• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Excelitas Qioptiq banner

BATTLESPACE Updates

   +44 (0)77689 54766
   j.nettlefold@battle-technology.com

  • Home
  • Features
  • News Updates
  • Company Directory
  • About
  • Subscribe
  • Contact
  • Media Pack 2021

BUSINESS NEWS

November 22, 2019 by

21 Nov 19. Comtech Telecommunications Corp. Announces Strategic Acquisition of UHP Networks Inc. for $40.0m. Comtech Telecommunications Corp. (“Comtech”) (Nasdaq: CMTL) announced today that it has entered into an agreement to acquire UHP Networks Inc. (“UHP”), a leading provider of innovative and disruptive satellite ground station technology solutions, for a purchase price of approximately $40.0m. Founded in 2005, UHP is based in Canada and has developed revolutionary technology that is transforming the Very Small Aperture Terminal (“VSAT”) market.

Fred Kornberg, President and Chief Executive Officer of Comtech, said, “With end-markets for high-speed satellite-based networks significantly growing, Comtech’s acquisition of UHP is a significant step in enhancing our solution offerings for the satellite ground station market. After months of extensive testing, we believe that UHP’s innovative implementation techniques for time division multiple access (“TDMA”) technology are best-in-class. UHP’s disruptive technologies were developed starting with a blank sheet of paper, are unencumbered by legacy methods and provide the highest TDMA efficiency at the lowest cost available. We are delighted to acquire UHP and expect the use of their incredible technology to expand globally for many years ahead.”

Vagan Shakhgildian, President of UHP, said, “I believe this strategic combination with Comtech is compelling. I expect our customers will significantly benefit from greater resources and capabilities than UHP could provide on a stand-alone basis. We intend to maintain a sharp focus on all scheduled and committed rollouts to our customers and supporting all existing products, services, and agreements to our customers including value-added resellers, distributors, original equipment manufacturers and other strategic partners. All of UHP employees and myself look forward to working with the Comtech management team to deliver world-class products to our existing customers and new customers around the world.”

Key Strategic Benefits for Comtech Include:

  • Expands Comtech’s product line in the satellite ground station market, which has a growing need for reliable, high capacity satellite equipment, particularly in the private and high-performance enterprise VSAT market.
  • Allows Comtech to integrate a revolutionary TDMA technology into Comtech EF Data Corp.’s industry leading HEIGHTSTM platform (which includes our HEIGHTS Dynamic Network Access (“H-DNA”) dynamic Single Carrier per Channel (“dSCPC”) technology).
  • Brings new relationships with top tier U.S. mobile network operators, Fortune 500 global companies and international government agencies.

About UHP’s Innovative and Disruptive Satellite Ground Station Technology

  • UHP offers several satellite routers which can process up to 450Mbps of aggregate traffic with over 190,000 IP packets per second and have remarkably low TDMA overhead. UHP’s implementation of TDMA technology can result in a 20% efficiency advantage over other TDMA implementations at a much lower cost.
  • UHP’s routers are truly universal and can switch on-the-fly between modes using multiple configuration profiles that are built into the device. As such, it enables mobile network operators to expand cell phone service to rural areas with full and highly efficient coverage. UHP’s universal routers can provide for a self-healing architecture, known as Smart RedundancyTM, which we believe is an industry first.
  • UHP has recently announced a next-generation, fully backward compatible, wideband platform that has 3x greater capability than its existing systems and which will allow High Throughput Satellite (“HTS”) satellite operators to combine different services and applications in just one carrier.

The purchase agreement for UHP includes the acquisition of a sister company and all of their intellectual property. All employees of UHP are expected to join and remain with the company and Mr. Vagan Shakhgildian will serve as President of UHP and have additional responsibilities to facilitate further growth of Comtech’s HEIGHTS solutions. The purchase agreement provides for an earn-out up to an additional $10.0 million if certain agreed upon sales milestones are reached over a twelve-month period after close. The impact of the UHP acquisition with respect to Comtech’s fiscal 2020 financial guidance will be dependent on the timing of the closing of the transaction which is expected to occur late in the second half of fiscal 2020. The transaction is subject to customary closing conditions.

Comtech will provide financial and other information about the UHP transaction during its regularly scheduled conference call to review the results of its fiscal quarter ended October 31, 2019, the exact date and time of which will be announced in advance.

Morgan Lewis & Bockius LLP, Proskauer Rose LLP and Torys LLP are serving as legal counsel to Comtech. KPMG M&A Advisory is serving as financial advisor to UHP. Dentons is serving as legal counsel to UHP. (Source: BUSINESS WIRE)

21 Nov 19. Chinese antitrust regulator approves Boeing-Embraer deal. A Chinese antitrust regulator has approved Boeing Co’s (BA.N) deal to buy a controlling stake in the commercial jet division of Brazilian planemaker Embraer (EMBR3.SA), according to a statement on the regulator’s website.

