14 Nov 19. Avon Rubber exits fire market. Avon Rubber (AVON) is ending its involvement in respiratory equipment for firefighting personnel, electing instead to prioritise the military and law enforcement markets, where the group is the leader in both.
Avon’s full-year results brought the news that the group registered $340m (£264m) in long-term contracts over its full year, while it expects to complete its $91m acquisition of ballistic protection specialist 3M in its 2020 first half. Its fire business, which Avon acquired in 2005, has largely been flat since and has come up against stiff competition, leaving Avon around fifth or sixth in the market according to chief executive Paul McDonald. “It takes quite a lot of our time and attention, and it’s giving us the lowest returns in the group,” he said.
But Avon has succeeded in bringing technology across into its military offering, which has thrived accordingly. Far from just producing respiratory masks for the face, Avon now offers equipment for personnel from the waist up, and the integration of 3M represents the latest step in this transition. “We’ll have also paid down the debt at the end of [2020], so we’ll have the firepower” for more deals, Mr McDonald added.
House broker Peel Hunt forecasts full-year 2020 pre-tax profits and earnings per share of £38.6m and 99.5p respectively, rising to £43.6m and 112.4p in 2021.
IC View
Avon shares are up by half since the beginning of 2019, with investors flocking to a leader in niche technologies that generates cash and looks to invest the proceeds in strengthening its market position. We support the decision to come out of fire, and expect healthy margin improvement from a renewed focus on Avon’s areas of strength to offset short-term reductions in fire revenues. Buy.
Last IC view: Buy, 1,398p, 1 May 2019. (Source: Investors Chronicle)
14 Nov 19. Recommended Cash Offer for SCISYS Group plc. (“SCISYS”) by CGI Group Holdings Europe Limited (“Bidco”), a Wholly-Owned Indirect Subsidiary Of CGI Inc. (“CGI”).
CGI and SCISYS have today:
- a) agreed that at the High Court Hearing today they will request the High Court to adjourn the hearing of its application for the sanction of the Scheme to such date which is as soon as possible after 13 December 2019 as may be acceptable to the High Court; and
- b) irrevocably confirmed that all of the Conditions to which the recommended cash offer for SCISYS (“Offer”) by way of scheme of arrangement under the Companies Act 2014 (“Scheme”) was made have been satisfied and/or waived, other than the following conditions (“Remaining Conditions”):
(i) the sanction by the High Court of the Scheme and the confirmation of the related reduction of capital involved therein by the High Court on or before the End Date (Condition 2.3 as set out in the Scheme Document);
(ii) the delivery of the Court Order sanctioning the Scheme and the minute required in respect of the related reduction of capital to the Companies Registration Office and the registration of same by the Registrar on or before the End Date (Condition 2.4 as set out in the Scheme Document); and
(iii) certain Conditions of the Scheme (being Conditions 3.5.2, 3.5.3, 3.5.6 (other than in respect of the accuracy of the representation and warranty concerning due diligence information set out in clause 6.2.7 of the Transaction Agreement), 3.5.7, 3.6 and 3.8 (as set out in Part 5 of the Scheme Document)),
and accordingly all other Conditions, other than the Remaining Conditions, have now been satisfied or waived, subject to continuing compliance with the Transaction Agreement.
This decision has been reached due to the forthcoming general election in the UK on 12 December 2019 which will be a key event for the news programming of SCISYS’ UK media and broadcasting customers. Both CGI and SCISYS are fully committed to supporting SCISYS’ customers during this vital period. The news operations of these media and broadcasting customers rely heavily on SCISYS’ product and for this reason CGI and SCISYS have reached such a position in order that the SCISYS team can be entirely focused on serving its customers.
As a consequence of the above the suspension of dealings in SCISYS Ordinary Shares which was expected to take effect at 7.30 am on 15 November 2019 and the subsequent cancellation of listings of SCISYS Ordinary Shares on AIM and Euronext Growth which was expected to take effect at 8.00 am on 18 November 2019 will not now proceed. Further announcements will be made in due course including those relating to the expected revised timetable for the completion of the Acquisition, suspension of dealings and cancellation. The Acquisition remains conditional on the Remaining Conditions being satisfied or (where permissible) waived on or before the sanction of the Scheme by the High Court.
SCISYS Group PLC confirms that further to the announcement made by SCISYS and CGI on 14 November 2019, the new Court Hearing date, where sanction of the Scheme by the High Court will be sought, has been set for 17 December 2019 at 11.00 a.m.
