REG - Bigblu Broadband PLC - Annual Financial Report
20/03/2023 07:00
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RNS Number : 4264T Bigblu Broadband PLC 20 March 2023
Bigblu Broadband plc
('BBB', the 'Company' or the 'Group')
Audited final results for the year ended 30 November 2022
Strong revenue growth, expanded product range and primed for further value
realisation
Bigblu Broadband plc (AIM: BBB.L), a leading provider of alternative
super-fast and ultra-fast broadband services, announces its audited results
for the period ended 30 November 2022 (the "Period"). The Company has
operations in Australasia, the Nordics and a residual shareholding in
Quickline Communications ("Quickline").
During the Period, BBB delivered positive progress with strong revenue and
profit growth in the Australasian region. The trading performance of the
Norwegian business was impacted in the year by a cyber-attack to its satellite
provider and by delays in the 5G product launch. Quickline, which the Group
still has a retained interest of 4.0% in, has undergone significant scaling
since BBB sold its majority shareholding in this company in June 21 with the
support of its new owner Northleaf Capital Partners, including £70m of
additional capital, and can now address around 300,000 premises with its
hybrid Fixed Wireless and Full Fibre infrastructure.
Whilst the Company operates in several different geographies, the directors
remain confident in the future growth prospects of the business and the Board
will continue its focus on ensuring it can maximise the inherent value within
the Company and deliver further shareholder returns.
Financial Highlights
· Total revenue increased 15.1% to £31.2m (FY21: £27.1m)
· Like for like revenue growth(1) of 12.3% (FY21: 15.3%)
· Average Revenue per User per Month improved 9.5% to £43.03 (FY21:
£39.30) due in the main to an improved product mix
· Adjusted EBITDA(2) in the period improved by 11.4% to £5.1m
(FY21: £4.6m)
· Adjusted PAT(3) was £2.6m (FY21: £2.5m)
· Adjusted EPS(4) profit of 4.4p (FY21: profit 4.3p) with reported
EPS loss of 5.0p (FY21: Profit 46.9p)
· Adjusted Operating cash inflow(5) of £5.8m (FY21: Inflow £5.2m)
· Adjusted Free cash inflow(6) of £3.7m (FY21: inflow £2.1m)
· Net cash(7) at 30 November 2022 was £4.2m (FY21: £5.2m) after
the payment of £1.2m following the acquisition of the customers and assets of
Clear Networks (Pty) in January 2022.
Operational Highlights
· Total customers at the period end were 59.4k (FY21: 58.8k) of which
Australasia represents 51.5k customers (87%).
· The acquisition of c.2.2k satellite and fixed wireless customers
together with certain business assets of Clear Networks (Pty) Ltd ("Clear")
ISP in Australia, was completed post regulatory approval in January 2022.
· The distribution agreement the Norwegian business entered into with
Telenor is providing next generation ultrafast broadband via Fixed Wireless
Access using 5G technology ("5G FWA"), delivering speeds up to 500 Mbps with
unlimited data packages. Although at the start of the year this was running
six months behind schedule, due to equipment shortages, it has now reached
c.1k customers with month-on-month growth and significantly lower annualised
churn rates, reflecting greater customer satisfaction with the products.
· On 21 December 2021 the Company signed a Distribution Partner
Agreement with OneWeb, to distribute low Earth Orbit ("LEO") satellite based
broadband services.
· Progress in New Zealand ("NZ") market with our Asia Pacific
broadband satellite partner, Kacific Broadband Satellites Group was initially
slow however we are pleased to report that NZ has fully opened its borders
after the long pandemic closure, which will allow us to drive activity
alongside new products being launched in the market. We have also recruited a
local experienced sales executive, in the country, and progress is
accelerating.
· Post period end, BBB acquired the Satellite operations of Harbour
ISP PTY LTD, a subsidiary of Uniti Group LTD in Australia (the "Acquisition"),
with the consideration paid on completion of AUD$4.72m (£2.7m), paid from
existing cash resources. This acquisition, combined with the Clear
acquisition, will result in SkyMesh having an enlarged market share of 45% of
the NBN Co satellite market across Australia, focused primarily in the rural
and suburban market segments.
1 Like for like (LFL) revenue treats acquired businesses as if they were owned
for the same period across both the current and prior year whilst business
disposed of in the period are excluded from the calculation. Such numbers are
adjusted for constant currency and non-recurring items such as government
support.
2 Adjusted EBITDA is stated before interest, taxation, depreciation,
amortization, share based payments and exceptional items. It also excludes
property lease costs which, under IFRS 16, are replaced by depreciation and
interest charges.
3 Adjusted PAT represents adjusted EBITDA less interest, taxation,
depreciation, and amortisation, adjusted for items of an exceptional nature,
being impairment of Fixed Assets, amortisation and deferred tax adjustments.
4 Adjusted EPS is adjusted PAT, divided by the weighted average number of
shares over the period.
5 Adjusted Operating cash flow relates to the amount of cash generated from
the Group's operating activities and is calculated as follows: Profit/(Loss)
before Tax adjusted for Depreciation, Amortisation, Share Based Payments and
adjusting for changes in Working Capital and non-cash items and excludes items
identified as exceptional in nature.
6 Adjusted Free cash flow being cash (used)/generated by the Group after
investment in capital expenditure, servicing of debt and payment of taxes and
excludes items identified as exceptional in nature.
7 Cash / Net debt excludes lease-related liabilities of £1.4m of under IFRS
16 (FY21 £1.4m).
Key Financials
During the year there was a focus on launching new products in new
territories, with Telenor 4G/5G FWA in Norway and Kacific Satellite in NZ as
well as significant marketing campaigns to migrate c.9k customers in Australia
to more suitable products which the business believe should help to reduce
churn in the future.
Total revenue was £31.2m, up 15.1% (FY21: £27.1m) with a strong recurring
revenue remaining above 90% of total revenue. Total like-for-like (LFL)
revenue for the Continuing Group in the period was £30.4m representing 12.3%
growth.
Balancing margin control with continued focus on overheads during the period
resulted in an adjusted EBITDA for the period of £5.1m, representing an
adjusted EBITDA margin of 16.3% compared to £4.6m in FY21 and an adjusted
EBITDA margin of 16.9% despite the challenges of a Cyber Attack and the costs
of launching new products in new territories.
Andrew Walwyn, Chief Executive Office of Bigblu Broadband plc, commented.
We are very pleased with the overall performance of the Group. We started the
year with a couple of setbacks, especially in our Nordic business, but we have
continued to focus on customer service and providing our customers with
attractive packages. Our Australian business has complemented its organic
growth opportunity with two acquisitions and we will continue to target
suitable bolt-on opportunities.
The Board remains focused on maximising value and returns for shareholders.
The combination of strong underlying operating cashflows, favorable market
dynamics and opportunities available to our business units provides a strong
backdrop for delivering enhanced shareholder value."
For further information:
Bigblu Broadband Group PLC www.bbb-plc.com (http://www.bbb-plc.com)
Andrew Walwyn, Chief Executive Officer Tel: +44 (0)20 7220 0500
Frank Waters, Chief Financial Officer
finnCap (Nomad and Broker) Tel: +44 (0)20 7220 0500
Marc Milmo / Simon Hicks / Charlie Beeson (Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
About Bigblu Broadband plc
Bigblu Broadband plc (AIM: BBB.L), is a leading provider of alternative
superfast and ultrafast broadband solutions throughout Australasia and the
Nordics. BBB delivers a portfolio of superfast and ultrafast wireless
broadband products for consumers and businesses typically unserved or
underserved by fibre.
High levels of recurring revenue, increasing economies of scale and Government
stimulation of the alternative broadband market in many countries provide a
solid foundation for significant organic growth as demand for alternative
ultrafast broadband services increases around the world.
BBB's range of solutions includes satellite, next generation fixed wireless
and 4G/5G FWA delivering between 30 Mbps and 500Mbps for consumers, and up to
1 Gbps for businesses. BBB provides customers with a full range of services
including hardware supply, installation, pre-and post-sale support, billings,
and collections, whilst offering appropriate tariffs depending on each end
user's requirements.
Importantly, as its core technologies evolve, and more affordable capacity is
made available, BBB continues to offer ever-increasing speeds and higher data
throughputs to satisfy market demands for broadband and broadband services.
BBB's alternative broadband offerings present a customer experience that is
broadly similar to that offered by wired broadband and the connection can be
shared in the normal way with PCs, tablets and smart phones via a normal wired
or wireless router.
CHIEF EXECUTIVE'S REPORT
We started the year with a couple of initial setbacks, including a
cyber-attack to one of our satellite providers affecting c.3k customers in
Norway, as well as a delayed 5G launch in the region due to chip shortages.
