REG - Bigblu Broadband PLC - Final Results
21/03/2022 07:00
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RNS Number : 3512F Bigblu Broadband PLC 21 March 2022
Bigblu Broadband plc
('BBB', the 'Company' or the 'Group')
Audited final results for the year ended 30 November 2021
Above market expectations and positioned for growth in FY 2022
Bigblu Broadband plc (AIM: BBB.L), a leading provider of alternative
super-fast and ultra-fast broadband services, announces its audited results
for the year ended 30 November 2021.
The last 18 months have been transformational for the Group following a period
of consolidation of the Satellite Market in Europe and further afield. In
late 2020, the Company successfully disposed of its UK and European Satellite
operations to Eutelsat S.A. ("Eutelsat") and in 2021, the Company disposed of
its holding in QCL Holdings Limited (the "Disposal"), the holding company
for Quickline Communications Limited ("Quickline"), to global private markets
investment firm Northleaf Capital Partners ("Northleaf").
Following the cash from the successful disposals being received by the
Company, not only did the Company pay down its outstanding debt in its
entirety, but the Board also chose to implement a payment to Shareholders by
way of a Return of Capital through a bonus issue of a new class of B Shares "B
Share Scheme" which the Company redeemed for cash, in order to return 45 pence
per existing ordinary share to shareholders, in the most efficient manner
possible, whilst maintaining their pro rata interest in the Company.
BBB now has a robust platform from which to grow the remaining businesses and
is well positioned in the satellite, fixed wireless and 5G broadband markets
in the territories in which it operates. The Board believes that BBB is firmly
on the front foot with a strong balance sheet and remains focused on
maximising and delivering shareholder value from each of the Company's
remaining businesses; Australasian operations (Skymesh Pty Limited) based in
Brisbane and the Nordics operations based in Oslo (Bigblu Norge AS) (the
"Continuing Group"). BBB also has a residual interest in Quickline in the form
of equity, loan notes and potential deferred cash consideration.
Financial Highlights - Continuing Operations
· Total revenue increased 15.8% to £27.1m (FY20: £23.4m)
· Like for like(1) revenue growth on a constant currency basis of 15.3%
(FY20: 4.3%)
· Adjusted EBITDA(2) increased 11.1% to £4.6m (FY20: LFL(1) £4.1m)
· Adjusted PAT(3) improved to £2.5m (FY20: £1.1m)
· Reported Profit for the period was £27.0m including profit on the
disposal of Quickline
· Adjusted EPS(4) profit of 4.3p (FY20: profit 1.9p) with Reported EPS
of 46.9p (FY20: 16.8p)
· Adjusted Operating cash inflow(5) of £5.2m (FY20: Outflow £0.4m)
· Adjusted Free cash inflow(5) of £2.1m (FY20: Outflow £2.6m)
following capital investment of £2.2m and before exceptional items of £3.9m
· Net cash(6) was £5.2m, after debt repayment in full of £8.4m and
return of capital of £26.1m (FY20: Net cash £7.4m with LFL £5.2m)
Financial Highlights - Total Operations (Including Quickline)
· Total revenue for the Group was £30.3m (FY20: LFL(1) £27.2m)
· Adjusted EBITDA for the Group was £5.3m (FY20: LFL(1) £4.6m)
Operational Highlights
· Successful disposal of the Company's shareholding in Quickline to
Northleaf, for a consideration of up to £48.6m, comprising £31.1m cash, up
to a maximum £10.1m deferred consideration and £7.4m rolled equity and loan
note investment, representing a return of up to 5.8x the cost of BBB's
investment over a three-year period and an initial book gain of £25.9m.
· Total customers as at 30 November - 59k (FY20: 57k).
· Strong organic growth in customer numbers in Australia offset by
continued pressure on customer numbers in the Nordics due to exceptional churn
relating to the phased demounting of loss-making sites.
· SkyMesh has become the clear market leader in Australia having been
named Best Satellite NBNCo Provider for three years in a row to 2021.
· Regional expansion into New Zealand through secured Partnership
Agreement with Kacific and first customers installed.
· Completion of Bigblu Norge's infrastructure upgrade and demounting of
unprofitable site program within target timelines and at a lower cost than
budgeted.
· Bigblu Norge has also recently entered into a distribution agreement
with Telenor to provide next generation ultrafast broadband via wireless 5G
delivering speeds up to 500 Mbps with unlimited data packages and although
running six months behind due to equipment shortages, has successfully
delivered its first customers in Norway on this service and momentum is
building with great customer satisfaction.
Post Period End Highlights
· Acquisition of customers and assets of Clear Networks (Pty) in
Australia
· BB Norge appointed a new Managing Director Stig Myklebust from the 1
February 2022 to strengthen the management team
(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 and adjusts
for constant currency and business disposed of in the period are excluded from
the calculation.
(2)Adjusted EBITDA is stated before interest, taxation, depreciation,
amortisation, 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.
(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. Adjusted Free
cash flow being cash (used)/generated by the Group after investment in capital
expenditure, servicing of debt and payment of taxes. Both excludes exceptional
items.
(6 )Cash / Net debt excludes lease-related liabilities of £1.1m of under IFRS
16 (FY20 £2.5m).
Financials
Total Group revenues (including Quickline to the date of disposal) for the
year to 30 November 2021 were £30.3m and adjusted EBITDA for the year was
£5.3m.
Total Continuing Group revenues for the year to 30 November 2021 were £27.1m
(FY20: £23.4m). Like for like total Continuing Group revenues for the year to
30 November 2021 on a constant currency basis up 15.3% (FY20: 4.3%). Total
Continuing Group adjusted EBITDA was £4.6m (FY20: £4.1m). As at 30 November
2021, total customers were 59k.
As at 30 November 2021, the net cash position of the Group was £5.2m (FY20
£7.4m net cash, LFL £5.2m) having used £8.4m of the consideration received
on the disposal to pay down debt in full and having returned £26.1m to
shareholders. The Group has also renegotiated a new £5m revolving credit
facility with Santander, which remains undrawn at the year end.
The Group has a very clear focus to continue to deliver shareholder value. It
will seek to further grow its presence in Australia, where it is already the
market leader, along with expansion into New Zealand. The focus for the
Nordics is to revitalise the customer proposition having undertaken the
upgrade and demounting projects in 2021.
Overall, the Group's financial performance has been robust despite the wider
impact of the COVID-19 pandemic on the global business environment. The Board
is delighted that the Group has been able to service its customers well
throughout the pandemic whilst also delivering a strong financial performance.
COVID-19
The business continues to plan a flexible response with regard to the
continued concerns of COVID-19. The Group's response is based on following
guidance and legislation from the local government and health authorities in
the territories in which it operates. Managers have identified those employees
who are able to work remotely and will continue to allow employees to practise
"social distancing" when they are within Company offices. The external IT team
(Kick ICT) are working to allow greater numbers of people to work remotely so
that the Company can maintain a full operation if further restrictions are
placed on travel or assembly. In all territories, the Group has reinforced
messages around the importance of workplace and personal hygiene as the best
preventative measure and are advising individuals to follow public health
guidance should they develop symptoms or if they have been exposed to
confirmed cases.
Outlook
Having repaid bank debt in full and established a net cash positive position,
the Group is continuing to generate positive underlying operating cashflows
from its Continuing Operations.
