Q&A

There are two parts to this answer. First, the quarter was impacted by several negative factors, of which no single factor was of such importance that it prompted communications.

Second, basing assessments on shorter periods of time than 3 months is precarious, especially in our type of business with volatile development as a result of several projects ongoing in parallel where individual events can impact results. With the full Q2 figures at hand though, we did decide to lower our estimates for the full year in order to provide shareholders with relevant and diligent guidance.

We don’t expect to be able to recover the delays we communicated in the Q2 report during the remainder of 2024. This results in lower turnover than previously forecasted.

We provide the best assessment we can in order to provide shareholders with relevant and diligent guidance.

Revenue from these satellites were not included in the previous guidance.

The EBITDA margin will be positively impacted by the license revenue recently communicated. This will have an off-setting effect.

The satellites are just one part of the overall system to deliver a service to our customers. There are many steps that go beyond the testing and commissioning the satellites. We have to assess the quality and validate the data received, we have to prove we can do it repeatedly and in large volumes every day. All these activities have taken longer than planned and also have to be approved by our data customers. The satellites themselves are of a new class and required more testing than expected. You may see some images from the first satellite in the website and LinkedIn account of our customer for this data.

We had one-off revenues in the Q1 report boosting the comparative number.

We expect to finalize these projects during Q4 2024.

Supplier problems occur from time to time in our business. We always put in place robust plans to mitigate these events, but sometimes this is not enough. That is what happened in the second quarter. We expect to solve these problems in the short term. 

Staffing is a recurring issue across the space industry and we expect that to pose a continued challenge, but we have made substantial progress on new hires and contractors in the last few months and will help to alleviate the immediate problem.

We have spent a lot less than 100 MSEK on Cyklops. The satellites in the constellation are expected to be operational for several years. This first order is a pre-commercial agreement which will focus on the analysis, including automation and integration, of image data into Scottish Forestry's Geospatial Information Systems (GIS) and operations, lasting until Q3 2026. The constellation will have capacity to take on more assignments and continue for several years further.

The opportunity is the one that is described in the text: as the legacy missions reach the end of life, the existing customers for those missions will be looking for replacement suppliers. We want to position ourselves to be that replacement supplier. For that we need to develop our satellites quickly to benefit fully from that opportunity. 

The pre-commercial agreement now entered into with Scotland will focus on the analysis, including automation and integration, of image data into Scottish Forestry's Geospatial Information Systems (GIS) and operations. This is a pre-commercial agreement, which does not reflect the potential of the field we target.

Yes.

The first Cyclops satellite is expected to start delivering data in 2025, after launching in mid 2025.

The useful life is expected to be at least 4 years.

The Arctic Weather Satellite is an ESA project carried out on behalf of Eumetsat, as you state. Currently, it is a prototype mission that aims to demonstrate the usefulness of radiometric measurements to improve weather forecasts in the Arctic region and globally. Thereafter it is intended to involve a full constellation of satellites, but orders for further satellites have yet not been placed. It is standard practice though, to analyse the results of a prototype mission before proceeding further.

Our assessment is that it is a temporary effect. We have suppliers who have not been able to deliver to us resulting in lower revenue recognition for us.

When we have more information to share, we will do so.

We can only communicate news about the constellation when our data customer agrees to do so.

Where it is relevant and possible, we have penalty clauses.

Our primary focus continues to be to run the business in the best possible way in order to achieve good financial performance. We are also spending time with shareholders, potential investors and the stock market in general to explain our investment case and attract interest in the share.

The company has no mandate to comment on the plans of private individuals, nor of those of its owners.

The development during Q2 has not prompted us to revisit our longer term forecast.

We have communicated that we target an EBITDA margin of 5-10%.

Regrettably, we have recently had to restart this recruitment process due to issues that emerged when we were finalizing an agreement with a selected candidate.

This is commerciallly confidential information at this point and cannot be publicly disclosed.

We cannot comment on other company’s technical solutions.

There are 11 satellites in total in the AAC’s fleet. Of these 8 are fully operational, 2 suffered payload losses  and 1 is in its pod awaiting deployment.

20 satellites, including full missions (8) and platforms delivered to customers for they to  integrate with payloads (12). Of the full missions, three are for our own fleet.

This is confidential information and cannot be publicly disclosed.

This is confidential information and cannot be publicly disclosed.

This is confidential information and cannot be publicly disclosed.

No, not at this time. We believe Nasdaq First North Premier is an adequate listing for the share at this point.

We are referring to Kelpie-1, see press release dated 2024-03-28.

Please refer to the answer to question 4 for the total number of satellites we are working on. The customers for those have been publicly announced through our press releases. The same for the products, which are publicly announced.

The company continues to develop, both by supporting other group companies in their projects and by running its own projects. The team is currently integrating its first two satellites and is working on a range of other smaller projects including developing new technology.

For a company our size, we have quiet a large number of shareholders. Currently, entrepreneurs in the Group are large shareholders, with our largest shareholder being Dino Lorenzini who started SpaceQuest, as well as the former owners of Omnisys and Hyperion.

Our primary focus continues to be to run the business in the best possible way in order to achieve good financial performance. We are also spending time with shareholders, potential investors and the stock market in general to explain our investment case and attract interest in the share. We are also recruiting a senior communications officer to work with public affairs and investor relations. We recently had to restart this recruitment process.

