REG - Bigblu Broadband PLC - Half-year Report
30/08/2024 07:00
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RNS Number : 2292C Bigblu Broadband PLC 30 August 2024
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
Progress in realisation strategy, improvements in Australian Operations and
significant Quickline Contract wins
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 ending 31(st) May 2024 (the "Period or 1H24").
The Company's continuing operations comprise Skymesh in Australia, as well as
the retained residual stake in Quickline Communications ("Quickline") in the
UK.
During the period there was continued progress against the Group's stated
realisation strategy with the disposal of the Norwegian operations.
Importantly we were delighted with the significant contract wins in Quickline
where the Company retains a 2.8% shareholding. Following the disposal of our
Norwegian operations and with the sole focus on our trading operations in
Australia, we have undertaken a further rationalisation of the central cost
base.
Financial Highlights - Continuing Operations (being the Australian business)
· Total revenue £11.2m (1H23: £13.0m) with a like for like(1) revenue
reduction of c.8% as we continued to focus on the migration of customers onto
more appropriate packages with a higher lifetime value.
· Adjusted EBITDA(2) in the Period of £1.1m (1H23: £1.5m) with like
for like(1) adjusted EBITDA in 1H23 of £1.1m, on a constant currency basis
following planned customer migrations and consequent realignment of cost base.
· Adjusted Free cash outflow(3) of £4.5m (1H23: inflow £0.1m), before
exceptional items. This reflects planned stock investment of £2.1m in the
recently announced Starlink contract as well as anticipated one off working
capital requirements associated with the transition to the new systems
platform. Consequently, net debt as at 1H24 was £4.9m (1H23: Net debt
£0.3m)
Operational Highlights
· Australia -
o As highlighted at the year end, the emergence of 5G and LEO satellite
technologies is expected to lead to an accelerated uptake of non-fibre
broadband internet services in Australia.
o Starlink has demonstrated the appetite of consumers for alternative
broadband solutions and has successfully progressed in our market. Following
the Starlink investment, the Group made in December 2023 in conjunction the
distribution contracts, the Group is now able to offer Starlink LEO internet
solutions to business and small office / home office workers in Australia as
well as UK / Europe which has further strengthened our position in the
Australian market. We continue to work with our network partners including NBN
Co. to ensure that we have a full suite of product offerings to meet all
customer needs. New NBN Co. products recently launched at SkyMesh offer
faster speeds and greater data packages than previously offered by the Group,
which is expected to lead to further potential increases in customer numbers,
satisfaction and improving retention.
o Post implementation of our new fully integrated Cloud Based Microsoft
System "Pathfinder" and the migration of legacy bases onto the same single
system, Skymesh customers who may have had multiple accounts with distinctly
different billable services (i.e Satellite, Fixed Wireless, VOIP, or email)
have been merged into one billable SIO (Service in Operation). This exercise
resulted in Skymesh having a total of 52.3k (1H23: 51.4k) unique customers as
at 1H24. On a like for like basis, Skymesh increased the customer base by 0.7k
customers in 1H24 (1H23: Net churn 1.6k customers) to 52.3k.
o SkyMesh remains the leading Australian satellite broadband service
provider with c50% of all new additions, having been named Best Satellite NBN
Provider for the sixth year in succession (2019-2024)
· Quickline - Continues to be well supported by Northleaf, who
acquired majority control in June 2021. Northleaf has provided £130m of
additional funding since acquisition with BBB currently retaining a 2.8%
stake. In addition, Quickline has secured a £250m debt facility. Quickline
can currently address over 200,000 rural premises with its hybrid FTTP and FWA
infrastructure and has over 10,000 customers.
Quickline has recently secured all four contracts it had tendered under the
government's £5bn Project Gigabit programme. The contracts will subsidise the
rollout of a full fibre network to more than 170k hard-to-reach rural homes
and businesses across Yorkshire and Lincolnshire which have been left behind
by commercial rollouts. The contracts have been secured by Quickline following
competitive public procurement processes and total c£300m of government
subsidy. Quickline will make further private investment alongside Project
Gigabit to roll out its full fibre network to around 400k premises in addition
to its next generation FWA coverage.
· Norwegian Operations - As announced on 20 May 2023, following a
full market exercise undertaken by independent advisors, the Group completed
the Management Buy Out (MBO) of the business by local management, supported by
Andrew Walwyn. The Board believed that this disposal was in the best interests
of shareholders. In arriving at this decision, the Board recognised the
challenges being faced in the turnaround of the Norwegian business as well as
the potential need for further cash investment to grow the business and
support any further demounting and migration projects as the Norwegian
operations sought to continue its transition to an asset light business. In
addition, the disposal of the Norwegian business allowed the Board to reduce
annualised central costs by c.£0.4m (including the costs associated with
Andrew's position as CEO).
· Director changes. In conjunction with the Group's disposal of the
Norwegian Operations, Andrew Walwyn resigned from his position as Executive
CEO within the plc. As announced at the time of his departure, Andrew has
undertaken to support the Board as required, whilst it continues to execute
its strategy of realising value for shareholders. Frank Waters became CEO of
the plc and will be supported by the new CFO in Australia, Ray Vaughan, who
joined on 1 April 2024 is responsible for all financial aspects of the Skymesh
operations alongside the Australian management team.
1 Like for like (LFL) revenue and EBITDA is adjusted for new or divested
businesses in both the current and prior year and adjusts for non-recurring
one off items and constant currency to ensure present underlying LFL.
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 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 £0.1 of under IFRS 16
(1H23 £0.9m).
Frank Waters, Chief Executive Officer of Bigblu Broadband plc, commented:
"The overall performance of the Group is in line with the Board's expectations
for the first half as we focus exclusively on the Australian business. Skymesh
is a leading regional brand champion, The business has undergone significant
change with new systems, new branding, new products and importantly new local
leadership. Having incurred this investment, the Group will look to capitalise
on Skymesh's already strong reputation in remote and regional areas by
executing our brand strategy, and with a relentless focus on reliability and
excellence in customer service and support. We will also continue to broaden
the Skymesh product offering and solutions as appropriate with our Network
partners to our existing and new Australian customers and our agreement with
Starlink is an excellent step in that direction.
The Board believes that its strategy of organic growth complemented by further
product launches 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 and
returns for shareholders, including a private equity transaction, an MBO,
trade sale or an ASX listing of SkyMesh, as previously announced.
For further information:
Bigblu Broadband Group PLC www.bbb-plc.com (http://www.bbb-plc.com)
Cavendish Capital Markets Limited (Nomad and Broker) Tel: +44 (0)20 7220 0500
Marc Milmo (Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
About Bigblu Broadband plc
Bigblu Broadband plc (AIM: BBB.L), is an in market leading provider of
alternative superfast and ultrafast broadband solutions throughout Australia
for consumers and businesses.
High levels of recurring revenue, increasing economies of scale and Government
stimulation of the alternative broadband market provides a solid foundation
for organic growth as demand for alternative ultrafast broadband services
increases around the world.
