SSTL CEO Outlines U.S. Ambitions

[11-14-07 – Satellite News] Small satellite manufacturer Surrey Satellite Technology Ltd. (SSTL) has been growing at an impressive rate throughout the last few years, building satellites for European, African and Asian customers .
    The next stage of the company’s growth is to make more of an impact in the U.S. market, SSTL group CEO Matt Perkins said.
    "We want to see more constellations of small satellites in orbit,” he said. “They provide huge amounts of utility and capability in space at great prices and very quickly. We want to be leading that activity. SSTL wants to demonstrate the U.K.’s capability in terms of its space activities, for example getting to the moon in a way that is cost-effective compared to the large major space programs. We want to maintain our world leading position as a provider of small satellites and we want to take advantage of other markets that are opening up for these technologies, the U.S. in particular. There has been reluctance there. One of the problems being a lack of low-cost launches.”
  
Perkins spoke with Satellite News about the company’s aspirations in the United States as well as the challenges in building the business.

Satellite News: How do you view the role of small satellites? Do you expect more organisations to look to go down this route?

Perkins: We see the role of small satellites as a growing market place with the capabilities improving all the time. They represent value for money that has become a real driver in a number of markets globally. We are even seeing more of an appetite in the U.S. for smaller satellites, particularly addressing operationally responsive space activities. One of our strategic growth targets is to focus on the U.S. market, which will result in either a wholly-owned SSTL enterprise or a joint venture in the U.S.

Satellite News: When will you announce your intentions in the United States

Perkins: It will be in the first half of next year that an announcement is made, and SSTL is currently considering a number of options from acquisition to joint venture to a new start-up.

Satellite News: What are the major challenges for SSTL over the next 12 months?

Perkins: SSTL has enjoyed a good year, with results at the end of July showing that we achieved growth in both revenues and profitability. Our challenge for the current year is to more than double the net profit we achieved last year — from 1.2 million pounds ($2.5 million) to 3 million pounds ($6.3 million). To do this, we have to increase our turnover from 26 million pounds ($54.5 million) to 46 million pounds ($96.4 million). The majority of the revenue for this financial year is already secured, so we have to complete our current projects and deliver them on time and on budget.
We also have to fill our order book for the future. Last year, we managed to secure contracts worth£55 million pounds ($115.3 million) — our best year ever. This year, we want to secure substantially more so, there’s a lot of work to do to keep the business moving ahead, but the opportunities are definitely out there.

Satellite News: Could you tell us about your capital expenditure plans in terms of developing new satellites?

Perkins: We are currently funding internally the replacement of the UK-DMC satellite with a new-generation DMC satellite to be called UK-DMC-2. Even though it is still fully functional, UK-DMC is coming to the end of its five-year design life. The replacement satellite, to be launched next October, will ensure continuity of imagery into our subsidiary company, DMCii. … The investment in UK-DMC2 and other strategic investments aim to achieve the company’s longer term growth forecasts. In addition, we are investing in internal product development and research activities to secure the company’s future and deliver those contracts already in place.

Satellite News: How many contracts are you hoping to pick up in 2008?

Perkins: We look at secured contracts through the financial year, rather than the calendar year. Also, it is not the number of contracts but the total value of secured contracts we focus on — from full mission contracts worth 30 million pounds ($62.3 million), down to study contracts, which might be worth 200,000 pounds to 300,000 pounds ($419,300-$628,900). Last year, SSTL secured contracts to the value of£55 million pounds. This year we are aiming for around 70 million pounds ($146.7 million), so this a substantial increase and we expect that number to grow in future years.
Looking ahead three years in this industry is much easier than five years, and it is clear that the market for small satellites is growing. We have a very strong brand in terms of the provision of small satellite missions and we will be continuing to build on that.

Satellite News: Will you be targeting any new types of customers?

Perkins: Another key strategic development at SSTL is the development of a small geo communications satellite. We have joint funding with the European Space Agency for developing subsystems specifically for a small geo as well as to further develop the space-proven Giove-A platform. Giove-A weighs 660 kilograms, the largest that we have built to date. The small geo satellite will weigh around 1 ton when it is in orbit,  a major development.
Our other major activity at the moment is lunar exploration. SSTL recently won a contract with Mississippi State University, who in turn are working with NASA, to study the requirements for a lunar mission. Whilst actively working on that study, we are also looking at securing a second phase of the contract that would see us reaching a point with the design where we are ready to start cutting metal, hopefully some time around the first half of next year.
We are also in discussion with the Science and Technology Facilities Council to acquire funding for a U.K.-led international mission to the moon. There is already an agreement between the U.K. and NASA for joint lunar activity and we are pushing hard for consideration of mission proposals that we have already derived — MoonLITE and Moonraker. Both these studies were funded by one of the research councils here in the U.K.

Satellite News: Do you believe the work of SSTL is having wider implications on the satellite market in general?

Perkins: Definitely. SSTL is providing opportunities to achieve faster times to orbit. Our standard order to orbit time is two years. However, we can do it more quickly than that, particularly with rebuilds of existing satellites, for example Giove-A2, which we are looking to complete within 14 months. So that gives people real opportunities to get things into space, and that’s exactly what we’re focused on. We also want to change the economics of space. I think we have started this change but we have more to do.