REG - Bigblu Broadband PLC - Annual Financial Report
20/05/2024 07:00
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RNS Number : 9995O Bigblu Broadband PLC 20 May 2024
Bigblu Broadband plc
('BBB', the 'Company' or the 'Group')
Audited final results for the year ended 30 November 2023
and
CEO Resignation
Continued focus on shareholder value realisation
Bigblu Broadband plc (AIM: BBB.L), a leading provider of alternative
super-fast and ultra-fast broadband services, announces its audited results
for the period ended 30 November 2023 (the "Period").
During the Period, BBB delivered progress against its stated objectives to
drive profitability growth in Australia and post Period end has made further
progress against its stated realisation strategy with the disposal of the
Norwegian operations announced today. Furthermore, the Company was encouraged
to see the important recent contract wins in Quickline where the Company
retains a 2.8% shareholding.
The Board remains focused on executing its value realisation strategy and
ensuring it can maximise the inherent value within its remaining Australian
asset as well as the retained investment in Quickline and deliver shareholder
returns.
Financial Highlights - Continuing Operations (being mainly the Australian
operations given the disposal of the Norwegian Operations)
· Total revenue £25.9m (FY22: £27.2m) with like for like revenue
growth(1) on a constant currency basis of c.0.3%
· Adjusted EBITDA(2) in the Period of £4.5m (FY22: £4.1m) following
further cost initiatives
· Adjusted PAT(3) improved to £4.2m (FY22: £3.2m)
· Adjusted EPS(4) profit of 7.1p (FY22: profit 5.4p) with Reported EPS
loss of 8.0p (FY22: Loss 5.0p)
· Adjusted Operating cash inflow(5) of £5.3m (FY22: Inflow £0.7m)
· Adjusted Free cash inflow(3) before exceptional items of £4.7m (FY22:
outflow £0.3m)
· Net cash as at 30 November 2023 was £1.5m which is after the Clear
and Harbour acquisition payments of £2.8m and reorganisation costs of £0.8m
incurred during the year
Financial Highlights - Group Operations including the Norwegian operations
· Group revenue in the year of £30.1m (FY22: £31.2m)
· Group adjusted EBITDA, before items identified as exceptional in
nature, grew by 15% for the period to £5.9m (FY22: £5.1m)
· Reported loss for the year £4.7m after items identified as
exceptional in nature and including a loss of £3.3m from the Group's
Norwegian operations.
Operational Highlights
· Total customers for our operations in Australia at the period end were
55.3k (FY22: 51.5k) with like for like overall customer numbers largely
maintained.
· In February 2023, SkyMesh completed the acquisition of the satellite
operations of Harbour ISP PTY LTD, a subsidiary of Uniti Group LTD in
Australia that brought with it 5.2k customers. This customer base was fully
migrated onto SkyMesh systems in May 2023.
· As highlighted at the half year, the emergence of 5G and LEO satellite
technologies is expected to lead to accelerated uptake of non-fibre broadband
internet services in Australia. Starlink has demonstrated the appetite of
consumers for alternative broadband solutions and has successfully progressed
in our market with continued strong promotional offers which have impacted
churn rates throughout the year in Australia, increasing from 30% to 32%. We
are working with our network partners and c.15% of the customer base had been
transferred to new product offerings with NBN Co by the year end.
· New product opportunities recently launched at SkyMesh will offer
faster speeds and greater capacity, leading to a potential increase in
customer numbers and satisfaction and therefore improved retention. The
investment the Group has made in being able to offer Starlink solutions will
strengthen our position in the Australian market.
· We migrated all customers from the bespoke 13-year-old legacy
operational and financial systems in Australia to the latest Pathfinder Cloud
based Microsoft system. Whilst this large undertaking has caused some initial
strain, we are beginning to see the targeted benefits of this investment in
terms of servicing customers more efficiently and improved integrations with
networks.
· SkyMesh won WhistleOut best Satellite NBN provider award for the fifth
year in a row.
· Quickline continues to be well supported by Northleaf, who acquired
majority control in June 2021. Northleaf has provided £130m of additional
funding since acquisition with BBB currently retaining a 2.8% stake. Quickline
can currently address over 200,000 rural premises with its hybrid FTTP and FWA
infrastructure and has over 10,000 customers.
Post Balance Sheet Events
· Director changes
o As part of the acquisition of the Norwegian Operations by local
management, Andrew Walwyn, is also participating in the Buy Out. As a result,
Andrew Walwyn resigned with immediate effect from his position as Executive
CEO within the plc to prevent any conflicts perceived or otherwise arising.
Andrew remains a major shareholder of BBB having founded the business in 2008
and listed the business in 2015. Andrew has undertaken to support the Board as
required whilst it executes its strategy of realising value for shareholders.
Frank Waters will remain as CEO of the plc whilst the Board of BBB continues
to execute the value realisation strategy and will be supported by the new CFO
in Australia, Ray Vaughan, who joined on 1 April 2024. Ray will be responsible
for all financial aspects of the Skymesh operations alongside Paul Torrisi and
the management team and will support Frank Waters with plc matters as
appropriate. We are delighted to welcome Ray in a Non-Board Role as CFO of
Skymesh (the Group's only remaining trading operations) having previously
worked with the business between 2016 and 2019 and spent the last 5 years as
CFO of Ion Group in Sydney.
· Norwegian Operations.
o Following a full market exercise undertaken by independent advisors the
Board has today announced a Management Buy Out (MBO) of the business by local
management, supported by Andrew Walwyn. The Board believe that this disposal
was in the best interests of shareholders. In arriving at this decision, the
Board recognised the challenges being faced in the turnaround of the Norwegian
business as well as the potential need for further cash investment to grow the
business far less support any further demounting and migration projects as the
Norwegian operations sought to continue its transition to an asset light
business. In addition, the disposal of the Norwegian business allows the Board
to reduce annual central costs by c.£0.4m (including the costs associated
with Andrew's position as CEO).
· Starlink
o In December 2023, BBB plc invested c£2.0m in an important distribution
contract with Starlink enabling the Group to provide high-speed internet to
business and small office / home office workers. This alongside the One Web
contract allows BBB to offer customers an extended suite of products covering
all their needs.
· Quickline
o Quickline has recently been awarded two contracts under the government's
£5bn Project Gigabit programme. The contracts will subsidise the rollout of a
full fibre network to more than 60,000 hard-to-reach rural homes and
businesses across the parts of Yorkshire which have been left behind by
commercial rollouts. The contracts have been secured by Quickline following
competitive public procurement processes and totals £104m of government
subsidy. Quickline will make further private investment alongside Project
Gigabit to roll out its full fibre network to over 200,000 premises.
Outlook
· The Board is focused on continuously improving the underlying
Australian business unit performance by addressing the challenges posed by
Starlink and other LEO operators in the Australian market, hence the
importance of the recently announced contract with Starlink. Also supporting
Quickline in realising its potential whilst at the same time reducing central
plc costs to reflect the reduced size of the group.
Current trading - Continuing operations
· There has been progress in the Australian market in terms of expanding
the product offerings, Skymesh now offers an enhanced NBNCo GEO satellite
offering as well as going live with LEO offerings including Starlink and One
Web and a range of Optus 4G / 5G offerings in May. The new core platform
systems are live and despite some teething problems we are working to deliver
the expected value in terms of operational improvements.
· The emergence of 5G and LEO satellite technologies is expected to lead
to accelerated uptake of non-fibre broadband internet services in Australia.
Working with our network partners c25% of the base has now been transferred to
new product offerings with NBNCo, and although early and at lower margins, we
are seeing far higher customer satisfaction and reduced churn, giving a higher
customer lifetime value.
· Trading in continuing operations reflects the market challenges
mentioned above however, the local management team remain focussed and have
robust plans to accelerate growth in EBITDA in the business following the
launch of new product offerings in Australia in the second half of the year.
