Interim report, January–June 2020

January–June 2020

• Revenue amounted to TSEK 94,559 (109,348).
• Operating profit amounted to TSEK -11,958 (-4,389).
• Operating profit excluding non-recurring costs amounted to TSEK -11,958 (7,908).
• Profit after tax amounted to TSEK -18,186 (8,418).
• Earnings per share amounted to -0.51 SEK (0.29).

April-June 2020

• Revenue amounted to TSEK 34,983 (55,987).
• Operating profit amounted to TSEK -17,313 (-9,049).
• Operating profit excluding non-recurring costs amounted to TSEK -17,313 (3,248).
• Profit after tax amounted to TSEK -51,891 (-12,915). The result includes currency conversions and financial transaction costs of TSEK -37,668.
• Earnings per share amounted to -1.42 SEK (-0.38).

Significant events during the period

• Ovzon and Airbus Defense and Space has entered into a partnership agreement in which Airbus as a reseller will include Ovzon’s innovative satellite communication services into its portfolio.
• Ovzon raised a total of approximately MSEK 504 in two steps; through a directed share issue of MSEK 350 and a rights issue of approximately MSEK 154.

Significant events after the period

• Order from IGC on behalf of the US defense of MUSD 3.9. The order includes, among other things, the capacity of a steerable antenna on IS-39 and will be delivered from September 2020.
• Agreement with Intelsat regarding capacity on IS-39 and IS-37 that substantially increases capacity and reach for the Ovzon service.

Key figures

Comments from the CEO

During the second quarter of the year, we further strengthened our financial position through a capital raising where, among other things, the 4th AP Fund entered as a new shareholder. Our strong financial position gives us stability and room to maneuver as we build the company to prepare for our own upcoming satellite Ovzon 3. On the business side, we now have established a collaboration with Airbus as a distributor and we sell together with them to their customers in the defense industry. Together with the distributors we appointed in the first quarter, we thus have a broad sales organization.

Sales work and Covid-19

Our sales and marketing activities were limited by Covid-19 during the quarter. The trade fairs that are important to the industry have been canceled or postponed. We have also not been able to travel as usual to demonstrate our service to existing or potential customers. The turbulent situation in the world economy following the outbreak of Covid-19 and the lower six-month contract from the US DoD signed in March meant, as we predicted in the previous quarterly report, that sales and profitability weakened in the short term during the quarter.
The lower turnover has a direct impact on our gross profit as it means that we have a lower utilization of our leased satellite capacity. The contract with US DoD runs until September and in July we secured another quarter with this customer at a slightly higher level as we expanded the offer with a steerable antenna on Intelsat’s IS-39 satellite, where we lease capacity for our service. In this way, we pave the way for Ovzon 3, which is equipped with several steerable antennas.

Increased capacity

To secure additional capacity in the important Ku30b frequency band, we agreed in August with Intelsat on access to three powerful steerable antennas on the Intelsat 39 (IS-39) and Intelsat 37 (IS-37) satellites. The agreement replaces and expands the previous agreement regarding capacity on IS-39. The agreement is an important step for Ovzon to expand our opportunities to serve customers with demands for global reach of high-bandwidth services, and it thus paves the way for our upcoming Ovzon 3 satellite.

Strengthened balance sheet and organization

In June, we further strengthened our financial position through a capital raising totaling approximately MSEK 500 in two steps; a directed new issue of MSEK 350 to, among others, the 4th AP Fund and a rights issue of approximately MSEK 150. The rights issue was subscribed for at 150 percent, a good proof of investors’ interest in the growth opportunities we face.
To continuously strengthen our organization is crucial to capture future growth opportunities. During the quarter, the management team was therefore strengthened with Nils Norén as Chief Development and Production Officer and Tom Hopkins as Chief Operations Officer – two important recruitments for key positions, in line with our growth strategy.

Ovzon 3 on schedule

Ovzon 3, which is now in production at our partner Maxar, is planned to be launched during the latter part of 2021. The pandemic has not affected the satellite construction, which is progressing according to plan. With Ovzon 3 our capacity multiplies, and the satellite gives us the opportunity to offer new services and increased functionality. Ovzon 3 is the first of a number of planned satellites for global reach for our service based on our own satellites.

The external business environment continue to be challenging and we do not expect any improvement in 2020. This affects our ability to take on new business and the turnover rate during the remaining part of 2020 will thus be in line with the turnover rate in the second quarter, which means that turnover for 2020 will be lower than for 2019.

We are, however, well positioned. We have a strong balance sheet, we are strengthening the organization, we have added new satellite capacity and taken our first contract on a steerable antenna.
In this difficult business climate, we are preparing to be in a position to grow in 2021.

Magnus René, CEO

This information is inside information that Ovzon is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 08.30 CET on August 18, 2020.

For additional information please contact

Magnus René, CEO, mre@ovzon.com, +1 781 266 6957

Johan Brandt, CFO, jbr@ovzon.com, +46 70 369 33 00