BBB's range of solutions includes satellite, GEO and LEO, 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, 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 billings phones.
CHIEF EXECUTIVE'S REPORT
1H24 was an important half year in many respects. We disposed of the Group's
Norwegian operations to a management led team, reducing the risk of
significant cash outflows in the near term and at the same time allowing us to
further reduce central operating costs across the group. In the period we also
launched new products in Australia including Starlink following the signing of
the strategically important agreement in December 2023. Operationally post the
implementation of new systems in Australia, we have undergone a
rationalisation of the call center team to ensure that we deliver improved
underlying profitability in Australia in the second half of the year.
It was also very pleasing to note that Quickline, in which the Company retains
a 2.8% equity interest, secured momentous contract wins under the UK
government's £5bn Project Gigabit programme. The Quickline team backed by
Northleaf with support from the UK Infrastructure Bank and NatWest, are now
well placed to ensure Quickline boosts rural broadband connectivity across
Northern England.
Operational Review
Australia
Skymesh is now at an inflexion point. We have seen the advancement of
Starlink in Australia and were therefore delighted to have entered into a
distribution agreement with them. At the same time, SkyMesh has worked with
its major satellite provider NBNCo to bring uncapped data packages to market
for the first time. These new packages are more affordable to a number of
customers and are comparable in speed and Skymesh is able to provide
in-country support. This expanded suite of uncapped data products at varying
price points was released in the period, which the business expects will
further enhance the growth potential of Skymesh whilst we also look to
managing margins. We are very focused on balancing new product launches with
profitable and sustainable cash generative growth whilst bringing the best
possible solutions to existing and new customers.
SkyMesh remains the leading Australian satellite broadband service provider,
having been named Best Satellite NBN Provider for the sixth year in succession
(2019-2024). SkyMesh has continued to be the market leader in the satellite
broadband market with total market share in the first half of the year of c50%
of NBNCo Skymuster. SkyMesh continues to command a significant market share of
all new orders placed and is considered the fastest growing operator in the
GEO satellite market. Customer numbers post the implementation of the new
system and the consolidation of SIO's as at 1H24 were 52.3k (1H23: 51.4k).
During the last twelve months, SkyMesh upgraded their legacy systems with a
total investment of c.£1.5m (of which £0.2m was incurred in the period).
This brings touchless integration with NBNCo for ordering, provisioning of
services and support. The outcome is a more efficient system that enables
customers to be set up online faster than ever. The sales process has been
streamlined and provides the ability to track orders and sales in real time.
The system brings upgraded security and flexibility to integrate with future
vendors. This was a large exercise and resulted in a number of teething
challenges. We are now seeing a more stable platform and have invested in
additional IT headcount resource to drive future systems improvements,
reporting and efficiency gains.
Skymesh has also refreshed its branding with a new website, logo and tone of
voice, in addition we have launched a market leading consumer facing app in
July 2024 which is now available in both Apple and Google stores. The app
will redefine the way the business interacts with its customers and further
drive efficiencies in the customer experience.
Further new product opportunities are emerging as SkyMesh heads into the
second half of 2024 which possess the potential to underpin future growth in
customer numbers and performance.
Revenue is underpinned with a high percentage (c.93%) of recurring revenue
attached to contracts.
The Board's focus will remain on organic growth with our network partners that
can accelerate the Company's presence as well as scaling the Australian
business. In addition, the Board continues to explore all options to realise
value for BBB shareholders from Skymesh, including a private equity
transaction, an MBO/trade sale or an ASX listing of SkyMesh, as previously
announced.
Quickline Contract Wins
Quickline has been awarded four contracts under the government's £5bn Project
Gigabit programme, securing all four contracts that it bid for and making it
the second largest Project Gigabit regional delivery partner. Two of these
contracts worth £186m of government support and addressing c.108k premises
were awarded in 1H24 following the two contracts worth £105m and addressing
60k premises announced at the time of the year end results. Quickline is also
the only provider to be awarded contracts across England's largest county,
Yorkshire. The contracts will subsidise the rollout of a full fibre network
to more than 170k hard-to-reach rural homes and businesses across Yorkshire
and Lincolnshire which have been left behind by commercial rollouts.
Alongside the contracts secured by Quickline which total c£300m of government
subsidy under Project Gigabit, Quickline will make further private investment
to roll out its full fibre network to around 400k premises in addition to its
next generation FWA coverage.
Project Gigabit is the government-backed programme to connect hard-to-reach
areas which, without government intervention, would miss out on fast and
reliable, gigabit capable broadband. The rollout of Project Gigabit is
overseen by Building Digital UK (BDUK) - an executive agency of the Department
for Science, Innovation and Technology.
Norway disposal
During the period we announced the disposal of our Norwegian operations for an
equity value of £1 to a team led by local management and Andrew Walwyn. In
addition, BBB will be entitled to a contingent Consideration as follows: If
the Norwegian operations,
· in the period between 17th May 2024 and 16th May 2025, achieves an
Adjusted EBITDA of five hundred thousand pounds (£500,000) or more, BBB will
receive twenty (20) percent of the Adjusted EBITDA for that period, within six
months of the period.
· in the period between 17th May 2025 and 16th May 2026, achieves an
Adjusted EBITDA of one million pounds (£1,000,000) or more, BBB will receive
twenty (20) percent of the Adjusted EBITDA for that period, within six months
of the period.
A deferred consideration is also payable of up to NOK 2.3m (c£0.2m) on the
return, or release of the deposit held with networks, or a Trigger Event. In
addition, on the occurrence of a Trigger Event, including a listing, an
additional consideration shall be payable of 20% of the proceeds less costs.
This business had faced meaningful headwinds over the last few years and the
Board had actively been seeking to find an exit for this business. This
process included the appointment of external advisors to try and find
appropriate buyers for these operations. The management buyout offered the
most realistic and quickest exit for the Group without having to potentially
incur further costs in the region and the Board believed that this transaction
was in the best interests of shareholders.
Board Changes
As part of the acquisition of the Norwegian Operations by local management,
Andrew Walwyn also participated in the Buy Out. As a result, Andrew Walwyn
resigned during the period from his position as Executive CEO of the plc. At
the time of his departure, it was announced that Andrew had undertaken to
support the Board as required whilst it executes its strategy of realising
value for shareholders. The Board reiterates its thanks to Andrew for his
incredible energy and execution over the years.
Frank Waters became CEO of the plc in addition to his CFO responsibilities,
whilst the Board of BBB continues to execute the value realisation strategy.
Ray Vaughan who joined on 1 April 2024 as Skymesh CFO will be responsible for
all financial aspects of Skymesh.
Post Balance Sheet Events
We highlight the following post balance sheet events:
QCL Contract wins / funding
Post period end, on 1 August 2024 Quickline secured a £250 million debt
package comprising a £125 million term loan and £100 million debt guarantee
from the UK Infrastructure Bank alongside a £25 million term loan provided by
NatWest. This additional funding helps support Quickline's large-scale
broadband expansion in Yorkshire and Lincolnshire as it targets passing more
than 500k rural premises in these two counties. On completion of the four
recently secured contracts under the UK government's Project Gigabit programme
Quickline will connect almost 170k homes and businesses to full-fibre
broadband in hard-to reach rural areas across Yorkshire and Lincolnshire.