With the launch of these new products in Australia the Skymesh team will be
pro-actively migrating customers onto new tariffs with faster speeds and
improved data packages. The disposal of the Norwegian operations will result
in a reduction in central costs.
1 Like for like (LFL) revenue treats acquired businesses as if they were owned
for the same period across both the current and prior year and adjusts for
constant currency and exceptional items and business disposed of in the period
are excluded from the calculation.
2 Adjusted EBITDA is stated before interest, taxation, depreciation,
amortization, share based payments and exceptional items. It also excludes
property lease costs which, under IFRS 16, are replaced by depreciation and
interest charges.
3 Adjusted PAT represents adjusted EBITDA less interest, taxation, and
amortisation.
4 Adjusted EPS is adjusted PAT divided by the weighted average number of
shares over the period.
5 Adjusted Operating cash flow relates to the amount of cash generated from
the Group's operating activities and is calculated as follows: Profit/(Loss)
before Tax adjusted for Depreciation, Amortisation, Share Based Payments and
adjusting for changes in Working Capital and non-cash items as well as items
identified as exceptional in nature.
6 Adjusted Free cash flow being cash (used)/generated by the Group after
investment in capital expenditure, servicing of debt and payment of taxes and
excludes items identified as exceptional in nature.
7 Cash / Net debt excludes lease-related liabilities of £0.2m of under IFRS
16 (FY22 £0.4m).
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information:
Bigblu Broadband Group PLC www.bbb-plc.com (http://www.bbb-plc.com)
Frank Waters, Chief Executive Officer Tel: +44 (0)20 7220 0500
Cavendish Capital Markets Limited (Nomad and Broker) Tel: +44 (0)20 7220 0500
Marc Milmo / Simon Hicks / Charlie Beeson (Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
About Bigblu Broadband plc
Bigblu Broadband plc (AIM: BBB.L), is an in market leading provider of
alternative superfast and ultrafast broadband solutions throughout Australia.
BBB delivers a portfolio of superfast and ultrafast wireless broadband
products for consumers and businesses.
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
ultrafast broadband services increases around the world.
BBB's range of solutions includes satellite, GEO and LEO, next generation
fixed wireless and 4G/5G FWA delivering between 30 Mbps and 500Mbps for
consumers, and up to 1 Gbps for businesses. BBB provides customers with a full
range of services including hardware supply, installation, pre-and post-sale
support, billings, and collections, whilst offering appropriate tariffs
depending on each end user's requirements.
Importantly, as its core technologies evolve, and more affordable capacity is
made available, BBB continues to offer ever-increasing speeds and higher data
throughputs to satisfy market demands for broadband services. BBB's
alternative broadband offerings present a customer experience that is broadly
similar to that offered by wired broadband and the connection can be shared in
the normal way with PCs, tablets and smart phones.
CHIEF EXECUTIVE OFFICER'S REPORT
2023 was an important year for the Group as we continued to focus on
maximising shareholder value. We have delivered improved underlying
profitability in Australia and have announced the disposal of the Group's
Norwegian operations to a management led team, post the end of the Financial
Year. As a result, our remaining focus is now on our Australian operations and
our retained minority interest in Quickline.
Operational Review of Continuing Operations
The last year has seen a hive of activity across the sector generally and the
business units more specifically. We have seen the advancement of Starlink in
Australia our only remaining market and are absolutely delighted to have
entered into a distribution agreement with them in December 2023.
- Further positive sector momentum includes Satellite communications
market's profile raised in 2023.
- Significant mergers and constellation expansions have created
satellite network operators with greater scale, especially in the low-earth
orbit (LEO) sector.
- Telcos with ambitious, and extremely challenging, goals of
delivering communications and digital services to every corner of the world,
will increasingly rely on satellite coverage to close connectivity gaps in
various locations, especially the digital divide where BBB operate.
In Australia, we remain focused on our strategy of organic growth combined
with targeting suitable bolt-on acquisition opportunities as well as
considering all options available to BBB to best achieve our value realisation
strategy.
SkyMesh, is the leading Australian satellite broadband service provider,
having been named Best Satellite NBN Provider for the fifth year in succession
(2019-2023). SkyMesh has continued to be the market leader in the satellite
broadband market with total market share post the Harbour transaction of 46%
of NBNCo Skymuster, a growth of 7.6% year on year.
SkyMesh now commands a 53% market share of all new orders placed, the fastest
growing operator in the GEO satellite market. Customer numbers at 30
November 2023 were 55.3k (FY22: 51.5k), an increase of 7% on prior year and
includes the customers acquired from Harbour (5.2k).
Increased competition from Starlink in FY23 had an impact on customer numbers
mainly during the first half of the year. SkyMesh worked with its major
satellite provider NBNCo to bring uncapped data packages to market for the
first time, which are more affordable, comparable in speed, and better
supported than other networks. From the launch of this product in late 2023,
customer growth has returned. An expanded suite of uncapped data products at
varying price points was released on 1 December 2023, which the business
expects will further enhance its growth potential.
During the year, SkyMesh upgraded their legacy systems with an investment of
£1.3m. This brings touchless integration with NBNCo for ordering,
provisioning of services and support. The outcome is a more efficient system
that enables customers to be set up online faster than ever. The sales
process has been streamlined and provides the ability to track orders and
sales in real time. The system brings upgraded security and flexibility to
integrate with future vendors. This was a large exercise and resulted in a
number of teething challenges. We are now seeing a more stable platform and
have invested in additional IT resources to drive future developments.
Further acquisition opportunities and new product opportunities are emerging
as SkyMesh heads into 2024 with the potential for the product offering to
expand further underpinning future growth in customer numbers.
Revenue is underpinned with a high percentage (c.93%) of recurring revenue
attached to contracts. We remain confident in our ability to deliver further
returns for shareholders from our operations in Australia together with the
remaining equity stake in Quickline. As we enter the new financial year, there
are opportunities to deliver improved shareholder value as we continue to
support customers unserved and underserved in the digital divide, whilst at
the same time improving our product range thereby reducing churn. Given the
changes in the product offering in Australia, the Company is only expecting
the benefits of the actions it is taking to be seen in the second half of the
year and therefore the Group expects that underlying revenues for FY24 in
Australia are likely to be below the results for FY23.
The Board's focus will remain on both organic growth with our network
partners, and suitable accretive bolt on acquisitions that can accelerate the
Company's presence as well as scaling the Australian business. In addition,
the Board continues to explore all options to realise value for BBB
shareholders from SkyMesh, which could include an MBO supported by private
equity, trade sale or ASX listing of SkyMesh.
Board Changes
As part of the acquisition of the Norwegian Operations by local management,
Andrew Walwyn is also participating in the Buy Out. As a result, Andrew Walwyn
has resigned with immediate effect from his position as Executive CEO within
the plc to prevent any conflicts perceived or otherwise arising. Andrew
remains a major shareholder of BBB having founded the business in 2008 and
listed the business in 2015.
Andrew has undertaken to support the Board as required whilst it executes its
strategy of realising value for shareholders.
Frank Waters has become CEO of the plc in addition to his CFO
responsibilities, whilst the Board of BBB continues to execute the value
realisation strategy and will be supported by the new CFO in Australia Ray
Vaughan who joined on 1 April 2024. Ray will be responsible for all financial
aspects of Skymesh finances and support Frank Waters with plc matters as
required.
