TIDMBBB
RNS Number : 3901X
Bigblu Broadband PLC
28 August 2020
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 ("MAR"). Upon the
publication of this announcement, the inside information is now
considered to be in the public domain for the purposes of MAR.
Bigblu Broadband plc
('BBB' or the 'Company')
Interim Results
& Investor Presentation
Solid performance with continued delivery of organic customer
growth
Bigblu Broadband plc (AIM: BBB.L), a leading provider of
alternative super-fast broadband solutions, announces its unaudited
half year results for the six months ended 31 May 2020, a period
that reflects the Company before the announcement of the proposed
disposal of the Company's UK and European satellite broadband
operations (the "Sale Companies") to Eutelsat S.A. for a maximum
aggregate consideration of up to approximately GBP39.3m on a cash
free/debt free basis (the "Disposal") . Eutelsat will also be
assuming certain existing net working capital creditors within the
Sale Companies amounting to GBP13.9 million. As previously stated,
it is anticipated that Bigblu will be left with net cash of c.GBP6m
and plans to significantly reduce central costs post the
transaction.
Following completion of the Disposal, the Company's ongoing
operations will c onsist of its Australian operations (Skymesh Pty
Limited), its majority interest in Quickline (QCL Holdings Limited)
and its Nordics business (Bigblu Norge AS), (together, the
"Continuing Group").
Financial Highlights
-- Revenue of GBP25.8m (1H19: GBP30.5m) reflecting customer
rationalisation during Q4 2019 and COVID-19 impact on
installations
-- Recurring airtime revenue, defined as revenue generated from
the Company's broadband airtime, which is typically linked to
contracts, increased to 87% of revenue (1H19: 82%)
-- Adjusted EBITDA(1) of GBP3.1m (1H19: GBP5.1m)
-- The Continuing Group generated LFL(2) revenues of GBP12.1m
(1H19: GBP11.7m) and Adjusted EBITDA(1) of GBP2.4m (1H19:
GBP1.6m)
-- Net debt(3) increased following the refinancing activities to
GBP20.1m (1H19: GBP16.9m), with net debt to adjusted last 12m
EBITDA improving to 2.3x (1H19: 2.4x)
Operational Highlights
-- Customer numbers increased by c.5k during the period to
c.115k (FY19: 110K) with particularly strong growth from its
Preferred Partner Programme with EBI ("PPP") and Australian
customers
-- Continuing Group customers increased to c.64k (FY19:60k)
-- Net organic customer growth in 1H20 showed a year on year
increase of 10% to 6.3k (1H19: 5.7k)
-- 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
-- Agreed GBP30m revolving credit facility with Santander Bank
UK plc to replace loan notes totalling GBP12m issued in 2016 by
Business Growth Fund ("BGF") and the Company's GBP10m revolving
credit facility with HSBC plc and to provide additional working
capital to support the Company. HSBC continues to provide a GBP4m
revolving credit facility and operational banking support to QCL
Holdings Limited ("QCL")
-- Quickline selected to lead a GBP6m Government-backed project
to boost rural connectivity in North Yorkshire, England's largest
rural county
(1) Adjusted EBITDA is stated before interest, taxation,
depreciation, amortisation, share based payments and exceptional
items. It also excludes property lease costs which, under IFRS 16,
are replaced by depreciation and interest charges.
(2) Like for like revenue and adjusted EBITDA treat
acquired/disposed 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.
(3) Net debt excludes lease-related liabilities of GBP5.2m
arising from the implementation of IFRS 16.
COVID-19
Mid way through our first half year, we saw the most
unprecedented global healthcare issue with the proliferation of the
COVID-19 pandemic. As a result, the economic environment was
extremely challenging across all sectors. BBB, whilst to an extent
protected, based on the increased requirement for remote
connectivity, was also subject to the impacts. BBB's management
team carefully monitored and managed these impacts with particular
reference to customer debt management, customer discounting,
operational delays from installation availability and the pressures
on our supplier network.
As highlighted in the AGM Statement, the Company was impacted by
fluctuating foreign exchange rates while there was also some
slippage in new satellite capacity coming on-line from suppliers.
In addition, due to restrictions caused by COVID-19, the Company
experienced some installation delays which has led to an increase
in in-flight sales (the period between a new contract being signed
and the installation being completed).
It is worth noting that there was a seamless transition to home
working with over 95% of all staff across all our global hubs now
working full time from home, enabling the Company to continue
servicing existing customers at the same time as converting a
growing number of new business leads.
Post Period Events
On 31 July 2020, BBB announced the proposed "Disposal" of its
European Satellite business to Eutelsat S.A. ("Eutelsat"). The
Disposal is conditional upon the approval of a simple majority of
Shareholders at a General Meeting of the Company being held at 10am
today, 28 August 2020, and on certain regulatory approvals and
clearances being obtained.
The Disposal is for a maximum aggregate consideration of up to
GBP39.3m on a cash free/debt free basis and the assumption of
approximately GBP13.9m of working capital creditors. An initial
consideration of GBP37.8m is payable in cash, with GBP36.8m paid on
completion and GBP1.0m, subject to adjustment, paid following the
finalisation of completion accounts. Additional consideration of up
to approximately GBP1.5m could be paid over the course of the 12
months following completion, subject to certain conditions.
Eutelsat will also be assuming certain existing net working capital
creditors within the Sale Companies amounting to approximately
GBP13.9m. The final consideration due to Bigblu is subject to other
customary adjustments at completion, such as the actual working
capital at completion against an agreed target level and
adjustments for cash or debt items.
Upon completion, BBB's continuing operations will consist of its
Australian operations (Skymesh Pty Limited), its majority interest
in Quickline (QCL Holdings Limited) and its Nordics business
(Bigblu Norge AS), together, the "Continuing Group". It is
anticipated that BBB will be left with net cash of c.GBP6m post the
transaction. The Continuing Group had revenue in the period of
GBP12.1m (1H19: LFL GBP11.7m), with adjusted EBITDA(1) of GBP2.4m
(1H19: LFL GBP1.6m).
Andrew Walwyn will remain as CEO of the Continuing Group and
will provide transitional and ongoing consultancy advice and
support to the Sale Companies.
This post period event clearly has significant and material
effects on the structure of the business and the financial
statements going forward, therefore, it has been referenced within
the introductory statements as the Company will be materially
different following completion of the Disposal.
Andrew Walwyn, CEO of BBB, commented:
"Like many businesses, so far 2020 has been a very eventful year
for the Company. The focus during the period was very much on
putting the Company on an even stronger footing to execute our
strategy while increasing value for shareholders. The period
started with the Company refinancing its debt facilities with the
funding designed to supplement our increasingly cash generative
business model. While the onset of COVID-19 presented us with a
number of challenges, trading during the period highlighted the
resilience of our operations and scope for continued organic
growth.
"It is also very important to mention the first half of this
year has seen the COVID-19 pandemic unfold creating an
unprecedented impact on our way of life and at the very core of our
economy and business. BBB were no exception with virtually the
entire workforce working remotely and careful planning to ensure we
could still meet the demands and needs of our customers whilst
protecting our employees and representatives. We also worked
tirelessly with our partners, resellers and suppliers to support
our customers during the continuing COVID-19. However, as
previously announced, our results in the period were also impacted
by widely fluctuating foreign exchange rates, and we also saw some
slippage in new satellite capacity coming on-line from suppliers
due to COVID-19 and experienced some installation delays, which has
led to an increase in in-flight sales (the period between a new
contract being signed and the installation being completed) at the
period end.
"Given the underlying dynamic across the UK and European
satellite operations, we were very pleased to announce last month
the agreement in principle for Eutelsat to purchase our UK and
European Satellite business. The purchase is a major step in the
history of the Company 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. As well as offering an excellent return on investment
for our shareholders, Eutelsat have 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 growth potential of the
Continuing Group and believe that the Company is well-placed to
generate further value for shareholders. Following completion of
the Disposal, the Company will be in a position to pay down debt,
return to a net cash position of c.GBP6 million and accelerate
investment and growth opportunities."