The Board is focused on maximising value and returns for shareholders and the
combination of balance sheet strength, favourable market dynamics and
opportunities available to its 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 / Richard Chambers (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 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 delivering between 30 Mbps and 150 Mbps for consumers, and up to 1
Gbps for businesses. BBB provides customers 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
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
2021 was another important year for the Group, with the Disposal of the
Group's majority interest in Quickline, the UK fixed wireless business, to
Northleaf. Following completion in June 2021, BBB's remaining operations
consist of our Australasian operations and our Nordics business. The Company
also continues to hold a minority interest in Quickline.
In the six years since listing, the Group has successfully executed its
strategy of becoming a leading provider of rural broadband solutions,
realising shareholder value through the disposals of its UK and European
satellite operations and Quickline, and has established a market leading
presence in Australasia, via SkyMesh and a strong Nordics presence.
The Directors consider that the Group has created a strong value proposition
by combining management experience and core IT systems which enable the Group
to control costs, increase margins and average revenues per user (ARPU). The
Directors believed that the disposals in 2020 and 2021 not only realised
significant value for the Company's shareholders but left the business with a
robust platform for growth and an established position across our markets from
which to grow and service our customers. At the same time, the Group has
focused on reducing costs to align these to the relative size of the business.
The Continuing Group
Following the Disposal, the Continuing Group has two distinct businesses with
59k customer connections and given their respective strengths, each of the
business units has potential opportunities to enhance further shareholder
value.
A review of Continuing Operations:
Australasia
Our SkyMesh business continues to be the leading Australian satellite
broadband service provider. For the year ended 30 November 2021, total
revenues from SkyMesh were £21.8m, adjusted EBITDA of £4.0m and as at 30
November 2021, Skymesh had 50k customers (FY20: 46k). Having been named Best
Satellite NBNCo Provider in 2019, 2020 and again in 2021, SkyMesh continues to
secure over 50% market share of net new satellite adds under the NBNCo scheme
as demand continues to grow for the Sky Muster Plus product. SkyMesh is seeing
growth in the business sector subsequent to the release of a new business
focused product by NBNCo and this momentum will continue into 2022.
Having assessed the opportunity in this region, we continue to believe that,
whilst the organic growth remains highly impressive, this growth could be
complemented by certain partnerships or acquisitions that could accelerate the
Group's presence into the wider Australasia region. As announced in February
2021, SkyMesh signed an agreement with Kacific to provide services into New
Zealand and has signed its first customers in December 2021. In addition,
post-period end, the Company completed the acquisition of certain assets and
customers from Clear Networks (Pty) Ltd ("Clear"). Clear is an Australian ISP
based in Melbourne offering a suite of NBNCo broadband products, as well as a
private fixed wireless network primarily serving the greater Melbourne area.
This acquisition has helped the Company strengthen its presence in this area
as SkyMesh looks to grow its presence across Australia.
Overall, the Board continue to believe that there are excellent growth
opportunities for SkyMesh to not only increase its presence in its core market
of Australia but also to expand its reach across the Australasian region.
Nordic Region
Our Nordics business, Bigblu Norge, has a large in country footprint and has
historically delivered strong EBITDA and Free Cash Flow. However, over recent
years the performance of the region has proved a challenge as the Company's
offering in the region suffered from high levels of customer churn due, in the
Board's opinion to low broadband speeds and increased competition from fibre
offerings as well as the loss of customers as the company demounted loss
making sites. The challenges experienced in the Nordic region in the period
saw a reduction in both revenue and adjusted EBITDA. Total revenue from the
Nordics for the year ended 30 November 2021 was £4.6m and adjusted EBITDA was
£1.9m.
As previously announced, in order to address these challenges, the Group
focused on upgrading its existing infrastructure including 55 towers so as to
be able to offer speeds up to 100Mbps to over 1500 customers whilst also
demounting 100 loss making sites. The Board believes that this demounting of
loss-making sites will help the region to make great strides in improving its
EBITDA. The Company ended the period on 9k customers in the region (FY20:
11k), which includes the loss of 4k customers as a result of the withdrawal of
the loss-making demounted sites together with underlying growth of 2k
customers.
The Board believes that it now has a clear plan in place to diversify the
Company's customer offering in the Nordics and broader routes to market are
expected to help drive customer growth. Through a distribution agreement
with Telenor, we have started offering our new 5G Fixed Wireless product with
speeds up to 500Mbps and unlimited data packages. Due to delays in equipment
availability, this 'white-label' initiative is running approximately six
months behind schedule and as a result, this new 5G Fixed Wireless product was
launched during Q1 2022. The Board believes that this initiative will allow us
to complete our strategy of delivering a high-quality broadband experience to
all customers wherever they reside: we will deliver true wireless broadband to
all end roads and rural areas. In addition, the Company continues to expand
its offerings through partnerships and resellers, as well as reaching out to
the Finnish and Swedish markets.
More recently, one of our Satellite network partners that has customers in the
Ukraine was targeted by a cyber event caused by the terrible situation in
Ukraine. This event has impacted c.3k of the Company's Norwegian satellite
customers. Progress has been made in the resolution of the cyber event and the
Nordic team are in regular dialogue with the network provider on solutions and
timescales and also with our customers to ensure that they are supported as
far as possible. However, should this not be resolved rapidly, a prolonged
period without service may result in increased level of churn from the
impacted customers.
Whilst these are near term difficulties to be addressed in the region,
overall, the Directors consider that the Group's ability to offer Fixed
Wireless Access, satellite and 5G solutions in the Nordics means that there is
potentially significant scope to expand its presence and reach in this region
and create further shareholder value.
Continuing Operations Performance
Net organic customer growth in 2021, was approximately 6k (excluding the 4k
loss of customers in the Nordics following the demounted loss-making sites),
resulting in a closing continuing customer base of 59k (FY20 57k).
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 £27.1m (FY20: £23.4m) with revenue growth of
15.8%.
Revenue in satellite was £21.7m, up on prior year by 26% (FY20: £17.2m) due
in the main to strong customer growth in Australasia. Revenue in fixed
wireless was £4.6m, down on prior year by 27% (FY20: £6.2m) due to the
demounting of the loss-making sites which is now complete in the Nordics.
Recurring revenue, defined as revenue generated from the Group's broadband
airtime, which is typically linked to contracts at £25.6m represented 94% of
total revenue (FY20 £21.1m represented 89% of total revenue).
Average Revenue Per User ("ARPU") increased 7% year on year to £39.30 (FY20:
£36.65) due in the main to a higher percentage mix of larger packages across
the regions. Average customer churn reduced fractionally to 21.3% (FY20:
21.7%).
Adjusted EBITDA for the period was £4.6m, showing a solid underlying
performance, and representing an adjusted EBITDA margin of 17% compared to
£4.1m in FY20 on a like for like basis and an adjusted EBITDA margin of 17%.
This continues to demonstrate the good progress made in driving the quality of
the consumer offering, the margin review work being undertaken and improving
cost efficiencies. Importantly, the Group exceeded both its internal and
market expectations for its revenue, EBITDA and Cash targets for Continuing
Operations, despite the Global challenges posed by COVID-19.
Discontinued operations
Quickline
In December 2020, Quickline won the competitive tender to provide
significantly improved broadband speeds to premises across North Yorkshire.
