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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Satcom Grp | LSE:SGH | London | Ordinary Share | GB00B0D66620 | ORD USD0.10 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 9.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:9098O SatCom Group Holdings plc 15 July 2005 Press Release 15 July 2005 SatCom Group Holdings plc ("SatCom" or "the Group") First day of dealings on the AIM market SatCom Group Holdings plc ("SatCom" or "the Group"), a mobile satellite communications business, today announces the commencement of dealings of its Ordinary Shares and Convertible Bonds on the AIM market of the London Stock Exchange. Ernst & Young LLP is acting as Nominated Adviser to the Company and Teather & Greenwood is acting as Broker to the Company. The stock market EPIC for the Ordinary Shares will be SGH.L and the EPIC for the Convertible Bonds will be SGHA.L. Details of the placing Placing Price 30p Total number of new Ordinary Shares to be issued pursuant to the Placing 1,667,667 Number of Ordinary Shares in issue following Admission 50,116,667 Percentage of enlarged share capital being placed pursuant to the Placing 3.3 per cent Issue price of convertible bonds #1,000 per #1,000 nominal of Placing Bonds Aggregate principal amount of Convertible Bonds being issued #3 million Maximum number of Ordinary Shares in issue on the basis of the conversion of all 57,808,594 the Convertible Bonds Proceeds of the Placing (net of estimated expenses) #2.88 million Market capitalisation following the Placing at the Placing Price #15.04 million The net proceeds received by the Company will be used to enable the Company to make further acquisitions as part of its overall expansion strategy and to repay US$1 million of Founders Loans. Commenting on the move to AIM, Mark White, CEO of SatCom, said: "We are delighted to announce SatCom's successful Admission to AIM. SatCom will benefit from the AIM listing and we look forward to taking advantage of our position as a listed company and seeking to make strategic acquisitions." For further information: SatCom Group Holdings plc Mark White, Chief Executive Officer Tel: +44 (0) 1722 439 206 mark.white@satcomgroup.com www.SatComgroup.com Martin Ward, Chief Financial Officer Tel: +44 (0) 1722 439 201 martin.ward@satcomgroup.com www.SatComgroup.com Ernst & Young LLP John Stephan, Tel: +44 (0) 207 951 2000 jstephan@uk.ey.com Teather & Greenwood Limited Stephen Austin, Corporate Finance Tel: +44 (0) 207 426 9000 stephen.austin@teathers.com www.teathers.com Media enquiries: Abchurch Chris Lane / Dana Thomas Tel: +44 (0) 20 7398 7700 Chris.lane@abchurch-group.com www.abchurch-group.com Introduction SatCom is an established and fast growing mobile satellite communications business. It supplies, either directly or through Dealers, the mobile handsets and data devices (together referred to as terminals) and airtime of the three largest Satellite Operators, Inmarsat, Thuraya and Iridium. Airtime services typically comprise the provision of voice, data, fax, SMS and e-mail. Through a recently acquired subsidiary, SatCom is also expanding its operations into high frequency radio. In the eight months ended 28 February 2005, approximately 85 per cent. of SatCom's revenues were derived from the sale of airtime, with the sale of equipment making up the remaining 15 per cent. Research estimates that the market for mobile satellite services (MSS) is currently worth in excess of US$1 billion per annum and is expected to grow further. SatCom has built a profitable business with growing revenues, free cash flow generation and low ongoing capital expenditure requirements. The Directors believe that the success of SatCom's commercial business model is based on its established relationships with Satellite Operators, Land Earth Station Operators, hardware manufacturers, Dealers, end users and customers. History, background and Group structure In 2001, SatCom Distribution Limited (SDL) and its US subsidiary SatCom Distribution Inc. (SDI) were formed by the three founding shareholders, Mark White, Alexandra Johnson and Adam Thompson. In July 2002, SDI acquired O'Gara Satellite Systems Inc. (OSS), a satellite communications company which contracts directly and through Dealers with the US Government, in order to gain access to this market. Shortly after its acquisition, OSS was integrated into the Group and its airtime billing was transferred to the UK in line with SatCom's policy of centralising back office operations. In December 2003, SatCom established SatCom Distribution (Asia) Limited (SDA), a joint venture company targeting the Asian market. In January 2005, SatCom took a controlling interest in the joint venturing company and now owns 60 per cent. of the issued ordinary share capital and 100 per