Investor Presentation:
BBB's management team will be hosting a remote presentation at
3.00 p.m. on Tuesday 29 September 2020 for existing shareholders
and prospective investors. If you are interested in attending
please contact Walbrook PR via either
BigbluBroadband@walbrookpr.com or calling 020 7933 8780.
For further information:
Bigblu Broadband Group PLC www.bbb-plc.com
Andrew Walwyn, Chief Executive Officer Via Walbrook PR
Frank Waters, Chief Financial Officer
Dom Del Mar, Corporate Development
finnCap (Nomad and Broker) Tel: +44 (0)20 7220 0500
Marc Milmo / Simon Hicks / Charlie Beeson
(Corporate Finance)
Tim Redfern / Richard Chambers / Manasa
Patil (ECM)
Walbrook PR (PR / IR advisers) Tel: +44 (0)20 7933 8780
or
Nick Rome /Tom Cooper/Nicholas Johnson BigbluBroadband@walbrookpr.com
About Bigblu Broadband plc:
Bigblu Broadband plc (AIM: BBB), is a leading provider of
alternative super-fast broadband solutions throughout Europe and
Australia. 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.
In July 2020, BBB announced the conditional sale of its European
Satellite business to Eutelsat and whilst the completion has yet to
be concluded this offers an excellent return for its shareholders
whilst providing a key asset for Eutelsat to solidify its position
in the European Satellite market. With the remaining businesses,
BBB is extremely well positioned to continue growing as it targets
customers that are trapped in the 'digital divide' with limited
fibre broadband options.
BBB provides customers ongoing services including hardware
supply, installation, pre and post-sale support billings and
collections, whilst offering appropriate tariffs depending on the
requirements of each end user.
CHIEF EXECUTIVE'S REPORT
Overview
The first half of this financial year has been a period where we
have had to, like all businesses, contend with the challenges
created by the global proliferation of COVID-19 across all our key
markets. Whilst the period was a challenging one for the Company,
we were delighted by the resilient performance of the Company and
our ability to ensure all of our staff across all jurisdictions
advanced to 95% home working to support our customers within 72
hours, following the government guidance on the pandemic. In the
context of the near-term global challenges created by COVID-19, our
long term relationships with our satellite partners were vital as
we worked together to ensure we could deliver against the growing
demand for rural broadband services.
Off the back of this long-term relationship, we were delighted
to announce last month that Eutelsat S.A. have agreed to purchase
BBB's UK and European Satellite business, subject to shareholder
approval and certain regulatory approvals and clearances in
Australia and Italy. I firmly believe that this offers both an
excellent return on investment for shareholders but also a hugely
capable retail business for Eutelsat to cement is position as the
foremost Satellite Provider in the European market and further
afield.
The Disposal provides BBB with an excellent return, transforms
its balance sheet and allows management to concentrate on
businesses with strong market opportunities to therefore provide
increased returns to shareholders.
Australasia
Our Australian business Skymesh, is the leading Australian
satellite broadband service provider. It has over 40k customers in
total and continues to grow rapidly. Having been named Best
Satellite NBN Provider in both 2019 and 2020, SkyMesh commands a 50
per cent. market share of net new adds under the NBN scheme in the
12 months to 30 June 2020. Recently, SkyMesh has benefited from a
strong take up of Australia's new Sky Muster Plus product, which
has added 2,500 customers to SkyMesh since it was released on 1
April 2020, representing 52 per cent. of the total subscribers in
SkyMesh to this product to date.
The Board believes that it could complement organic growth
opportunities by acquisitions that could accelerate the Company's
presence into the wider Australasia region. Overall, the Board
believes the business could potentially double the number of
customers in the Australasia region in the next three years to 80k
through organic and acquisitive growth, with New Zealand a current
area of focus for potential expansion.
UK - Fixed Wireless
Quickline is one of UK's leading rural broadband fixed wireless
operators and is currently 69.7 per cent owned by the Company. It
builds and operates its own fixed wireless access network,
supported by increasing amounts of fibre infrastructure, avoiding
the high cost and lengthy build periods which makes the economics
of full fibre to the home unattractive in certain rural
settings.
There is significant scope for further growth within Quickline
through securing government tenders, M&A and organic
investment. In August 2019, Quickline secured GBP12m of additional
financing of which GBP8m remains committed but currently undrawn.
It is currently investing in key resources including people,
systems, and capacity as Quickline prepares to accelerate its
growth.
The Directors consider that Quickline's future success is
directly linked to its ability to increase the size and scale of
its infrastructure business. Quickline is currently targeting a
customer base of approximately 30k subscribers over the next three
years.
Nordics
In Norway we continue to attract new fixed wireless clients with
targeted investment in new towers and whilst the fixed wireless
product comes under some pressure from the accelerated roll out of
fibre in Norway, the business continues to investigate ways to
diversify and find new routes to market. In this respect, it is
worth highlighting the Norwegian's incumbent decision to turn-off
its copper network in certain geographic areas, leaving several
hundred thousand premises reliant, at least initially, on wireless
solutions. As previously announced, the Board intends to evaluate
the opportunity to allocate part of the net proceeds from the
Disposal to refining and enhancing the Company's service
proposition in the Nordic market in both fixed wireless and
satellite.
Santander
The first half of the year started with the securing of our new
GBP30m revolving credit facility with Santander UK, thus ensuring
that the Company was and is well funded with a stronger balance
sheet as we sought to deliver enhanced shareholder value from the
opportunities available to the Company. We are very grateful to
Santander for their support.
Key Financials
Total revenue including recurring airtime, equipment,
installation sales and network support was GBP25.8m (1H19:
GBP30.5m), This reduction in revenue was a reflection of a lower
number of customers against the comparative period in 2019
following the rationalisation of c.13k customers towards the tail
end of FY19 as well as installation delays due to COVID-19
restrictions and fluctuating FX rates in the period. Recurring
airtime revenue, defined as revenue generated from the Company's
broadband airtime, which is typically linked to contracts, was
GBP22.4m representing 87% of total revenue (1H19: 82%).
Total LFL revenue for the Continuing Group in the period was
GBP12.1m (1H19: LFL GBP11.7m).
Adjusted EBITDA for the period was GBP3.1m representing an
adjusted EBITDA margin of 12.0% compared to GBP5.1m in 1H19 and an
adjusted EBITDA margin of 16.8%. In addition to the impact on
EBITDA linked to the revenue comments above, there was a change in
the commercial arrangements in our PPP contract with EBI compared
to 1H19. Furthermore, BBB benefited from the timing of certain
grant awards through our Quickline subsidiary in 1H19. In February
20, Quickline announced that it had been selected to lead a GBP6m
project to boost rural connectivity in North Yorkshire. The project
will focus on bringing mobile connectivity to the County where 35%
of the population currently has no 4G mobile coverage.
Adjusted LFL EBITDA for the Continuing Group in the period was
GBP2.4m (1H19: LFL GBP1.6m).
Total customers increased by c.5k to 115.1k at the period end
(FY19: 110K) with particular strong growth in UK / European PPP and
Australian customers. Total LFL customers for the Continuing Group
at the period end was c64k (FY19: LFL 60k).
Net organic customer growth in the first half of 2020 showed a
year on year increase of 10% to 6,300 (1H19: 5,700). In-flight
customers at the end of 1H20 were 2,500 compared with 1,100 at the
end of 1H19 reflecting increased demand but also installation
delays following the outbreak of COVID-19. We are delighted with
the support that we have had from all our network partners and our
reseller / installer partners during this period in helping our
customers, especially those forced with home working.
