Bigblu Broadb. Regulatory News (BBB)

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.£15m 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.£27m (FY19: LFL2 £26m) in the period

· Adjusted EBITDA1 in line with expectations of c.£6m (FY19: LFL £5m)

· Following completion of the disposal, the Group's net cash position before any adjustment for IFRS16 as at 30 November 2020 is c.£7m with the Continuing Group generating growing levels of operating cashflow (FY19: Net debt3 £14.2m) 

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 £6m 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 £15m whilst itself committing approximately £4m to fund £19m 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 £2m from the £12m funding it secured in August 2019 leaving a balance of £6m 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 £1,500 per residential premise and £3,500 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 £39.3 million. An initial consideration of £37.2m 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 £1.5m (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 £27m (FY19: LFL £26m). Total Continuing Group adjusted EBITDA1 is expected to c.£6m (FY19: LFL £5m). As at 30 November 2020, total customers were approximately 65k.

As at 30 November 2020, the net cash position of the Group was approximately £7m (FY19 £14.2 net debt). Following completion of the Disposal, the Group was able to renegotiate a new £12m revolving credit facility with Santander having used approximately £21m 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.

2Like 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 £5.2m arising from the implementation of IFRS 16.

For further information:

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.