cent. of the voting rights. In March 2004, SatCom Group Holdings Limited (SGH) was formed as a new holding company for the Group in order to realign the interests of the three founding shareholders. In May 2004, Martin Ward joined as Chief Financial Officer and became the fourth shareholder. In November 2004, SDI acquired an 80 per cent. interest in NorthStar Communications Inc. (NorthStar). Based in the Washington DC area of the US, NorthStar designs, supplies and supports high frequency systems and radios for US Government departments. The Directors believe that the acquisition of NorthStar will enable SatCom to cross-sell satellite and radio solutions into their respective client bases. Markets The market for MSS emerged from the provision of safety at sea mobile voice and data communications to the maritime community. The market subsequently expanded into land based operations and is serving areas of the World not covered by either terrestrial or cellular communications systems. These include sparsely inhabited areas of Africa, Asia, Australia and the Middle East. The market is dominated by the three largest Satellite Operators, Inmarsat, Thuraya and Iridium, who between them have a market share in excess of 85 per cent.. Research estimates that the MSS market is currently worth in excess of US$1 billion a year. The market has grown in the past few years, and according to estimates is expected to continue growing, influenced by conflicts and natural disasters. Further analysis indicates that growth will be driven by a migration from traditional voice and data to next generation high-speed broadband data services enabled by the introduction of new technologies such as Inmarsat's Broadband Global Area Network (BGAN). Such data delivery services are expected to be particularly important to the government and military sectors. Today's military relies heavily on the use of satellites as part of its communications strategy. The Directors believe that as the technological innovations they develop become de-classified, increasingly sophisticated mobile broadband applications will also become commercially available, further fuelling sector growth. Recent world events, including terrorist attacks, conflicts in Afghanistan and Iraq and natural disasters such as the Asian tsunami have also renewed focus on the satellite communications sector. Such events create both an initial demand for products and services followed by secondary demand during reconstruction phases. Global demand for satellite communications, particularly from government, media, and aid agencies operating in these areas, is increasing and is expected to remain high. Satellite Operators and products The satellite services industry comprises Satellite Operators, Land Earth Station Operators and a number of independent Service Providers and Dealers. Satellite signals are transmitted from Earth to the satellite which in turn sends the signal onto a land based receiving station - known as a Land Earth Station - before being routed onto the public telephone network or transmitted back to the satellite for onward distribution to the receiver of the call or information being sent. There are a small number of Satellite Operators and SatCom focuses on reselling the terminals and airtime of the three largest operators, Inmarsat, Thuraya and Iridium. In the eight months ending 28 February 2005, approximately 42 per cent., 51 per cent. and 5 per cent. of the Group's revenue was derived from reselling the products and services of Inmarsat, Thuraya and Iridium respectively. The remainder of the Group's revenue was derived from other Satellite Operators. In recent years, the Group's involvement with Thuraya has grown more rapidly than with other Satellite Operators and the Directors believe this trend is likely to continue. Inmarsat provides voice and high speed data services and Thuraya provides both voice and low and high speed data services, both using Geostationary Orbit satellites. These satellites orbit at very high altitude and effectively remain in a static position over the Earth. Iridium provides voice and low speed data services using Lower Earth Orbit satellites. SatCom supplies a wide range of terminals specific to each of these major Satellite Operators. The products range from small, handheld mobile phones to portable high-speed data devices for specialised uses such as video streaming and encryption. SatCom advises customers on the most appropriate service and equipment based on customer usage needs. Upon signing a contract, a customer may be required to pay a deposit to SatCom. This deposit is effectively held against the customer's credit limit. SatCom sells both pre-pay and post-paid or contract airtime. Pre-pay is a small but growing part of airtime sales. Inmarsat Inmarsat's products are