Post Balance Sheet Events
We highlight the following post balance sheet events:
Quickline Contract Wins
Quickline has been awarded two contracts under the government's £5bn Project
Gigabit programme. The contracts will subsidise the rollout of a full fibre
network to more than 60,000 hard-to-reach rural homes and businesses across
the parts of Yorkshire which have been left behind by commercial rollouts. The
contracts have been secured by Quickline following competitive public
procurement processes and totals £104m of government subsidy. Quickline will
make further private investment alongside Project Gigabit to roll out its full
fibre network to over 200,000 premises. Project Gigabit is the
government-backed programme to connect hard-to-reach areas which, without
government intervention, would miss out on fast and reliable, gigabit capable
broadband. The rollout of Project Gigabit is overseen by Building Digital UK
(BDUK) - an executive agency of the Department for Science, Innovation and
Technology.
Starlink Distribution Agreement
We were delighted to sign a distribution contract with Starlink in December
2023 to provide high-speed internet to business and small office / home office
workers. BBB plc invested £2m in buying stock in advance to support future
orders. This, alongside the One Web contract allows BBB to offer customers an
extended suite of products covering all their needs.
Norway disposal
We have separately today also announced the disposal of our Norwegian
operations for consideration of £1 to a team led by local management and
Andrew Walwyn. This business has faced meaningful headwinds over the last few
years and the Board has actively been seeking to find an exit for this
business, including the appointment of external advisors to try and find
appropriate buyers for these operations. The management buyout offered the
most realistic and quickest exit for the Group without having to potentially
incur further costs in the region and the Board believes that this transaction
is in the best interests of shareholders.
Current Trading
The Group has positioned itself at the forefront of the alternative super-fast
and ultrafast broadband industry in Australia. The Group's product portfolio
and expanding routes to market mean that it remains one of the most recognised
companies in its sector in Australia. Underlying trading in Australia in the
first few months is in line with prior year and the planned migration of
customers to the new tariffs, whilst likely to result in a far higher Customer
Lifetime Value will potentially impact short term EBITDA and cash, however the
business will benefit from the strong visibility afforded by the high
percentage of recurring revenues. At the same time, we are progressing with
our systems efficiencies. The disposal of the Norwegian business therefore
allows us to focus on the remaining operating unit in Australia. Prior to
disposal the trading conditions in the Norwegian operations remained
challenging as the business continues to pivot into a low capex business. We
have enacted significant cost savings at the plc level following the disposal
as we seek to realise value in Australia.
Frank Waters
Chief Executive Officer
20 May 2024
Key Financials
Total results for the Continuing and Discontinued operations
Total Group revenue including recurring airtime, equipment, installation
sales, one off IP sales, network support and the Harbour acquisition was
£30.1m. (FY22: £31.2m) of which the negative impact of currency movements
translating Skymesh trading currency in Australian Dollars to Sterling
reporting currency of BBB, was £1.4m. Recurring airtime revenue (revenue
generated from the Company's broadband airtime) which is typically linked to
contracts, was £28.0m representing 93% of total revenue (FY22: 93%).
Gross profit margins decreased marginally to 41.2% in FY23 (FY22: 42.5%), due
to planned product mix changes net of additional income earned in the period.
This is an area of constant focus in the business working with our network
partners and at the same time as providing the most suitable products to our
customers.
Overheads, before items identified as exceptional in nature, reduced to
£11.2m (FY22: £11.7m) representing 37.2% of revenue (FY22: 37.5%) mainly due
to lower headcount costs from the re-organisation program of £1.4m, lower
depreciation due to the assets in the Norwegian business being written off in
FY22 of £0.7m, reduced marketing cost of £0.1m and lower IT costs of £0.2m,
partially offset by higher amortisation in Australia due to the Harbour
acquisition of £1.0m and higher impairment of Fixed Assets of £0.6m in the
period.
Consequently, adjusted EBITDA for the period was £5.9m (FY22: £5.1m) growth
of 15.6% and representing an improved adjusted EBITDA margin of 20.1% (FY22:
16.3%).
Depreciation, excluding 'right of use assets', decreased to £1.0m in FY23
from £2.3m in FY22 in line with the reduced scale of the continuing
operations but reflecting increased investment in the Nordic region.
Amortisation increased to £1.7m in FY23 from £0.7m in FY22 due to the
amortisation on the customer base acquired from Harbour in the year. There was
also an impairment of £2.1m relating to the write down of the goodwill
associated with the Norwegian business.
Finance costs were £0.3m in FY23 (up £0.2m on FY22 (FY22: £0.1m), relating
to the revolving credit facility (RCF) with Santander.
Financial Review - Continuing Operations
We ended the year with a customer base of 55.3k (FY22: 51.5k) despite
contending with a challenging market environment in Australia with Starlink
promotional activity and a massive systems migration. In addition, there has
been a negative currency impact of £1.4m on revenue and £0.4m on EBITDA in
the year.
Within the Australian market, we focused on the integration of bases acquired,
the go live with new systems as well as working with our network partners to
migrate as many customers as possible to new NBNCo tariffs with c10k migrated
to more suitable products which the business believes should help to reduce
churn in the future. In terms of year end customer mix the FY23 closing base
of 55.3k customers is split as follows:
· Satellite 49.1k (FY22: 44.0k)
· Fixed Wireless 6.2k (FY22: 7.5k)
Total revenue including recurring airtime, equipment, installation sales,
network support other income and the Harbour acquisition decreased by £1.3m
(4%) to £25.9m (FY22: £27.2m) of which the negative impact of currency
movements was £1.4m. Total like-for-like revenue for the Continuing Group in
the period was £27.3m, representing 0.3% growth (FY22: increase 4%).
Recurring revenue, defined as revenue typically generated from the Group's
broadband airtime contracts, which is typically linked to contracts and
monthly subscriptions, was £23.9m in the period, representing 93% of total
continuing revenue (FY22: 93%).
ARPU, calculated by dividing total revenues from all sources by the average
customer base, in 2023 was £39.80 per month (FY22: £40.44), down on FY22 by
2% due to the impact of the currency translation, as well as specific
switching of customers to more appropriate packages with a higher customer
lifetime value CLV. CLV is calculated by comparing the Present Value of a new
customer (considering ARPU, Churn and Margin) with the net costs of customer
acquisition (considering up front revenue less equipment, shipping,
installation and marketing costs).
Revenue in satellite was £21.9m, down on prior year by 3.4% (FY22: £22.7m)
due in the main to plan switching in Australia offset by the satellite base
acquired from Harbour, offset by currency impact of £1.4m. Revenue in fixed
wireless was £3.5m, down on prior year by 8% (FY22: £3.8m). PLC added £0.5m
(FY22: £0.7m) from services related revenue.
Gross profit margins reduced marginally to 37% in FY23 (FY22: 38%), due to
planned product mix changes. This is an area of constant focus in the business
working with our network partners and at the same time as providing the most
suitable products to our customers.
Distribution and Administrative Expenses, pre-exceptional costs, increased by
£0.1m to £7.4m (FY22: £7.3m) due to increased underlying costs covering
headcount costs, marketing, and IT costs, as well as increased costs combining
depreciation, impairment of fixed assets and amortisation on the customer
acquisition from Clear and Harbour.
Consequently, adjusted EBITDA for the period from our continuing operations
was £4.5m (FY22: £4.1m) a growth of 8.7% and representing an improved
adjusted EBITDA margin of 17.2% (FY22: 15.1%).
Items identified as exceptional in nature, increased to £3.9m (FY22: £2.6m)
representing 15% of revenue (FY22: 9%) due to specific deal related and
operational exceptional costs primarily associated with the reorganisations in
the Norwegian and Central Operations.
Depreciation, including 'right of use assets', remained unchanged at £0.6m in
FY23 from £0.6m in FY22.
Amortisation increased to £1.5m in FY23 from £0.4m in FY22 due to the
amortisation of the customer base acquired from Uniti (FY22) and Harbour
(FY23) in the year which will be written off over a 2-year period from
acquisition. In addition, the assets acquired through the Clear acquisition
were impaired by £0.1m.
Finance costs were £0.2m in FY23 relating to the RCF facility in the period
compared with £0.1m in FY22.