An updated expected Timetable of Principal Events is set out below.
| Event
|
Time and/or date |
| Scheme Court Hearing | 17 December 2019 |
| Expected last day of dealings in, and for the registration of transfers of, SCISYS Ordinary Shares | 17 December 2019 |
| Dealings in SCISYS Ordinary Shares expected to be suspended | 7:30 a.m. on 18 December 2019 |
| Expected Scheme Record Time | 11.59 p.m. on 17 December 2019 |
| Expected Effective Date of the Scheme | 18 December 2019 |
| Expected Cancellation of listings of SCISYS Ordinary Shares on AIM and Euronext Growth | 7.00 a.m. on 19 December 2019 |
| Expected date of despatch of cheques and crediting of CREST accounts for cash consideration due under the Scheme | By 2 January 2019 |
All references to times are to Irish time unless otherwise stated.
The Acquisition remains conditional on the Remaining Conditions (as such term is defined in the announcement made by SCISYS and CGI on 14 November 2019) being satisfied or (where permissible) waived on or before the sanction of the Scheme by the High Court.
Definitions
Capitalised terms used but not otherwise defined in this announcement have the meanings given to them in the Scheme Document.
Definitions
Capitalised terms used but not otherwise defined in this announcement have the meanings given to them in the Scheme Document.
A copy of this announcement will be available free of charge (subject to any applicable restrictions with respect to persons resident in Restricted Jurisdictions) on the SCISYS website at https://www.scisys.co.uk/who-we-are/investors/soa.html.
14 Nov 19. QinetiQ orders continue to rise. QinetiQ’s (QQ.) orders surged more than a third against its previous half-year, while the defence engineer’s total funded order backlog climbed 64 per cent to £3bn. More than a quarter of the group’s order increase was organic, even after QinetiQ excluded its new long-term partnership with the UK Ministry of Defence (MoD), which it signed in April 2019.
The engineering group earned a £19m contract through this agreement to lower the electromagnetic and acoustic signatures of the Royal Navy’s submarines and ships. Its most intriguing source of growth is the international operation, which is thriving. Along with growing orders from the Australian military, QinetiQ agreed to acquire US sensing solutions specialist MTEQ for $105m (£80.5m) in October, in a deal that will more than double its US presence. Overall international orders grew by more than half on an organic basis. The QinetiQ Target Systems business, which provides unmanned targets for weapons training and testing, doubled orders alone and boosted its revenue by 50 per cent.
Bloomberg consensus gives full-year adjusted 2020 earnings per share of 19.1p, rising to 20.6p in 2020.
IC View
Global defence spending is rising in response to a deterioration in geopolitical relations, and QinetiQ is leveraging its relationships with key governments accordingly. Its investment in unmanned technologies, a burgeoning area in defence, is also paying off. With the balance sheet remaining in a net cash position, giving the business the necessary firepower to make further acquisitions and diversify its footprint, we retain our rating in anticipation of further earnings growth. Buy.
Last IC View: Buy, 307p, 3 Oct 2019 (Source: Investors Chronicle)
13 Nov 19. Magellan Aerospace Corporation Announces Financial Results. Magellan Aerospace Corporation (“Magellan” or the “Corporation”) released its financial results for the third quarter of 2019. All amounts are expressed in Canadian dollars unless otherwise indicated. The results are summarized as follows:
- Overview
A summary of Magellan’s business and significant updates
Magellan is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries, Magellan designs, engineers, and manufactures aeroengine and aerostructure components for aerospace markets, advanced products for defence and space markets, and complementary specialty products. The Corporation also supports the aftermarket through supply of spare parts as well as performing repair and overhaul services.
Magellan operates substantially all of its activities in one reportable segment, Aerospace, which is viewed as one segment by the chief operating decision-makers for the purpose of resource allocations, assessing performance and strategic planning. The Aerospace segment includes the design, development, manufacture, repair and overhaul, and sale of systems and components for defence and civil aviation.
Business Update
On June 12, 2019 Magellan congratulated the Canadian Space Agency (“CSA”) on the RADARSAT Constellation Mission (“RCM”) that was launched successfully from Vandenberg, California aboard a SpaceX Falcon 9 rocket. The three identical RCM satellite buses were built by Magellan under subcontract to MDA, a Maxar Technologies company, the prime contractor for RCM.
Magellan will be attending the upcoming Dubai Airshow which is being held between November 17th and November 21st 2019. At this venue, the Corporation intends to meet with a number of current and potential customers primarily to further its engine repair and overhaul business.
Acquisition
On November 7, 2019, Magellan completed the acquisition of 100% of the outstanding shares of Service Inter Industrie (“SII”), an aerospace component supplier based in Marignane France. SII specializes in precision machining of critical components used in the manufacture of civil and military helicopters as well as components for the fixed wing commercial and defense aerospace markets. SII is in close proximity to its major customers, whom it serves for the serial production as well as maintenance, repair and overhaul services on select parts. The acquisition of SII provides a new growth vehicle for Magellan and is its first business acquired in France, close to major Airbus operations.
For additional information, please refer to the “Management’s Discussion and Analysis” section of the Corporation’s 2018 Annual Report available on www.sedar.com.
