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15 Jan 21. Babcock contract audit flags possible write-offs. Three years after coming under fire from activist short sellers, the defence engineering contractor Babcock has warned that a contract audit may result in write-offs.

Early indications from the review, supported by an independent accounting firm, “suggest that there may be negative impacts on the balance sheet and/or income statement for current and/or future years,” Babcock said. The company, which in September appointed new chief executive David Lockwood, aimed to have the audit completed in time for full-year results due in May.

Trading in its fiscal third quarter showed no improvement on the first half of the year, Babcock added. Weakness in civil aviation and Covid-19 disruption meant underlying revenue for the nine months ended December was down 3 per cent at £3.4bn.

“Uncertainty remains around the outturn for this financial year, especially given that our fourth quarter is historically our strongest and that the Covid-19 situation has worsened in most of our markets. Given this uncertainty, and the start of our review of contract profitability and balance sheet, we continue not to provide financial guidance for this financial year,” the company said. (Source: FT.com)

BATTLESPACE Comment:  Looks like the natural ‘kitchen sink’ option from incoming CEO David Lockwood. Although no specific write-offs were mentioned by the FT, one area where we have forecast a write-off for some time is the former DSG Defence division. (See: BATTLESPACE UPDATE Vol.22 ISSUE 31, 03 August 2020, BUSINESS NEWS, DSG is confined to history) 27 Jul 20. End of an era, DSG is confined to history. On July 16th Babcock Plc. quietly issued a Resolution changing Babcock DSG Ltd. to Babcock Land Defence Ltd at Companies House. At that same time it is reported that Babcock undertook some clever accounting by moving £100m intra accounts. We see this as another write off of the £147m purchase price of DSG by Babcock. Babcock has yet to start negotiating the 5 year extension to the DSG contract as we reported BATTLESPACE UPDATE Vol.22 ISSUE 21, 25 May 2020, Babcock DSG Contract Extension) 20 May 20. FoI Request from Julian Nettlefold, BATTLESPACE.

Babcock DSG Contract Extension.

1. The formal start of contract delivery by Babcock was 1/4/15.
2. The 10 year base agreement expires in 2025.
3. There were 5 potential 1-year extensions to take it to 15 years, with negotiation of each extension to be done 5 years before the extension is due to be used based on contract performance to that date.
4. The extension from 2025 to 2026 should be in negotiation now.

Have negotiations to extend this to 2026 commenced?

Have Babcock performed as per their contract?

Dear Mr Nettlefold,

Thank you for your email of 25 April 2020 requesting the following information:

Babcock DSG Contract Extension

1. The formal start of contract delivery by Babcock was 1/4/15.
2. The 10 year base agreement expires in 2025.
3. There were 5 potential 1-year extensions to take it to 15 years, with negotiation of each extension to be done 5 years before the extension is due to be used based on contract performance to that date.
4. The extension from 2025 to 2026 should be in negotiation now.

Have negotiations to extend this to 2026 commenced?

Have Babcock performed as per their contract?

I am treating your correspondence as a request for information under the Freedom of Information Act 2000.

A search for the information has now been completed within the Ministry of Defence, and I can confirm that information in scope of your request is held and is as follows.

I can confirm that negotiations to extend the contract do not need to commence at the moment. The contract allows for flexibility in the negotiation and award of any future potential extension years.

Babcock’s performance is actively and regularly assessed. At the most recent review, Babcock were assessed to be performing to plan.

If you have any queries regarding the content of this letter, please contact this office in the first instance.

If you wish to complain about the handling of your request, or the content of this response, you can request an independent internal review by contacting the Information Rights Compliance team, Ground Floor, MOD Main Building, Whitehall, SW1A 2HB (e-mail ). Please note that any request for an internal review should be made within 40 working days of the date of this response.

If you remain dissatisfied following an internal review, you may raise your complaint directly to the Information Commissioner under the provisions of Section 50 of the Freedom of Information Act. Please note that the Information Commissioner will not normally investigate your case until the MOD internal review process has been completed. The Information Commissioner can be contacted at: Information.

This change of name could herald a move to divest DSG either back into the MoD as is the wish of the Unions or to another company such as RBSL which is now the main custodian of the UJK’s armoured fleet. With fleet reductions rumoured such as disposal of FV432 and CVR(T)the level of work at DSG will be dramatically reduced and given that DSG has only made a profit once, in 2018, under Babcock’ ownership , then retaining DSG would just lead to more losses. In addition, DSG’s sole source position as the integrator for the Warrior WCSP requirement has yet to be confirmed, that would be a big hit as the chosen integrator would likely be the support partner for LMUK. The new broom David Lockwood is likely to take a long look at DSG which was purchased to add Land to the Maritime and Air operations of Babcock Plc. David Lockwood is likely to propose a more focused group possibly shorn of all land operations this space!