Consequently, Adjusted PAT (adjusted for exceptional items, impairment and
amortisation) for the period was £4.2m (FY22: £3.2m) growth of 31.4% and
representing an improved adjusted PAT margin of 16.0% (FY22: 11.6%).
The focus of the Board now turns to creating shareholder value from the
remaining business unit being our Australian operations (SkyMesh Pty Limited)
through organic growth and the possibility of accretive acquisitions and our
retained interest in Quickline.
The financial review will therefore focus primarily on the performance of
continuing business unit which is operational.
Key Performance Indicators for continuing Operations
The Group utilises a number of Key Performance Indicators ('KPI's') to measure
performance against our strategy. A description of these KPI's and performance
against them for continuing operations is set out below.
KPI 2023 2022 Description 2023 performance
Customer Base 55.3k 51.5k Represents total gross organic connections plus acquisitions, less disposals, 7.4% increase reflecting the Harbour acquisition.
less lost customers (churn) and base management.
Customer Net Connections 3.8k 4.4K Represents gross connections in the period less lost customers (churn) in the Underlying Customer growth reduced year on year due in the main to Starlink in
period. Includes M&A and excludes exceptional churn. Australia offset to a degree with the Harbour acquisition.
The focus during the period was on switchers with c4k during the period.
Switchers arise where we proactively migrate a customer to a more appropriate
tariff during the period.
Gross Underlying Churn 32% 30% Gross underlying churn defined as the number of subscribers who discontinue Churn rate of 32.3% (FY22: 30%) in Australia following pressure from Starlink
their service as a percentage of the average total number of subscribers during the year.
within the period and excludes exceptional churn.
ARPU £39.80 £40.44 Calculated by dividing total revenues from all sources by the average customer Lower by 1.6% due in the main to currency translation. On a LFL basis ARPU
base increased to £40.54 in current year.
Revenue £25.9m £27.2m Revenue includes sales from all operations. Like for like (LFL) revenue treats Total Revenue decreased by 4%. On a constant currency basis this would show an
acquired businesses as if they were owned for the same period across both the increase on FY22 of 0.3%.
current and prior year and adjusts for constant currency, omitting any
distinct differences that skew the numbers. Business disposed of in the period
are excluded from the calculation.
Adjusted EBITDA £4.5m £4.1m Earnings before share based payments, depreciation, intangible amortisation, Adjusted EBITDA increase of 8.7% (£0.4m) driven in the main by reduced
impairment costs, acquisition costs, one-off employee related costs, deal overheads across the Group.
related costs and start-up costs is the measure of the Group's operating
performance.
EBITDA Margin of 17% (FY22: 15%) following reduced marketing spend of £0.1m
and £0.1m reduced headcount costs.
Adjusted Operating Cash Flow - Continuing Operations £5.3m £0.7m Adjusted Operating cash flow relates to the amount of cash generated from the Adjusted operating cash inflow was £5.3m (FY22: £0.7m), an improvement of
Group's operating activities and is calculated as follows: Profit/(Loss) £4.6m YOY, due to increased EBITDA (£0.4m), lower forex and non-cash charge
before Tax adjusted for Exceptional Items, Depreciation, Amortisation, Share (£0.4m), and better working capital management year on year (£3.8m).
Based Payments and adjusting for changes in Working Capital and non-cash
items.
KPI 2023 2022 Description 2023 performance
Adjusted Free Cash Flow - Continuing Operations £4.7m (£0.3m) Adjusted Free cash flow being cash (used)/generated by the Group after Adjusted free cash inflow in the year was £4.7m (FY22: £0.3m outflow), an
investment in capital expenditure, servicing of debt and payment of taxes and improvement of £5.0m YOY. Operating cash inflow improved £4.6m, lower
excludes items identified as exceptional in nature. capital expenditure of £0.3m at £49k (FY22: £0.4m), higher interest of
£0.2m (FY22: £0.1m), offset by decreased tax instalments of £0.3m (FY22:
£0.5m)
Adjusted EPS 7.1p 5.4p Adjusted Earnings per share (EPS) is the Continued business's profit/(loss) Increased post improved EBITDA and lower tax charge.
after tax before exceptional costs, share based payments, impairment of Fixed
Assets and deferred tax adjustments, divided by the weighted average number of
shares.
Total customers at the period end including in-flight customers for our
Australian operations were 55.3k (FY22: 51.5k). During the year we delivered
3.8k net adds (FY22: 4.4k).
This is summarised as follows:
FY23 FY22
000 000
Opening base 51.5 47.1
Switched out customers (4.0) (9.0)
Switched in customers 4.0 9.0
Gross Adds 15.9 16.9
Acquisition 5.2 2.2
Churn (17.3) (14.7)
Net Growth 3.8 4.4
Closing Base 55.3 51.5
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) increased to an average annualised churn rate of 32% in FY23 (FY22:
30%) due in the main to the launch of Starlink in the Australian market.
In the first three months of FY24, underlying churn has slightly reduced to
31%, and importantly we are starting to roll out next generation products in
Australia.
Continuing Operations analysis
A reconciliation of the adjusted EBITDA to PAT of £4.2m (FY22: £3.2m profit)
is shown below: This is a non-GAAP alternative performance measure.
2023 2022
£000 £000
Adjusted EBITDA 1 4,459 4,102
Depreciation 2 (597) (561)
Amortisation 3 (1,515) (444)
Impairment of Intangible Assets 3 (147)) -
Adjusted EBIT 2,200 3,097
Share based payments - (309)
Continuing Operations operating profit - pre-exceptional items 2,200 2,788
Exceptional items relating to M&A and restructuring activities 4 (3,929) (2,271)
Continuing Operations Statutory operating (loss) / profit - post exceptional (1,729) 517
items
EBIT 2,200 3,097
Interest charge 5 (238) (64)
Tax credit / (charge) 6 529 (328)
Impairment of Intangible and Fixed Assets 7 147 -
Amortisation 7 1,515 444
Adjusted PAT 4,153 3,149
Group Statutory Results and EBITDA Reconciliation
1. Adjusted EBITDA (before share based payments, depreciation, intangible
amortisation, impairment of goodwill, refinancing, fundraising, acquisition,
employee related costs, deal related costs and start-up costs) improved 8.7%
to £4.5m (FY22: £4.1m).
2. Total depreciation was broadly unchanged at £0.6m in FY23 from £0.6m
in FY22 due to the weaker AUD offsetting a small increase reflecting the full
year effect of FY22 purchases.
3. Amortisation increased to £1.5m from £0.4m in FY22 as a result of
the acquisition of the Uniti customer base. During the year we undertook a
full review of the carrying value of Goodwill, with the review resulting in
impairment charges of £0.1m for the IP of the Clear customers of SkyMesh.
4. The Group incurred expenses in the period that are considered
exceptional in nature and therefore appropriate to identify. These comprise:
a. £1.2m (FY22: £1.2m) of acquisition, deal, legal and other costs
relating to M&A (primarily the acquisition of Harbour in Australia) and
restructuring activities during the period. These costs comprise mainly
professional and legal fees and includes an apportionment of staff and
management time spent specifically on M&A projects
b. £0.8m (FY22: £0.4m) employee restructuring costs in the UK and
Australia
c. £1.3m (FY22: £0.3m) development costs in the period primarily for
the new Pathfinder system in Australia and APIs with key suppliers, that do
not meet the criteria for intangible asset capitalisation
d. £0.6m (FY22: £0.3m) relating to various non-operational costs
including one-off trademark licensing, payment provider historical balances
written off and Commercial and Financial due diligence.
5. The interest charge in the year of £0.2m (FY22: £0.1m) relates to
the RCF (£0.2m)
6. The tax credit of £0.5m (FY22: charge £0.3m) relates to our
Australia business where amortisation of the customer base goodwill, increased
depreciation and increased development costs resulted in a taxable loss.