The market capitalization does not have any direct impact on our business, but our aim is, as communicated, to grow and expand our operations in a financially good way, which would under normal circumstances translate into a higher market cap.

The risks and their mitigations are outlined in our annual report on page 44. The annual report can be reached at the following link:

https://cdn.bequoted.com/media/1/37cfb174-5536-4b44-8ff9-62e83d209583/AAC-Clyde-Space-Annual-Report-2023.pdf

The growth of the workforce has been limited over the last few years, growing from 5 people 2022 to 2023, and another 6 people so far this year. This is a modest growth in relation to our revenue and investments and is very much driven by the need to staff specific projects. This said, we have several initiatives on going to support all of us to become more efficient and deliver more without dramatically having to grow the workforce.

Our own satellites are capitalized. The public funds are set off against our own costs, i.e. reducing the investment. The satellites are usually depreciated over 5 years and starts when the satellites are finalized.

Following the announcement regarding Kelpie-1, we now have four satellites undergoing commissioning and/or data validation.

xSPANCION is a large and technically complex project on which we have several partners/suppliers - some of these partners faced their own delays and those propagated to the project. Furthermore, this is a match funded project, for which AAC also needs financial partners and that takes longer to secure. We have last year taken the decision to self finance the first four satellites as that was important for our Data & Services business, but for the other six we are negotiating with external partners.

We place our fleet of satellites in safe mode when we see exceptionally high solar activity, particularly if a large coronal mass ejection is expected to hit Earth, like it happened in May. This said, as our satellites operate in low Earth orbit, the impact on the satellite’s equipment is statistically negligible, but we do see an increase in atmospheric drag what leads to faster decay of the satellites. This does not impact the nominal lifetime of the satellites as they were placed in orbits with enough margin to account for events of this type.

At the turn of the year the order backlog for 2024 stood as you said at SEK 280 M. Since then, we have press released orders at a total value of approx. SEK 143 M of which SEK 68 M will be delivered and recognized as revenue during 2024. We will start to recognise the balance as revenues during 2024. This brings us closer to the target range, providing us comfort in our ability to reach the target.

Over the next few months, more of our SDaaS services will come on line which will result in increased revenue from that business line. We don’t provide quarterly guidance though.

We have had a number of projects that have been delayed, often due to supply chain issues in the wake of the pandemic, which has coincided with general cost increases. This has resulted in substandard profitability for these projects. As these projects are finished, they are replaced by newer ones, which mainly are for our standardized platforms for which margins are better and production schedules are expected to be met.

 We expect all segments to grow over the coming year. Revenue recognition vary from quarter to quarter which impacts revenue.

We don’t provide guidance on our segments but for the group we target an EBITDA at 5-10%.

We have reiterated the target after the loss of the Kelpie satellites.

Our CTO lead an extensive review of what went wrong, and several recommendations were issued and implemented by AAC and by the antenna manufacturer. These were implemented for Ymir-1 and for our upcoming satellites based on a similar design and I am happy to report that the antenna on Ymir-1 deployed successfully.

We receive royalty payments when projects are completed, but the claim occur when the licensee starts their production.

The AWS instrument has been delivered and the majority of the revenue was recognized in 2023.

We believe that EBITDA is a relevant measure for us as its provides a clearer picture of our ability to generate cash flow from operations, which is crucial for supporting rapid growth and financing acquisitions.

The partners will provide the remaining funding in equal parts.

Over the last year we have seen an increased interest from customers for constellations and higher performance cubesats, aligning with our strategy to deliver increased performance and higher quality. The development of 12U and 16U variants of our EPIC line of satellites follows that strategy, delivering larger payload capacity, what is of particular interest for many of our customers, several of whom have shown interest in the new size.

The order backlog was reported at SEK 630.3 M at year-end, of which approx. SEK 280 M is expected to be recognized as revenues during 2024. Our revenues follow the how our projects develops. For example, we recognize a high value of revenue when a supplier invoices a major milestone. This means that there will be variations between quarters depending on progress in the different projects. We don’t give any guidance for quarterly sales.

In Q4 alone we saw more than SEK 200M of new orders, showing the strength of demand for our products. We expect to maintain this momentum throughout the year and grow our order backlog. We see a growing demand for our products and missions, with new constellations driving that demand. The increased need for timely, good quality data will also drive the growth of our Data & Services business, particularly as more of our satellites come online and we have more data to sell. This growth across all our business lines will result in improved financials for the year and we expect to hit net sales between SEK 430M and SEK 500M.

We expect to increase our revenues in 2024 to 430 – 500 MSEK. At the same time, we will not increase our fixed costs at the same rate.

The loss is mainly explained by the product mix and a currency loss of 4.8 MSEK in the quarter.

Yes, we see an increased need for good quality data and as more of our satellites are commissioned we will have more data to sell.

We currently have four satellites delivering data under SDaaS contracts, another five undergoing commissioning and plan to launch a further three in 2024 and early 2025.

Contracts for Secured Capacity (also known as Capacity Subscription) data and services are not frequent in the SDaaS business, and in that sense a company having two such contracts is unusual. The more frequent type of contract in SDaaS are Subscription contracts (which we previously called Annual Subscription) and AAC is growing its fleet of satellites to support this type of offering, as success in this part of the market requires the availability of data to sell, and that is currently the bottleneck.

