16 May 2016 – 3Q trading update

The data satellite communications group has issued a trading update covering the three months to 31 March which has revealed that revenues for the period were $19.5m, an increase of 14.7% over the second quarter.  EBITDA was $0.4m due to the growth in revenue above the group’s largely fixed cash cost base.  Order wins were strong in the third quarter with all material customer renewals completing whilst the group also won an important new contract with EE after the period end.  At the end of the period the group had cash balances of $122.4m which should be sufficient for the company’s needs.  The launch of HYLAS 4 is now only months away and this should triple the group’s satellite capacity and this should have a transformational impact on the business.  Strong revenue growth is forecast going forward with a minimal increase in the cost base which should lead to a rapid move towards profitability.  Although progress has been slow in terms of share price appreciation we believe that this should change over the coming months and therefore continue to rate the shares as a BUY.