) in the year ended December 31, 2017. The lower level of general and administrative expenses in 2017 was mainly a result of revaluation of liabilities related to assets and activities acquired in prior years.
Other operating income, net for the year ended December 31, 2018 amounted to $45.4m. This was the result of net gains related to deconsolidation of two of our Israeli subsidiaries in the commercial cyber and medical instrumentation areas, due to third party investments.
Non-GAAP(*) operating income for the year ended December 31, 2018 was $340.7m (9.2% of revenues), as compared to $353.0m (10.5% of revenues) in the year ended December 31, 2017. GAAP operating income in 2018 was $292.8m (7.9% of revenues), as compared to $324.4m (9.6% of revenues) in 2017.
GAAP operating income in 2018 was reduced by expenses of $66.6m related to the acquisition of IMI.
Financial expenses, net for the year ended December 31, 2018 were $44.1m, as compared to $34.5m in the year ended December 31, 2017. The increase in financial expenses in 2018 was mainly a result of higher debt and higher interest rates.
Other expenses, net were $11.5m in 2018 as compared to $5.1m in 2017. Other expenses in 2018 included write-off impairment of $7.8m in investments in two affiliated Israeli companies. Other expenses also included expenses of $3.8m in 2018 as compared to $5.1m in 2017, related to non-service cost components of pension plans that were reclassified from operating income, according to ASU 2017-07, “Compensation – Retirement benefits” that was adopted on January 1, 2018, retrospectively.
Taxes on income for the year ended December 31, 2018 were $26.4m (effective tax rate of 11.1%), as compared to $55.6m (effective tax rate of 19.5%) in the year ended December 31, 2017. The effective tax rate was affected by the mix of the tax rates in the various jurisdictions in which the Company’s entities generate taxable income and other income that is not part of the taxable income mainly related to non-cash elements such as impairment of assets. Taxes on income in 2017 included a $10.9m adjustment to deferred tax assets as a result of the tax reform in the U.S.
Equity in net earnings (losses) of affiliated companies and partnerships for the year ended December 31, 2018 was a loss of $2.2m (0.1% of revenues), as compared to earnings of $11.4m (0.3% of revenues) in the year ended December 31, 2017. The loss in 2018 was mainly a result of a $9.7m re-evaluation of the fair value of an investment in an affiliated company.
Net income attributable to non-controlling interests for the year ended December 31, 2018 was $1.9m, as compared to $1.5m in the year ended December 31, 2017.
19 Mar 19. Elbit attributes revenues boost to 2018 acquisitions. Elbit Systems has reported a 9% increase in revenues year on year in 2018, attributed to an uptick in the sales of land systems in Europe through both its existing business and that of the newly-acquired IMI, as well as a boost to its commercial avionics sales via its new US subsidiary.
As of 31 December 2018, revenues for the year totalled USD3.68bn, up from the USD3.38bn reported over the same period in 2017. This was credited to the success of the acquisition of Universal Avionics in April 2018, through which Elbit has increased its sales of commercial avionics, as well as to an increase in sales of land-based electronic warfare and armoured vehicle systems in Europe, which included revenue from IMI. (Source: IHS Jane’s)
19 Mar 19. ZF acquires mobility provider 2getthere.
- Investment in 60 percent stake of the experienced provider of automated electric passenger transport systems
- Acquisition complements existing co-operations and investments
- ZF strives to set new standards for autonomous mobility and transport solutions
Friedrichshafen/Utrecht. ZF Friedrichshafen AG has acquired a 60 percent share of 2getthere B.V. The company offers complete automated transport systems and is located in Utrecht/Netherlands, with offices in San Francisco, Dubai and Singapore. Applications range from driverless electric transport systems at airports, business and theme parks to dedicated urban transport infrastructures. With this strategic investment, ZF is executing its Next Generation Mobility strategy to strengthen its foothold in the Mobility as a Service and automated guided vehicle growth markets, and complements its existing activities.
“2getthere has more than three decades of experience in the market for autonomous passenger transport vehicles as well as unique engineering and software competences. This acquisition supports our strategy to become a leading autonomous transportation systems supplier in the booming new mobility market”, said Wolf-Henning Scheider, Chairman of the Board of Management at ZF Friedrichshafen AG. With its strategic investment, ZF is strengthening its position in the growth markets of Mobility-as-a-Service solutions, autonomous transport systems, and shared autonomous vehicles. The majority stake in 2getthere complements ZF’s existing investments and co-operations, such as the e.GO Moove, a joint venture with e.GO Mobile AG, which targets the production of the e.GO Mover autonomous minibus, as well as Transdev, a leading operator and global provider of integrated mobility solutions.