portable units designed for multiple applications such as Internet Protocol (IP) connectivity, maritime use and video links. The Mini-M unit is a versatile portable terminal and is available in land, maritime and vehicular versions. The Elite M4 is designed for use in harsh conditions and has the ability to stream data. The Fleet range is designed for maritime usage and provides packet and high-speed data, together with voice and fax capability. Inmarsat regional broadband IP modems must be used with a Subscriber Identity Module (SIM) card, which are both purchased separately from airtime. These SIM cards must be registered with the relevant Land Earth Station Operator prior to being activated for airtime access. To streamline the registration process, SatCom provides its customers with a proprietary online registration service, SIMREGTM. Inmarsat's existing regional BGAN provides high-speed broadband services over a footprint covering Europe, North Africa, the Middle East and parts of Asia. The recent launch of the first Inmarsat I-4 satellite will provide enhanced BGAN data services (at 432kbps, three times faster than existing services) for the land portable terminal market. Further, the planned launch of a second I-4 satellite in the third quarter of 2005 will extend this service to the Americas. SatCom resells both pre-paid and post-paid based airtime on an initial 12 month contract. On expiry of an airtime contract the end user may move airtime provider without changing hardware, but in practice for SatCom this rarely occurs. Inmarsat airtime is typically sold into two different markets, the general commercial sector and the US Government. Thuraya and Iridium Thuraya handsets are light handheld mobile phones capable of voice and data delivery, SMS and global position determination. Base stations and external antennae are available to transform these devices into indoor, maritime or vehicular solutions. When satellite connectivity is not required the phones can use the standard mobile Global System for Mobile Communications (GSM) network. Thuraya's satellite footprint is regional, covering Europe, the Middle East, Central and North Africa and parts of Asia. Iridium supplies handheld mobile phones, but provides worldwide coverage. These units deliver voice, data and SMS communications. SatCom packages and resells Thuraya and Iridium airtime, both with and without hardware. SatCom supplies hardware to Dealers and directly to larger customers. When the products are supplied, the package includes a SIM card specific to each Service Provider, such as SatCom. The SIM card must be activated by the end user customer before use. In SatCom's case, this is done via the SIMREGTM internet site where registration and a request for activation may be made prior to activation, each customer must also enter into an initial twelve month contract for airtime services with SatCom. SIMREGTM The SIMREGTM website (www.simreg.com) allows customers to request activation of their SIM cards from anywhere in the world and control their accounts on-line. This enables SatCom to provide a fast and efficient customer service whilst at the same time minimising support and administrative staff costs. Customers SatCom's key customer market is the US, which in the eight months ended 28 February 2005 contributed 83 per cent. of total revenue. This was followed by Europe from which SatCom generated 9 per cent. of its revenue. This geographical split reflects the customer's billing address rather than the location of the end user. The Group generated approximately 70 per cent. of its revenue from four key customers all of which are based in the US and these include US Government departments. SatCom has established a large customer base, comprising Dealers and end users who between them operate over 7,500 active terminals. Initially customers sign up to a 12 month contract (or longer in the case of the US Government) with a 30 day notice period thereafter. SatCom's contract customers show churn rates that are currently less than 2 per cent. per annum. Users typically fall within sectors such as government and non-government organisations, reconstruction, media, aid agencies, maritime, security, mining and the exploration of oil and gas. The Group is able to offer its customers a full range of communication solutions including voice, fax, data, SMS and e-mail. SatCom currently sells through a worldwide network consisting of over 100 Dealers. Dealers purchase terminals from SatCom on a non-returnable basis. SatCom has built close relationships with its Dealers who hold the necessary security clearances to deal with sensitive government contracts. Sales and marketing SatCom uses a number of methods to generate new business and increase its awareness in the market place including public relations