REG - Bigblu Broadband PLC - Half-year Report
29/08/2023 07:00
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RNS Number : 5490K Bigblu Broadband PLC 29 August 2023
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
Bigblu Broadband plc
('BBB', the 'Group' or the 'Company')
Interim Results
Trading in line with expectations, Operational Improvements
Bigblu Broadband plc (AIM: BBB.L), a leading provider of alternative
super-fast and ultra-fast broadband services, announces its unaudited interim
results for the six months period ending 31 May 2023 (the "Period"). The
Company has operations in Australia, Norway and a residual stake in Quickline
Communications ("Quickline").
There was progress across the Company's business units in the period, with the
focus on the introduction of new products and systems improvements. The
Company is therefore well positioned for the second half of the year.
Financial Highlights
· Total revenue was £15.0m (1H22: £14.9m)
· Adjusted EBITDA(1) increased 2.1% to £2.1m (1H22: £2.0m)
· Like for like revenue(2) and adjusted EBITDA growth, on a constant
currency basis increased by 3.1% and 21.4% respectively
· Adjusted Free cash inflow(3) of £0.2m (1H22: inflow £0.4m)
· Net debt(4) as at 31 May 2023 was £0.3m (1H22: Net Cash £4.5m)
following the Acquisition in Australia, as well as one off restructuring
payments made in Norway and Central.
Operational Highlights
· SkyMesh completed the acquisition of the satellite operations of
Harbour ISP PTY LTD, a subsidiary of Uniti Group LTD in Australia (the
"Acquisition") at a cost of c.£2.7m which included net 5.2k customers
· Total customers at period end were 62.6k (1H22: 60.4k), including the
Acquisition
· The Company has pro-actively undertaken a reorganisation of the
Norwegian business and restructured the central costs within the business.
This has resulted in a reduction in the Norwegian workforce of approximately
30%, and a reduction of c.75% of our UK head office. Together bringing annual
savings of £0.9m
· In Norway we completed the planned separation of 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.
· Quickline continues to be well supported by Northleaf with an
addressable base of over 350,000 premises at the half year, with its hybrid
Fixed Wireless (FWA) and Full Fibre infrastructure. The Company retains a 3.1%
stake holding following further investment since the year end with a current
carrying value of £5.9m. Northleaf have invested £110m in total since they
acquired the majority stake.
1 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.
2 Like for like (LFL) revenue and EBITDA is adjusted for new or divested
businesses in both the current and prior year and adjusts for constant
currency.
3 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. 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.
4 Cash / Net debt excludes lease-related liabilities of £0.9m of under IFRS
16 (FY22 £1.4m).
Andrew Walwyn, Chief Executive Officer of Bigblu Broadband plc, commented:
"The overall performance of the Group is in line with the Board's
expectations. We are carefully extending our product offerings with our
partners in each region, thereby increasing our addressable markets, at the
same time implementing new systems in each territory and cutting central
headcount / other costs.
We have reorganised our Norwegian business and our Australian business has
completed another important bolt on acquisition. 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 large numbers
of customers are likely to be working from home, whether full or part time.
Specifically, following the recent acquisitions by SkyMesh in Australia, the
Board believes that its strategy of organic growth complemented by further
bolt-on acquisitions should accelerate the Company's presence across Australia
with the potential to achieve 80,000 customers over the next three years.
Furthermore, the Board continues to assess all options to realise value for
shareholders, including a potential spin out ASX listing, as previously
announced.
The Board remains focused on maximising value and returns for shareholders.
The combination of market dynamics and opportunities available to our business
units provides a 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 Australia and Norway.
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 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.
CHIEF EXECUTIVE'S REPORT
Overview
The first half of this financial year has been a further period where we have
had to contend with the challenges created by the global economy and
inflationary issues. In the context of these global challenges, our
long-term relationships with our network partners were vital as we worked
together to ensure we could deal with the growing demand for rural and remote
broadband services.
In early 2023, our fully owned Australian business, SkyMesh PTY LTD, 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, including deferred payments, was AUD$4.72m (£2.7m). The cash
consideration was satisfied from existing cash resources including our
revolving credit facilities with Santander. The satellite operations acquired
consisted of net 5.2k customers and in 1H23 contributed £0.9m of revenue,
£0.3m of EBITDA and £0.3m of cash generation. Post this acquisition the
Board continues to explore all options to realise value for BBB shareholders
from SkyMesh, which could include an ASX listing of SkyMesh.
Key Financials for the continuing operations
Net customer growth after the Acquisition in the first half of 2023 was 3.6%
to 62.6k (1H22: 2.6%). There was a big focus on driving new products, with
Telenor 4G/5G FWA in Norway and fixed line in Australia together with
continued marketing campaigns to migrate c.1k customers to more suitable
products which the Board believe should help to reduce churn in the future.
Total revenue was £15.0m, up 0.5% (1H22: £14.9m). This increase in revenue
reflected a net increase in customers, including the acquisition (£0.5m) and
ARPU progression (£0.1m) but reduced by impact of negative FX rates (£0.5m)
in the period. Recurring airtime revenue, defined as revenue generated from
the Company's broadband airtime, which is typically linked to contracts, was
£14.0m representing 93% of total revenue (1H22: 95%). Total like-for-like
(LFL) revenue for the Continuing Group in the period was £14.6m representing
3.1% growth on a constant currency basis.