15 Jan 21. Babcock sinks as Covid pressures continue.  Defence engineering group Babcock (BAB) saw its underlying operating profit plunge by more than a third year-on-year in the nine months to 31 December, to £202m. This reflects the government’s insourcing of civil nuclear contracts and weakness in civil aviation that has been exacerbated by Covid-19.

Looking ahead, the group is still facing choppy waters. While the fourth quarter is typically the strongest for the group, it says that the impact of the pandemic has “worsened in most of our markets”. The order book has also contracted from £17.2bn at the half-year stage to £16.8bn.

There are further complications as Babcock has initiated a detailed review of its balance sheet and contract profitability. Warning of potential “negative impacts” on its current and future financial years, there could be writedowns to come.

The slew of bad news in the unscheduled trading update sent the shares crashing by close to a fifth and has also prompted analysts to downgrade their forecasts. Broker Liberum says it is “not entirely surprised by another downgrade” and believes that a dilutive fundraise has now become more likely. (Source: Investors Chronicle)

14 Jan 21. A Realistic, More Efficient and Positive Meggitt Looks Forward To Better Things to Come. Just as the majority of large supermarkets, pharmaceutical, those specialising in digital products, communications and technologies have managed to achieve through this very difficult and unprecedented year of trauma, so it is that through hard work, determination, adapting to change and thinking forward many specialist engineering and real manufacturing companies have also managed to do reasonably well in the face of adversity. The international aerospace, defence and energy engineering and manufacturing company Meggitt plc is quite definitely one of those.

No one can be in any doubt that COVID-19 forced a major change of thinking and approach for almost every company in the land just as we all know that the next few months will continue to be tough. Those of us who as specialists observe aerospace and defence manufacturing businesses closely just as we do across all spheres of manufacturing and engineering well recognise that time will be needed before any form of normality returns. We analysts and commentators along with those charged with running these vitally important UK based businesses know well that even with signs of a way out of C-19 are now at last increasing it will take a very long time to see a full recovery in the aviation industry. But despite the considerable difficulties that have and continue to be faced by many companies, rather than even stand relatively still or maybe take each day, week or month as it comes, Meggitt senior management chose to continue pushing forward with its future plans, building its future through investment and in the process, strengthening all parts of the company so that they are well placed for tomorrow.

2020 was a very tough year and the scale of shock is one that we all hope we will never see being repeated. Searching for positive news over the last few months has, to say the least, been rather like searching for a needle in a haystack but despite all the woes and uncertainty, it is extremely pleasing to find another large and important player in the international aerospace and defence engineering sector providing investors with not only pre-audit trading statement confirmation that results for the period ending December 31st 2020 are expected to be broadly in line with previous expectation but also some very welcome positive remarks in relation to the company believing “that it is well placed to recover from the impact of the COVID-19 pandemic”. Meggitt has rightly chosen to emphasise that “as a result of the significant work it has done to over the past year to reposition the group and our diverse end market exposure across civil aerospace, defence and energy, that the company is well placed. But it also cautions that while the recent launch and roll-out of vaccines, coupled with pent up demand for air travel provides a supportive backdrop for the recovery in civil aerospace in 2021 that , given the logistical challenges associated with a global vaccine roll-out, it expects that positive developments will take time to feed through into growth in flight and passenger numbers and aftermarket activity levels.

Having invested to modernise the whole business operation in the UK and in the process, make itself more efficient over the past three years by closing old sites and moving many of subsidiary businesses onto the large, highly invested and very interesting purpose built  facilities in Warwickshire, Meggitt is now in a very good place to move forward.

As a leading international company specialising in high performance components and sub-systems for the aerospace, defence and energy markets, Meggitt said today that, subject to audit, group trading performance and expected outturn for full year ended 31st December 2020 that it anticipates to be able to deliver results in-line with published guidance issued on 10 November. The break-down of its expectations are as follows: Group revenue of £1.7bn – Group underlying operating profit to be in the middle of the £180m to £200m range – Group free cash flow to be positive and Net debt below the level at the end of 2019. All this is undoubtedly testament to the work done by global teams set up to manage costs and successfully deliver planned cash savings targets for the year.  The company states that trading across its end markets in the final quarter of last year was broadly in line with the trends experienced in October, with Group performance being lower than its September base case which had assumed a progressive improvement in Civil Aerospace in the fourth quarter.  None of this is to suggest that the current year will see everything return back to normal in its main industries but it is to suggest that Meggitt’s enthusiastic outlook for 2021 is soundly based not only on the anticipation of some market related improvements appearing through the year but also one that should eventually see improved margin improvement and potential for better shareholder reward.  (Source: Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.)