exercises, direct marketing and website advertising. SatCom employs a public relations agency whose aim is to distribute on average two press releases per month, circulating them to both the vertical market press, such as maritime and telecom magazines and major national and international news publications. Press releases are either new product specific, or relate to interesting user stories. The Group sometimes takes the opportunity to advertise alongside press releases to maximise their effectiveness. SatCom provides sponsorship in the form of subsidised or donated equipment when the use of a satellite unit may generate publicity. Examples of this include sponsoring a yachtswoman in the single-handed transatlantic OSTAR race this year and the donation of equipment to aid agencies for use in the region affected by the recent tsunami. The Group targets vertical markets by sending out specific mail shots and by making calls. Generally, leads produced are sent to Dealers who process and place orders with SatCom. In addition, SatCom receives leads from its suppliers, which are either forwarded to Dealers or managed directly. SatCom also attend international trade and vertical market specific exhibitions. In order to support its existing customers and Dealers, SatCom provides marketing and technical assistance through its Xtranet site, providing downloadable brochures, pricelists, images, technical manuals and training sheets. Regular mailings are also sent giving the latest news on new products and airtime programmes. In addition, SatCom's sales team make regular contact with Dealers to provide support and training. For US Government business, SatCom has a dedicated sales person who manages the accounts and promotes new business. The Group is also on the tender lists for several large organisations that purchase via open contract for specific requirements. As a worldwide business, an important promotional avenue is through the use of online advertising. SatCom's website is also carefully designed to optimise prominence on search engine results pages when conducting 'key word' searches when browsing the Internet for information regarding satellite communication equipment. Strategy Organic growth is expected from SatCom's continued sales and marketing initiatives. Hardware sales are of strategic importance to SatCom in that they are a driver of future airtime sales as well as being profitable in their own right. In addition, the launch of Inmarsat's I-4 satellites will provide enhanced footprint coverage and high-speed broadband data services both of which, the Directors believe, will provide significant opportunities for growth. SatCom intends to build on its recent acquisition of NorthStar to allow further penetration into the high frequency radio market and enable the cross-selling of satellite and radio solutions into their respective client bases. The recent establishment of SDA will also allow SatCom to leverage Thuraya's intended expansion into the Asian market beyond 2006. It is expected that SatCom's future organic growth will be augmented by further acquisitions of other satellite airtime businesses. The Directors believe that the MSS market is fragmented and contains a large number of small independent Service Providers who they believe will be attracted by consolidation. SatCom has already made a number of acquisitions. In addition SatCom has identified and is in discussions with several potential targets. The Directors believe that the commercial maritime sector provides particularly attractive acquisition opportunities as it is a large and stable sector of the market. SatCom has successfully integrated acquisitions in the past and the Directors believe it has the management resources to manage integration and consolidation. The Group intends to retain key personnel from acquired companies to maintain customer relationships and will drive synergy cost benefits by migrating customers onto a common UK based billing platform. Management believe the anticipated acquired and organic growth will enhance SatCom's position in the market, giving it the scale necessary to improve margins and efficiency. Operations SatCom is headquartered in Salisbury, England and has a further two sales offices in the US and one in Asia all of which are leased premises. Excluding Directors and operational board directors there are currently 27 members of staff of which 18 are based in the UK, 8 in the US and 1 in Asia. The UK head office is located in a modern building housing the sales, accounts, marketing, warehousing and airtime contracts administration staff. The US operation is run from NorthStar's warehousing facilities in the Washington DC area with additional premises in New York. The Asian operation is run out of offices in Hong Kong. Directors and senior management The