TIDM20CA
Arqiva Financing PLC
22 September 2020
Arqiva FY20 financial results
Robust performance and strengthened financial position in year
of transition for Arqiva
Sale of Telecoms business to Cellnex sharpens focus on broadcast
and utilities sectors
London, UK, 22 September 2020: Arqiva, the UK's leading player
in critical network infrastructure services for the broadcast and
utility sectors , announces its results for the year ended 30 June
2020.
Highlights
-- Group refocused on broadcast and utilities infrastructure
following GBP2bn sale of Telecoms business to Cellnex
announced in October 2019 and completed post year-end.
-- Significant investment in core infrastructure continued,
maintaining unique base and leading position within
industry.
-- Successful delivery of major programmes including smart
metering and 700MHz clearance, with key coverage and
clearance targets achieved respectively.
-- Strong financial control enabled continuing operations
EBITDA to remain flat year-on-year, despite expected
revenue decline following peak activity in the 2019
financial year.
-- New CEO Paul Donovan appointed on 20 April 2020.
Financial Results
Group revenue decreased 11.2% during the year to GBP879.9m, as
expected due to one off contractual fees and end of legacy
contracts, managed exit of the Occasional Use satellite
distribution, and reductions on the 700MHz Clearance programme as
the programme neared completion. Revenue from continuing operations
declined 10.0% year-on-year to GBP677.5m.
EBITDA was roughly flat for both the Group at GBP522.4m and for
Arqiva's continuing operations at GBP391.0m. The Group's EBITDA
performance benefited in 2020 from the 2019 implementation of IFRS
16.
Net cash inflow from operations was down 2.3% to GBP475.3m,
while net capital expenditure was flat at GBP115.4m
(2019:115.3m).
Paul Donovan, CEO of Arqiva, commented:
"Having delivered solid financial performance in 2020, Arqiva is
now entering a period of evolution. Our focus is now squarely on
maintaining our position as the number one provider of broadcast
infrastructure in the UK and establishing ourselves a leading
player in the utilities market. With a newly refocused organisation
supported by a stronger financial position, I feel we are
well-positioned to capitalise on the opportunities ahead of
us."
Sale of the Telecoms Business
In October 2019, Arqiva announced the agreement for the sale of
its Telecoms business to Cellnex for c. GBP2.0bn. The transaction
included divestment of c. 7,400 of Arqiva's cellular sites,
including masts and towers as well as urban rooftop sites, and the
right to market a further c.900 of Arqiva's retained sites across
the UK. Relevant staff within the Telecoms business also
transferred to the Cellnex business as part of the transaction.
Following the announcement of the sale of the Telecoms business
and the resulting deleveraging of the Arqiva group, in June 2020
Moody's announced a one notch upgrade (to Ba2/B1) for the junior
debt. Fitch and S&P maintained the ratings existing prior to
the sale with senior and junior debt at BBB (Fitch/S&P) and B-
(Fitch) respectively.
Highlights from Arqiva's Continuing Business
Terrestrial Broadcast
DTT remains the primary platform medium within the broadcast
market, currently reaching 98.5% of the UK's population. Arqiva's
main (DVB-T) multiplexes remain highly utilised with 90% of
capacity sold as at 30 June 2020.
The uptake of TV viewing on the DTT/Freeview platform was also
particularly strong during the lockdown period as more people
stayed at home and utilised our services to stay informed, minimise
social isolation and increase entertainment. The wide reach of the
DTT platform has been of vital national importance for delivering
news and other information to the whole nation and for supporting
society during the current pandemic.
Like many sectors, commercial radio in the UK was impacted by
Covid-19 with a reduction in revenue as many businesses cut
advertising budgets. Discussions between Arqiva, the government and
the radio industry resulted in a reduction of fees for independent
commercial radio customers across both DAB and analogue. Despite
the loss of advertising revenue, informal indications are that the
volume of hours of radio listening increased during the lockdown as
more people tuned in to radio for news and entertainment. With the
easing of lockdown restrictions, we expect radio advertising to
increase again as companies strive to regain market share and
rebuild their businesses. The latest figures from industry data
provider RAJAR show that 58.6% of listening is now to digital radio
platforms (Q1 2020) with DAB representing more than two thirds of
digital consumption. This has helped keep the first national
commercial DAB multiplex, Digital One (wholly owned by Arqiva) at
100% occupancy.
