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Research: Industrials
AAC Clyde Space has delivered a strong Q121 with revenue growth of 55% and a substantial reduction in EBITDA losses. The ongoing activities continued to develop, positively augmented by initial contributions from the 2020 acquisitions of Hyperion and SpaceQuest, both of which continue to deliver positive EBITDA. With Omnisys acquired in April alongside the SEK100m fund-raising, AAC Clyde Space remains well positioned to execute its growth strategy in the New Space market.
Written by
AAC Clyde Space |
Progress as consolidation phase commences |
Q121 trading statement |
Aerospace & defence |
1 June 2021 |
Share price performance
Business description
Next events
Analyst
AAC Clyde Space is a research client of Edison Investment Research Limited |
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AAC Clyde Space has delivered a strong Q121 with revenue growth of 55% and a substantial reduction in EBITDA losses. The ongoing activities continued to develop, positively augmented by initial contributions from the 2020 acquisitions of Hyperion and SpaceQuest, both of which continue to deliver positive EBITDA. With Omnisys acquired in April alongside the SEK100m fund-raising, AAC Clyde Space remains well positioned to execute its growth strategy in the New Space market.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
66.4 |
(38.2) |
(0.45) |
0.0 |
N/A |
N/A |
12/20 |
98.4 |
(26.7) |
(0.26) |
0.0 |
N/A |
N/A |
12/21e |
217.8 |
(3.8) |
(0.02) |
0.0 |
N/A |
N/A |
12/22e |
293.0 |
16.5 |
0.08 |
0.0 |
33.3 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Organic growth and transforming acquisitions
Ongoing activities grew revenues by 24% to SEK29.5m with the acquisitions of Hyperion and SpaceQuest adding SEK3.4m and SEK3.9m respectively in their first full quarter of consolidation. Clyde Space reduced its EBITDA loss by 90% to SEK0.5m (Q120: SEK5.4m) on sales up 23% at SEK17.1m. It grew platform (+35%) and subsystem (+103%) revenues, more than offsetting the absence of Space Data as a Service (SDaaS) sales (Q120: SEK2.4m). AAC in Sweden increased sales by 24% to SEK12.4m, boosted by platform revenues of SEK2.8m following the start of production in FY20 and SEK1.4m in licence income. Its subsystems revenues fell 18% against a strong Q120, but we expect the segment to progress positively for FY21. The EBITDA loss increased to SEK1.7m including licence income. SpaceQuest contributed positive EBITDA of SEK1.1m (margin 29.3%) and Hyperion EBITDA was SEK0.6m (margin 17.6%). The group EBITDA loss reduced to SEK0.5m (Q120: loss SEK6.2m).
Moving up the value chain
The order backlog reduced to SEK141.8m (FY20: SEK156.3m). Following the acquisition of Omnisys, which added SEK130m, the group backlog at 30 April 2021 was SEK260.4m. Management sees a strong pipeline of order opportunities across the group, which should convert during FY21. It expects FY24 revenues of SEK500m, which should also see the mix shift towards SDaaS sales (FY24: c SEK55m), which are expected to earn margins roughly double the 15–20% margins typically achieved for Space Products & Components and Space Missions (including satellite platforms). We expect SDaaS to be the dominant revenue stream by the end of the decade, improving earning quality and cash conversion.
Valuation: Heading towards profitable growth
Net cash of SEK36.8m at end-Q121 has been strengthened in April by the SEK68m net proceeds from the fund-raising after paying the initial cash consideration for Omnisys. AAC Clyde Space is well positioned to invest in further organic growth and value-enhancing acquisitions. Our capped DCF value remains at SEK5.6.
Q121 results
The highlights from Q121 are summarised below.