founding management team consisted of Mark White, Alexandra Johnson and Adam Thompson. Each has over 10 years' experience in the satellite communications industry. They were joined in 2004 by Martin Ward. The Directors of SatCom are set out below: David Hickey, age 49, Non-Executive Chairman David qualified as a Chartered Accountant with KPMG in 1981 and subsequently joined HSBC James Capel where he became a director in corporate finance, specialising in international transactions. In 1992 he moved to the Guinness Mahon Group and took over as head of corporate finance. In 1998 Investec acquired the Guinness Mahon Group and he became head of corporate finance for the enlarged group in the UK. Between 1998 and 2000 he also served as a member of the corporate finance Committee of the London International Banking Association. Currently he holds a number of directorships including that of Executive Chairman of Lighthouse Group Plc and Chairman of Just Car Clinics Group plc. Mark White, age 44, Chief Executive Officer* Mark is the CEO and founder of SatCom. He has been in the satellite communications business since 1995 and has been involved in the distribution of electronic equipment since 1990. Mark joined Cetrek Limited, a maritime autopilot manufacturer as sales manager, in 1984 and became sales director in 1988. In 1990 he left Cetrek to form Euro Marine Group Limited, a European distributor of US electronic marine equipment, including Garmin GPS products. In 1992, Mark was appointed Chief Executive of Garmin (Europe) Limited, bringing with him Euro Marine's distribution business. Having successfully established Garmin's distribution network, he then left Garmin to form Next Destination Limited, the European distributor of Magellen GPS and satellite communication products. In 1997 Mark sold Next Destination, but continued to work in the satellite communications industry and in 2001 established SDL and SDI with Alexandra Johnson and Adam Thompson. Martin Ward, age 47, Chief Financial Officer* Martin qualified as a Chartered Accountant in 1983 before joining PricewaterhouseCoopers where he progressed to audit manager. In 1987, he left PwC to become a partner in Langdowns DFK a midsize professional firm based in Southampton. In 1990 he started acting for Mark White, advising him in the areas of business development and acquisition strategy. At Langdowns, Martin was responsible for mergers and acquisitions and international work, including successfully raising the profile of Langdowns within the DFK International network. In 2004 Martin joined SatCom to oversee the financial aspects of running a global business and to assist with acquisitions. Richard Vos, age 59, Non-Executive Director Richard has extensive knowledge of the satellite and international telecommunications world with over 30 years experience of working in the industry. Between 1999 and 2003, he was chairman of Inmarsat Ventures Plc. Through this position, he has experience of preparing a company for flotation, although Inmarsat eventually raised funds through a private equity sale. Current positions include Director of the National Space Science Centre, member of the Advisory Board for Technology, Communications & Entertainment for Ernst & Young, and Advisor to Inmarsat Limited and previous positions include Chairman of Inmedia Communications Limited and Chairman of the British National Space Centre Telecommunications and Navigation Advisory Board. Alexandra (Sandy) Johnson, age 50, Chief Operating Officer* Prior to SatCom, Alexandra held various accounting and IT positions before joining Mark White at Next Destination Limited, where she held the position of finance and operations manager. Alexandra brings extensive experience in sales, training and support and has contributed greatly to the development of the Group. She is also responsible for the SIMREGTM website and the recently developed online technical support system. She has also worked closely to develop and integrate the SatCom's US operators. Adam Thompson, age 42, President of SDI* Before founding SDL with Mark White and Alexandra Johnson, Adam worked for Teleflex Marine and O'Gara Satellite Networks Inc. Adam runs SDI's hardware sales and OSS's US Government airtime business. His understanding of the satellite communications industry combined with his previous sales and marketing experience in the maritime sector have enabled him to build SatCom's US Government and commercial business. Jack Lemmerman, age 62 , US Government Airtime Manager Jack joined the Group through OSS and now has an exclusive consultancy arrangement with SatCom. He was heavily involved in winning the agreement with the US Government Defense Information Agency which is administered by the Defense Information Contracting Organisation (DITCO). He has a unique understanding