2getthere was founded in 1984. Since then 2getthere accumulated more than 100 million kilometers of autonomous mileage with driverless passenger and cargo transport systems in several major cities worldwide, including Rotterdam, Abu Dhabi and Singapore, as well as numerous ports and airports. 2getthere’ s driverless systems, in revenue service at business park Rivium (Capelle aan den IJssel) and Masdar City (Abu Dhabi) have transported more than 14 million people, fully electric and reliable. The reliability of the systems installed by 2getthere, including vehicle controls and software architecture, exceeds 99.7 percent.
“The market for driverless electric transport systems is developing dynamically. We want to continue to lead the market and the involvement of ZF is helping us to realize our growth plans, accelerate our technology roadmap and provide the required security for new and existing customers,” said Carel C. van Helsdingen, founder and CEO of 2getthere. “The technological cooperation with ZF will support 2getthere’s work for the delivery of mixed traffic applications like Rivium and Brussels Airport.” Looking at the past three years alone, the company’s revenue has increased by 60 percent.
In the future, ZF and 2getthere will closely work together to further develop technologies for autonomous transport systems.
“We have developed into a complete systems supplier for automated functions and we are therefore in a perfect position to support 2getthere. We can deliver electric drivelines, solutions for sensor technology, high performance computing, and actuators for all levels of automated applications,” explained Scheider. Conversely, ZF will also benefit from the vast field experience of the Dutch company and its extensive engineering and software competences when it comes to configuring and implementing complete autonomous transport systems. 2getthere’s engineering and software development teams in Utrecht are expected to grow significantly over the next years, approximately doubling the current 60 employees. The two companies agreed not to disclose the transaction volume.
18 19 Mar 19. MBDA’s order backlog reaches record high after strong 2018 results. MBDA saw another strong year of trading performance in 2018, recording a further €4.0bn in orders that brought the company’s order book up to a record total of €17.4bn. Revenue was also slightly ahead year-on-year to €3.2bn. Strong performance in our home markets saw MBDA’s domestic order intake of €2.5 bn exceed that from exports at €1.5bn.
MBDA CEO Antoine Bouvier said: “Our strong financial and in particular our domestic performance is reflective of the strategic importance of the missile sector to Europe’s nations. This can only be achieved by the right combination of national programmes and by co-operation across Europe’s nations, as without this balance, Europe will lack the critical size of its defence technological and industrial base to autonomously develop the technologies necessary for the operational performance of our armed forces.”
Significant domestic orders in 2018 included a contract from the French DGA to develop the next generation of the MICA air-to-air missile, the renewal of in-service support for the Aster missile across France, Italy and the UK, upgrade and maintenance work on Taurus in Spain, among others. Major export orders included the weaponisation of Eurofighter Typhoon fighter aircraft and NH90 helicopters ordered by Qatar, as well as further export orders of Taurus, MMP and Mistral.
This robust order intake has been paralleled by another year of strong recruitment that saw MBDA hiring 1,200 new employees across Europe in 2018 with plans to hire another 1,000 people this year. Important domestic milestones in 2018 that pave the way for future successes include the creation of a joint venture to pursue the next generation Integrated Air and Missile Defence System (TLVS) for Germany. The formal opening of our new manufacturing facility in Bolton in July 2018 by the UK Secretary of State for Defence marked the completion of five years of development and leaves the company well placed to grow revenue in the future. The company also took steps in 2018 to secure European sovereignty in its supply chain, including the joint purchase, together with Soitec of France, of Dolphin Integration, a specialist of System on Chip (SoC) solutions for low power computing applications.
The past year also saw MBDA deliver vital new operational capabilities to its armed forces customers, including: the operational deployment of MMP with the French Army; the entry into service of Sea Ceptor with the Royal Navy and major progress on the Land Ceptor system for the British Army; the first firing trials of the Marte ER anti-ship missile; and the entry into service of Meteor, Storm Shadow and Brimstone onto the Eurofighter. 2018 also saw MMP chosen as the missile of reference for the development of a Beyond Line Of Sight capability sovereign to Europe through the sharing of a common doctrine, training and interoperability among European forces under the new Permanent Structured Cooperation framework of the European Union.
18 Mar 19. Interserve enters administration. Interserve (IRV) has entered administration after management lost a crucial vote over its controversial deleveraging plan, with the shares suspended on Friday evening. Votes representing 59 per cent of the issued share capital voted against the debt-for-equity swap, despite the outsourcer’s management warning in late February that failure to approve would force the group to default on its substantial debt obligations.
Interserve’s largest shareholder US hedge fund Coltrane Asset Management and Farringdon Capital Management – which owned 26 and 4 per cent of the outstanding shares, respectively – spearheaded the opposition, with the former requisitioning a general meeting to propose firing all of the directors except for chief executive Debbie White in February.
Shareholders representing 56 per cent of outstanding share capital turned out to vote and Investors Chronicle understands that outside of Coltrane and Farringdon, 95 per cent of those voters supported the deleveraging plan.