14 Jan 21. VTG Acquires Intelligent Shift, Enhancing Digital Transformation Capabilities and Adding Intelligence Community to Customer Portfolio.

VTG, an industry-leading provider of force modernization and digital transformation solutions, is pleased to announce the acquisition of Intelligent Shift LLC, a rapidly growing firm delivering innovative technologies and digital solutions to the U.S. Intelligence Community. The combination bolsters VTG’s systems, software, and digital engineering capabilities, and expands the company’s presence in the national security market.

“I am excited to welcome the Intelligent Shift team to VTG,” said John Hassoun, VTG president and CEO. “This acquisition represents the next chapter in the strategic transformation of VTG. Intelligent Shift brings unique technical expertise that positions us to deliver a more differentiated suite of engineering and digital solutions to a customer base that now spans the Defense enterprise and the Intelligence Community.”

Founded in 2017 by Mike DeFede, Alissa Redding, and Mike Matthews, Intelligent Shift’s highly skilled engineers provide subject matter expertise across numerous high-priority national security mission areas. On behalf of the founders, Mike DeFede said, “Intelligent Shift has always been focused on an industry-best employee culture and a commitment to customer missions. In VTG, we’ve found a partner that shares these passions. The combined company will expand our ability to drive smart change for our customers and will create new opportunities for our employees while strengthening our culture.” Intelligent Shift, which will continue to be led by DeFede, Redding, and Matthews, will operate as the IC services component of a new business segment led by recently appointed VTG executive Kirk Herdman.

Last year, VTG completed the integration of its enterprise-wide capabilities under a single customer delivery model, including its two previous acquisitions, National Technologies Associates and DELTA Resources. VTG also won a string of prime contracts, earning the ACG National Capital 2020 Corporate Growth Company of the Year award. “We continue to reshape our enterprise and reposition for the future,” said Sunil Ramchand, chief growth officer of VTG. “The acquisition of Intelligent Shift accelerates our strategy, both in terms of game-changing capability growth and customer reach.”

About VTG

VTG delivers force modernization and digital transformation solutions that expand America’s competitive advantage in the modern battlespace. Headquartered in Chantilly, Virginia, VTG provides full lifecycle engineering for naval, aerospace, network, and digital requirements. Whether at sea, in the air, on land, or in cyberspace, VTG delivers Tomorrow’s Transformation Today. For more information, visit us at www.VTGdefense.com. (Source: PR Newswire)

14 Jan 21. ZAF Energy Spins off Æsir Technologies. ZAF Energy Systems, Inc., announced today the spinoff of Æsir Technologies, Inc., to provide advanced energy storage solutions to the specialty markets of aerospace, defense, medical, and critical infrastructure.

Prior to Jan 01, 2021, Æsir had been a wholly owned subsidiary of ZAF.  On Jan 01, 2021, this rearrangement takes the form of divestiture by ZAF of Æsir and an asset transfer from ZAF to Æsir of all its assets and operating employees. The legal definition of the relationship between ZAF and Æsir is known as a Section 355 spinoff.

From 2011 to 2016, ZAF’s intention was to operate as an “asset light” company with an intellectual property (IP) sale or license as an exit strategy for the purpose of investor returns.  However, in 2018 it started low-rate initial production (LRIP) factory operations in Joplin, with the intention to continue to serve customers in the aerospace and defense market, indefinitely.  As ZAF’s IP-portfolio, customer demand, manufacturing capability, and sustainability have now demonstrated, ZAF is preparing to assist license partners in the motive, industrial, energy storage system, and consumer markets to begin their product lines.

“We built our LRIP line to seed the market and create demand for NiZn and to work out the necessary manufacturing equipment and processes,” said Randy Moore, ZAF’s (now Æsir’s) president and CEO.  “That mission has been accomplished.  Now we are focusing on fulfilling our current contracts with the US Air Force and Navy and building a capacity to service sustained future demand.”

In spinning off Æsir to continue to serve the specialty markets, ZAF has granted Æsir a non-exclusive, license to use the NiZn Intellectual Property.  Work will continue to be performed at (now) Æsir’s LRIP facility for all current and future contracts to continue to serve customers needing energy storage solutions in the specialty markets.