Strategy, Current trading and Outlook - Continuing operations
The Group has positioned itself at the forefront of the alternative super-fast
and ultrafast broadband industry in Australia. The demand for our products
continues to increase with an element of home working being the norm, and the
consequential need for faster and different broadband solutions to the home.
Whilst recognising the pressure on individuals and companies' disposal income
and profits, we believe that the solution set Skymesh offers its customers is
important and a necessary utility cost.
The Group's product portfolio and expanding routes to market mean that it
remains one of the most respected companies in its sector in Australia.
Skymesh now offers an enhanced NBNCo GEO satellite offering as well as LEO
offerings including Starlink and One Web, and a range of Optus 4G / 5G
offerings which went to market in July 2024. Working with our network partners
c25% of the base has now been transferred to new product offerings with NBNCo,
and although early and at lower margins, we are seeing far higher customer
satisfaction and reduced churn, giving a higher customer lifetime value.
Skymesh has recently undergone a complete rebranding in line with its expanded
product range, its product plan and increased addressable market. The
alignment and rationalisation of the central office cost base post the
Norwegian disposal and the cost base in Australia post the systems
implementation are expected to result in improved 2H24 margins as the business
continues to benefit from the improved visibility afforded by the high
percentage of recurring revenues. At the same time, we continue to invest in
our people and systems in Australia as we seek to realise value in Australia.
As we enter the second half of the financial year, we remain optimistic that
opportunities remain to deliver improved shareholder value from our remaining
business interests.
We will continue to focus on improving our customer offerings and service wrap
to those customers unserved and underserved in the digital divide with changes
in the product offering in Australia. Therefore, the Group expects that
underlying performance in 2H24 will continue to improve, which reflects the
investments made in products, systems and our people. We remain confident in
our ability to deliver further returns for shareholders from our operations in
Australia together with the remaining equity stake in Quickline.
Frank Waters
CEO
FINANCIAL REVIEW
This financial review describes the performance of the Company during the
Period.
We ended the period with a unique customer base of 52.3k (1H23: 51.4k),
representing an increase in 1H24 of 0.7k customers in the 6-month period
(1H23: Net Churn 1.6k).
Within the Australian market, we continued to focus on working with our
network partners to migrate relevant customers to new NBNCo tariffs as
appropriate with c1k migrated to more suitable products during the period
which the business believes should help to reduce churn in the future. In
terms of period end customer mix the 1H24 closing base of 52.3k customers is
split as follows:
· Satellite
o GEO 45.8k (1H23: 45.1k)
o LEO 0.2k (1H23: nil)
· Fixed Wireless 6.2k (1H23: 6.3k)
· 4G / 5G - 0.1k (1H23: nil)
During the period the Company had gross adds of 9.0k, (1H23: 7.1k), underlying
churn of 8.3k (1H23: 8.7k), giving c.0.7k net organic adds (1H23: net organic
churn c.1.6k). This is summarised as follows:
Unaudited Unaudited(4) Audited(4)
6 months to 6 months to 12 months to
31-May-24 31-May-23 30-Nov-23
Opening base 51.6 47.8 47.8
Gross Additions(1) 9.0 7.1 15.9
Churn - Underlying(2) (8.3) (8.7) (17.3)
Migrated / Switched out(3) (0.8) (1.0) (4.0)
Migrated / Switched in(3) 0.8 1.0 4.0
Underlying Net Additions / (Churn) 0.7 (1.6) (1.4)
Acquisition of Harbour - 5.2 5.2
Net (Churn) / Growth 0.7 3.6 3.8
52.3 51.4 51.6
Closing Base(4)
(1)Customers where orders have been received but not activated (0.3k) and
Customers who have taken a contract out and commenced service (8.7k)
(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)Prior periods have been adjusted by 3.7k relating to consolidation of
customers SIO's
Churn (defined as the number of customers who discontinue their service as a
percentage of the weighted average total number of subscribers within the
period), reduced to an average annualised churn rate of 32% in 1H24 from 35%
in 1H23.
Total ARPU(1) per month in 1H24 was £35.93 (1H23: £40.77), due to currency
movements and planned specific switching of customers to more appropriate
packages with a higher customer lifetime value "CLV"(2). The underlying ARPU
per month on a LFL basis in 1H23 was £36.41.
(1)Average Revenue Per User - calculated by dividing total revenues from all
sources by the average customer base
(2)CLV is calculated by comparing the present value of a new customer
(considering ARPU, churn and margin) with the net costs of customer
acquisition (considering up front revenue less equipment, shipping,
installation and marketing costs).
Total revenue including recurring airtime, equipment, installation sales,
network support other income was £11.2m (1H23: £13.0m) of which the negative
impact of currency movements was £0.8m, with total like-for-like revenue for
the Continuing Group in the period decreasing 8% to £11.2m (1H23: £12.2m).
Recurring revenue, defined as revenue typically generated from the Group's
broadband airtime contracts, which is typically linked to contracts and
monthly subscriptions, was £10.2m in the period, representing 93% of total
continuing revenue (1H23: 93%).
The sales revenue mix across the Company for the period was c.87.5% Satellite,
c.10.7% Fixed Wireless and 1.8% other services (1H23: c.82.4% Satellite,
c.16.1% Fixed Wireless and 1.5% other services).
Total Gross profit margins (GPM) were 32.1% in 1H24 (1H23: 35.1%), due to
planned product mix changes. On a LFL basis 1H23 GPM was 32%. This is an area
of constant focus in the business working with our network partners and at the
same time providing the most suitable products for our customers.
Distribution and Administrative Expenses, pre-exceptional costs, decreased by
£1.1m (20.1%) to £4.5m (1H23: £5.6m) due to lower staff costs following
recent cost rationalisations. Depreciation reduced in the period to £0.2m
(1H23: £0.3m), and amortisation of intangible assets remained constant at
£0.7m (1H23: £0.7m) and arose due to the customer contracts acquired with
Clear (£0.2m) and Harbour (£0.5m), which are being amortised over 24 months
(note - Clear fully amortised from February 2024).
Consequently, adjusted EBITDA for the period from our continuing operations
was £1.1m (1H23: £1.5m). On a LFL basis adjusted EBITDA for the period from
our continuing operations was £1.1m (1H23: £1.1m) representing an improved
underlying EBITDA margin of 10% (1H23: 8%). This is expected to increase
further in the second half of the year.
The Company incurred charges identified as exceptional in nature during the
period of £1.0m (1H23: £1.6m) including costs related to internal
restructuring/redundancy (£0.4m), legal and related costs associated with
acquisition and disposal activities (£0.4m), system costs (£0.1m) and other
costs deemed exceptional to ordinary activities (£0.1m).