The Boeing-Embraer deal appears on a list dated Nov. 19 of transactions “approved unconditionally” that is posted to the website of the Chinese State Administration for Market Regulation’s anti-monopoly department.

The document gives no further details, only saying that the case was adjudicated 10 days earlier on Nov. 9.

Boeing, the world’s largest planemaker, has been seeking to finalize its purchase of 80% of Embraer’s commercial jet division in a bid to compete with Europe’s Airbus (AIR.PA) in the market for planes with fewer than 150 seats.

China’s approval comes as EU regulators have delayed a decision until both companies provide additional documents, which Embraer has said it is trying to do as soon as possible.

The companies originally said they expected to close the deal this year. (Source: Reuters)

20 Nov 19. Buoyant warship division keeps Babcock on course for 2020 targets. British engineer Babcock International (BAB.L) said it was on course to hit its full-year profit and revenue targets due to solid demand for support services across its UK warship division. Babcock, whose biggest customer is Britain’s Ministry of Defence, is reshaping the group as the ending of a number of contracts eats into its expected income for the year ending March 31 2020. The group said on Wednesday that when cutting out the impact of the so-called step downs, its first-half revenue was flat at 2.5bn pounds ($3.2bn) and the underlying operating profit slipped by 2%. (Source: Reuters)

21 Nov 19. Chemring (CHG) has completed its exit from commoditised energetics, agreeing the sale of its US subsidiary Chemring Ordnance to Norwegian aerospace and defence business Nammo Defense Systems for $17m. The sale is expected to complete before the end of Chemring’s 2020 second quarter.  (Source: Investors Chronicle)

21 Nov 19. MBDA ready to meet the challenge of Europe’s missile defence. MBDA has signed an agreement to purchase GDI Simulation from Airbus with closing subject to regulatory closing conditions. Terms of the deal are not being disclosed.

GDI Simulation is one of the leading French players in simulation for the French Armed Forces. GDI Simulation, based in the Ile de France, is a SME with over 70 employees and in 2018 generated sales of €15 million. It develops, assembles, integrates and maintains simulation systems for ground vehicles and for MBDA battlefield missiles, for the French and foreign armed forces. Over the course of several years, it has built a well-developed and recognised competence in eye-safe laser based systems and it provides crucial services and support to the land based training centres of the French Army.

GDI Simulation will continue to operate independently under the ownership of MBDA as a prime contractor to the DGA for simulation systems equipment and as a supplier to MBDA.

MBDA’s CEO, Éric Béranger said: “With the acquisition of GDI, MBDA will reinforce its position in training simulation equipment, especially in the battlefield segment, combining MBDA’s expertise in missiles and simulation with GDI Simulation’s industrial capability for development, production and maintenance of training equipment to offer an integrated solution to its domestic and foreign clients.”

20 Nov 19. Get on board for a highly profitable voyage. As a global leader in AIS, an advanced identification communications technology that is used to track and monitor maritime vessels, SRT Marine Systems (SRT:41p) is now fulfilling the potential that first enticed investors to back its IPO on Aim in November 2005.

SRT’s transceivers enable real-time data communication between multiple marine entities such as vessels, buoys and coast stations, and facilitate a wide range of functionality such as vessel identification and status, vessel safety, search and rescue, and environment monitoring. They are sold through a global network of value-added resellers (electronics dealers and distributors) who target commercial and leisure vessels in Europe and North America under SRT’s own brands. The company also supplies AIS modules to third-party original equipment manufacturers (OEMs) including Raymarine, Koden and Transas. With over 30 years’ expertise in this area, SRT has a reputation for delivering cutting-edge technology based on a deep domain knowledge and one that has created a high barrier to entry.

The plan is to grow the transceivers side of the business organically at 10 per cent a year by expanding the distribution network, launching new products (a new range was released earlier this month), and through marketing initiatives and special projects with partners. In this week’s half-year results, the company hit that sales target, growing half-year revenues by 10 per cent to £3.5m on a healthy gross profit margin of 38 per cent. Key demand drivers are the voluntary adoption of the technology by leisure and commercial vessel owners, improved sales distribution, and greater market recognition of the quality and performance of the product range.

However, the key reason why analysts at house broker FinnCap expect SRT to report record revenues and profits in the 12 months to 31 March 2020 is down to a sea change in trading prospects in the company’s systems business, which provides integrated maritime surveillance and management systems to coastguards, fishery and other maritime agencies.

Each system varies in exact configuration and scale, but at the heart is SRT’s state-of-the-art GeoVS systems application that enables multiple system users to display, analyse and manage large amounts of real time and historical data derived from extensive satellite and terrestrial networks. For instance, the system enables coastguards to automatically detect and manage potential threats, and fishery authorities to detect illegal, unlicensed and unregulated (IUU) fishing on a national scale.

