London, UK, 26 September 2019: Arqiva, one of the UK’s leading communications infrastructure and media services providers with significant investments in essential communications infrastructure, announces its results for the year ended 30 June 2019. Robust results reflect a strong performance delivered across Arqiva’s core business in a year of major project delivery.

Highlights

Revenue growth for the year of 2.7%, including organic growth of 2.8%(1)
5% increase in EBITDA including EBITDA growth in the Telecoms & M2M (6.1%) and Terrestrial Broadcast (0.2%) business units
Peak activity in the delivery of the 700MHz Clearance programme in accordance with key programme milestones, with work completed on 613 sites thus far
Continuing the delivery phase of the smart energy metering contracts, and implementing incremental contract change requests, finishing the year in line with milestones and network coverage of circa 99%
Refinancing of the Group’s £600m 9.5% coupon junior bonds, due in 2020, raising £625m of new bonds, maturing in 2023 with a coupon of 6.75%

Financial Results

Revenue grew 2.7% to £990.4m (2018: 964.2). Revenue includes £0.6m (2018: £1.6m) from the Group’s former Inbuilding Solutions business disposed of during the year. Excluding the effect on financial performance of this disposal, organic revenue growth from the continuing business was 2.8%. The trend of reported revenue growth has continued. Over the 3 years to June 2019 compound annual revenue growth was 3.8%. All revenue figures below are from continuing operations.

  • Terrestrial Broadcast revenues increased by 0.4% to £491.3m (2018: £489.4m). Revenue on contracts has increased through the year, resulting from increased DAB activity as well as RPI linked increases on broadcast contracts. These increases have been partially offset by a reduction in other engineering projects due to phasing of projects.
  • Telecoms & M2M revenues increased by 10.1% to £375.9m (2018: £341.3m). Excluding the effect of the Group’s Inbuilding Solutions business disposed in the year which contributed £1.6m to revenue in 2018 and £0.6m in 2019, the Telecoms & M2M business experienced revenue growth of 9.5%.
  • Satellite and Media continues to operate in a competitive market with revenue reductions in 2019 of 7.7% to £123.2m (2018: £133.5m). Revenues were impacted largely due to the strategic decision to exit a low margin managed service contract, reduced focus on Playout and Occasional Use products (from which the Group expects to be fully exited from over the next couple of years), as well as the transfer of the reporting of revenues from the Connected Solutions into Terrestrial Broadcast (£2.5m).

EBITDA, a key measure of the Group’s financial performance, grew 1.5% to £527.3m (2018: £519.3m) due to the increase in revenues resulting from strong programme delivery, and operating cost savings partially offset by lower gross margins due to changes in sales mix. This performance reflects another year of EBITDA growth benefitting from peak levels of project activity with an annualised growth rate over the past 4 years of 7.1%.

Net cash inflow from operating activities was £486.7m (2018: £572.1m), representing a decrease of 14.9%. This decrease is owing to a working capital outflow driven by the utilisation of cash received in advance during prior years (decreasing contract liabilities) and timing of payments, typical with historical trends of the business. In the prior year the operating cash inflow was higher due to working capital inflows arising from one off additional contract liabilities recognised from Telecoms & M2M and Terrestrial Broadcast customers.

Net capital expenditure and financial investment fell 27.4% to £115.3m (2018: £159.0m). The net financial investment of the Group includes consideration received in respect of the assets and contracts of the Group’s Inbuilding business.

(1) Organic growth refers to the underlying performance of the business excluding the impact of non-core business areas which were disposed in the current or comparative period (e.g. the Group’s Inbuilding business within the Telecoms and M2M business unit).

Simon Beresford-Wylie, Chief Executive of Arqiva, commented:
“In 2019 Arqiva completed multiple major projects and delivered both revenue and EBITDA growth, led by an outstanding performance in our Telecoms & M2M business with 10.1% growth. The last four years have been a period of growth and operational improvement for Arqiva through peak levels of project activity, delivering 7.1% of compound EBITDA growth.

“Arqiva is strongly positioned, with our infrastructure helping to underpin the UK’s digital services, including driving sector innovation for 5G services for MNOs and delivering an engaging digital radio experience for listeners. Arqiva continues to work on a number of substantial projects across the UK including 700 MHz Clearance, DAB radio and smart metering in the energy and water sectors.

“Looking ahead to 2020, we continue to transform and optimise our business to be FutureFit, proactively developing new solutions and ways of working for our customers to address the opportunities and challenges ahead of us.”

Souce: Arqiva

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