Gross profit margins reduced to 39.0% in 1H23 (1H22: 41.8%), due to planned
product mix changes with the increase in 5G FWA customers being at slightly
lower margins than existing recurring margins for fixed wireless, but which
have a higher lifetime value, as well as plan switching in Australia.
Overheads, before items identified as exceptional in nature, reduced to £3.8m
(1H22: £4.2m), representing 25.2% of revenue (1H22: 28.3%) due in the main to
reduced headcount costs of c.9 FTE (£0.4m).
Consequently, adjusted EBITDA for the period increased 2.1% to £2.1m (1H22:
£2.0m), alongside an adjusted EBITDA margin of 13.8% (1H22: 13.6%). Total
like-for-like (LFL) adjusted EBITDA for the Continuing Group on a constant
currency basis in the period was £1.8m (1H22: £1.5m) representing 21.4%
growth.
Australia
SkyMesh remains the leading Australian satellite broadband service provider
having been named Best Satellite NBN Provider for the fifth year in succession
(2019-2023). SkyMesh commanded a 55 per cent market share of net new adds
under the NBN scheme in the period to 31 May 2023.
SkyMesh ended the period with customer numbers at 55.1k - up 5.9% on the prior
year (1H22: 52.0k), which includes the net customers acquired from Uniti
(5.2k) and revenues of £12.8m. Gross margins were c.35% (down c.1% on 1H22)
due to the slightly lower margin from the Harbour customer base acquisition
(34%) and less data packs sold in the period. With new products being
implemented in the second half of the year, as well as price increases, we
expect gross margins to increase to around 36%.
Adjusted EBITDA was in line with prior year at £2.2m supporting both a
positive adjusted operating cash inflow of £1.4m and generating a positive
adjusted underlying free cash flow before group transfers of £1.2m.
The acquisition of customers from Harbour continues SkyMesh's strategy of
expanding its presence across Australia.
The Board believes that it can continue to complement organic growth
opportunities by accretive acquisitions and partnerships that could accelerate
the Company's presence across Australia.
The emergence of 5G and LEO satellite technologies has accelerated the uptake
of non-fibre broadband internet services in Australia. Starlink has continued
to target our market with strong promotional offers which continue to impact
current churn rates, and we are monitoring such promotion and marketing
activity. We believe we can counter such challenges to the business by
expanding our product offerings to increase our addressable market. In this
regard and working with our network partners, c.25% of the base has been
transferred to new product offerings from NBN Co, and although early, we are
seeing far higher customer satisfaction and reduced churn.
Norway
Our Norwegian business ended 1H23 with customer numbers of 7.5k (1H22: 8.4k)
and underlying churn has reduced to 12.1% (1H22: 16.7%).
Revenues remained in line with prior year at £1.9m. Gross margin decreased in
line with expectations to a blended 55.0% (1H22: 62.3%) with lower margins in
our Satellite base of 46.2% (1H22: 47.5%), our 4G/5G FWA base of 57.3%
(1H22: 59.2%) and our fixed wireless base of 66.0% (1H22: 67.2%). The 4G/5G
FWA revenue stream continues to strengthen and is now contributing in excess
of 70% of net new customers and revenue on a monthly basis.
Adjusted EBITDA for Norway was £0.2m (1H22: £0.5m), Adjusted operating cash
was an inflow of £0.4m (1H22: Outflow £0.6m) and adjusted underlying free
cash flow was an inflow of £0.2m (1H22: Outflow £1.1m) following capital
expenditure of £0.2m.
The Company has pro-actively undertaken a reorganisation and restructuring of
our Norwegian business and consequently reduced the workforce by approximately
30%, with an annualised cost saving going forward of c.£0.5m
The Directors consider that each of the remaining business units in Australia
and Norway are progressing in line with expectations; product offerings are
being widened, increasing the addressable markets, and costs reduced. The
Directors are carefully balancing new initiatives with the desire to realise
shareholder value. Specifically
Strategy
The demand for our products has increased with an element of home working in
the countries we operate 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 believe that the
solution set the Group offers its customers is important and a necessary
utility cost.
The Directors consider that, each of the remaining business units in Australia
and Norway are progressing in line with expectations in terms of, carefully
widening product offerings and therefore addressable markets, reducing costs.
The Directors are carefully balancing new initiatives with the desire to
realise shareholder value. Specifically
· For the SkyMesh business in Australia, the Board believes that it
could complement organic growth opportunities by additional acquisitions that
could accelerate the Company's presence across Australia's addressable market.
As noted previously, the Board believes the business has the potential to
achieve 80,000 customers in the region over the next three years through
organic and acquisitive growth. Post the recent acquisition the Board
continues to explore all options to realise value for BBB shareholders from
SkyMesh including an ASX listing.
· Norway is showing early signs of stabilising, but we recognise the
importance of limiting further cash requirements.
Current Trading and Outlook
During the period to 31 May 2023, the Company continued to grow its customer
base while still benefiting from the strong visibility afforded by the high
percentage of recurring revenues. This will prove to be key to the Group as we
seek to maximise shareholder value from our Australian and Norwegian
businesses.