Philippine government contract a game changer

Key to the transformation in trading prospects is the game-changing contract, worth £31.8m at current exchange rates, with the Philippine government to deliver a vessel management system (VMS) configured for fisheries monitoring and management. Announced in December 2018, the contract is being executed over a four-year period in two main phases.

Phase one involves the supply and commissioning of all the equipment and systems across a network of 132 coast stations, two data centres, 17 monitoring centres, and 5,000 vessel transceivers. This phase is worth £30.8m and is spread across eight milestones of various values over a period of 14 months to deliver and implement the physical system itself.

The system will enable the Philippine authorities to efficiently track, monitor and manage the activities of fishing vessels in real-time without range limitation and comply with international, regional and national regulations. The SRT VMS system fuses large amounts of data from multiple sensor systems such as AIS, radar, optical, environmental and sources – terrestrial and satellite – to create a high-quality raw data set in a dedicated local data centre that runs the company’s GeoVS-HUB™ network and data management application under the full control of the end customer. The data is then mobilised by operators using special work stations equipped with SRT’s specialist GeoVS-VIEWER™ application.

Milestone revenues due in the second half from the Philippine contract, and ongoing transceiver sales, explain why chief executive Simon Tucker is comfortable that SRT will produce a record second-half trading performance to lift full-year revenue from £20.6m to £30.4m in the 12 months to 31 March 2020, as house broker FinnCap predicts. On this basis, analysts expect SRT to deliver a record annual pre-tax profit of £4m, up from £3.5m in the 2018/19 financial year.

End user demand growing

It’s well worth noting that the Philippine contract, the largest Marine Domain Awareness (MDA) contract of its kind in the world, could be easily expanded from the initial requirement of 5,000 of the country’s fisheries largest vessels to include tens of thousands of medium and small fishing boats, as well as the seamless integration with other relevant maritime authorities.

Indeed, SRT is discussions on additional contracts with separate government agencies and Ministries in the Philippines worth around £160m. They are not the only major contract opportunities, either. Chairman Kevin Finn notes that the six specific projects the company is targeting in the near term in southeast Asia and the Middle East have an aggregate value of £300m (previously £212m) and are nearing the point of contract. Each project has its own delivery timescale, varying from six months to four years

As well as the near-term pipeline opportunities, SRT has a number of longer-term validated potential contracts worth £280m (previously £200m), ranging in value from less than £1m to £150m and with gross profit margins between 28 per cent and 72 per cent depending on the complexity of the work involved. In aggregate, the total potential validated systems opportunity is worth £580m, mainly with government entities and driven by a combination of national security and fisheries management concerns, and regional regulations such as the EU Fish Catch Certification and the IUU programme.

True, the nature of these system contracts, typically being government projects of significant size and complexity requiring extensive planning and preparation by the end customer, means that they take considerable time to reach the point of contracting. As a result, forecasting exact contract start dates is impossible.

Also, SRT doesn’t have the market all to itself as there are rival producers of AIS transceivers, although only Alltek Marine, a subsidiary of Alltek Technology Corp, an Asia Pacific communication solution provider listed in Taiwan since 2004, provides a complete range of AIS devices. Other AIS suppliers include JRC from Japan, which specialises in Class A devices for big commercial ships; Weatherdock AG, a private German company founded in 2003, which focuses on the cheaper Class B and search and rescue transceivers (SART) devices; Vesper Marine of New Zealand; and ICOM in the UK which supplies Class B devices. Florida-based ACR/ARTEX supplies emergency and survival equipment so is only focused on the SART segment of the AIS market.

Exploiting an opportunity in marine domain management

That said, the real opportunity for SRT lies in exploiting the increasing opportunities across the globe for the adoption of sophisticated large-scale fisheries vessel monitoring and management systems (VMS) and integrated coast guard surveillance command and control marine domain management (MDM) systems. SRT’s directors have also identified new opportunities in areas such as environment monitoring. The plan is to develop a dedicated sales division to tap demand in this area and use its core SRT-MDA system with customised configuration to deliver a robust and innovative solution.

In makes sense to do so because MDM is likely to have the largest market share in the marine safety market in the coming years as end users such as authorities, transport and shipping organisations adopt advanced surveillance and tracking solutions for better safety and security of the maritime business. The maritime security service market is driven by factors such as ungoverned marine regions, increased awareness about maritime security, and use of advanced and integrated technologies and solutions.

