Ovzon — Interim / Quarterly Report 2022

Aug 18, 2022

Interim report January-June 2022

www.ovzon.com

Ovzon

Interim report, January–June 2022

Strong growth and clarity around Ovzon 3

January–June 2022

• Revenue increased to TSEK 177,815 (70,346). Revenue for the period include compensation for divested production stock of TSEK 3,367 (-)
• Operating profit amounted to TSEK -26,318 (-61,568)
• Profit after tax amounted to TSEK 4,483 (-49,792). The result includes currency conversions and financial transaction costs of TSEK 31,420 (11,948)
• Earnings per share amounted to SEK 0.09 (-1.08)

April–June 2022

• Revenue increased to TSEK 77,928 (33,216)
• Operating profit amounted to TSEK -8,810 (-30,910)
• Profit after tax amounted to TSEK 16,263 (-38,538). The result includes currency conversions and financial transaction costs of TSEK 25,027 (-7,451)
• Earnings per share amounted to SEK 0.32 (-0.83)

Significant events during the quarter

• Delivery of Ovzon SATCOM-as-a-Service to the Italian Fire and Rescue Service started
• MUSD 1.8 order from U.S. DOD for renewal of SATCOM-as-a-Service

Significant events after the quarter

• Ovzon's CFO will leave the company in September 2022
• MUSD 1.1 order from UK MoD for renewal of SATCOM-as-a-Service

Outlook

• The company believes that sales for 2022 will be significantly higher than 2021, and that the launch of Ovzon 3 will take place in the period from December 2022 to February 2023, given that the final tests fall out as planned. Previously, the company's assessment was that sales for 2022 would be higher than for 2021.

Key figures

	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Full-Year
TSEK	2022	2021	2022	2021	2021
Revenue	77 928	33 216	177 815	70 346	191 378
Operating profit/loss	-8 810	-30 910	-26 318	-61 568	-113 383
Profit/loss for the period after tax	16 263	-38 538	4 483	-49 792	-83 854
Earnings per share, SEK	0,32	-0,84	0,09	-1,08	-1,78
Total cash flow	51 933	218 032	-43 635	123 630	208 880
Equity ratio, %	73	78	73	78	78
Order book, SATCOM services, MUSD	16,5	10,4	16,5	10,4	29,1
Share price end of period, SEK	44,65	66,4	44,65	66,4	62,8

Strong growth and clarity around Ovzon 3

During the second quarter of 2022, we have further advanced Ovzon's position with our unique and world-leading SATCOM-as-a-Service offering. We see clear signs that our current customers are extending contracts and the use of our services. In addition, an increasing number of potential customers are attracted by our premium service offering and the new applications we can add. We have been in active dialogues with European, American, and international civil and defense organizations since the war in Ukraine started. There is clearly an increased need for high performing and resilient mobile satellite communications for all types of critical missions. We are convinced that this will lead to strategic business. It is however important to note that despite this increased need, sales cycles and lead times are still relatively long. We do have the endurance needed and we are deeply engaged with the most progressive and relevant organizations. Our ability to quickly establish high-performing and secure communication in environments with geopolitical and security concerns where the regular infrastructure is deficient or non-existent is more important than ever before.

With the increased interest and need as a starting point, we believe that it is a clear advantage that we have high performing satellite capacity available that we previously invested in from Intelsat. This means that we immediately are able to deliver Ovzon SATCOM-as-a-Service to current and new customers. However, this does not mean that our potential to grow and take more orders is limited only to our own available satellite capacity. We have the ability to purchase additional external capacity with fast delivery in case of increased order intake. This, until our own satellite Ovzon 3 is launched and operational, which will of course increase our capacity considerably. In addition, Ovzon 3 will increase the value of our unique service offerings, as we can then offer additional flexibility, resiliency, data speed, and mobility to our existing and future customers.

