AAC Clyde Space : Interim report Q3 2020

AAC Clyde Space AB (publ)

INTERIM REPORT, Q3 2020

Third quarter, July-September 2020 (compared with July-September 2019)

• Net sales amounted to SEK 27.3 M (14.2)
• Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) totalled SEK -2.2 M (-7.9)
• Earnings before interest and tax (EBIT) totalled SEK -4.9 M (-11.0)
• The loss after tax was SEK -4.9 M (-11.1)
• Basic and diluted earnings per share amounted to SEK -0.05(-0.12)
• Cash flow from operating activities totalled SEK 3.8 M (-7.4)
• The order backlog amounted to SEK 159.4 M (179.6 M)

January-September 2020 (compared with January-September 2019)

• Net sales amounted to SEK 69.7 M (45.9)
• Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) totalled SEK -15.9 M (-22.1)
• Earnings before interest and tax (EBIT) totalled SEK -24.4 M (-31.8)
• The loss after tax was SEK -24.9 M (-32.2)
• Basic and diluted earnings per share amounted to SEK -0.26(-0.40)
• Cash flow from operating activities totalled SEK -2.8 M (-16.0)

Significant events in the third quarter of 2020

• AAC Clyde Space captured two Japanese orders totalling EUR 360,000 (approximately SEK 3.7 M)
• AAC Clyde Space, Saab and ORBCOMM are building the next generation of maritime communications. The order value is SEK 17 M
• AAC Clyde Space's share began trading on the American OTCQX market.
• Peter Anderson was appointed VP Business Development

Significant events after the end of the reporting period

• AAC Clyde Space began a three-year project to develop an innovative constellation of satellites for EUR
• 1. M (approximately SEK 202 M) together with ESA and the UK Space Agency
• AAC Clyde Space agreed to acquire the American SpaceQuest Ltd for the equivalent of approximately SEK
• 1. M. The acquisition is pending approval from the Committee on Foreign Investment in the United States (CFIUS)
• AAC Clyde Space acquired Hyperion Technologies BV, based in the Netherlands, for the equivalent of SEK
• 1. M
• The Board of AAC Clyde Space resolved, pursuant to the authority granted at the Annual General Meeting on 2 June 2020, to carry out a directed share issue that raised SEK 52 M for AAC Clyde Space before transaction costs
• In conjunction with the directed share issue, Erik Penser Bank negotiated the purchase of shares in a block transaction totalling SEK 28.5 M. The sellers were Fouriertransform AB and Craig Clark. Fouriertransform AB has already announced that it will divest all of its holdings over the long term, according to a parliamentary resolution from June 2016.
• An extraordinary general meeting on 5 November approved the acquisitions and accordingly the corresponding new share issue.

AAC Clyde Space AB (publ) | Interim Report January-September 2020

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Financial overview - Group

kSEK	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	full-year
Net sales	2020	2019	2020	2019	2019
27 345	14 193	69 717	45 856	66 435
EBITDA	-2 162	-7 900	-15 906	-22 080	-27 297
EBIT	-4 905	-11 055	-24 367	-31 810	-40 191
Basic and diluted earnings per share, SEK	-0,05	-0,12	-0,26	-0,40	-0,48
Equity ratio	84%	85%	84%	85%	85%
Cash flow from operating activities	3 766	-7 380	-2 761	-16 018	-15 706
Cash flow for the period	-3 541	-14 269	-20 602	47 243	40 064
Cash and cash equivalents	31 499	59 551	31 499	59 551	52 380
Order backlog	159 455	125 674	159 455	125 674	169 212

Net sales - Rolling 12 months

Order backlog

Net sales and EBITDA broken down by quarter

AAC Clyde Space AB (publ) | Interim Report January-September 2020

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Comments from the CEO

The 3rd Quarter of 2020 was a busy and successful period for AAC Clyde Space when we focused in delivering our projects and actively preparing the future of the company. During the fall, we have taken several strategically critical actions to position AAC Clyde Space for continued leadership in the small satellite market. Our aim is to drastically change the economics for space-based services. The transformation of AAC Clyde Space into a company servicing a wide range of companies with business-critical data has now begun in earnest.

A key building block of this strategy was forming the Public Private Partnership (PPP) with the European Space Agency (ESA) and the UK Space Agency (UKSA). Through this partnership, we will develop the next generation of Space as a Service (SaaS) offerings with the support of both agencies and with our partners in industry. The programme, called xSPANCION, includes the building of 10 demonstration satellites forming a ramp up for the establishment of a multiservice constellation to serve a variety of uses.

As the SaaS service offering evolves, becoming self-sustaining, we will add new satellites and new capabilities to the constellation to grow the services it delivers. We will bring in customers for services from the constellation start, enabling us to collaborate closely with those key users for the service offering as well as to finance our part of the project through service agreements. Through the xSPANCION programme, AAC Clyde Space will design and deploy an extremely scalable and flexible system. This can provide services as varied as communications, weather forecasting or environmental monitoring, all on an accessible basis to companies and operators, making it much easier and affordable to access and use services from space.

We also agreed to acquire two successful and profitable space companies, Dutch Hyperion and US SpaceQuest, also a major step forward in meeting our strategic objectives. The Hyperion acquisition has since been completed while the acquisition of SpaceQuest awaits approval from US authorities.

Through Hyperion we strengthen our product range and the competitiveness of our satellites, bringing in-house many subsystems that until now we had to buy in, particularly in the attitude control domain. This acquisition was also driven by the important new technologies that Hyperion has been developing in laser communications and advanced propulsion, opening new opportunities for future business. Through the combination of both company's product lines and distribution networks, we expect to substantially increase sales of subsystems and products.

With SpaceQuest in the group we gain a clear presence in the United States, the world's largest space market. The US company brings a wealth of experience in delivering services from space, as well as a fleet of operational satellites and associated ground segment. As part of the group, they will be able to offer a larger, and more attractive space as a service-offering to US customers.

Following these announcements, we concluded an oversubscribed directed rights issue, raising 52 MSEK before transaction costs, to strengthen our Space as a Service offering and develop new technology.

All these strategic initiatives did not distract us from our regular business. On the contrary, we report a record quarter, almost doubling our revenue to 27.3 MSEK and posting a 52 percent gain to 69.7 MSEK for the first nine months. The increased revenue led to more than halving of the negative EBITDA during the quarter, taking us closer to our goal of a positive EBITDA in 2021 or 2022. Operating cashflow also improved substantially being positive during the quarter. The measures we have taken to manage the effects of the pandemic, have successfully

AAC Clyde Space AB (publ) | Interim Report January-September 2020

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