Strategy
The opportunity in the super-fast broadband market remains
extremely exciting across the continuing operations as it is
changing significantly and accelerating at pace, where in the past
a service of 30Mbps was seen as an appropriate solution to a
typical customer, nowadays this is north of 50Mbps and our
satellite and fixed wireless solutions will ensure that all
customers can be served and not left in the digital divide.
The announcement last month of the conditional purchase of our
European Satellite business by Eutelsat will enable the new Company
to take maximum advantage of these technological developments and
continue the organic growth trajectory that Bigblu have set.
For the continuing Company, the business will still have over
60k customers. The Directors consider that, given their respective
strengths, each of the three business units has potential
opportunities to enhance shareholder value and therefore the Board
will be focused on ensuring that it can fully capitalise on this
opportunity.
For the SkyMesh business in Australia, the Board believes that
it could also complement organic growth opportunities by
acquisitions that could accelerate the Company's presence into the
wider Australasia region. As noted above, the Board believes the
business could potentially double the number of customers in the
Australasia region in the next three years to 80,000 through
organic and acquisitive growth, with New Zealand a current area of
focus for potential expansion.
For Quickline, there is potential scope for further growth
through securing government tenders, M&A and organic
investment. It builds and operates its own fixed wireless access
network, supported by increasing amounts of fibre infrastructure,
avoiding the high cost and lengthy build periods which makes the
economics of full fibre to the home unattractive in certain rural
settings.
The Directors consider that the 'digital divide' in the UK
presents potential opportunities for the continuing Company with
around 1.0m homes still unable to receive superfast broadband
services and around 12.4m homes unable to access ultrafast speeds.
There are various government programmes to address this digital
divide which are overseen by Building Digital UK (BDUK), part of
the Department for Digital, Culture, Media & Sport (DCMS).
These include the GBP1.7bn Superfast Broadband Programme that is
committed to run until 2026 and the GBP200m Rural Gigabit
Connectivity Programme. In May 2019, the Chancellor also announced
a GBP5.0bn commitment to fund gigabit-capable deployment in the
hardest to reach 20 per cent. through the 'Outside-In'
approach.
The Directors consider that Quickline's future success is
directly linked to its ability to increase the size and scale of
its infrastructure business. Quickline is currently targeting a
customer base of approximately 30k subscribers over the next three
years. In line with this ambition, the Board believes that there is
a clear path ahead for the business to deploy in excess of the
funding of up to GBP12m raised last year and achieve such
scale.
To date, the Nordics business has been focused on the Norwegian
market and there has been limited investment by the Company in
improving the fixed wireless network over the last 24 months. There
have been relatively high levels of customer churn in this region
due, in part, in the view of the Directors, to relatively low
broadband speeds. However, the launch of the Preferred Partner
Program satellite operations in the Nordic region has been a
success with new customers being attracted to the packages on
offer.
Following the Disposal, the Board intends to evaluate the
opportunity to allocate part of the net proceeds from the Disposal
to refining and enhancing the Company's service proposition in the
Nordic market. Initiatives considered will include adding a "sales
and marketing" director for the Nordics with a strategic objective
to, among other things, expand the geographic focus of the
operation into Sweden and Finland. In addition to the launch of new
product satellite offerings across the region offering speeds of
50Mbps and unlimited capacity, the Company will also consider
investing to upgrade its fixed wireless network whilst also looking
to provide services over a virtual network backed by Telenor,
redeploying the successful strategy used by BBB in Italy.
The Directors consider that the Company's ability to offer
improved fixed wireless and satellite solutions in the Nordics
means that there is potentially significant scope to expand its
presence and reach in this region. The suite of competitive
offerings and growing demand for working from home solutions means
that the target market continues to increase in size. Market
growth, alongside the operational investment outlined above,
provides the Directors with confidence of stronger demand for its
FWA solutions in Norway whilst, capital-light satellite solutions
are expected to be successfully deployed across the wider Nordic
region.
Accelerating Technology Evolution
Products
Our fixed wireless businesses are also benefiting from
significant advances in technology, improving speeds and
throughput. The Company has now demonstrated the first gigabit
capable network with a pioneering mmWave technology, utilising the
newly released 60 GHz spectrum. Importantly, all customers who have
been connected to the Company's networks in Norway and the UK
within the last year are now able to be connected at up to 100 Mbps
if desired.
New satellites from our European partners, which are fully
funded and already in build, will usher in a completely different
satellite broadband proposition for customers signing up. In
Australia, new NBN product Sky Muster Plus is stimulating market
growth leading to increased ARPU levels for the premium product.
Sky Muster Plus and extending its reach to new and existing
customers will be a focus for the coming year.
Marketing
We use a digital-first strategy to both acquire new customers,
retain and up-sell (ensuring our customers are on the most
appropriate package) to our existing base. For customer
acquisition, we target in-market prospects based on geography,
broadband speed and purchase intent. Channels used vary depending
on in-country results, blending Facebook, Google, Bing and
lead-generation partners in order to achieve our internal KPI's in
terms of cost per lead and cost per activation. We deploy a suite
of engaging content from ad copy, through to static display ads and
video. Most important of all is word of mouth or customer referral
hence the importance of looking after our existing customers.
Board Changes
Non-Executive Director Simon Clifton has decided to step down
from his role post completion of the Disposal. As a co-founder of
Bigblu Broadband, Simon was instrumental in establishing its
leading technology platforms and assisting its geographic growth.
His knowledge base and experience played a key role in the
Company's transition from a private to public entity, its buy and
build roll up strategy as well as the integration and development
of its European operations - ultimately enabling the Company to
maximise shareholder value via the Disposal. Simon remains a
supportive shareholder and the Company would like to put on record
its appreciation of his support and efforts in developing its
growth strategy.
Current Trading and Outlook
The Company has continued its successful positioning at the
forefront of the alternative super-fast broadband industry. During
1H20, the Company continued to grow its customer base while still
benefiting from the strong visibility afforded by the high
percentage of recurring revenues. Our robust model and
infrastructure continued to underpin growth in customers and
revenues per user. This will prove to be key to the Continuing
Group as we seek to maximise shareholder value from Quickline and
our Nordic and Australian businesses.
With the announcement last month of the conditional sale of its
UK and European Satellite business to Eutelsat, BBB enters a new
era in its history. The customer base and operational capability
that Eutelsat will purchase gives them the depth and strength to
fully capitalise on the launch of the Eutelsat Konnect Satellite
(launched in January 2020) and the significant increase in capacity
in the core markets.
Looking beyond and with the Company's continuing businesses, the
Board remains very convinced that there is plenty of scope for the
Company to take advantage of the long-term global growth
opportunities. These include, but are not limited to, taking
advantage of the Government support in addressing the 'digital
divide' in the UK through our Quickline business; capitalising on
organic growth opportunities in Australia to further solidify our
hold in the region and to push on with Sales and Marketing
strategies in the Nordics.
In the current environment, whilst we are clearly dealing with
unprecedented events, we have carefully monitored the impacts on
the business that the COVID-19 pandemic has brought. Part of our
continued growth, and improvement year on year, is satisfying the
increased demand for high speed Broadband in rural areas as more
and more employees work from home. We have also closely monitored a
number of business KPIs to ensure that the economic pressures faced
by our customers and suppliers have not materially impacted our
operations and financial performance. These KPIs include: customer
debt profiles, customer discounting, lead times for activations,
and movement flexibility of stock. As a global business with
customers in some of the countries that have been most affected by
COVID-19, we continue to support staff and customers during these
difficult times. Whilst the Company goes through significant change
and completes the Disposal, the Board continues to work hard in
taking action to mitigate any COVID-19 impacts so as to manage any
short-term disruption to the business or for customers.
