Bigblu Broadband plc (AIM: BBB.L), a leading provider of alternative super-fast and ultra-fast broadband services, announces its audited results for the year ended 30 November 2020.
There is little doubt that 2020 has been a transformational year for the Group. We commenced the year with a reconstitution of our entire debt facilities at highly competitive rates with our lead banking partner Santander Bank UK plc. During the year, we successfully disposed of the UK and European Satellite operations (the "Disposal") to our industry leading partner Eutelsat S.A. ("Eutelsat") for maximum aggregate consideration of up to £39.3m, a value that the Directors believe was extremely attractive. We ended the year with the announcement of three substantial contract wins in Quickline and a fourth just after the year end worth a combined total of around £30m under the BDUK Superfast Programme to improve connectivity in deep rural communities to around 30,000 premises using a combination of fixed wireless and fibre technologies.
We believe that we are well positioned in the satellite and fixed wireless broadband markets in the territories in which we operate, with an attractive portfolio of companies, consisting of our Australasian operations (Skymesh Pty Limited), our Nordics business (Bigblu Norge AS) and our majority interest in Quickline (Quickline Holdings Limited), (the "Continuing Operations"). We believe that we have placed BBB firmly on the front foot with a strong balance sheet and remain focused on maximising and delivering shareholder value from each of our companies.
Financial Highlights - Continuing Operations
· Like for like revenue growth1 on a constant currency basis of 4.3% (FY19: 3.0%)
· Total revenue increased 1.3% to £27.2m (FY19: £26.8m)
· Adjusted EBITDA2 increased 29.7% to £6.2m (FY19: £4.8m)
· Adjusted PAT3 improved to a profit of £1.3m (FY19: profit £0.3m)
· Adjusted EPS4 of 2.7p (FY19: loss 0.1p)
· Adjusted Operating cash inflow5 of £3.8m (FY19: £0.7m). Adjusted Free cash outflow5 of £3.1m (FY19: £3.7m) following capital investment of £5.6m and before exceptional items of £0.5m
Financial Highlights - Total Operations
· Reported EPS of 16.8p (FY19: loss 13.9p)
· Disposal of UK and European Satellite operations generated cash of £37.2m, and a book gain of £18.9m
· Following the Disposal, cash / (debt)6 improved substantially to a net cash position of £7.4m (FY19: Net Debt £14.2m)
· Total customers at period end was c.65k.
· Net customer growth for the continuing business was 6.0k (FY19: growth 3.8k).
· In December 2019, we agreed a new £30m revolving credit facility with Santander Bank UK plc to replace loan notes totalling £12m issued in 2016 to Business Growth Fund ("BGF"), the Company's £10m revolving credit facility with HSBC plc and to provide working capital to support the Group. At the time of the Disposal, we repaid £21m of the facility, replacing it with a new £12m facility.
· Leading position in Australia maintained with SkyMesh named best NBN Co satellite provider (NBN Co was established in 2009 to design, build and operate Australia's wholesale broadband access network). SkyMesh now commands a c.50 per cent market share of net new adds under the NBNCo contract.
· Quickline selected to lead a £6m Government-backed 5G project to boost rural connectivity in North Yorkshire, England's largest rural county.
· Quickline won three significant competitive tenders under the BDUK Superfast Programme to the value of £15m, pre year end, to provide significantly improved broadband speeds to premises across West Yorkshire, Lincolnshire and North Lincolnshire.
Post Period End Highlights
· On 7 December 2020, Quickline announced a further competitive tender win of £15m to provide significantly improved broadband speeds to premises across North Yorkshire that are unable to access fast and reliable internet connectivity. Quickline has won a total of £30m of tenders in a four-month period with approximately £24m of subsidy and Quickline investing approximately £6m in the delivering of these programmes to approximately 30,000 premises.
· On 8 February 2021, the Company signed an important Partner Agreement with leading next-generation Asia Pacific broadband satellite operator Kacific Broadband Satellites Group to provide a high-speed broadband internet service initially across New Zealand.
· On 30 March 2021, Quickline announced that Sean Royce will join the Quickline board as CEO on 4 May 2021. Sean brings a wealth of experience to the business and will further develop its growth strategy and focus on establishing Quickline as a leading provider of rural broadband services across Northern England and beyond. Steve Jagger, founder of Quickline, will remain full time on the Board as Founder and Chief Technology Officer, with a strategic focus on building on the rollout and development of Quickline's fibre and 5G technology.
1Like 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.
2Adjusted EBITDA is stated before interest, taxation, depreciation, amortisation, share based payments and exceptional items. It also excludes property lease costs which, under IFRS 16, are replaced by depreciation and interest charges.