- Results of Operations
A discussion of Magellan’s operating results for third quarter ended September 30, 2019
The Corporation reported revenue in the third quarter of 2019 of $235.6m, an increase of $9.1 m from third quarter of 2018 revenue of $226.5m. Gross profit and net income for the third quarter of 2019 were $35.1m and $15.8 m, respectively, in comparison to gross profit of $37.7 m and net income of $18.6m for the third quarter of 2018.
Consolidated Revenue
Revenues in Canada increased 16.1% in the third quarter of 2019 in comparison to the same period in 2018, primarily due to higher volumes in repair and overhaul services, proprietary and casting products, and the strengthening of the United States dollar relative to the Canadian dollar when compared to the prior period. On a currency neutral basis, Canadian revenues in the third quarter of 2019 increased by 15.6% over the same period of 2018.
Revenues in United States decreased 6.0% in the third quarter of 2019 compared to the third quarter of 2018 when measured in Canadian dollars mainly due to volume decreases for single aisle aircraft and timing of deliveries, partially offset by favourable foreign exchange impact due to the strengthening of the United States dollar against the Canadian dollar. On a currency neutral basis, revenues in the United States decreased 7.0% in the third quarter of 2019 over the same period in 2018.
European revenues increased 2.8% in the third quarter of 2019 compared to the corresponding period in 2018 primarily driven by increased production rates for single aisle and wide body aircraft, and the strengthening of the United States dollar relative to the British pound, offset partially by the unfavourable foreign exchange impact due to the weakening of the British pound against the Canadian dollar. On a constant currency basis, revenues in the third quarter of 2019 in Europe increased 2.9% when compared to the same period in 2018. (Source: Google/https://finance.yahoo.com/)
14 Nov 19. OPVs provide long-term growth and positive outcomes for WA SME. Western Australia-based Civmec has reported a positive start for the FY2020 with revenue of $82.1m and a net profit of $3.8m, supported by the long-term delivery of the Arafura Class offshore patrol vessels.
Civmec has commenced FY2020 with a substantial increase in financial performance, delivering $3.8m net profit for the September quarter and a positive future growth outlook. The result represents a substantial increase in net profit after tax (NPAT) margin, up to 4.6 per cent from revenue of $82.1m for the period. Revenue increased by 11.9 per cent on the previous quarter (Q4 FY2019: $73.4m).
With a current order book of $816m and the ramping up of recently secured projects – including playing a significant role in the delivery of Australia’s largest lithium hydroxide plant being constructed in the south-west of WA for Albemarle – the group is well positioned for FY2020.
The group said it remains committed to delivering its strategy of capitalising on major expansion project opportunities with key clients and further establishing consistent, recurring revenue streams.
Civmec chief executive Patrick Tallon explained, “It is pleasing to deliver such a strong financial result for the quarter. Our focus is on securing projects that utilise a combination of our facilities and on-site multi-disciplined, self-performance capability, enabling us to provide clients with a single, vertically integrated solution.”
Shifting to the company’s defence portfolio, Civmec is banking on long-term growth as a result of the SEA 1180 Arafura Class offshore patrol vessel program.
While the processing of steel for the first two vessels being constructed in South Australia under the Royal Australian Navy’s OPV program is well underway at Henderson, revenue generated from these works will increase once the consolidation of the remaining 10 vessels moves to Civmec’s new state-of-the-art facility in 2020, providing a sustained revenue stream until 2029.
Furthermore, the federal government’s commitment to undertake its minor naval vessel continuous build program and significant sustainment activities at Henderson will provide further construction and through-life support opportunities in the marine and defence sector going forward.
The group has recently expanded its executive team to support future growth, with the appointment of two new executive general manager roles for manufacturing and maintenance, sitting alongside the existing executive general manager construction role.
This will facilitate the focused management of the group’s three functional areas of operation, providing multi-disciplined capability across its four operating sectors.
“The intent of these structural changes is to support our strategic growth plan, enabling the focused delivery of major projects to drive profitability; streamlining east and west coast operations to deliver efficiency and maximise synergies in production; and leveraging our national footprint and multidisciplinary capability to capitalise on the growing maintenance and turnaround services market,” Tallon added.
Civmec is an integrated, multi-disciplinary construction and engineering services provider to the oil and gas, metals and minerals, infrastructure, and marineand defence sectors. Headquartered in Henderson, Western Australia, Civmec has regional offices in Newcastle (NSW) and Gladstone (Queensland).