“The simplified way to look at this,” said Kirk Plautz, ZAF’s, and now Æsir’s, VP of Marketing and Sales, “is this is a rebranding of sorts.  ZAF Energy has an exit strategy and Æsir Technologies has an operations focus. For our existing and future customers, this means we can renew our focus on meeting their ongoing needs with our products and technology. This development is a win-win for everyone.” (Source: PR Newswire)

14 Jan 21. TP Group plc, (“TP Group”, “the “Company” or the “Group”) – Possible disposal of Maritime Engineering business. TP Group (AIM: TPG), the provider of mission-critical solutions for a more secure world, notes that it has received expressions of interest for the Group’s Maritime Engineering business (TPG Maritime Limited) based in Portsmouth, which includes manufacturing facilities and technologies to support mission-critical equipment for submarines and other applications. In light of such interest, the board has appointed advisers to review these opportunities and consider the strategic options for the Group’s engineering business. There can be no certainty at this stage that a formal agreement will be reached, nor as to the terms of any agreement. A further announcement will be made if and when appropriate. Any disposal by the Group would be in-line with the Company’s strategy to focus on delivering consulting, digital solutions, advanced-technology, and bespoke engineering to critical programmes in the global defence, space and energy sectors.

14 Jan 21. DoD Updates List Communist Chinese Military Companies. The U.S. Department of Defense has released Tranche 5 of its list of Communist Chinese Military Companies pursuant to section 1237 of the National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261). This latest list includes Commercial Aircraft Corporation of China, Ltd., and the following other companies:

• Advanced Micro-Fabrication Equipment Inc. (AMEC)
• Luokong Technology Corporation (LKCO)
• Xiaomi Corporation
• Beijing Zhongguancun Development Investment Center
• GOWIN Semiconductor Corp
• Grand China Air Co. Ltd. (GCAC)
• Global Tone Communication Technology Co. Ltd. (GTCOM)
• China National Aviation Holding Co. Ltd. (CNAH) (Source: glstrade.com)

14 Jan 21.  Kromek Covid-19 airborne threat detection profit opportunity. Simon Thompson highlights a company with a ground-breaking prototype to sample air and identify the presence of Covid-19.

• Pilot of solution to start in UK airports and hospitals.
• Beneficiary of UK Government’s £329m five-year nuclear detection budget.

Dr Arnab Basu, chief executive of Kromek (KMK:13.75p), a Sedgefield-based radiation detection technology company focused on the medical, security screening and nuclear markets, was in bullish mood during our interim results call. He has every reason to be as Kromek’s business is rebounding strongly following last year’s lockdowns which led to delays in fulfilling contracts and resulted in a small interim cash loss of £0.9m.

For instance, deliveries on a seven-year Original Equipment Manufacturer (OEM) contract worth US$58m (£43m) to provide its cutting edge CZT detectors and electronics in state-of-the-art medical imaging detectors are being ramped up to “millions of dollars” of revenue as shipments return to the contract delivery schedule.

Kromek has also received its first commercial order from a security screening customer whose next generation scanner, based on Kromek’s technologies, achieved the highest level of European liquid detective certification for cabin baggage. Furthermore, Kromek is completing a two-year $1.6m development project funded by the US Department of Homeland Security for a CZT detector platform which Dr Basu expects to be commercial adopted and integrated in multiple commercial baggage screening products.

Further contract wins include an initial $0.66m order (ahead of a likely multi-year contract) from a US-based OEM with a global industrial customer base that is incorporating Kromek’s screening technology into its customers’ systems to identify contaminations during the production process. In fact, Dr Basu revealed that procurement and tender activity is “higher than at any time in the past three to four years”.

Investors are rightly getting excited by Kromek’s ground breaking prototype to sample air and identify the presence of any biological pathogen – including Covid-19 or any mutant version – that will be piloted in UK airports, hospitals and the retail sector in the coming months. It is based on Kromek’s work in developing a mobile bio-security system capable of detecting airborne pathogens for an agency of the US Department of Defence. The detector is incredibly accurate, giving a false alarm in just one in 800,000 tests.

Knowing a carrier is infected with a disease before they infect other individuals is key to halting the onset of an outbreak and will be critical in helping the world return to some form of normality even after the vaccine programme is rolled out. Other obvious non-military applications include use in sports arenas, theme parks, schools, offices and cruise ships. The fact that UK government agency Innovate UK is funding a £1.25m programme to customise Kromek’s biological threat detection solution is a strong validation of the technology. Expect commercial roll-out later this year.

The potential profit windfall is simply not priced in, nor is the likelihood of Kromek returning to cash profitability in the 2021/22 financial year. Analyst Paul Hill at Equity Development values the annual global market for the biological threat detection devices at £500m and believes that Kromek could win a 20 per cent share on a 25 per cent profit margin, implying operating profit of £25m. Kromek only has a £45m market capitalisation. Moreover, with its working capital normalising, a £0.9m Covid-19 Paycheck loan set to be written off by the US Government, and a R&D tax credit of £1m due, then current net debt of £1.9m overstates the true position.