The Board's current view is that the continuing Company has a
strong basis to further enhance shareholder value in the future
with several growth opportunities across each business. Whilst the
Board recognises that it is difficult to predict with absolute
certainty the impact COVID-19 will have on the business and indeed
our customers, the Board recognises the robust nature of the
business, including but not limited to, delivering a product
existing and potential customers urgently need, strong underlying
recurring revenue, a materially improved balance sheet and
focussing on the growth opportunities that are available.
Following typical seasonal trends, we expect a strong second
half and are comfortable with current market expectations.
Andrew Walwyn
CEO
FINANCIAL REVIEW
The first half of FY20 was characterised by an underlying solid
trading performance across the Company's key indicators especially
in light of the challenges associated with COVID-19 on the business
and our customers. This financial review describes the performance
of the entire Company during the course of 1H20.
Where appropriate, and recognising the significance of the post
balance sheet announcement on July 31(st) 2020 that the Company
agreed to the sale of its UK and European Satellite business to
Eutelsat S.A. ("Eutelsat"), we have provided extracts of the
performance of the business split between proposed Continuing and
Discontinuing businesses to aid further analysis. Under IFRS 5,
assets held for sale (including disposal groups) are classified as
discontinued operations and should be presented separately in the
income statement. As the sale announcement is a post balance sheet
event it is considered the criteria for discontinued operations as
laid out by IFRS 5 had not been met as at 31 May and as such there
is no separate presentation of discontinued operations.
Financial Review
Total revenue was GBP25.8m (1H19: GBP30.5m). This reflects the
lower like for like customer numbers, following the rationalisation
of 13k customers in the last quarter of 1H19 as well as
installation delays created by the restrictions imposed by
COVID-19. For the businesses that will continue to remain part of
the Company post the Disposal, like for like revenue in the period
was GBP12.1m (1H19: LFL GBP11.7m).
Total customers at the period end were c.115k (FY19: c.110k).
During the half year the Company had gross adds of 18k (1H19: 16k)
and churn of 12k (1H19: 11k) giving c.6,000 net organic adds (1H19:
c.5,000). In addition, during the period, we disposed of a small 4G
loss making base in Australia and made two base acquisitions in
strategically important countries in Europe, the net impact of
which was c.1,000 reduction in subs linked to M&A activity.
This is summarised as follows:
Unaudited Unaudited Audited
As at As at As at
31 May 2020 31 May 2019 30 Nov 2019
000 000 000
Opening base 110 113 113
Acquisition / Disposal (1) 0 1
Gross Additions 18 16 33
Churn (12) (11) (24)
Base Management - - (13)
------------- ------------- -------------
Closing Base 115 119 110
------------- ------------- -------------
Net Organic Additions
in the period 6 5 9
------------- ------------- -------------
For the Continuing Group customer numbers increased to 64k
(FY19: 60k), an increase of 7% in the six month period.
The sales revenue mix across the Company at the end of the
period was c.80% Satellite and c.20% Fixed Wireless (1H19: c.80%
Satellite and c.20% Fixed Wireless). Following the Disposal, the
sales revenue mix is expected to be approximately 56% Satellite and
44% Fixed Wireless.
Underlying ARPU, calculated by dividing total revenues from all
sources by the average customer base, increased in the first half
to GBP38.9 per month (1H19: GBP35.3) after adjusting for the change
in network policy as we sought to offer better packages to
customers with increased revenue from services, installations and
network support.
Churn rates (defined as the number of subscribers who
discontinue their service as a percentage of the average total
number of subscribers within the period, excluding the
rationalisation of customers), increased to an average annualised
churn rate of 21% in 1H20 (1H19: 18.0%). The main area of increased
churn was in fixed wireless in Norway and in certain countries in
Europe where beam congestion arose prior to the delayed launch of
the Konnect Satellite capacity and associated products.
Gross profit margins improved to 44.5% in 1H20 (1H19: 43.7%)
because of improved product sales mix and the removal of less
profitable JV trading.
Distribution and Administrative expenses, before items
identified as exceptional in nature, increased to GBP9.7m (1H19:
GBP8.6m) representing 37.6% of revenue (1H19: 27.9%) due in the
main to increased marketing costs in the period to GBP0.9m from
GBP0.1m, representing 3.3% of revenue (1H19: 2.6%).
Depreciation increased to GBP2.8m in the first half of the year
from GBP2.1m in 1H19 due to the increased CAPEX programme around
our PPP relationship and is analysed as follows:
Unaudited Revised Unaudited Audited
As at As at As at
31 May 2020 31 May 2019 30 Nov 2019
GBP000 GBP000 GBP000
Base depreciation 2,017 1,440 3,365
IFRS 16 impact 802 613 1,245
Reported depreciation 2,819 2,053 4,610
------------- ------------------ -------------
Amortisation decreased to GBP1.3m in 1H20, from GBP1.9m in 1H19,
mainly due to the completed amortisation of assets acquired through
business combinations in 2016 and 2017, which are written off over
a 24-month period, offset against increased amortisation for
acquisitions completed in FY18 and FY19.
The Company incurred charges identified as exceptional in nature
during the period, including costs related to internal
restructuring and continued Hub consolidation (GBP0.5m), new RCF
for the Company across multiple jurisdictions, legal and related
costs associated with acquisition and disposal activity (GBP0.2m)
and other costs deemed exceptional to ordinary activities
(GBP0.3m).
Interest costs increased during the period to GBP4.4m (1H19:
GBP1.2m) as a result of GBP2.1m of additional charge related to the
BGF redemption premium following the refinancing at the start of
the period and GBP1.2m additional interest from the penalty
incurred by settling the BGF loan and the RCF facility with
HSBC.
Unaudited Revised Unaudited Audited
As at As at As at
31 May 2020 31 May 2019 30 Nov 2019
GBP000 GBP000 GBP000
Underlying Interest 4,287 1,096 2,340
IFRS 16 impact 152 142 282
Reported Interest 4,439 1,238 2,622
------------- ------------------ -------------
The HSBC RCF and the BGF loans were repaid in full in December
2019 other than the redemption premium which is not due until May
2024 under the current terms of the deal with BGF. This was
replaced by the Santander facility announced in December 2019. Due
to the announcement of BBB disposing part of the Company and based
on the terms and conditions of the BGF redemption premium, we have
taken an additional charge of GBP2.1m in 1H20 to provide 100% of
the redemption premium payable of GBP5.5m, less a net present value
adjustment of GBP0.7m. In accordance with previous years the
redemption premium is included within non-current liabilities
'Other Payable' at GBP4.8m (1H19: GBP2.0m).
The tax credit arises from the release of deferred tax on
amortised customer base intangible assets.
Company results
Adjusted EBITDA (before share based payments and specific items
relating to M&A, the new RCF for the Company across multiple
jurisdictions, integration and the establishment of the network
partnerships) for the half year decreased 39% to GBP3.1m (1H19:
GBP5.1m). A reconciliation of the adjusted EBITDA to statutory
operating loss of GBP2.4m (1H19: GBP0.8m profit) is shown
below:
Revised
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 2020 31 May 2019 30 Nov 2020
GBP000 GBP000 GBP000
Adjusted EBITDA 1 3,064 5,090 11,695
Depreciation - Core 2 (2,017) (1,440) (3,365)
Depreciation - IFRS 16 2 (802) (613) (1,245)
Amortisation (1,301) (1,891) (4,071)
Impairment of goodwill 3 - - (3,286)
------------ ------------ -------------
Adjusted EBIT (1,056) 1,146 (272)
Share based payments (325) (204) (437)
Exceptional items relating to M&A, fundraising, hub
consolidation, integration and the establishment
of the network partnerships. 4 (970) (101) (4,921)
----------------------------------------------------------------- ---- ------------ ------------ -------------
Employee related costs associated with consolidations in the
regions (517) (51) (1,999)
Fundraise, legal and related costs associated with acquisition
and disposal activity (185) (50) (2,431)
Other (268) - (491)
----------------------------------------------------------------- ------------------ ------------ -------------
Statutory operating loss (2,351) 841 (5,630)
------------ ------------ -------------
Company Statutory Results and EBITDA Reconciliation
1) Adjusted EBITDA (before share based payments, depreciation,
intangible amortisation, impairment of goodwill, acquisition,
employee related costs, deal related costs, start-up costs and) was
GBP3.1m (1H19: GBP5.1m).