The company is listed on the SGX (Singapore) and the ASX (Australia). (Source: Defence Connect)
13 Nov 19. Smith & Wesson owner to separate gun business. Continues American Outdoor Brands’ effort to lessen exposure to gun sales. Smith & Wesson owner American Outdoor Brands announced plans for a spin-off that will separate its gun-making business from brands that sell knives, rifle scopes and other outdoor gear. The company has sought to lessen its exposure to the boom-and-bust cycle of gun sales by expanding its footprint in the accessory market, but acknowledged “changes in the political climate” have contributed to its decision to split its assets. American Outdoor Brands said on Wednesday it intends to spin off its outdoor products and accessories unit to create two independent and publicly traded companies, with the other comprised of Smith & Wesson, the 167-year-old firearms maker, and related businesses.
The spun-off unit will include companies such as Crimson Trace, a purveyor of laser gun sights, and knife maker Bubba Blade, that represented part of its efforts to reduce its reliance on revenue from firearm sales. The strategy was punctuated by the company’s decision in late 2016 to change its corporate name from Smith & Wesson to American Outdoor Brands. The spin-off follows a strategic review that included an evaluation of the Springfield, Massachusetts-based group’s growth prospects, business operations in the current market, and credit and insurance factors. Barry Monheit, the company’s chairman, said in a statement that separating the businesses “will allow each company to better align its strategic objectives with its capital allocation priorities”. “There have been significant changes in the political climate as well as the economic, investing, and insurance markets since we embarked upon what we believe have been our very successful diversification efforts,” Mr Monheit said.
The spin-off will be conducted as a tax-free dividend to shareholders, who will own 100 per cent of each company. It is expected to be completed in the second half of 2020. The new Smith & Wesson Brands will manufacture rifles and handguns under the namesake brand and Thompson/Center Arms, in addition to making Gemtech suppressors, generating an estimated $450m to $500m in revenue during its first 12 months as a standalone company. It will be led by Mark Smith, current president of the manufacturing services division. American Outdoor Brands’ current chief executive, James Debney, is slated to become head of the spun-off company of the same name. Revenue is projected to be $200m to $210m in the first year. Firearm manufacturers have struggled with weaker consumer sales in recent years. Retailers stocked up on guns in 2016, anticipating a flood of demand during the US presidential election season. But sales cooled off after Donald Trump’s victory lessened gun owners’ concerns over potential new restrictions on purchases. The industry has also faced opposition following mass shootings in the US. Earlier this week, the Supreme Court declined to block a lawsuit brought by families of Sandy Hook victims against Remington, in a case that could broaden liabilities for gun companies. Shares in American Outdoor Brands were up 3.9 per cent in after-hours trading, after rising 2.9 per cent during Wednesday’s session. (Source: FT.com)
13 Nov 19. Avon Rubber (AVON) said that it expects to complete its $91m acquisition of ballistic protection business 3M during the first half of 2020, as the specialist in military respirators delivered full-year 2019 results ahead of expectations. During this time, Avon Rubber secured $340m of long-term contracts and lifted adjusted pre-tax profits by 11.2 per cent. Avon Protection revenues grew by 5.9 per cent while military turnover increased by 26.1 per cent. Buy. (Source: Investors Chronicle)
12 Nov 19. BlackSky Secures $50m in Funding from Intelsat. Creates First Industry Relationship to Pair Earth Observation with Global Communications Infrastructure. BlackSky, a leading provider of geospatial intelligence, satellite imaging and global monitoring services, announced it has secured a $50m senior secured loan from global satellite communications leader, Intelsat (NYSE: I). The transaction results in an industry first, creating a strategic relationship that pairs Earth observation with a global communications infrastructure.
The new capital will allow BlackSky to augment existing assets and alliances, ensuring BlackSky remains a leader in delivering actionable Earth intelligence faster, with greater accuracy and more affordably than anyone else in the industry. Over time, BlackSky could incorporate access to Intelsat’s robust global communications infrastructure, delivering first-to-know insights to customers no matter where in the world they are.
“BlackSky is enabling a whole new level of global intelligence by leveraging the economics of small satellites so that our customers will always be the first to know,” said Brian E. O’Toole, President and CEO of BlackSky. “It takes a lot of expertise, engineering and capital to make smallsats viable; BlackSky is the first company to overcome these challenges with proven economies of scale. This latest partnership is a vote of confidence in our ability to deliver industry leading insights to our customers from one of the biggest players in the market.”
With an established manufacturing capability, mission operations center and sales channels in place, BlackSky is in the process of expanding its constellation of smallsats that will deliver the highest revisit rate in the industry. The company is also leading the industry in fusing AI/ML-powered computer vision, high revisit rate imagery from orbital assets and open-source intelligence to provide customers with comprehensive, deep insights about the locations in the world they care about.
“BlackSky is well positioned to be a significant player in the expanding earth observation sector, which we believe benefits from accelerating trends including cloud computing, change detection, predictive analytics and machine learning. We believe a significant number of commercial and government sector customers will increasingly rely on geospatial intelligence,” said Intelsat CEO Stephen Spengler. “Our investment will be used to fund enhancements to the current BlackSky infrastructure and will serve as a springboard for a commercial alliance with Intelsat and our Intelsat General government subsidiary.”
