Agreement to acquire EIS Aircraft Operations
QinetiQ accelerates international growth through the acquisition of a leading provider of airborne training services based in Germany.
QinetiQ Group plc announces that it has entered into an agreement to acquire E.I.S. Aircraft Operations (“Aircraft Operations” or “the Business”), currently part of E.I.S. Aircraft Group, for €70 million on a cash-free, debt-free basis.
Aircraft Operations is a leading provider of airborne training services based in Germany, delivering threat representation and operational readiness for military customers. It generated €20.1m revenue and €5.4m EBITDA in the year to 31 December 2017.
Aircraft Operations delivers airborne training services using a highly cost-effective fleet of 14 leased Pilatus PC-9 and PC-12 aircraft, flown by a team of 20 pilots.
The Business has well established relationships with its customers. It has been the exclusive provider of low-speed aerial training services to the German armed forces since 1999, and delivers aerial training services to the United States Air Force in Europe. It also modifies aircraft for special missions through the integration of sensors and digital systems used in Intelligence, Surveillance and Reconnaissance (“ISR”).
- Aircraft Operations has a strong track record and further growth potential
- Delivers airborne training services using Pilatus aircraft at a substantially reduced cost compared with jet-engine aircraft alternatives
- Complementary core activities; the business modifies special mission aircraft that are used to provide enhanced training services
- Sustainable and growing end markets driven by increasing demand for cost-effective training
- Accelerates QinetiQ’s international growth strategy
- Establishes a test and evaluation and engineering services capability in Germany
- Enhances access to the broader European defence market
- Aircraft Operations will also benefit from QinetiQ’s wider access to international markets such as the Middle East
- Strengthens QinetiQ’s capability integration, threat representation and operational readiness offering to customers
- Enhances QinetiQ’s live and synthetic training capabilities, supporting its focus on defence operational training
- Complements QinetiQ’s test aircrew training and engineering services
- Supplements QinetiQ’s acquisition of Meggitt Target Systems in 2016 to provide both manned and unmanned airborne test and training services
- Compound annual revenue growth of 17% over the past three financial years
- Average EBITDA margin of more than 20% over the past three financial years
- Strong cash flow generation
- Expected to enhance QinetiQ’s earnings per share in the current financial year
- Returns exceed QinetiQ’s cost of capital
- Funded from QinetiQ’s available cash resources
Steve Wadey, QinetiQ CEO, said:
“E.I.S Aircraft Operations is a high growth business which provides airborne training at a disruptively low price. This acquisition supports our strategy for international growth by providing access to the European defence market and enhancing our ability to deliver capability integration, threat representation and operational readiness for customers.”
“We look forward to welcoming the Aircraft Operations team in Germany to QinetiQ and working with them to continue to grow the business both within their existing markets and beyond.”
The business currently forms a discrete business unit within the wider E.I.S Aircraft Group which is owned by EQT and focuses on aircraft interiors for the commercial aerospace market.
The transaction is subject to certain regulatory and legal approvals and is expected to close towards the end of the first half of QinetiQ’s 2019 financial year.
Following completion, Aircraft Operations will continue to be led by its existing management team. It will form part of QinetiQ’s International business unit and will be reported within QinetiQ’s EMEA Services division.
This announcement contains inside information and the person responsible for making this announcement is Jon Messent, Company Secretary.
There will be a call for QinetiQ analysts and investors at 0730 hours UK time on 24 April 2018
Dial in details: +44 (0) 20 3003 2666 Password: QinetiQ
A playback of the call will be available shortly afterwards by dialling +44 (0) 844 584 0220 and entering PIN number 1703633#
About Aircraft Operations:Aircraft Operations is a leading aviation services business, delivering aerial training services and combat battle simulations through a fleet of Pilatus PC-9 and Pilatus PC-12 aircraft, facilitating military pilot readiness. Technical solutions include modification of special-mission aircraft as well as providing customised engineering services for a variety of military aircraft and aircraft components. The business employs approximately 60 people in Germany, including 20 pilots, and operates from two main strategic locations in Kiel and Mönchengladbach. In the year to 31 December 2017, the business had gross assets of approximately €100.2million.
For further information please contact:
David Bishop, Group Director Investor Relations and Communications: +44 (0) 7920 108675
Investor Relations: Ian Brown, Group Head of Investor Relations: +44 (0) 7908 251123
Jon Hay-Campbell, Group Head of External Communications: +44 (0) 7500 856953