Despite this we are satisfied with the continued progress shown by the Group
in the Period.
Extensive effort has been made across the business units to switch customers
into more attractive packages at the expense of net adds, with c.9k migrations
in the period and net adds of 0.6k, of which c.2.2k were associated with the
Clear acquisition in Australia. We ended the period with 59.4k customers. The
recently completed Uniti transaction has increased our total customer base to
c.66k and we remain focused on our strategy in Australia of organic growth
combined with targeting suitable bolt-on acquisition opportunities. In
addition, we remain focused on creating and realising shareholder value for
BBB Shareholders and in this regards we are exploring all options for the
Australasian business including a potential ASX listing.
The necessary investment made to improve our offerings in Norway, resulted in
c.1k new FWA 5G customers at the period end. Work is still required to improve
the performance of the Norwegian business including product offerings, costs
and systems. We also remain focused on ensuring our operations are run as
efficiently as possible and post period end regrettably we have had to make
some headcount reductions in our Norwegian business.
Despite the global economic environment, the Group continues to demonstrate
strong year-on-year revenue growth underpinned with a high percentage of
recurring revenue. We remain confident in our ability to deliver further
attractive returns for shareholders from our operations in Australasia and to
realise a return from the Norwegian business together with the 4.0% equity
stake in Quickline. As we enter the new financial year, there are
opportunities for each business unit to deliver further shareholder value as
we continue to support customers unserved and underserved in the digital
divide, whilst at the same time improving our product range. Operationally we
will remain focused, in conjunction with our network partners, on increasing
gross adds and reducing churn as well as ensuring our customers are on the
most suitable packages and receive the best customer support. Alongside this,
we will continue to seek to deliver against our strategic objective of
maximising and realising shareholder value.
Operational Review
The Group has two distinct businesses, in Australasia and the Nordics, with a
total of c66k customers post the Uniti acquisition and given their respective
strengths, each of the business units has potential opportunities to enhance
further shareholder value.
Australasia
Our Australian business SkyMesh, is the leading Australian satellite broadband
service provider having been named Best Satellite NBN Provider for the fourth
year in succession (2019-2022). SkyMesh has continued to be the market
leader in the satellite broadband market with a total market share post the
recent Uniti transaction of c.40% (FY21: c.36%).
SkyMesh is consolidating its purchase of Clear Networks and expanded into NZ
during the year and the recently announced acquisition of the satellite
customers of Uniti further strengthens our position in the market.
Our Australasian business performed well during the year. As a result of a
growth in customers together with ARPU improvements, SkyMesh revenues
increased to £26.5m (PY: £21.8m), up 21.6% (LFL excluding the Clear
acquisition is 14.2%) on prior year, with adjusted EBITDA of £5.0m, up 25.1%
on prior year (FY21: £4.0m). The Clear acquisition contributed EBITDA of
£0.3m. This trading performance supported both a positive adjusted operating
cash inflow(3) of £5.6m and a positive adjusted underlying free cash flow,
before group transfers of £4.4m. Customer numbers closed at 51.5k at year
end, an increase of 3.5% on the prior year (FY21: 49.7k), which includes the
customers acquired from Clear (2.2k).
Post period end, we completed the acquisition of the Uniti satellite
operations with c.6k customers which are now in the process of being
transferred to SkyMesh by the Company's half year.
The emergence of 5G and LEO satellite technologies is expected to lead to
accelerated uptake of non-fibre broadband internet services in Australasia.
Starlink has launched in the region with strong initial promotional offers.
This is impacting current churn rates and we are monitoring such marketing
activity. We believe we can counter such threats to the business by expanding
the product offerings as well as addressable markets. Further acquisitions
and new product opportunities are emerging as SkyMesh heads into 2023 with its
product offering likely to offer faster speeds / capacity, leading to
continued increases in customer numbers.
The Board's focus will be on organic growth with our network partners together
with suitable accretive bolt on acquisitions that could accelerate the
Company's presence into the wider Australasia region and importantly
accelerate the scaling of the Australasian business. In addition, the Board
continues to explore all options to realise value for BBB shareholders from
SkyMesh, which could include an ASX listing of SkyMesh.
Nordic Region
Reflecting the decrease in customer numbers associated with the impact of the
satellite cyber-attack on the satellite provider to our Norwegian business and
the demounting of non-profitable sites, BB Norge (rebranded Brdy AS.no), ended
FY22 with customer numbers at 7.9k, down on the previous year (FY21: 9.1k).
Consequently, revenues for BB Norge were £4.0m, down 13.0% on the prior year
(FY21: £4.6m). After some initial delays, the 4G/5G FWA revenue stream has
grown in FY22 and is now contributing to early growth in new customers and
revenue. Adjusted EBITDA for the region was £1.0m, down 47.3% on prior year
(FY21: £1.9m). Adjusted operating cash was an outflow of £0.1m and adjusted
underlying free cash flow was an outflow of £1.0m following capital
expenditure of £0.7m and set up costs associated with the 5G FWA of £0.2m.
As noted above, post period end further cost saving initiatives were
implemented in the region and regrettably we have had to make some headcount
reductions in this business.
During the Period the Group invested in refining and enhancing the Company's
service proposition in the Nordic market to support the next generation
ultrafast broadband via wireless 5G FWA, delivering speeds up to 500 Mbps with
unlimited data packages. As reported previously this is beginning to show
early momentum with growing traction in the market (c.1k customers) and great
customer satisfaction being reported.
The Board continues to evaluate the opportunity to refine and enhance the
Group's service proposition in the Nordic market. Initiatives include the
launch of new satellite offerings across the region offering speeds of 50Mbps
and unlimited capacity. The Directors consider that the Group's ability to
offer a combination of services including our own Fixed Wireless network, 5G
FWA via Telenor and satellite solutions in the Nordics provides the Group with
potentially scope to expand its presence and reach in this region and create
shareholder value. At the same time the Board are examining all opportunities
to realise shareholder value including full or partial disposal, partnership,
or a merger.
Operational Performance
Net customer growth in 2022, was approximately 0.6k (post the 1.8k loss of
customers in the Nordics following the cyber-attack event and demounting, and
the 2.2k net adds from the Clear acquisition), resulting in a closing
continuing customer base of 59.4k (FY21: 58.8k).
Total revenue including recurring airtime and other income (equipment sales
and installation sales) covering continuing operations for 12 months shows a
solid underlying performance of £31.2m (FY21: £27.1m) with revenue growth of
15.1%.
Revenue in satellite was £24.7m, up on prior year by 14% (FY21: £21.7m) due
in the main to customer growth, plan switching in Australasia, and the
satellite base acquired from Clear. Revenue in fixed wireless was £4.9m, up
on prior year by 7% (FY21: £4.6m) Revenue in 5G was £0.9m in the year (FY21:
£nil) due to growth in Norway. PLC added £0.7m (FY21: £0.7m) from services
related revenue.
Recurring revenue, defined as revenue generated from the Group's broadband
airtime, which is typically linked to contracts at £28.9m represented 93% of
total revenue (FY21 £25.6m represented 94% of total revenue).
Average Revenue Per User ("ARPU") increased 9.5% year on year to £43.03
(FY21: £39.30) due in the main to a higher percentage mix of larger packages
across the Australian region. Average underlying customer churn increased to
28.4% (FY21: 21.3%) as a result of the removal of COVID Support tariffs in
Australia and the continued fibre encroachment in Norway.
Adjusted EBITDA for the period was £5.1m, showing a solid underlying
performance, and representing an adjusted EBITDA margin of 16.3% compared to
£4.6m in FY21 on a like for like basis and an adjusted EBITDA margin of
16.9%. This continues to demonstrate the progress made in driving the quality
of the consumer offering, the margin review work being undertaken and
improving cost efficiencies.
Accelerating Technology Evolution
Products
The Nordics have entered the 5G market through an agreement with Telenor
allowing the Group to promote a 'white-label' offering of self-install
wireless broadband, which is a niche product and, although it has run
approximately six months behind schedule, at c 1k customers at the period end
it will allow the Group to target a far wider customer audience across Norway.
Thanks to our partnerships on Satellite broadband access, we have also been
able to stabilise our customer base allowing us to now have a good foundation
for the launch of the next generation satellites over the coming years.
Across Australasia, SkyMesh expects to be able to offer a fibre like service
via Satellite from the sky, with 100 Mbps download speeds, <70 milli-second
latency and unlimited data allowances across its key territories over the next
couple of years with the launch of significant new satellite capacity. With
the acquisition of Clear Networks there will also be an increased focus on the
business market and new product offerings from NBN Co will allow expansion
into the fixed wireless market with a view to combining satellite and fixed
wireless technologies to offer high quality services to both the residential
and business sectors in regional and remote areas.