The crux of the dissent was that it would lead to a substantial dilution of existing shareholders. The original plan would have diluted holdings down to 2.5 per cent of the overall issued share capital, although a later proposal would have left them with 5 per cent.
In the run-up to the vote, Coltrane proposed to underwrite a £110 right issue for the group, while converting £435m of debt into equity. It said this would leave existing shareholders with 37.5 per cent and creditors owning 55 per cent.
Interserve rejected the proposal. In statement responding to Coltrane, Interserve’s board said the hedge fund had refused permission to share the plan with lenders, bonding providers or the pension trustee. The board also said Coltrane’s proposal was “non-binding and unfunded and remains subject to due diligence”, adding there was “no certainty” it could be implemented.
“[Coltrane’s] strategy doesn’t seem to make too much sense from the outside,” said Laith Khalaf, senior analyst at Hargreaves Lansdown. “Perhaps there’s more to it than meets the eye,” he added. Coltrane and Farringdon did not respond to requests for comment.(Source: Investors Chronicle)
18 Mar 19. Curtiss-Wright Corporation (NYSE: CW) today announced that it has completed the acquisition of Tactical Communications Group (TCG), LLC for $50m in cash. TCG, a private company, is a leading designer and manufacturer of tactical data link (TDL) software solutions for critical military communications systems. The acquired business will operate within Curtiss-Wright’s Defense segment, and is expected to be accretive to 2019 earnings per share excluding the effects of first year purchase accounting adjustments.
“This acquisition yields significant opportunities for growth by enhancing our existing flight test instrumentation offering with complementary tactical data link processing software, analytics and visualization capabilities, and also providing penetration into the tactical data link test, simulation and training markets,” said David C. Adams, Chairman and CEO of Curtiss-Wright Corporation. “TCG’s proven commercial off-the-shelf (COTS) TDL software solutions minimize the time and effort required to build, integrate, test, train, and deploy effective and affordable military communications systems. Further, this transaction is consistent with our disciplined acquisition strategy and supports our long-term financial objectives to drive continued profitable growth for our shareholders.”
TCG’s software solutions provide a complete ecosystem for enhancing the value of deployed data link systems. These solutions allow platform integrators to validate their links, provide more valuable data services on their networks, and utilize comprehensive analytics, simulation, scripting, and visualization of the network data to drive effective training and situational awareness solutions.
Founded in 2001, TCG is a recognized leader in tactical data link software solutions for military communications systems around the world. Their products help to secure and exchange wireless communications, including voice, imagery, text, and command and control messages, between various platforms such as ships, aircraft, weapons, and ground vehicles, and by dismounted soldiers. TCG has broad exposure on high-performance military aircraft and at major defense flight test centers. Key products include LinkPro tactical data link processing software, Battlefield Operations Support System (BOSS) software for scripting and simulation capability, and HUNTR for integrating LinkPro software with multi-TDL standard message translation, as well as the Ground TDL System (GTS) hardware test station.
Headquartered in Tewksbury, MA, TCG has approximately 50 employees and generated sales of approximately $15m in 2018, principally to the aerospace defense market.
18 Mar 19. Embraer CEO to step down ahead of deal with Boeing. The chief executive of Brazilian planemaker Embraer SA will step down next month, the company said on Monday, as it prepares to cede control of its commercial aviation division to Boeing Co for $4.2bn.
Embraer CEO Paulo Cesar Silva will step down on April 22 and a new CEO will be announced by then, the company said.
Silva assumed the top position at Embraer in June 2016 as the company dealt with the fallout from a bribery investigation in the United States. Before becoming CEO, he led Embraer’s commercial plane division.
“Paulo Cesar conceived of the partnership with Boeing and led the negotiating process of the transaction,” Alexandre Silva, the chairman of Embraer’s board, said in a statement.
Embraer has defended the Boeing tie-up as crucial to its long-term survival of the company, as Boeing and Airbus SE grab more market share and the aerospace supply chain consolidates.
Silva has been invited to become a consultant until the deal with Boeing officially closes, the company said. The deal still needs to be approved by regulators around the world. (Source: glstrade.com/Reuters)
15 Mar 19. Leonardo revenue up 4.3% in 2018. Italian defence and aerospace manufacturer Leonardo published results from its 2018 financial year on 13 March, with improvements posted across a range of financial metrics. The company generated sales of EUR12.4bn (USD19.0bn) in 2018, a rise of 4.3% year on year. The company also realised a much stronger expansion of net profit, rising from EUR279m in 2017 to EUR510m. Last year’s growth was not evenly distributed across Leonardo’s activities, however. The swiftest expansion was seen in its second largest business line by revenue, Helicopters, which increased its annual revenue by 10.8%, to EUR3,810m, while taking EUR6,208m in new orders, almost double the previous year. (Source: Google/IHS Jane’s)