Seraphim Space Investment Trust: Trading Update

27th July 2022 | Seraphim Space Investment Trust

Trading Update

Seraphim Space Investment Trust plc (LSE: SSIT), the world’s first listed SpaceTech investment company, today provides a trading update to the 30 June 2022.

Full Year Results

The audited results for the financial year ended 30 June 2022 and associated audited NAV will be published in October 2022.

Investment Environment

Despite the macro-economic backdrop, investment activity in the global space domain remained strong in the period. Global security, food security and humanitarian support remain key drivers underpinning growth in the space domain, followed by climate and sustainability themes.

The Seraphim Space Index, which reports on global private funding in the space domain is published quarterly by SSIT’s investment manager, Seraphim Space Manager LLP (the “Manager”), showed total private funding in the year to 30 June 2022 of $12.2bn, which was broadly in line with the previous calendar year.

Investment Activity

As at 31 March 2022, the Company had net assets of £250m, comprising £188m of investments (75% of NAV) and cash of £62.3m (25% of NAV). The top 10 holdings, the focus of this trading update, represented 91% of the portfolio at fair value as at 31 March 2022.

During the quarter ended 30 June 2022, SSIT made three new unlisted investments with an aggregate cost of £5.3m and two follow-on unlisted investments with an aggregate cost of £2.4m. As at 30 June 2022, the Company had cash of £57.7m.

Unlisted Investments

The NAV weighted average revenue and booking figures for these unlisted businesses in the top 10 holdings as at 30 June 2022 are set out below:

Revenues  – +34% (H1’21 vs H1’22 +58% (12 months)

Bookings – +144% (H1’21 vs H1’22 +77% (12 months)

Notes: Weighted average based on unaudited NAV of unlisted holdings in SSIT’s portfolio as at 31 March 2022. H1 is the six months ended 30 June in the relevant year. 12 months compares the 12 months ended 30 June 2022 to the 12 month ended 30 June 2021.

We are particularly pleased with the solid growth rates of bookings (contracted future revenues) which reflect the strong underlying performance of the businesses as they develop their commercial operations.

Most of the portfolio is in the early stages of making an impact on their sizeable addressable markets and, in light of the key trends underpinning the growth of SSIT’s portfolio, namely global security, food security, humanitarian, climate and sustainability drivers, we expect these companies to scale up significantly.

The Manager has undertaken a review of the cash runways and funding plans of the private companies in SSIT’s portfolio and those companies’ own expectations. Based on this analysis:

  • the companies are well capitalised having, on average, sufficient cash to deliver against their growth strategies, for at least the 12-month period to June 2023, without further capital;
  • of the three companies that may require funding before June 2023, two have additional forms of financing expected to close shortly that would extend their runway beyond June 2023. The remaining one portfolio company, Altitude Angel (1.5% of net assets at 31 March 2022), will need to raise equity capital prior to Q2 2023; this business has recently announced a major commercial milestone in relation to an initial 265km drone superhighway in the UK, in partnership with BT, connecting airspace above Reading, Oxford, Milton Keynes, Cambridge, Coventry and Rugby over the next two years, with the option to expand the corridor to many other locations in the country;
  • SSIT intends to reserve approximately two-thirds of current cash available for investment (having taken into account SSIT’s estimated operating costs for the period ending 31 December 2023) (“Net Cash”) to support the next funding rounds of portfolio companies through to 31 December 2023, including Altitude Angel; and
  • the remaining Net Cash is currently expected to be available for new investments.

Listed Investments

The Company’s two listed investments in the top 10 assets, Arqit Quantum and Spire Global, represented 14.3% of NAV as at 31 March 2022, both previously having merged with listed special purpose acquisition companies (“SPACs”). Their share prices fell substantially (59% and 66% respectively) during the quarter ended 30 June 2022, in common with other SPAC-merged companies. As at 30 June 2022, the aggregate value of these investments was £16.2m (31 March 2022: £35.7m).

The Manager remains confident in the prospects for both companies which during the quarter ended 30 June 2022, both reported positive commercial performance.

  • Arqit Quantum: Having commenced commercialisation and begun generating revenue in the first half of its financial year ended 30 September, Arqit Quantum reported significant commercial progress and generated operating income of $12.3m (key clients included the European Space Agency, Virgin Orbit and AUCloud) during the first half of its financial year ending 30 September 2022 ($30m YE22 revenue guidance). At 31 March 2022, Arqit Quantum had a cash balance of $82.2m (30 September 2021: $87.0m).
  • Spire Global: In respect of the first quarter of its financial year ending 31 December 2022, the Spire Global reported revenue of $18.1m (86% year over year (“YoY”) growth), annual recurring revenue of $81.6m ($10.9m of sequential and 134% YoY growth), improved full year guidance (increased ARR low end range; lowered operating loss) and reaffirmed remaining guidance. At 31 March 2022, Spire Global had a cash balance of $91.6m (31 December 2022: $109.3m).

Mark Boggett, Chief Executive Officer, Seraphim Space Manager LLP, said:

“It has been just over a year since SSIT’s IPO and, whilst the space sector is not immune to the macro-economic backdrop, the last six months have demonstrated the crucial role space plays in global defence, food security and humanitarian support as well as addressing longer-term climate and sustainability solutions. Portfolio commercial performance has been robust, the underlying companies are well capitalised and SSIT retains cash reserves to continue to support the portfolio growth ambitions during the year ahead”.

In the video below, CEO Mark Boggett outlines Seraphim’s Investment Strategy