This was the fourth tender that Quickline had won under the BDUK Superfast
Programme since August 2020 with the four broadband contracts being valued at
around £30m.
Following an approach, the Group sold its majority holding in Quickline
Communications ("Quickline") to global private markets investment firm
Northleaf Capital Partners ("Northleaf") during the period. The Disposal
valued BBB's shareholding in Quickline at up to £48.6 million, representing a
return of up to 5.8x the cost of its investment over a three-year period.
The Group received £31.1 million in cash on completion, with up to a further
£10.1 million payable as deferred contingent consideration that is subject to
certain performance conditions being met by no later than 31 March 2022, or in
certain circumstances, 31 May 2022.
In addition, the Group retained an interest in the new holding company
structure, including both equity and loan notes, which was valued at the time
of transaction at up to £7.4m.
As disclosed when the Disposal was announced, the deferred contingent
consideration is dependent on achieving certain roll-out and subsidy
milestones. Whilst progress is being made in scaling up the organisation in
terms of people and systems, the continued global shortage of microchips
affecting the supply of 5G radio equipment means that the milestones required
to deliver the maximum amount due for the deferred contingent consideration
are unlikely to be met in full, partially reducing the amount payable. The
Board continues to work closely with Quickline to maximise the deferred
contingent consideration payable to the Group.
Accelerating Technology Evolution
Products
Our fixed wireless business in the Nordics has benefited from significant
advances in technology, improving speeds and throughput by the recent
investment made by the Group through an upgrading program which is now
complete. In addition, 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, 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 next 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 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
We use a digital-first strategy to both acquire and retain new and existing
customers. 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 as clearly demonstrated 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 fixed fibre broadband to the premises is unlikely to become
a reality for many customers.
In Australia, SkyMesh commanded a 50% market share of net new adds under the
Government funded NBNCo scheme during the last financial year. This
performance has continued into Q1 FY22.
Post Balance Sheet Events
We highlight the following post balance sheet events:
SkyMesh, Australia
The Company completed the acquisition of customers and certain business assets
from Clear Networks (Pty) Ltd ("Clear") in January 2022. Clear is an
Australian ISP based in Melbourne offering a suite of NBNCo broadband
products, as well as a private fixed wireless network serving primarily the
greater Melbourne area. This acquisition has helped the company strengthen its
presence in this area as SkyMesh looks to grow its presence across Australia.
Clear has 2.2k customers (3k connections) which were acquire for an initial
purchase price of AUS$2.4m (£1.3m) with a further maximum earn out potential
of up to AUS$0.5m (£0.3m). The earn out based on the total contract value
of the sales pipeline delivered in the 12 months post completion.
Current Trading
The Group has positioned itself at the forefront of the alternative super-fast
and ultrafast broadband industry in its chosen markets. The Group's product
portfolio and expanding routes to market mean that it remains one of the
largest and most recognised companies in the geographies where we are present.
During the current year to date, the Group has continued to show year on year
growth while still benefiting from the strong visibility afforded by the high
percentage of recurring revenues. Our Australasian operations are
demonstrating robust year on year performance. As noted above, our Nordics
business still has a number of headwinds to overcome including the cyber event
on one of our Satellite network providers into the Nordic region which is
impacting c.3k customers but with the new Management team in Norway we remain
positive for the region. We believe we will continue to deliver Group year on
year growth.
In the current environment, we continue to monitor potential impacts on the
business of COVID-19, in which we continue to support staff and customers
during these difficult times.
We 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, in its Continuing Operations, valuable
assets that have established a meaningful market position in each of 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
21 March 2022
FINANCIAL REVIEW
2021 was another significant year for the Group having exceeded both its
internal and market expectations for its Revenue, EBITDA and Cash targets for
Continuing Operations, despite the Global challenges posed by COVID-19. In
addition, the Group repaid all bank debt (£8.4m) and returned £26.1m to
shareholders by way of a bonus issue of a new class of B shares, which the
Company redeemed for cash in order to return 45 pence per Ordinary Share to
Shareholders.
The focus of the Board now turns to creating additional shareholder value from
the Continuing operations being our Australian operations (SkyMesh Pty
Limited) and, our Nordics business (Bigblu Norge AS) (together, the
"Continuing Group"). In addition, the Company also continues to hold a
minority interest in Quickline following its disposal to Northleaf.
The disposal of the Group's majority holding in Quickline to Northleaf, was
agreed in April 2021 and completed in June 2021 after Shareholder approval.
Northleaf are a global private markets investment firm with US$18 billion in
private equity, private credit and infrastructure commitments under
management. The consideration due to the Company following the Disposal was
total cash of up to £41.2m of which £31.1m was paid on completion, with a
further maximum £10.1m deferred contingent consideration that is subject to
certain performance conditions being met by 31 March 2022, or in certain
circumstances, 31 May 2022; and £5.6m being satisfied in shares (£2.2m) and
Loan Notes (£3.4m at an interest rate of 4.5% pa) that were issued to the
Group on completion and an additional award of Loan Notes (with an option to
convert partially into equity) of up to £1.8m subject to the conditions of
the deferred contingent consideration also being met.
At the time of the announcement of the Disposal, the Board of the Company made
it clear that it would explore means of returning any surplus cash to
shareholders within BBB's current financial year. Following completion of the
Disposal, and receipt of the initial cash consideration, the Company had
outstanding gross debt of £8.4m and gross cash of approximately £41m.
After due and careful consideration of the investment requirements, and
opportunities, of the Group, the Board announced the return of £26.1m in
aggregate to Shareholders and chose to implement this as a return of capital
through a bonus issue of a new class of B shares, which the Company redeemed
for cash in order to return 45 pence per Ordinary Share to Shareholders. This
transaction return of value was completed in October 2021 following
shareholder approval. In addition, the Company repaid the balance of all
outstanding debt (£8.4m) and secured a new facility with its bank Santander,
of £5m. As at 30 November 2021, this facility remained undrawn.
Given the strength of the balance sheet, the Board remains focused on
delivering further increases in shareholder value from its Continuing
Operations through organic growth, with the view of possible acquisitions in
the territories we operate in. The financial review will therefore focus
primarily on the performance of the Continuing Operations.
Financial Review
Total Like-for-Like results - Including Continuing and Discontinued Operations
Total revenue including recurring airtime and other income (equipment sales
and installation sales) covering continuing operations for 12 months and
discontinued operations to the date of disposal, was £30.3m (FY20: £27.2m).
Adjusted EBITDA covering continuing operations for 12 months and discontinued
operations to the date of disposal was £5.3m (FY20: £4.6m), representing an
adjusted EBITDA margin of 16.9% (FY20: 23.0%).
Depreciation, excluding 'right of use assets', decreased to £2.7m in FY21
from £5.6m in FY20 in line with the reduced scale of the continuing
operations but reflecting increased investment in the Nordic region.
Amortisation reduced to £21k in FY21 from £1.6m in FY20 and related to the
assets of the discontinued operations. FY20 included an impairment charge of
£0.2m for our investment in JHCS which was fully integrated into the books
and operations of Quickline.