The Board will continue to consider such opportunities as they arise
including, but not limited to, capitalising on organic growth and considering
acquisition targets in Australia to further solidify our position in the
region, create scale and at the same time reigniting our Norway operation with
a smaller, more profitable footprint, reduced churn and new product offerings
to our customers.
In the current environment, part of our continued growth, and improvement year
on year, is satisfying the increased demand for high-speed broadband in rural
areas as more and more employees work from home. We closely monitor a number
of KPIs daily that impact on the businesses, to ensure that the economic
pressures faced by our customers and suppliers don't materially impact our
operations and financial performance. These KPIs include customer sales,
activations, churn, customers inflight, FOREX, cash and stock levels.
Following typical seasonal trends, we expect a positive second half and remain
comfortable with financial market expectations for the current year.
Andrew Walwyn
CEO
FINANCIAL REVIEW
This financial review describes the performance of the Company during the
Period.
Total customers at the Period end for the Group were c.62.6k (1H22: c.60.4k).
During the period the Company had gross adds of 7.5k, (1H22: 8.5k) and
underlying churn of 8.2k (1H22: 7.5k) giving c.0.7k net organic churn (1H22:
net organic adds c.1.0k). In addition, there were net 5.2k customers acquired
with the acquisition of Harbour satellite customers. The exceptional churn
c.1.3k (1H22: c.1.6k) resulted in the main from demounting equipment on
Norwegian masts that are no longer profitable. This is summarised as follows:
Unaudited Unaudited Audited
As at As at As at
31-May-23 31-May-22 30-Nov-22
Opening base 59.4 58.8 58.8
Gross Additions(1) 7.5 8.5 16.7
Churn - Underlying(2) (8.2) (7.5) (16.5)
Migrated / Switched out(3) (1.0) (4.0) (9.0)
Migrated / Switched in(3) 1.0 4.0 9.0
Underlying Net Additions / (Churn) (0.7) 1.0 0.2
Acquisition 5.2 2.2 2.2
Net Additions 4.5 3.2 2.4
Churn - Exceptional(4) (1.3) (1.6) (1.8)
Net growth 3.2 1.6 0.6
62.6 60.4 59.4
Closing Base
(1)Customers where orders have been received but not activated (0.5k) and
Customers who have taken a contract out and commenced service (7.0k)
(2)Underlying churn is where customers have cancelled their contract
(3)Customers who have been specifically targeted to switch their contract and
renew with a new product and contract
(4)Exceptional churn is where we or a customer cancels their contract due to
uncontrollable circumstances impacting their service such as cyber event and
demounting
Significant focus in 1H23 was on launching 4G/5G FWA services in Norway and
"right sizing" the business across all territories. Total Churn (defined as
the number of subscribers who discontinue their service as a percentage of the
average total number of subscribers within the period, including the
exceptional churn), increased slightly to an average annualised churn rate of
32.3% (Excluding exceptional churn 28.3%) in 1H23 from 30.7% in 1H22
(Excluding exceptional churn 25.3%). The main areas of exceptional churn were
the continued demounting of loss making fixed wireless customers in Norway.
Total revenue increased 0.5% to £15.0m (1H22: £14.9m). This reflects the
higher customer numbers (£0.5m) and increased underlying ARPU (£0.1m),
reduced by currency movement (£0.5m). ARPU improved from £40.64 to £40.88
as we sought to offer better packages to customers, more appropriate to
increasing demands for speed and data, with increased revenue from services
and installations. Importantly Like for like revenue in the period increased
3.1% to £14.6m (1H22: £14.1m).
The sales revenue mix across the Company at the end of the period was c.75%
Satellite, c.21% Fixed Wireless and 4% 4G / 5G FWA (1H22: c.76% Satellite,
c.22% Fixed Wireless and 2% 4G / 5G FWA).
Gross margin was lower due to the product mix associated with the introduction
of 5G FWA products in Norway and the gross margin from the Harbour acquisition
slightly lower than the existing run rate in Australia. Overheads reduced
£0.4m (10.4%) on 1H22, due to lower staff costs following the Group
restructuring.
Depreciation reduced in the period to £0.7m (1H22: £1.0m) following the
write down of fixed assets in Norway at last year end.
Amortisation of intangible assets increased to £0.8m (1H22: £0.2m), due to
the customer contracts acquired with Clear (£0.3m) and Harbour (£0.5m),
which are being amortised over 24 months.
The Company incurred charges identified as exceptional in nature during the
period of £2.3m (1H22 £0.9m), including costs related to internal
restructuring/redundancy (£1.3m), legal and related costs associated with
acquisition and disposal activities (£0.4m), system costs (£0.5m) and other
costs deemed exceptional to ordinary activities (£0.1m).
Interest costs increased during the period to £0.1m (1H22: £0.1m) as a
result of a draw down of the revolving credit facility in 1H23 of £2.1m to
support M&A activity, working capital and the restructuring costs.