Utilities
Roll-out of Arqiva's network for Thames Water network continued
during 2020, with over 480,000 meters installed and well over 10
million meter-readings being delivered per day. In June 2020 Thames
Water announced that round-the-clock data from smart meters across
London has helped it achieve what it described as the water
industry's "biggest reduction in leakage this century".
The successful delivery of this contract has been boosted by a
new contract secured with Anglian Water, signed in June 2020
following an open competitive procurement process. Arqiva will
deploy its fixed network infrastructure to support the operation of
over three-quarters of a million (789,000 target by 2025) smart
water meters across 24 planning zones. Arqiva will then operate the
infrastructure for a further 15 years. Covering both household and
non-household properties, the project will support Anglian Water's
target Planning Zones including Norwich, Lincoln, Northampton and
Peterborough, among others.
During the year Arqiva was also selected by Yorkshire Water to
deliver and monitor a smart metering fixed-network trial as part of
its plans to revolutionise its leakage detection programme. This
two-year exercise will see Arqiva build and monitor the
fixed-network infrastructure to facilitate the operation of new
smart water meters for non-household customers across 30 of
Yorkshire Water's areas.
The Group's smart metering communication network in the North of
England and Scotland currently covers 99.4% of premises and is
planned to reach final coverage of 99.5% by the end of the calendar
year.
Covid-19 Response
As a critical national infrastructure provider, it has been
imperative for Arqiva to maintain its services providing
communications and broadcast capabilities across the country.
Arqiva has continued to provide customers with essential
communications infrastructure for broadcast, media and M2M
services. We have deployed business continuity plans as part of our
operational and financial risk mitigation, to ensure the safety of
our staff and the ongoing provision of services for our
customers.
CEO Appointment
Paul Donovan was appointed Chief Executive Officer on 20 April
2020. Paul has over 20 years' experience in senior executive roles
across the technology, media and telecommunications sectors. He was
a Non-executive Director on Arqiva's Board since 2018 and has
previously been CEO of Odeon and UCI Cinemas Group and eir,
Ireland's leading telecommunications business. Paul was also a
member of Vodafone Group's Executive Committee, where he led the
Group's emerging markets businesses.
Outlook
Following the sale of the Telecoms business, Arqiva continues to
seek new opportunities in its key broadcast and utilities markets.
These are dynamic markets demonstrated with evolving trends in TV
content delivery, radio distribution and machine-to-machine
capabilities supporting energy management for utilities companies.
By continuing to work with key stakeholders, including government,
regulatory bodies and our customers, we can strengthen these
relationships to help influence the future industry.
Moving forward, strengthening Arqiva's leading position as a
broadcast infrastructure provider and leading player in the UK
machine-to-machine utilities market underpins the core priorities
of the business. The business will evolve, but our unique service
capabilities from our critical national infrastructure, gives a
strong platform on which to build to serve better the changing
delivery requirements of the markets. This will be further
developed with a revised long-term strategy, new operating model
and continued transformation across the Group in order to achieve
efficiencies and streamline processes.
Figures quoted within this release are for the Arqiva Broadcast
Parent Limited Consolidated Group
- Ends -
About Arqiva:
Arqiva is at the heart of the broadcast and utilities sectors in
the UK and beyond, providing critical communications infrastructure
and media services.
We are the only supplier of national terrestrial television and
radio broadcasting services in the UK, consistently delivering
digital TV, analogue and digital radio to people in all four
corners of the country. We distribute over 1,000 channels
internationally using our fibre and satellite infrastructure. Our
advanced, secure and dedicated networks are also supporting the
management of critical data for a range of smart metering networks
in the energy and water sectors.
Our teams are behind the scenes, delivering millions of vital
connections every day for our customers - major UK and
international broadcasters, independent radio groups as well as
major utility companies and networks. They include leading brands
such as the BBC, ITV, Sky, Global, Bauer, Thames Water and Anglian
Water.
For more information, news and insights from Arqiva, please
visit the website at: www.arqiva.com
For further information please contact:
FTI Consulting
James Melville-Ross / Adam Davidson / Chris Birt
+44 (0) 203 727 1000 / arqiva@fticonsulting.com
Arqiva
Tony Johnson / Amy Knights-Whittome
+44 (0) 7773 045 080 / +44 (0) 7583 017 130 /
press.office@arqiva.com
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END
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