2) Depreciation increased to GBP2.0m in 1H20 from GBP1.4m in
1H19 following increased CAPEX in the period. In FY19 we adopted
IFRS 16, with the depreciation element in 1H20 GBP0.8m (1H19:
GBP0.6m).
3) Total amortisation decreased to GBP1.3m in the period, from
GBP1.9m in 1H19. Underlying amortisation reduced significantly
(down 31% on 1H19) mainly due to the completed amortisation of
acquisitions made in 2017 and 2018, which were written off over
24-month period, offset against amortisation for acquisitions
completed in FY18 and FY19.
4) The Company incurred significant expenses in the period, that
are considered exceptional in nature and appropriate to identify.
These comprise:
a. GBP0.5m (1H19: GBP0.05m) employee termination and redundancy
costs where internal restructuring has occurred
b. GBP0.2m (1H19: GBP0.05m) of net acquisition, deal, legal and
other costs relating to M&A activities and fundraising during
the period. These costs comprise mainly professional and legal
fees.
c. GBP0.3m (1H19: GBPnil) Other one off set up costs including
legals of new businesses including Greece and Hungary (GBP0.1m),
market launch costs associated with new regions (GBP0.1m) and other
(GBP0.1m).
Total Revenue and Adjusted EBITDA in 1H20 and the comparative
period is categorised as follows:
Revenue Adjusted EBITDA(3)
----------------------- ----------
Unaudited Unaudited Audited Unaudited Revised Unaudited Audited
6 months 6 months 12 months 6 months 6 months to 12 months
to to to To 31 May To
31 May 31 May 30 Nov 31 May 2019 30 Nov
2020 2019 2019 2020 2019
GBPm GBPm GBPm GBPm GBPm GBPm
UK 7.6 10.3 19.1 2.6 2.6 6.9
Europe(1) 11.0 13.1 28.1 1.5 2.6 5.4
Australia 7.2 7.1 14.9 1.2 0.9 2.9
Plc and
Central Costs
(2) (2.2) (1.0) (3.5)
Total 25.8 30.5 62.1 3.1 5.1 11.7
---------- ----------- ---------- ------------------
(1) Europe includes Norway, France, Ireland, Poland, Italy,
Germany, Sweden, Finland, Poland and Spain
(2) Central costs include finance, IT, marketing and plc
costs
(3) Adjusted EBITDA includes the impact of adoption of
IFRS16
The Company's total customer base of c.115k as at 31 May 2020
(FY19: c.110k) was split as follows: UK: 19% (1H19: 23%), Europe:
45% (1H19: 49%), Australia: 36% (1H19: 28%).
The year on year analysis from both a revenue and EBITDA
perspective is explained as follows:
UK
-- The decrease in revenue originates from a reduction of
c.GBP1.6m of SAC contribution and Kit revenue vs 1H19 from the
networks due to a change in how the PPP scheme operates and c.GBP1m
of grant revenue received in 1H19.
-- Notwithstanding this EBITDA has remained in line with previous year
Europe
-- Revenue in satellite decreased mainly due to the
rationalisation of 13k satellite customers in 2H19 as well as beam
congestion in certain European territories.
-- Revenue in fixed wireless reduced marginally due to churn
increasing in the Nordic region which is being addressed.
-- EBITDA decreased due to increased marketing investment in the period
Australia
-- The increase in revenue was due to continued growth of the
customer base. EBITDA improved following the disposal of the fibre
business in 1H19 and the cost control actions subsequently
taken.
An analysis of continued and discontinued activities on a like
for like basis (like for like revenue and adjusted EBITDA treat
acquired/disposed 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), is provided as
follows:
Continuing Operations* Discontinuing Operations*
1H20 1H19 1H20 1H19
------------ ------------- -------------
Customers 64.0k 56.0k 51.0k 50.0k
------------ ----------- ------------- -------------
Revenue GBP12.1m GBP11.7m GBP13.7m GBP12.7m
------------ ----------- ------------- -------------
Adjusted EBITDA GBP2.4m GBP1.6m GBP0.7m GBP1.0 m
------------ ----------- ------------- -------------
* split between continuing and discontinuing is an estimate
based on those businesses transferring announced in the Disposal on
31 July 2020
Continuing Operations
- The growth in customers, revenue and adjusted EBITDA, remained
strong throughout the period in Continuing Operations, underpinned
by a strong Australian attainment with a slight reduction in fixed
wireless performance, in the main, due to timing of grant awards
and installation delays.
Discontinuing Operations
- Customers: The discontinuing customer base increased by c1.2k
after adjusting for the rationalisation in 2H19 of c12k customers.
In addition, there were some delays in installations which resulted
in inflight customers increasing by c1k in the period. Discontinued
businesses will benefit from the Disposal with access to Eutelsat's
Konnect satellite in congested beams.
- Revenue: 1H20 revenue increased by 8% (GBP1.0m) vs 1H19 LFL
following increased sales and ARPU improvements
- Adjusted EBITDA: reduced by GBP0.3m due in the main to timing
of marketing investment and launch costs incurred in Hungary and
Greece.
Underlying average revenue per user across continuing and
discontinuing operations ("ARPU") increased by c.12% to GBP38.9 per
month in 1H20 (1H19: GBP34.8 LFL). Customer average annualised
churn was 21% (1H19: 18.0%) in the period.
Balance Sheet
There was a step change in the balance sheet following the
investment in capital expenditure during the half year to support
the PPP roll out in Europe and the continued investment in fixed
wireless in UK and Norway.
Fixed Assets have increased in the last 12 months to GBP18.1m
(1H19: GBP12.3m), following a planned capital expenditure
investment as a direct result of growth in the PPP (CAPEX incurred
by the Company). The main components of the GBP5.8m increase
include the purchase of rental equipment of GBP7.2m, fixed wireless
investment of GBP0.4m and the continued adoption of IFRS 16
creating a right to use asset GBP1.0m, adjusted by depreciation
provided in the year (GBP2.8m) and foreign exchange movements.
Intangible Assets decreased to GBP29.7m (1H19: GBP34.6m)
following amortisation charges of GBP3.5m in 12 months ending May
2020 and the goodwill impairment of GBP3.2m in the second half of
FY19. Total amortisation reduced slightly to GBP1.3m in 1H20 (1H19:
GBP1.9m). Underlying amortisation reduced significantly (down by
32% on 1H19) mainly due to the completed amortisation of
acquisitions made in FY16, which are written off over 24-month
period, offset against amortisation for acquisitions completed in
FY18 and 1H19.
Goodwill and Amortisation Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 May 2020 31 May 2019 30 Nov 2019
GBP000 GBP000 Comments
GBP000
2016 acquisitions
now
Underlying Amortisation 1,302 1,891 4,071 fully amortised
Additional charge - - 3,286 BBS Ltd/BeyonDSL
- Impairment as integrated with
BBO Ltd
Reported
Amortisation 1,302 1,891 7,357
------------- ------------- -------------
Working Capital
Inventory days decreased to 28 days (1H19: 30 days) due to
increased sales.
Debtor days decreased to 22 days (1H19: 33 days) following
strengthening of the recovery team and implementation of auto
suspend in several regions.
Creditor days increased to 138 days (1H19: 107 days) due to
extended terms from our airtime providers and agreed payments to a
key supplier in Australia.