BlackSky currently has four 1-meter satellites in orbit with another four slated for launch in early 2020, and plans to have 16 satellites in its constellation by early 2021.
For this transaction, Evercore acted as a financial advisor to BlackSky and PJT Partners acted as financial advisor to Intelsat.
About BlackSky
BlackSky’s premier global monitoring and alerting services provide an easy, affordable way to observe, analyze and act on timely and relevant insights about the world. BlackSky combines access to high-quality satellite images from multiple sources, including its own planned 60-satellite constellation, fused with diverse, real-time sensor data and social media, news and other data feeds. Whether you’re tracking economic assets, monitoring illegal maritime activity or securing troops and borders, BlackSky ensures you have the most current and meaningful information at your fingertips so you can make well-informed decisions. BlackSky is part of Spaceflight Industries and based in Seattle, Washington. For more information, visit www.blacksky.com. (Source: BUSINESS WIRE)
11 Nov 19. EU Stops the Clock on Review of Boeing Deal with Embraer. European regulators halted their in-depth antitrust probe into Boeing Co.’s plan to invest in Embraer SA, saying they hadn’t received sufficient information from the planemakers.
The European Commission has been investigating the venture, warning that the deal could remove Embraer as the third-largest global competitor to both Boeing and Airbus SE, which “may therefore result in higher prices and less choice.” The commission, one of the world’s toughest merger regulators, said Monday that it “stopped the clock” and a review can only be restarted once it gets the answers it needs.
The heightened scrutiny puts new pressure on Boeing’s plan to take an 80% stake in a venture controlling Embraer’s commercial airplane and services businesses. The move, which would broaden Boeing’s reach into the regional-jet market by giving it access to Embraer’s E-Jet family, is intended to position the two companies to better compete with Airbus, which last year took control of Bombardier Inc.’s C Series aircraft — now known as the A220.
“Parties must supply the necessary information for the investigation in a timely fashion,” a spokeswoman for the regulator said Monday in a statement. “Failure to do so will lead the commission to stop the clock.” (Source: defense-aerospace.com/Bloomberg News)
12 Nov 19. Embraer announces Results.
- In 3Q19, Embraer delivered 17 commercial and 27 executive (15 light and 12 large) jets, compared to 15 commercial jets and 24 executive (17 light and 7 large) jets in 3Q18;
- The Company’s firm order backlog at the end of 3Q19 was US$ 16.2bn;
- EBIT and EBITDA in 3Q19 were US$ (20.8) m and US$ 18.2m, respectively, yielding EBIT margin of -1.8% and EBITDA margin of 1.5%. The quarterly results were impacted by separation costs of US$ 34.8m related to the carve out of Embraer’s Commercial Aviation business. In the first nine months of 2019 the Company’s EBIT was US$ (9.3)m (EBIT margin of -0.3%) and EBITDA was US$ 116.2m (EBITDA margin of 3.4%). In the same period separation costs represented US$ 66.6m;
- 3Q19 Net loss attributable to Embraer shareholders and Loss per ADS were US$ (77.2)m and US$ (0.42), respectively. Adjusted net loss (excluding deferred income tax and social contribution) for 3Q19 was US$ (48.4)m, with Adjusted loss per ADS of US$ (0.26). Embraer reported adjusted net loss in 3Q18 of US$ (16.5)m, for an adjusted loss per ADS of US$ (0.09) in the quarter;
- Embraer reported 3Q19 Free cash flow of US$ (257.4)m, versus free cash flow of US$ (162.6)m reported in 3Q18;
- Embraer updates its 2019 and 2020 guidance. For 2019, Embraer reaffirms deliveries of 85 – 95 commercial jets, 90 – 110 executive jets, two KC-390 aircraft, and now expects five Super Tucano deliveries. The Company reaffirms guidance for 2019 revenues of US$ 5.3 – 5.7bn and breakeven EBIT margin, while removing the estimates related to the consummation of the strategic partnership with Boeing by the end of the year. Embraer also introduces 2019 Free Cash Flow guidance for a use of US$ (300) – US$ (100)m for the year;
- For 2020, Embraer reaffirms revenues of US$ 2.5 – US$ 2.8bn, EBIT margin of 2 – 5%, and breakeven Free Cash Flow, and now expects a special dividend of between US$ 1.3bn and US$ 1.6bn to be paid in 2020.
12 Nov 19. Engineering firm Meggitt warns on annual margins due to 737MAX grounding. British engineering firm Meggitt Plc (MGGT.L) on Tuesday raised its outlook for annual organic revenue growth, buoyed by good third-quarter performance in the U.S. defence market but warned of pressured margins due to the grounding of Boeing’s (BA.N) 737MAX.
