Börsveckan 2021

Sep 16, 2021

Thank you. Thank you, everyone. Thank you. Good morning. I hope you are having enjoying your breakfast and I will be talking about AAC Clyde Space. So, we are a company I will actually start by introducing myself. I just joined the company in May 2019. So I'm the CEO. My background is in space. I've worked for about 21 years in another company in the UK, building spacecraft, building from very small spacecraft all the way to spacecraft that were about half a 10. And I joined AAC Clyde Space because I wanted actually to work at the cutting edge of the space industry. This is a company that has revolutionized a lot of what we do in space nowadays. It's working in the really innovative side of the business. I decided that it was time to actually go back to do really cool, innovative, new things. And as such, I joined. So, I was the CTO before. I have been Commercial Director in the other company. I have been a board member. And but in May, I moved to ASE Clyde Space and I can say it has been a great experience so far. It's something I really enjoy. It's a company I really enjoy. And many times I'm asked what is the biggest take I brought from my previous job to this new one. What did I bring? What did I learn? And I put there unfortunately, it is a bit overlapped, but it looks different there actually. But the biggest stake I brought was how to grow a company. When I joined my previous company, it was a small 60 people company. When I left, it had touched about 675 and what I learned there was how do you actually grow these companies? What are the good things, what are the pitfalls. And I think that is very important, learning how to do that for a company that is growing like it's the case of Clyde. So this is me. So what is AEC Clyde Space? Well, we came together so this this is a company that is based here in Sweden and in Scotland and we basically do space things. We do Syrp systems. We go all the way to actually doing spacecraft. And we have been actually revolutionizing a lot what is done. What people used to think that you needed a 1 ton spacecraft, we are now doing with about 5 kilo spacecraft. And what this has done is open a lot new all set of new applications. 20 years ago, if you said you wanted to do something in space, people thought of very large organizations, very large companies, very large spacecraft, big rockets, very expensive. And so you didn't do a lot of things. People had lots of ideas of how to use space, but they couldn't afford it. And what companies like AC Clyde Space have been doing is to actually change that. And once you actually change the paradigm, once you actually change the rules and you say you can do much smaller spacecraft for doing whatever you need it to do, then you open a whole new range of applications. And nowadays, we use space for things like this, Earth observation. So we take pictures from space. We are monitoring the oceans. We are doing asset tracking. Nowadays, if you actually want to track a container, a car. If you are outside the range of mobile phones, we can do that with satellites. You need a lot of them And because of that, you need them to be cheap, low cost, small, so that you can do a lot of them. You can have large constellations in orbit, but we are doing those. And that's why AAC Glide Space works. It's such an exciting company and it works in such a nice area of this business, because it is the one that is growing. The company, we are global. We are present here in Sweden, in Uppsala. We have a facility in the U. K, in Glasgow. We are present in the U. S. And growing there. We have commercial partnerships in Japan and Korea. We are always looking for expanding those commercial partnerships. We have a growing workforce. We are now 89 or at least we were in June. We are actually growing that at this stage to actually be able to fulfill all the projects we've got on our books. We launched 7 satellites not in 2018 since the beginning 2018. 2 of these were already launched this year. We had a turnover of revenue of SEK 79,900,000. And our backlog in June was $126,000,000 And this is actually quite a good thing because it's increasing from last year, the beginning from the end of last year, showing that these markets, there is quite a lot of appetite for the kind of things we are building and delivering. So what do we offer? What do we sell? What are we actually bringing to the market? Well, we started as a company both here in Sweden and in the UK delivering subsystems. These are small components for satellites that other manufacturers then use on their spacecraft. We then started using those subsystems we were designing to actually make our own spacecraft. So, we do platforms. We do we put them together. We put a platform. We then sell that as one unit to customers and then they put their payloads, their instruments on it, be it the camera, be it the communication systems. And they build that and then they launch it and they operate it. Now we are also starting and we have been doing that for a while actually doing missions. And mission, difference in here is that the customer comes to us and says, I need a satellite to do this, to take pictures of the Earth. And we will actually design the satellite. We'll find the camera or design the camera ourselves. We'll build it all together. We'll put it there and that is a full mission that has been delivered to the customer. And then with that, we can actually provide services. And these are things like we can offer the launch, we can arrange the launch. We don't do rockets as much as I would like to do those, but we don't. It's quite an expensive activity. But there are lots of people that do rockets. So we go to them and we actually organize the launch. And we can do operations. We can actually operate the spacecraft on behalf of the customer. And actually, when we put all this together, some customers say, actually, I need the data or I need the service from space, but I don't want anything to do with the satellites. So, you guys do everything. Just provide me the service. This is what we call space as a service. And we currently have 1 customer, 1 U. S. Customer that is that contracted to us. We are building the spacecraft for them and then we will provide them a service on a daily basis and what they are doing is tracking ships. So they track big boats around the world and so and that's their business. That's what they want to do. They don't actually want to have to operate the spacecraft. So we'll do all of that for them. And that is Space as a Service. And that is an area that is growing now. In my previous job, I actually did one one of the first