Finance costs were £0.9m in FY21 (down £6.2m on FY20 (FY20: £7.1m), with
£0.3m (FY20: £1.1m) relating to the revolving credit facility (RCF), £0.5m
relating to the costs associated with the settlement of the £8.4m (being the
write off of capitalised debt raise costs £0.5m on the original £30m RCF)
debt repayment and £0.1m for lease interest (£0.1m related to the
discontinued business). This reduction from FY20 was due to the repayment of
the Company's BGF redemption premium (£5.5m) following the refinancing.
Financial Review - Continuing Operations
Key Performance Indicators for Continuing Operations
The Group utilises a number of Key Performance Indicators ('KPI's') to measure
performance against our strategy. A description of these KPI's and performance
against them for continuing operations is set out below.
KPI 2021 2020 Description 2021 performance
Customer Base 58,832 57,215 Represents total gross organic connections plus acquisitions, less disposals, 4.4% increase.
less lost customers (churn) and base management, including demounting.
Underlying Customer Net Organic Connections 6,024 6,161 Represents gross organic connections in the period less lost customers (churn) Connections split c.4k Australia and c.2k Norway.
in the period. Excludes exceptional churn of 4.4k customers associated with
the demounting program in Norway.
Gross Underlying Churn 21.3% 21.7% Gross underlying churn defined as the number of subscribers who discontinue Slight decline in underlying churn. Underlying churn rate of 28.6% in
their service as a percentage of the average total number of subscribers Australia and 15.2% in Norway (39% in Norway Including demounting churn). Net
within the period and excludes exceptional churn in association with the churn (incl Norwegian demounting was 28.1% versus 21.7% in FY20).
demounting program in Norway.
ARPU £39.30 £36.65 Calculated by dividing total revenues from all sources by the average customer Higher by 7.2% due to improved product mix and increased recurring revenues up
base. 5% to 94%.
Revenue £27.1m £23.4m Like for like "LFL" revenue treat acquired/disposed businesses as if they were Total Revenue increased by 15.8%. LFL revenues in 2020 were £23.4m, after
owned for the same period across both the current and prior year and adjusts £0.1m of currency movements, resulting in a 15.3% increase LFL revenues of
for constant currency and changes in the commercials of the PPP contract and £3.5m on a constant currency basis.
accounting treatment for Grants.
Adjusted EBITDA £4.6m £4.1m Earnings before share based payments, depreciation, intangible amortisation, LFL EBITDA increase of 11.1% driven by organic revenue growth. EBITDA Margin %
impairment costs, acquisition costs, one-off employee related costs, deal held constant at c 17% despite increased marketing spend of £0.4m.
related costs and start-up costs is the measure of the Group's operating
performance. It evaluates performance without factoring in financing
decisions, accounting decisions or tax environments or provisions for
potential legal costs, share based payments, acquisition costs and
fund-raising fees.
Adjusted Operating Cash Flow - Continuing Operations £5.2m (£0.4m) Adjusted Operating cash flow relates to the amount of cash generated from the Adjusted Operating cash inflow due to increased EBITDA, and improvement in
Group's operating activities and is calculated as follows: Profit/(Loss) Working capital.
before Tax adjusted for Depreciation, Amortisation, Share Based Payments and
adjusting for changes in Working Capital and non-cash items.
Adjusted Free Cash Flow - Continuing Operations £2.1m (£2.6m) Cash (used)/generated by the Group after investment in capital expenditure and Adjusted Free Cash Flow improved in year following improvements in EBITDA and
servicing debt. working capital. There was capital expenditure in the year of £2.2m to
support the upgrading projects in Norway.
Basic EPS 46.9p 16.8p Basic Earnings per share (EPS) is the portion of the Continued and Reflects gain on disposal of majority interest in Quickline to Northleaf,
discontinued business's profit (£27.0m) divided by the weighted average together with improved underlying trading.
number of shares.
Adjusted EPS 4.3p 1.9p Adjusted Earnings per share (EPS) is the Continued business's profit after tax Improved due to underlying trading performance and lower underlying interest
(£2.5m) before exceptional costs divided by the weighted average number of and taxation.
shares.
Total customers at the period end including in flight customers for continuing
operations were 59k (FY20: 57k). During the year we delivered underlying 6k
net adds (FY20: 6k) This is summarised as follows:
FY21 FY20 Comments
000 000
Organic
Opening base 57.2 51.1
Inflight customers 1.3 1.0 30.0% increase
Gross Adds 19.1 18.0 6.1% increase
Churn (14.4) (12.9) 11.6% increase
Underlying Net Growth 6.0 6.1
Exceptional churn (4.4) 0.0
Closing Base 58.8 57.2
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) decreased to an average annualised churn rate of 21.3% in
FY21 (FY20: 21.7%), before exceptional churn of 4.4k.
In our Nordics business underlying churn was 15.2% (39% including exceptional
demounted customers). (FY20: 34.8%).
In our Australian business underlying churn was 28.6% (FY20: 20.3%) due to a
number of technical challenges on the Skymuster plus product which we are
working with NBNCo on resolving.
In the first three months of FY22, underlying churn has reduced, and
importantly we are starting to roll out next generation products in Australia,
New Zealand and Norway.
Continuing Operations - Revenue
Total revenue including recurring airtime and other income (equipment sales
and installation sales) for continuing operations for the period increased by
£3.7m (16%) to £27.1m (FY20: £23.4m). Total revenue on a like-for-like
constant currency basis increased in the year by 15.3%, (FY20: increase 4.3%)
as the Group continued to add customers during the year with higher ARPU.
ARPU, calculated by dividing total revenues from all sources by the average
customer base, in 2021 was £39.30 per month (FY20: £36.65) due to higher
revenues, specific to the Skymuster Plus products in Australia.
Revenue in the period from satellite was £21.7m (FY20: £17.2m) which
reflected continued strong organic growth in our Australian business, and
revenue from fixed wireless reduced to £4.6m (FY20: £6.2m), due to the known
challenges faced in the period by our Nordics fixed wireless businesses
including the demounting of loss-making mast infrastructure.
Recurring revenue, defined as revenue generated from the Group's broadband
airtime, which is typically linked to contracts and monthly subscriptions, was
£25.6m in the period, representing 94% of total continuing revenue (FY20
£21.1m representing 89% of total revenue).
Continuing Operations - Margins and profitability
Gross profit margins remained materially in line with previous year at c.45%.
(FY20: c.46%)
Distribution and Administrative Expenses, pre-exceptional costs, increased to
£9.2m (FY20: £8.4m) due to increased headcount costs and marketing costs.
Post items identified as exceptional in nature, these expenses increased to
£13.1m (FY20: £8.6m) representing 48.2% of revenue (FY20: 36.5%) due to
specific deal related and operational exceptional costs.
Adjusted EBITDA increased 11% for the period at £4.6m representing an
adjusted EBITDA margin of c17% compared to £4.1m in FY20 and an adjusted
EBITDA margin of c17%.
Continuing Operations analysis
A reconciliation of the adjusted EBITDA to adjusted PAT of £2.5m (FY20:
£1.1m profit) is shown below:
2021 2020
£000 £000
Adjusted EBITDA 1 4,577 4,126
Depreciation 2 (1,390) (1,335)
Amortisation 3 - (18)
Adjusted EBIT 3,187 2,773
Share based payments (163) (332)
Continuing Operations operating profit - pre-exceptional items 3,024 2,441
Exceptional items relating to M&A and restructuring activities 4 (3,922) (158)
Continuing Operations Statutory operating (loss)/profit - post exceptional (898) 2,283
items
Adjusted EBIT 3,187 2,773
Underlying interest 5 (798) (1,397)
Tax credit/(charge) 6 76 (262)
Adjusted PAT 2,465 1,114
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% to £4.6m (FY20: £4.1m).