7. Adjustments
a. Impairment amortisation charge relates to SkyMesh IP £0.1m (FY22:
Nil).
b. Amortisation of £1.5m (FY22: £0.4m) following the acquisitions of
the Uniti and Clear customer bases being amortised over two years.
Customer Base, Revenue, Adjusted EBITDA in FY23 and the comparative period for
Continuing Group is segmented by the following categories as follows:
Customer Base Revenue Adjusted EBITDA
2023 2022 2023 2022 2023 2022
Number % Number 000's % £m £m % £m £m %
000's
Australia 55.3 100% 51.5 100% 25.4 26.5 (4%) 5.2 5.0 4%
Central Revenue and Costs(1)
- - - 0.5 0.7 (22%) (0.7) (0.9) 16%
25.9 27.2
Total 55.3 100% 51.5 100% (4%) 4.5 4.1 9%
(1) Central revenue includes recharges for post-sale services and Loan Note
interest and central costs include finance, IT, HR and plc costs.
Customer Connections by Technology
2023 2023 2023 2022 2022 2022
Satellite Fixed Wireless/5G Total Satellite Fixed Wireless/5G Total
000's 000's 000's % 000's 000's 000's %
Australia 49.1 6.2 55.3 100% 44.0 7.5 51.5 100%
Central
Total 49.1 55.3 44.0 51.5
6.2 100% 7.5 100%
From the above analysis for Continuing Operations year on year movements from
a Customer Base, Revenue, Adjusted EBITDA and product mix perspective are
analysed as follows:
1 Australia
a. There was customer net growth of 3.8k over the course of the year,
including the c5.2k from the Harbour acquisition.
b. During the year there were a number of customers switching contracts
(c.4k)
c. The reduction in revenue of £1.3m was a reflection of the currency
movement on translation and the increased churn, the acquisition of customers
from Harbour, and a reduced ARPU from £40.44 to £39.80. Like for like ARPU
would be £40.53, a slight increase.
d. Importantly, EBITDA improved by 9% following continued cost
efficiencies across the company.
2 PLC
a. Revenue was down on prior year at £0.5m due to reduced invoiced
support services.
b. With lower costs, following the rationalisation this resulted in
EBITDA losses improving by 45% at £0.5m.
Cashflow performance - Continuing Operations
Adjusted Free Cash Flow in the year, before exceptional costs and M&A
activities undertaken by the Group, was an inflow of £4.7m (FY22: outflow
£0.3m). This reflects the improvement in operating cashflow of £4.6m, lower
capital expenditure by (£0.3m) at £0.1m (FY22: £0.4m) and tax payments
lower by (£0.3m), offset by interest higher by £0.2m, at £0.5m (FY22:
£0.6m).
This is a non-GAAP alternative performance measure.
The underlying cash flow performance analysis seeks to clearly identify
underlying cash generation within the Continuing Group, and separately
identify the cash impact of identified exceptional items including
refinancing, fundraising M&A activity cash costs and is presented as
follows:
2023 2022
£000 £000
Adjusted EBITDA 4,459 4,102
Underlying movement of working capital 1 544 (3,309)
Forex and other non-cash items 2 262 (99)
Adjusted operating cash inflow before interest, tax Capex and exceptional 3 5,265 694
items
Tax and interest paid 4 (506) (603)
Purchase of Assets 5 (49) (374)
Adjusted free cash inflow/(outflow) before exceptional and M&A items. 4,710 (283)
Exceptional items relating to refinancing, fundraising, M&A, integration, 6 (3,929) (2,271)
restructuring and the establishment of network partnerships.
Free cash inflow/(outflow) after exceptional items 781 (2,554)
Investing activities 7 (2,693) 1,632
Movement in cash from Discontinued operations 8 (2) 53
Financing activities 9 1,856 (137)
Decrease in cash balances (58) (1,006)
1) Underlying movement in working capital was an inflow of £0.5m (FY22:
outflow £3.3m). This reflects the inflow of receipts from sale of inventory
£1.0m, and increased Creditors payments (£0.5m).
2) Forex and non-cash represent a movement in the year of £0.3m (FY22:
£0.1m). This reflects the currency revaluation of key balance sheet accounts
using the closing rate as at 30 November of a charge £0.3m (FY22: £0.2m) and
other non-cash movements resulting in a charge of Nil (FY22: Credit £0.1m).
3) This resulted in an adjusted operating cash flow before Interest, Tax,
Capital expenditure and Exceptional items of £5.3m inflow (FY22: £0.7m
inflow), and an adjusted operating cash flow to EBITDA conversion of 118%
(FY22: positive 17%).
4) Tax and interest paid was £0.5m (FY22: £0.6m) on a like-for-like
basis. This covers interest on the loan facility and leases (£0.2m) and
monthly taxation paid by our Australian business (£0.3m). Final corporation
tax calculations for the financial year show year-on-year tax savings in
excess of £0.5m.
5) Purchases of assets in FY23 were £0.1m (FY22: £0.4m). These
purchases were primarily office related costs in Australia. Note that asset
purchases do not include the capitalized value of new leases of ROU assets,
which are non-cash items.
6) Exceptional items relating to M&A, finance raising and
restructuring costs of £3.9m (FY22: £2.3m).
7) In FY23 investing activities include the acquisition of customers and
assets of Uniti by SkyMesh £2.5m plus a deferred payment of £0.3m in respect
of Clear Networks less £0.1m proceeds of asset sales (FY22: acquisition of
customers and assets of Clear Networks £1.2m).
8) The net movement of cash held in the discontinued operations during
the year.
9) The inflow in the year of £1.9m comprises the loan finance of £2.1m
offset by lease principal payments of £0.2m (FY22: £0.2m lease principal
payments).
Adjusted Net Cash reconciliation
This is a non-GAAP alternative performance measure.
2023 2022
£000 £000
Opening Net Cash 4,195 5,201
(Loss) / profit after tax from Continuing operations (1,438) 125
Interest charge 238 64
Depreciation 597 561
Impairment of Intangible and Fixed Assets 147 -
Amortisation 1,515 444
Tax (credit) / charge (529) 328
Share Based payments - 309
Exceptional costs 3,929 2,271
Adjusted EBITDA 4,459 4,102
Forex movement and other non-cash 262 (99)
Movement in Working Capital 544 (3,309)
Cash inflow from Continuing operations 5,265 694
Interest paid (209) (64)
Tax paid (297) (539)
Underlying inflow from Continuing operations 4,759 91
Purchase of Assets (49) (374)
Adjusted free cash inflow/(outflow) before exceptional and M&A items 4,710 (283)
Exceptional items relating to refinancing, fundraising, M&A, integration,
restructuring and the establishment of network partnerships
(2,271)
(3,929)
Free cash inflow/(outflow) after exceptional and M&A items 781 (2,554)
Investment activities (2,693) 1,632
Financing activities 1,856 (137)
Movement in Cash from Continuing operations (56) (1,059)
(Outflow) / inflow of cash from Discontinued operations (2) 53
Movement in Net Cash (58) (1,006)
Increase in Debt (2,100) -
Closing Net Cash inclusive of Escrow arrangements (£0.8m) 2,037 4,195
Cash split
Net cash and cash equivalents 1,532 4,195
Discontinued operations cash / cash equivalents including deposits 505 -
Closing net cash 2,037 4,195
Cash and net debt for the overall Group is summarised as follows:
2023 2022
£000 £000
Opening Net Cash 4,195 5,201
Increase in loans: offset in financing activities
Facilities utilised (2,100) -
Cash inflow / (outflow) from operating activities 1,660 (512)
Cash (outflow) / inflow generated in investing activities (3,166) 200
Cash inflow / (outflow) from financing activities 1,448 (694)
Movement in Net Cash (2,158) (1,006)
Closing Net Cash 2,037 4,195
Composition of closing net cash
Cash and cash equivalents 1,782 4,195
Cash held in escrow - restricted cash 850 -
Gross cash and cash equivalents 3,632 4,195
Gross cash and cash equivalents in disposal group 505
Bank loans (2,100) -
Net Cash 2,037 4,195
Net Cash
Net cash and cash equivalents 1,532 4,195
Discontinued operations cash / cash equivalents including deposits 505 -
Adjusted net cash 2,037 4,195
Net Cash and cash equivalents / Adjusted EBITDA 0.34x 1.02x
Net cash reduced from £4.2m in 2022 to a net cash position of £1.5m, a
reduction of £2.7m in the year, as detailed in the net cash reconciliation
above. With discontinued cash this is a net cash position of £2.0m.