3 Adjusted PAT represents adjusted EBITDA less interest, taxation, depreciation and amortisation.
4 Adjusted EPS is adjusted PAT divided by the weighted average number of shares over the period.
5 Adjusted Operating cash flow relates to the amount of cash generated from the Group's operating activities and is calculated as follows: Profit/(Loss) before Tax adjusted for Depreciation, Amortisation, Share Based Payments and adjusting for changes in Working Capital and non-cash items. Adjusted Free cash flow being cash (used)/generated by the Group after investment in capital expenditure and servicing debt. Both excludes exceptional items.
6 Cash / Net debt excludes lease-related liabilities of £3.6m of under IFRS 16 ( FY19 £5.7m).
During the first half of 2020, the COVID-19 pandemic began to reach the countries that we operate in. We expect that the consequences of the COVID-19 pandemic will continue in some form well into the foreseeable future.
Consequently, the economic global environment remains challenging in a number of sectors. BBB, has to a large extent been protected during the crisis, based on the increased requirement for remote connectivity, however, BBB's management team carefully monitor and manage any pandemic potential impacts such as customer debt management, customer discounting, installation delays, leading to an increase in in-flight sales (the period between a new contract being signed and the installation being completed) at the period end and the availability and the pressures on our supplier network.
It is worth noting that during the initial stages of the COVID-19 pandemic, there was a seamless transition to home working with over 95% of all staff across all our global hubs working full time from home, enabling the Group to continue servicing existing customers at the same time as converting a growing number of new customer leads. With vaccines being rolled out, we will continue to work with local management to ensure, where appropriate, we continue to provide safe working conditions for teams to be present in locations, taking into consideration their safety needs and mental wellbeing.
On 31 July 2020, BBB announced the proposed Disposal of its European Satellite business (the "Sale Companies") to Eutelsat ("Eutelsat"). The Disposal was approved by Shareholders at a General Meeting held of the Company on 28 August 2020, and after receiving the relevant regulatory approvals and clearances.
The Directors considered that the Disposal represented an attractive opportunity for the Group with a maximum aggregate consideration of £39.3m receivable, being £37.8m initial consideration and up to £1.5m of additional consideration. The additional consideration is payable over the course of 12 months following completion, subject to certain conditions. The initial consideration was subject to customary adjustments for cash, debt and a normal level of working capital at the completion date. Based on provisional estimates, an amount of £37.2m was actually paid in cash on completion as the initial consideration. The process to finalise the completion accounts, determine the balance of the initial consideration and the additional consideration payable remains ongoing. Eutelsat also assumed certain agreed net working capital creditors within the Sale Companies amounting to approximately £13.9m at the date of the disposal.
Having significantly reduced debt and established a net cash positive position, the Group is continuing to generate operating cashflows from its Continuing Operations with the Group continuing to see growth in customer numbers, revenue and EBITDA over the comparable period last year. The Board is focused on maximising value and returns for shareholders and the combination of balance sheet strength, favourable market dynamics and having valuable business units in their own right provides a strong backdrop for delivering enhanced shareholder value.
Andrew Walwyn, CEO of BBB, commented:
"2020 was a very eventful year for the Group. The focus during the period was on putting the Group on an increasingly strong financial footing. This can be seen firstly via our refinancing with Santander and secondly with the Disposal of our UK and European satellite assets to Eutelsat, thereby increasing value for shareholders.
"During the year the COVID-19 pandemic unfolded creating an unprecedented impact on our way of life, the economy and business generally. BBB was no exception with virtually the entire workforce working remotely. However, we were delighted that our team still safely met the demands and needs of our customers. We have worked tirelessly with our partners, resellers and suppliers to support our customers during the continuing COVID-19 challenges. Given lock-down restrictions in various jurisdictions during the year, we experienced some installation delays, which led to an increase in in-flight sales during the period as demand increased.
"We were very pleased to announce the agreement with Eutelsat to purchase our UK and European Satellite business. The purchase was a major step in the history of the Group coming off the back of five years of successfully executing our strategy of becoming a leading provider of last mile rural broadband solutions in a number of European territories. The Disposal delivered an excellent return on investment for our shareholders and Eutelsat has purchased a fully operational retail business thereby enabling it to solidify its direct-to-consumer presence in the UK and Europe.
"We remain extremely excited by the potential of the Continuing Operations and we remain very focussed on ensuring that we generate further value for shareholders from our valuable assets. As the market leader in Australia, and given the strong momentum at Quickline and opportunity to strengthen operations in the Nordics, the Group continues to be well placed to create further value."
The Company will be hosting an investor briefing on Thursday 22 April from 16.30-18.00. This will be hosted remotely via web conference. Investors wishing to join should contact [email protected] for further details.