Marketing
Whilst we use a digital-first strategy to both acquire and retain new and
existing customers we also promote our Refer-a-friend programmes in country.
For customer acquisition, we target in-market prospects based on geography,
broadband speed and purchase intent. Channels used vary depending on
in-country results, blending Facebook, Google, Bing and lead-generation
partners in order to achieve our internal KPI's in terms of cost per lead and
cost per activation. We deploy a suite of engaging content from ad copy,
through to static display ads and customer testimonial videos. Most important
of all is word of mouth or customer referral, hence the importance of looking
after our existing customers by proactively migrating them to more appropriate
tariffs in our Australasian business.
Continued Government Support
We remain focused on helping governments in our current markets to achieve
their targets of delivering ultrafast and gigabit capable broadband
connections nationwide. We remain convinced that it will be difficult for
governments to meet these challenging targets without the use of alternative
technologies such as fixed wireless and satellite broadband. Indeed, many
governments have already launched 'intervention schemes". These are aimed at
stimulating the market and educating consumers about the options available to
them - given that full fibre broadband to the premises is unlikely to become a
reality for many customers.
In Australia, SkyMesh commanded a 55% market share of net new adds under the
Government funded NBNCo scheme during the last financial year. This
performance has continued into Q1 FY23.
Post Balance Sheet Events
We highlight the following post balance sheet events:
SkyMesh, Australia
The Company announced that its fully owned Australian business, SkyMesh PTY
LTD had completed the acquisition of the Satellite operations of Harbour ISP
PTY LTD, a subsidiary of Uniti Group LTD in Australia (the "Acquisition"). The
total cash consideration paid on completion was AUD$4.72m (£2.7m) with a
retention of AUD$0.2m (£0.1m), to be paid in March 2023 post reconciliation
of customer numbers. The cash consideration paid on completion was satisfied
from existing cash resources including our revolving credit facilities with
Santander. The satellite operations acquired consisted of c.6k customers.
The customer base is being transferred to SkyMesh who will provide full
ongoing support services from its Australian Customer Engagement Centre.
Pursuant to the terms of the acquisition agreement, Uniti will continue to
provide services for up to three months post completion to ensure a smooth
transition of the customer base. As previously announced, the Directors
anticipate that the acquired operations are expected to generate annualised
revenues of c.£2.5m and EBITDA of c.£0.7m with positive cash generation,
enabling the Group to continue to reinvest and grow the business in the
Australian market. The Directors believe that the profitability of operations
acquired should improve under Bigblu Broadband's ownership due to the Group's
better operational gearing, economies of scale and SkyMesh's dedicated focus
on customers in this sector.
Post Period redundancies / reorganisations
Since the year end the Group has gone through a reorganisation of our
Norwegian business and also reflected on our reduced UK scale. This has
resulted in redundancies in our Norway business and our UK head office.
In Norway we are examining splitting the business into two legal entities,
recognising the different attributes of each being our Satellite and 5G
technology business, typically lower CAPEX, and our infrastructure business,
typically higher CAPEX. This has resulted in making approximately 30% of the
workforce in our Nordic business redundant in the first quarter of 2023, with
an annualised cost saving of c.£0.4m.
Due to the size of the Group, after the recent disposals in FY20 and FY21, the
Group has sought to reduce head office costs to a level sustainable for the
current continuing operations. This will result in approximately 75% of the
central team being made redundant, with annualised savings in the region of
£0.5m. The internal process has commenced with all planned redundancies
expected to be complete by May 2023.
Strategy
Within the business units, we have worked continuously with our network
partners in the regions to offer our customers a selection of products that
best suits their needs. We continue to see the demand for our products
increasing with an element of home working in the Nordics and Australasia now
being the norm, and the consequential need for faster broadband solutions to
the home. Whilst recognising the pressure on individuals and companies'
disposal income and profits, we firmly believe that the updated solution set
that the Group offers to its customers is becoming more important and a very
necessary utility cost. The opportunity in the super-fast broadband market
remains exciting across the businesses as it is changing significantly and
accelerating at pace. Where in the past a service of 30Mbps was seen as an
appropriate solution to a typical customer, nowadays this is upward of 50Mbps
and our satellite, fixed wireless and FWA 5G solutions will ensure that all
unserved and underserved customers can receive an appropriate solution. We are
pleased that our network partners are continuously developing products to meet
customer needs.
Specifically, following the recent acquisitions for the SkyMesh business in
Australia, the Board believes that its strategy of organic growth complemented
by further bolt-on acquisitions should accelerate the Company's presence into
the wider Australasia region as it considers all options to realise value for
shareholders, including a potential spin out ASX listing, as previously
announced. The Board continues to believe the business has the potential to
achieve 100,000 customers in the region over the next three years through
organic and acquisitive growth.
In Norway, following the launch of new FWA 5G products and the new Satellite
offerings, we are showing early signs of stabilising, although the business
remains cash consumptive.
The Board will continue to look at all opportunities to maximise shareholder
value from its operations in Australasia, Norway and its retained 4.0% stake
in Quickline.
Outlook
The Group has positioned itself at the forefront of the alternative super-fast
and ultrafast broadband industry in its chosen markets. Similar to many
businesses, there are current headwinds which require addressing and
consideration in how we operate and deliver services, including existing and
new customers disposable incomes, inflationary pressures together with
competition from other providers such as Starlink. We continue taken the
actions necessary in carefully extending our product offerings, upgrading our
systems and reducing our cost base to address such challenges head on.
Since the period end, the Group is growing customers, revenues and
profitability, supported by the Harbour acquisition. The Group has continued
its objectives of widening the product offerings in each territory with our
Network Partners while still benefiting from the strong visibility afforded by
the high percentage of recurring revenues. Across our operations, work
continues to improve the performance by upgrading the systems and reducing the
cost base.
We continue to develop products and solutions with our network partners that
will enable customers to operate as effectively as possible, particularly at a
time where increasing numbers of customers are likely to be working from home,
whether full time or part time.
The Board believes that the Group has valuable assets that have established
important strategic positions in in their respective territories and the Board
therefore believes that it is well positioned to ensure it can continue to
focus on maximising and delivering enhanced shareholder value.
Andrew Walwyn
CEO
20 March 2023
FINANCIAL REVIEW
2022 was another important year for the Group having demonstrated strong
progress against its internal and market expectations for Revenue, EBITDA and
cash targets as well as identify and complete important acquisitions in
Australia in the period and just after. We reviewed and increased our
Revolving Credit Facilities ("RCF") with continued support from Santander and
the Group generated adjusted operating cash in excess of 100% of EBITDA.
The focus of the Board now turns to creating additional shareholder value from
the remaining business units being our Australasian operations (SkyMesh
Australia, Brdy New Zealand) and, our Nordics business (Brdy). In addition,
the Company also continues to hold a valuable minority interest in Quickline.
The Board remains focused on delivering further increases in shareholder value
from its remaining business units through organic growth whilst considering
selective accretive acquisitions in the territories we operate in.
Financial Review
Total revenue including recurring airtime and other income (equipment sales
and installation sales) in the period was £31.2m (FY21: £27.1m).
Adjusted EBITDA was £5.1m (FY21: £4.6m), representing an adjusted EBITDA
margin of 16.3% (FY21: 16.9%).
Depreciation, including 'right of use assets', increased to £3.0m in FY21
from £1.4m in FY21, an increase of £1.6m analysed as follows; depreciation
associated with the tower upgrade program investment in Norway in FY21
(£0.5m), an impairment write down of old assets in the Norwegian region
(£1.0m), and the assets acquired through the Clear acquisition (£0.1m)
Amortisation increased to £0.7m in FY22 from £21k in FY21 due to the
amortisation on the customer base acquired from Clear Networks in the year
(£1.4m), which will be written off over a 2-year period from acquisition.
Finance costs were £0.1m in FY22 relating to the undrawn RCF facility in the
period compared with £0.8m in FY21 where there were drawn RCF facilities.
Key Performance Indicators
The Group utilises several Key Performance Indicators ('KPI's') to measure
performance against our strategy. A description of these KPI's and performance
against them is set out below.
KPI 2022 2021 Description 2022 performance
Customer Base 59,385 58,832 Represents total gross organic connections plus acquisitions, less disposals, 1% increase despite cyber-attack and delayed 4G / 5G launch
less lost customers (churn) and base management, including demounting
Customer Net Connections 2,336 6,024 Represents gross connections in the period less lost customers (churn) in the Net connections split c.1.8k Australia and c.0.5k Norway. Focus during period
period. Includes M&A and excludes exceptional churn. was on switchers with c 9k during the period. Switchers arise where we
proactively migrate a customer to a more appropriate tariff during the period.