Total net debt, excluding IFRS 16, increased in the year by
GBP5.9m to GBP20.1m (FY19: GBP14.2m) and is explained further in
the Cash Flow Analysis section.
As at 31 May 2020, the Company had a cash balance of GBP5.9m and
GBP3.5m of headroom under the Santander facility. The increase in
cash is largely due to the continued support of our network
partners. However, we recognise as we work closer with our network
partners across existing and new territories, there will be a
desire to reduce creditor days. We will continue to work with them
to ensure payment terms are appropriate for our size of business
alongside the ongoing marketing and product support obligations to
ensure the Company can deliver consistently improving products and
services to its customers.
Cash Flow Analysis:
Underlying Cashflow performance
The underlying cash flow performance analysis seeks to clearly
identify underlying cash generation within the Company and
separately identify the cash impact of M&A activities,
identified exceptional items and the treatment of IFRS 16 and is
presented as follows:
Unaudited Revised Unaudited Audited
6 months 6 months 12 months
to to to
31 May 2020 31 May 2019 30 Nov 2019
GBP000 GBP000 GBP000
Underlying adjusted EBITDA 2,110 4,335 10,208
IFRS 16 adoption 1 954 755 1,487
------------- ------------------ -------------
Revised underlying adjusted EBITDA 3,064 5,090 11,695
Underlying movement of working capital 2 2,008 (3,075) 2,426
Forex and non-cash 3 (717) 163 (1,494)
------------- ------------------ -------------
Underlying operating cash flow before interest, tax Capex
and exceptional items 4 4,355 2,178 12,627
Tax and interest paid 5 (1,850) (731) (2,144)
Purchase of Assets 6 (3,694) (3,386) (8,913)
------------- ------------------ -------------
Underlying free cash flow before exceptional and M&A items (1,189) (1,939) 1,570
Cash Exceptional items 7 (970) (101) (3,337)
Cash impact of M&A Activity 8 (746) (2,000) (2,093)
------------- ------------------ -------------
Underlying free cash flow after exceptional and M&A items (2,905) (4,040) (3,860)
Investing activities 9 (661) (641) (865)
Financing activities 10 3,484 2,977 5,647
------------- ------------------ -------------
Increase/(Decrease) in cash balance (82) (1,704) 922
------------- ------------------ -------------
1) IFRS 16 is shown as an adjusted item between underlying
adjusted EBITDA and revised underlying adjusted EBITDA. The GBP1.0m
is offset by GBP0.8m in Financing activities and GBP0.2m in non -
cash interest. The net impact therefore eliminates to zero on the
increase in cash balances.
2) Underlying movement in working capital was a benefit of
GBP2.0m (1H19: outflow GBP3.1m and last 12 months (LTM) shows
working benefit inflow of GBP7.5m). Working capital benefitted from
an increase in creditors due to the support from EBI through our
PPP agreement, which defers payments for kit over a 48 month
period, resulting in deferred payment of GBP3.4m.
3) Forex and non-cash outflow of GBP0.7m (1H19: Inflow GBP0.2m)
relate to the exchange movement in the Condensed consolidated
statement of comprehensive income and the Condensed consolidated
statement of financial position, as well as costs/income where
there is no impact on operating cashflow.
4) This resulted in an underlying operating cash flow before
Interest, Tax, Capital expenditure and Exceptional items of GBP4.4m
(1H19: GBP2.2m and LTM GBP14.8m), and an underlying operating cash
flow to EBITDA conversion of 142.1% (1H19: 42.7% and LTM 153%).
5) Tax and interest paid was GBP1.8m (1H19: GBP0.7m and LTM
GBP3.3m) which included the GBP1.2m penalty to BGF, with the
difference to the condensed consolidated statement of comprehensive
income being accrued interest of GBP2.6m. LTM includes the GBP1.8m
and GBP1.5m of loan and RCF interest, and due to the refinancing we
are expecting a substantial reduction of interest.
6) Purchase of assets were GBP3.7m (1H19 GBP3.4m and LTM
GBP9.2m). These purchases covered the rental equipment of GBP3.1m,
fixed wireless investment of GBP0.2m, as well as installations and
IT costs of GBP0.4m. Of the LTM GBP6.0m was for rental equipment in
relation to the PPP customer base.
7) Cash Exceptional items of GBP1.0m (1H19: GBP0.1m and LTM
GBP4.2m) is net of non-cash exceptional items including provisions
made in accordance with IAS 37 which are expected to be incurred
throughout 2020.
8) Cash impact of M&A activity was an outflow of GBP0.7m
(1H19: GBP2.0m outflow and LTM GBP0.8m outflow) and includes the
GBP0.7m deferred consideration paid to previous owners of OpenSky
(1H19 QL GBP2.0m).
This resulted in an underlying Free Cash Flow in the year being
an outflow of GBP2.9m (1H19: outflow GBP4.0m and LTM GBP2.7m
outflow).
9) Purchase of intangibles were GBP0.7m compared to GBP0.6m in
1H19 (LTM GBP0.9m) due to less M&A activity. 1H20 consists of
Software development costs of our Pathfinder project (GBP0.3m), as
well as a few small investments of GBP0.4m.
10) In 1H20 the major financing activities related to the
drawdown of cash on the RCF of GBP3.5m (1H19 GBP3.0m and the LTM
GBP6.2m)
Statutory Cash flow Analysis
Operating cash flows improved to GBP2.6m in 1H20 (1H19:
GBP0.1m), showing an improvement in working capital movements. This
results in an operating cash flow to adjusted EBITDA (pre IFRS 16
adjustment) conversion of 86% (1H19: 1%).
In terms of working capital, during the year we have had great
support from our main airtime suppliers and we will continue to
work with them to ensure that trading and payment terms are
appropriate alongside marketing and product support to ultimately
ensure that the customer continues to get better product
offerings.
Tax and interest paid increased to GBP1.8m in 1H20 from GBP0.8m
in 1H19 following the GBP1.2m penalty payable to BGF, the revised
RCF facility with Santander at a lower interest rate, and the
interest element in relation to the adoption of IFRS 16
(GBP0.2m).
The net summary of the above is an equity free cash outflow of
GBP2.9m as at 1H20 from a GBP4.0m outflow in 1H19 and is summarised
as follows:
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2020 2019 2019
GBP000 GBP000 GBP000
Underlying Operating Cash Flows(1) 2,639 77 7,197
Purchase of assets (3,694) (3,386) (8,913)
Interest and Tax (1,850) (731) (2,144)
------------- ------------- --------------
Equity free cash flow (outflow)/inflow (2,905) (4,040) (3,860)
------------- ------------- --------------
% % %
------------- ------------- --------------
Underlying Operating cash flow analysis - Underlying Operating Cash
Flow /Adjusted EBITDA 86% 1% 61%
------------- ------------- --------------
(1) Underlying Operating Cash flows is before interest, tax and
exceptional items relating to M&A, integration costs and
investment in network partnerships
Net debt comprises:
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2020 2019 2019
GBP000 GBP000 GBP000
Cash 5,907 3,363 5,989
Debt (26,052) (20,256) (20,187)
------------- ------------- --------------
Net Debt (20,145) (16,893) (14,198)
------------- ------------- --------------
In the LTM period, comparing 1H20 with 1H19, cash increased by
cGBP2.6m and debt increased by GBP5.8m resulting in an increase in
net debt of GBP3.2m to GBP20.1m from GBP16.9m. excluding IFRS 16
liabilities.