Increased clarity around the launch of Ovzon 3

The details and clarity around the launch of Ovzon 3 have increased significantly in recent months. The critical key components that were previously delayed are now delivered to our production partner Maxar as well as our own developed On-Board-Processor, which is now integrated, and under testing on the satellite. This industry-unique communication platform will make the satellite's capabilities exceptional from many perspectives, but above all,around guaranteed and secure connectivity in all kinds of conditions. Ovzon 3 is now entering the final stages of integration and assembly with active final tests, including the so-called Thermal Vacuum Test. Given that all tests perform well, and that all logistics and coordination is achieved the launch of Ovzon 3 will take place sometime during the period December 2022 to February 2023. We have received this launch slot from our partner Arianespace as part of their total launch plan. The launch of Ovzon 3 will take place at Arianespace's spaceport in Kourou, French Guinea. After launch, it will take another four months approximately before the satellite is in an operational position and can be used for customer deliveries.

Due to the delay in the launch of Ovzon 3, the pre-capacity commitment of MUSD 56.2 from Intelsat General Communications (IGC) has been, in accordance with the agreement, reduced by 5 percent in the third quarter and will most likely be adjusted down by another 10 percent in the fourth quarter to then amount to MUSD 47.8. Considering our solid relationship and collaboration with Intelsat and IGC and the increased demand for our services, it is our assessment that this will not have any impact on future revenues for Ovzon 3.

Good position for the second half of the year

In conclusion, our focus continues to be to drive profitable growth in our core offering, Ovzon SATCOMas-a-Service. We also continue to deliver on last year's clearly increased order intake. Our recently extended agreements with key customers, as well as the new deals we are working feverishly on, show that there are many needs our solutions can fill in a number of geographic markets. It also shows that our go to market method based on close and active customer dialogue, a deep understanding of the customer's environment and operational needs, coupled with well-functioning partnerships, can make initial test installations and smaller orders grow into large contracts.

In addition, there is a tangible appetite for investment and activity in the satellite industry right now, which benefits the entire industry and thus puts the spotlight on companies like Ovzon. Our advanced and reliable technology, our products and premium services, in combination with our ability to deliver quickly means that we have a simple and progressive business model at the absolute forefront. The generally growing macroeconomic uncertainty of the last six months has not affected us or our industry significantly so far. We see that the escalation of security and geopolitical concerns in Europe have instead increased the demand for surveillance, security, and critical communication where traditional communication channels and infrastructure cannot be used or are not available. There is also an ongoing consolidation in the satellite industry, which creates room for Ovzon to focus even more on winning new customers and thus continue to grow. Our previous assessment was that sales for 2022 will be higher than for 2021. That assessment has become more certain, and we now assess that sales will be significantly higher in 2022. Through higher capacity utilization, our profitability conditions have also improved.

I would also like to take the opportunity to thank Ovzon's CFO and my colleague Johan Brandt for his contributions to the company, as he at the end of September will leave his position. The recruitment of a new CFO is in progress. The company is growing and developing rapidly, and we continue to strengthen Ovzon's organization. We work close with the market, and our employees and partners do a fantastic work. We have an exciting fall ahead of us.

Per Norén, CEO Ovzon

This information is information that Ovzon AB (publ) is obligated to make public pursuant to the EU Market Abuse Regulation 596/2014 and the Securities Markets Act (2007:528). The information in this press release has been published through the agency of the contact persons set out below, at the time stated by Ovzon AB's (publ) news distributor Cision upon publication of this press release.

About Ovzon

Ovzon provides mobile broadband satellite service through its own and leased satellite capacity to customers in various parts of the world.

Vision

To revolutionize mobile broadband via satellite by offering global coverage of the highest bandwidth through the smallest mobile satellite terminals.

Business idea

The Group provides mobile satellite broadband services in areas without functioning infrastructure.

Financial targets

Ovzon's financial target is to continue to develop and expand its current service offering in the coming years, at the same time as the company prepares the launch of its first self-developed satellite.

Ovzon at a glance

Costumer segments Key trends Sales, MSEK

Defense Government Emergency services NGOs Media

Increased demand for:

• Integrated solutions

• Bandwidth
• Mobility

Financial overview

Development during the period

	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep
TSEK	2022	2022	2021	2021	2021	2021	2020	2020
Revenue	77 928	99 887	73 209	47 823	33 216	37 131	33 633	32 285
Operating profit/loss	-8 810	-17 508	-29 030	-22 785	-30 910	-30 658	-19 326	-17 000
Profit/loss for the period after tax	16 263	-11 780	-21 723	-12 339	-38 538	-11 254	-55 683	-30 180
Earnings per share, SEK	0,32	-0,21	-0,42	-0,26	-0,84	-0,24	-1,20	-0,55
Total cash flow	51 933	-95 568	-59 266	144 516	218 032	-94 402	-288 789	-70 368
Equity ratio, %	73	79	78	80	78	95	97	88

Revenue and order intake

Revenue for the second quarter increased to TSEK 77,928 (33,216), which corresponds to a growth of 135% (96% after adjustment for currency movements). Revenue for the first six months amounted to TSEK 177,815 (70,346), which corresponds to a growth of 153% (112% after adjustment for currency movements).