At the year end an amount of £0.9m within the adjusted net cash balance was
held in Escrow and received on 5 December 2023 (FY 22: Nil).
The table above excludes the lease liabilities of £0.1m (FY22: £1.4m).
Including this amount would give a total adjusted net cash of £1.4m (FY22:
Adjusted net cash £2.8m) and a ratio of adjusted net cash to adjusted Group
EBITDA before IFRS 16 of 0.31x (FY22: Adjusted net cash 0.54x).
Consolidated Statement of Financial Position
Fixed Assets reduced in the year to £0.4m (FY22: £2.9m), following the
purchase or lease of new fixed assets (£0.8m), less disposals (£0.3m), and
adjusted for depreciation provided in the year (£1.4m) and negative foreign
exchange movements (£0.2m) together with the reclassification of £1.4m of
assets as held for sale at year end.
Intangible Assets decreased to £5.6m (FY22: £7.4m) due to the contracts
acquired from Uniti £2.5m less amortization of £1.7m together with
impairment of goodwill and IP values by £1.9m following a review in the year.
Negative foreign exchange movements accounted for a (£0.4m) translation
adjustment. £0.4m carrying value was reclassified as assets held for sale.
Working Capital
Inventory days decreased to 16 days (FY22: 24 days) as stock holdings in
Australia were reduced from the planned high level in FY22 by £0.4m.
Reclassification of £0.6m as held for sale resulted in a balance of £0.1m
(FY22: £1.1m). Trade Debtor days increased to 14 days (FY22: 9 days) with a
£0.7m increase in the closing Trade Debtors year on year. Trade Creditor days
decreased to 70 days (FY22: 77 days) due to alignment of terms for a key
network provider in Australia.
Earnings per share - Continuing operations
2023 2022
Basic earnings per share (8.0p) (5.0p)
Diluted earnings per share (8.0p) (5.0p)
Non-GAAP Adjusted basic earnings per share 7.1p 5.4p
Basic EPS
Basic EPS was a loss of 8.0p per share in 2023, increasing from a loss of 5.0p
in 2022, largely due to increased amortisation and exceptional costs.
Diluted EPS
Diluted EPS is a calculation used to gauge the quality of a company's earnings
per share (EPS) if all share options are exercised. Diluted EPS was a loss of
8.0p per share in 2023 from a loss of 5.0p in 2022.
Basic adjusted earnings per share
Adjusted basic EPS was a profit of 7.1p per share in FY23 from a profit of
5.4p in FY22.
Accounting standards
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS), as endorsed and adopted for use in the
EU. There have been no changes to IFRS standards this year that have a
material impact on the Group's results. No forthcoming new IFRS standards are
expected to have a material impact on the financial statements of the Group.
Dividend
The directors do not recommend the payment of a dividend (2022: £Nil)
Going Concern
The Directors have prepared and reviewed projected cash flows for the Group,
reflecting its current level of activity and anticipated future plan for the
next 12 months, from the date of signing. The Group is currently loss-making,
mainly because of depreciation, amortisation and exceptional charges. The
business continues to grow customer numbers and revenue in key target markets
and continues to monitor the short-term business model of the Group.
The Board have identified the key risks, and these include:
· Slower revenue growth, EBITDA and cash generation if sales
activities, installations or activations decrease over the period
· Reduced ARPU if market pressures result in discounting
customer products to support them
· Increased churn could be experienced if services levels are not as
expected due to volumes of traffic, personnel shortages, and capacity
constraints
· Increased bad debt as customers suffer income loss
The Board also recognises a number of significant mitigating factors that
could protect the future going concern of the business. These include:
· Super-fast Broadband is already an essential utility for many
and even more so now, it is likely to be one of the last services that
customers will stop paying for
· Support from network partners for the business and customers
· Strong support from banking partners with an increased RCF
facility of £10m
The Board has conducted stress tests against our business performance metrics
to ensure that we can manage any continuing risks. We recognise that a number
of our business activities could be impacted, and we have reflected these in
this analysis including supply chain disruptions, delays in sales or
installations, earnings, or cash generation. By modelling sensitivities in
specific KPIs such as volume of activations, churn, ARPU, margin, overhead and
FOREX, management is satisfied that it can manage these risks over the going
concern period.
Furthermore, management has in place and continues to develop robust plans to
protect EBITDA and cash during this period of uncertainty and disruption.
Under this plan identified items include reducing discretionary spend,
postponing discretionary Capex, reducing marketing, freezing all headcount
increases, and working with suppliers on terms particularly our network
partners.
The Board believes that the Group is well placed to manage its business risks
and longer-term strategic objectives successfully. The latest management
information shows a strong net cash position, and in terms of volumes, ARPU
and churn, we are in fact showing a strong position compared to prior year and
budget and indeed the business is seeing an increase in demand in Australia.
Accordingly, we continue to adopt the going concern basis in preparing these
results.