installments of that kind of service. And now we are seeing more and more people wanting that. So who are our customers? Well, they are very varied. And this is just a summary of our customers. We actually have a much bigger customer base. And I divide but this has examples of who our customers are. And I divided these in the Established and the Upcoming. Established are people like the space agencies. What you see there is NASA, the European Space Agency, the U. K. Space Agency. Those are people that know exactly what they want. They know everything about space. They understand it. They have been flying spacecraft for 50 years, 60 years. So what this shows when it comes to us to buy Missions and Platform is that they trust us. So that for us is important that they trust us. It shows that actually they believe in us. They believe that we know what we are doing. We also have a few other companies like OHB here in Sweden, be in Luxembourg, SSL, Space Systems Loral, so one of the great producers of spacecraft. They all come to us. They know that we know what we can do. And then we also have probably the slightly more exciting side of the business that is all these new upcoming companies that have great ideas, all these guys in the Evo sorry. All these companies are people with great ideas. They have really entrepreneurial ideas for the future of space. They are investing. They have investment from Capital Venture many times, many times from stock exchanges. They are actually growing very quickly, but they are coming. They are not established yet. We are working with them in building their business. So this is about the future. This is new space. So we are very fortunate to actually work with a lot of the new space entrants. And I'm sure that the large majority of them will actually become very big businesses in the future. So, let's talk a bit about the present and the past. I'd like to talk a little bit more about the future now. And in terms of our plans, and as I said, we started our business both here in Sweden and Scotland. We started it as a subsystem and component business. We used to make batteries, computers, onboard computers, little computers, they are about this big. They are not much bigger than your salsa. But what these little systems allowed us to do was to gain a lot of experience. We actually built a business on that, okay? I think we can use that one. Use this one instead? Okay. Can you hear me well? Yes, I hope so. But so we started by doing that. And nowadays, the makeup of our business is very much this one on the left. That is subsystems and components, they are still a dominant part of the business. We have started doing more missions and platforms and we have started space as a business space as a service in the last year or so. But we see the growth of the market and also the profitability to be more in the Missions platforms and on the Space as a Service. So our objective now is to actually grow that side of the business. It's not to say that components and subsystems are not going to grow. They will grow. But higher profitability for us is on that side of the business. So as we go towards the future, what we see is more missions, we see more platforms, particularly constellations, there is a big drive to fly large constellations of small satellites in orbit to provide you services like, as I said, tracking assets, tracking cars, even 5 gs. There is a lot of environmental monitoring, there are many ideas about environmental monitoring for the near future. So all of these things will require lots of small satellites. And this is where we are going. In terms of our plan, this is to some extent a plan that is a bit the plan that I set out to the company when I arrived. And the first one is about consolidation, it's about actually looking at the present is very much a present. Present, and it shouldn't be like that again. It's very much about consolidating the business. It's about looking at the present, looking at where we are, improving our financials. It's about improving our delivery, making sure that we actually deliver what we say we'll deliver when we say so and meet our sales targets. So this is actually making sure that we get the orders that we set out to get. So that to me is normal management. Then there are the improvements. So there was a list of improvements that I identified with the team. I've got a very good management team and they have already done a lot of that work. So we came in and we said, okay, there are certain things we need to do immediately. One of them is actually planning on the resource. As I said, we are growing the company in terms of people. We need certain skills. If you are going to be competitive in this world of small satellites, you actually need certain key skills. So we are recruiting those. We already have quite a lot of very good engineers, very capable, very good managers, but we need a few more key skills. We are also looking at our production. How do we streamline our production? As always, when you are growing companies, it's very easy to sometimes start doing several versions of the same product. So we are actually just saying, no, this is the version that we actually will produce. This is how we'll produce it. And that will also include looking for partners. Some things we are not going to do in house. There is no point in us we are not they don't make we can't make them at the price points that customers want. So we'll find partners to actually produce some of the components. And then we are looking towards growing. And that is looking for the near future, what are we going to do to actually grow the company. And one of the things is coupled to the change in the way we produce spacecraft and produce subsystems. One of the things is to increase our production rate from we are currently, as I said, we did about 7 satellites in the last year or so. We want to actually be able to every year produce 20. And these are unique satellites. So these are different satellites, 20 different types of satellite. But if we are if we achieve that, we actually will have a very standard platform. And if we do that, we will actually be able to turn the production up to 100 spacecraft a year if we need. If it's the same type of satellite, we can actually go up to those numbers. I usually tell our engineers, and this is part of one of the activities we've got ongoing that is to actually that is to actually to streamline our production as I said, but also to make things as standard as possible. I say my dream is that I actually get to our clean room one day and I look at 20 satellites there and I cannot tell you which customer they are going