Interim Report, January–March 2019
Profitable quarter and successful share issue MSEK 750
JANUARY–MARCH 2019 QUARTER
- Revenue amounted to TSEK 53,361 (46,311).
- Operating profit totalled TSEK 4,660 (-11,623).
- Operating profit excluding items affecting comparability amounted to TSEK 4,660 (414).
- Profit after tax amounted to TSEK 21,333 (-14,940).
- Earnings per share amounted to SEK 0.71 (neg: 2.99).
SIGNIFICANT EVENTS DURING THE QUARTER
- The company has completed a rights issue providing the company with approx. MSEK 750 before deduction for issue costs.
SIGNIFICANT EVENTS AFTER THE QUARTER
- The company entered an agreement with Intelsat regarding future sales on the company’s coming satellite Ovzon 3 of MUSD 56 (approx. MSEK 520) for the first three years.
- The company has also entered agreement with Intelsat regarding capacity on their new satellite, IS-39, which adds possible capacity for the customers.
- At the AGM on April 10, Anders Björkman was elected a new Director of the Board. He was also elected new Chairman of the Board.
- In connection with this quarterly report, Ovzon changes CEO, from the founder Per Wahlberg to Magnus René, who is also a member of the board. Per continues as vice president of the company and in a role within innovation and development.
Strong beginning of the year with order of 520 MSEK
Completed new share issue, continued innovation and important agreements
During the first quarter, we have continued to have very high activity in all areas. We have taken a very important step to launch our first satellite, Ovzon 3. In January, the company received SEK 750 million before issue costs in a share issue, where the main owners Investment AB Öresund and Bure Equity AB increased their ownership in the company.
Continued high business point
We have recruited key personnel in several areas. The development of our OBP (On-board processor) has continued according to plan. During and after the quarter, we have performed several successful demonstrations of our mobile broadband service for, among others, European defense and civil organizations, which has radically improved Ovzon's position in the market for satellite communication. After the quarter, two very important contracts were signed with Intelsat, the world’s largest satellite operator. The first contract means that Intelsat buys Ovzon's services on the planned new satellite Ovzon 3 with a total order value of USD 56 million (approximately SEK 520 million), distributed up to three years starting in 2021. The order means that as of the reporting date, the company has an order backlog of approximately SEK 600 million on leased and on the future own satellite. When Ovzon 3 is in operation, it will give Intelsat the opportunity to resell Ovzon’s unique mobile broadband service to its customers. The second agreement means that Ovzon has secured additional capacity to be able to expand the current service. It is a multi-year agreement in which Intelsat offers Ovzon capacity and two steerable beams on its planned new satellite, Intelsat 39 (IS-39). The satellite is expected to be launched in the third quarter of 2019 and enables Ovzon to offer supplementary coverage in Africa, Europe, the Middle East and Asia.
Net sales and operating results
Net sales increased during the first quarter compared with the corresponding period last year, which is mainly explained by a stronger dollar exchange rate. The revenues are expected to remain more or less constant going forward, with existing contracts. This until we can offer our customers more capacity on satellites that have sufficient performance - for example, through the agreements we signed during and after the quarter. Together, these agreements are expected to increase our capacity by approximately 40 percent.
The underlying profitability of our satellite service during the quarter was higher compared with the previous year. Our operating profit increased to TSEK 4,660 compared to a loss of TSEK 11,623 in the first quarter previous year when our result was affected by relocation of a satellite and costs related to the listing. Nevertheless, it can be noted that profitability has increased with more than SEK 4 million from a small positive result to the above operating profit.
Important part of the financing declared
During the quarter, we have taken important steps in our strategy for future growth through the launch of our first satellite. The new satellite will increase the available capacity and thereby greatly increase the company's revenue potential, improve operating margins and give us additional advantages in technology and performance. The total investment for the satellite, including manufacturing, launching, financing and insurance, is estimated to SEK 1.5 billion. Half the funding has now been completed thanks to the fully guaranteed rights issue in January. The next step for the company will now be to complete the loan financing of the satellite of SEK 750 million - a process that we will continue during 2019.
All in all, we have taken further steps towards our goals during the first quarter of 2019. Ovzon has a strong team with the right expertise and experience to deliver on the current strategy and revolutionize our industry.
We have the markets most high-performance mobile broadband service via satellite, which combines high-speed data with high mobility. We are now entering an interesting and intensive phase of the project with our first satellites, while we continue to evaluate opportunities for growth through leased capacity and more customers.
In connection with this quarterly report, I will, twelve years since the inception of the company, hand over the CEO to our board member Magnus René, who has extensive experience of leading internationally oriented stock exchange companies. While we now enter a new phase, I am looking forward to focus on what I am passionate about – business development and innovation!
Per Wahlberg, retiring 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 08.00 CET on May 6, 2019.
FNCA Sweden AB, +46(0)8-528 00 399, email@example.com, is the company’s Certified Adviser.
Per Wahlberg Johan Brandt Ovzon AB (publ)
CEO CFO Anderstorpsvägen 10
www.ovzon.com Corp. Reg. No. 559079-2650 Tel. no.+46 8 508 600 60