The increased revenue compared to last year is driven by the new orders signed with US DOD, UK MoD and the Italian Fire and Rescue Services during 2021. Together with the company's SATCOM-as-a-Service, the revenue also includes sold satellite terminals of TSEK 38,593 (-) that were delivered during the first quarter 2022. The revenue was also positively affected by the higher average exchange rate for USD, which during the first six months was SEK 9.59 (8.40).

The order intake regarding SATCOM services (excluding terminals) for the period amounted to MUSD 2.1 (3.3) and for the quarter MUSD 2.1 (2.9). The order book for undelivered SATCOM services (excluding terminals) at the end of the period amounted to MUSD 16.5 (10.4) (excluding sold capacity of Ovzon 3).

Operating profit

Operating profit for the second quarter amounted to TSEK -8,810 (-30,910). Operating profit for the first six months amounted to TSEK -26,318 (-61,568). Operating profit has been affected positively by the new contracts (mentioned above), as well as the big number of delivered terminals during the first quarter.

The capacity utilization improved from April 1, 2022, when OHO-13 (IS-37) began to be delivered to the Italian Fire and Rescue Services. However, the operating profit is still affected by unused contracted satellite capacity. One of the steerable antennas on IS-39 was unsold during the first six months and the steerable antennas on IS-37 was unsold during the first quarter. In total, these steerable antennas have affected the operating profit by TSEK -24,320 (-28,509). The unsold capacity has to a large extent been used for tests and customer demonstrations of the company's satellite service.

During the first six months previous year, the company received government grants in the US linked to Covid-19 of TSEK 1,789. The operating profit is further affected by listing costs of TSEK 2,282 for the company's move to Nasdaq Stockholm during the spring of 2021.

The capacity agreement with Intelsat regarding capacity on IS-39 and IS-37 extends over a total of 48 months from November 1, 2020.

Profit/loss after financial items

Net financial items for the second quarter amounted to TSEK 24,966 (-7,638) with a profit after financial items of TSEK 16,155 (-38,548). Net financial items for the first six months amounted to TSEK 31,221 (11,758) with a profit after financial items of TSEK 4,903 (-49,810). The company's net financial items primarily include currency effects on the part of the company's liquidity and group balances that are held in US dollars.

Profit/loss after tax

Profit after tax for the second quarter amounted to TSEK 16,263 (-38,538). Profit after tax for the first six months amounted to TSEK 4,483 (-49,792).

Cash flow

Cash flow from operating activities for the second quarter amounted to TSEK 507 (-51,221) and for the first six months to TSEK -81,575 (-70,301).

Cash flow from investing activities for the quarter amounted to TSEK -51,434 (-61,513) and for the first six months to TSEK -64,920 (-136,835). The investments were mainly attributable to the development of new terminals as well as the company's first own satellite Ovzon 3, a project estimated to be completed during 2022 (see also Note 8).

Cash flow from financing activities for the second quarter amounted to TSEK 102,860 (330,766) and for the first six months to TSEK 102,860 (330,766). During the second quarter, the company subordered MUSD 35 of existing loan facilities and thus strengthened its liquidity. During the second quarter, the company paid loan expenses totalling TSEK 14,249 (9,224). For the first six months the loan expenses amounted to TSEK 23,785 (9,224). Of the loan expenses, interest paid comprises TSEK 9,574 for the second quarter and TSEK 18,010 for the first six months. These have been capitalized and reported as part of the investment activities in the cash flow statements (included in the year's accrued costs and advances paid).

Financial position

The Group's cash and cash equivalents at the balance sheet date amounted to TSEK 390,829 compared with TSEK 406,084 at the beginning of the year. Equity amounted to TSEK 1,436,215, compared to TSEK 1,450,268 at the beginning of the year. The equity ratio is 73 (78) percent.