Importantly, AIS has become a critical path identification technology that is an integral sensor system in MDA systems for ports, waterways, coastal surveillance and fishery management. That’s because while radar shows where a vessel is located, AIS technologies offer far more insight, giving greater detail without visual inspection, and providing information in radar shadows, and without loss of targets in sea, rain and snow. SRT’s position in AIS gives the company a strategic position in the MDA market, and one that can be leveraged through its innovative GeoVS maritime display, data analytics and management system. In effect, it is selling ‘Big Data’ systems for the marine environment. For example, highlighting a vessel will reveal its ownership, next of kin, where it’s been for the past few weeks, its licence and owner’s address.

Admittedly, there are a number of large defence and surveillance companies supplying large-scale/national MDM systems. These include Raytheon, Saab, Lockheed Martin, Signalis (Airbus),Elman, Selex (Finmeccanica/Leonardo) and Harris, which has partnered with exactEarth to deliver satellite-based AIS solutions. However, defence companies supplying these systems look to build high-value weapons-system sales into the packages, whereas SRT only provides civil defence and security systems. Furthermore, larger defence groups do not match SRT’s specific AIS domain expertise on the civil side, which the company is exploiting by targeting national government contracts specifically in large-scale fisheries monitoring and management systems and integrated coast guard surveillance.

The uncertain global geopolitical backdrop is another driver of demand for SRT’s maritime surveillance and monitoring systems across national security, border control, search and rescue and fisheries management. Governments in Asia and Middle East now have a preference for autonomous systems rather than those supplied by third-party nations, and there is increasing recognition of the need for day-to-day management of civilian maritime activities given heightened security risks in the region. The rise of nationalism and protectionism is another reason for national governments to increase their control and security of economic zones, including coastal and fishing waters, as are migrant and immigration concerns. This can only add weight to the case for the adoption of SRT’s MDA systems.

Funded for profitable growth and high operational leverage

The game changing Philippine contract award could just be the tip of the iceberg for SRT. If the company lands any one of the aforementioned six contract opportunities in its £300m near-term bid pipeline, then this would have a transformational impact on profits. That’s because a fixed annual operating cost base of £9.5m could support £100m of annual contract revenue at a 40 per cent gross margin over a three-year period, so a high percentage of incremental gross margin earned will be converted into operating profit and lead to material pre-tax profit and earnings per share (EPS) upgrades.

Indeed, the near-term bid pipeline could generate cumulative operating profit of close to £90m, a huge sum in relation to the £3.4m operating profit SRT reported on revenue of £20.6m in the 2018/19 financial year, and the £4m operating profit forecast by analysts at FinnCap for the 12 months to 31 March 2020. That’s serious operational leverage.

Importantly, SRT has the funding in place to support such a step change in revenue and profits, having raised £7m of new equity through share placings in May 2018 and January 2019. The directors also refinanced debt facilities and have a three-year loan note facility of £10m in place (£6.2m drawn down at 30 September 2019) at an annual interest rate of 8 per cent. This may seem a tad on the high side, but interest costs are tax deductible and the post-tax interest charge is well below cost of equity.

At the end of September 2019, SRT had cash of £1.7m on its balance sheet and since the half-year end has received £4.9m of the £14.3m trade receivables outstanding, so effectively has around £10m of free cash and untapped credit facilities to deliver on the aforementioned six major contracts in its near-term bid pipeline. Current assets of £20.4m are four times higher than current liabilities of £5m, highlighting a strong liquid ratio.

Valuation and target price

Based on a normalised tax charge, SRT’s shares are rated on 21 times earnings estimates, a small discount to the average of FinnCap’s Tech40 index. However, the case for making an investment in SRT is predicated on the company converting its near-term pipeline into firm orders so that the operating leverage of the business really kicks in.

In fact, SRT could be making annual pre-tax profit of £25m to £30m in the coming years, assuming that the company lands the major contracts in its near-term £300m sales pipeline. That level of profitability not only supports the conservative target price of 55p I outlined in my August Alpha Report, to value the company’s equity at £85m, but significant further upside, too. Strong buy.  (Source: Investors Chronicle)

20 Nov 19. Albany International Acquires CirComp GmbH.  Albany International Corp. (NYSE:AIN) announced today that it has acquired CirComp GmbH, a privately-held developer and manufacturer of high-performance composite components. CirComp, located in Kaiserslautern, Germany was founded by Dr. Ing. Ralph Funck and specializes in designing and manufacturing customized engineered composite components for aerospace and other demanding industrial applications. The acquisition complements and expands Albany’s portfolio of proprietary, advanced manufacturing technologies for composite components, increases the Company’s position as a leading innovator in advanced materials processing and automation and opens a geographic footprint in Europe to better serve our global customer base.

