Page 8 - hisdeSAT Informe Anual 2019

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The 2019 financial year has been clearly positive both quantitatively and qualitatively. From the point of view of the
Income Statement, the 2019 budget has improved substantially, mainly due to growth in income and the financial
result, which has led, extraordinarily, to a doubling the expected net profit.

From a qualitative point of view, the SPAINSAT NG programme has been initiated. This includes the Ministry of
Defence contract, the satellite construction contracts, the associated financing through the granting of a loan from
the Ministry of Industry, Commerce and Tourism, and the signing with the ESA of the Pacis 3 programme for the
development, within ESA's GOVSATCOM Precursor programme, of the most innovative elements of the mission
through R&D funds provided by the CDTI. The entire Hisdesat staff are pleased and proud of the achievement of
this important milestone, but also excited and committed to carrying out this complex programme with a large R&D
component over the next 5 years. I have no doubt that, making use of our know-how and that of all the companies
working with us on the programme, we will achieve the desired success.
This is strategically the most important project of the company since its foundation, and will extend over the next 20
years, from development, manufacture and launch, to the operational phase in orbit. It will replace the current secure
communications satellites, SPAINSAT and XTAR-EUR, providing greater capacity, flexibility, security and resilience in
satellite communications for the Spanish Armed Forces as well as other national and international clients, such as
NATO, the European Union within the GOVSATCOM program, and other allied and friendly countries such as the US,
Portugal, Norway, etc. The SPAINSAT NG satellites comprise three missions in three simultaneous frequency bands:
X-Band, military Ka-Band and UHF, and include important technological innovations like the reconfigurable active
antennas in the X-band orbit, which constitute the greatest challenge in terms of technological development and
which are led by the Spanish space industry with Airbus DS System Spain at the helm.

It is important to highlight the dynamic effect that all Hisdesat’s programmes, and especially SPAINSAT NG, have on
the national space industry. The percentage of direct participation of Spanish industry in the satellites will be over
40%, in addition to being responsible for all payloads – TAS Spain for the UHF and military Ka-bands payloads, and
Airbus DS System Spain for the X-band payload.

What is more, 2019 is the first full year of operation of the PAZ synthetic aperture radar satellite, which has allowed us
– not without some difficulties – to meet the operational objectives of the Spanish Ministry of Defence as well as other
clients who are now joining the system. Already in the first full year of operation, the required modifications to the
ground segment have been implemented, in order to incorporate new radar observation modes, very high resolution
Staring Spotlight with up to 25cm pixel size, and Wide ScanSAR with a wide image sweep of up to 270km. This will
bring us more commercial opportunities in the coming years, as for instance with EMSA.

Also in 2019, and with the aim of guaranteeing continuity of secure satellite communications capabilities for the
Ministry of Defence, a feasibility study was done for a mission to extend the life of the XTAR-EUR satellite, which will
be the first to reach its nominal 15-year service life, although reserve propellant is available to extend this by almost
two years.

Lastly, our investee companies have performed more or less as expected: better in the case of exactEarth, worse
in the case of XTAR and Airbus DS GEO SGSA, but either way within Hisdesat's 2019 budget forecasts. Returning to
the income statement, the 2019 financial year has been exceptionally positive. Revenues reached a record 74.37
million euros, due to the incorporation of a full year’s income from the PAZ programme and having had a very good
year in the secure communications business, incorporating new clients such as the Portuguese Ministry of Defence,
and new services such as the SAPZO Operations Area Personnel Support System. With expenses well under control,
the EBITDA for the year reached 49.27 million euros, also for the first time ever. Finally, the net result was 9.97 million
euros, three times more than for the previous year. During 2019 the workforce continued to grow and now comprises
69 employees.

All of these achievements would not have been possible without our customers' confidence in our capabilities for
secure satellite communications, Earth observation radar and maritime surveillance with satellite AIS. I want to
expressly thank them for their support for another year. I especially want to highlight the support of the Ministry of
Defence and the Spanish Armed Forces, not only for being the main users of our systems, but also for, on a daily
basis, defending and promoting Hisdesat and our systems in different international settings.