QinetiQ Accelerates International Growth Through Acquisition of E.I.S. Aircraft Operations
25 April 2018 – QinetiQ Group plc (“QinetiQ” or “the Group”) has entered into an agreement to acquireE.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”).Strategic rationaleAircraft Operations has a strong track record and further growth potentialDelivers airborne training services using Pilatus aircraft at a substantially reduced cost compared with jet-engine aircraft alternativesComplementary core activities; the business modifies special mission aircraft that are used to provide enhanced training servicesSustainable and growing end markets driven by increasing demand for cost-effective trainingAccelerates QinetiQ’s international growth strategyEstablishes a test and evaluation and engineering services capability in GermanyEnhances access to the broader European defence marketAircraft Operations will also benefit from QinetiQ’s wider access to international markets such as the Middle EastStrengthens QinetiQ’s capability integration, threat representation and operational readiness offering to customersEnhances QinetiQ’s live and synthetic training capabilities, supporting its focus on defence operational trainingComplements QinetiQ’s test aircrew training and engineering servicesSupplements QinetiQ’s acquisition of Meggitt Target Systems in 2016 to provide both manned and unmanned airborne test and training servicesFinancial highlightsCompound annual revenue growth of 17% over the past three financial yearsAverage EBITDA margin of more than 20% over the past three financial yearsStrong cash flow generationExpected to enhance QinetiQ’s earnings per share in the current financial yearReturns exceed QinetiQ’s cost of capitalFunded from QinetiQ’s available cash resourcesSteve 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.”Transaction completionThe 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.
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