In the LTM period, we generated operating cash flows of GBP14.8m
and this was utilised as follows; investment in fixed assets of
GBP9.2m, purchase of intangibles GBP0.9m, refinancing penalty
costs, fees and other interest of GBP3.3m, settlement of Opensky
earnout payment of GBP0.8m, following successful post acquisition
performance, and exceptional items of GBP4.2m, offset by GBP0.1m
repayment of loans and drawdown from our RCF facility of GBP6.3m,
resulting in an increase in cash of GBP2.6m. The increase in debt
of GBP5.8m is net of GBP0.5m of borrowing costs incurred at the
time of refinancing and charged to the P&L over the term of the
Santander RCF facility.
Since the start of the year, cash balances have remained
relatively constant at c.GBP5.9m. Debt increased by GBP5.8m
following the repayment of the RCF facility with HSBC plc
(GBP8.25m) and the loan with BGF (GBP12.0m), and replaced with a
new RCF facility with Santander UK, which incurred penalty costs of
c.GBP1.8m. In addition, the new RCF facility was also used to
support the purchase of investment fixed assets and M@A activity
ofGBP1.6m.
The table above excludes the lease liabilities of GBP5.2m
recognised for the first time in 2019 after the adoption of IFRS
16. Including this amount would give a total net debt of
GBP25.3m.
Statutory EPS and Adjusted EPS
Statutory EPS loss per share increased to 12.1p from 1.2p. As
for EBITDA, the revision to accounting policies and changes in
presentation impact the results. We have therefore provided a
reconciliation to previous presentation and policies to aid users
of these accounts EPS movement following IFRS 16 adoption is (0.1)p
due to the foreign exchange element of the calculations:
Statutory EPS Pence
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 Nov
2020 2019 2019
As reported with 2019 presentation and accounting policy (12.0) (1.2) (13.8)
Changes due to accounting policy
* IFRS 16 (0.1) - (0.1)
------------ ------------ -------------
Consistent with 2020 presentation and accounting policy (12.1) (1.2) (13.9)
------------ ------------ -------------
Adjusted EPS loss increased to 12.1p versus an adjusted EPS loss
of 1.2p in 1H19.
Frank Waters
CFO
Bigblu Broadband plc
Condensed consolidated statement of comprehensive income
6 months ended 31 May 2020
Note Unaudited Revised Unaudited Audited
6 months to 6 months to 12 months to 30 Nov
31 May 31 May 2019
2020 2019
GBP000 GBP000 GBP000
Revenue 25,826 30,526 62,088
Cost of goods sold (14,333) (17,198) (34,868)
------------- ------------------ ---------------------
Gross Profit 11,493 13,328 27,220
Distribution and administration expenses 2 (9,723) (8,543) (20,883)
Depreciation (2,017) (1,440) (3,365)
Depreciation - IFRS 16 (802) (613) (1,245)
Amortisation (1,302) (1,891) (7,357)
------------- ------------------ ---------------------
Operating Loss (2,351) 841 (5,630)
Interest Payable (4,287) (1,096) (2,340)
Interest - IFRS 16 (152) (142) (282)
------------- ------------------ ---------------------
Loss before Tax (6,790) (397) (8,252)
Taxation (229) (280) 231
------------- ------------------ ---------------------
Loss for the period (7,019) (677) (8,021)
Foreign currency translation difference (407) 221 (879)
------------- ------------------ ---------------------
Total comprehensive Income (7,426) (456) (8,900)
------------- ------------------ ---------------------
Owners of Bigblu Broadband Plc (7,378) (456) (8,816)
Non-Controlling Interests (48) - (84)
------------------------------------------ ----- ------------- ------------------ ---------------------
Loss per share
Basic and diluted 3 (12.1p) (1.2p) (13.9p)
Bigblu Broadband plc
Condensed consolidated statement of financial position
As at 31 May 2020
Note Unaudited Revised Unaudited Audited
As at As at As at
31 May 2020 31 May 2019 30 Nov 2019
GBP000 GBP000 GBP000
Non-Current Assets
Intangible assets 29,673 34,610 29,362
Property Plant and Equipment 18,064 12,286 15,865
Investments 52 26 52
Deferred Tax asset 643 882 643
------------- ------------------ -------------
Total Fixed Assets 48,432 47,804 45,922
------------- ------------------ -------------
Current Assets
Inventory 2,827 2,818 3,911
Trade Debtors 4,095 5,653 2,618
Other Debtors 9,851 8,346 5,707
Cash and Cash Equivalents 5,907 3,363 5,989
------------- ------------------ -------------
Total Current Assets 22,680 20,180 18,225
------------- ------------------ -------------
Current Liabilities
Trade Payables (16,805) (10,274) (11,750)
Recurring Creditors and
Accruals (11,874) (7,777) (3,865)
Other Creditors (5,767) (11,456) (12,117)
Payroll taxes and VAT (3,330) (2,931) (2,760)
------------- ------------------ -------------
Total Current Liabilities (37,776) (32,438) (30,492)
------------- ------------------ -------------
Non-Current Liabilities
Loans and debt facilities (26,052) (20,256) (20,187)
Other payables (8,199) (5,723) (6,706)
Deferred taxation (234) (657) (234)
------------- ------------------ -------------
Total Non-Current Liabilities (34,485) (26,636) (27,127)
------------- ------------------ -------------
Total Liabilities (72,261) (59,074) (57,619)
------------- ------------------ -------------
Net Assets (1,149) 8,910 6,528
------------- ------------------ -------------
Equity
Share Capital 8,638 8,522 8,636
Share Premium 23,918 23,900 23,900
Other Reserves 4 12,776 12,074 13,025
Revenue Reserves (49,754) (35,586) (42,412)
------------- ------------------ -------------
Capital & Reserves attributable (4,422) 8,910 3,149
to owners of Bigblu Broadband
Plc 3,273 - 3,379
Non-controlling interests
Total Equity (1,149) 8,910 6,528
------------- ------------------ -------------
Bigblu Broadband plc
Condensed consolidated Cash Flow Statement
As at 31 May 2020
Unaudited Unaudited Audited
12 months
As at As at ended
31 May 31 May 2019 30 Nov 2020
2020
GBP000 GBP000 GBP000
Operating Loss after tax for the
year (7,019) (677) (8,021)
Interest 4,439 1,096 2,622
Taxation 229 280 (231)
Release of grant creditors (84) (615) (605)
Amortisation of intangible assets 1,302 1,891 4,071
Impairment of goodwill - - 3,286
Depreciation charge 2,017 1,440 3,365
Depreciation - IFRS 16 802 613 1,245
Share based payments 325 204 437
Foreign exchange variance and other
non-cash items (717) 163 118
Movement in working capital 1,345 (4,318) 910
-------------- ------------ --- ------------
Operating cash flows after movements
in working capital 2,639 77 7,197
Interest paid (1,850) (782) (2,144)
Tax paid - 51 -
-------------- ------------ --- ------------
Net cash generated in operating
activities 789 (654) 5,053
Investing activities
Purchase of assets (3,694) (3,386) (8,913)
Purchase of intangibles (661) (308) (665)
Purchase of investments - (333) (200)
-------------- ------------ --- ------------
Net cash used in investing activities (4,355) (4,027) (9,778)
-------------- ------------ --- ------------
Financing activities
Proceeds from issue of ordinary
share capital 20 310 37
Proceeds from loans 4,318 3,350 3,350
Investment by non-controlling interest - - 3,631
Loans paid/within subsidiaries acquired (52) (70) (142)
Principal elements of lease payments (802) (613) (1,229)
-------------- ------------ --- ------------
Cash generated from financing activities 3,484 2,977 5,647
-------------- ------------ --- ------------
Net increase in cash and cash equivalents (82) (1,704) 922
Cash and cash equivalents at beginning
of period 5,989 5,067 5,067
-------------- ------------ --- ------------
Cash and cash equivalents at end
of period 5,907 3,363 5,989
-------------- ------------ --- ------------
Bigblu Broadband plc
Condensed consolidated Reserves Movement
6 months ended 31 May 2020
Share Capital Share Premium Other Revenue Total
Reserves Reserve
GBP000 GBP000 GBP000 GBP000 GBP000
Note 4
------------------------------------------- -------------- ---------- ---------- ----------
At 31 May 2019 8,522 23,900 12,074 (35,043) 9,453
Loss for the period (7,481) (7,481)
Change in accounting
policy - IFRS 16 (550) (550)
Issue of shares 114 296 410
Share option reserve 233 - 233
Foreign Exchange Translation 422 (879) (457)
Disposal of non-controlling
interest in subsidiary 1,541 1,541
------ -------------- ---------- ---------- ----------
Capital & Reserves attributable
to owners of Bigblu Broadband
Plc 8,636 23,900 13,025 (42,412) 3,149
Attributable to non-controlling
interest in subsidiary 3,379 3,379
------ -------------- ---------- ---------- ----------
At 30 November 2019 8,636 23,900 13,025 (39,033) 6,528
Loss for the period (7,378) (7,378)
Adjustment to non-controlling
interest 36 36
Issue of shares 2 18 - 20
Share option reserve 325 325
Foreign Exchange Translation (303) (303)
Other Equity (271) (271)
------ -------------- ---------- ---------- ----------
Capital & Reserves attributable
to owners of Bigblu Broadband
Plc 8,638 23,918 12,776 (49,754) (4,422)
Attributable to non-controlling
interest in subsidiary 3,273 3,273
------ -------------- ---------- ---------- ----------
At 31 May 2020 8,638 23,918 12,776 (46,481) (1,149)
------ -------------- ---------- ---------- ----------
Non-Controlling Interest
The loss attributable to shareholders is GBP7.3m, which
represents the loss for the half year of GBP7.4m (2019: GBP0.5m)
less the loss attributable to non-controlling interests of GBP0.1m
(2019: GBPNIL). The GBP3.3m represents the carrying value of the
non-controlling interest
Bigblu Broadband plc
Notes to the financial statements
For the period ended 31 May 2020
1. Presentation of financial information and accounting
policies
Basis of preparation
The condensed consolidated financial statements are for the half
year ending 31 May 2020.