Strictly speaking, the capital injection from last year was intended to accelerate the growth of the Earth Observation part of our SDaaS business, not the xSPANCION project. This said, the xSPANCION project is part of that SDaaS growth and is supporting it and the capital raise enabled that to happen by providing the funds to match investment.

As part of this plan, the first four xSPANCION satellites went through preliminary design review (the first major review of the full, detailed satellite design) at the end of 2023. Manufacturing for the first two starts in the spring, in preparation for the launch of the first satellite in either late 2024 or beginning of 2025.  These will be the first 16U satellites built by AAC Clyde Space and will introduce a new generation of EPIC VIEW satellites.

We are working closely with customers to get commitments for the data, but we need to be closer to data delivery before customers sign up to the service.

Using a new satellite type for the data will require an investment from the customers to prepare their internal systems to process the data, and as such they need to be confident that the satellites will be a reality. We see good demand for the data from the satellites, but customers for this type of SDaaS service want to be assured that the satellites will be launched before contracting for the service.

Furthermore, the constellation is planned in such a away that the investment is done over a period of time and we can accelerate or slow down its deployment depending on the pull from the market.

The PDR in 2021 covered the generic design, process improvements among other things. The PDR in 2024 covered the specific design of the satellites.

I will not speculate on that. It should also be noted that we expect to keep 4 of the satellites, and sell the rest to customers.

The main reasons are payments from achieved milestones in customer projects and prepayments from new customer orders.

Yes.

Ymir-1 is first and foremost a satellite demonstrating VDES capabilities. When the capability has been demonstrated, it will deliver AIS data to Orbcomm.

As stated in the CEO letter, we say more than SEK 200M of new orders in Q4, showing the strength of demand for our products. We expect to maintain this momentum throughout the year and grow our order backlog. But order inflow will continue to fluctuate over the year.

We expect to gain focus and efficiency through the reorganisation, and don’t expect it to incur any additional costs.

The plan is to launch them in Q3 and Q4, but as always with launches, dates can move depending on the launcher schedule.

We don’t comment on reactions in financial markets.

We expect to launch 2 AIS/VDES satellites, under our ownership. The first xSPANCION satellite is planned for launch late 2024 or early 2025. We are also manufacturing satellites for some customers but they are arranging the launches themselves and launch dates are not confirmed yet.

We are working on it and have a pipeline of potential customers.

Yes, there are other laser communication systems for small satellites. AAC Hyperion’s SmallCAT distinguishes itself from the competition by offering high performance with a low cost and small size.

We do not engage in speculation.

The intention was to write it in a more clear way. What it says is that we had SEK 59.5 M in available cash end of 2023 and another 4.8 available thru the overdraft facility.

There have been no changes to our targets. For 2023 we target positive EBITDA and we are targeting revenues of SEK 500M in 2024.

The guidance we have given is that we target positive EBITDA for 2023. For 2024 the revenue target remains SEK 500M.

We have been reporting positive EBITDA for the last three quarters.

Many companies are witnessing a difficult funding environment. In this context we are grateful as these funds will enable is to increase our SDAAS operations through the xSPANCION project, which also has co-funding from UK Space Agency and ESA.

In this case, we were able to in addition to subscriptions also utilize guarantee undertakings representing approx. 20% of the rights issue to provide us with the funds necessary to advance the xSPANCION project which was the main aim of the effort. Our assessment was that this was the most attractive financing options available.

Past rights issues have resulted in many outstanding shares, so the board decided to consolidate the number. There is no connection to additional rights issues.

We have no plans at this time to move to the main market.

The consolidation did take place in November, not in Q3. The reduced number of shares impact on key figures and incentive programmes will be reported in the year-end report 2023, as stated in the Q3 report.

Our cash position varies and is often impacted by larger payments from clients. We are monitoring our cash position as part of normal operations.

We are investigating other options to deliver the data service to the customer in order to mitigate any financial consequences, while we in parallel also continue with existing data deliveries to the customer.

We have submitted an insurance claim for the satellite loss and will provide further information as soon as its available.

If we do manage to deliver the data from satellites we own, there should be no material impact on sales apart from the fact that the that capacity cannot be sold to any other customer.

We will provide further information as soon as possible. At this time we have nothing further to convey.

The satellite is reported as lost to the insurer. We will come back with more information as soon as it is available.

The order backlog would be about the same, as it consists of a mix of different currencies.

Payment of the royalties impact cash flow and are made successively. We expect payments to be completed during the first half of 2024.

The main part of the order value will be recognized up until the launch, which is expected before the summer 2024.

The revenue recognition model is based on accrued costs in a project. If, for example, if 30 % of the total costs of a project have been accrued, 30 % of the order value will be recognised as revenues.

In the press release we stated that it is from an existing license agreement relating to power and data handling systems. We are not providing further details as they are part of a confidential business agreement.

Unfortunately, we cannot provide any details about licensing agreements, as they are central business agreements. We do press release larger royalty amounts once they are agreed and communicated to us.

The margin varies over time as a result of the product mix.

We are growing our business, but sales revenue varies quite a bit from quarter to quarter, which is why we show net sales on rolling 12 months in the report. We believe this conveys a better picture of how our sales are developing. That being said, in Q3 revenue recognition was affected by a temporarily slower supply chain due to summer holidays.

The Group’s investments in non-current assets for the period totaled SEK 41.0 M (26.7), of which intangible assets accounted for SEK 28.4 M (25.0). Investment in intangible assets mainly comprised development expenses related to the ORBCOMM and Wyvern projects, ongoing development of next-generation space products and satellite platforms (50% financed by Scottish Enterprise) and investments in two new Space Data as a Service satellites.