Gross Underlying Churn 28.4% 21.3% Gross underlying churn defined as the number of subscribers who discontinue Underlying churn rate of 30.3% (FY21: 28.6%) in Australia following removal of
their service as a percentage of the average total number of subscribers COVID support and 22.4% (FY21: 15.2%) in Norway. (35.1% (FY21: 39%) in Norway
within the period and excludes exceptional churn in association with the Including demounting churn)
demounting program in Norway
ARPU £43.03 £39.30 Calculated by dividing total revenues from all sources by the average customer Higher by 9.5% due in the main to improved product mix.
base
Revenue £31.2m £27.1m Revenue includes sales from all operations. Like for like (LFL) revenue treats Total Revenue increased by 15.1%.
acquired businesses as if they were owned for the same period across both the
current and prior year and adjusts for constant currency, omitting any LFL revenues in 2022 were £30.4m, resulting in a 12.3% increase on a constant
distinct differences that skew the numbers. Business disposed of in the period currency basis and adjusting for such items as M&A activity in periods.
are excluded from the calculation.
Adjusted EBITDA £5.1m £4.6m Earnings before share based payments, depreciation, intangible amortisation, Adjusted EBITDA increase of 11.4% (£0.5m) driven by revenue growth and the
impairment costs, acquisition costs, one-off employee related costs, deal acquisition of customers from Clear Networks, which contributed £0.2m of
related costs and start-up costs is the measure of the Group's operating EBITDA in FY22.
performance. It evaluates performance without factoring in financing
decisions, accounting decisions or tax environments or provisions for EBITDA Margin of 16.3% (FY21: 16.9%) following increased marketing spend of
potential legal costs, share based payments, acquisition costs and £0.2m and £0.2m increased Australian Headcount costs.
fund-raising fees.
Adjusted Operating Cash Flow - Continuing Operations £5.8m £5.2m Adjusted Operating cash flow relates to the amount of cash generated from the Adjusted operating cash inflow was £5.8m (FY21: £5.2m), an improvement of
Group's operating activities and is calculated as follows: Profit/(Loss) £0.6m YOY, due to increased EBITDA (£0.5m), lower forex and non-cash charge
before Tax adjusted for Depreciation, Amortisation, Share Based Payments and (£0.9m), and lower working capital improvement year on year £0.9m.
adjusting for changes in Working Capital and non-cash items.
Adjusted Free Cash Flow - Continuing Operations £3.7m £2.1m Adjusted Free cash flow being cash (used)/generated by the Group after Adjusted free cash inflow in the year was £3.7m (FY21: £2.1m), an
investment in capital expenditure, servicing of debt and payment of taxes and improvement of £1.6m YOY. Operating cash inflow improved £0.6m, lower
excludes items identified as exceptional in nature. capital expenditure of £0.8m at £1.4m (FY21: £2.2m) and lower interest by
£0.3m at £0.1m (FY21: £0.4m), offset by increased tax charge of £0.1m at
£0.6m (FY21: £0.5m)
Basic EPS (5.0p) 46.9p Basic Earnings per share (EPS) is the portion of the Continued and Represents increased loss in the year. Prior year reflected the gain on
discontinued business's loss of £2.9m (FY21: Profit £27.0m) divided by the disposal of majority interest in Quickline to Northleaf
weighted average number of shares.
Adjusted EPS 4.4p 4.3p Adjusted Earnings per share (EPS) is the Continued business's profit/(loss) Increased marginally post improved EBITDA
after tax before exceptional costs, share based payments, impairment of Fixed
Assets and deferred tax adjustments, divided by the weighted average number of
shares.
Total customers at the period end including in-flight customers for continuing
operations were 59.4k (FY21: 58.8k). During the year we delivered underlying
2.4k net adds (FY21: 6k). This is summarised as follows:
FY22 FY21
000 000
Opening base 58.8 57.2
Switched out customers (9.0) (3.0)
Switched in customers 9.0 3.0
Gross Adds 16.7 20.4
Acquisition 2.2 -
Churn (16.5) (14.4)
Net Growth 2.4 6.0
Exceptional churn (1.8) (4.4)
Closing Base 59.4 58.8
Underlying churn rates (defined as the number of subscribers who discontinue
their service as a percentage of the average total number of subscribers
within the period) increased to an average annualised churn rate of 28.4% in
FY22 (FY21: 21.3%), before exceptional churn of 1.8k, relating to the
cyber-attack in Norway during the year (1.6k) and the final elements of the
demounting project commenced in FY21 (0.2k).
In our Nordics business underlying churn was 22.4% (35.1% including
exceptional demounted customers). (FY21: 15.2%).
In our Australian business underlying churn was 30.3% (FY21: 28.6%) due to the
removal of COVID Support packages and continued technical challenges on the
Skymuster plus product, which will be updated in FY23 to an improved product
which would be more attractive in terms of speed and data packages, which
should reduce churn. Competitors, such as Starlink, have also contributed to
the churn with aggressive marketing, and we continue to work with NBNCo to
counter this.
In the first three months of FY23, underlying churn has slightly reduced, and
importantly we are starting to roll out next generation products in Australia,
New Zealand and Norway.
Revenue
Total revenue including recurring airtime and other income (equipment sales
and installation sales) for the period increased by £4.1m (15.1%) to £31.2m
(FY21: £27.1m). Total revenue on a like-for-like and constant currency basis
increased in the year by 12.3%, (FY21: increase 15.3%) as the Group continued
to add customers during the year but importantly improved ARPU by 9.5%.
ARPU, calculated by dividing total revenues from all sources by the average
customer base, in 2022 was £43.03 per month (FY21: £39.30) due to higher
revenues, specific to the Skymuster Plus products in Australia as well as
switching customers to more appropriate packages.
Revenue in satellite was £24.7m, up on prior year by 14% (FY21: £21.7m) due
in the main to customer growth, plan switching in Australasia, and the
satellite base acquired from Clear. Revenue in fixed wireless was £4.9m, up
on prior year by 7% (FY21: £4.6m) Revenue in 5G was £0.9m in the year (FY21:
£nil) due to growth in Norway. PLC added £0.7m (FY21: £0.7m) from services
related revenue.
Recurring revenue, defined as revenue generated from the Group's broadband
airtime, which is typically linked to contracts and monthly subscriptions, was
£28.9m in the period, representing 93% of total continuing revenue (FY21:
94%).
Margins and profitability
Gross profit margin was c.43%. (FY21: c.45%) due in the main to the planned
product mix changes. In Norway increased 5G revenue at lower margins resulted
in a 10.6% decrease in margins from 79.7% to 71.2%. In Australia gross profit
improved 2.5% from 35.8% to 36.7% due to product mix.
Distribution and Administrative Expenses, pre-exceptional costs, increased to
£11.7m (FY21: £9.0m) due to increased headcount costs, marketing costs,
depreciation and amortisation on the customer acquisition from Clear. Post
items identified as exceptional in nature, these expenses increased to £14.8m
(FY21: £13.1m) representing 47.3% of revenue (FY21: 48.2%) due to specific
deal related and operational exceptional costs.
Adjusted EBITDA increased 11.4% for the period at £5.1m representing an
adjusted EBITDA margin of 16.3% compared to £4.6m in FY21 and an adjusted
EBITDA margin of 16.9%.
Continuing Operations analysis
A reconciliation of the adjusted EBITDA to adjusted PAT of £2.6m (FY21:
£2.5m profit) is shown below:
2022 2021
£000 £000
Adjusted EBITDA 1 5,101 4,577
Depreciation 2 (2,076) (1,390)
Impairment of Fixed Assets 2 (966) -
Amortisation 3 (702) -
Adjusted EBIT 1,357 3,187
Share based payments (309) (163)
Continuing Operations operating profit - pre-exceptional items 1,048 3,024
Exceptional items relating to M&A and restructuring activities 4 (2,707) (3,922)
Continuing Operations Statutory operating loss - post exceptional items (1,659) (898)
1,357 3,187
Adjusted EBIT
Interest charge 5 (124) (798)
Tax (charge) / credit 6 (1,031) 76
Impairment of Fixed Assets 7 966 -
Amortisation 7 702 -
Deferred taxation adjustment in Norway 7 714 -
Adjusted PAT 2,584 2,465
Group Statutory Results and EBITDA Reconciliation
1. Adjusted EBITDA (before share based payments, depreciation, intangible
amortisation, impairment of goodwill, refinancing, fundraising, acquisition,
employee related costs, deal related costs and start-up costs) improved 11.4%
to £5.1m (FY21: £4.6m).