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 EU. The financial statements have been prepared on the
historical cost basis, except for the revaluation of financial
instruments.
Under IFRS 5, assets held for sale (including disposal groups)
are classified as discontinued operations and should be presented
separately in the income statement. As the sale announcement is a
post balance sheet event it is considered the criteria for
discontinued operations as laid out by IFRS 5 had not been met as
at 31 May and as such there is no separate presentation of
discontinued operations.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts in the
financial statements. The areas involving a higher degree of
judgement or complexity, or areas where assumptions or estimates
are significant to the financial statements are disclosed further.
The principal accounting policies set out below have been
consistently applied to all the periods presented in these
financial statements, except as stated below.
Going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive Report. The financial position
of the Company, its cash flows and liquidity position are described
in the Finance Review.
As at 31 May 2020 the Company generated an adjusted EBITDA
before a number of non-cash and start-up costs expenses in the
Condensed consolidated statement of financial position, of GBP3.1m
(2019: GBP5.1m), and with cash inflow from operations of GBP0.8m
(2019: outflow of GBP0.6m) and a net decrease in cash and cash
equivalents of GBP0.1m in the year (2019: decrease GBP1.7m). The
Company balance sheet showed net cash at 31 May 2020 of GBP5.9m
(2019: GBP3.4m). 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 COVID-19 risks 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 in fact showing a positive position compared to prior year and
budget as a result of each government's response to COVID-19
resulting in the remote working position of individuals across our
key territories. 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 announced post balance sheet event of the
proposed disposal of part of the business to Eutelsat, together
with 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 these condensed 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 and Individual company's financial statements for
the year ended 30 November 2019.
Basis of consolidation
The condensed consolidated financial statements comprise the
financial statements of Bigblu Broadband plc and its controlled
entities. The financial statements of controlled entities are
included in the consolidated financial statements from the date
control commences until the date control ceases. The financial
statements of subsidiaries are prepared for the same reporting
period as the parent company, using consistent accounting policies.
All inter-company balances and transactions have been eliminated in
full.
2. Distribution and Administration Expenditure
Distribution and administration costs are analysed as
follows:
Unaudited Unaudited Audited
As at As at As at
31 May 31 May 2019 30 Nov 2019
2020
GBP000 GBP000 GBP000
Employee related costs 5,822 6,330 13,118
Marketing and communication
costs 856 807 1,924
Logistics, Finance, IT, banking,
insurance AIM and Other costs 1,750 1,101 483
------------------------------------- ---------- ------------- -------------
Underlying costs 8,428 8,238 15,525
% of Revenue 32.6% 26.9% 25.0%
------------------------------------- ---------- ------------- -------------
Share based payments 325 204 437
Employee related costs associated
with consolidations in the
regions 518 51 1,999
Fundraise, legal and related
costs associated with acquisition
and disposal activity 184 50 2,431
Other 268 - 491
Identified Exceptional Costs 1,295 305 5,358
% of Revenue 5.0% 1.0% 8.5%
Total 9,723 8,543 20,883
% of Revenue 37.6% 27.9% 33.5%
3. Loss per share
Basic loss per share is calculated by dividing the loss
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 profit and weighted average number of
shares used in the calculation are set out below:
Loss Weighted average Number of Per share amount Pence
GBP000 Shares units
At 31 May 2019
Basic and Diluted EPS
Loss attributable to
shareholders:
- Continuing operations (677) 56,723,149 (1.2)
Loss Weighted average Number of Shares Per share amount Pence
GBP000 Units
At 30 November 2019
Basic and Diluted EPS
Loss for the financial year (8,021)
Less: adjustment for non-controlling
interest 84
Loss attributable to shareholders:
- Continuing operations (7,937) 56,932,172 (13.9)
Loss Weighted average Number of Shares Per share amount Pence
GBP000 Units
At 31 May 2020
Basic and Diluted EPS
Loss for the half year ( 7,019 )
Less: adjustment for non-controlling
interest 48
Loss attributable to shareholders:
- Continuing operations (6,971) 57,589,857 (12.1)
4. Other capital reserves
Foreign
Listing Merger Reverse Other exchange Share Total
Cost Relief acquisition equity translation option capital
Reserve reserve Reserve reserve reserve reserve reserves
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 31 May 2019 (219) 16,233 (3,317) 271 (2,647) 1,753 12,074
Other equity 296 296
Foreign Exchange
Translation 422 422
Equity settled
Share based payments 233 233
At 30 November
2019 (219) 16,233 (3,317) 271 (2,225) 2,282 13,025
Other equity (271) - (271)
Foreign Exchange
Translation (303) (303)
Equity settled
Share based payments 325 325
At 31 May 2020 (219) 16,233 (3,317) - (2,528) 2,607 12,776
-- Listing cost reserve
-- The listing cost reserve arose from expenses incurred on AIM listing.
-- Other equity reserve
-- Other Equity related to the element of the BGF Convertible
Loan which has been settled in December 2019 due to the debt
restructure
-- 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 difference 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.
-- Merger relief reserve
-- The merger relief reserve relates to the share premium
attributable to shares issued in relation to the acquisition of
Bigblu Operations Limited (Formerly Satellite Solutions Worldwide
Limited).
5. Related party transactions
T ransactions between the Company and its subsidiaries, which
are related parties, have been eliminated on consolidation and are
not disclosed within the financial statements or related notes.
6. 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
week day. The Company's registered office is at Broadband House,
108 Churchill Road, Bicester OX26 4XD. The Company is registered in
England No. 9223439 .
A copy can also be downloaded from the Company's website at
https://www.bigblu.com
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END
IR PRMBTMTMTTRM
(END) Dow Jones Newswires
August 28, 2020 02:00 ET (06:00 GMT)
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