Options outstanding

In connection with the raising of a subordinated loan facility of TSEK 200,000 on July 3, 2019, 1,500,000 warrants were issued to the subordinated lenders. Following the rights issue in June 2020, the terms of the warrants have been recalculated. Each option entitles the holder to subscribe for 1.02 new shares in the company at a price of SEK 98.16 per share. The warrants run over a maximum of 5 years and may be exercised for subscription of shares until July 3, 2024.

An Extraordinary General Meeting on May 18, 2020, resolved to issue a maximum of 900,000 warrants under "Warrant Program 2020/2023". The company's management team has subscribed for the maximum number of warrants granted a total of 500,000 and other personnel have subscribed for a total of 200,000 options. Each warrant entitles the holder to subscribe for one new share in the company at a price of SEK 102.10 per share. If all granted warrants and options in the programs are used, a dilution of 1.4 percent of the shares and votes in the company will occur. The exercise period for the warrants runs from June 18, 2023, to July 18, 2023.

The Annual General Meeting on April 13, 2021, resolved to issue a maximum of 1,100,000 warrants under "Warrant Program 2021/2024". The company's management team has subscribed for a total of 410,000 options and other personnel have subscribed for a total of 186,000 options. Each warrant entitles the holder to subscribe for one new share in the company at a price of SEK 145.6 per share. If all granted warrants and options in the program are used, a dilution of 1.2 percent of the shares and votes in the company will occur. The exercise period for the warrants runs from May 15, 2024, to June 15, 2024.

The Annual General Meeting on April 21, 2022, resolved to issue a maximum of 450,000 warrants under two incentive programs: "Warrant Program 2022/2025" (maximum 225,000 warrants that are transferred at market value) and "Employee Stock Option Program 2022/2025" (maximum 225,000 employee stock options that are issued free of charge). The company's management team has signed the maximum number of allocated options, a total of 250,000, and other personnel have signed a total of 145,000 options. Each warrant or employee stock option entitles the holder to subscribe for one new share in the company at a price of SEK 80.93 per share. If all issued options are used in the option programs, a dilution of 0.9 percent of the shares and votes in the company will occur. The exercise period for the warrants runs from June 1, 2025, to June 30, 2025.

Management and organization

The number of employees in the Group at the end of the quarter was 40 (35). The company's CFO Johan Brandt has chosen to resign from his employment in the company and will leave his position at the end of September. The recruitment for a new CFO is in progress.

Significant risks and uncertainties

Risks associated with the Group's operations can generally be divided into strategical and operational risks related to business activities and risk related to financing activities. There was no major change to significant risks or uncertainties during the period. For a detailed description of Ovzon's risks and uncertainties and how they are managed, refer to Ovzon's Annual Report 2021.

Parent company

Parent company operations comprise costs for parts of senior management and staff functions as well as other central costs. The Parent Company invoices the subsidiaries for these costs.

The parent company's revenue for the second quarter amounted to TSEK 4,956 (4,956) with a profit after financial items of TSEK 26,144 (-6,697). Revenue for the first six months amounted to TSEK 9,912 (9,912) with a profit after financial items of TSEK 35,861 (14,933). Cash and cash equivalents at the balance sheet date are TSEK 354,625 compared with TSEK 380,551 at the beginning of the year. Investments during the year was TSEK 46,000 (-). Equity amounted to TSEK 1,860,649, compared with TSEK 1,824,122 at the beginning of the year. The number of employees is 2 (2).

The company's major shareholders

At the end of the reporting period: Investment AB Öresund (11.9%), Bure Equity AB (11.4%), Futur Pension (9.8%), Fjärde AP-fonden (9.1%), Handelsbanken Fonder (8.3%), AFA Försäkring (7.7%), Nortal Investment AB (6.1%) and other shareholders (35.7%). At the end of the reporting period, the total number of shares was 51,270,876.

Covid-19 and the war in Ukraine

As a consequence of Covid-19, the company continues to see an increased risk of potential disruptions in the supply chains as well as the financial stability of the company's customers and suppliers, which could affect the delivery time and the quality of components.

The war in Ukraine and the changed geopolitical situation have not yet affected Ovzon significantly, but the board and management are following developments to evaluate and manage potential risks.