The company, which supplies aerospace components and wheels and brakes for military fighter programmes, said it expects full year organic revenue growth between 6% and 7%, and operating margin to be towards the lower end of its guidance range of 17.7% to 18.2%. (Source: Reuters)
12 Nov 19. Meggitt PLC Update on Q3 trading and 2019 guidance. Meggitt PLC (“Meggitt” or “the Group”), a leading international company specialising in high performance components and sub-systems for the aerospace, defence and energy markets, today announces its third quarter trading update and an upgrade to its revenue guidance for the year to 31 December 2019. Trading in the third quarter was stronger than previously anticipated, with overall organic revenue growth of 11%, driven by all end market segments and a particularly strong performance in Defence. In Civil Aerospace, Original Equipment (OE) revenues grew by 4% in the third quarter, driven by good growth in regional and business jets with revenue from large jets slightly ahead of the comparative period. The Group is maintaining its full year guidance of 5 to 7% reflecting our expectation of continued growth in aircraft deliveries to year end.
Civil Aftermarket revenues grew by 4% in the third quarter, where we delivered good growth in large jets against a backdrop of lower air traffic growth and ongoing delays in the delivery of initial provisioning spares for the 737MAX. Growth in large jets and a good performance in business jets were partially offset by a softer quarter in regional jets. The Group continues to expect full year civil aftermarket organic revenue growth of 3 to 5%.
In Defence, revenues grew by 20% in the third quarter, with strong growth in both OE and the aftermarket reflecting our significant platform and fleet positions and a continuation of upgrade and retrofit activity in the US. The Group now expects full year organic revenue growth of 9 to 11% (up from previous guidance of 6 to 8%). In Energy, revenues grew by 26% in the third quarter, driven by a strong performance in our Heatric business. The project-driven nature of this division means that performance can be unevenly distributed across the year. The Group therefore continues to expect full year organic revenue growth of 0 to 5%. Strategic initiatives During the quarter, we continued to see the benefit of our strategic initiatives including improving operational performance in Engine Composites, reflecting the investment we have made to increase capacity and capability in this business. We have also delivered further savings in purchase costs and continued to make good progress on consolidating our global footprint, notably on the construction of our new facility at Ansty Park, UK where we are on track to commence the progressive transition of four existing UK sites in 2020.
In our Services and Support division, we further strengthened our relationships with customers securing a number of new SMART Support™ contracts during the period. Revenue upgrade and outlook for the full year 2019 As a result of the Group’s strong revenue performance in the quarter, we are upgrading guidance for organic revenue growth for the Group for the full year to 6 to 7% (up from 4 to 6% previously).
While we expect good top line growth for the full year, margin progression will be constrained by mix effects, the grounding of the 737MAX and, as discussed at the half year, pressures across our internal and external supply chain driven by the unprecedented ramp up in new aircraft production. As a result, full year operating margin is expected to be towards the lower end of our guidance range of 17.7% to 18.2%. With exposure to some of the fastest growing platforms and hardest working fleets across both civil aerospace and defence, and continued progress on our strategic initiatives, the Group remains well positioned for the future and we look forward to delivering another year of profitable growth.
12 Nov 19. SAS announces new proposal to raise funds for space operations. Australian space company Sky and Space Global is seeking to raise additional funds to advance its plans for a constellation of communications satellites. The company wants to raise a total of $15.8m, comprising a $10.8m non-renounceable entitlement issue to eligible shareholders and $5m to professional investors on the same pricing and terms as the entitlement issue. This replaces an earlier proposal to raise $15m through a share placement.
SAS said that on completion of the entitlement issue and placement, the company would be well placed to accelerate its global growth strategy as it prepares to launch its first commercial 6U nanosatellites.
“Growing demand for satellite IoT, M2M and real-time connectivity by telecommunications providers around the world represent a significant and growing market opportunity, with the total addressable market expected to grow globally to US$1.4bn by 2027,” SAS said in its announcement of the fund raising proposal.
SAS incorporated in the UK in 2015 and listed on the Australian Securities Exchange in May 2016.
The company is based in Perth and is well advanced in plans for what it calls the Pearls constellation of as many as 200 nanosatellites in equatorial orbit, providing low-cost communications, data and internet services for markets in Africa, South America and Asia.
SAS is proposing an additional satellite constellation, allowing full global coverage, including Australia, Russia, China, South Africa, Argentina and Canada. The company has more than 50 agreements in place for use of its services.
In 2017, SAS Global launched three prototype satellites on an Indian rocket to test its technology.
SAS has experienced its fair share of problems, particularly attaining the cash needed to advance its operations.
SAS managing director Meir Moalem said that during 2019, “SAS continued to develop our hardware, technology, infrastructure and commercial channels and signed additional future potential customers in preparation for commercialisation”.