On behalf of the Board
Frank Waters
Chief Executive Officer
20 May 2024
Bigblu Broadband plc
Condensed consolidated statement of comprehensive income
12 months ended 30 November 2023
2023 2022
Continuing Operations £'000 £'000
Revenue from contracts with customers 25,937 27,192
Cost of sales (16,310) (16,770)
Gross profit 9,627 10,422
Distribution expenses (5,639) (5,638)
Administrative expenses (5,717) (4,267)
Operating (loss) / profit (1,729) 517
Finance costs (238) (64)
(Loss) / profit before tax (1,967) 453
Taxation charge on operations 529 (328)
Loss from continuing operations (1,438) 125
Loss from discontinued operations (3,263) (3,059)
Loss for the year (4,701) (2,934)
Other comprehensive expense
Foreign currency translation difference (406) 206
Total comprehensive loss for the year (5,107) (2,728)
Total comprehensive loss for the year is all attributable
to the owners of Bigblu Broadband Plc
Earnings per share from loss attributable to the ordinary equity holders of
the company
Total - Basic EPS (8.0p) (5.0p)
Total - Diluted EPS (8.0p) (5.0p)
Continuing operations - Basic EPS (2.5p) 0.2p
Continuing operations - Diluted EPS (2.5p) 0.2p
Discontinued operations - Basic EPS (5.6p) (5.2p)
Discontinued operations - Diluted EPS (5.6p) (5.2p)
Adjusted earnings per share from continuing operations attributable to the
ordinary equity holders of the company (A non-GAAP measurement)
Continuing operations - Adjusted Basic EPS 7.1p 5.4p
Continuing operations - Adjusted Diluted EPS 7.1p 5.4p
Bigblu Broadband plc
Condensed consolidated statement of financial position
As at 30 November 2023
2023 2022
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 378 2,881
Intangible assets 5,553 7,433
Investments 5,995 5,830
Deferred tax asset 800 303
Total non-current assets 12,726 16,447
Current assets
Cash and cash equivalents 3,632 4,195
Inventory 111 1,142
Trade and other receivables 2,830 2,335
6,573 7,672
Asset classified as held for sale 2,516 -
Total current assets 9,089 7,672
Total assets 21,815 24,119
Current liabilities
Trade and other payables (7,743) (8,839)
Provisions for liabilities and charges (685) (685)
Loans (2,100) -
(10,528) (9,524)
Liabilities associated with assets classified as held for sale (2,349) -
Total current liabilities (12,877) (9,524)
Non-current liabilities
Other payables - (559)
Deferred tax liability (616) (646)
Total non-current liabilities (616) (1,205)
Total liabilities (13,493) (10,729)
Net assets 8,322 13,390
Equity
Share capital 8,783 8,763
Share premium 8,608 8,589
Share option reserve 309 309
Capital redemption reserve 26,120 26,120
Foreign exchange translation reserve (2,952) (2,546)
Reverse acquisition reserve (3,317) (3,317)
Listing cost reserve (219) (219)
Retained losses (29,010) (24,309)
Capital and reserves attributable to owners of Bigblu Broadband Plc 8,322 13,390
Total equity 8,322 13,390
Bigblu Broadband plc
Condensed consolidated Cash Flow Statement
12 Months Ended 30 November 2023
2023
2022
£'000 £'000
Loss after tax from Continuing operations (1,438) 125
Loss after tax from Discontinued operations (3,263) (3,059)
Loss for the year including discontinued operations (4,701) (2,934)
Adjustments for:
Interest charge 287 124
Amortisation of intangible assets 1,676 702
Impairment charges 2,558 -
Depreciation of property, plant and equipment - owned assets 690 2,281
Depreciation of property, plant and equipment - ROU assets 712 761
Tax (credit) / charge (529) 1,031
Share based payments - 309
Foreign exchange variance and other non-cash items 218 (102)
Decrease / (Increase) in inventories - adjusted for discontinued operations 406 (440)
Increase in trade and other receivables - adjusted for discontinued operations (826) (212)
Increase in trade and other payables - adjusted for discontinued operations 1,763 (1,353)
Gain on disposals of fixed assets (39) (16)
Cash generated from operations 2,215 151
Interest paid (258) (124)
Tax paid (297) (539)
Net cash inflow / (outflow) from operating activities 1,660 (512)
Investing activities
Purchase of property, plant and equipment (462) (1,191)
Purchase of business (2,757) (1,211)
Purchase of other intangibles (9) (241)
Proceeds from sale of property, plant and equipment 62 -
Proceeds from sale of subsidiary - 2,843
Net cash (outflow) / inflow generated from investing activities (3,166) 200
Financing activities
Proceeds from issue of ordinary share capital 39 14
Loans received 2,100 -
Principal elements of lease payments (691) (708)
Net cash inflow / (outflow) generated from financing activities 1,448 (694)
Net (decrease) / increase in cash and cash equivalents (58) (1,006)
Cash and cash equivalents at beginning of year 4,195 5,201
Less cash held for sale (505)
Cash and cash equivalents at end of year 3,632 4,195
Note that the presentation of the cashflow takes into consideration the
combined Continued and Discontinued movements in cash
Bigblu Broadband plc
Condensed consolidated Reserves Movement
12 Months Ended 30 November 2023
Share Capital Share Premium Other Reserves Revenue Reserve Total
£000 £000 £000 £000 £000
Note 6
At 30 November 2021 8,749 8,589 20,154 (21,581) 15,911
Loss for the period (2,934) (2,934)
Issue of shares 14 14
Share option reserve 309 309
Foreign Exchange Translation (116) (116)
Other comprehensive expense 206 206
At 30 November 2022 8,763 8,589 20,347 (24,309) 13,390
Loss for the period (4,701) (4,701)
Issue of shares 20 19 39
Share option reserve -
Foreign Exchange Translation (406) (406)
At 30 November 2023 8,783 8,608 19,941 (29,010) 8,322
Bigblu Broadband plc
Notes to the financial statements
For the period ended 30 November 2023
1. Presentation of financial information and accounting policies
Basis of preparation
The condensed consolidated financial statements are for the full year to 30
November 2023.
The nature of the Group'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 Group 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.
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 Group'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 continuing Group, its cash
flows and liquidity position are described in the Finance Review. In addition,
the financial statement includes the Group's objectives, policies and
processes for managing its capital, its financial risk management objectives,
details of its financial instruments and its exposures to credit risk and
liquidity risk.
In the year to 30 November 2023 the continuing Group generated an adjusted
EBITDA from continuing operations before a number of non-cash and start-up
costs expenses as shown on page 15, of £4.5m (2022: £4.1m), and with cash
inflow from operations before interest, tax and capital expenditure, of £5.3m
(2022: inflow of £0.7m) and a net reduction in cash and cash equivalents of
£0.1m in the year (2022: decrease £1.0m). The Group balance sheet showed net
cash and cash equivalents at 30 November 2023 of £2.0m (2022: £4.2m).
Having reviewed the Group's budgets, projections, prospective covenant
compliance, and funding requirements, and taking account of reasonable
possible changes in trading performance over the next twelve months, the
Directors believe they have reasonable grounds for stating that the Group has
adequate resources to continue in operational existence for the foreseeable
future. Accordingly, the Directors continue to adopt the going concern basis
in preparing the Annual Report and Accounts.
The Board has concluded that no matters have come to its attention which
suggest that the Group 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,
ARPU and Churn are in fact showing a positive position compared to prior year
and budget. The forecasts for the combined Group projections, taking account
of reasonably possible changes in trading performance, indicate that the Group
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. As a consequence,
the Board believes that the Group 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 Group's accounting
policies and the key sources of estimating uncertainty were principally the
same as those applied to the Group's and Individual company's financial
statements for the year ended 30 November 2023.
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
intercompany balances and transactions have been eliminated in full.
2. Distribution and Administration Expenditure
Distribution and administration costs for the continued operations are
analysed below. This is non-GAAP information, in which the allocation is
unaudited.
2023 2022
£000 £000
Employee related costs 4,268 4,307
Marketing and communication costs 1,038 1,145
Logistics, Finance, IT, banking, insurance AIM and Other costs (138) 866
Underlying costs 5,168 6,318
% of Revenue 19.9% 23.9%
Depreciation 597 561
Impairment of Fixed Assets 147 -
Amortisation 1,515 444
Underlying Depreciation and Amortisation 2,259 1,005
% of Revenue 8.7% 3.7%
Share based payments - 309
Professional, legal and related costs associated with corporate activity 3,929 2,273
Identified Exceptional Costs 3,929 2,582
% of Revenue 15.1% 9.5%
Total 11,356 9,905
% of Revenue 43.7% 36.4%
3. Interest Payable and Finance Costs
2023 2022
£'000 £'000
Revolving Credit Facility interest payable 227 38
Other interest payable 4 6
Lease interest expense 7 20
Total finance costs 238 64
Interest in the Condensed consolidated statement of comprehensive income is
total finance costs.
The Revolving Credit Facility interest payable is in respect of the Santander
facility.
4. Profit and loss on Discontinued Operations
Group financial information for 2023 is set out below for the disposal group.
2022 comparative information in the Financial Statements has been adjusted to
reflect the revised split of activities between continuing and discontinued
operations.
Financial performance and cash flow information
Group
2023 2022
£'000 £'000
Revenue 4,157 4,028
Expenses (7,420) (6,264)
Loss before tax (3,263) (2,236)
Taxation on operations - (703)
Loss after tax of discontinued operations (3,263) (2,939)
Loss on sale of the subsidiary after tax (see below) - (120)
Loss from discontinued operations (3,263) (3,059)
Net cash inflow from operating activities 830 1,668
Net cash outflow from investing activities (424) (1,058)
Net cash outflow from financing activities (408) (557)
Decrease in cash generated by the subsidiaries (2) (53)
Details of sale of subsidiary
Expenses of sale - (120)
Gain on sale before tax - (120)
Corporation tax expense on gain - -
Loss on sale after tax - (120)
In 2022 additional expenses of sale in respect of the disposal of Quickline in
2021 were incurred.