“I’m excited to welcome Dr. Funck and the CirComp team to Albany International. We are combining two great innovators of high-performance engineered composite component design and technology, both with strong capabilities in proprietary automated manufacturing process development. CirComp will be a compelling addition to Albany’s current portfolio,” said Olivier Jarrault, Albany’s President and CEO. “Together we will be able to leverage our combined know-how, accelerating our technology development in thermoplastic composites and expanding our offering of innovative composite solutions to our customers.”

Dr. Ing. Ralph Funck, Managing Director for CirComp GmbH said, “We are extremely pleased to be joining Albany International Corporation, as part of their Engineered Composites Group. Albany International will enhance CirComp’s ongoing growth plans, supported by their global reach and strong customer relationships. Together we will strengthen one another’s advanced materials and engineered products capabilities. We envision significant strategic benefits from this combination, allowing us to even better serve our customers’ needs. Our employees and management team are looking forward to joining the Albany organization and working together for continued growth and success.”

About Albany International Corp.

Albany International is a leading developer and manufacturer of engineered components, using advanced materials processing and automation capabilities, with two core businesses. Machine Clothing is the world’s leading producer of fabrics and process felts used in the manufacture of all grades of paper products. Albany Engineered Composites is a rapidly growing designer and manufacturer of advanced materials-based engineered components for jet engine and airframe applications, supporting both commercial and military platforms. Albany International is headquartered in Rochester, New Hampshire, operates 23 plants in 11 countries, employs 4,400 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com. (Source: BUSINESS WIRE)

20 Nov 19. Inmarsat plc reports Third Quarter Results 2019. Inmarsat plc (LSE: ISAT.L), (“Inmarsat”, the “Group”), the world leader in global mobile satellite communications, today announces unaudited financial results for the third quarter, and nine months, ended 30 September 2019.

Operational Highlights:

  • Group Revenue decreased by $42.0m, 11.4%, to $327.3m. Group Revenue, excluding Ligado, decreased by $9.1m, 2.7%.

o Maritime: continued revenue decline in the mid-market partly offset by on-going double-digit revenue growth in fast-growing VSAT segment. Revenues again stable sequentially.

o Government: on-going strong performance across both businesses.

o Aviation: In-Flight Connectivity revenue down against challenging comparator (driven by equipment revenue). Continued strong growth from Core business.

o Enterprise: further decline of products in legacy markets.

  • Group EBITDA: reduced by $33.9m, 16.4%, to $172.6m. Group EBITDA, excluding Ligado and costs associated with recommended offer for the Group, up $0.3m to $173.9m reflecting lower revenues but improved revenue mix. Recommended offer for the Group:
  • The transaction was approved by Inmarsat’s shareholders in Q1 2019 and all necessary regulatory clearances have now been received. The Court Hearing to sanction the Scheme of Arrangement is scheduled for 28 and 29 November 2019. Rupert Pearce, Chief Executive Officer, commented on the results: “Inmarsat produced a solid performance in the quarter, supported by our diversified growth portfolio, as we remain focussed on growing market share in our target markets.” Group revenue declined $42.0m to $327.3m in Q3, mainly due to lack of revenue contribution from Ligado. Excluding Ligado, Group revenue was down by $9.1m. Direct costs improved by $9.7m to $51.7m in Q3, mainly due to changes in revenue mix. Indirect costs were little changed at $101.7m. Q3 EBITDA, declined by $33.9m to $172.6m mainly reflecting lower revenues.

EBITDA excluding Ligado and costs associated with the recommended offer for the Group, was slightly up to $173.9m reflecting lower revenues but improved revenue mix. Cash capex in Q3 fell by $58.2m to $99.3m, mainly due to the slippage of contractual payments for major infrastructure projects into 2020 and lower success-based capex in Aviation and Maritime.

Business Units

Maritime revenue in Q3 declined by $6.7m, 5.0%, with further double-digit growth from Fleet Xpress and higher terminal sales more than offset by lower revenue from FleetBroadband, partly as a result of vessel migrations to FX, and on-going decline in revenues from legacy products. Direct costs reduced by $2.0m, reflecting revenue mix and leased capacity cost savings from the migration of XpressLink vessels to Fleet Xpress. Indirect costs increased slightly to $8.9m. EBITDA declined by $5.1m, with EBITDA margin up slightly to 80.7%.

Maritime capex declined by $4.5m reflecting fewer XpressLink migrations, as the migration programme continues to wind down.