2. Total depreciation increased to £3.0m in FY22 from £1.4m in FY21 due
to the capitalisation of costs associated with the upgrading project in Norway
last financial year now being depreciated (£0.5m), an impairment depreciation
charge of £1.0m due to historic infrastructure assets written down in Norway
following the demounting exercise, and depreciation of assets acquired with
Clear (£0.1m).
3. Amortisation increased to £0.7m from Nil in FY21 following the
acquisition of the Clear customer base. During the year we undertook a full
review of the carrying value of Goodwill, with the review resulting in no
requirement for an impairment.
4. The Group incurred expenses in the period that are considered
exceptional in nature and therefore appropriate to identify. These comprise:
a. £1.3m (FY21: £2.0m) of acquisition, deal, legal and other costs
relating to M&A and restructuring activities during the period. These
costs comprise mainly professional and legal fees.
b. £0.3m (FY21: £0.4m) employee restructuring costs primarily in the
Nordics.
c. £0.5m (FY20: £0.6m) associated with the cost of the demounting
program in Norway
d. £0.1m (FY20: £nil) associated with the new RCF facility with
Santander
e. £0.3m (FY20: £nil) development costs for the new Pathfinder system
in Australia
f. £0.1m setup costs for the New Zealand operations
5. The interest charge in the year of £0.1m related to the RCF facility
with Santander (FY21: £0.7m).
6. The tax charge of £1.0m (FY20: £0.2m) relates to our Australia
business on taxable profits (£0.3m) and a deferred tax asset adjustment
relating to our Norway business (£0.7m). Prior year also included a deferred
tax credit adjustment in our Norwegian business of £0.3m
7. Adjustments
a. Impairment depreciation charge of £1.0m due to historic
infrastructure assets written down in Norway following the demounting
exercise.
b. Amortisation of £0.7m following the acquisition of the Clear customer
base.
c. Deferred tax adjustment of £0.7m relating to our Norway business.
Customer Base, Revenue, Adjusted EBITDA in FY22 and the comparative period for
Continuing Group is segmented by the following categories as follows:
Customer Base Revenue Adjusted EBITDA
2022 2021 2022 2021 2022 2021
Number % Number 000's % £m £m % £m £m %
000's
Australia 51.5 87% 49.7 84% 26.5 21.8 22% 5.0 4.0 25%
Norway 7.9 13% 9.1 16% 4.0 4.6 (13%) 1.0 1.9 (47%)
Pre-Central 59.4 100% 58.8 100% 30.5 26.4 15% 6.0 5.9 2%
Central Revenue and Costs(1)
- - 0.7 0.7 0% (0.9) (1.3) 31%
31.2 27.1
Total 59.4 100% 58.8 100% 15% 5.1 4.6 11%
(1) Central revenue includes recharges for post-sale services and central
costs include finance, IT, HR and plc costs.
Customer Base by Technology and Region
2022 2022 2022 2021 2021 2021
Satellite Fixed Wireless/5G Total Satellite Fixed Wireless/5G Total
000's 000's 000's % 000's 000's 000's %
Australia 44.0 7.5 51.5 87% 42.4 7.3 49.7 84%
Norway 2.9 5.0 7.9 13% 1.6 7.5 9.1 16%
Total 46.9 12.5 59.4 100% 44.0 14.8 58.8 100%
From the above analysis for Continuing Operations year on year movements from
a Customer Base, Revenue, Adjusted EBITDA and product mix perspective are
analysed as follows:
1 Australasia
a. There was customer net growth of 1.8k over the course of the year,
including the c2.2k from the Clear acquisition.
b. During the year there were a number of customers switching contracts
(c.9k)
c. The increase in revenue of £4.7m was a result of the continued growth
in customer numbers, the acquisition of customers from Clear, and an improved
APRU from £37.83 to £43.65.
d. Importantly, EBITDA improved by 25% following continued cost
efficiencies across the company.
2 Norway
a. Net underlying customers growth was 0.6k before exceptional churn of
1.8k relating to customers associated with the demounting (0.2k) and the
cyber-attack (1.6k).
b. Revenue in the year reduced £0.6m due to the loss of these customers,
although ARPU increased from £35.81 to £39.32 due to price increases in the
year
c. Adjusted EBITDA reduced by £0.9m, to £1.0m during the year,
reflecting the lower revenue and fixed costs associated with operating leases.
3 PLC
a. Revenue was in line with prior year at £0.7m relating to invoiced
support services to a third party.
b. With lower costs this resulted in EBITDA losses improving by 31% at
£0.9m.
Cashflow performance
Adjusted Free Cash Flow in the year, before exceptional and M&A activities
undertaken by the Group, was an inflow of £3.7m (FY21: inflow £2.1m). This
reflects the improved operating cashflow of £0.6m, lower capital expenditure
of £0.8m at £1.4m (FY21: £2.2m) and lower interest by £0.3m, at £0.1m
(FY21: £0.4m), offset by increased tax charge of £0.1m at £0.6m (FY21:
£0.5m). The underlying cash flow performance analysis seeks to clearly
identify underlying cash generation within the Continuing Group, and
separately identify the cash impact of identified exceptional items including
refinancing, fundraising M&A activity cash costs and is presented as
follows:
2022 2021
£000 £000
Adjusted EBITDA 5,101 4,577
Underlying movement of working capital 1 777 1,742
Forex and other non-cash items 2 (113) (1,085)
Adjusted operating cash inflow before interest, tax Capex and exceptional 3 5,765 5,234
items
Tax and interest paid 4 (663) (906)
Purchase of Assets 5 (1,432) (2,208)
Adjusted free cash inflow before exceptional and M&A items 3,670 2,120
Exceptional items relating to refinancing, fundraising, M&A, integration 6 (2,707) (3,922)
and the establishment of network partnerships
Free cash inflow/(outflow) after exceptional items 963 (1,802)
Investing activities 7 (1,154) 31,041
Movement in cash from Discontinued operations 8 (120) (2,209)
Movement in working capital from discontinued operations 9 - (2,339)
Financing activities 10 (695) (34,796)
Decrease in cash balances (1,006) (10,105)
1. Underlying movement in working capital was an inflow of £0.8m (FY21:
inflow £1.7m). This reflects the inflow of receipts from accrued income
(£2.8m), lower receipts in Trade Debtors (£0.2m), the outflow of investment
in 5G stock (£0.4m) and increased Creditors payments (£1.4m).
2. Forex and non-cash represent an improvement on FY21 of a lower outflow
in the year £0.1m (FY21: outflow £1.1m). This reflects the currency
revaluation of key balance sheet accounts using the closing rate as at 30
November of a charge £0.2m (FY21: £0.9m) and non-cash movements relating in
a credit of £0.1m (FY21: Charge £0.2m).
3. This resulted in an adjusted operating cash flow before Interest, Tax,
Capital expenditure and Exceptional items of £5.8m inflow (FY21: £5.2m
inflow), and an adjusted operating cash flow to EBITDA conversion of 113%
(FY21: positive 114%).
4. Tax and interest paid was £0.7m (FY21: £0.9m) on a like-for-like
basis. This covers interest on the RCF facility and leases (£0.1m) and
monthly taxation paid by our Australian business (£0.5m). Final corporation
tax calculations for the financial year show year-on-year tax savings in
excess of £0.4m.
5. Purchases of assets in FY22 were £1.4m (FY21: £2.2m). These
purchases included the fixed wireless investment in Norway of £0.7m,
installations and IT costs of £0.3m and other £0.4m.
6. Exceptional items relating to M&A, finance raising and
restructuring costs of £2.7m (FY21: £3.9m).
7. In FY22 investing activities includes the acquisition of customers and
assets of Clear Networks (£1.2m). In FY21 sales proceeds from the disposal of
subsidiaries were £31.1m cash (excluding consideration satisfied by equity
investments) less the purchase of intangibles (£0.1m).
8. Relates to costs associated with the discontinued operations (£2.2m
in FY21 retained by the entities disposed of in the year).
9. Represents the movement in the Group's working capital due to the
deconsolidation of the disposed businesses in FY21.
10. The outflow in the year of £0.7m relates to lease principal payments.
In FY21 the major financing activities included the return of capital to
shareholders of £26.1m outflow, the repayment of the Santander RCF facility
£8.4m together with £0.8m lease principal payments, offset by the issuance
of shares from the exercise of options generating an inflow of £34.8m.