We saw a marked increase in customer interest and activity in the second half of 2022, and that continued into 2023, allowing us to build a large pipeline of opportunities. If anything, we have seen an increase of interest/activity towards the second half of 2023, particularly for larger orders.

The timing of orders is variable, and particularly larger orders can take several months to negotiate. This can create quarters with low order intake, followed by large order intakes in the next quarter.

When Ymir-1 delivers data to Orbcomm, we will be able to recognize revenue from the satellite.

The 166.8 MSEK order backlog does not include the 4 xSPANCION satellites.

What we have done is advance the project and now moved into the phase 3B of the project, in which the project will be completed with the manufacturing of 10 novel spacecraft of which four will be launched within the project's framework.

Any important customer agreements and orders will be communicated as soon as possible.

Yes, it is.

The current constellation continues to deliver good service, but it is undeniable that some of the satellites in the constellation are getting old. For that reason, we started in 2022 a constellation refurbishment program, with the first two satellites in the plan scheduled to be launched in the second half of 2024. This will grow our constellation, while providing increased redundancy.

In our most recent launches, we have used an orbital transfer vehicle, what means that after the launch, the satellite will be in transit in its pod for several weeks to a few months until it reaches its final orbit. Only at that time does deployment occur and the satellite is switched on. After that follows a phase of early operations to stabilize the satellite, what can take a few weeks, and we then enter the commissioning phase, which varies from satellite to satellite.

During the commissioning phase our engineering teams will work closely with the operations team (and the data customers) to ensure that all equipment is operating within its design parameters, the satellite is performing to specification and the payload delivers the data that it is expected. This process can be long, particularly for the first satellite of a new design, as the process requires analysis of large amounts of data, understanding if there are problems and many software corrections and upgrades – some aspects of a satellite design cannot be tested on the ground, so several necessary improvements only come to light once in orbit. We aim for commissioning of a new design in six months, but sometimes this might need to be extended, with subsequent satellites of the same class requiring less time. One aspect that also needs to be taken into account when planning a start of service date is the readiness of data customers to receive and process data, as this is a necessary part of validating the data chain and hence start to deliver data.

Commissioning is underway for EPIC Hyper-1.

The satellites have been launched, and we are working with their commissioning. AAC-AIS-SAT2, also known as Kelpie-2, was only deployed from its orbital transfer vehicle recently, so it is still going through the first phases of in-orbit testing. AAC-HSI-SAT2 (Wyvern-2) deployed earlier and is going through commissioning. 

After the period end, the Group completed a rights issue raising a total of approx. SEK 47.6 M before transaction costs. The rights issue was carried out to accelerate the development of our next generation space data services. Space data services has been pointed out as a key area for growth for us. Our target for 2023 is to achieve a positive EBITDA and for 2024 to reach revenues of SEK 500M. We don’t expect to require more capital to achieve this growth.

We expect 2023 to be a value inflection point in our strategy of profitable growth and that we are aiming for positive EBITDA in 2023. We have not provided any more detailed forecasts, but margins will be dependent on product mix between hardware and SDaaS. The net margin on hardware typically is 10-15% and 30-40% on SDaaS.

We regularly meet with larger investors, presenting the company and our future growth plans. These are usually well received, but one of the challenges we face is that our current market capitalization does not meet the requirements of most large investors, making it difficult for them to invest in the company.

We are not providing at this stage an independent forecast for SDaaS turnover in the coming years, but the funding from the rights issue will have an impact starting in 2025, with the launch of new services. The funding will ensure that we can deploy these services earlier than what we originally planned.

The satellite VDES (SAT-VDES) service will be marketed in the future as a SDaaS offering. AAC Clyde Space entered into a partnership with Orbcomm and Saab to develop the market and offerings in the SAT-VDES market. AAC builds the satellite which will carry a VDES (VHF Data Exchange System) payload from Saab for two-way communication between satellite and ground. ORBCOMM will integrate the data in its distribution centre for maritime communications. The current agreement covers the in orbit demonstration of the services, with the companies intending to further their cooperation to offer a global service based on the current technology.

Yes, the consortia has decided to rename the satellite Ymer-1.

As of September 2023, our fleet has a total of 8 satellites. These will be joined by another 2 later this year, subject to launch dates, followed by 2 further launches in 2024, and all these satellites are either ready to launch or in final phases of manufacture. We are now starting the manufacture of another four satellites for launch in late 2024 / early 2025, part of the xSPANCION programme.

The plan is to sell these satellites to customers, whereby AAC will not retain any ownership.

The “4 xSPANCION” satellites mentioned are 16U EPIC VIEW versions, weighing in at about 25-30kg. The “other 6” will be a mixture of sizes, mostly 6U and 8U.

No, under our contract we are unable to provide more information than what we have provided.

Unfortunately we are unable to provide further details.

The company continues on its planned path, focusing on the supply of advanced radio communication and machine-to-machine systems to the rest of the group, while expanding our business in Africa. Its first main delivery was a ground station with locally and internationally sourced parts, delivered to a client in Africa. It is currently developing payloads for some missions to be launched next year, as well as developing new radio technology. In parallel discussions with potential customers continue on supporting the development of space in Africa.

We have no immediate plans to add more proprietary ground stations. Our current network, supplemented by third-party ground stations, covers our current needs.