Unaudited Unaudited Audited
As at As at As at
31 May 2023 31 May 2022 30 Nov 2022
£000 £000 £000
Underlying Interest 100 18 78
Interest element of lease payments 17 34 46
Reported Interest 117 52 124
Statutory Results and EBITDA Reconciliation
Adjusted EBITDA (before share based payments and exceptional items) for the
half year increased 2.1% to £2.1m (1H22: £2.0m). A reconciliation of the
adjusted EBITDA to statutory operating loss of £1.7m (1H22: £0.1m loss) and
to adjusted PAT of £1.2m (1H22: £0.5m profit) is shown below:
Unaudited 6 months to 31 May 2023 Unaudited 6 months to 31 May 2022 Audited 12 months to 30 November 2022
£000 £000 £000
Adjusted EBITDA 1 2,062 2,020 5,101
Depreciation 2 (688) (979) (2,076)
Impairment of Fixed Assets 2 - - (966)
Amortisation 3 (808) (188) (702)
Adjusted EBIT 566 853 1,357
Share based payments - (154) (309)
Continuing Operations operating profit - pre-exceptional items 566 699 1,048
Exceptional items 4 (2,272) (830) (2,707)
Continuing Operations Statutory operating loss - post exceptional items (1,706) (131) (1,659)
Adjusted EBIT 566 853 1,357
Underlying interest (117) (52) (124)
Tax charge (91) (330) (1,031)
Impairment of Fixed Assets - - 966
Amortisation 808 - 702
Deferred taxation adjustment in Norway - - 714
Continuing Adjusted PAT 1,166 471 2,584
Company
1) Adjusted EBITDA (before share based payments, depreciation,
intangible amortisation, acquisition, employee related costs, deal related
costs, and start-up costs) was £2.1m (1H22: £2.0m).
2) Depreciation reduced to £0.7m in 1H23 from £1.0m in 1H22, following
the impairment of fixed assets in Norway at the year end.
3) Amortisation of intangible assets increased to £0.8m (1H22: £0.2m),
due to the customer contracts acquired with Clear (£0.3m) and Harbour
(£0.5m) being amortised over 24 months.
4) The Company incurred expenses in the period that are considered
exceptional in nature and appropriate to identify. These comprise:
a. £1.3m (1H22: £0.1m) employee termination and redundancy costs where
internal restructuring has occurred.
b. £0.4m (1H22: £0.5m) of net acquisition, deal, legal and other costs
relating to M&A activities and fundraising during the period. These costs
comprise mainly professional and legal fees associated with the Harbour
acquisition.
c. System development related costs of £0.5m (1H22: £nil).
d. £0.1m of other one-off costs (1H22: £0.2m)
Total Revenue and Adjusted EBITDA in 1H23 and the comparative period is
analysed as follows:
Revenue Adjusted EBITDA(2)
Unaudited Unaudited Audited Unaudited Unaudited Audited
6 months 6 months 12 months 6 months 6 months 12 months
to to to to to to
31 May 31 May 30 Nov 31 May 31 May 30 Nov
2023 2022 2022 2023 2022 2022
£m £m £m £m £m £m
Australia 12.8 12.6 26.5 2.2 2.2 5.0
Norway 1.9 1.9 4.0 0.2 0.5 1.0
Pre-Central 14.7 14.5 30.5 2.4 2.7 6.0
Central Revenue and Costs(1) 0.3 0.4 0.7 (0.3) (0.7) (0.9)
Total 15.0 14.9 31.2 2.1 2.0 5.1
(1) Central costs include finance, IT, marketing and plc costs
(2) Adjusted EBITDA includes the impact of adoption of IFRS16
The Company's total customer base of c.62.6k as at 31 May 2023 (1H22: c.60.4k)
was split as follows: Australia: 87% (1H22: 86%), Norway: 13% (1H22: 14%).
The year-on-year analysis from both a revenue and EBITDA perspective is
explained as follows:
Australia
· Revenue increased from £12.6m to £12.8m and is analysed as
follows
o increase in revenue following customer acquisition from Harbour - £0.9m
o decrease in revenue from net underlying Churn - (£0.2m)
o impact of currency reduced revenue - (£0.5m)
· Adjusted EBITDA remained constant year-on-year at £2.2m and is
analysed as follows
o Increase following acquisition - £0.3m
o Reduced GM% from 36% to 35% - (£0.4m)
o Cost reductions positive impact £0.1m
Norway
· Revenue is in line with prior half year at £1.9m and is analysed as
follows
o decrease due to the cyber-attack last year impacting 1.3k customers -
(£0.3m)
o fixed wireless decreased by mainly due to the demounting of identified
loss-making masts in period - (£0.1m)
o Revenue in 5G increased - £0.4m
· Adjusted EBITDA decreased from £0.5m in 1H22 to £0.2m in 1H23
and is analysed as follows
o Reduction following cyber-attack and demounting - (£0.3m)
o Increased from 5G - £0.1m
o Reduced GM% from 62% to 55% - (£0.5m)
o Cost reductions positive impact£0.4m
Central
· Revenue reduced from £0.4m to £0.3m
o Due to a reduction in services to third parties - (£0.1m)
· Adjusted EBITDA improved from a loss of £0.7m to a loss of £0.3m
o Reduced from impact of lower revenue - (£0.1m)
o Cost reductions with positive impact £0.5m
Cash Flow Analysis:
Underlying Cashflow performance
The underlying cash flow performance analysis seeks to clearly identify
underlying cash generation within the Company and separately identify the cash
impact of M&A activities, identified exceptional items and the treatment