Product performance

There was further double-digit revenue growth from our VSAT products, with revenues up 11.5% in the quarter. At the end of the period, there were 7,448 installed VSAT vessels (7,287 of which were FX vessels). The proportion of the total FX vessel base installed by our distribution partners in Q3 2019 was 37% of installed vessels, from 33% in Q3 2018. This mix change continued to drive vessel volumes, but has a dilutive impact on VSAT ARPU, as previously highlighted. 413 vessels were installed with FX in the third quarter, the majority of which were migrated from FB. The XL migration programme remains on track for completion by the end of 2019, with c. 100 vessels remaining at the end of the quarter. FB revenues fell by 15.3% in Q3 2019, with a year-on-year net FB vessel decline of 2,502 vessels, of which c. 1,480 were customer migrations to FX and other VSAT products. FB ARPU declined by 8.3% to $674 per month, mainly reflecting the migration to VSAT being weighted towards higher usage customers as well as the transfer of low-ARPU FB vessels from Enterprise in Q1 2019. Fleet One airtime and equipment revenue was flat at $1.7m, with over 5,000 vessels now installed. Legacy products continued to decline by $0.1 in the quarter. 1 Equipment revenue, previously included in “Other” products (and reported separately in our FY18 results statement), is included within the relevant categories listed above in our 2019 results. Terminal sales are excluded from the calculation of ARPU in Maritime whereas terminals leased to the customer are included.

Government revenue increased by $9.3m, 9.8%, to $104.5m in Q3. Revenues in our US Government business increased by 12.5% in Q3, driven by recent new business wins and expanded mandates achieved over recent quarters, increased government expenditure under long term customer contracts as well as higher revenues from GX and L-band services. Outside the US, revenues were up 4.7% in Q3, driven by higher GX airtime and equipment revenues and higher customer spend on key services. Direct costs increased by $3.8m due to revenue growth and mix, while indirect costs were flat at $10.8m. Mainly as a result of higher revenue, EBITDA increased by $5.1m in Q3, but EBITDA margin decreased to 71.8%, driven by revenue mix.

Aviation

Aviation revenues declined by $5.5m, 8.1%, to $62.7m in Q3, mainly driven by significantly higher IFC equipment sales in the prior year, partly offset by continued stable growth from our Core business. Direct costs in Q3 declined by $14.4m to $1.7m, due to the change of revenue mix in IFC, as outlined above, while indirect costs were flat at $15.3m. EBITDA increased by $9.2m, 25.2%, to $45.7m, driven by the improvement in direct costs, with EBITDA margin consequently increasing to 72.9%. Cash capex decreased to zero in Q3, from $10.7m in the prior year, reflecting the timing of installation of GX equipment for certain customers. Core Aviation business Revenues in our Core Aviation business, comprising SwiftBroadband and JetConneX for BGA, Classic Aero and SwiftBroadband-Safety for SOS and legacy products, grew by $3.6m, 8.6%, to $45.6m in the quarter. By the end of the period, 606 aircraft were installed with JetConneX, our GX-based product for BGA, up from 395 at the end of Q3 2018. JetConneX airtime revenue grew by $5.2m, 85.2%, to $11.3m in the quarter. SwiftBroadband revenues increased by $1.0m, 5.4%, to $19.5m. In SOS, Classic Aero delivered revenue growth of $0.7m, or 5.8%, to $12.8m, driven by growth in the number of aircraft using the service. Direct costs in our Core business remained immaterial at $0.3m, whilst indirect costs were flat at $2.3m in the quarter. EBITDA and Business Unit Operating Cash Flow for the Core Aviation business both grew by $3.7m to $43.0m in the quarter.

IFC

IFC revenues, comprising our GX Aviation services for IFC and our L-band-based IFC services for commercial aviation, together declined by $9.1m to $17.1m in Q3 2019. IFC installation revenues reduced by $11.5m to $0.7m, due to relatively high installation revenue in the prior year. GX airtime revenues increased by $4.0m to $6.5m in Q3, while airtime revenues from our Lband-based IFC business were down by $1.6m to $9.9m. We have around 1,790 aircraft under signed contracts or through hardware commitments for GX and EAN IFC services. In addition, there are c. 300 further aircraft where existing customers have an option to install further aircraft. We continue to pursue our new business pipeline of around 3,000 aircraft.

Core/IFC

At the end of Q3 2019, there were 696 aircraft installed with Inmarsat GX and EAN equipment across a number of customers (from 666 at the end of Q2 2019), including c. 303 GX and EAN connected aircraft now in commercial service (from c. 235 at the end of Q2 2019). IFC direct costs declined by $14.4m to $1.4m, reflecting the significant reduction in installation revenues, as outlined above. Indirect costs in IFC decreased by $0.2m to $13.0 in Q3. IFC EBITDA improved by $5.5m to $2.7m in the quarter, with IFC Operating Cash Flow improving by $16.2m to $2.7m in Q3.