In addition, the company should be a major beneficiary of the UK Government’s recently announced £329m five-year nuclear detection budget. Not only does Kromek have a robust product offering in key areas of border control and terrorism threat detection – its dirty bomb detectors are now used in 25 countries, for instance – but post-Brexit, Kromek is only one of two UK companies offering this type of radiation technology.

The shares have rallied from 8p to 13.75p since my last buy advice at the annual results (‘Tech winner in the fight against Covid-19’, 7 October 2020), and could double again as investors cotton onto the scale of the profit opportunity on offer. Strong buy. (Source: Investors Chronicle)

13 Jan 21. AeroVironment to Acquire Arcturus UAV, Expanding Product Portfolio and Reach into Group 2 and 3 Unmanned Aircraft Systems Segments.

• Total transaction value of $405m in cash and stock
• Arcturus UAV’s complementary capabilities provide program diversification, increase key customer penetration and enhance shareholder value
• Arcturus UAV is well positioned for ongoing United States Special Operations Command (USSOCOM) Mid-Endurance UAS (MEUAS) task orders, United States Army Future Tactical UAS (FTUAS) program delivery orders and international contracts
• Expected to be immediately accretive to revenue growth, adjusted EBITDA margin and non-GAAP diluted EPS, excluding intangible assets, amortization expense and deal and integration costs, and accretive to GAAP diluted EPS by fiscal year 2022
• AeroVironment to host conference call and audio webcast at 2:00 pm Pacific Time today

AeroVironment, Inc. (NASDAQ: AVAV), a global leader in unmanned aircraft systems, and Arcturus UAV, Inc., a privately-held leading provider of Group 2 and 3 unmanned aircraft systems (UAS) and services, today announced that they have entered into a definitive agreement under which AeroVironment will acquire Arcturus UAV for a total purchase price of $405m, including $355m in cash and $50m in AeroVironment stock.  The transaction, which was unanimously approved by the AeroVironment and Arcturus UAV Boards of Directors, is expected to accelerate AeroVironment’s strategy to drive profitable growth and value by expanding into attractive adjacent segments and by broadening its capabilities and customer footprint.

Founded in 2004 and based in Petaluma, California, Arcturus UAV has approximately 270 employees, designs and manufactures Group 2 and Group 3 UAS and provides related services, including contractor-owned, contractor-operated (COCO) services. Arcturus UAV is a leading supplier to the USSOCOM, supporting its $1.4bn MEUAS III and IV programs, and one of four awardees selected for funded development and demonstrations supporting the U.S. Army’s FTUAS program, a potential billion dollar, and next-generation UAS program. Arcturus UAV has a demonstrated track record of solid performance, with topline growth exceeding 20 percent for each of its last two fiscal years.

“We are excited about the opportunities for value creation through our acquisition of Arcturus UAV, which will enable us to accelerate our growth strategy and expand our reach into the more valuable Group 2 and 3 UAS segments,” said Wahid Nawabi, AeroVironment president and chief executive officer. “Group 2 and 3 UAS and services, collectively, potentially represent more than one billion dollars in annual contract value, according to an independent forecast. Combining our highly complementary products and technologies will enhance our portfolio, deliver top and bottom-line growth, and enable us to provide customers with a complete set of Group 1 through 3 UAS, tactical missile systems, high-altitude pseudo-satellites and unmanned ground vehicle solutions. Through this expanded portfolio, we will be well positioned to serve a broader range of customer missions across multiple domains and significantly enhance value for shareholders over the near and long-term.”

“The Arcturus UAV team has produced strong growth in recent years and has secured strategically important wins in the MEUAS and FTUAS programs, positioning Arcturus as a leader for next-generation program requirements. Together, we will offer an unmatched portfolio of multi-domain unmanned capabilities, supported by our ongoing investments in artificial intelligence and autonomy, to help our customers address a broad set of defense and commercial missions. We look forward to welcoming Arcturus UAV’s talented team, strong customer relationships in growing UAS segments and robust pipeline of innovations to AeroVironment,” Mr. Nawabi added.

“AeroVironment’s depth of experience in UAS and tactical missile systems, international presence, and impressive team is a natural fit for Arcturus UAV, and will create substantial opportunities to build on our strong momentum,” said D’Milo Hallerberg, Arcturus UAV president and chief executive officer. “With the support of AeroVironment, we will have greater scale, expanded resources, cutting-edge technology and superior capabilities to meet the growing global demand for our products and solutions. We are confident that with AeroVironment, we can accelerate our growth as part of a larger, more diverse company and look forward to working closely with the team to complete this exciting transaction.”