Exhibit 1: Q121 highlights
Three months to March (SEKm) |
Q120 |
Q121 |
% change |
Net sales |
23.8 |
36.8 |
54% |
EBITDA |
(6.2) |
(0.5) |
-93% |
EBIT |
(9.1) |
(4.4) |
-51% |
EPS (basic, diluted) SEK |
(0.10) |
(0.03) |
-70% |
Cash flow from operating activities |
(6.2) |
(20.8) |
238% |
Cash and cash equivalents |
41.7 |
37.1 |
-11% |
Order backlog |
183.4 |
141.8 |
-23% |
Source: AAC Clyde Space reports
The revenue, EBITDA and operating profit development during Q121 is as shown below. We note that the SDaaS revenue was generated by SpaceQuest in Q121, with the balance in Space Products. Hyperion revenues are entirely attributable to the sale of Space Products.
Exhibit 2: AAC Clyde Space revenue, EBITDA and OPBIT breakdown
Three months to March (SEKm) |
Q120 |
Q121 |
% change |
AAC |
9.969 |
12.383 |
24.2% |
Clyde |
13.865 |
17.062 |
23.1% |
Hyperion |
3.406 |
||
SpaceQuest |
3.932 |
||
Net sales |
23.834 |
36.783 |
54.3% |
SDaaS |
2.437 |
2.014 |
-17.4% |
Space Missions |
9.081 |
15.109 |
66.4% |
Space Products |
12.316 |
18.279 |
48.4% |
Licence income |
0.000 |
1.381 |
|
Net sales |
23.834 |
36.783 |
54.3% |
Other operating income |
3.487 |
3.476 |
-0.3% |
Development work capitalised |
1.785 |
2.185 |
22.4% |
Group income |
29.106 |
42.444 |
45.8% |
EBITDA |
|||
AAC |
(0.848) |
(1.676) |
97.6% |
Clyde |
(5.379) |
(0.537) |
-90.0% |
Hyperion |
0.598 |
||
SpaceQuest |
1.152 |
||
EBITDA |
(6.227) |
(0.463) |
-92.6% |
D8A |
(2.901) |
(3.982) |
37.3% |
Expenses |
|||
Raw materials & subcontractors |
(12.860) |
(15.289) |
18.9% |
Personnel costs |
(15.641) |
(20.770) |
32.8% |
Other external expenses |
(4.966) |
(6.441) |
29.7% |
Other operating expenses |
(1.866) |
(0.407) |
-78.2% |
Total operating expenses |
(35.333) |
(42.907) |
21.4% |
Operating profit |
(9.128) |
(4.445) |
-51.3% |
Source: AAC Clyde Space reports
The order backlog has declined in recent periods, partly due to currency but also reflecting the absence of substantial incremental order flows We expect order intake to improve in the remainder of FY21. The addition of Omnisys’s SEK130m backlog space products has almost doubled the Q121 backlog level following its consolidation in April 2021.
|
Exhibit 3: AAC Clyde Space order backlog development |
|
|
Source: AAC Clyde Space reports, Edison Investment Research estimates. Note: *Includes SEK130m Omnisys. |
Exhibit 4: Financial summary
SEKm |
2019 |
2020 |
2021e |
2022e |
||
Year end December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Net sales |
|
|
66.4 |
98.4 |
217.8 |
293.0 |
Own work capitalised and other operating income |
14.1 |
21.1 |
23.0 |
22.2 |
||
Group income |
80.6 |
119.5 |
240.8 |
315.2 |
||
EBITDA |
|
|
(27.3) |
(17.5) |
7.2 |
25.6 |
Operating Profit (before amort. and except). |
(32.7) |
(22.2) |
1.6 |
19.6 |
||
Intangible Amortisation |
(4.6) |
(3.3) |
(5.9) |
(6.4) |
||
Exceptionals |
(2.9) |
(12.1) |
(11.8) |
(4.4) |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Operating Profit |
(40.2) |
(37.5) |
(16.1) |
8.8 |
||
Net Interest |
(0.8) |
(1.3) |
0.5 |
3.2 |
||
Profit Before Tax (norm) |
|
|
(38.2) |
(26.7) |
(3.8) |
16.5 |
Profit Before Tax (FRS 3) |
|
|
(41.0) |
(38.8) |
(15.5) |
12.0 |
Tax |