of the DITCO bidding process and a strong relationship with US Land Earth Station Operators who provide the airtime. Bill Perry, age 43, President of NorthStar Bill joined SatCom when it acquired NorthStar. He has worked in the radio industry for many years dealing with both government and specialist radio applications. NorthStar's acquisition by SatCom will enable Bill to tender for increasingly large radio projects with the US Government. Pauline Truckle, age 36, Airtime Manager Pauline has been with SatCom since its formation. With a background in accounts and airtime management, she manages the SatCom's billing processes. Her team of administrators respond to internet and telephone enquiries, deal with activations, suspensions, deactivations, prepaid airtime sales and credit control in addition to the production of contract airtime billings. Definitions ''Admission'' Admission of the Ordinary Shares (including the Placing Shares) and the Convertible Bonds to trading on AIM becoming effective ''AIM'' AIM, a market owned and operated by the London Stock Exchange ''Convertible Bonds'' The #3,000,000 8 per cent. convertible unsecured bonds due 2009, convertible into Ordinary Shares. ''Directors'' or ''Board'' The directors of the Company at the date of this document ''Founders Loans'' The US$3,000,000 of outstanding loans due to Mark White, Alexandra (Sandy) Johnson and Adam Thompson. ''Inmarsat'' Inmarsat Limited, a leading satellite operator ''Iridium'' Iridium Satellite LLC, a leading satellite operator ''London Stock Exchange'' London Stock Exchange plc ''NorthStar'' NorthStar Communications Inc., a subsidiary of SDI ''Ordinary Shares'' Ordinary shares of US$0.10 each in the capital of the Company ''OSS'' O'Gara Satellite Systems, Inc., a wholly owned subsidiary of SDI ''Placing'' The conditional placing by Teather & Greenwood of the Placing Shares and the Convertible Bonds pursuant to the terms of the Placing Agreement ''Placing Bonds'' 3,000 Convertible Bonds which are the subject of the Placing ''Placing Price'' 30p per Placing Share ''SatCom'' or ''Group'' SGH and its subsidiaries. ''SDA'' SatCom Distribution (Asia) Limited, a subsidiary of SDL ''SDI'' SatCom Distribution, Inc., a wholly owned subsidiary of SDL ''SDL'' SatCom Distribution Limited, a wholly owned subsidiary of SGH ''SGH'' or ''Company'' SatCom Group Holdings plc ''Thuraya'' Thuraya Satellite Communications Company, a leading satellite operator ''United Kingdom or UK'' The United Kingdom of Great Britain and Northern Ireland ''US'' or ''United States'' The United States of America, its territories and possessions, any state or political sub-division of the US and the District of Columbia Glossary BGAN Broadband Global Area Network - Inmarsat's high speed satellite communications network Dealers Resellers of hardware and airtime that contract directly with the customer on SatCom's behalf Geostationary Orbit An orbit in which a satellite is always in the same position with respect to the rotating earth. A single satellite can cover up to 40 per cent. of the earth's surface GPS Global Positioning System - a worldwide satellite radio-navigation system used to compute positions on Earth GSM Global System for Mobile Communications - digital mobile telephone system IP Internet Protocol - a standard that allows the transmission of data across networks and the internet Kbps Kilobits per second - a speed rating for computer modems that measures the maximum of numbers of bits a device can transfer in one second Land Earth Station Terrestrial satellite receiving station Land Earth Station Operator Operator of Land Earth Stations Lower Earth Orbit Satellites that orbit at an altitude of less than 1,000 miles and circle the earth every 90 minutes. Approximately 66 are required for global coverage MSS Mobile Satellite Services Satellite Operator Operator of satellites including Inmarsat, Iridium and Thuraya Service Provider Reseller of equipment, airtime and provider of customer services SIM Subscriber Identity Module - a smart card inside all GSM phones that identifies the user account on a network, handles authentication, and provides data storage for basic user data and network information SMS Short Messaging Service - short text messages that can be sent from a mobile phone Copies of the Admission Document will be available to the public, free of charge, during normal business hours on any weekday (Saturdays and public holidays excepted) at the offices of Shoosmiths, Russell House, 1550 Parkway, Solent Business Park, Whiteley, Fareham, Hampshire, PO15 7AG from the date of this document until at least one month after Admission. This information is provided by RNS The company news service from the London Stock Exchange END MSCRIMRTMMTBBTA
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