2. Depreciation increased to £1.4m in FY21 from £1.3m in FY20 due to
the capitalisation of costs associated with the upgrading project in Norway
(£1.9m) and IT systems setup in Australia (£0.2m)
3. Underlying amortisation reduced to Nil from £18k in FY20 as a result
of historic acquisitions being fully written down. During the year we
undertook a full review of 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. £2.0m (FY20: £0.3m) 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. £0.4m (FY20: £0.1m credit release of overprovision) employee
restructuring costs primarily in the Nordics.
c. £0.6m (FY20: £nil) associated with the cost of the demounting
program in Norway
d. £0.8m costs related to the return of capital to shareholders
e. £0.1m setup costs for the New Zealand operations
5. The interest charge in the year related to the RCF facility with
Santander (£0.7m) and lease liabilities (£0.1m). In FY22 we expect the
interest charge to be materially lower on the existing facility
6. The tax credit relates to our Australia business Skymesh charge of
£0.2m, and a deferred tax credit adjustment in our Norwegian business BB
Norge of £0.3m
Customer Base, Revenue, Adjusted EBITDA in FY21 and the comparative period for
Continuing Group is segmented by the following categories as follows:
Customer Base Revenue Adjusted EBITDA
2021 2020 2021 2020 2021 2020
Number % Number 000's % £m £m % £m £m %
000's
Australia 49.7 84% 46.0 80% 21.8 16.6 31% 4.0 2.8 43%
Norway 9.1 16% 11.2 20% 4.6 6.3 (27%) 1.9 2.9 (34%)
Pre-Central 58.8 100% 57.2 100% 26.4 22.9 15% 5.9 5.7 4%
Central Revenue and Costs(1)
- - 0.7 0.5 40% (1.3) (1.6) 19%
27.1 23.4
Total 58.8 100% 57.2 100% 16% 4.6 4.1 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
2021 2021 2021 2020 2020 2020
Satellite Fixed Wireless Total Satellite Fixed Wireless Total
000's 000's 000's % 000's 000's 000's %
Australia 42.4 7.3 49.7 84% 40.1 5.9 46.0 80%
Norway 1.6 7.5 9.1 16% 2.3 8.9 11.2 20%
Total 44.0 14.8 58.8 100% 42.4 14.8 57.2 100%
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. Strong organic customer net growth of 3.7k (underlying 4.0k before
exceptional churn of 0.3k due to product issues with the Skymuster Plus
impacting churn) over the course of the year
b. The increase in revenue of £5.2m was a result of the continued
organic growth in customer numbers and an improved APRU.
c. Importantly, EBITDA improved by 43% following continued cost
efficiencies across the company.
2 Norway
a. Net underlying customers growth was 2.0k before exceptional churn of
4.1k customers associated with the demounting and cancellation of loss-making
mast and contracts.
b. Consequently, revenue in the year reduced £1.7m due to the loss of
these customers.
c. Notwithstanding the above, adjusted EBITDA reduced by only £1.0m
in the year due to strict overhead cost controls implemented during the year.
3 PLC
a. Revenue was 40% higher at £0.7m due to the support services
b. With lower costs this resulted in EBITDA losses improving by 19% at
£1.3m.
Cashflow performance
Adjusted Free Cash Flow in the year before exceptionals and M&A activities
undertaken by the Group was an inflow of £2.1m (FY20: outflow £2.6m). This
reflects improved EBITDA and working capital management offsetting increased
capital investment.
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:
2021 2020
£000 £000
Adjusted EBITDA 4,577 4,126
Release of Grant 1 - (144)
Underlying movement of working capital 2 1,742 (3,227)
Forex and other non-cash items 3 (1,085) (1,111)
Adjusted operating cash inflow/(outflow) before interest, tax Capex and 4 5,234 (356)
exceptional items
Tax and interest paid 5 (906) (1,262)
Purchase of Assets 6 (2,208) (954)
Adjusted free cash inflow/(outflow) before exceptional and M&A items 2,120 (2,572)
Exceptional items relating to refinancing, fundraising, M&A, integration 7 (3,922) (156)
and the establishment of network partnerships
Free cash inflow/(outflow) after exceptional items (1,802) (2,728)
Investing activities 8 31,041 37,222
Movement in cash from Discontinued operations 9 (2,209) (2,029)
Movement in working capital from discontinued operations 10 (2,339) (3,885)
Financing activities 11 (34,796) (19,263)
(Decrease) / Increase in cash balances (10,105) 9,317
1) Release of deferred grant income to revenue in the year £nil (FY20:
£0.1m)
2) Underlying movement in working capital was an inflow of £1.7m (FY20:
outflow £3.2m). Working capital benefitted from increased creditor terms and
deferred payment of creditors whose invoices received just prior to the year
end.
3) Forex and non-cash inflow of £1.1m (FY20: Outflow £1.1m) relate to
the exchange movement in the Condensed consolidated statement of comprehensive
income and the Condensed consolidated statement of financial position, as well
as costs/income where there is no impact on operating cashflow.
4) This resulted in an adjusted operating cash flow before Interest,
Tax, Capital expenditure and Exceptional items of £5.2m inflow (FY20: £0.4m
outflow), and an adjusted operating cash flow to EBITDA conversion of 114%
(FY20: negative 5%).
5) Tax and interest paid was £0.9m (FY20: £1.3m) on a like-for-like
basis. This covers interest on the RCF facility (£0.4m) 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 £0.8m with
a refund of £0.2m due on the tax paid in the year following substantial
investment.
6) Purchases of assets in FY21 were £2.2m. These purchases included the
fixed wireless investment in Norway of £1.6m, installations and IT costs of
£0.5m and other £0.1m
7) Exceptional items relating to M&A and restructuring costs of £3.9m
as disclosed on page 15 and 16 above. (FY20: £0.2m)
8) Sales proceeds from the disposal of subsidiaries were £31.1m cash
(excluding consideration satisfied by equity investments) less the purchase of
intangibles (£0.1m), compared to £37.2m in FY20.
9) Relates to cash of £2.2m (FY20: £2.0m) retained by the disposed
entities in the year
10) Represents the movement in the Group's working capital due to the
deconsolidation of the disposed businesses.
11) 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 £0.4m. For
FY20 the outflow of £19.3m comprised the:
- draw down of £29.4m from the RCF with Santander relating to a refinancing
of external debt, to repay the HSBC plc RCF (£8.25m) and BGF Loan Notes
(£12.0m). A further £21m was repaid to Santander after disposal of the
subsidiaries.
- £2.0m, net, was received from further investment by the non-controlling
interests of Quickline.