Enterprise

Enterprise revenues declined by $5.6m, 16.2%, in Q3, mainly as a result of on-going market pressure on some of our legacy products and lower terminal sales. BGAN revenues were down by $2.0m, 27.0%, to $5.4m, while fixed-to-mobile declined by $0.2m, 8.0%, to $2.3m. Satellite phone revenue declined by $1.3m, 12.5%, to $9.1m, with lower levels of handset sales more than offsetting higher airtime revenues. M2M revenue declined by $0.9m, 16.4%, to $4.6m due to winding down of a capacity lease in Q3 2018. Direct costs declined by $2.9m to $4.6m in Q3 due to a lower level of terminal sales. Indirect costs were down by $0.5m to $4.9m, driven by cost containment on the back of lower revenues. EBITDA was $2.2m lower in Q3 reflecting the issues above, while EBITDA margin was up to 67.9% in Q3, due to revenue mix.

19 Nov 19. Melrose Industries PLC (“Melrose” or the “Group”) publishes the following trading update for the four months from 1 July 2019 to 31 October 2019 (the “Period”). All numbers are calculated at constant currency. Melrose is trading in line with the Board’s expectations for 2019. The improvements in the businesses are being delivered at pace and the Melrose Board is confident this will unlock significant further shareholder value.

Divisional highlights

Aerospace

Aerospace has achieved sales growth of over 5% in the Period compared to the same period last year, once again outperforming the Board’s expected longer term average growth rate. In addition, good margin improvement has been delivered compared to the same period last year.

Automotive

Automotive delivered a higher profit and margin in the Period compared to the same period last year.

In the Period sales were down 5% year-on-year, which includes the temporary effect of the General Motors strike in the US. The business consequently showed, once more, its ability to perform impressively even with this market headwind.

Powder Metallurgy

Powder Metallurgy was impacted proportionately more than Automotive by the temporary effect of the General Motors strike, which led to a sales decline of 13% in the Period compared to the same period last year – without the strike revenue would have been in line with the Board’s expectations.

In the Period, contracts were exchanged to acquire Forecast 3D, a leading player in 3D printing, which had 2018 sales of $19m. This acquisition is expected to complete by the year end and will further expand Powder Metallurgy’s capabilities to become a leading global player in this fast growing and exciting market.

Nortek Air & Security

Nortek Air & Security has seen improving year-on-year trends in the Period compared to those seen in the first half of the year. The division achieved modest sales growth with margins similar to those achieved in the same period last year.

Other Industrial

Other Industrial is trading in line with the Board’s expectations.

Net Debt

Group net debt was in line with the Board’s expectations with significant investment and restructuring actions being funded to further improve performance and initial steps to reduce working capital in GKN being implemented as planned.

Melrose will be presenting its full year results on 5 March 2020.

Justin Dowley, Chairman of Melrose, said: “Melrose continues to do what it has always done well: improve businesses. Some macro conditions could be more helpful, but this has not stopped us continuing to transform the GKN businesses, delivering another trading period in line with expectations, and achieving better trends than seen in the first half of the year. We are excited about what is possible and confident in our ability to unlock significant further shareholder value.”

19 Nov 19. UK minded to accept Advent’s undertakings to secure Cobham deal. The British government has said it is minded to accept legally binding undertakings put forward by private equity group Advent in order to secure its purchase of defence company Cobham. (COB.L)

Business minister Andrea Leadsom said she would now run a consultation until Dec. 17 on the proposals which include ensuring that existing security arrangements will be strengthened. Advent will also have to give prior notice to the Ministry of Defence if it plans to sell all or parts of Cobham’s business. (Source: Reuters)

19 Nov 19. Today (19 November 2019) the Business Secretary Andrea Leadsom has announced that she is consulting on steps to address the national security concerns raised by the proposed acquisition of Cobham, a UK defence company, by Advent International, a US private equity firm. She is minded to accept undertakings offered by the acquiring company to address the concerns identified. No decision will be taken until the consultation has concluded and the representations have been carefully considered.

This decision follows further advice from the Ministry of Defence.

The proposed undertakings are now out for public consultation until midnight at the end of 17 December 2019, in accordance with the process set out in the Enterprise Act 2002. They would require Cobham’s new owners to:

  1. ensure that existing security arrangements which currently apply to Cobham and protect sensitive HMG information will be continued and strengthened, ensuring new Board structures that Advent plan to institute will also comply with nationality requirements, in addition to existing boards
  2. maintain capability and honour the terms of existing contracts, notify the Ministry of Defence (MOD) in advance if there is a material change to Cobham’s ability to supply key services, and also refrain from withdrawing from any of the specified service, for 5 years
  3. give the MOD prior notice of plans to sell-on the whole, or elements of, Cobham’s business

Business Secretary Andrea Leadsom said:  Following my update to Parliament on 5 November, I have now reviewed further national security advice from the MOD and met with both Cobham and Advent who have offered legally-binding undertakings designed to mitigate national security concerns, which I am minded to accept. They will now be considered by a public consultation and I will provide a further update once that process has concluded. No decision will be taken on whether to accept the undertakings until the consultation has closed and the representations have been carefully considered. This decision on the national security considerations is separate to any discussions on the economic implications of the proposed merger.