Interest costs increased during the period to £0.3m (1H23: £0.1m) as a
result of a drawdown of the revolving credit facility in 1H24 of £4.4m in the
main to support contracted Starlink investment, planned working capital
requirements and restructuring costs.
Unaudited Unaudited Audited
As at As at As at
31 May 2024 31 May 2023 30 Nov 2023
£000 £000 £000
Underlying Interest 328 94 232
Interest element of lease payments 2 3 6
Reported Interest 330 97 238
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 1H24 1H23 Description 1H24 Performance
Unique Customer Base 52.3k 51.4k Represents total gross organic connections plus acquisitions, less disposals, Underlying growth in period in unique Customer base. Ability to further grow
less churn and base management. with additional marketing expenditure.
Customer Underlying Net Additions / (Churn) 0.7k (1.6)k Represents gross connections in the period less churn in the period. Excludes Underlying customer growth in positive territory following the launch of
M&A and excludes exceptional churn. attractive satellite products with uncapped data packages and faster speed as
well as new Starlink LEO customers.
Gross Underlying Churn 32% 35% Gross underlying churn defined as the number of subscribers who discontinue Churn rate of 32% (1H23: 35%) reducing by 3% following the addition of more
their service as a percentage of the average total number of subscribers suitable GEO satellite services at attractive price points.
within the period and excludes exceptional churn.
Total ARPU £35.93 £40.77 Calculated by dividing total revenues from all sources by the average customer Lower by 11.8% due to due to currency movements and planned specific switching
base of customers to more appropriate packages with a higher customer lifetime
value CLV
LFL Underlying ARPU £35.93 £36.41 Calculated by dividing total LFL revenues from all sources by the average Broadly in line on a LFL revenue basis.
customer base
Revenue £11.2m £13.0m Revenue includes sales from all operations. Like for like (LFL) revenue treats Like for like Revenue decreased by 8.2% due to planned focus on switching
acquired businesses as if they were owned for the same period across both the customers as well as promotional activities in period.
current and prior year and adjusts for constant currency, omitting any
distinct differences that skew the numbers. Business disposed of in the period
LFL(1) Revenue £11.2m £12.2m are excluded from the calculation.
Adjusted EBITDA £1.1m £1.5m Earnings before share based payments, depreciation, intangible amortisation, Adjusted EBITDA decreased by £0.4m while like for like Adjusted EBITDA was in
impairment costs, acquisition costs, one-off employee related costs, deal line with 1H23. Adjusted EBITDA Margin improved to 10% (1H23: 8%). This
related costs and start-up costs is the measure of the Group's operating reflects gross profit margins reducing marginally to 32.0% in 1H24 (1H23:
performance. 35.0%), due to planned product mix changes, offset by a significant reduction
LFL(1) Adjusted EBITDA in Distribution and Administrative Expenses of £1.0m.
£1.1m £1.1m
KPI 1H24 1H23 Description 1H24 Performance
Adjusted Operating Cash Flow - Continuing Operations £(4.1)m £0.4m Adjusted Operating cash flow relates to the amount of cash generated from the Adjusted operating cash outflow was £4.1m (1H23: Inflow £0.4m), a movement
Group's operating activities and is calculated as follows: Profit/(Loss) of £4.5m YOY, after planned stock investment of £2.1m in the recently
before Tax adjusted for Exceptional Items, Depreciation, Amortisation, Share announced Starlink contract as well as forecast working capital requirements
Based Payments and adjusting for changes in Working Capital and non-cash in Australia associated with the transition to the new systems platform
items.
Adjusted Free Cash Flow - Continuing Operations £(4.5)m £0.1m Adjusted Free cash flow being cash (used)/generated by the Group after Adjusted Free cash outflow (before exceptional items primarily related to
investment in capital expenditure, servicing of debt and payment of taxes and M&A activities and re organisations costs post the disposal of the
excludes items identified as exceptional in nature. Norwegian operations) was £4.5m (1H23: inflow £0.1). An outflow movement of
£4.6m YOY, which in addition to the OCF movements of £4.5m YOY there was a
reduction in capital expenditure of £0.1m and an increase in interest of
£0.2m.
Adjusted EPS 0.9p 1.7p Adjusted Earnings per share (EPS) is the Continued business's profit/(loss) The loss for the period was broadly in line with the prior 6-month period.
after tax before exceptional costs, share based payments, impairment of Fixed The reduction in EPS was due to the decrease in exceptional expenses in 1H24
Assets and deferred tax adjustments, divided by the weighted average number of of £1.0m (1H23: £1.6m) which is added back to arrive at adjusted EPS.
shares.
1 Like for like (LFL) is adjusted for new or divested businesses in both the
current and prior year and adjusts for non-recurring one off items and
constant currency to ensure present underlying LFL.
Statutory Results and EBITDA Reconciliation
A reconciliation of the adjusted EBITDA to PAT is shown below:
This is a non-GAAP alternative performance measure.
Adjusted EBITDA (before share based payments and exceptional items) for the
half year was £1.1m (1H23: £1.5m). A reconciliation of the adjusted EBITDA
to statutory operating loss of £0.9m (1H23: £1.0m loss) and to adjusted PAT
of £0.5m (1H23: £1m profit) is shown below:
Unaudited 6 months to 31 May 2024 Unaudited 6 months to 31 May 2023 Audited 12 months to 30 November 2023
£000 £000 £000
Adjusted EBITDA 1 1,110 1,540 4,459
Depreciation 2 (163) (332) (597)
Impairment of Intangible Assets 3 - - (147)
Amortisation 3 (677) (671) (1,515)
Adjusted EBIT 270 537 2,200
Share based payments - - -
Continuing Operations operating profit - pre-exceptional items 270 537 2,200
Exceptional items relating to M&A and restructuring activities 4 (984) (1,580) (3,929)
Foreign exchange transaction loss 5 (156) - -
Continuing Operations Statutory operating loss - post exceptional items (870) (1,043) (1,729)
Adjusted EBIT 270 537 2,200
Underlying interest 6 (330) (97) (238)
Tax (charge) / credit 7 (79) (91) 529
Impairment of Intangible Assets - - 147
Amortisation 677 671 1,515
Continuing Adjusted PAT 538 1,020 4,153
1. Adjusted EBITDA (before share based payments, depreciation,
intangible amortisation, impairment of goodwill, refinancing, fundraising,
acquisition, employee related cost and deal related costs) of £1.1m (1H23:
£1.5m).
2. Total depreciation reduced to £0.2m in 1H24 from £0.3m in 1H23 due
to lower net book value of fixed assets.
3. Amortisation of intangible assets remained constant at £0.7m (1H23:
£0.7m) and arises due to the customer contracts acquired with Clear (£0.3m)
and Harbour (£0.5m) being amortised over 24 months During the period we
undertook a full review of the carrying value of Goodwill, with the review
resulting in no further impairment charges (FY23 £0.1m for the IP of the
Clear customers of SkyMesh).