Arcturus UAV’s products include the JUMP-20, a multi-mission, medium endurance vertical takeoff and landing (VTOL) system requiring no launch equipment or runway and the T-20, a multi-mission, medium endurance catapult-launched system. Arcturus UAV sells its products directly to end users and delivers COCO services. All Arcturus UAV systems have the ability to carry a broad range of payloads, including standard EO/IR gimbals as well as 3-D mapping, SAR, LIDAR, communications relay, COMINT and SIGINT payloads.

AeroVironment expects the acquisition to be immediately accretive to adjusted EBITDA, excluding deal and integration costs, and non-GAAP diluted earnings per share, excluding intangible assets, amortization expense and deal and integration costs, and accretive to GAAP diluted EPS in fiscal year 2022, while increasing pro forma net leverage to 0.5 times adjusted EBITDA.

Upon completion of the transaction, key members of the Arcturus UAV executive management team will remain in leadership positions. The transaction is expected to close during fourth quarter of AeroVironment’s fiscal year 2021, subject to customary closing conditions and regulatory approvals. At close, Arcturus UAV will operate as a wholly-owned subsidiary of AeroVironment.

The purchase price represents a multiple of approximately 11x Arcturus UAV’s LTM 9/30/20 adjusted EBITDA, net of anticipated tax benefits. In connection with the acquisition, AeroVironment has received commitments for a $200m Term Loan Facility and $100m revolver (undrawn at close) with Bank of America, N.A. acting as Administrative Agent, and with BofA Securities, Inc., JPMorgan Chase Bank, N.A. and U.S. Bank National Association acting as arrangers. AeroVironment will fund approximately $155m of the acquisition from cash on hand.

13 Jan 21. Department of Defense Announces Establishment of the Trusted Capital Digital Marketplace. The Department of Defense is proud to announce the establishment of the Trusted Capital Digital Marketplace (TCDM). The program establishes trusted sources of funding for small and medium-sized providers of innovative defense-critical capabilities, offering long-term strategic benefit and combatting predatory investment practices.

On Jan. 13, 2021, Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord announced the launch of the Trusted Capital program’s digital marketplace. The TCDM is the gateway to an investment ecosystem designed to promote innovation and ensure access to trusted sources of capital for emerging technologies and critical capabilities required for national security.

Small and medium-sized businesses are vital to the defense industrial base (DIB) and the U.S. economy. Funding is paramount to the success of these firms and newly established businesses are susceptible to predatory investment. According to the current National Counterintelligence Strategy, our Nation’s “adversaries use front companies, joint ventures, mergers and acquisitions, foreign direct investment, and talent recruitment programs to gain access to and exploit U.S. technology and intellectual property.” The TCDM was developed to combat these predatory tactics and promote DIB capabilities.

“Trusted Capital works by providing opportunities for trusted financial institutions and qualifying companies to explore mutually beneficial partnerships in support of national security goals,” said Lord. “Aligned with the National Defense Strategy, the Trusted Capital program provides a more lethal force by creating new partnerships in order to reform the way the government will provide opportunity for innovation.”

Led by the Chief Information Security Officer for Acquisition and Sustainment (CISO(A&S)) Katie Arrington and Trusted Capital Director Colin Supko, the program connects vetted investors with qualifying domestic companies critical to the DIB. “I congratulate Ms. Arrington and the entire team involved in making this project a reality,” said Lord. “Through tools like the Trusted Capital Digital Marketplace, the Department of Defense and industry work together to make the Defense Industrial Base more secure.”

Trusted Capital’s military service stakeholders engage in the Marketplace by employing rapid acquisitions contracting vehicles to identify innovative capability providers deemed critical to their supply chains. Such “down-selected” providers of defense-critical and dual-use solutions are candidates for the Trusted Capital Marketplace. Interested capability providers with existing U.S. Government contracts should contact their contracting officer to request an invitation to apply; capability providers with no existing contracts can request a military service down-selection via the Trusted Capital public landing page (https://dodtrustedcapital.force.com).

About Trusted Capital

Trusted Capital (TC) is an Undersecretary of Defense for Acquisitions and Sustainment (USD (A&S)) program to strengthen the defense industrial base and limit threats to national security posed by adversarial capital. Trusted Capital provides qualifying small to medium-sized technology capability providers with a range of capital solutions via “trusted” capital providers. To qualify, capability providers and capital providers undergo a national security due diligence process to limit foreign access to critical technology through foreign investments. The TC strategy lays out three lines of effort: Trusted Capital Digital Marketplace, Financial Incentives to invest in national security solutions, and Military Innovation Tours with Venture Capital/Private Equity Industry. To learn more about the Trusted Capital program, visit the website at OUSD A&S – Trusted Capital (osd.mil). (Source: US DoD)

13 Jan 21. S&P maintains Rafael’s A- international credit rating with a stable horizon. Highest credit rating ever given to an Israeli company.

