The aerospace and defence technology firm has agreed to acquire Cubica Technology, a Woking-based R&D firm specialising in AI and machine learning, and Q6 Holdings, the majority shareholder in online child exploitation image detection specialist Vigil AI
PLC () said it agreed to acquire Cubica Technology Ltd, a Woking-based research and development (R&D) firm specialising in artificial intelligence (AI) and machine learning, and Q6 Holdings Limited, the majority shareholder in online child exploitation image detection specialist Vigil AI Limited, to accelerate and enhance the growth of its Roke R&D business.
The aerospace and defence technology firm said the purchases will be funded through its existing bank facilities and paid in cash on completion, while a deferred consideration will be paid in its own shares in two tranches on the second and third anniversary of completion.
Chemring said Cubica’s “leading edge capability” in machine augmented intelligence and autonomy complements Roke’s existing capabilities in cybersecurity, intelligence and electronic warfare, adding that the acquiree’s Omniscient and TensorGrid products will benefit from the increased scale of Roke’s engineering investment and access to a wider international customer base.
The company also said it plans to invest around £1mln in Cubica and Vigil AI to accelerate growth, with a particular focus on R&D, infrastructure and security.
“With a focus on innovative protective technologies and outstanding delivery in support of their customers, the acquisition of the Cubica Group, a business we know well, is a valuable addition to Chemring’s portfolio and will further accelerate growth in our Roke business”, Chemring chief executive Michael Ord said in a statement.
“Specialising in artificial intelligence, machine learning, data fusion and autonomy, the Cubica and Vigil AI businesses are an excellent strategic and cultural fit for our Roke business and also offer significant additional research and development expertise as we invest in next generation technologies and expand our product, service and capability offerings. This acquisition is further evidence of Chemring delivering against its strategy and demonstrates the progress that has made on our path to long-term sustainable growth”, he added.
Profits bounce in first half
In a separate announcement on Thursday, Chemring reported that its underlying pre-tax profit for the six months to April 30 had risen 12% to £27.2mln, while revenues for the period rose 4% to £198.5mln.
The company said the performance had been in line with its expectations and reflected a strong performance in all of its segments despite a foreign exchange headwind caused by the weakening of the US dollar.
Chemring also highlighted double-digit growth in orders, revenue and operating profit for its Roke business, adding that it also managed to cut its net debt by 36% year-on-year to £38.7mln.
As a result of the improved performance, the firm’s interim dividend was hiked 23% to 1.6p per share, while Chemring kept its full year expectations unchanged.
“Chemring’s positive first half performance again demonstrates the progress that we continue to make in building a higher quality technology-based Group…Whilst our modernisation and operational excellence programmes will continue, our focus is now shifting towards the growth of our Sensors & Information segment, where our market leading positions and investment in high technology niches positions us well in this area of growing customer requirement. We are investing in our organic capabilities, both in the development of our technology and people. In addition we now have the financial flexibility to pursue both organic and inorganic growth opportunities”, CEO Ord said in a statement.
“The acquisition of Cubica Group is a small but important first step in driving further scale to our growing Roke business, and is further evidence of Chemring delivering against its strategy. Whilst there may be some macro-economic uncertainty surrounding the level and timing of defence spending as a result of the Covid-19 pandemic, our multiple market leading positions and investment in high technology niches, provide attractive growth opportunities. Chemring’s long-term prospects remain strong”, he added.
Shares in the firm rose 0.8% to 309p in early deals on Thursday.
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