4. The Group incurred expenses in the period that are considered
exceptional in nature in that whilst they may re-occur given the nature of the
business undergoing significant changes it is appropriate to clearly identify
separately by their nature so as to identify underlying trading trends in the
period. These comprise:
a. £0.4m (1H23: £0.3m) of M&A related costs, the establishment of
network partnerships and restructuring costs. These costs comprise mainly
professional and legal fees and includes an apportionment of staff and local
management time spent on Specific One-Off Projects such as the disposal of the
Norwegian operations and development and delivering value realization
strategies for the Australian operations
b. £0.4m (1H23: £0.7m) employee termination and restructuring costs In
the UK where internal restructuring has occurred.
c. £0.2m (1H23: £0.6m) development costs in the period primarily for
the new Pathfinder system in Australia and APIs with key suppliers, that do
not meet the criteria for intangible asset capitalisation
5. Foreign exchange transaction loss includes the movement in currency
attributable to the foreign payments and receipts between the transactional
rate and the date of payment.
6. The interest charge in the year of £0.3m (1H23: £0.1m) relates to
the RCF with Santander.
7. The tax charge of £0.1m (1H23: charge £0.1m) relates to our
Australia business and is a provision against expected taxable profits at the
1H24 period.
Total Revenue and Adjusted EBITDA in 1H24 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
2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m
Australia 11.0 12.7 25.4 1.7 2.2 5.2
Central Revenue and Costs(1) 0.2 0.3 0.5 (0.6) (0.7) (0.7)
Total 11.2 13.0 25.9 1.1 1.5 4.5
(1) Central revenue includes recharges for post-sale services and Loan Note
interest and central costs include finance, IT, HR and plc costs
(2) Adjusted EBITDA includes the impact of adoption of IFRS16
The year-on-year analysis from both a revenue and EBITDA perspective is
explained as follows:
Australia
· Revenue £11.0m (1H23: £12.7m) and is analysed as follows
o impact of currency movements reduced revenue by £0.8m
o marginally lower planned ARPU due to new products, product mix and
promotional offers - £0.9m
· Adjusted EBITDA £1.7m (1H23: £2.2m) and is analysed as follows
o impact of currency movements reduced EBITDA by £0.2m
o GM% 32% v 34.4% (£0.7m)
o Cost reductions positive impact £0.4m
Central
· Revenue slightly reduced to £0.2m at 1H24 (1H23: £0.3m) due to
less recharges
· Adjusted EBITDA reduced from a loss of £0.7m (1H23) to a loss of
£0.6m after further cost actions with positive impact £0.1m
Cash Flow Analysis:
Underlying Cashflow performance
Adjusted Free Cash Flow in the period, before exceptional costs, was an
outflow of £4.5m (1H23: inflow £0.1m). This reflects the increase in
operating cashflow outflow of £4.1m, with capital expenditure of £0.1m
(1H23: £0.1m), higher tax and interest of £0.2m at £0.4m (1H23: £0.2m).
This is a non-GAAP alternative performance measure.
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 the treatment of
IFRS 16 and is presented as follows:
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 May 2024 31 May 2023 30 Nov 2023
£000 £000 £000
Adjusted EBITDA 1,110 1,540 4,459
Underlying movement of working capital 1 (4,287) (605) 544
Forex and other non-cash items 2 (874) (556) 262
Adjusted operating cash flow before interest, tax, Capex and exceptional items 3 (4,051) 379 5,265
Tax and interest paid 4 (371) (188) (506)
Purchase of Assets 5 (70) (120) (49)
Adjusted free cash flow before exceptional and M&A items (4,492) 71 4,710
Exceptional items relating to M&A, disposals, restructuring costs and the 6 (984) (1,580) (3,929)
establishment of network partnerships.
Free cash (outflow) / inflow after exceptional items
(5,476) (1,509) 781
Investing activities 7 (267) (2,923) (2,693)
Movement in cash from discontinued operations 8 (626) 94 (2)
Proceeds from Loans 9 4,400 2,100 2,100
Financing activities 10 (96) (205) (244)
Decrease in cash balance pre-Discontinued operations (2,065) (2,443) (58)
1. This reflects the outflow working capital position of £4.3m due in
the main to
a. An increase in Trade & Other Receivables (£1.9m) due to delayed
collections post initial go live systems teething issues and linked with
ensuring compliance with the February 2024 Telecommunications (Financial
Hardship) Industry Standard 2024
b. a reduction in Trade Payables (£0.6m)
c. higher inventory (£1.6m) due to the investment in the Starlink
agreement and stock
d. small working capital movements of £0.2m associated with accruals
and prepayments movements
2. Forex and non-cash inflow of £0.2m (1H23: outflow £0.6m) reflects
the currency revaluation relating to the exchange movement in the Consolidated
Statement of Comprehensive Income and the Consolidated Statement of Financial
Position (£0.1m) where AUD 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 adjusted operating cash flow before Interest,
Tax, Capital expenditure and Exceptional items of £4.1m outflow (1H23: £0.4m
inflow).
4. Tax and interest paid was £0.4m (1H23: £0.3m). This covers interest
on the loan facility and leases (£0.3m) and monthly taxation paid by our
Australian business (£0.1m).
5. Purchases of assets in FY23 were £0.1m (1H23: £0.1m). These
purchases were primarily office related costs in Australia. Note that asset
purchases do not include the capitalized value of new leases of ROU assets,
which are non-cash items.
6. Exceptional items relating to M&A, disposals, the establishment
of network partnerships and restructuring costs of £1.0m (1H23: £1.6m).
7. In 1H24 investing activities include the increase in the carrying
value of the Loan Notes associated with the Quickline investment.
8. The cash held in the discontinued operations during the year, which
was a net cash of £0.6m, was transferred to the discontinued operations as
part of the disposal.
9. Proceeds from drawdown of the RCF facility with Santander to support
Starlink purchases and Skymesh planned working Capital.
10. In 1H24 financing activities related to the principal element of lease
payments of £0.1m (1H23: £0.2m).
Adjusted Net Cash reconciliation
This is a non-GAAP alternative performance measure.