Dividend

At the Annual General Meeting on April 21, 2022, it was decided that no dividend will be paid for the 2021 financial year.

Outlook

The company believes that sales for 2022 will be significantly higher than 2021, and that the launch of Ovzon 3 will take place in the period from December 2022 to February 2023, given that the final tests fall out as planned. The business outside of the US is increasing and the company expects to continue contracting new customers in 2022 who will also be interested in capacity on Ovzon 3. Previously, the company's assessment was that sales for 2022 would be higher than for 2021.

Webcast

In connection to this interim report a webcast will be held at 2 p.m. CEST on August 18, 2022.

Ovzon's CEO Per Norén and CFO Johan Brandt will present the results and answer questions.

The webcast will be available via the following link: https://onlinexperiences.com/Launch/QReg/ShowUUID=43A7F849-7F1B-4486-850B-E1B45AC15B9B

To participate via conference call, and thus be able to ask questions, please dial in ten minutes prior on the following phone number: +46 856642651 submit pin: 57189564#

The presentation will be held in English, with the opportunity to ask questions in Swedish if desired.

Financial calendar

Interim report January-September 2022	October 21, 2022
Full-year report January-December 2022	February 21, 2023

Review by auditors

The interim report has not been subject of review by the company's auditors.

Certification

The Board of Directors and Chief Executive Officer hereby declare that the interim report provides a true and fair overview of the Parent Company and the Group's operations, financial position and earnings, and describes significant risks and uncertainties faced by the Parent Company and the companies of the Group.

Stockholm, August 18, 2022

Per Norén CEO

Magnus René Anders Björkman Cecilia Driving Chairman of the Board Board member Board member

Board member Board member Board member

Dan Jangblad Nicklas Paulson Patrik Tigerschiöld

Contact information

Per Norén Johan Brandt Ovzon AB (publ)

pno@ovzon.com jbr@ovzon.com SE-171 54 Solna +1 206 931 7232 +46 703 69 33 00 +46 8 508 600 60

CEO CFO Anderstorpsvägen 10, www.ovzon.com Org nr 559079-2650

Group financial statements

Group income statements

TSEK	Apr-Jun 2022	Apr-Jun 2021	Jan-Jun 2022	Jan-Jun 2021	Full-Year 2021
Revenue note 5	77 928	33 216	177 815	70 346	191 378
Other operating income	6 252	4 401	9 188	7 114	10 535
Purchased satellite capacity and other direct costs	-53 947	-33 873	-137 444	-68 582	-177 313
Other external costs	-11 733	-14 074	-25 449	-29 077	-58 867
Employee benefit expenses	-20 022	-17 579	-36 953	-34 736	-65 618
Depreciation/amortisation	-5 443	-1 969	-9 713	-3 702	-9 895
Other operating expenses	-1 846	-1 031	-3 763	-2 931	-3 602
Operating profit/loss	-8 810	-30 910	-26 318	-61 568	-113 383
Financial income	25 027	-7 451	31 420	11 948	29 865
Financial expenses	-62	-187	-199	-190	-368
Profit/loss after financial items note 7	16 155	-38 548	4 903	-49 810	-83 886
Tax on the profit for the period	107	11	-420	18	32
NET PROFIT/LOSS FOR THE PERIOD	16 263	-38 538	4 483	-49 792	-83 854
Net profit/loss for the period attributable to:
Shareholders of the Parent Company	16 263	-38 538	4 483	-49 792	-83 854
Earnings per share attributable to shareholders of the Parent Company, SEK	0,32	-0,83	0,09	-1,08	-1,78
Earnings per share after dilution	0,32	-0,83	0,09	-1,07	-1,78
Average number of shares	51 270 876	46 293 992	51 270 876	46 269 476	47 023 823

Group statements over comprehensive income

	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Full-Year
TSEK	2022	2021	2022	2021	2021
Profit/loss for the period	16 263	-38 538	4 483	-49 792	-83 854
Other comprehensive income:
Items that can be subsequently reclassified to the income statement:
- Translation differences	-16 089	2 052	-19 234	-3 031	-11 085
Other comprehensive income after tax	-16 089	2 052	-19 234	-3 031	-11 085
Comprehensive income/loss for the period	174	-36 486	-14 751	-52 823	-94 939
Comprehensive income/loss for the period attributable to:
Shareholders of the Parent Company	174	-36 486	-14 751	-52 823	-94 939
Comprehensive income/loss for the period	174	-36 486	-14 751	-52 823	-94 939