Net Cash reconciliation
2022 2021
£000 £000
Opening Net Cash 5,201 7,419
Loss after tax from Continuing operations (2,814) (1,620)
Interest charge 124 798
Depreciation 2,076 1,390
Impairment of Fixed Assets 966 -
Amortisation 702 -
Tax charge / (Credit) 1,031 (76)
Share Based payments 309 163
Exceptional costs 2,707 3,922
Adjusted EBITDA 5,101 4,577
Forex movement and other non-cash (118) (1,085)
Movement in Working Capital 782 1,742
Cash inflow from Continuing operations 5,765 5,234
Interest paid (124) (411)
Tax paid (539) (495)
Underlying inflow from Continuing operations 5,102 4,328
Purchase of Assets (1,432) (2,208)
Adjusted free cash inflow before exceptional and M&A items 3,670 2,120
Exceptional items relating to refinancing, fundraising, M&A, integration
and the establishment of network partnerships (2,707)
(3,922)
Adjusted free cash inflow/(outflow) after exceptional and M&A items 963 (1,802)
Investment activities (1,154) 31,041
Movement in working capital from discontinued operations - (2,339)
Financing activities (695) (34,796)
Movement in Cash from Continuing operations (886) (7,896)
Outflow in cash from Discontinued operations (120) (2,209)
Movement in Net Cash (1,006) (10,105)
Decrease in Debt - 7,887
Closing Net Cash 4,195 5,201
Cash and net debt for the overall Group is summarised as follows:
2022 2021
£000 £000
Opening Net Cash 5,201 7,419
Decrease in loans: offset in financing activities
Facilities Repaid - 7,887
Cash outflow from operating activities (512) (1,640)
Cash generated in investing activities 200 22,591
Cash outflow from financing activities (694) (31,056)
Movement in Net Cash (1,006) (2,218)
Closing Net Cash 4,195 5,201
Composition of closing net debt
Net cash and cash equivalents 4,195 5,201
Bank loans - -
Net Cash 4,195 5,201
Net Cash
Net cash and cash equivalents 4,195 5,201
Discontinued operations cash - -
Adjusted net cash 4,195 5,201
Adjusted Net Cash (Debt) / Adjusted EBITDA 0.82x 1.13x
Adjusted Net Cash (Debt) inc IFRS16 / Adjusted EBITDA 0.54x 0.82x
Net cash reduced from £5.2m in 2022 to a net cash position of £4.2m, a
reduction of £1.0m in the year, as detailed in the net cash reconciliation
above. 2021 includes the repayment of the debt (£7.9m) and the return of
Capital (£26.1m)
The table above excludes the lease liabilities of £1.4m (FY21: £1.4m).
Including this amount would give a total adjusted net cash of £2.8m (FY21:
Adjusted net cash £3.8m) and a ratio of adjusted net cash to adjusted Group
EBITDA before IFRS 16 of 0.54x (FY21: Adjusted net cash 0.82x).
Consolidated Statement of Financial Position
There was a step change in the balance sheet following the performance in the
year with increased Revenue (£31.2m) and EBITDA (£5.1m).
Fixed Assets reduced in the year to £2.9m (FY21: £4.1m), following the
purchase of new fixed assets (£1.4m), less disposals (£0.1m), and adjusted
for depreciation provided in the year (£3.0m) and positive foreign exchange
movements £0.2m.
Intangible Assets increased to £7.4m (FY21: £5.6m) due to the IP addresses
and contracts relating to the Clear acquisition £2.3m plus software
development of £0.2m less amortization of £0.7m. Software development costs
of £0.4m were reclassified from PP&E. Following a review in FY22 there
was no requirement for an impairment of the carrying value of the Company's
goodwill.
Working Capital
Inventory days increased to 24 days (FY21: 13 days) as we purposefully
increased stock holdings in Norway by £0.4m, to £1.1m (FY21: 0.7m) to
support the 5G offering given global shortages during the financial year.
Trade Debtor days slightly increased to 9 days (FY21: 7 days) with £0.2m
increase in the closing Trade Debtors year on year.
Trade Creditor days increased to 77 days (FY21: 81 days) due to agreed revised
extended payment terms with suppliers to support our 5G growth in Norway.
Earnings per share
2022 2021
Basic earnings per share (5.0p) 46.9p
Diluted earnings per share (5.0p) 45.6p
Basic adjusted earnings per share 4.4p 4.3p
The Group delivered a basic loss per share of 5.0p (2021: basic profit per
share of 46.9p as a result of the material exceptional profit) and fully
diluted loss per share of 5.0p (2021: fully diluted profit per share of
45.6p). Adjusted earnings per share was a profit per share of 4.4p (2021:
profit per share of 4.3p).
Basic EPS
Basic EPS was a loss of 5.0p per share in 2022, down from a profit of 46.9p in
2021, largely due to the sale of the discontinued businesses in FY21.
Diluted EPS
Diluted EPS is a calculation used to gauge the quality of a company's earnings
per share (EPS) if all share options are exercised. Diluted EPS was a loss of
5.0p per share in 2022 from a profit of 45.6p in 2021.
Basic adjusted earnings per share
Basic EPS was a profit of 4.4p per share in FY22 from a profit of 4.3p in
FY21.
Streamlined Energy and Carbon Reporting
Large UK companies are required to report their levels of greenhouse gases
(GHG) emissions in their annual report and accounts. This obligation is for
Scope 1 (direct) and Scope 2 (indirect) emissions, only to the extent that
emissions are the responsibility of the Company. Direct emissions originate
from combustion of natural gas and fleet vehicles, whilst indirect emissions
are based on purchased electricity.
Emissions are calculated following the UK Government GHG Conversion Factors
for Group Reporting 2020 and UK Government Environmental Reporting Guidelines.
Emissions are based on the Group's UK sales and operations. An intensity ratio
of carbon dioxide equivalent (CO2e) per £1m of revenue has been selected
which will allow a comparison of performance over the time and with other
similar types of businesses. The data below represents the GHG emissions from
the UK disposal of Quickline for the period up to the 10 June 2021. Continuing
UK operations comprising only central and head office functions emit less than
40MWh and are regarded as a low energy user. Accordingly, no emission or
energy consumption figures for the Company are included in the following
table. Carbon emissions for non-UK subsidiaries are not reported.
2022 2021
Tonnes CO2e Tonnes CO2e
Source of Emissions
Direct Emissions - Scope 1 - Gas and Vehicle fleet - 113
Indirect Emissions - Scope 2 - Electricity - 3
Indirect emissions - Scope 3 - Employee cars - -
Gross Emissions - 116
Turnover - UK discontinued operations £m - 3.2
Tonnes CO2e per £1m of revenue - 35.6
Energy consumption used to calculate emissions - MWh - 846
Accounting standards
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS), as endorsed and adopted for use in the
EU. There have been no changes to IFRS standards this year that have a
material impact on the Group's results. No forthcoming new IFRS standards are
expected to have a material impact on the financial statements of the Group.
Dividend
The directors do not recommend the payment of a dividend (2021: £Nil)
Going Concern
The Directors have prepared and reviewed projected cash flows for the Group,
reflecting its current level of activity and anticipated future plan for the
next 12 months, from the date of signing. The Group is currently loss-making,
mainly as a result of depreciation, amortisation and exceptional charges. The
business continues to grow customer numbers and revenue in key target markets
and continues to monitor the short-term business model of the Group.
The Board have identified the key risks, and these include:
• Slower revenue growth, EBITDA and cash generation if
sales activities, installations or activations decrease over the period
• Reduced ARPU if market pressures result in discounting
customer products to support them
• Increased churn could be experienced if services levels
are not as expected due to volumes of traffic, personnel shortages, and
capacity constraints
• Increased bad debt as customers suffer income loss
• Increased CAPEX costs to support growth targets or
shipping delays
The Board also recognises a number of significant mitigating factors that
could protect the future going concern of the business. These include:
• Super-fast Broadband is already an essential utility for
many and even more so now, it is likely to be one of the last services that
customers will stop paying for
• Increased self-install / tripods to offset any
installation delays
• Reduced CAPEX / discretionary spend
• Support from Network Partners for the business and
customers
• Strong support from banking partners with an increased
RCF facility of £10m
The Board has conducted stress tests against our business performance metrics
to ensure that we can manage any continuing risks. We recognise that a number
of our business activities could be impacted, and we have reflected these in
this analysis including supply chain disruptions, delays in sales or
installations, earnings, or cash generation. By modelling sensitivities in
specific KPIs such as volume of activations, churn, ARPU, margin, overhead and
FOREX, management is satisfied that it can manage these risks over the going
concern period.
Furthermore, management has in place and continues to develop robust plans to
protect EBITDA and cash during this period of uncertainty and disruption.
