Interim report, January–March 2020

Progress in a turbulent world

January–March 2020

  • Revenue increased to TSEK 59,576 (53,361).
  • Operating profit increased to TSEK 5,355 (4,660).
  • Profit after tax increased to TSEK 33,705 (21,333).
  • Earnings per share increased to 0.98 SEK (0.71).

Significant events during the period

  • Directed new share issue of approx. SEK 84.5 million to Stena Finans AB.
  • New distributors in Benelux, Colombia and Peru.
  • Ozone’s mobile broadband service via satellite in use by Italian authorities in the work of limiting the spread of Covid-19.
  • Secured renewed contracts, valued at approximately USD 6.9 million, from US DoD.

Significant events after the period

  • Ovzon and Airbus Defence and Space has entered into a partnership through a reseller agreement in which Airbus will include Ovzon’s innovative satellite communication services into its portfolio.
  • Based on current order book and the difficulty in closing new deals at present, the turnover and result will short term develop weaker.

Key figures

Jan-Mar Jan-Mar Full-year
TSEK 2020 2019 2019
Revenue 59,576 53,361 231,642
Operating profit/loss 5,355 4,660 11,419
Adjusted operating profit/loss* 5,355 4,660 23,716
Profit/loss for the period after tax 33,705 21,333 29,230
Earnings per share, SEK 0.98 0.71 0.93
*Excluding items affecting comparability

Comments from the CEO

The first months of the year have entailed continued progress for Ovzon, although the effects of Covid-19 naturally make our sales and marketing activities more difficult. We have strengthened our financial position through a directed share issue to Stena Finans. This strengthens our work on our fully financed first own satellite, Ovzon 3, as well as continued product development. During the quarter we also expanded our sales capacity through several new distributors, including  Airbus, the leading system provider.

New distributors and Airbus as important partner

In December 2019, Ovzon signed an agreement with Italian Gomedia Satcom and at the same time secured a first order from the Italian army. Ovzon’s mobile broadband service via satellite has during the quarter been used by Italian authorities in the work to prevent further spread of Covid-19.

In early 2020, we also engaged Network Innovations as a distributor in Benelux, Bansat in Colombia, Orbita in Peru, Syntelix in Panama and Aicox in Spain and Portugal.

In early April, we signed an agreement with Airbus. Airbus will include Ovzon’s satellite communications services in its product portfolio and from late 2021 the offering will be expanded with Ovzon’s own satellite Ovzon 3. Airbus is a leading system integrator providing advanced, secure, satellite communications and network services. We are, of course, happy and hopeful for the collaboration, as Airbus’s professional team has a long history of providing advanced satellite communications to demanding customers.

Renewed contracts and IS 39

We secured renewed contracts of USD 6.9 million from the US defense through the US service provider Intelsat (IGC). The contracts are for the second half of the customer’s financial year 2020, until September 2020. The total order volume for the financial year thus amounts to USD 20.6 million, compared to USD 22.8 million previous financial year.

Intelsat’s satellite IS-39, on which we have secured capacity for our service, has shown good performance in tests during the fall of 2019. However, Intelsat has still not been able to set a date for when to start delivering the service within the agreed geography. This delay is beyond our control, but when we receive a green light, we will be able to offer supplementary coverage for our customers.

Outlook and Covid-19

Unfortunately, our market activities have been limited by Covid-19. Fairs have been cancelled as well as trips to potential customers in order to demonstrate our service. Nevertheless, we have maintained a very good dialogue with both defense and media-related players.

Our assessment is that the market for satellite services demanding high mobility and performance will continue to develop positively.  We expect to contract additional customers, also interested in capacity on Ovzon 3, during the year.  However, the turbulent global situation in the Covid-19 outbreak and the lower volume of the present 6-month contract with US DoD, signed in March, will short term give us a weaker turnover and profitability, compared to last year.

Ovzon 3 is just the beginning

Ovzon 3, which is now in production with our partner Maxar, is scheduled to be launched during the latter part of 2021. Ovzon 3 multiplies our capacity and gives us the opportunity to offer new improved services and features, which further improves our unique mobile broadband service. The project is central and our primary focus in the coming years. It is the first of a number of planned satellites to provide global reach based on own satellites. We are thus well positioned in the satellite market of the future.

Magnus René, CEO

Publication

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 April 28, 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