Consolidated condensed balance sheets

TSEK	Jun 30 2022	Jun 30 2021	Dec 31 2021
ASSETS *
Intangible fixed assets	46 979	20 504	23 862
Property, plant and equipment note 8	1 410 283	1 222 909	1 345 303
Access rights assets	8 961	7 383	6 653
Financial fixed assets	129	84	102
Inventory	39 353	42 850	25 259
Current receivables	70 692	12 619	46 055
Cash and cash equivalents	390 829	312 973	406 084
TOTAL ASSETS	1 967 226	1 619 322	1 853 318
EQUITY AND LIABILITIES*
Equity	1 436 215	1 263 080	1 450 268
Long-term liabilities, interest bearing note 6	459 873	297 860	316 530
Liabilities related to leasing, interest-bearing	9 575	7 781	7 139
Warranty provisions	1 400	–	–
Current liabilities, non-interest-bearing	60 163	50 601	79 382
TOTAL EQUITY AND LIABILITIES	1 967 226	1 619 322	1 853 318

*Reported values for financial assets and liabilities are either valued at fair value or constitute a good approximation of fair value.

Consolidated condensed statement of changes in equity

TSEK	Jun 30 2022	Jun 30 2021	Dec 31 2021
Equity at the beginning of the year	1 450 268	1 292 611	1 292 611
Comprehensive income/loss for the period	-14 751	-52 823	-94 939
Share issue, net after transaction costs	–	20 908	250 212
Employee stock options (according to IFRS 2)	32	100	100
Issued warrants	666	2 283	2 283
EQUITY AT THE END OF THE PERIOD	1 436 215	1 263 080	1 450 268

Consolidated condensed cash flow statements

	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Full-Year
TSEK	2022	2021	2022	2021	2021
Cash flow from operating activities before changes in working capital	5 080	-45 360	-23 626	-71 133	-95 457
Total change in working capital	-4 573	-5 861	-57 950	832	18 087
Cash flow from operating activities	507	-51 221	-81 575	-70 301	-77 370
Cash flow from investing activities	-51 434	-61 513	-64 920	-136 835	-273 814
Cash flow from financing activities	102 860	330 766	102 860	330 766	560 063
CASH FLOW FOR THE PERIOD	51 933	218 032	-43 635	123 630	208 880
Cash and cash equivalents at the beginning of the period	315 944	92 765	406 084	185 025	185 025
Exchange-rate difference in cash and cash equivalents	22 952	2 176	28 380	4 318	12 179
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	390 829	312 973	390 829	312 973	406 084

Financial statements, Parent Company

	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Full-Year
TSEK	2022	2021	2022	2021	2021
Revenue	4 956	4 956	9 912	9 912	24 818
Other operating income	732	298	944	682	1 260
Other external costs	-3 198	-5 266	-6 815	-8 488	-15 233
Personnel costs	-3 577	-2 733	-5 126	-5 165	-10 613
Operating profit/loss	-1 087	-2 745	-1 085	-3 059	232
Financial revenues	41 480	112 369	60 731	134 313	175 925
Financial expenses	-14 249	-116 321	-23 785	-116 321	-137 056
Profit/loss after financial items note 7	26 144	-6 697	35 861	14 933	39 101
Tax	–	–	–	–	–
NET PROFIT/LOSS FOR THE PERIOD	26 144	-6 697	35 861	14 933	39 101

Condensed parent company income statements

Parent company statements of comprehensive income

	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Full-Year
TSEK	2022	2021	2022	2021	2021
Profit/loss for the period	26 144	-6 697	35 861	14 933	39 101
Other comprehensive income:	–	–	–	–	–
Comprehensive income for the period	26 144	-6 697	35 861	14 933	39 101

Condensed parent company balance sheet

	Jun 30	Jun 30	Dec 31
TSEK	2022	2021	2021
ASSETS*
Intangible fixed assets	245	–	–
Shares in Group companies	1 441 491	1 033 491	1 395 491
Financial assets	–	–	–
Receivables from Group companies note 12	530 266	552 265	375 136
Current receivables	1 196	1 777	654
Cash and cash equivalents	354 625	289 092	380 551
TOTAL ASSETS	2 327 823	1 876 625	2 151 832
EQUITY AND LIABILITIES*
Equity	1 860 649	1 570 650	1 824 122
Long term liabilities, interest bearing note 6	459 873	297 860	316 530
Current liabilities, non-interest bearing	7 301	8 115	11 180
TOTAL EQUITY AND LIABILITIES	2 327 823	1 876 625	2 151 832
* Reported values for financial assets and liabilities are either valued at fair value or constitute a good approximation of fair value.