for. Because until they've got their payload on top, they've got their power system, they will all be exactly the same. And if we can achieve that, we can then produce very easily, very quickly many satellites. So that's what we are working on right now. We have a plan to actually go to the U. S. We have had a company in the U. S. For several years, it's operating. So we are selling in the U. S, but you need to actually have a manufacturing base there. So we are looking right now at how we do that, how do we expand into the U. S. And then we would like to introduce new space as a service offerings. There are many other things, many other areas. Currently, we are working on the ship tracking, but there are lots of other areas that could benefit from Space as a Service. So we are looking into those areas and working with partners on them. We've got the road map, and this is just a summary of the road map. As you can imagine, in a technology in a high technology company, a road map is a fairly complex thing. But the highlights of those road map of that road map is our platform functional unit. And effectively what we are doing is this thing about standardizing all our control units in the satellites. They're already quite small. We can already do a control unit for a satellite in about the Eastside. But we can actually make that even better. We can actually leverage a lot of the developments in software defined systems. We can actually make it very standard and then you upload a different version of software when you need to control a different type of payload, for instance. And that means that we can reduce our manufacturing costs, but particularly we can reduce our manufacturing schedule. So the idea is that we will have on the shelf all these units. They are ready to go. They are produced there. You just pick 1 up and you mounted on your satellite. You could actually do your platform in a week or even less in a couple of days, if you really had to. And then it's a question of actually putting the payload on top of that. We are also developing our operations capability. So we have one ground station in Glasgow. We are actually going to expand that. The reason for that is because if we are offering this space as a service, we need to actually be able to operate more spacecraft. Now there are many ways of doing that nowadays, you don't necessarily need your own antennas. There are many people you can just go and hire antennas or you can actually use other people's antennas or people's ground stations. So there are many ways of doing that. We are going through that process of deciding what is the best way to do it. And we are developing advanced software defined radios. And this is important because for many of our customers, many of the applications for satellites, they rely on communications from space. And this is an area that's particularly every time you are talking about asset tracking or machine to machine communications, this is an area that we have to be very fluent in. So we are doing quite a lot of work on that. We are fortunate because a lot of our R and D is usually paid by grants, by projects. And also, with our latest share rights issue, we've raised capital to actually finance these developments. So we are actually going ahead with these developments. We are the teams are working on these. And that is it's quite an exciting time to see that happening. So just to finish, the key takeaways that I would like you to take from this talk. The market for small satellites is growing fast. It has been growing explosively in the last 5, 10 years, and it continues to grow very, very quickly. And to some extent, we are now going through the phase where the people with the crazy ideas that will never go anywhere have kind of disappeared from the market. The people that are left are the serious ones, are the ones that know what they are doing. And they are still talking about hundreds of spacecraft constellations. We as a company are very strongly positioned to actually take advantage of that growth. We have the technology, we have the people, we have the knowledge and we've got a track record. People know us. They have seen us operating for many years. They've seen that we have been successful. We have a clear and financed plan to grow the company and to capture more of the market. And that is very important. You need to actually be able to prove to the market that you can supply what they need. So it is my belief and it is my objective to actually make us the leader in the commercial small satellites. This is what I'm here to do. So thank you very much. I'll be with my colleague, our CFO. We'll be by our little banner outside for the rest of the morning. So if you would like to come and ask us questions afterwards. I don't know if there are any questions in the meantime, but I'll be happy to answer them. Thank you. Thank you very much, Louise. It's a very interesting transformation I mean, you're moving basically from being a component manufacturer into a service provider, but it seems to be quite a big Do you really have the sort of managerial resources to make all of this happen? And do you have sort of a time line when do you expect this to be Ready? Is it next year, 2021 or So this is a transformation that hasn't started now. We have actually been going through that transformation now for a few years. We are currently providing to some of our customers already services in terms of operations. So they rely on us to operate their spacecraft. We have our space as a service contract with ORBCOMM, a U. S. Company, an asset tracking company and machine to machine system. So those satellites will be launched next year. So we'll be actually in about a year's time, we'll actually be getting ready to start that as a proper service. So it's a gradual growth. It's not suddenly we are going to transform the company solely from a subsystem and platform supplier to a service company. We'll continue to do both. So we will actually just grow the service side. The second part of your question in terms of the managerial capability, yes, we are actually growing that. So one of the things that we have been doing and that work has been started by our Chief Operating Even before I arrived at the company, I accelerated and probably added a few things is actually getting the management team in place for that side of the business. Interesting. Another thing that's interesting is you talked about each satellite being unique and your vision is to have them More or less standardized. What's the hurdle? Or what's I mean it seems obvious that if the higher degree of standardization, the lower the cost, which would be