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 2024 31 May 2023 30 Nov 2023
£000 £000 £000
Opening Net Cash 2,037 4,195 4,195
Loss after tax from Continuing operations (1,279) (1,231) (1,438)
Interest charge 330 97 238
Depreciation 163 332 597
Impairment of Intangible and Fixed Assets - - 147
Amortisation 677 671 1,515
Tax charge / (credit) 79 91 (529)
Foreign exchange transaction loss 156 - -
Exceptional costs 984 1,580 3,929
Adjusted EBITDA 1,110 1,540 4,459
Forex movement and other non-cash (874) (556) 262
Movement in Working Capital (4,287) (605) 544
Cash (outflow)/inflow from Continuing operations (4,051) 379 5,265
Interest paid (340) (97) (209)
Tax paid (31) (91) (297)
Underlying (outflow)/inflow from Continuing operations
(4,422) 191 4,759
Purchase of Assets (70) (120) (49)
Adjusted free cash (outflow)/inflow before exceptional and M&A items (4,492) 71 4,710
Exceptional items relating to refinancing, fundraising, M&A, integration, (984) (1,580) (3,929)
restructuring and the establishment of network partnerships
Free cash (outflow)/inflow after exceptional and M&A items (5,476) (1,509) 781
Investment activities (267) (2,923) (2,693)
Financing activities 4,304 1,895 1,856
Movement in Cash from Continuing operations (1,439) (2,537) (56)
(Outflow) / inflow of cash from Discontinued operations (626) 94 (2)
Cash retained by Discontinued operations (505) - -
Movement in Net Cash (2,570) (2,443) (58)
Increase in Debt (4,400) (2,100) (2,100)
Closing Net (Debt)/Cash (4,933) (348) 2,037
Cash split
Net cash and cash equivalents (4,933) (348) 1,532
Discontinued operations cash / cash equivalents including deposits - 505
Closing net (debt)/cash (4,933) (348) 2,037
Cash and net debt for the overall Group is summarised as follows:
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 2024 31 May 2023 30 Nov 2023
£000 Unaudited £000
Opening Net Cash 2,037 4,195 4,195
Increase in loans: offset in financing activities
RCF Facilities drawn in period (4,400) (2,100) (2,100)
Cash (outflow) / inflow from operating activities (5,406) (1,191) 1,660
Cash (outflow) / inflow generated in investing activities (1,468) (3,147) (3,166)
Cash inflow / (outflow) from financing activities 4,304 1,895 1,448
Movement in Net Cash (6,970) (4,543) (2,158)
Closing Net (Debt)/Cash (4,933) (348) 2,037
Composition of closing net cash
Cash and cash equivalents 1,567 1,752 2,782
Cash held in escrow - restricted cash - - 850
Gross cash and cash equivalents 1,567 1,752 3,632
Gross cash and cash equivalents in disposal group - 505
Bank loans (6,500) (2,100) (2,100)
Net (Debt)/Cash (4,933) (348) 2,037
Net (Debt)/Cash
Net debt and cash equivalents (4,933) (348) 1,532
Discontinued operations cash / cash equivalents including deposits - 505
Adjusted net (debt)/cash (4,933) (348) 2,037
Net debt increased from £0.3m in 1H23 to a net debt position of £4.9m, an
increase of £4.6m over the 12 month period, as detailed in the net cash
reconciliation above.
The table above excludes the lease liabilities of £0.1m (1H23: £0.9m).
Including this amount would give a total adjusted net debt of £5.0m (1H23:
Adjusted net debt £1.2m).
Statutory Cash flow Analysis
Underlying operating cash outflow was £4.1m in 1H24 (1H23: Inflow of £0.4m).
Tax and interest paid increased to £0.4m in 1H24 from £0.2m in 1H23,
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 outflow of £4.5m in 1H24
(1H23: £0.1m inflow) which is summarised as follows:
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2024 2023 2023
£000 £000 £000
Underlying Operating Cash Flows(1) (4,051) 379 5,265
Purchase of assets (70) (120) (49)
Interest and Tax (371) (188) (506)
Equity free cash flow (outflow)/inflow (4,492) 71 4,710
(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
2024 2023 2023
£000 £000 £000
Cash 1,567 1,752 3,632
Discontinued cash - - 505
Debt (6,500) (2,100) (2,100)
Net (Debt)/Cash (4,933) (348) 2,037
Comparing 1H24 Free Cash Outflows with 1H23, there was a free cash outflows
movement of £4.6m, and this is analysed as follows;
- Working Capital outflow of £3.6m which includes the investment in
Starlink Stock £2.1m, anticipated trade debtor movements of £1.3m plus other
smaller movements.
- Reduction in lease liabilities of £0.6m
- Increased Interest payments of £0.2m
- Forex impact £0.2m
Consolidated Statement of Financial Position
Fixed Assets reduced in 1H24 to £0.3m (1H23: £2.2m), adjusted for
depreciation provided in the year (£0.5m) and the reclassification of £1.4m
of assets as held for sale at year end.
Intangible Assets decreased by £3.8m to £4.9m (1H23: £8.7m) due to
amortisation in the year of £3.7m, an impairment of intangible assets of
£0.2m and asset additions of £0.1m.
Working Capital
Inventory days increased to 42 days (1H23: 19 days) due to stock held to
support the Starlink opportunity.
Debtor days increased to 38 days (1H23: 14 days) due to delayed collections
post initial go live systems teething issues and linked with ensuring
compliance with the February 2024 Telecommunications (Financial Hardship)
Industry Standard 2024
Creditor days increased to 76 days (1H23: 64 days).
Total net debt, excluding lease liabilities, increased in the first half of
the year to £4.9m (FY23: Net cash excluding discontinued business £1.5m) and
is explained further in the Cash Flow Analysis section.
Statutory EPS and Adjusted EPS for total company including discontinued
operations
Statutory basic and diluted EPS loss per share increased to 3.4p (1H24) from
3.3p (1H23).