The company cannot comment on decisions made by individuals.

There are no such plans at this time.

The project includes manufacturing of 10 satellites and launch of 4 of them. The other 6 satellites can of course be launched outside of the project.

We still expect to finalize the project in Q3, 2024.

We are engaged in dialogue with selected customers and will publish agreements when they are ready.

We offer customers three different business models in SDaaS, each with its merits and advantages. In the case of Orbcomm and Wyvern, they chose a capacity subscription model where they secure the full capacity in a number of satellites. It is a model that makes sense for these customers. We also offer annual subscriptions to satellite data and in some cases customers just buy data when they need it, a pay-per-access model. By offering different models we are better able to service the needs of our customers and capture a larger share of the market.

The second Kelpie satellite is planned for launch during the first half of 2023.

The other two satellites under the contract are expected to be delivered and launched in 2023. No dates have been set yet.

Njord-1 is the first AAC Clyde Space VDES satellite, being manufactured in Uppsala. The project is key to demonstrate VDES operation as a reliable ship tracking and communications system, and Njord-1 will be the first in a new constellation of VDES satellites.

The plan is to launch the first VDES satellite towards the end of 2023

Other liabilities increased to SEK 148.5 m by the end of Q1 from SEK 140.5 m at year-end, after partial use of the overdraft facility.

Cash flow from operating activites, which does not include the overdraft facility, totalled - 9.7 MSEK. The assessment, based on the current order backlog and new customer orders intake, is that the Group is financed for the next 12 months.

It should be noted that our cash flow is variable as it is impacted by when we achieve milestones that trigger payments from customers as well as by some of our payments to suppliers. Operating cash flow does not include use of the overdraft facility.

I am sorry, but we cannot comment further.

According to Swedish law, board members are obliged to act in the best interest for all shareholders. Moreover, all current board members are independent of larger shareholders. Dino Lorenzini has been nominated to the Board, and if he is elected, there will be one board member who is not independent of larger shareholders.

The target for positive EBITDA is for 2023, and as stated we are targeting revenues of SEK 500M in 2024. This will be achieved by expanding all our business lines, but particularly by growth in Space Data as a Service. M&A activities are always a possibility, but they are not the baseline in our short-term growth plan.

We have said that we are aiming for positive EBITDA in 2023. We have not provided any more detailed forecasts, but margins will be dependent on product mix between hardware and SDaaS. The net margin on hardware typically are 10-15% and 30-40% on SDaaS.

On March 31 our order backlog amounted to SEK 460.2 M and we continue to win new orders. We see strong interest in our current offering, and we expect revenue from particularly SDaaS to grow significantly over the coming years. It should be noted that many of the “large” orders mentioned in the question are either targeted to companies headquartered in specific countries, or are for satellites in classes that AAC Clyde Space does not offer to the market. This said, you can probably find our products on some of those satellites.

We cannot comment upon personal decisions. The Board has proposed new incentive schemes for both board members, management and other staff that would align their interests strongly to those of shareholders.

We regularly meet with and present the Group to institutional investors.

The assessment, based on the current order backlog and new customer order intake, is that the Group is financed for the next 12 months.

We have noted the share price development, and put a lot of effort into growing the business in a good way. Delivering on our strategy and  targets 2023, 2024, and with business mix shifting to more profitable Space Data as a Service would be a value inflection point in shareholder value creation. Growing EBITDA supports self financing of growth.

Our MoU with ReOrbit will expand the use base for the Sirius product line, ensuring a new long-term user for these products. In addition, ReOrbit’s software + hardware package will be available in the market in the future, extending the availability of Sirius based solutions for the space market.

Delivering on our financial targets and plan with business mix shift to more profitable Space Data as Service would be a value inflection point and a new level of shareholder value creation. We are fully focused on achieving this which should pay-off to shareholders.

In the press release about the extended overdraft facility, we said that we had met the group's short-term financing needs.

Space Data as a Service is a growth market, representing a huge opportunity for the company to grow and expand. By that token, this is the area with the biggest “room for growth”. Our focus is in growing our offering to the market, ensuring that we have the satellites in orbit necessary to deliver more data and services.

We remain open to hear about interesting businesses that could strengthen AAC Clyde Space when acquired. This is particularly true if those businesses are in the space data and services downstream, as that would accelerate our Space Data as a Service growth. But at this point in time we are not actively looking for M&A targets and are instead focused on growing our business organically and together with our strategic partners.

We have so far launched two Space Data as a Service (SDaaS) dedicated satellites in 2023. These will deliver data to Orbcomm and Wyvern so far this year. We are currently preparing for launch this year three more satellites that will deliver data to these customers. Additionally we have another three satellites in production that will also be dedicated to SDaaS to launch later in 2023 or early 2024. xSPANCION is a separate project, following a different timeline.

At this stage, the key customers for weather data prefer to own and control their own satellites. As such, our approach for now is to be part of the team led by OHB Sweden supplying satellites to the customers as part of the AWS project. If and when the market for weather data changes, and customers prefer a SDaaS business model, we will be ready to invest in our own assets to deliver weather data.

The company cannot comment on the reasons behind changes in the Board of the Company.

These costs relate to different advisors, financial, legal, etc, that we contracted in conjunction with investigations and negotiations around an acquisition, that we decided not to complete.

We cannot comment on the company since we are bound by non-disclosure agreements.