beneficial for the customers as well, right? So is it because there are unique specifications to each payload? Or what you need to achieve that level of stylization. I would say that's a hurdle. The biggest hurdle is engineers. All right. But I'm being one myself. I understand. But the thing is most customers will have specific requirements. And because of that, traditionally in the space industry, you tend to set project teams. So a project team will be set to answer a certain set of requirements. The problem with that is that then you have a team that makes separate decisions from all the other teams. So even if you are using exactly the same avionics, the same components, you can configure them in slightly different ways. And so you end up with things that are slightly different. So one of the works we are doing one of the work that we are doing right now is to actually change that. If you've got a very standard set of hardware that you use for everything, and what we do is we get the engineers and get them to agree what that one is, then you can actually design a very good standard baseline control system. And then the difference will come on the payloads, on the instruments and on the software that you need to run them, you tweak that. But it's a lot less work than starting from scratch every time. Could you say something about the competitive landscape? I mean you've shown us some examples of your clients and what you can do. But I guess there are other companies out there as well. As always, there are several companies working on this. Actually, Sweden is in a slightly strange place with this because it's the only country to have 2 listed small satellite manufacturers. So there is GOM Space, that is a Danish, Swedish company. There is ourselves. And I think that we are actually the world's only stock market listed companies doing this kind of work. So you have a lot of companies in the U. S. Operating in this arena. Interestingly enough, they are moving to bigger satellites because they leave very much of government contracts in the U. S. And because the U. S. Air Force and Department of Defense usually want slightly bigger spacecraft. So they're actually a lot of them are moving from the smaller end, the commercial smaller end of the market. But yes, there is there are plenty of manufacturers. What there isn't around that much it's manufacturers with experience and with track record. And that is where I'm a firm believer that we have an advantage is because we actually we have been in this market for several years. We have done many missions. We have done many components. And many of the companies you'll see out there have done one satellite, and they say, oh, we are a satellite manufacturer. I can tell you it's a little bit harder than that. Right. Are there any regulatory hurdles? Like for instance, if you say the medical device industry and so forth, there are a lot of requirements to be met in order to commercially launch Product, is it the same with space that you need approvals and regulatory authorities from Yes. Yes, quite a lot. So you need a set of licenses. You need insurance. It is a slightly different environment because it's a very international environment. So you send it to Orbit, that is a shared resource of all the countries. That's number 1. Then you actually usually launch it from country different countries from where you manufacture the satellites. You might even license them in different countries. So there are many regulations. I would say actually in the last few years, those have become much clearer. They are not always I would prefer if I could just build spacecraft and launch them and not have to worry about that. But of course, we all need to actually be regulated. And in that sense, I would say that actually things are getting better now. They are much clearer now. We license satellites usually from the U. K. The U. K. Has quite a benign regulatory framework, but many other countries are now actually changing their laws. So yes, there are rules and regulations, and we follow them. And the hurdles there are some hurdles, but they don't necessarily affect us. They tend to be more around the spectrum allocation and that usually tends to affect the large geospacecraft providers. They have probably more problems than we do. Right. But apart from that, it's actually like any market, we have pay attention to regulations and export rules, and we have people to do that and we work with local authorities on that. Do we have any questions from the audience? Please Just raise your hand if you want, and I will provide you with the microphone if there is someone who wants to ask something. Looking at your revenues, it seems that for the first half of this year we have a question. Okeydoke, please. Yes, thank you. You haven't mentioned financials at all. Have you shown a profit before? And would you expect to show a profit in, say, the next 5 years? We haven't shown a profit before. Actually, our financials are if you want to see, I think we've got some copies of our quarterly report. So our CFO is over there, Matt. And we can actually have a discussion on that. So they are published. So we haven't as I said, we haven't shown a profit yet. Of course, our objective is to make a profit as quickly as possible. That's but also want to grow the company, so there is a balance there. So but we can have a discussion, if you want, afterwards in more detail about that. Mats is probably better placed to answer most of those questions. Could you perhaps ask us a final question if you're done? Just give us some idea what sort of Scale you need to reach to reach breakeven on a financial basis would say 20 satellites per year, as you showed in one of your slides, be sufficient? Or Does it depend on revenue mix and under Depends on revenue, I believe. I would love to say that there is a magic number. I don't think Right. To some extent, it's a balance between the a lot of what we are doing now is about investment and about actually developing new capabilities. So if we were less ambitious, we probably could with a smaller number of spacecraft, you can make a living. But then actually you don't grow and eventually the rest of the market will catch up with you and we'll eat you for breakfast. So you actually have to grow and you have to invest and you have to accept sometimes that you can't be immediately you can't have as much revenue and make as much profit as you want, but there is a balance there and we are. And as I say, if you want to discuss that in more detail, we will be around the rest of the morning. But we are trying to strike that balance. Thank you very much. We're out of time.