“On behalf of SAS, I’d like to express my thanks to shareholders for their ongoing support at this challenging and important time as we move closer to commercialisation of our services,” he said.
SAS remains in voluntary suspension from trading on the ASX.
It says it expects the suspension to end once the capital raising is completed, two Australian resident directors are appointed and all ASX requirements are satisfied. (Source: Space Connect)
11 Nov 19. Italian aerospace group Leonardo invests in solar-powered drones. Italian defence and aerospace group Leonardo LDOF.MI has invested in a company developing solar-powered drones potentially capable of unlimited flight with no refuelling, it said.
The drone, which is expected to begin autonomous flights next year and go into production in 2021, can operate from existing airbases around the world and remain airbourne for much longer than current aircraft.
Leonardo gave no financial details of the deal, but said it would become lead investor in and main industrial partner to Skydweller Aero Inc, and would lead marketing of the drone in Italy, the United Kingdom and Poland.
Chief Executive Alessandro Profumo said the deal would “improve the company’s competitive advantage in the aerospace business for the next 20 years”.
Leonardo said the system would comply with European export laws and would not be subject to international arms trafficking restrictions.
Development and construction of the aircraft will be carried out at the Skydweller facility in the Castilla-La Mancha region of Spain, Leonardo said. Its Aircraft division will help development and engineering via a dedicated team.
Various groups including Airbus AIR.PA, Boeing BA.N, Facebook FB.O and Google GOOGL.O have looked at solar-powered aircraft.
However, development has been hampered by issues such as installing solar panels that generate enough power for flight without adding too much weight to the aircraft.
Leonardo said Skydweller had already developed a “proven and mature” aircraft that had successfully circumnavigated the globe in 2016.
Its first development phase would focus on converting the aircraft from a manned platform to an “optionally piloted vehicle” by building in autonomy algorithms.
A second phase would develop a fully autonomous unpiloted aircraft, capable of standing up to a range of environmental conditions.
Drones capable of flying as long as the sun shone would have widespread applications in areas ranging from the military to communications, navigation, weather and environmental, and infrastructure monitoring.
06 Nov 19. The Sale of Inmarsat is in Jeopardy. Journalist Chris Forrester is reporting that barely a week ago, the $6bn sale of Inmarsat to a consortium with Apax and Warburg Pincus as key players was approved by the UK government — now emerging is that the deal may be in jeopardy.
A relatively small shareholder (2.85 per cent), Oaktree Capital Management, has called for the sale to be halted, arguing that the recommended offer fails to account for the potential value of a key Inmarsat partner in the U.S., Ligado.
Ligado is the follow-on company of the failed LightSquared that wanted to build a wireless broadband service. LightSquared went bust following a U.S. communications regulator saying that the firm’s services could interfere with GPS signals widely used by the farming industry in the U.S. Additional investors have emerged who also object to the deal in its current form — Rubic Capital (2.2 percent holding) and Kite Lake Capital (3.8 percent) also say the deal should be halted until the Ligado asset is better understood.
Intelsat’s management and advisers have rejected the move but there will be a routine court hearing next week as part of the purchase and the objectors are expected to object to the deal.
The formal acquisition of Inmarsat is being undertaken by Connect Bidco, which is a consortium comprising Apax Partners LLP, Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan Board and Warburg Pincus LLP for Inmarsat plc.
The UK Secretary of State for Digital, Culture, Media and Sport, Nicky Morgan, on October 29, announced that she has accepted statutory undertakings from the parties involved in the proposed acquisition of Inmarsat plc by Connect Bidco Limited and that the acquisition will not, therefore, be referred to the Competition and Markets Authority for a phase 2 inquiry under the Enterprise Act 2002. (Source: Satnews)
08 Nov 19. Banks forced to rethink Cobham loan selldown. Bankers are reconsidering the selldown strategy of a £2.517bn financing backing a £4bn buyout of UK defence and aerospace group Cobham after the British government further delayed the acquisition.
Banks were preparing to launch syndication of the jumbo financing within the next two weeks and it was touted to be the last of the mega event-driven financings of 2019. Lenders were expecting to have it wrapped up by the beginning of December.
That timetable is now under consideration after government Business Secretary Andrea Leadsom announced further discussions were needed over the acquisition.
A number of bankers attribute the delay to an upcoming general election on December 12, speculating that the government could come under attack for allowing the sale of a sensitive UK asset to a US firm.
“Clearly if this delay had not occurred the debt would likely be out for syndication but now it will have to be reconsidered. A decision on the acquisition seems to be punted to after the election. They don’t want a decision to be a political football and easy for the opposition to use,” a senior capital markets banker said.
US private equity firm Advent agreed to buy Cobham, known for its air-to-air refuelling technology, in July.