of IFRS 16 and is presented as follows:
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 May 2023 31 May 2022 30 Nov 2022
£000 £000 £000
Adjusted EBITDA 2,062 2,020 5,101
Underlying movement of working capital 1 (870) (1,314) 777
Forex and non-cash 2 (556) 595 (113)
Underlying operating cash flow before interest, tax, Capex and exceptional 3 636 1,301 5,765
items
Tax and interest paid 4 (208) (382) (663)
Purchase of Assets 5 (216) (526) (1,432)
Underlying free cash flow before exceptional and M&A items 212 393 3,670
Exceptional items 6 (1,500) 448 (2,707)
Investing activities 7 (2,621) (1,192) (1,154)
Movement in cash from discontinued operations 8 - - (120)
Proceeds from Loans 9 2,100 - -
Financing activities 10 (634) (308) (695)
Decrease in cash balance (2,443) (659) (1,006)
1) Underlying movement in working capital was an outflow of £0.9m
(1H22: outflow £1.3m), an improved working capital position of £0.4m due in
the main to
o an decrease in Trade & Other Receivables £0.6m
o a reduction in Trade Payables (£1.1m)
o lower inventory £0.6m
o and improved working capital movements £0.3m
2) Forex and non-cash outflow of £0.6m (1H22: inflow £0.6m) relate to
the exchange movement in the Consolidated Statement of Comprehensive Income
and the Consolidated Statement of Financial Position (£0.5m) where AUD and
NOK values are translated to GBP for the Group reporting currency, as well as
costs/income which have no impact on operating cashflow (£0.1m).
3) This resulted in an underlying operating cash flow before Interest,
Tax, Capital expenditure and Exceptional items of £0.6m (1H22: £1.3m inflow)
and an underlying operating cash flow to EBITDA conversion of 30.9% (1H22:
64.4%).
4) Tax and interest paid was £0.2m (1H22: £0.4m). Tax paid relates to
the prepayment in Australia on the monthly revenue (£0.1m), with the interest
element being the fee on the undrawn and drawn funds from the RCF
5) Purchases of assets were £0.2m (1H22 £0.5m). These relate to
Norwegian 5G FWA stock capitalised (£0.2m).
This resulted in an underlying Free Cash inflow before exceptional items,
M&A activities and financing activities in the period of £0.2m (1H22:
inflow £0.4m) and an underlying free cash flow to EBITDA conversion of 74.4%
(1H22: (10.0%)). Excluding the currency translational impact this would have
been an underlying operating cash flow to EBITDA conversion of 95.1% (1H22:
34.9%).
6) Exceptional items of £1.5m (1H22: Inflow £0.4m) covers completion
payments (£0.1m) in respect of earlier M&A activity, staff
restructuring/redundancy costs in Norway (£0.4m) and central (£0.5m),
disposals and acquisitions (£0.2m) and others (£0.3m).
7) Investing activities included the purchase of Uniti of £2.7m (1H22:
purchase of Clear Networks for £1.2m)
8) There were no operations discontinued during 1H23 (1H22: £nil).
9) Proceeds from the RCF facility with Santander.
10) In 1H23 the financing activities related to the principal element of
lease payments of £0.6m (1H22: £0.3m).
Statutory Cash flow Analysis
Underlying operating cash inflow was £0.6m in 1H23 (1H22: Inflow of £1.3m).
Tax and interest paid increased to £0.2m in 1H23 from £0.4m in 1H22,
covering the monthly corporation tax payments on account in Australia as well
as interest payments.
The net summary of the above is an equity free cash inflow of £0.2m in 1H23
(1H22: £0.4m inflow) which is summarised as follows:
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2023 2022 2022
£000 £000 £000
Underlying Operating Cash Flows(1) 636 1,301 5,765
Purchase of assets (216) (526) (663)
Interest and Tax (208) (382) (1,432)
Equity free cash flow inflow 212 393 3,670
Underlying Operating cash flow analysis - Underlying Operating Cash Flow 30.9% 64.4% 113.0%
/Adjusted EBITDA
Underlying Operating cash flow analysis - Adjusted for currency - Underlying 95.1% 34.9% 115.2%
Operating Cash Flow (currency adjusted) /Adjusted EBITDA
Underlying Free cash flow analysis - Adjusted for currency - Underlying Free 74.4% (10.0%) 74.1%
Cash Flow (currency adjusted) /Adjusted EBITDA
(1)Underlying Operating Cash flows is before interest, tax and exceptional
items relating to M&A, integration costs and investment in network
partnerships
Net Cash / (debt) comprises:
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2023 2022 2022
£000 £000 £000
Cash 1,752 4,542 4,195
Debt (2,100) - -
Net Cash / (Debt) (348) 4,542 4,195
In the last twelve months (LTM) period, comparing 1H23 with 1H22, cash
decreased by c£2.8m to £1.8m, from £4.5m, excluding IFRS 16 liabilities.
Along with the drawdown from the RCF this results in a net debt position of
£0.3m (1H22: £nil).
In the LTM period, we generated cash inflows of £5.1m, and this was utilised
as follows;
- investment in fixed assets of £1.1m
- purchase of intangibles £2.7m
- interest and tax £0.5m
- and other working capital elements £0.8m.