- The principal element of lease payments was an outflow of £1.4m
- The payment of the BGF redemption premium was an outflow of £5.5m
- The payment of the BGF penalty interest was an outflow of £1.2m
Net Cash / (Debt) reconciliation
2021 2020
£000 £000
Opening Net Cash / (Debt) 7,419 (14,198)
Loss after tax from Continuing operations (1,620) (4,213)
Interest charge 798 6,835
Depreciation 1,390 1,335
Amortisation - 18
Tax (credit) / charge (76) 262
Share Based payments 163 332
Exceptional costs 3,922 157
Adjusted EBITDA 4,577 4,126
Release of Grants - (144)
Forex movement and other non-cash (1,085) (1,111)
Movement in Working Capital 1,742 (3,227)
Cash inflow/(outflow) from Continuing operations 5,234 (356)
Interest paid (411) (1,186)
Tax paid (495) (76)
Underlying inflow/(outflow) from Continuing operations 4,328 (1,618)
Purchase of Assets (2,208) (954)
Adjusted inflow/(outflow) Continuing operations Free Cash Flow 2,120 (2,572)
Exceptional items relating to refinancing, fundraising, M&A, integration
and the establishment of network partnerships (3,922) (156)
Adjusted free cash inflow/(outflow) after exceptional and M&A items (1,802) (2,728)
Investment activities (Pre cash used and retained by Discontinued operations) 31,041 37,222
Movement in working capital from discontinued operations (2,339) (3,885)
Financing activities (34,796) (19,263)
Movement in Cash from Continuing operations (7,896) 11,346
(Outflow) / Inflow in cash from Discontinued operations (2,209) (2,029)
Movement in Net Cash (10,105) 9,317
Decrease in Debt 7,887 12,300
Closing Net Cash 5,201 7,419
Cash and net debt for the overall Group is summarised as follows:
2021 2020
£000 £000
Opening Net Cash / (Debt) 7,419 (14,198)
(Increase) / Decrease in loans: offset in financing activities
Facilities Received - (29,400)
Facilities Repaid 7,887 41,700
Cash inflow/(outflow) from operating activities (1,640) (5,670)
Cash generated/(used) in investing activities 22,591 26,646
Cash (outflow) used from financing activities (31,056) (11,659)
Movement in Net Cash (2,218) 21,617
Closing Net Cash 5,201 7,419
Composition of closing net debt
Net cash and cash equivalents 5,201 15,306
Bank loans - (7,877)
Other loans - (10)
Net Cash 5,201 7,419
Net Cash
Net cash and cash equivalents 5,201 7,419
Discontinued operations cash - (2,209)
Adjusted net cash 5,201 5,210
Adjusted Net Cash (Debt) / Adjusted EBITDA 1.13x 1.26x
Adjusted Net Cash (Debt) inc IFRS16 / Adjusted EBITDA 0.82x 0.59x
Net cash reduced from £7.4m in FY20 to a net cash position of £5.2m, a
reduction of £2.2m in the year, as detailed in the net cash/(debt)
reconciliation above and after the repayment of the debt (£8.4m) and the
return of Capital (£26.1m)
The table above excludes the lease liabilities of £1.4m (FY20: £2.7m).
Including this amount would give a total adjusted net cash of £3.8m (FY20:
Adjusted net cash £2.5m) and a ratio of adjusted net cash to adjusted Group
EBITDA before IFRS 16 of 0.82x (FY20: Adjusted net cash 0.59x).
Consolidated Statement of Financial Position
There was a step change in the balance sheet following
- The performance in the year with increased Revenue (£27.1m) and
EBITDA (£4.6m)
- The disposal of the Group's UK fixed wireless operations to
Northleaf for an initial consideration of £31.1m and the removal of the
non-controlling interest
- The return of capital (£26.1m) and the repayment of the debt with
Santander (£8.4m)
Fixed Assets reduced in the year to £4.1m (FY20: £10.9m), following the sale
of assets within the discontinued business (£6,9m net of purchases) and the
purchase of new fixed assets (£2.2m), less disposals (£0.6m), and adjusted
for depreciation provided in the year (£1.4m) and foreign exchange movements
(£0.1m).
Intangible Assets decreased to £5.6m (FY20: £12.0m) following the sale of
the discontinued business and underlying amortisation of Nil in FY21 (FY20:
£0.1m). Following a review in FY21 there was no requirement for an impairment
of the carrying value of the Company's goodwill.
Goodwill and Amortisation FY21 FY20
£000 £000
Underlying Amortisation - 18
Reported Amortisation - 18
Working Capital
Inventory days increased to 13 days (FY20: 11 days) as we purposefully
increased stock holdings in Norway to support the "Whitelabel" offering from
December 2021 given global shortages which has continued into FY22. This
accounted for 4 days
Debtor days decreased to 7 days (FY20: 11 days) following improved collections
Creditor days increased to 81 days (FY20: 73 days) due to agreed revised
extended payment terms with suppliers where setting up new operations.
Earnings per share
2021 2020
Basic earnings per share 46.9p 16.8p
Diluted earnings per share 45.6p 16.6p
Basic adjusted earnings per share 4.3p 1.9p
As a result of the material exceptional profit, and non-underlying costs in
the year as detailed above, the Group delivered a basic profit per share of
46.9p (2020: basic profit per share of 16.8p) and fully diluted profit per
share of 46.4p (2020: fully diluted profit per share of 16.6p). Adjusted
earnings per share (before exceptional items) was a profit per a share of 4.3p
(2020: profit per share of 1.9p).
Basic EPS
Basic EPS improved to a profit of 46.9p per share in FY21 from a profit of
16.8p in FY20, largely due to the sale of the discontinued businesses in FY20
and 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 improved to a
profit of 45.6p per share in FY21 from a profit of 16.6p in FY20
Basic adjusted earnings per share
Basic EPS improved to a profit of 4.3p per share in FY21 from a profit of 1.9p
in FY20, largely due to the improved performance of the Continued businesses.
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. Scope 3 emissions are included below only
to the extent that the Company is responsible for purchasing the fuel.
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 Quickline for the period up to the 10 June 2021 and shows a
36% reduction in the selected intensity rate compared to the previous year.
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.
2021 2020
Tonnes Tonnes
CO2e CO2e
Source of Emissions
Direct Emissions - Scope 1 - Gas and Vehicle fleet 113 193
Indirect Emissions - Scope 2 - Electricity 3 10
Indirect emissions - Scope 3 - Employee cars - 5
Gross Emissions 116 208
Turnover - UK discontinued operations £m 3.2 3.7
Tonnes CO2e per £1m of revenue 35.6 55.6
Energy consumption used to calculate emissions - MWh 846 469
We are currently reviewing ways to address the emissions which are typically
higher in the initial stages of infrastructure build but reduced significantly
once completed.
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 (2020: £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, and post the disposal of the UK
Fixed Wireless business in June 2021. The Group is currently loss-making,
before the gain on the sale of the discontinued business, mainly as a result
of 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:
• The COVID-19 situation has resulted in a significant
increase in demand for our products as the global workforces move more to
flexi home working
• 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
The Board has conducted stress tests against our business performance metrics
to ensure that we can manage any continuing risks that COVID-19 may continue
to present over the year. 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.
As a consequence, despite the risks to businesses still associated with the
COVID-19 pandemic, 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 as a result of government's
response to COVID-19 resulting in the remote working of individuals across our
key territories. Accordingly, we continue to adopt the going concern basis in
preparing these results.
