TIDMBBB
RNS Number : 0198H
Bigblu Broadband PLC
01 December 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' or the 'Group')
Trading Update
A transformational year with the Group primed for further
growth
Bigblu Broadband plc (AIM: BBB.L), a leading provider of
alternative super-fast and ultra-fast broadband services, provides
a trading update for the 12-month period ended 30 November 2020
(the "period"). Trading for the period was in line with
expectations and the Directors are increasingly confident in the
future growth prospects of the Group.
2020 has been a transformational year for the Group. We
successfully disposed of the UK and European Satellite operations
to Eutelsat S.A. ("Eutelsat") for a price that the Directors
believe was extremely attractive and have also reconstituted our
debt facilities in their entirety at highly competitive rates, with
our lead partner Santander.
We are now focused on increasing returns to shareholders from
the " Continuing Group", consisting of our Australian operations
(Skymesh Pty Limited), our majority interest in Quickline (QCL
Holdings Limited) and our Nordics business (Bigblu Norge AS). We
believe that we have placed BBB firmly on the front foot with a
strong balance sheet for the short, medium and longer term.
Highlights
-- Transformational period for the business with the:
o successful disposal of the Group's UK and European Satellite
operations
o paydown of all historic debt and establishment of new funding
packages with Santander and HSBC for the Continuing Group,
providing significant headroom
o strengthening of the Group's balance sheet
o return of the Group to a position of net cash
-- Strong growth across the Continuing Group during the period
with significant opportunity to further grow customer numbers,
revenue, EBITDA and free cash flow
-- Becoming clear market leader in Australia; Quickline
benefiting from increasing pace of grant wins in the UK - totalling
c.GBP15m during the period; and well positioned to grow Nordic
operations
Continuing Group: Excellent Organic Growth
The Continuing Group generated improvement across its key
performance indicators as follows:
-- The customer base at the end of November 2020 was c.65k -
Strong organic growth in customer numbers in Australia with net
growth in customers impacted by ongoing pressure on customer
numbers in the Nordics
-- Revenues of c.GBP27m (FY19: LFL(2) GBP26m) in the period
-- Adjusted EBITDA(1) in line with expectations of c.GBP6m (FY19: LFL GBP5m)
-- Following completion of the disposal, the Group's net cash
position before any adjustment for IFRS16 as at 30 November 2020 is
c.GBP7m with the Continuing Group generating growing levels of
operating cashflow (FY19: Net debt(3) GBP14.2m)
Overall, the Group's financial performance has proved to be
robust despite the wider impact of the COVID-19 pandemic on the
global business environment. There was a seamless transition to
home working with over 95% of all staff across our hubs flexibly
working from home, enabling the Group to continue servicing
existing customers at the same time as converting a growing number
of new business leads. In each region the Group has ensured that it
is working in accordance within local government guidelines.
Given the approach we have taken to ensuring that we can
continue to service our customers and broaden our reach, we are
delighted with the performance across our three core
territories.
Australasia
Our Skymesh business is the leading Australian satellite
broadband service provider. As at 30 November 2020, Skymesh had
c.47k customers and continues to see good growth opportunities.
Having been named Best Satellite NBN Provider in both 2019 and
2020, SkyMesh secured over 50% market share of net new adds under
the NBN scheme in the 12 months to 30 June 2020 and it continues to
benefit from the demand for Australia's Sky Muster Plus product
released in April 2020.
Having assessed the opportunity in this region, we continue to
believe that, whilst the organic growth remains highly impressive,
this growth could be complemented by certain partnerships or
acquisitions that could accelerate the Group's presence into the
wider Australasia region.
Nordics
Our Nordics business, Big Blu Norge, has a large in country
footprint and has historically delivered strong EBITDA. During the
period there was continued pressure on our customer numbers, which
were c.11k as at 30 November 2020. The Group is focusing on
upgrading existing infrastructure and reducing churn. We have a
clear plan in place to diversify our customer offering and routes
to market, which added to the recent appointment of a new Marketing
Director, is expected to drive customer growth.
Quickline
Quickline is one of UK's leading rural broadband fixed wireless
operators. 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.
In February 2020 Quickline was selected to lead a GBP6m DCMS
backed 5G contract in North Yorkshire. At the time of our half year
figures we commented that "The Directors consider that Quickline's
future success is directly linked to its ability to increase the
size and scale of its infrastructure business." Since that
announcement we have reported three significant grant wins, in West
Yorkshire, Lincolnshire and most recently North Lincolnshire.
In aggregate across these three tenders, Quickline will receive
subsidies of over GBP15m whilst itself committing approximately
GBP4m to fund GBP19m of total network investment. This will provide
significantly improved broadband speeds and availability to over
16k premises. Quickline will also invest further capital in scaling
up the organisation, sales and marketing and connecting customers.
During the year Quickline appointed a new COO and CFO.
This investment has already commenced allowing Quickline to draw
down a further GBP2m from the GBP12m funding it secured in August
2019 leaving a balance of GBP6m equity and debt to call upon. As a
consequence, the Group's holding in Quickline is now 62.7%.