The table above excludes the lease liabilities of £0.9m relating to IFRS 16
(1H22: £1.4m). Including this amount would give a total net debt of £1.2m
(1H22: net cash £3.1m).
Balance Sheet
Non-current assets have decreased in the last 12 months by £1.1m to £17.1m
(1H22: £18.2m) and are analysed as follows
- Increased due to the acquisition of customer contracts from
Harbour (Uniti) £2.7m
- Decreased by depreciation in the year (£2.7m)
- Decreased by amortisation in the year (£1.3m)
- Increased due to currency translation £0.2m
Capital expenditure in 1H23 was £0.2m (1H22: £0.5m) relate to Norwegian 5G
FWA stock capitalised.
Intangible Assets of £8.7m comprise Goodwill and other intangibles (1H22:
£7.9m). Of the increase of £0.8m,
- £2.7m relates to the customer acquisition by SkyMesh of the
Harbour customer base,
- offset by a reduction in deferred consideration payments of £0.5m
and
- amortisation of £1.4m.
Working Capital
Inventory days decreased to 19 days (1H22: 31 days) due to stock sold to
support the increasing 5G FWA sales in Norway.
Debtor days increased to 14 days (1H22: 10 days) due to delayed collections
associated with the Harbour acquisition and transfer of base.
Creditor days decreased to 64 days (1H22: 87 days) due to cash being used to
improve our credit position with our suppliers, specifically in our Norwegian
business.
Total net debt, excluding lease liabilities, increased in the year to £0.3m
(FY22: Net cash £4.5m) and is explained further in the Cash Flow Analysis
section.
Statutory EPS and Adjusted EPS for total company including discontinued
operations
Statutory EPS loss per share increased to 3.3p from 1.1p.
Statutory EPS Pence
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2023 2022 2022
Basic EPS attributable to ordinary shareholders (3.3) (1.1) (5.0)
Diluted EPS from continuing operations (3.3) (0.9) (4.8)
Statutory basic EPS shows a loss of 3.3p (1H22: Loss 1.1p). Diluted EPS
increased to a loss of 3.3p (1H22: Loss 0.9p).
Frank Waters
CFO
Bigblu Broadband plc
Consolidated statement of comprehensive income
6 months ended 31 May 2023
Note
Unaudited Unaudited Audited
6 months 6 months to 12 months
to 31 May to
31 May 2022 30 Nov
2023 2022
£000 £000 £000
Revenue 14,965 14,894 31,220
Cost of goods sold (9,131) (8,662) (18,121)
Gross Profit 5,834 6,232 13,099
Distribution and administration expenses 2 (6,044) (5,196) (11,014)
Depreciation (688) (979) (3,042)
Amortisation (808) (188) (702)
Operating Loss (1,706) (131) (1,659)
Interest Payable (117) (52) (124)
Loss before Tax (1,823) (183) (1,783)
Taxation charge (91) (330) (1,031)
Loss from continuing operations (1,914) (513) (2,814)
Loss from discontinued operations - (101) (120)
Loss for the period (1,914) (614) (2,934)
Foreign currency translation difference (570) 226 206
Total comprehensive expense for the period (2,484) (388) (2,728)
(Loss) / Profit per share
Total - Basic EPS 3 (3.3p) (1.1p) (5.0p)
Total - Diluted EPS 3 (3.3p) (1.1p) (5.0p)
Continuing operations - Basic EPS 3 (3.3p) (0.9p) (4.8p)
Continuing operations - Diluted EPS 3 (3.3p) (0.9p) (4.8p)
Discontinued operations - Basic EPS 3 - (0.2p) (0.2p)
Discontinued operations - Diluted EPS 3 - (0.2p) (0.2p)
Adjusted earnings per share from continuing operations
Total - Basic EPS 3 2.0p 0.8p 4.4p
Total - Diluted EPS 3 2.0p 0.8p 4.4p
Bigblu Broadband plc
Consolidated statement of financial position
As at 31 May 2023
Note Unaudited Unaudited Audited
As at As at As at
31 May 2023 31 May 2022 30 Nov 2022
£000 £000 £000
Non-Current Assets
Intangible assets 8,730 7,880 7,433
Property Plant and Equipment 2,209 3,879 2,881
Investments 5,911 5,750 5,830
Deferred Tax asset 282 717 303
Total Non-Current Assets 17,132 18,226 16,447
Current Assets
Inventory 937 1,577 1,142
Trade Debtors 1,215 851 773
Other Debtors 431 1,354 1,562
Cash and Cash Equivalents 1,752 4,542 4,195
Total Current Assets 4,335 8,324 7,672
Current Liabilities
Trade Payables (3,242) (4,364) (4,223)
Recurring Creditors and Accruals (2,326) (2,958) (2,363)
Other Creditors (54) (991) (534)
Payroll taxes and VAT (587) (359) (924)
Lease liabilities (633) (487) (795)
Provisions for liabilities and charges (685) (685) (685)
Total Current Liabilities (7,527) (9,844) (9,524)
Non-Current Liabilities
Loans and debt facilities (2,100) - -
Lease liabilities (300) (865) (559)
Deferred taxation (601) (288) (646)
Total Non-Current Liabilities (3,001) (1,153) (1,205)
Total Liabilities (10,528) (10,997) (10,729)
Net Assets 10,939 15,553 13,390
Equity
Share Capital 8,777 8,755 8,763
Share Premium 8,608 8,589 8,589
Other Reserves 4 19,777 20,178 20,347
Revenue Reserves (26,223) (21,969) (24,309)
Total Equity 10,939 15,553 13,390
Bigblu Broadband plc
Consolidated Cash Flow Statement
6 months ended 31 May 2023
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended
31 May 2023 31 May 2022 30 Nov 2022
£000 £000 £000
Loss after tax from Continuing operations (1,914) (513) (2,814)
(Loss)/Profit after tax from Discontinued operations - (101) (120)
(Loss)/Profit for the year including Discontinued operations (1,914) (614) (2,934)
Interest 117 52 124
Taxation 91 330 1,031
Amortisation of intangible assets 808 188 702
Depreciation of property, plant and equipment - owned assets 2,281
424 699
Depreciation of property, plant and equipment - ROU assets 761
264 280
Share based payments - 154 309
Foreign exchange variance and other non-cash items (556) 595 (102)
Movement in working capital (217) (2,879) (2,021)
Operating cash flows after movements in working capital (983) (1,195) 151
Interest paid (117) (52) (124)
Tax paid (91) (330) (539)
Net cash generated/(used) in operating activities (1,191) (1,577) (512)
Investing activities
Purchase of property, plant and equipment (216) (526) (1,191)
Purchase of intangibles and investments (2,621) (1,091) (1,452)
Payment of deferred consideration (310) - -
Proceeds from sale of subsidiary - 2,843 2,843
Net cash generated / (used) in investing activities (3,147) 1,226 200
Financing activities
Proceeds from issue of ordinary share capital 36 6 14
Loans drawn down 2,100 - -
Principal elements of lease payments (241) (314) (708)
Cash generated/(used) from financing activities 1,895 (308) (694)
Net increase / (decrease) in cash and cash equivalents (2,443) (659) (1,006)
Cash and cash equivalents at beginning of period 4,195 5,201 5,201
Cash in disposal group held for sale - - -
Cash and cash equivalents at end of period 1,752 4,542 4,195
Bigblu Broadband plc
Condensed consolidated Reserves Movement
6 months ended 31 May 2023
Share Capital Share Premium Other Reserves Revenue Reserve Total
£000 £000 £000 £000 £000
Note 4
At 31 May 2022 8,755 8,589 20,178 (21,969) 15,553
Profit for the period - - - (2,320) (2,320)
Issue of shares 8 - - - 8
Share option reserve - - 155 - 155
Foreign Exchange Translation
- - 14 (20) (6)
8,763 8,589 20,347 (24,309) 13,390
At 30 November 2022
Loss for the period - - - (1,914) (1,914)
Issue of shares 14 19 - - 33
Foreign Exchange Translation - - (570) - (570)
8,777 8,608 19,777 (26,223) 10,939
At 31 May 2023
Bigblu Broadband plc
Notes to the financial statements
For the period ended 31 May 2023
1. Presentation of financial information and accounting policies
Basis of preparation
The condensed consolidated financial statements are for the half year ending
31 May 2023.
The nature of the Company'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 Company prepares its consolidated financial statements in accordance with
International Accounting Standards ("IAS") and International Financial
Reporting Standards ("IFRS") as adopted by the UK. 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 Company'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 Company, its cash flows and
liquidity position are described in the Finance Review.
As at 31 May 2023 the Company generated an adjusted EBITDA before exceptional
items in the Consolidated statement of financial position, of £2.1m (1H22:
£2.0m), and with cash inflow from operations of £0.6m (1H22: inflow of
£1.3m) and a net decrease in cash and cash equivalents of £2.8m in the year
(1H22: increase £0.4m). The Company balance sheet showed net debt at 31 May
2023 of £0.3m (1H22: net cash £4.5m). Having reviewed the Company's budgets,
projections and funding requirements, and taking account of reasonable
possible changes in trading performance over the next twelve months,
particularly in light of the current global economy situation and counter
measures, the Directors believe they have reasonable grounds for stating that
the Company has adequate resources to continue in operational existence for
the foreseeable future.
The Board has concluded that no matters have come to its attention which
suggest that the Company 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 and
ARPU are showing a positive position compared to prior year and current
forecasts. The forecasts for the combined Company projections, taking account
of reasonably possible changes in trading performance, indicate that the
Company 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.
Furthermore, the continuing arrangements with key banking partners gives the
Board further comfort on the going concern concept.
As a consequence, the Board believes that the Company 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 this set of consolidated financial statements, the significant
judgments made by management in applying the Company's accounting policies and
the key sources of estimating uncertainty were principally the same as those
applied to the 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
inter-company balances and transactions have been eliminated in full.