On behalf of the Board
Frank Waters
Chief Financial Officer
21 March 2022
Bigblu Broadband plc
Condensed consolidated statement of comprehensive income
12 months ended 30 November 2021
2021 2020
Continuing Operations Notes £'000 £'000
Revenue from contracts with customers 27,067 23,428
Cost of sales (14,899) (12,594)
Gross profit 12,168 10,834
Distribution expenses 2 (8,734) (6,494)
Administrative expenses 2 (4,332) (2,057)
Operating profit (898) 2,283
Finance costs 3 (798) (6,834)
(Loss) before tax (1,696) (4,551)
Taxation on operations 76 (262)
(Loss) from continuing operations (1,620) (4,813)
Profit from discontinued operations 4 28,373 14,244
Profit for the year 26,753 9,431
Other comprehensive expense
Foreign currency translation difference (355) (202)
Total comprehensive income for the year 26,398 9,229
Total comprehensive income for the year is attributable to:
Owners of Bigblu Broadband Plc
26,682 9,456
Non-controlling interests (284) (227)
Earnings per share from profit attributable to the ordinary equity holders of
the company
Total - Basic EPS 5 46.9p 16.8p
Total - Diluted EPS 5 45.6p 16.6p
Continuing operations - Basic EPS (2.8p) (8.3p)
Continuing operations - Diluted EPS (2.7p) (8.3p)
Discontinued operations - Basic EPS 49.7p 25.1p
Discontinued operations - Diluted EPS 48.3p 24.9p
Adjusted earnings per share from continuing operations attributable to the
ordinary equity holders of the company
Continuing operations - Adjusted Basic EPS 5 4.3p 1.9p
Continuing operations - Adjusted Diluted EPS 5 4.2p 1.9p
Bigblu Broadband plc
Condensed consolidated statement of financial position
As at 30 November 2021
2021 Restated Restated
2020 2019
Notes £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 10 4,090 10,876 15,865
Intangible assets 11 5,576 11,968 29,362
Investments 12 5,672 - 52
Deferred tax asset 19 709 501 643
Total non-current assets 16,047 23,345 45,922
Current assets
Cash and cash equivalents 14 5,201 15,306 5,989
Inventory 15 699 896 3,911
Trade and other receivables 16 4,917 3,798 8,325
Total current assets 10,817 20,000 18,225
Total assets 26,864 43,345 64,147
Current liabilities
Trade and other payables 17 (9,420) (12,507) (32,461)
Provisions for liabilities and charges 17 (685) (1,468) (328)
Total current liabilities (10,105) (13,975) (32,789)
Non-current liabilities
Other payables 18 (835) (2,628) (4,409)
Loans 18 - (7,877) (20,187)
Deferred tax liability 19 (13) (104) (234)
Total non-current liabilities (848) (10,609) (24,830)
Total liabilities (10,953) (24,584) (57,619)
Net assets 15,911 18,761 6,528
Equity
Share capital 20 8,749 8,638 8,636
Share premium 20 8,589 34,180 34,161
Share option reserve 21 - 2,614 2,282
Capital redemption reserve 21 26,120 - -
Other equity reserve 21 - 1,294 271
Foreign exchange translation reserve 21 (2,430) (2,569) (2,225)
Reverse acquisition reserve 21 (3,317) (3,317) (3,317)
Listing cost reserve 21 (219) (219) (219)
Merger relief reserve 21 - 5,972 5,972
Retained losses (21,581) (32,403) (42,412)
Capital and reserves attributable to owners of Bigblu Broadband Plc 15,911 14,190 3,149
Non-controlling interests - 4,571 3,379
Total equity 15,911 18,761 6,528
Bigblu Broadband plc
Condensed consolidated Cash Flow Statement
12 Months Ended 30 November 2021
2021 2020
£'000 £'000
Loss after tax from Continuing operations (1,620) (4,813)
Profit after tax from Discontinued operations 28,373 14,244
Profit for the year including discontinued operations 26,753 9,431
Adjustments for:
Interest charge 852 7,108
Gain on disposal of subsidiaries (28,942) (18,928)
Goodwill impairment - 213
Amortisation of intangible assets 21 1,626
Release of grant creditors (285) (772)
Depreciation of property, plant and equipment - owned assets 1,834 3,897
Depreciation of property, plant and equipment - ROU assets 836 1,680
Tax (credit) / charge (76) 316
Share based payments 163 332
Foreign exchange variance and other non-cash items (332) (1,110)
Decrease in inventories 39 1,113
(Increase) / Decrease in trade and other receivables (2,418) 4,527
Increase / (Decrease) in trade and other payables 829 (6,764)
(Gain) / loss on disposals of fixed assets (8) (167)
Cash (used in) / generated from operations (734) 2,502
Interest paid (411) (8,171)
Tax paid (495) (1)
Net cash outflow from operating activities (1,640) (5,670)
Investing activities
Purchase of property, plant and equipment (6,009) (8,679)
Purchase of intangibles (53) (907)
Cash transferred out of group in disposed of subsidiaries (2,533) (1,035)
Proceeds from sale of property, plant and equipment 92 45
Proceeds from sale of subsidiary 31,094 37,222
Net cash generated/(used) in investing activities 22,591 26,646
Financing activities
Proceeds from issue of ordinary share capital 435 21
Return of capital to shareholders (26,120) -
Proceeds from bank revolving credit facility 2,000 29,400
Loans (paid) (8,400) (41,353)
Investment by non-controlling interest 2,000 1,972
Principal elements of lease payments (971) (1,699)
Net cash (outflow) generated from financing activities (31,056) (11,659)
Net (decrease)/increase in cash and cash equivalents (10,105) 9,317
Cash and cash equivalents at beginning of year 15,306 5,989
Cash and cash equivalents at end of year 5,201 15,306
Note that the presentation of the cashflow takes into consideration the
combined Continued and Discontinued movements in cash.
Bigblu Broadband plc
Condensed consolidated Reserves Movement
12 Months Ended 30 November 2021
Share Capital Share Premium Other Reserves Revenue Reserve Total
£000 £000 £000 £000 £000
Note 6
At 1 December 2019 8,636 23,900 13,025 (42,412) 3,149
Prior year reclassification 10,261 (10,261) -
Restated balance 8,636 34,161 2,764 (42,412) 3,149
Acquisition of shares in subsidiary by non-controlling interest 553 553
Profit for the period
9,660 9,660
Issue of shares 2 19 21
Share option reserve 332 332
Foreign Exchange Translation (344) (204) (548)
Equity settled share-based payments 1,023 1,023
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
Non-Controlling Interest
The profit attributable to shareholders of £27.3m (2020: £9.7m profit) is
the profit for the financial year of £22.6m (2020: £9.4m profit) after
adjusting for the add back of the loss attributable to non-controlling
interests of £0.3m (2020: £0.2m loss). Due to the disposal in the year the
carrying value of the non-controlling interest is nil.
Bigblu Broadband plc
Notes to the financial statements
For the period ended 30 November 2021
1. Presentation of financial information and accounting policies
Basis of preparation
The condensed consolidated financial statements are for the full year
to 30 November 2021.
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 EU. 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
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive report. The financial position of the Group, its cash flows and
liquidity position are described in the Finance Review. In addition, the
financial statement includes the Group's objectives, policies and processes
for managing its capital, its financial risk management objectives, details of
its financial instruments and its exposures to credit risk and liquidity risk.