Rafael Advanced Defense Systems Ltd. announces that its A- international credit rating has been ratified by S&P Global Rating company with a stable horizon. The international A- ranking is the highest that an Israeli company has ever received, and indicates financial stability, managerial quality and technological achievements.

S&P examined Rafael’s financial, managerial and technological achievements in 2020, and decided to maintain the company’s AAA Israeli ranking, and an A- international ranking for the fourth year in a row.

As a basis for its decision, S&P has referred to Rafael’s excellent technological capabilities and the manufacturing of systems that surpass their competition. It also referred to Rafael’s position as a prime provider of defense systems which shares its knowledge and technology externally.

Rafael’s field-proven solutions are unique among their kind, and hold a strategic value for the State of Israel.

In the last few weeks, Rafael has reported that it has received a number of orders from international customers, including an order by an Asian nation in the amount of $200m for its SPICE air-to-surface munitions, Spike tactical missiles, and for its Bnet software-defined radio communication systems, meeting all of its financial goals for FY 2020.

Rafael’s President and CEO, Mr. Yoav Har-Even: “We are proud of the way we maintained our financial robustness and stability throughout this challenging and uncertain period. This will allow us to continue to be a growth engine, a major pillar in the security of the State of Israel and a trusted provider of the most high-end technology to our partners around the world.”

12 Jan 21. Hi-Tech Engineering Announces Expansive Growth.   Precision manufacturing leader for commercial and government aerospace industries increases client roster and expands corporate facilities to accelerate 2021 growth

Hi-Tech Engineering, a precision manufacturing supplier for the commercial and government aerospace industries, is announcing record organizational growth and aggressive momentum going into 2021. Over the last 12 months, the company has secured stable YOY revenues and utilization despite an unprecedented COVID-19 operating year. In addition, it has expanded its strategic customer base by 20% and elevated team capabilities across key operating functions including quality, machining and programming. The company’s 2021 growth expectations are indicative of significant market opportunity and a growing demand for precision manufacturing capabilities within the aerospace sector.

Hi-Tech Engineering’s projected growth is driven by a new ownership team headed by Shaffiq Rahim, President, who brings more than 20 years of aerospace and technology experience to the business. Rahim and the new management team have a keen focus on leaning into the most forward-looking innovations in aerospace and SpaceTech, as both commercial and government entities continue to push the space exploration footprint.

“In 2021, we expect to see accelerated growth and investment in the aerospace and defense sectors, given a rejuvenated space race powered by both commercial and government entities largely in the U.S., but also China and Korea,” said Rahim. “Further, as ongoing consolidation continues to reduce the number of companies supporting these industries, we believe there will be ripe opportunity for manufacturing companies like us who are actively investing in expanded capabilities to fill the gap.”

To achieve this, Hi-Tech is elevating its precision engineering and design-for-manufacturability capabilities to integrate more closely with customers, becoming not only a machining partner, but also a thought partner as customers innovate new engineering solutions and product designs across the build and launch of new rocket and flight exploration systems.

Serco, one of the world’s largest providers of public services to Governments, employing over 50,000 people in over 20 countries, is a trusted Hi-Tech Engineering delivery partner to military organizations around the world for critical support services and the operation of sensitive facilities.

“We have been partnered with Hi-Tech Engineering for more than 10 years and what we appreciate the most is their dedication to their craft,” said Lynzy Williams, Project Manager and Mechanical Engineering at Serco. “No detail is ever overlooked, and they work side by side with us to the finish line, ensuring that we keep our customer happy with the final product. We look forward to our continued partnership on new and existing projects.”

Key investments to expand both the physical footprint and machine capacity of Hi-Tech Engineering’s facility in Camarillo, CA are already underway, including:

• Newly expanded Quality Assurance suite including new programmable CMM capabilities — this expansion will increase through-put by 2-3x, and provide data driven quality controls to ensure increasingly accurate production outcomes which meet customer & industry specifications
• Newly acquired & upgraded CNC machines including: (1) Haas UMC-1000 with 5-axis capabilities; (1) Haas ST-25 with expanded z-axis travel capabilities; (1) Haas VF-5SS with super-speed vertical machining options; and (1) VF-9 large formal mill which can machine parts as wide as 86″.
• A refreshed website (www.htemfg.com) which showcases the business’s precision production & design for manufacturability processes, along with market case studies and latest news