The success or failure of a merger depends heavily on the alignment of the companies’ philosophies, strategies, markets, customers, etc. Although there are some obvious advantages, like the aforementioned sharing of resources, the pitfalls are substantial, and any merger would need to be considered carefully. For us, any merger would need to be seen in the context of a strong strategic alignment, ensuring that the resulting entity was stronger than its parts It has been our strategy to grow by acquisitions, that successfully have broadened us from a hardware company delivering subsystem to now also delivering full satellites and space based data. Today, we are a vertically integrated company in the new space field.

Had a concrete offer on the company been received, it would be the Board of directors duty to pass it on to the shareholders.

We can’t comment on discussions, if any, with potential investors.

It is natural to run part of the two phases in parallel, as their scope naturally overlaps and needs to be aligned between the phases. As you may be aware, phase 2 focuses on preparations for spacecraft manufacturing and the phase 3a focus is on platform qualification, scaling production capacity with increased automation and the development of cloud-based software for delivery of data services to users. There is an interest in ensuring close alignment between these activities, and as such it was decided to run some of the phases concurrently to ensure this alignment.

We cannot comment on details in specific projects but normally, we aim to achieve a positive cash flow in our projects which is achieved by customer prepayments.

We expected to commence phase 3B once customer agreements are finalized, and complete it in Q3 2024 with the manufacture, launch and in-orbit operations activities.  

The project is on track.

We are engaged in dialogue with selected customers and will publish agreements when they are ready.

The project is on track. The satellite platform is versatile, making it possible for us to incorporate many different types of payloads, also enabling a late “onboarding” of customers.

Wyvern av ORBCOMM are our largest customers for SDaaS, but there are also other customers.

These three satellites are dedicated to delivering data to Wyvern.

The total value of the data sales from the Kelpie satellites is, as earlier press released,  USD 5.9 M over 5 years.

In the beginning of the year the Kelpie-1, was launched and we have also  communicated that Kelpie-2 is planned for launch in the first half of 2023. These will deliver AIS data to ORBCOMM.

We have also communicated that one EPIC VIEW satellite dedicated to delivering data to Wyvern is planned for launch in April and is to be followed by two more satellites during 2023.

As regards other satellites that we manufacture, but not own, we communicate when they have launched. Sadly, a satellite manufactured by AAC Clyde Space for the Satellite Applications Catapult was lost when a Virgin Orbit rocket failed to reach orbit early on this year.

We are restricted on what we can say about certain customers, and aim instead to convey a good understanding of what type of customers we have.

Satellites that we own ourselves are booked as assets on the balance sheet, and appear as investments in the cash flow statement.

Over the last few years, AAC Clyde Space has been growing its in-house capabilities through several acquisitions and technology development. This strategy was directed at ensuring that the company can offer the most technically advanced solutions to its customers, at competitive prices. This has been achieved and we now have a production process that can easily be scaled to the 10s or even 100s of satellites. Furthermore, the company has an extensive range of commercially successful products for satellites, that are now part of the designs of several constellations being built by other companies.

Profit margins in Space Products are very variable and depend highly of the product being sold. We aim to have an average profit margin between 10% and 20%, but the actual value depends on the mix of space products being sold, and as such on some occasions the average might be lower and on others higher.

For space missions, again the aim is to have a 10% to 20% profit margin, but this will be dependent on the types of missions we are supplying – first in class usually are less profitable as there are plenty new designs and technologies needing to be designed and de-bugged. Follow on missions of the same design tend to be more profitable.

It is a combination of several things, among them delays at some suppliers and shortage of components caused by the pandemic.

We do not usually comment on a customer’s commercial decisions, but on this specific case, NSLComm decided to change the design of their future satellites to a much larger platform. This would require a class of satellite that is outside of the range that AAC Clyde Space supplies, and the business case to develop such a capability for this project was not viable. As such, AAC Clyde Space did not bid for this constellation.

We are currently in the assembly phase for the first satellite for the AOS partnership, and as such activity is less visible. And VDES is a competitive field and as such we must balance being open, with protecting our competitive advantage.  But we have made several investments in the clean room in Uppsala and assembly, integration and test of the satellite is ongoing.

Recruiting takes time and is not facilitated by competition for qualified staff, what although being a global industry problem, is particularly noticeable in Scotland. The situation has improved over the last year, but certain roles remain challenging to fill. We are in the process of replacing consultants with own staff while we are also growing our workforce overall. Speed is important, but time is key to identify and onboard the right persons.

You can find open positions on our website. A lot of them require engineering degrees, combined with different types of experience.

The group is working increasingly closer together, so in the medium term we have the opportunity to grow where we find the right talent.

In Q4 we recorded SEK 8.6m in costs related to an aborted acquisition. On a more general level costs do increase as we grow and build for the future, but we do that while maintaining a healthy cost control.

The target to become EBITDA positive is for the full year, on an annual basis.

We do not provide any numbers on the forecast, but it should be noted that we had an order backlog of SEK 427.8m at year-end that we aim to deliver from. We also plan to increase the number of satellites that we have in orbit generating revenues from data from 4 to 9 during 2023.

We estimated SEK 210 M in revenue for 2022, and came in at SEK 197 m. That is SEK 13 M below, representing a difference of 6 per cent. We recognize that it would be better do differ on the upside, but our business is subject to short-term variabilities that many times are hard for us to foresee.   