Under this plan identified items include reducing discretionary spend,
postponing discretionary Capex, reducing marketing, freezing all headcount
increases, working with suppliers on terms particularly our network partners
and ultimately seeking relief, as appropriate, from the various forms of
Government support being put into place.
The Board believes that the Group is well placed to manage its business risks
and longer-term strategic objectives, successfully. The latest management
information shows a strong net cash position, and in terms of volumes, ARPU
and churn, we are in fact showing a strong position compared to prior year and
budget and indeed the business is seeing a significant increase in demand
across all main territories. Accordingly, we continue to adopt the going
concern basis in preparing these results.
On behalf of the Board
Frank Waters
Chief Financial Officer
20 March 2023
Bigblu Broadband plc
Consolidated statement of comprehensive income
12 months ended 30 November 2022
2022 2021
Continuing Operations Notes £'000 £'000
Revenue from contracts with customers 31,220 27,067
Cost of sales (18,121) (14,899)
Gross profit 13,099 12,168
Distribution expenses 2 (7,480) (8,734)
Administrative expenses 2 (7,278) (4,332)
Operating profit (1,659) (898)
Finance costs 3 (124) (798)
(Loss) before tax (1,783) (1,696)
Taxation (Charge)/Credit on operations (1,031) 76
(Loss) from continuing operations (2,814) (1,620)
Profit from discontinued operations 4 (120) 28,373
(Loss)/Profit for the year (2,934) 26,753
Other comprehensive expense
Foreign currency translation difference 206 (355)
Total comprehensive (loss)/income for the year (2,728) 26,398
Total comprehensive (loss)/income for the year is attributable to:
Owners of Bigblu Broadband Plc
(2,728) 26,682
Non-controlling interests - (284)
Earnings per share from profit attributable to the ordinary equity holders of
the company
Total - Basic EPS 5 (5.0p) 46.9p
Total - Diluted EPS 5 (5.0p) 45.6p
Continuing operations - Basic EPS (4.8p) (2.8p)
Continuing operations - Diluted EPS (4.8p) (2.7p)
Discontinued operations - Basic EPS (0.2p) 49.7p
Discontinued operations - Diluted EPS (0.2p) 48.3p
Adjusted earnings per share from continuing operations attributable to the
ordinary equity holders of the company
Continuing operations - Adjusted Basic EPS
5 4.4p 4.3p
Continuing operations - Adjusted Diluted EPS 5 4.4p 4.2p
Bigblu Broadband plc
Consolidated statement of financial position
As at 30 November 2022
2022 2021
Notes £'000 £'000
Assets
Non-current assets
Property, plant and equipment 2,881 4,090
Intangible assets 7,433 5,576
Investments 5,830 5,672
Deferred tax asset 303 709
Total non-current assets 16,447 16,047
Current assets
Cash and cash equivalents 4,195 5,201
Inventory 1,142 699
Trade and other receivables 2,335 4,917
Total current assets 7,672 10,817
Total assets 24,119 26,864
Current liabilities
Trade and other payables (8,839) (9,420)
Provisions for liabilities and charges (685) (685)
Total current liabilities (9,524) (10,105)
Non-current liabilities
Other payables (559) (835)
Loans - -
Deferred tax liability (646) (13)
Total non-current liabilities (902) (848)
Total liabilities (10,729) (10,953)
Net assets 13,390 15,911
Equity
Share capital 8,763 8,749
Share premium 8,589 8,589
Share option reserve 6 309 -
Capital redemption reserve 6 26,120 26,120
Other equity reserve 6 - -
Foreign exchange translation reserve 6 (2,546) (2,430)
Reverse acquisition reserve 6 (3,317) (3,317)
Listing cost reserve 6 (219) (219)
Merger relief reserve 6 - -
Retained losses 6 (24,309) (21,581)
Capital and reserves attributable to owners of Bigblu Broadband Plc 13,390 15,911
Non-controlling interests - -
Total equity 13,390 15,911
Bigblu Broadband plc
Consolidated Statement of Cash Flow
12 Months Ended 30 November 2022
2022 2021
£'000 £'000
Loss after tax from Continuing operations (2,814) (1,620)
Profit after tax from Discontinued operations (120) 28,373
Profit for the year including discontinued operations (2,934) 26,753
Adjustments for:
Interest charge 124 852
Gain on disposal of subsidiaries - (28,942)
Amortisation of intangible assets 702 21
Release of grant payables - (285)
Depreciation of property, plant and equipment - owned assets 2,281 1,834
Depreciation of property, plant and equipment - ROU assets 761 836
Tax (credit) / charge 1,031 (76)
Share based payments 309 163
Foreign exchange variance and other non-cash items (102) (332)
(Increase) / Decrease in inventories (440) 39
(Increase) / Decrease in trade and other receivables (212) (2,418)
Increase / (Decrease) in trade and other payables (1,353) 829
(Gain) / loss on disposals of fixed assets (16) (8)
Cash (used in) / generated from operations 151 (734)
Interest paid (124) (411)
Tax paid (539) (495)
Net cash outflow from operating activities (512) (1,640)
Investing activities
Purchase of property, plant and equipment (1,191) (6,009)
Purchase of business (1,211) -
Purchase of intangibles (241) (53)
Cash transferred out of group in disposed of subsidiaries - (2,533)
Proceeds from sale of property, plant and equipment - 92
Proceeds from sale of subsidiary 2,843 31,094
Net cash generated/(used) in investing activities 200 22,591
Financing activities
Proceeds from issue of ordinary share capital 14 435
Return of capital to shareholders - (26,120)
Proceeds from bank revolving credit facility - 2,000
Loans (paid) - (8,400)
Investment by non-controlling interest - 2,000
Principal elements of lease payments (708) (971)
Net cash (outflow) generated from financing activities (694) (31,056)
Net (decrease)/increase in cash and cash equivalents (1,006) (10,105)
Cash and cash equivalents at beginning of year 5,201 15,306
Cash and cash equivalents at end of year 4,195 5,201
Note that the presentation of the cashflow for 2021 takes into consideration
the combined Continued and Discontinued movements in cash.
Bigblu Broadband plc
Consolidated Reserves Movement
12 Months Ended 30 November 2022
Share Capital Share Premium Other Reserves Revenue Reserve Total
£000 £000 £000 £000 £000
Note 6
At 30 November 2020 8,638 34,180 3,775 (32,403) 14,190
Acquisition of shares in subsidiary by non-controlling interest 422 422
Profit for the period
27,037 27,037
Issue of shares 111 324 435
Share option reserve 163 163
Foreign Exchange Translation 139 139
Return of Capital (25,915) 16,077 (16,282) (26,120)
Other comprehensive expense (355) (355)
At 30 November 2021 8,749 8,589 20,154 (21,581) 15,911
Loss for the period (2,934) (2,934)
Issue of shares 14 14
Share option reserve 309 309
Foreign Exchange Translation (116) (116)
Other comprehensive expense 206 206
At 30 November 2022 8,763 8,589 20,347 (24,309) 13,390
Bigblu Broadband plc
Notes to the financial statements
For the period ended 30 November 2022
1. Presentation of financial information and accounting policies
Basis of preparation
The condensed consolidated financial statements are for the full year to 30
November 2022.
The nature of the Group's operations and its principal activities is the
provision of last mile (incorporating Satellite and Wireless) broadband
telecommunications and associated / related services and products.
The Group prepares its consolidated financial statements in accordance with
International Accounting Standards ("IAS") and International Financial
Reporting Standards ("IFRS") as adopted by the United Kingdom. The financial
statements have been prepared on the historical cost basis, except for the
revaluation of financial instruments.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts in the financial statements. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions or estimates are significant to the financial statements are
disclosed further. The principal accounting policies set out below have been
consistently applied to all the periods presented in these financial
statements, except as stated below.
Going concern
Having reviewed the Group's budgets, projections, and funding requirements,
and taking account of reasonable possible changes in trading performance over
the next twelve months, the Directors believe they have reasonable grounds for
stating that the Group has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis in preparing the Annual Report and Accounts.
The Board has concluded that no matters have come to its attention which
suggest that the Group will not be able to maintain its current terms of trade
with customers and suppliers or indeed that it could not adopt relevant
measures as outlined in the Strategic report to reduce costs and free cash
flow. The latest management information including forecasts in terms of
volumes, debt position, ARPU and Churn are in fact showing a positive position
compared to prior year and budget. The forecasts for the combined Group
projections, taking account of reasonably possible changes in trading
performance, indicate that the Group has sufficient cash available to continue
in operational existence throughout the forecast year and beyond. The Board
has considered various alternative operating strategies should these be
necessary and are satisfied that revised operating strategies could be adopted
if and when necessary. As a consequence, the Board believes that the Group is
well placed to manage its business risks, and longer-term strategic
objectives, successfully.