Statutory EPS Pence
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2024 2023 2023
Basic EPS attributable to ordinary shareholders from continuing operations (2.2) (2.1) (2.5)
Diluted EPS from continuing operations (2.2) (2.1) (2.5)
Frank Waters
CEO
Bigblu Broadband plc
Consolidated statement of comprehensive income
6 months ended 31 May 2024
Continuing Operations
Unaudited Unaudited Audited
6 months 6 months to 12 months
to 31 May to
31 May 2023 30 Nov
Note 2024 2023
£000 £000 £000
Revenue 11,204 12,986 25,937
Cost of goods sold (7,604) (8,432) (16,310)
Gross Profit 3,600 4,554 9,627
Distribution and administration expenses 2 (3,630) (4,594) (9,097)
Depreciation (163) (332) (597)
Impairment of Fixed Assets - - (147)
Amortisation (677) (671) (1,515)
Operating Loss (870) (1,043) (1,729)
Interest Payable 3 (330) (97) (238)
Loss before Tax (1,200) (1,140) (1,967)
Taxation (charge) /credit (79) (91) 529
Loss from continuing operations (1,279) (1,231) (1,438)
Loss from discontinued operations 4 (725) (683) (3,263)
Loss for the period (2,004) (1,914) (4,701)
Other comprehensive income / (expense)
Foreign currency translation difference 282 (570) (406)
Total comprehensive loss for the period (1,722) (2,484) (5,107)
(Loss) / Profit per share
Total - Basic EPS 5 (3.4p) (3.3p) (8.0p)
Total - Diluted EPS 5 (3.4p) (3.3p) (8.0p)
Continuing operations - Basic EPS 5 (2.2p) (2.1p) (2.5p)
Continuing operations - Diluted EPS 5 (2.2p) (2.1p) (2.5p)
Discontinued operations - Basic EPS 5 (1.2p) (1.2p) (5.5p)
Discontinued operations - Diluted EPS 5 (1.2p) (1.2p) (5.5p)
Adjusted earnings per share from continuing operations
Total - Basic EPS 5 0.9p 1.7p 7.1p
Total - Diluted EPS 5 0.9p 1.7p 7.1p
Bigblu Broadband plc
Consolidated statement of financial position
As at 31 May 2024
Note Unaudited Unaudited Audited
As at As at As at
31 May 2024 31 May 2023 30 Nov 2023
£000 £000 £000
Non-Current Assets
Intangible assets 4,897 8,730 5,553
Property Plant and Equipment 286 2,209 378
Investments 6,080 5,911 5,995
Deferred Tax asset 829 282 800
Total Non-Current Assets 12,092 17,132 12,726
Current Assets
Inventory 1,787 937 111
Trade Receivables 2,517 1,215 1,432
Other Debtors 1,522 431 1,398
Cash and Cash Equivalents 1,567 1,752 3,632
7,393 4,335 6,573
Assets classified as held for sale - - 2,516
Total current assets 7,393 4,335 9,089
Current Liabilities
Trade Payables (3,224) (3,242) (5,790)
Recurring Creditors and Accruals (1,038) (2,326) (1,013)
Other Creditors (290) (54) (233)
Payroll taxes and VAT (516) (587) (564)
Lease liabilities - (633) (143)
Provisions for liabilities and charges (685) (685) (685)
Loans (6,500) (2,100) (2,100)
(12,253) (9,627) (10,528)
Liabilities associated with assets classified as held for sale
- - (2,349)
Total Current Liabilities (12,253) (9,627) (12,877)
Non-Current Liabilities
Lease liabilities - (300) -
Deferred taxation (632) (601) (616)
Total Non-Current Liabilities (632) (901) (616)
Total Liabilities (12,885) (10,528) (13,493)
Net Assets 6,600 10,939 8,322
Equity
Share Capital 8,783 8,777 8,783
Share Premium 8,608 8,608 8,608
Other Reserves 6 23,093 19,777 19,941
Revenue Reserves (33,884) (26,223) (29,010)
Total Equity 6,600 10,939 8,322
Bigblu Broadband plc
Consolidated Cash Flow Statement
6 months ended 31 May 2024
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended
31 May 2024 31 May 2023 30 Nov 2023
£000 £000 £000
Loss after tax from Continuing operations (1,279) (1,231) (1,438)
Loss after tax from Discontinued operations (725) (683) (3,263)
Loss for the year including Discontinued operations (2,004) (1,914) (4,701)
Interest 330 117 287
Taxation 79 91 (529)
Amortisation of intangible assets 677 808 3,906
Depreciation of property, plant and equipment - owned assets 163 424 1,018
Depreciation of property, plant and equipment - ROU assets 76 264 712
Foreign exchange variance and other non-cash items (69) (556) 218
(Increase) / Decrease in inventories (1,676) 59 406
(Increase) in trade and other receivables (1,872) (338) (826)
(Decrease) / Increase in trade and other payables (739) 62 1,763
Gain on disposals of fixed assets - - (39)
Operating cash flows after movements in working capital (5,035) (983) 2,215
Interest paid (340) (117) (258)
Tax paid (31) (91) (297)
Net cash generated/(used) in operating activities (5,406) (1,191) 1,660
Investing activities
Purchase of property, plant and equipment (70) (216) (462)
Purchase of intangibles and investments (267) (2,621) (2,766)
Payment of deferred consideration - (310) -
Proceeds from sale of property, plant and equipment - - 62
Cash/Cash equivalents transferred on disposal of subsidiary (626) - -
Net cash used in investing activities (963) (3,147) (3,166)
Financing activities
Proceeds from issue of ordinary share capital - 36 39
Loans drawn down 4,400 2,100 2,100
Principal elements of lease payments (96) (241) (691)
Cash generated from financing activities 4,304 1,895 1,448
Net decrease in cash and cash equivalents (2,065) (2,443) (58)
Cash and cash equivalents at beginning of period 3,632 4,195 4,195
Cash in disposal group held for sale - - (505)
Cash and cash equivalents at end of period 1,567 1,752 3,632
Bigblu Broadband plc
Condensed consolidated Reserves Movement
6 months ended 31 May 2024
Share Capital Share Premium Other Reserves Revenue Reserve Total
£000 £000 £000 £000 £000
Note 6
At 31 May 2023 8,777 8,608 19,777 (26,223) 10,939
Loss for the period - - - (2,787) (2,787)
Issue of shares 6 - - - 6
Foreign Exchange Translation
- - 164 - 164
8,783 8,608 19,941 (29,010) 8,322
At 30 November 2023
Loss for the period - - - (2,004) (2,004)
Foreign Exchange Translation - - 282 - 282
Reclassification on disposal 2,870 (2,870) -
8,783 8,608 23,093 (33,884) 6,600
At 31 May 2024
Bigblu Broadband plc
Notes to the financial statements
For the period ended 31 May 2024
1. Presentation of financial information and accounting policies
Basis of preparation
The condensed consolidated financial statements are for the half year ending
31 May 2024.
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 a 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 Directors have prepared and reviewed projected cash flows for the Group,
reflecting its current level of activity and anticipated future plans for the
next 12 months, from the date of signing. The Group is currently loss-making,
mainly because of depreciation, amortisation central costs and exceptional
charges. These costs are planned to reduce significantly in the second half of
the year per the forecasts. 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
The Board also recognises a number of significant mitigating factors that
could protect the future going concern of the business. These include:
· Super-fast Broadband is already an essential utility for
many and even more so now, it is likely to be one of the last services that
customers will stop paying for
· Support from network partners for the business and
customers
· Strong support from banking partners with a RCF facility
of £10m, which is reduced to £8.5m in July 24 post the sale of the Norwegian
business earlier in the year.
The Board has conducted stress tests against our business performance metrics
to ensure that we can manage any continuing risks. We recognise that a number
of our business activities could be impacted, and we have reflected these in
this analysis including supply chain disruptions, delays in sales or
installations, earnings, or cash generation. By modelling sensitivities in
specific KPIs such as volume of activations, churn, ARPU, margin, overhead and
FOREX, management is satisfied that it can manage these risks over the going
concern period.
Furthermore, management has in place and continues to develop robust plans to
protect EBITDA and cash during this period of uncertainty and disruption.
Under this plan identified items include reducing discretionary spend,
postponing discretionary Capex, reducing marketing, freezing all headcount
increases, and working with suppliers on terms particularly our network
partners.
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 an increase in demand in Australia.
Accordingly, we continue to adopt the going concern basis in preparing these
results.
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 2024 the Company generated an adjusted EBITDA before exceptional
items in the Consolidated statement of financial position, of £1.1m (1H23:
£1.5m), and with free cash outflow from operations of £4.5m (1H23: inflow of
£0.1m) and a net decrease in cash and cash equivalents of £2.0m in the
period (1H23: decrease £1.4m). The Company balance sheet showed net debt at
31 May 2024 of £4.9m (1H23: net debt £0.3m). 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
2023.
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 for the continued operations are
analysed below. This is non-GAAP information, in which the allocation is
unaudited.