No, unfortunately that it not possible. As a company engaged in long-term projects, we recognize revenues and costs successively in a cost-based percentage of completion method. This means that revenues and costs are recognized throughout the project successively, evening out results and reflecting how projects progress in the accounts. If a project is delayed due to shortage of components for example, that is reflected in lower revenue and costs.

In the parent company, there are certain costs that we don’t distribute on subsidiaries such as those for the stock market listing. Clyde Space has been particularly effected by delays.

For 2023, we expect SDaaS revenue from ORBCOMM and Wyvern to improve Clyde Space revenues.

Yes, the target still stands.

In 2023, our SDaaS revenue will start to pick-up through the contracts with ORBCOMM and Wyvern. In the coming years, we plan to expand our own fleet of satellites delivering SDaaS further.

Our order backlog stod at SEK 427.8 m at year-end. This provides us a good platform to deliver from and also to grow further.

Share buyback programs are not allowed on Nasdaq First North where the share is traded.

The aim of this type of programs is to provide an incentive for the participants and to do so the naturally need to increase in value, but there are no guarantees that it will happen. The way that the company, and often the participants, can have an impact of the outcome of such program is through its operations.

An account of the Group’s material financial and business risks can be found in the administration report and under Note 3 in the 2021 Annual Report. COVID-19 affected operations in the form of lower income recognition than planned in projects, since deliveries from subcontractors were delayed. The ongoing war in Ukraine has not so far affected operations. It remains difficult to estimate the final impact of COVID-19 and the war on the Group. No further significant risks are deemed to have arisen during the period.

Currently, we are putting a lot of effort to broadening our business offering to include a larger share of data delivery. By becoming a complete supplier of avionics, subsystems, satellite platforms, full missions and SDaaS we aim for a leading role within the field of small satellites.

First, our heritage and experience of providing systems that work in space, built over more than 15 years (30 years for AAC SpaceQuest) of flying equipment in space.

Secondly, we control the majority of the IP and technical know how that we need for products and satellites, allowing us to customize solutions, both for our customers or for our internal purposes.

Thirdly, we have over the last few years developed the business models to attract a whole new range of customers, who although users of data collected by satellites, do not want to buy/own satellites – Space Data as a Service offers immense new opportunities, but like any new business line, needs time and effort to develop, and we have done exactly that.

We regularly present our strategy to the investor community, both through presentations, but also through our publication SpAACe Talk. The size of the constellation being built by AAC Clyde Space is defined by the needs of the services that it will deliver. These types of service require tens of satellites, not hundreds or thousands. This has clear benefits in terms of reduction of capital expenditure, but it also has environmental benefits, reducing the number of satellites in orbit.

There are a large number of trade shows in the space industry and every year we have to plan which to attend and which to miss. The decision takes into account the cost vs benefit of each presence, the strategic alignment between the show’s themes and participants with AAC Clyde Space’s own objectives, the customer interaction opportunities, etc.

We have had a booth at the Smallsat Symposium in the past, but we feel that the benefit for our business as not been high enough to justify the cost of such presence. It is a show well attended by the industry, but not by our customers (present and future). Opportunities to speak are also very limited and usually require an expensive sponsorship of the show. This said one colleague from AAC SpaceQuest attended the show representing the group.

Participation in the GSTC in Singapore was deemed to be beneficial to expose AAC Clyde Space group products and services in Asia, Australia, and New Zealand. These are growing markets, and this trade show has traditionally attracted a good level of potential customers. Furthermore, one of our home countries had planned a high level delegation presence on the show, enhancing our opportunities to engage with potential customers.

We cannot comment on behalf of other companies, but we are already working with farming applications, most recently illustrated by the shipment of the first satellite dedicated to delivering hyperspectral data to Wyvern (see press release on 1 March 2023).

The shares sold by the former Omnisys owners were placed outside of the market.

We are working on it.

Our objective is to deliver positive EBITDA and operational cash flow during 2023. We have also said that we target 500 MSEK in turnover in 2024. To reach these objectives, we need to deliver projects at a good pace, which is possible by delivering on orders already received or identified. Naturally, we also need to maintain a healthy cost control to reach profitability, and we need our suppliers to deliver when planned.

AAC Clyde Space has in recent times been affected by delayed launches and faced some challenges in its supply chain, what has pushed revenues later. We aim to reach our revenue objective by winning further orders and thereby expanding all our business lines, from avionics, to missions and Space Data as a Service (SDaaS).

First of all, on Sept 30 the order backlog amounted to SEK 418.6 M and we continue to win new orders. We see strong interest in our current offering, and we expect revenue from particularly SDaaS to grow significantly over the coming years. When it comes to profitability, these objectives are supported both by higher revenue and us maintaining or improving our underlying level costs.

In 2023, we expect that 9 or 10 satellites will be launched, subject to the launch schedules being kept by the launch companies. Of these, 6 satellites will be added to the AAC constellation and will generate SDaaS revenue to the group.

Of the order backlog of SEK 418.6 M in Q3, a total of 41 per cent are for data delivery. We already delivered the first Kepie satellite to the launch site at Cape Canaveral, Florida. This satellite will deliver AIS data to ORBCOMM under a SDaaS agreement. This is planned to be followed by a second satellite in the first half of 2023 adding further to our SDaaS revenue, and then by three satellites to deliver an hyperspectral imaging service.

The four-satellite constellation operated by our U.S. subsidiary AAC SpaceQuest, is set to grow by another two satellites in the fourth quarter of 2023.