As at 30 November 2023 the operations of Brdy AS and Brdy Nordics AS were
classified as held for sale and therefore no details of their sale are
included here since no sale was concluded as at the date of signature of these
accounts. The carrying value of Goodwill was impaired by £2.1m in the year,
with a remaining carrying value as at 30 November 2023 of £nil.
Assets and liabilities of disposal group held for sale
2023 2022
£'000 £'000
Assets classified as held for sale
Property, plant and equipment 1,034 -
Intangible assets 85 -
Inventory 615 -
Cash 505
Trade receivables 67 -
Other receivables 210 -
Total assets of disposal group held for sale 2,516 -
Liabilities directly associated with assets classified as held for sale
Trade payables (1,066) -
Lease liabilities (573) -
Other payables (710) -
Total liabilities of disposal group held for sale (2,349) -
The cumulative foreign exchange losses recognised in other comprehensive
income in relation to the
discontinued operation as at 30 November 2023 were £0.7m
5. Earnings / (Loss) per share
Basic earnings per share is calculated by dividing the profit/(loss)
attributable to shareholders by the weighted average number of ordinary shares
in issue during the period.
Reconciliation of the profit/(loss) and weighted average number of shares used
in the calculation are set out below:
30 November 2023
Weighted
Average Per Share
Profit/(Loss) Number of Amount
£'000 Shares Pence
Basic EPS - Loss attributable to shareholders (4,701) 58,524,645 (8.0)
Add back loss from discontinued operations 3,263
Add back exceptional costs 3,929
Adjusted Profit attributable to shareholders from continuing operations
2,491
Add back amortisation and impairment of intangible assets 1,662
Adjusted EPS - Adjusted Profit attributable to shareholders from continuing
operations(1)
4,153 58,524,645 7.1
Diluted EPS - Loss attributable to shareholders (4,701) 58,820,176 (8.0)
Adjusted Diluted EPS - Adjusted Profit attributable to shareholders from
continuing operations as above(1)
4,153 58,820,176 7.1
30 November 2022
Weighted Average
Per Share
Profit/(Loss) Number of Amount
£'000 Shares Pence
Basic and diluted EPS
Basic EPS - Loss attributable to shareholders (2,934) 58,376,211 (5.0)
Add back loss from discontinued operations 3,059
Add back exceptional costs 2,271
Add back share based payments 309
Adjusted Profit attributable to shareholders from continuing operations
Add back amortisation 2,705
444
Adjusted EPS - Adjusted Profit attributable to shareholders from continuing
operations(1)
3,149 58,376,211 5.4
Diluted EPS - Profit attributable to shareholders (2,934) 58,828,959 (5.0)
Adjusted Diluted EPS - Adjusted Profit attributable to shareholders from
continuing operations as above(1)
3,149 58,828,959 5.4
(1) Non-GAAP measure, the profit attributable to shareholders from continuing
operations is £4.2m (2022: £3.2m profit) after adding back exceptional costs
£3.9m (FY22: £2.3m), share based payments (FY22: £0.3m), impairment of
Fixed Assets £0.1m (FY22: £nil), amortisation £1.5m (FY22: £0.4m) and the
deferred tax adjustment in the Norwegian business in FY22. Adjusted EPS and
adjusted diluted EPS are alternative non-GAAP performance measures.
6. Other capital reserves
Listing Reverse Foreign Capital Share Total
Cost Acquisition Exchange Redemption Option Capital
Reserve Reserve Translation Reserve Reserve Reserves
£000 £000 Reserve £000 £000 £000
£000
At 30 November 2021 (219) (3,317) (2,430) 26,120 - 20,154
Share Options 309 309
Foreign Exchange Translation (116) (116)
At 30 November 2022 (219) (3,317) (2,546) 26,120 309 20,347
Foreign Exchange Translation (406) (406)
At 30 November 2023 (219) (3,317) (2,952) 26,120 309 19,941
· 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 grossed up but may be shown net.
· 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.
· Capital Redemption reserve
· The capital redemption reserve relates to the cash redemption of the
bonus B shares issued in order to return c.£26m to ordinary shareholders.
· 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)
7. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are disclosed within the
financial statements and related notes are as follows
Management charges from Parent to the other Group companies
During the year the Company made management charges on an arm's length basis
to its subsidiaries amounting to £1.6m (FY22: £2.2m)
As part of the reductions in the headcount within the plc during the course of
the year the Company entered into certain service contracts with Bigblu
Operations Limited ("BBO"), a company of which Andrew Walwyn is a director
(the "BBO Contracts"). The BBO Contracts are summarised below:
Licence Agreement
The Company has agreed to grant a licence over certain trademarks to BBO in
relation to the Brdy brand. In consideration for the rights granted by the
Company to BBO, BBO has agreed to pay the Company a notional annual license
fee for each period of usage for £12k (FY22: £nil).
Service Agreement - Company to BBO
The Company has entered into a service agreement with BBO. The services
provided by the Company to BBO include legal and corporate finance support,
IT, marketing, and certain Executive support services (the "Services"). Costs
and expenses are charged on a time and material basis based on the time spend
by individuals performing the Services. This equated to £118k in the last
financial year (FY22: £nil).
Service Agreement - BBO to Company
In addition, the Company has entered into a further service agreement with
BBO. The services provided by BBO to the Company primarily include finance, IT
and tech support (the "BBO Services"). Costs and expenses are charged on a
time and material basis for the time spend by individuals performing the BBO
Services. This equated to £73k in the last financial year (FY22: £nil).
Products
In the normal course of events the Company has entered into reseller
agreements with BBO for certain broadband products sold by the Company (the
"Products"). This equated to £10k in the last financial year (FY22: £nil).
Post the disposal of the Norwegian operations we anticipate these services to
reduce alongside further plc rationalisations.
8. Availability of the Full 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 weekday. The Company's
registered office is at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
The Company is registered in England No. 9223439.
A copy of the full year report will be available in May and can also be
downloaded from the Company's website at https://www.bbb-plc.com
(https://www.bbb-plc.com)
9. Post Balance Sheet Events
Starlink
The Company signed an important distribution contract with Starlink in
December 2023 to provide high-speed internet to businesses, as well as small
office / home office workers with an investment of c£2m. This alongside the
One Web contract allows BBB to offer customers an extended suite of products
covering all their needs. To accommodate the investment of c£2.5m for
Starlink post year end we have drawn down further on the Revolving Credit
Facility.
Quickline
Quickline has been awarded two contracts under the government's £5bn Project
Gigabit programme. The contracts will subsidise the rollout of a full fibre
network to more than 60,000 hard-to-reach rural homes and businesses across
the parts of Yorkshire which have been left behind by commercial rollouts. The
contracts have been secured by Quickline following competitive public
procurement processes and totals £104m of government subsidy. Quickline will
make further private investment alongside Project Gigabit to roll out its full
fibre network to over 200,000 premises.
Australia
We are very pleased to announce the appointment of a CFO in Australia, Ray
Vaughan. Ray previously worked with the business between 2016 and 2019 and
spent the last 5 years as CFO of Ion Group in Sydney.
Disposal of Norway and Director Changes
We are pleased to announce the disposal of the Norwegian Operations comprising
Brdy AS and Brdy Nordics AS (the "Brdy Group") to Brdy Holding AS (under
construction), a company owned by the Norwegian Management Team and Andrew
Walwyn who has today also announced that he has stepped down from his position
as Chief Executive Officer of the Company. Frank Waters, currently Chief
Financial Officer, has taken over as Chief Executive Officer of the Company.
Ultimate Controlling Party Note
No one shareholder has ultimate control over the business.
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