Unaudited Unaudited Audited
As at As at As at
31 May 2024 31 May 2023 30 Nov 2023
£000 £000 £000
Employee related costs 1,336 1,749 4,268
Marketing and communication costs 590 593 1,038
Finance, Legal, IT, banking, insurance, logistics, domains AIM and Other costs 720 672 462
Underlying costs 2,646 3,014 5,768
% of Revenue 23.6% 23.2% 22.3%
Depreciation 163 332 597
Impairment of Fixed Assets - - 147
Amortisation 677 671 1,515
Total Depreciation and Amortisation 840 1,003 2,259
% of Revenue 7.5% 7.7% 8.7%
Professional and legal related costs associated with corporate activity and 984 1,580 3,929
restructuring / redundancy costs / disposals
Identified Exceptional Costs 984 1,580 3,929
% of Revenue 8.8% 12.2% 15.1%
Total 4,470 5,597 11,956
% of Revenue 39.9% 43.1% 46.1%
3. Interest Payable and Finance Costs
Unaudited Unaudited Audited
As at As at As at
31 May 2024 31 May 2023 30 Nov 2023
£000 £000 £000
Revolving Credit Facility interest payable 311 88 228
Other interest payable 17 6 4
Lease interest expense 2 3 6
Total finance costs 330 97 238
Interest in the Condensed consolidated statement of comprehensive income is
total finance costs.
The Revolving Credit Facility interest payable is in respect of the Santander
facility.
4. Profit and loss on Discontinued Operations
Group financial information for 1H24 is set out below for the disposal group.
1H23 comparative information in the Financial Statements has been adjusted to
reflect the revised split of activities between continuing and discontinued
operations.
Unaudited Unaudited Audited
6 months to 6 months to 12 months
31 May 31 May to 30 Nov
2024 2023 2023
£000 £000 £000
Revenue 1,741 1,979 4,157
Expenses (1,810) (3,438) (7,420)
Loss before tax (69) (1,459) (3,263)
Taxation on operations - - -
Loss after tax of discontinued operations (69) (1,459) (3,263)
Loss on sale of the subsidiary after tax (see below) (656) - -
Loss from discontinued operations (725) (1,459) (3,263)
Net cash (outflow) / inflow from operating activities (411) 465 830
Net cash outflow from investing activities (161) (191) (424)
Net cash inflow / (outflow) from financing activities(1) 451 (180) (408)
Net cash outflow from discontinued operations (121) 94 (2)
Details of sale of subsidiary
Carrying amount of net assets sold (58) - -
Intercompany receivable written off (504) - -
Expenses of sale (94) - -
Loss on sale after tax (656) - -
(1) Adjusted for IFRS 16
Assets and liabilities of disposal group disposed of
Unaudited as at disposal date 17 May 2024 Unaudited as at 31 May 2023 Audited as at 30 November 2023
£'000 £'000 £'000
Assets disposed of / (Nov 23: classified as held for sale)
Property, plant and equipment 912 - 1,034
Intangible assets 62 - 85
Inventory 417 - 615
Cash 384 - 505
Trade receivables 557 - 67
Other receivables 177 - 210
Total assets of disposal group held for sale 2,509 - 2,516
Liabilities directly associated with assets disposed of / (Nov 23: classified
as held for sale)
Trade payables (728) - (1,066)
Lease liabilities (385) - (573)
Other payables (1,338) - (710)
Total liabilities of disposal group held for sale (2,451) - (2,349)
5. 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
2024 2023 2023
£000 £000 £000
Loss for the period (2,004) (1,914) (4,701)
Loss for the period from continuing operations (1,279) (1,231) (1,438)
Loss for the period from discontinued operations (725) (683) (3,263)
Loss attributable to shareholders (2,004) (1,914) (4,701)
984 1,580 3,929
Add exceptional items
Add loss from discontinued operations 725 683 3,263
Impairment of Fixed Assets - - 147
Foreign exchange transaction loss 156 - -
Amortisation 677 671 1,515
Adjusted profit attributable to shareholders 538 1,020 4,153
EPS Pence
Basic EPS(1) (2.2p) (2.1p) (2.5p)
Basic EPS from discontinued operations(2) (1.2p) (1.2p) (5.5p)
Total basic EPS attributable to ordinary shareholders(3)
(3.4p) (3.3p) (8.0p)
Adjusted basic EPS(4) 0.9p 1.7p 7.1p
Diluted EPS from continuing operations(1) (2.2p) (2.1p) (2.5p)
Diluted EPS from discontinued operations(2) (1.2p) (1.2p) (5.5p)
Total diluted EPS attributable to ordinary shareholders(3)
(3.4p) (3.3p) (8.0p)
Adjusted diluted EPS(4) 0.9p 1.7p 7.1p
Weighted average shares 58,551,487 58,505,079 58,524,645
Weighted average diluted shares 58,847,018 58,874,820 58,820,176
(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.
(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.
6. 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
At 31 May 2023 (219) (3,317) (3,116) 309 26,120 19,777
Foreign Exchange Translation - - 164 - - 164
Equity settled Share based payments
- - - - - -
At 30 November 2023 (219) (3,317) (2,952) 309 26,120 19,941
Foreign Exchange Translation - - 282 - - 282
Reclassification on disposal - - 2,870 - 2,870
At 31 May 2024 (219) (3,317) 200 309 26,120 23,093
· 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.
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.
Management charges from Parent to the other Group companies
During 1H24 the Company made management charges on an arm's length basis to
its subsidiaries amounting to £0.9m (1H23: £0.8m)
As part of the reductions in the headcount within the plc during the course of
the year the Company entered into certain service contracts with Bigblu
Operations Limited ("BBO"), a company of which Andrew Walwyn is a director
(the "BBO Contracts"). The BBO Contracts are summarised below:
Licence Agreement
The Company granted a license over certain trademarks to BBO in relation to
the Brdy brand. In consideration for the rights granted by the Company to BBO,
BBO has agreed to pay the Company a notional annual license fee for each
period of usage for £29k in 1H24 (1H23: £nil).
Service Agreement - Company to BBO
The Company has a service agreement with BBO. The services provided by the
Company to BBO include legal and corporate finance support, IT, marketing, and
certain Executive support services (the "Services"). Costs and expenses are
charged on a time and material basis based on the time spent by individuals
performing the Services. This equated to £169k in 1H24 (1H23: £51k).
Service Agreement - BBO to Company
The Company has a further service agreement with BBO. The services provided by
BBO to the Company primarily include finance, IT and tech support (the "BBO
Services"). Costs and expenses are charged on a time and material basis for
the time spent by individuals performing the BBO Services. This equated to
£201k in 1H24 (1H23: £nil).
Products
In the normal course of events the Company has entered into reseller
agreements with BBO for certain broadband products sold by the Company (the
"Products"). This equated to £102k in 1H24 (1H23: £3k).
8. 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
9. 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)
Ultimate Controlling Party Note
No one shareholder has ultimate control over the business.
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