0.5 |
0.5 |
0.8 |
(0.6) |
||
Profit After Tax (norm) |
(37.8) |
(26.4) |
(3.6) |
15.6 |
||
Profit After Tax (FRS 3) |
(40.6) |
(38.3) |
(14.8) |
11.4 |
||
Average Number of Shares Outstanding (m) |
84.8 |
102.3 |
175.3 |
196.1 |
||
EPS - fully diluted (SEK) |
|
|
(0.45) |
(0.26) |
(0.02) |
0.08 |
EPS - normalised (SEK) |
|
|
(0.44) |
(0.26) |
(0.02) |
0.08 |
EPS - (IFRS) (SEK) |
|
|
(0.48) |
(0.37) |
(0.08) |
0.06 |
Dividend per share (SEK) |
0.0 |
0.0 |
0.0 |
0.0 |
||
EBITDA Margin (%) |
-41.1 |
-17.8 |
3.3 |
8.7 |
||
Operating Margin (before GW and except.) (%) |
-49.3 |
-22.5 |
0.7 |
6.7 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
436.9 |
523.0 |
561.6 |
595.7 |
Intangible Assets |
418.6 |
494.3 |
536.1 |
573.5 |
||
Tangible Assets |
4.1 |
16.2 |
15.7 |
15.2 |
||
Right of use asset |
14.2 |
12.5 |
9.8 |
7.0 |
||
Investments |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Assets |
|
|
108.5 |
113.3 |
240.9 |
266.1 |
Stocks |
13.1 |
12.8 |
41.5 |
49.8 |
||
Debtors |
17.7 |
9.5 |
41.7 |
46.9 |
||
Cash |
52.4 |
62.4 |
125.0 |
140.0 |
||
Other |
25.2 |
28.5 |
32.8 |
29.4 |
||
Current Liabilities |
|
|
(60.5) |
(56.1) |
(113.4) |
(127.5) |
Creditors |
(60.5) |
(56.1) |
(113.4) |
(127.5) |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Long Term Liabilities |
|
|
(16.0) |
(14.4) |
(12.7) |
(13.2) |
Long term borrowings |
(0.8) |
(0.3) |
(1.1) |
(4.1) |
||
Lease liabilities |
(14.1) |
(12.9) |
(10.3) |
(7.8) |
||
Other long-term liabilities |
(1.1) |
(1.2) |
(1.2) |
(1.2) |
||
Net Assets |
|
|
468.9 |
565.8 |
676.4 |
721.2 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(15.3) |
(14.2) |
3.4 |
26.7 |
Net Interest |
(0.8) |
(0.7) |
0.7 |
3.4 |
||
Tax |
0.4 |
0.4 |
0.2 |
(0.8) |
||
Capex |
(13.9) |
(17.2) |
(17.8) |
(17.6) |
||
Acquisitions/disposals |
(3.0) |
(113.8) |
(41.5) |
(33.1) |
||
Financing |
73.3 |
156.8 |
116.7 |
33.3 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
40.7 |
11.4 |
61.7 |
12.0 |
||
Opening net debt/(cash) excluding lease liabilities |
(10.9) |
(51.6) |
(62.2) |
(123.9) |
||
HP finance leases initiated |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.1 |
(0.8) |
0.0 |
(0.0) |
||
Closing net debt/(cash) excluding lease liabilities |
(51.6) |
(62.2) |
(123.9) |
(135.8) |
||
Net financial liabilities including lease liabilities |
(37.5) |
(49.3) |
(113.6) |
(128.1) |
||
Source: Company accounts, Edison Investment Research
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Research: Consumer
Borussia Dortmund’s Q321 results reflected ongoing cost control, while COVID continued to affect attendance-related revenues. The team’s late surge to finish third in the Bundesliga, and more silverware by winning the DFB-Pokal ensured a pleasing end to a challenging year. We increase our FY22 EBITDA forecast by 33% to reflect a more positive outlook for attendance at matches given the roll-out of COVID vaccines. There will be much speculation about the futures of a number of key players during the summer transfer window, but the improving financial outlook means the company can remain firm on player valuations, with a number of open managerial roles at the major European teams following ‘poor’ seasons.