The satellite that will be launched on the Transporter 6 launch is not part of the AOS (AAC Clyde Space, Orbcomm, Saab) collaboration. It is instead part of a batch of two satellites that will be used to provide AIS data to Orbcomm. The first satellite of the AOS team will be launched later in 2023.

There are several discussions ongoing with potential customers for satellites in the xSpancion project. The satellites will be able to carry several payloads, making them interesting for a broad range of customers such as communication providers, earth observation and weather data to name a few.

The negative cash flow in Q3 was mainly due to revenues during the third quarter being accrued against project where prepayments already have been received, as well as not yet invoiced milestones in delayed projects. Scheduled launches in the next coming months have been delayed by launch providers, which will have a negative impact on revenue recognition and milestones to be invoiced in Q4.

We did also state in the Q3 report that the Group is assessed to be financed for the next 12 months based on the current order backlog and new customer orders intake. Please note that we also stated that measures to mitigate potential short term cash flow effects are under evaluation

At the time of writing, the share price has increased since publication of the Q3 report. Overall though, we strive to be transparent to facilitate for shareholders to assess how our business is developing. We also deliver from an order backlog, the size of which we update on quarterly. It should also be noted that all business forecasting is uncertain. Recently we have experienced delays both from launch providers and in our supply chain, both sources that our difficult for us to mitigate in the short term.

In the Q3 report, we stated that we expect to recognise SEK 75 M of order backlog as revenue in Q4 after delays by launch providers have pushed revenue recognition into 2023.

This is not a question for the company, but for the individuals. It should be noted though that the high business activity often prevents insiders from buying shares as we often have logbooks open.

It should also be noted that an incentive program for all employees, management and board was implemented earlier in 2022. The program represents 2% of the company.

It remains in phase 2. We will communicate when the next phase starts.

Depends on type, size and complexity of payloads. Our objective is always to have multiple payloads on satellites: it can be cost effective, it is a good environmental practice and, in some cases, works well operationally. But the trade off is if doing so increases complexity and price over the benefit of having multiple payloads then we won’t do it. Our current design for these satellites includes multiple payloads, but we do have options with a single payload. The cost/benefit analysis is on-going.

We are meeting with larger investors. One challenge is our current market cap.

Our customers want certainty on delivery dates and want us to sign to those dates. Our suppliers are not committing to delivery dates because of the issues in the supply chain.

To overcome this issue, we are having to either get our customers to agree to different contractual terms (what requires extra time to negotiate) or we are having to look for different suppliers and/or change designs, all of which require extra time and add to the negotiation time.

We believe that it has added to our visibility, and we have actually noted higher trading volumes totally since it became possible to trade our share at US OTCQX.

The industry will continue to consolidate in the coming years, but we would not like to speculate in the timing of any M&A activity in the industry.

We believe that there are benefits in being part of a larger group. That’s one of the reasons why we have acquired several companies, which has made us well positioned in the industry. Our aim is to be a leader in the small satellite sector, and that will require more from us as the industry develops.

Should someone like to acquire the entire group and present an offer, it’s not a management decision. It is the Board obligation to issue a recommendation to shareholders to accept or reject such an offer, and ultimately it is up to the shareholders to decide upon it.

Commercial customers will first evaluate the demo project and then decide on how to proceed. This also applies to projects financed by the European Space Agency. We are currently involved in the Arcit Weather Satellite demonstration project, where a successful demonstration can lead to a constellation.

As stated in the Q2 report, we have had problems with specifying delivery times which has made it difficult for us to reach agreements on the sale of new satellites. It is an industry wide problem which has not forced us to turn down any customers.

We plan to launch three satellites on Space-X’s Transporter-6.

Yes, one of the satellites is for Space Data as a Service. The satellite is expected to  start to generate data and revenue during Q1 2023, subject to a successful launch and commissioning.

Preparation for the Critical Design review were held in March 2022. Some activities remain to be completed by our partners.

As stated in the Q2 report, supply chain issues continue to affect the entire industry, delaying the delivery of existing projects and casting uncertainty over delivery times for new customer orders. These unexpected events result in delayed order intake and reduced net sales. We do expect sales to pick-up in the second half of the year as we complete more projects and thereby can recognize the associated revenue, but we don’t expect this to be enough to offset the delays we experienced during the first half of the year.

This is the background to that we needed to push our objective of a positive EBITDA and operational cashflow until 2023. We expect to generate at least SEK 236M of annual sales in 2022 from existing contracts (at the end of June). Since then, we have secured several new contracts and aim to continue doing so.

The AGM decided to adopt an incentive programme for the Board and employees including management. In this programme a total of 3.15 million warrants had been subscribed for as of 30 June 2022.

We expect to reach positive EBITDA and operational cashflow in 2023.

We usually share a link on social media where it is possible to follow the launch.

Yes, they are. The first Orbcomm satellite is expected to be commissioned and start to generate revenue during first half year 2023.

Currently, our subsidiary SpaceQuest owns 4 satellites which are in orbit, delivering data to clients. We also have a further 19 satellites of our own which have yet to be completed, launched and commissioned.

The planned satellites include 2 satellites which will be added to SpaceQuest’s constellation. The group is also working on 3 satellites which are to deliver data to Wyvern, 2 being built with a grant from Scottish Enterprise, another 2 which will deliver data to Orbcomm, and 10 for xSpancion.