Condensed parent company statement of changes in equity

TSEK	Jun 30 2022	Jun 30 2021	Dec 31 2021
Equity at the beginning of the year	1 824 122	1 532 525	1 532 525
Comprehensive income for the period	35 861	14 933	39 101
Share issue, net after transaction costs	–	20 908	250 212
Issued warrants	666	2 283	2 283
EQUITY AT THE END OF THE PERIOD	1 860 649	1 570 650	1 824 122

Notes

Note 1: Basis of preparation and accounting policies for the Group

Ovzon applies the International Financial Reporting Standards (IFRS) as adopted by the EU, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board RFR 1, Supplementary Accounting Rules for Groups. The Group's financial reports are prepared in accordance with the Swedish Annual Accounts Act and RFR 2, Accounting for Legal Entities. The interim report for the period January – June 2022 was prepared in accordance with IAS 34 Interim Reporting and the Swedish Annual Accounts Act. Disclosures in accordance with IAS 34 are provided in notes as well as elsewhere in the interim report. The same accounting principles and calculation methods are applied as in the latest Annual Report. New or revised IFRS and interpretations with application from 2022 are not considered to have any significant impact on Ovzon's financial reports.

Note 2: Business segment reporting

The regular internal reporting of results to the CEO and that meets the criteria to constitute a segment takes place for the Group as a whole. The total Group is therefore reported as the company's only segment. In other respects, information is provided for the Group as a whole regarding the breakdown of income from various products and services and geographical areas respectively, see note 5.

Note 3: Fair value of financial instrument

The Group has no derivative instruments or other financial instruments measured at fair value. The fair value of long-term and current interest-bearing liabilities is not considered to deviate materially from their carrying amount. For financial instruments measured at amortised cost (accounts receivable, other receivables, cash and cash equivalents, trade payables and other interest-free liabilities), their fair value is considered equal to their carrying amount.

Note 4: Leasing

According to IFRS 16 (Leasing agreements), an asset (relating to a right of use) and a financial liability (relating to an obligation to pay leasing fees) must be reported in the balance sheet. The lessee shall divide the cost of the leased asset into depreciation and interest payments.

The company's agreement with Intelsat regarding capacity on IS-39 and IS-37 amounts to MUSD 39.4 and runs over 4 years, starting November 1, 2020. Since the capacity leased on the antennas does not correspond to substantially the entire capacity of the antennas, the capacity parts leased are not identified assets and therefore the agreements are not deemed to meet the definition of a leasing agreement in accordance with IFRS 16.

Note 5: Net sales

				Group
Distribution of net sales	Apr-Jun 2022	Apr-Jun 2021	Jan-Jun 2022	Jan-Jun 2021	Jan-Dec 2021
Satellite services	76 675	33 216	134 832	70 346	169 798
Terminals	1 787	–	40 380	–	2 332
Other	-534	–	2 603	-–	19 248
Total	77 928	33 216	177 815	70 346	191 378

Net sales by geography	Apr-Jun 2022	Apr-Jun 2021	Jan-Jun 2022	Group Jan-Jun 2021	Dec 31 2021
Europe	20 004	2 247	28 534	8 349	35 332
US	57 924	30 969	149 281	61 997	156 046
Total	77 928	33 216	177 815	70 346	191 378

Note 6: Financing

In 2019, the company signed a senior loan facility of MUSD 60 to secure the financing of its own satellite Ovzon 3. During 2021, MUSD 35 was utilized and during the first quarter 2022 MUSD 5 of the unused part of the loan facility expired. During the second quarter another MUSD 10 has been utilized. Total unused facility as of the balance sheet date thus amount to MUSD 10. The loan runs over up to 6 years with an interest rate of USD 3m Libor + 10 percent.