2. Distribution and Administration Expenditure
Distribution and administration costs are analysed as follows:
Unaudited Unaudited Audited
As at As at As at
31 May 2023 31 May 2022 30 Nov 2022
£000 £000 £000
Employee related costs 2,160 2,608 5,164
Marketing and communication costs 720 711 1,339
Finance, Legal, IT, banking, insurance, logistics, domains AIM and Other costs 892 893 1,495
Underlying costs 3,772 4,212 7,998
% of Revenue 25.2% 28.3% 25.6%
Share based payments - 154 309
Professional and legal related costs associated with corporate activity and 2,272 830 2,707
restructuring / redundancy costs
Identified Exceptional Costs 2,272 984 3,016
% of Revenue 15.2% 6.6% 9.6%
Total 6,044 5,196 11,014
% of Revenue 40.4% 34.9% 35.2%
3. Earnings per share
Basic (loss)/profit per share is calculated by dividing the loss or profit
attributable to shareholders by the weighted average number of ordinary shares
in issue during the period.
IAS 33 requires presentation of diluted EPS when a company could be called
upon to issue shares that would decrease earnings per share or increase the
loss per share. For a loss-making company with outstanding share options, net
loss per share would be decreased by the exercise of options. Therefore, as
per IAS33:36, the antidilutive potential ordinary shares are disregarded in
the calculation of diluted EPS.
Reconciliation of the loss and weighted average number of shares used in the
calculation are set out below:
Unaudited Unaudited Audited
6 months to 6 months to 12 months
31 May 31 May to 30 Nov
2023 2022 2022
£000 £000 £000
Loss for the period (1,914) (614) (2,934)
Loss for the period from continuing operations (1,914) (513) (2,814)
Loss for the period from discontinued operations - (101) (120)
Loss attributable to shareholders (1,914) (614) (2,934)
Add exceptional items 2,272 830 2,707
Add Share Based Payment - 154 309
Add loss from discontinued operations - 101 120
Impairment of Fixed Assets - - 966
Amortisation 808 - 702
Deferred taxation adjustment in Norway - - 714
Adjusted profit attributable to shareholders 1,166 471 2,584
EPS Pence
Basic EPS(1) (3.3p) (0.9p) (4.8p)
Basic EPS from discontinued operations(2) - (0.2p) (0.2p)
Total basic EPS attributable to ordinary shareholders(3)
(3.3p) (1.1p) (5.0p)
Adjusted basic EPS(4) 2.0p 0.8p 4.4p
Diluted EPS from continuing operations(1) (3.3p) (0.9p) (4.8p)
Diluted EPS from discontinued operations(2) - (0.2p) (0.2p)
Total diluted EPS attributable to ordinary shareholders(3)
(3.3p) (1.1p) (5.0p)
Adjusted diluted EPS(4) 2.0p 0.8p 4.4p
Weighted average shares 58,505,079 58,352,525 58,376,211
Weighted average diluted shares 58,874,820 59,880,537 58,828,959
(1)Basic and diluted EPS from continuing operations is the loss for the period
divided by the weighted average shares and weighted average diluted shares
respectively. None of these losses are attributable to non-controlling
interests.
(2)Basic and diluted EPS from discontinued operations is the (loss)/profit for
the period less the amounts attributable to non-controlling interests divided
by the weighted average shares and weighted average diluted shares
respectively. The loss incurred in 1H22 of £101k was in relation to the costs
incurred with the Eutelsat claim, which is classified as exceptional in nature
and specific to the discontinued business.
(3)Total basic and diluted EPS attributable to ordinary shareholders is the
sum of (losses)/profits from continuing and discontinued operations less the
amounts attributable to non-controlling interests, divided by the weighted
average shares and weighted average diluted shares respectively.
(4)Adjusted basic and diluted EPS is the loss for the period from continuing
operations before exceptional expenses, exceptional interest and share based
payments, divided by the weighted average shares and weighted average diluted
shares respectively. None of these losses are attributable to non-controlling
interests. This is a non-GAAP measure.
4. Other capital reserves
Foreign
Listing Reverse exchange Share Capital Total
Cost acquisition translation option redemption capital
Reserve Reserve reserve reserve reserve reserves
£000 £000 £000 £000 £000 £000
(219) (3,317) (2,560) 154 26,120 20,178
At 31 May 2022
Foreign Exchange Translation - - 14 - - 14
Equity settled Share based payments
- - - 155 - 155
At 30 November 2022 (219) (3,317) (2,546) 309 26,120 20,347
Foreign Exchange Translation - - (570) - - (570)
At 31 May 2023 (219) (3,317) (3,116) 309 26,120 19,777
· Listing cost reserve
· The listing cost reserve arose from expenses incurred on AIM
listing.
· 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 differences arising from the translation of the financial statements
of foreign operations.
· 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.
· 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.
5. 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.
6. Intangible assets recognised in a business combination
Intangible assets acquired in a business combination and recognised separately
from goodwill are initially recognised at their fair value at the acquisition
date.
Amortisation is charged to profit or loss on a straight-line basis (Within
administration expenses) over the estimated useful lives of the intangible
asset unless such lives are indefinite. These charges are included in other
expenses in profit or loss. Intangible assets with an indefinite useful life
are tested for impairment annually. Other intangible assets are amortised from
the date they are available for use. The useful lives are as follows:
• Customer Contracts - 2 years
• Intellectual Property - 3 years
7. Availability of the Half 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 60 Gracechurch Street, London, EC3V 0HR. The Company
is registered in England No. 9223439.
A copy can also be downloaded from the Company's website at
https://www.bbb-plc.com (https://www.bbb-plc.com)
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