REG - Bigblu Broadband PLC - Trading Update

Bigblu BroadbandAnnouncement

02/12/2021 07:00

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RNS Number : 2817U  Bigblu Broadband PLC  02 December 2021

 

Bigblu Broadband plc

('BBB' or the 'Company' or the 'Group')

 

Trading Update

 

Comfortably above market expectations and positioned for continued growth in
FY 2022

 

Bigblu Broadband plc (AIM: BBB.L), a leading provider of alternative
super-fast and ultra-fast broadband services, provides an unaudited trading
update for the 12-month period ended 30 November 2021 (the "period"). During
the period, BBB delivered growth across all four of the Board's key metrics:
customer base, revenue, EBITDA and free cash flow. As a result, the Directors
remain confident in the future growth prospects of the business, and the Board
will continue its focus on ensuring it can maximise the inherent value within
the Company and deliver further shareholder returns.

 

Highlights

·    Good growth across the Continuing Group during the period with
significant opportunity to further accelerate customer numbers, revenue,
EBITDA, and free cash flow

·    SkyMesh has become the clear market leader in Australia having been
named Best Satellite NBN Provider for three years in a row to 2021

·    Conditional acquisition of customers and assets of Clear Networks
(Pty) in Australia which has c2.2k customers (c3k connections)

·    Completion of Bigblu Norge's infrastructure upgrade program in the
agreed timelines at a lower cost and have continued the demounting of the most
unprofitable masts where appropriate

·    Bigblu Norge has also recently entered into a distribution agreement
with Telenor to provide next generation superfast broadband via wireless 5G
delivering speeds up to 500 Mbps with unlimited data packages and has
successfully delivered its first customers in Norway on this service.

 

Continuing Group: significant improvement across key performance indicators as
follows:

·    The customer base at the end of November 2021 was c.60k (FY20: 57.2k)
- strong organic growth in customer numbers in Australia offset by ongoing
pressure on customer numbers in the Nordics due to the churn relating to the
phased demounting of loss-making sites

·    Revenues increased by c 15% to c.£27m (FY20: LFL(1)( )£23.6m) in
the period

·    Adjusted EBITDA(2) improved by c10% to c.£4.5m (FY20: LFL £4.1m)

·    Following completion of the disposal and the return of capital to
shareholders, the Group's net cash(3) position at 30 November 2021 was
c.£5.0m.

During the period under review, the Company sold its majority holding in
Quickline Communications ("Quickline") to global private markets investment
firm Northleaf Capital Partners ("Northleaf") (the "Disposal"). The Disposal
valued BBB's shareholding in Quickline at up to £48.6 million(4),
representing a return of up to 5.8x the cost of BBB's investment over a
three-year period.

Following the Disposal, BBB's remaining operations consist of its Australasian
operations (SkyMesh Pty Limited) and its Nordics business (Bigblu Norge AS),
(together, the "Continuing Group").

A fundamental responsibility of the Company is to deliver shareholder value,
and, in this regard, the Board were delighted to return c.£25.9 million in
cash to shareholders, equivalent to 45 pence per share, in October 2021. In
addition, the Company was also able to use the cash received following the
Disposal to repay its debt facilities in their entirety and secured a new RCF,
with our lead banking partner Santander.

In addition to focusing on organically growing the business, the Board
continue to pursue all options to deliver further returns to Shareholders from
the Continuing Group and BBB's retained equity interest in Quickline. We
believe that we have placed BBB firmly on the front foot with a strong balance
sheet for the short, medium, and longer term.

Financials

Total Continuing Group revenues for the year to 30 November 2021 are expected
to be approximately £27m (FY20: LFL £23.6m). Total Continuing Group adjusted
EBITDA(2) is expected to be c.£4.5m (FY20: LFL £4.1m). As at 30 November
2021, total customers were approximately 60k.

 

As at 30 November 2021, the net cash position of the Group was approximately
£5.0m (FY20 £7.4m net cash) having used c.£8.4m of the consideration
received on the Disposal to pay down debt in full and returned approximately
£25.9m to shareholders. The Group has also renegotiated a new £5m revolving
credit facility with Santander, which remains undrawn.

 

The Group has a very clear focus to continue to deliver shareholder value. It
will seek to further grow its presence in Australia, where it is already the
market leader, along with expansion into New Zealand. The focus for the
Nordics is to revitalise the customer proposition having undertaken the
upgrade project in 2021.

 

Overall, the Group's financial performance has been robust despite the wider
impact of the COVID-19 pandemic on the global business environment. Given the
approach the Board has taken to ensuring that the Group can continue to
service its customers and broaden the Company's reach, the Board is delighted
with the performance across the Continuing Group. The Board's strategic focus
will continue to be on maximising value and returns for shareholders.

 

Australasia

 

SkyMesh continues to be the leading Australian satellite broadband service
provider. As at 30 November 2021, Skymesh had c.51k customers and continues to
see strong growth opportunities, both organically and through acquisition.
Having been named Best Satellite NBN Provider for three years in a row to
2021, SkyMesh continues to secure over 50% market share of net new satellite
adds under the NBN scheme as demand continues to grow for the Sky Muster Plus
product. SkyMesh is seeing growth in the business sector after the release of
a new business focused product by NBN and the Board are confident that this
momentum will continue into 2022.

 

Having assessed the opportunity in this region, we continue to believe that,
whilst the organic growth remains highly impressive, this growth could be
accelerated by certain partnerships or acquisitions in the wider Australasia
region. As announced earlier in the year, SkyMesh has signed an agreement
with Kacific to provide services into New Zealand and will sign its first
customers before the end of 2021.