Note 7: Net financial items

The Group's net financial items consist primarily of currency effects on the part of the company's net liquidity and group balances held in US dollars. Aggregate currency effects are reported net, which means that individual quarters can present negative income or positive costs.

The Parent Company's net financial items include, in addition to the above items, debited loan expenses to Ovzon Sweden AB of TSEK 14,249 for the quarter and TSEK 23,785 for the first six months.

Note 8: Current material fixed assets under construction and advance payments

Ongoing investment pertains to the company's proprietary satellite Ovzon 3, which is expected to be completed during the period December 2022 to February 2023.

Ongoing investment: Ovzon 3, TSEK	Jun 30 2022	Dec 31 2021
Opening balance accrued costs and advances paid	1 320 279	986 947
Costs and advances paid during the year	34 193	317 173
Translation difference	23 670	16 158
Closing balance accumulated capitalized costs 1)	1 378 142	1 320 279
Opening balance write-downs	-12 297	-12 297
Write-downs for the year	–	–
Closing balance accumulated write-downs	-12 297	-12 297
Closing balance, reported value	1 365 845	1 307 982

1) Of the total capitalization TSEK 28,717 (19,359) relates to internal work.

As part of the loan facility has been utilized since April 2021, loan expenses of TSEK 23,785 were capitalized in the first six months. These are included in costs and advances paid during the year.

Note 9: Tax

Deferred tax assets on tax-loss carry forwards are not included on the balance sheet.

Note 10: Pledged assets and contingent liabilities

TSEK 3,848 (7,023) of the Group's cash and cash equivalents consist of blocked funds.

In connection with the utilization of the credit facility in April 2021, the company and its subsidiaries have pledged the following central assets under the loan agreement and associated collateral agreements: the shares in the company's subsidiaries, certain intellectual property rights, certain intra-group liabilities, central supplier contracts in the Ovzon 3 project (between some of the suppliers and the lenders) as well as certain bank balances and that the subsidiaries have acceded to the loan agreement and guarantee the loans under the loan agreement.

	Group			Parent Company
Pledged assets	Jun 30 2022	Dec 31 2021	Jun 30 2022	Dec 31 2021
Shares in subsidiaries	1 041 497	1 048 753	1 441 491	1 395 491
Receivables from group companies	–	–	530 266	375 136
Pledged bank funds	3 848	7 023	–	–
Total	1 045 345	1 055 776	1 971 757	1 770 627

Note 11: Events after the balance sheet date

• Ovzon's CFO will leave the company in September 2022.
• MUSD 1.1 order from UK MoD for renewal of SATCOM-as-a-Service.

Note 12: Related-party transactions

	Jun 30	Dec 31
Total receivables from Group companies, TSEK	2022	2021
Ovzon Sweden AB	63 573	9 112
OverHorizon OHO 1 Limited	38 465	32 799
Ovzon LLC	427 127	332 379
Ovzon US LLC	1 101	845
Total	530 266	375 136

Ovzon AB (publ) is the parent company of the Group, which also consists of the subsidiaries Ovzon Sweden AB, OverHorizon OHO 1 Ltd, Ovzon US LLC and Ovzon LLC, a wholly owned subsidiary of Ovzon US LLC.

As the Parent Company's loan facility for financing Ovzon 3 has further been utilized, loan expenses of TSEK 14,249 have been debited to Ovzon Sweden AB during the quarter and TSEK 23,785 during the first six months.

Alternative performance measures

The company reports alternative key ratios in this interim report. The alternative key ratios provide valuable supplementary information to investors and other stakeholders as they enable evaluation of the company's performance. The alternative key ratios in this report may differ from the calculation method of similar measurements used by other companies.

Operating margin

Operating profit/loss in relation to revenue.

Earnings per share

Profit for the period in relation to the average number of shares. Average number of shares is calculated as the number of shares at the end of the period multiplied by the number of days that this number of shares has existed during the period, plus any other number of shares during the period multiplied by the number of days that this number of shares has existed during the period, divided by the total number of days in the period.

Equity/asset ratio

Equity in relation to total assets.

Order intake

The value of new orders received.

Order book

The total value of orders received that have not yet been delivered.