Credit Suisse, Citigroup and Goldman Sachs underwrote the debt financing and were joined in August by Blackstone Holdings Finance, BNP Paribas, Deutsche Bank, UniCredit, NatWest Markets and Barclays as arrangers and underwriters.
On September 17 Leadsom initiated a public interest intervention under the Enterprise Act 2002 into the merger on the grounds of national security. The Competition and Markets Authority provided her with a report on the transaction by October 29. The Secretary of State for Defence also wrote to her about the national security implications.
HOLDING ON
Lenders may decide to wait until there is more clarity on the M&A process before launching a sell-down or they could still go ahead with the syndication process. Banks don’t favour holding risk over year-end, uncertain what January will bring from a political and economic point of view.
“There is a referral outstanding that could theoretically change the transaction. What lenders want and what they can do is not the same thing. Banks would rather not hold loans over year-end if they don’t have to, but if they don’t know what the deal is for whatever reason, they almost have no choice. The fact it has been delayed again doesn’t suggest an easy outcome,” a second senior banker said.
The financing comprises £1.985bn-equivalent of senior facilities, including a £1.71bn-equivalent seven-year Term Loan B paying 450bp, with a 0% floor on the euros and a 1% floor on the US dollars and a £275m 5.5-year multi-currency revolving credit facility.
There is also a £532m-equivalent second-lien facility, some or all of which has been preplaced. Bonds are also thought to have been included in the capital structure, sources said.
Ticking fees on the TLB and second lien start at 50% of the applicable margin after 60 days from final allocation rising to 100% after 120 days. (Source: Google/Reuters)
08 Nov 19. Hungary to Buy Hirtenberger Defence. The Hungarian Government Commissioner for Defence, Defence Industries and the Coordination of Defence Modernisation announced that HDT Védelmi Ipari Kft. Company has acquired the Austrian Hirtenberger Defence Group.
“Hirtenberger Defence is globally known for its technology and performance of products. We are convinced this is driven by the outstanding people at Hirtenberger. For us, it is key to maintain and further grow Hirtenberger business, technology and its outstanding customer relations. We will maintain our operations in Hirtenberg,” says Gáspár Maróth, Government Commissioner Responsible for Defence, Defence Industries and the Coordination of Defence Modernisation. “Our location in Middle Wallop will also play a major part of future growth of the Hirtenberger Defence Group,” he added.
The acquisition of Hirtenberger is a cornerstone of the Hungarian strategy to develop the Hungarian Defence Industry Sector. HDT Védelmi Ipari will maintain Hirtenberger as it is and takes full responsibility for all commercial operations and commitments to employees, customers and suppliers.
Hirtenberger Defence will continue to operate from all its locations and carry the well-known brand. Since October 29 on Hirtenberger has operated under the new ownership; the Hirtenberger management will stay on board.
“I am very happy to have HDT Védelmi Ipari Kft as an investor, it will allow us to further grow our business, drive our key research and development programmes and gain opportunities in the growing defence industry globally. I think we’ll have a lot of opportunities for our customers and partners for the future,” says Carsten Barth, CEO Hirtenberger Defence. (Source: ESD Spotlight)
08 Nov 19. Draganfly Debuts on Canada Stock Exchange. Draganfly Inc. has announced that it will begin trading on the Canadian Securities Exchange (“CSE”) under ticker symbol “DFLY”.
Chairman and CEO, Cameron Chell: “Dynamic industry expansion and recent regulatory and government positions on drone operations in North America focused on securing, promoting and adopting North American technology has Draganfly well positioned for growth. We are fortunate to be able to access the public markets to support this growth and the evolution of the drone and unmanned vehicle space in North America”.
For further details of the Company and the listing transaction, please refer to the non-offering prospectus of the Company dated October 23, 2019, available on SEDAR at www.sedar.com.
The Company also announced today the grant of stock options and restricted share units (“RSUs”) to certain officers, directors and employees of the Company. Incentive stock options to purchase up to 2,925,000 common shares were granted to officers, directors and employees of the Company, pursuant to the Company’s share compensation plan, exercisable at a price of $0.50 per common share.
The options shall have a term of 10 years and vest in three equal tranches, on the first, second and third anniversaries of the date of grant. In addition, 2,925,000 RSUs were awarded to officers, directors and employees pursuant to the Company’s share compensation plan. The RSUs shall vest in three equal tranches, on the first, second and third anniversaries of the date of grant.
Business of Draganfly
Draganfly Inc. is the creator of quality, cutting-edge, unmanned vehicle systems and software that revolutionize the way people do business. Recognized as being at the forefront of technology for over 21 years, Draganfly is an award-winning, industry-leading manufacturer within the commercial UAV space, serving the public safety, agriculture, industrial inspections and mapping and surveying markets. Draganfly is a company driven by passion, ingenuity and the need to provide efficient solutions and first-class services to its customers around the world with the goal of saving time, money and lives. (Source: UAS VISION)