Finally, Quickline is already an approved supplier under the
Rural Gigabit Voucher Scheme which provides for up to GBP1,500 per
residential premise and GBP3,500 per business premise for new
gigabit-capable connections in rural areas and is quickly ramping
up infrastructure build via this programme. Through a combination
of its current footprint, the three existing and potential further
grants plus Rural Gigabit Vouchers, Quickline sees scope to target
100k premises and grow its customer base to around 30k subscribers
over the next three years. As at 30 November 2020, customer
connection numbers were c.7k.
Discontinued operations
On 31 July 2020, we announced the proposed disposal (the
"Disposal") of our UK and European Satellite business to Eutelsat.
The transaction was successfully completed on 30 September 2020.
The Disposal delivered an attractive return for shareholders,
especially against the risks associated with the nature and timing
of delivering continued growth in the face of increasing
competition.
Pursuant to the terms of the Share Purchase Agreement, the
aggregate consideration payable for the Disposal was up to GBP39.3
million. An initial consideration of GBP37.2m was paid to the Group
at Completion and outstanding amounts including monies held in
ESCROW will be paid following the finalisation of the completion
accounts. Additional Consideration of up to approximately GBP1.5m
(subject to certain conditions) can be paid up to and including 30
September 2021 (being 12 months from the date of completion) and
Eutelsat also assumed certain working capital creditors as part of
the Disposal. The process to finalise the completion accounts,
including agreeing the actual working capital at completion against
an agreed target level and adjustments for cash or debt items has
commenced and it is expected that any such adjustments will be
agreed over the coming weeks.
Summary
In the period, total Continuing Group revenues were
approximately GBP27m (FY19: LFL GBP26m) . Total Continuing Group
adjusted EBITDA(1) is expected to c.GBP6m (FY19: LFL GBP5m). As at
30 November 2020, total customers were approximately 65k.
As at 30 November 2020, the net cash position of the Group was
approximately GBP7m (FY19 GBP14.2 net debt). Following completion
of the Disposal, the Group was able to renegotiate a new GBP12m
revolving credit facility with Santander having used approximately
GBP21m of the consideration received on the Disposal to pay down
debt.
The Group has a very clear focus to continue to deliver
shareholder value. It will seek to further grow its presence in
Australia, where it is already market leader. The focus for the
Nordics is on making the necessary investment to revitalise the
customer proposition. In the UK Quickline has already started to
invest in the infrastructure required to roll out the new networks
with support of government subsidies and will seek to participate
in further tenders.
With a strong balance sheet, the Group is well positioned to
capitalise on the growth potential that the Board believes is open
to it.
Outlook
The Board continues to have confidence that the continued
organic growth and balance sheet strength allied with the actions
taken during the period in addition to the underlying improvements
in cash generation will enable the Group to make further progress
in the year ahead.
Andrew Walwyn, Chief Executive Officer of Bigblu Broadband plc,
commented : "We have a clear direction of travel for our
operations, with significant scope to generate further shareholder
value as we take advantage of the various growth opportunities in
each territory. Having restructured the business during the period,
it is clear to see the strong growth trajectory of the Continuing
Group, which performed extremely well despite the wider market
issues."
(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 .
For further information:
Bigblu Broadband Group p lc 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 BBB
Bigblu Broadband plc (AIM: BBB), is a leading provider of
alternative super-fast and ultra-fast broadband solutions
throughout Australia, the Nordics and parts of the UK. BBB delivers
a portfolio of super-fast wireless broadband products for consumers
and businesses unserved or underserved by fibre. The Group has a
significant target market with 3m customers in the territories we
operate in with speeds of under 4 Mbps.
High levels of recurring revenue, increasing economies of scale
and Government stimulation of the alternative broadband market in
the countries we operate in provide a solid foundation for strong
organic growth as demand for alternative super-fast broadband
services increases in the territories we operate in.
Acquisitive and organic growth enabled BBB to grow rapidly since
inception in 2008 during which time the Company completed 21
acquisitions across nine different countries. In September 2020,
BBB concluded the sale of its UK and European Satellite business to
Eutelsat, offering an excellent return for shareholders. With the
remaining businesses - consisting of its Australian operations
(Skymesh Pty Limited), its majority interest in Quickline (QCL
Holdings Limited) and its Nordics business (Bigblu Norge AS) , 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 continues to provide customers significant ongoing services
in the territories present including hardware supply, installation,
pre and post-sale support billings and collections, whilst offering
appropriate tariffs depending on the requirements of each end user
in each territory. BBB's range of solutions includes satellite,
next generation fixed wireless and 4G/5G delivering between 30 Mbps
and 150 Mbps for consumers, and up to 1 Gbps for businesses.
Importantly, as core technologies evolve, and more affordable
capacity is made available, BBB continues to offer ever-increasing
speeds and higher data throughputs to satisfy market demands for
'video-on- demand'. Its alternative broadband offerings present a
customer experience that is similar to that offered by wired
broadband and the connection can be shared in the normal way with
PCs, tablets and smart-phones via a normal wired or wireless
router.
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