In the year to 30 November 2021 the Group generated an adjusted EBITDA from
continuing operations before a number of non-cash and start-up costs expenses
as shown on page 16, of £4.6m (2020: £4.1m), and with cash inflow from
operations before interest, tax and capital expenditure, of £5.2m (2020:
outflow of £0.4m) and a net reduction in cash and cash equivalents of £10.1m
in the year (2020: increase £9.3m). The Group balance sheet showed net cash
and cash equivalents at 30 November 2021 of £5.2m (2020: £15.3m) after the
repayment of debt (£8.4m) and the Return of Capital (£26.1m).
Having reviewed the Group's budgets, projections, prospective covenant
compliance, and funding requirements, and taking account of reasonable
possible changes in trading performance over the next twelve months,
particularly in light of COVID-19 risks and counter measures, 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 in terms of volumes, debt position,
ARPU and Churn are in fact showing a positive position compared to prior year
and budget as a result of each government's response to COVID-19 resulting in
the remote working position of individuals across our key territories. 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 judgments
The preparation of a condensed set of financial statements requires management
to make judgments, 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 judgments 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 2021.
Prior year reclassification
The prior year reclassification relates to the treatment of share capital
issued in connection with previous acquisitions made during the year ended 30
November 2018. From a review of the Company's distributable reserves, it was
identified that the Merger Relief did not apply to the portion of shares
allotted where consideration was settled in cash. As a result, the premium
arising on these allotments of £10.3m (stated net of the relevant
apportionment of attributable issue costs) should have been credited to the
Share Premium account at the time, and a reclassifcation of reserves as at 1
October 2019 has been made accordingly. Net assets and results for both
periods presented in these financial statements are not impacted by this
adjustment.
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
FY21 FY20
£000 £000
Employee related costs 5,103 5,050
Marketing and communication costs 1,119 664
Logistics, Finance, IT, banking, insurance AIM and Other costs 1,369 994
Underlying costs 7,591 6,708
% of Revenue 28.0% 28.6%
Depreciation 1,390 1,335
Amortisation - 18
Underlying Depreciation and Amortisation 1,390 1,353
% of Revenue 5.1% 5.8%
Share based payments 163 332
Professional, legal and related costs associated with corporate activity 3,922 158
Identified Exceptional Costs 4,085 490
% of Revenue 15.1% 2.1%
Total 13,066 8,551
% of Revenue 48.2% 36.5%
3. Interest Payable and Finance Costs
2021 2020
£'000 £'000
BGF unsecured loan interest payable - 55
Bank loan interest payable - 87
Revolving Credit Facility interest payable 747 1,117
Lease interest expense 105 262
Total interest payable 852 1,521
BGF Penalty Interest - 1,408
BGF redemption premium and finance charges - 4,179
Total finance costs 852 7,108
Finance costs include the following amounts charged to the discontinued
operations:
Bank loan interest payable 38 170
Lease interest expense 16 104
Total interest payable 54 274
Interest split as follows:
Continued business 798 6,834
Discontinued business 54 274
Total interest payable 852 7,108
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
On 10 June 2021 QCL Holdings Ltd together with its subsidiaries was sold to
Northleaf and is reported in the current year as a discontinued operation.
Financial information relating to the discontinued operation for the period to
the date of disposal is set out below.
On 30 September 2020 Bigblu Operations Ltd together with all its subsidiaries
was sold to Eutelsat SA and was reported in the prior year as a discontinued
operation. Financial information relating to the discontinued operation for
the period to the date of disposal is set out below.
Group financial information for 2020 set out below is thus a combination of
these two discontinued operations.
Financial performance and cash flow information
2021 2020
£'000 £'000
Revenue 3,091 28,908
Expenses (3,896) (33,983)
Loss before tax (805) (5,075)
Taxation on operations (53) 391
Loss after tax of discontinued operations (858) (4,684)
Gain on sale of the subsidiary after tax (see below) 25,925 18,928
Adjustment to fair value of deferred consideration 3,306 -
Profit from discontinued operations 28,373 14,244
Exchange differences on translation of discontinued operations - (294)
Other comprehensive income from discontinued operations - (294)
Net cash inflow/(outflow) from operating activities (3,133) 6,635
Net cash inflow from investing activities 25,531 27,555
Net cash (outflow) from financing activities 1,666 996
Net increase in cash generated by the subsidiaries 24,064 35,186
Details of sale of subsidiary
Consideration received or receivable:
Cash 31,094 37,222
Investments 5,600 -
Fair value of contingent consideration - 449
Total disposal consideration 36,694 37,671
Carrying amount of net assets sold (13,660) (16,058)
Elimination of non-controlling interest 5,865 -
Expenses of sale (2,974) (1,217)
Other Provisions - (1,468)
Gain on sale before tax 25,925 18,928
Corporation tax expense on gain - -
Gain on sale after tax 25,925 18,928
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 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 27,037 57,697,017 46.9
Adjusted EPS - Profit attributable to shareholders from continuing operations
2,465* 57,697,017 4.3
Basic Diluted EPS - Profit attributable to shareholders
27,037 59,251,343 45.6
Adjusted Diluted EPS - Profit attributable to shareholders from continuing
operations
2,465* 59,251,343 4.2
30 November 2020
Weighted Average
Per Share
Loss Number of Amount
£'000 Shares Pence
Basic and diluted EPS
Profit for the financial year 9,431
Add: adjustment for non-controlling interest share of losses (227)
Basic EPS - Loss attributable to shareholders 9,658 57,589,857 16.8
Adjusted EPS - Profit attributable to shareholders from continuing operations
1,114* 57,589,857 1.9
Basic Diluted EPS - Profit attributable to shareholders
9,660 58,027,855 16.6
Adjusted Diluted EPS - Profit attributable to shareholders from continuing
operations
1,114* 58,027,855 1.9
The profit attributable to shareholders of £27.0m (2020: £9.7m profit) is
the profit for the financial year of £26.8m (2020: £9.4m profit) after
adjusting for the add back of the loss attributable to non-controlling
interests of £0.3m (2020: £0.2m loss).
* Whilst this is a non-GAAP measure, the profit attributable to shareholders
from continuing operations is £2.5m (2020: £1.1m profit) after adjusting for
the gain from the sale of the discontinuing operations and adding back
exceptional costs.
6. Other capital reserves
Foreign
Listing Merger Reverse Other 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 December 2019 (219) 16,233 (3,317) 271 (2,225) - 2,282 13,025
Prior year reclassification (10,261) (10,261)
Restated balance (219) 5,972 (3,317) 271 (2,225) - 2,282 2,764
Other equity 1,023 1,023
Foreign Exchange Translation (344) (344)
Credit to equity for equity settled Share based payments
332 332
At 30 November 2020 (219) 5,972 (3,317) 1,294 (2,569) - 2,614 3,775
Return of Capital (5,972) (1,294) 26,120 (2,777) 16,077
Other equity
Foreign Exchange Translation
139 139
Credit to equity for equity settled Share based payments
163 163
At 30 November 2021 (219) - (3,317) - (2,430) 26,120 - 20,154
· 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 Broadband House, The Old Bakery, Victoria Road,
Bicester, OX26 6PB. 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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