Estimates and judgements
The preparation of a condensed set of financial statements requires management
to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities at each period end. The estimates and associated
assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis.
In preparing these condensed set of consolidated financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimating uncertainty were principally the
same as those applied to the Group's and Individual company's financial
statements for the year ended 30 November 2022.
Basis of consolidation
The condensed consolidated financial statements comprise the financial
statements of Bigblu Broadband plc and its controlled entities. The financial
statements of controlled entities are included in the consolidated financial
statements from the date control commences until the date control ceases. The
financial statements of subsidiaries are prepared for the same reporting
period as the parent company, using consistent accounting policies. All
intercompany balances and transactions have been eliminated in full.
2. Distribution and Administration Expenditure
Distribution and administration costs for the continued operations are
analysed below. This is non-GAAP information, in which the allocation is
unaudited.
2022 2021
£000 £000
Employee related costs 5,164 5,103
Marketing and communication costs 1,339 1,119
Logistics, Finance, IT, banking, insurance AIM and Other costs 1,495 1,369
Underlying costs 7,998 7,591
% of Revenue 25.7% 28.0%
Depreciation 2,076 1,390
Impairment of Fixed Assets 966 -
Amortisation 702 -
Underlying Depreciation and Amortisation 3,744 1,390
% of Revenue 12.0% 5.1%
Share based payments 309 163
Professional, legal and related costs associated with corporate activity 2,707 3,922
Identified Exceptional Costs 3,016 4,085
% of Revenue 9.6% 15.1%
Total 14,758 13,066
% of Revenue 47.3% 48.2%
3. Interest Payable and Finance Costs
2022 2021
£'000 £'000
Revolving Credit Facility interest payable 38 747
Other interest 6 -
Lease interest expense 78 105
Other finance costs 2 -
Total finance costs 124 852
Finance costs include the following amounts charged to the discontinued
operations:
Bank loan interest payable - 38
Lease interest expense - 16
Total interest payable - 54
Interest split as follows:
Continued business 124 798
Discontinued business - 54
Total interest payable 124 852
Interest in the Condensed consolidated statement of comprehensive income is
total finance costs less the element associated with the discontinued
business.
The Revolving Credit Facility interest payable is in respect of the Santander
facility.
4. Profit and loss on Discontinued Operations
There were no business disposals in 2022. Prior year 2021 relates to the sale
of QCL Holdings Ltd together with its subsidiaries to Northleaf and is
reported in the prior year financials below as a discontinued operation.
Group financial information for 2021 set out below is thus a combination of
these two discontinued operations.
Financial performance and cash flow information
2022 2021
£'000 £'000
Revenue - 3,091
Expenses (120) (3,896)
Loss before tax (120) (805)
Taxation on operations - (53)
Loss after tax of discontinued operations (120) (858)
Gain on sale of the subsidiary after tax (see below) - 25,925
Adjustment to fair value of deferred consideration - 3,306
(Loss) / Profit from discontinued operations (120) 28,373
Exchange differences on translation of discontinued operations - -
Other comprehensive income from discontinued operations - -
Net cash inflow/(outflow) from operating activities - (3,133)
Net cash inflow from investing activities - 25,531
Net cash (outflow) from financing activities - 1,666
Net increase in cash generated by the subsidiaries - 24,064
Details of sale of subsidiary
Consideration received or receivable:
Cash - 31,094
Investments - 5,600
Fair value of contingent consideration - -
Total disposal consideration - 36,694
Carrying amount of net assets sold - (13,660)
Elimination of non-controlling interest - 5,865
Expenses of sale - (2,974)
Other Provisions - -
Gain on sale before tax - 25,925
Corporation tax expense on gain - -
Gain on sale after tax - 25,925
5. Profit / (Loss) per share
Basic earnings per share is calculated by dividing the profit/(loss)
attributable to shareholders by the weighted average number of ordinary shares
in issue during the period.
Reconciliation of the profit/(loss) and weighted average number of shares used
in the calculation are set out below:
30 November 2022
Weighted
Average Per Share
Profit/(Loss) Number of Amount
£'000 Shares Pence
Basic and diluted EPS
Basic EPS - Loss attributable to shareholders(1) (2,934) 58,376,211 (5.0)
Loss attributable to shareholders (2,934)
Add back exceptional costs 2,707
Add back share based payments 309
Add back loss on discontinued operations 120
Adjusted Profit attributable to shareholders from continuing operations
202
Add back impairment of Fixed Assets 966
Add back amortisation 702
Add back deferred taxation adjustment in Norway 714
Adjusted EPS - Adjusted Profit attributable to shareholders from continuing
operations(2)
2,584 58,376,211 4.4
Basic Diluted EPS - Loss attributable to shareholders (2,934) 58,828,959 (5.0)
Adjusted Diluted EPS - Adjusted Profit attributable to shareholders from
continuing operations as above(2)
2,584 58,828,959 4.4
30 November 2021
Weighted Average
Per Share
Profit/(Loss) Number of Amount
£'000 Shares Pence
Basic and diluted EPS
Profit for the financial year 26,753
Add: adjustment for non-controlling interest share of losses (284)
Basic EPS - Profit attributable to shareholders(1) 27,037 57,697,017 46.9
Profit attributable to shareholders 26,753
Add back exceptional costs 3,922
Add back share based payments 163
Less profit on discontinued operations (28,373)
Adjusted EPS - Adjusted Profit attributable to shareholders from continuing
operations(2)
2,465 57,697,017 4.3
Basic Diluted EPS - Profit attributable to shareholders 27,037 59,251,343 45.6
Adjusted Diluted EPS - Adjusted Profit attributable to shareholders from
continuing operations as above(2)
2,465 59,251,343 4.2
(1) The loss attributable to shareholders of £2.9m (2021: £27.0m profit) is
the loss for the financial year of £2.9m (2021: £26.8m profit) after
adjusting for the add back of the loss attributable to non-controlling
interests of £Nil (2021: £0.3m loss).
(2) Non-GAAP measure, the profit attributable to shareholders from continuing
operations is £2.6m (2021: £2.5m profit) after adjusting for the loss
related to the sale of the discontinued operations in FY21 and adding back
exceptional costs, share based payments, impairment of Fixed Assets,
amortisation and the deferred tax adjustment in Norway
6. Other capital reserves
Listing Merger Reverse Other Foreign Exchange Capital Share Total
Cost Relief Acquisition Equity Translation Redemption Option Capital
Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserves
£000 £000 £000 £000 £000 £000 £000 £000
At 30 November 2020 (219) 5,972 (3,317) 1,294 (2,569) - 2,614 3,775
Foreign Exchange Translation 139 139
Credit to equity for equity settled Share based payments 163 163
Return of Capital (5,972) (1,294) 26,120 (2,777) 16,077
At 30 November 2021 (219) - (3,317) - (2,430) 26,120 - 20,154
Foreign Exchange Translation (116) (116)
Credit to equity for equity settled Share based payments 309 309
At 30 November 2022 (219) - (3,317) - (2,546) 26,120 309 20,347
· Listing cost reserve
· The listing cost reserve arose from expenses incurred on AIM listing.
· Other equity reserve
· Other Equity related to the element of the BGF Convertible Loan which
has been grossed up but may be shown net.
· Reverse acquisition reserve
· The reverse acquisition reserve relates to the reverse acquisition of
Bigblu Operations Limited (Formerly Satellite Solutions Worldwide Limited) by
Bigblu plc (Formerly Satellite Solutions Worldwide Group plc) on 12 May 2015.
· Foreign exchange translation reserve
· The foreign exchange translation reserve is used to record exchange
difference arising from the translation of the financial statements of foreign
operations.
· Capital Redemption reserve
· The capital redemption reserve relates to the cash redemption of the
bonus B shares issued in order to return c.£26m to ordinary shareholders.
· Share option reserve
· The share option reserve is used for the issue of share options during
the year plus charges relating to previously issued options.
· Merger relief reserve
· The merger relief reserve relates to the share premium attributable to
shares issued in relation to the acquisition of Bigblu Operations Limited
(Formerly Satellite Solutions Worldwide Limited)
7. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed within
the financial statements or related notes.
8. Availability of the Full Year Report
A copy of these results will be made available for inspection at the Company's
registered office during normal business hours on any weekday. The Company's
registered office is at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
The Company is registered in England No. 9223439.
A copy of the full year report will be available in May and can also be
downloaded from the Company's website at https://www.bbb-plc.com.
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