“Over the past 12 months, we have made multiple critical investments in people, process, technology, and capacity to ensure we are well-positioned to capture these future growth opportunities. I look forward to building deeper partnerships with our existing customers, while also unlocking similar discussions with new prospects in the industry,” stated Rahim. (Source: https://news.thomasnet.com/)

12 Jan 21. Nick Prest Cohort Director Shareholdings. The Company announces that on 12 January 2021, Nick Prest, Chairman of the Company, sold 285,000 ordinary shares of 10 pence each in the Company (Shares) at a price of 615 pence per Share. The sale was for personal financial reasons and to satisfy institutional demand. As a result of the above transaction, Nick Prest’s beneficial interest in Shares of the Company is 1,791,738, representing 4.37% of the total issued share capital of the Company.  The information set out below is provided in accordance with the requirements of the UK Market Abuse Regulation.

11 Jan 21. Horizon Technologies Announces 2020 Results and Corporate Restructuring. John Beckner, Horizon Technologies CEO gave his annual company update on 4 January, 2021. Horizon Technologies announced that despite Covid-related challenges, 2020 has been our best year ever: over £4.5m in sales, and continued profitable growth. Our heartfelt thanks to the whole Horizon Technologies team, our partners, our suppliers, and most importantly, our customers who use our products on a daily basis.

As a result of our continued success and growth of the company, effective 1 January, 2021 Horizon Technologies will be operating as two separate business units. According to Beckner, the establishment of the two (2) separate business units makes sense going forward since the Horizon Aerospace Technologies business continues to expand, and is primarily hardware driven. Our AMBER™ Horizon Space Technologies business is a Data as a Service (DaaS) business, and operates under an entirely different business model. Our FlyingFish™ SIGINT system was in use all over the world in 2020 saving refugees, combating illegal fishing, smuggling, transshipments, terrorism, etc. Within six (6) years, FlyingFish™ has become the world’s preferred, fully airborne qualified, Sat Phone SIGINT solution for manned and unmanned aircraft. Since 2015, many thousands of refugees have been rescued in the Mediterranean Sea alone due to the use of FlyingFish™. 2021 will see additional sales of our transformational Xtender product for UAVs as well as a major new product announcement. Mr. Basharit Ahmed has been promoted to Chief Operating Officer (COO) and will lead this business segment. In 2020, we delivered our first AMBER™ CubeSat payload to AAC Clyde Space in preparation for our first launch in mid-2021. At that time, our AMBER™ Space-Based Maritime Domain Awareness (MDA) Intelligence data will be available to customers worldwide; led by the UK Government. The AMBER™ constellation will be a state-of-the-art 2nd Generation Constellation which doesn’t require “clusters” of CubeSats for RF data collection. AMBER™ will provide demodulated data to our customers rather than mere geolocations. Even before the first AMBER™ launch, we will be providing data to a NATO customer from one of our terrestrial AmberPersistent stations which provide 24/7 sensor coverage of strategic maritime chokepoints. John Beckner will continue to run the Horizon Space Technologies segment personally until a COO for the segment can be found. 2021 promises to be the break-out year for AMBER™!

11 Jan 21. Paramount Group acquires stake in Burnham Global. Paramount Group’s new Advanced Training and Support division will undertake a range of training and capacity building operations, including pilot training and dog-handling. (Paramount Group)

South Africa’s Paramount Group has revealed that it has taken a “strategic ownership stake” in Dubai-based defence services provider Burnham Global.

Established in April 2020 from part of the UK-based Risk Advisory’s Government Services unit, Burnham Global undertakes capacity-building training and mentoring for armed forces, with previous experience on European, UK, and US-funded projects in Lebanon, Jordan, and Uganda. These projects have included counter-terrorism and counter-IED training, staff officer training, and border security development.

As part of the acquisition, Paramount Group has launched a new division, Paramount Advanced Training and Support. Paramount Industrial Holdings CEO Alison Crooks said in a statement that the new division “will be in charge of group-wide skills development efforts. This will consolidate our existing training platforms, most notably our pilot and vehicle operator training, under one standalone business entity. The operator training ensures the effective utilisation of the platforms provided to sovereign end-users. This has become an essential part of solution provision”.

Paramount Group has previously acquired a range of aircraft to deliver pilot training from its base in South Africa, covering a curriculum from basic ab initio skills to fast jet operations using a fleet of aircraft that includes the Alenia Aermacchi SF-260 basic trainer and Dassault Mirage F1 multirole combat jet.

Other training offerings by the company include aviation ground crew and maintenance technician education, as well as specialised dog-handling courses. (Source: Jane’s)

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TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.

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