 

In November 2021, SkyMesh also signed a conditional agreement to acquire the
customers and assets of Clear Networks (Pty) Ltd ("Clear") with completion
expected later this month. Clear is an Australian ISP based in Melbourne
offering the suite of NBNCo broadband products, as well as a private fixed
wireless network serving primarily the greater Melbourne area. Bigblu has
agreed an initial purchase price of up to AUS$2.4m (£1.3m) with a further
maximum earn out capable of being earned up to AUS$0.5m (£0.3m) with the earn
out based on the total contract value of the sales pipeline delivered in the
12 months post Completion. Pro forma customers, revenue and adjusted EBITDA
for Clear for the period to July 2021 were c2.2k,  AUS$3.2m and AUS$0.5m
respectively

 

Nordics

 

BigBlu Norge has a large in country footprint and has historically delivered
strong EBITDA and FCF. As indicated, the Group has been focused on improving
the identified infrastructure (approximately 55 towers) to now offers speeds
of up to 100 Mbps.  As part of this process the Company demounted
approximately 100 loss making sites and we ended the period on c.9k customers.
The Group has a clear plan in place to diversify and improve its customer
offering and routes to market that the Board are confident will deliver a
return to customer growth.

 

Importantly BBB has started selling a new 5G Fixed Wireless product, offering
speeds up to 500 Mbps following the signing of a distribution agreement with
Telenor. This new 5G Fixed Wireless product was launched during Q4 2021 and
allows the Company to complete its strategy of delivering the best broadband
experience to all customers wherever they stand.

 

Discontinued operations

 

Quickline

Following an approach, the Company completed the sale of its majority holding
in Quickline to global private markets investment firm Northleaf in June 2021.
The Disposal valued BBB's shareholding in Quickline at up to £48.6 million,
representing a return of up to 5.8x the cost of its investment over a
three-year period.

The Company received £31.1 million in cash on completion, with up to a
further £10.1 million payable as deferred contingent consideration that is
subject to certain performance conditions being met by no later than 31 March
2022, or in certain circumstances, 31 May 2022. In addition, the Company
retained an interest in the new holding company structure, including both
equity and loan notes, which was valued at the time of transaction at up to
£7.4m.

As disclosed when the Disposal was announced, the deferred contingent
consideration is dependent on achieving certain roll-out and subsidy
milestones. Whilst progress is being made in scaling up the organisation in
terms of people and systems, the continued global shortage of microchips
affecting the supply of 5G radio equipment is likely to mean that the
milestones required to deliver the maximum amount due for the deferred
contingent consideration may not be met in full, partially reducing the amount
payable. The Board continues to work closely with Quickline to maximise the
deferred contingent consideration payable to the Company.

Outlook

 

The Board continues to have confidence that the continued organic growth and
balance sheet strength allied with the actions taken during the period in
addition to the underlying improvements in cash generation will enable the
Group to make further progress in the year ahead.

 

Andrew Walwyn, Chief Executive Officer of Bigblu Broadband plc, commented: "We
have a clear direction of travel for our operations, with significant scope to
generate further shareholder value as we take advantage of the various growth
opportunities in each territory. It is clear to see the strong growth
trajectory of the Continuing Group, which performed extremely well despite the
wider market issues."

 

(1)Like for like revenue treats acquired businesses as if they were owned for
the same period across both the current and prior year and adjusts for
constant currency and changes in the commercials of the PPP contract and
accounting treatment for Grants, and business disposed of in the period are
excluded from the calculation.

(2)Adjusted EBITDA is stated before interest, taxation, depreciation,
amortisation, share based payments and exceptional items. It also excludes
property lease costs which, under IFRS 16, are replaced by depreciation and
interest charges.

(3)Net Cash excludes lease-related liabilities of £1.1m under IFRS 16 (1H21
£1.9m).

 (4)Before completion accounts adjustment

 

For further information:

 

 Bigblu Broadband Group plc                                      www.bbb-plc.com (http://www.bbb-plc.com)
 Andrew Walwyn, Chief Executive Officer                          Via Walbrook PR

 Frank Waters, Chief Financial Officer

 finnCap (Nomad and Broker)                                      Tel: +44 (0)20 7220 0500

 Marc Milmo / Simon Hicks / Charlie Beeson (Corporate Finance)

 Tim Redfern / Richard Chambers

 (ECM)

 Walbrook PR (PR / IR advisers)                                  Tel: +44 (0)20 7933 8780 or
 Nick Rome/Tom Cooper/Nicholas Johnson                           BigbluBroadband@walbrookpr.com (mailto:BigbluBroadband@walbrookpr.com)

 

ABOUT BBB

 

Bigblu Broadband plc (AIM: BBB.L), is a leading provider of alternative
super-fast broadband solutions throughout Australasia and the Nordics. BBB
delivers a portfolio of super-fast wireless broadband products for consumers
and businesses unserved or underserved by fibre.

 

High levels of recurring revenue, increasing economies of scale and Government
stimulation of the alternative broadband market in many countries provide a
solid foundation for significant organic growth as demand for alternative
super-fast broadband services increases around the world.

 

BBB's range of solutions includes satellite, next generation fixed wireless
and 4G/5G delivering between 30 Mbps and 150 Mbps for consumers, and up to 1
Gbps for businesses. BBB provides customers ongoing 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 'video-on-demand'. Its alternative
broadband offerings present a customer experience that is similar to that
offered by wired broadband and the connection can be shared in the normal way
with PCs, tablets and smart phones via a normal wired or wireless router.

 

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