The Business Secretary’s decision is made in a quasi-judicial capacity, which means that the Secretary of State must act, and be seen to act, in a scrupulously fair and impartial manner. (Source: Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.)

18 Nov 19. Avcorp loses millions in third quarter. Airframe structure maker Avcorp suffered an operating loss of CAN5.2m (USD3.9m) in the third quarter of 2019 due to several factors, including labour unrest and a delivery downturn caused by the Boeing 737 MAX grounding, according to the Vancouver, Canada-based company. The figure represented a sharp turnaround from the same period a year ago, when Avcorp reported operating income of CAN41.8m. Revenue in the latest quarter was USD37.4m, down 16.6% from a year ago, Avcorp said on 14 November. Avcorp’s Delta facility in British Columbia experienced labour disruptions and a nine-day lockout, which hurt the site’s performance but Avcorp said that a newly ratified labour agreement for Delta will last until March 2025, “bringing the company long-term stability”. (Source: IHS Jane’s)

18 Nov 19. Rostec attracts UAE investor for VR-Technoloiges. During the International Dubai Airshow 2019, Russian Helicopters Holding Company (part of Rostec State Corporation) signed with the Emirati Tawazun Holding Company an agreement on the basic terms of the transaction of the purchase of a stake in VR-Technologies.

The document was signed by Director General of Russian Helicopters Andrey Boginsky and Director General of Tawazun Tareq Abdul Raheem Al Hosani. The agreement defines the main parameters of the future transaction, including the stake to be acquired by the UAE investor; Tawazun will become the owner of half of the shares of VR-Technology company, which is developing promising helicopters and unmanned aerial vehicles. The transaction is planned to be finalized in the 1st quarter 2020.

Upon the acquisition of a stake in VR-Technologies, Tawazun representatives will enter the company’s Board of Directors, and their rights will be equal to those of the members representing Russian Helicopters.

“I am sure that the investments of our partners will fasten the development of VRT300 and VRT500 projects and will give impetus to new developments of advanced helicopter and UAV systems. Our agreements also provide cooperation in promoting these products in the markets of the Middle East and GCC in particular. Both rotorcrafts have good prospects in the region, where solutions for the development of urban air mobility are becoming increasingly popular”, noted Sergey Chemezov, CEO of Rostec State Corporation.

“The agreement signed today lays the foundation for long-term cooperation in the format of not just colleagues, but business partners. With the support of Rostec State Corporation and RT-Business Development, we were able to achieve full understanding with Tawazun, without which it would be impossible to implement such significant and large-scale projects. As equal partners, we plan to invest at least 400m euro in the development of VR-Technologies, which will help make the company’s products competitive and in demand all over the world,” said Andrey Boginskiy, Director General of Russian Helicopters Holding Company.

Also commenting on the signing, Abdullah Nasser Al Jaabari, Chief Officer and Head of Tawazun Strategic Development Fund, said: “This agreement stems from the Fund’s commitment to support the UAE’s strategic vision of investing in advanced industries and transferring relevant technologies”.

The International Dubai Air Show is the first foreign site to showcase the VRT500 project. The model of the helicopter is presented at the joint exposition of Russian Helicopters and Tawazun Holding Company. The helicopter has the largest passenger and cargo cabin in its class with a total capacity of up to 5 people. At the same time, the outline dimensions of the rotorcraft were reduced due to the coaxial rotor placement, which permits to operate the helicopter in the restrained urban conditions.  VRT500 is equipped with a modern avionics complex based on the “glass cockpit” principle, and its key systems were developed by the best international manufacturers.

Primary Sidebar

Advertisers

  • qioptiq.com
  • Exensor
  • TCI
  • Visit the Oxley website
  • Visit the Viasat website
  • Blighter
  • Arnold Defense logo
  • SPECTRA
  • InVeris
  • Britbots logo
  • Faun Trackway
  • Systematic
Hilux

Contact Us

BATTLESPACE Publications
Old Charlock
Abthorpe Road
Silverstone
Towcester NN12 8TW

+44 (0)77689 54766

j.nettlefold@battle-technology.com

BATTLESPACE Technologies

An international defence electronics news service providing our readers with up to date developments in the defence electronics industry.

Recent News

  • EXHIBITIONS AND CONFERENCES

    February 26, 2021
    Read more
  • VETERANS UPDATE

    February 26, 2021
    Read more
  • MANAGEMENT ON THE MOVE

    February 26, 2021
    Read more

Copyright BATTLESPACE Publications © 2002–2021.

This website uses cookies to improve your experience. If you continue to use the website, we'll assume you're ok with this.   Read More  Accept
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

SAVE & ACCEPT