Arqiva 1H18 financial results
First half delivers strong revenue and profit growth. Increasing efficiency delivers Group EBITDA growth of 11.0% YoY on reported revenue growth of 3.4%
London, UK, 26 February 2018: 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 half year to 31 December 2017.
- Revenue on a like-for-like basis is up 5.0%, demonstrating excellent progress in 700MHz spectrum clearance, DAB radio rollout and smart-metering
- This growth, together with progress in ongoing efforts to increase operating efficiency, led to an increase in EBITDA of 11.0%
- Resultant cash inflow from operations of £259m is up 19.4% against the prior year
Revenue in the period was up 3.4% to £482.0m from £466.3m in the same period last year. Revenue on a like-for-like basis, which accounts for last year’s WiFi business disposal, increased 5.0%.
- Revenue in our Terrestrial Broadcast business grew 7.0% to £239.4m from £223.8m in the same period last year. This performance was driven in part by our 700 MHz spectrum clearance programme which is paving the way for 5G communications in the UK, and also by DAB radio rollout.
- Revenue in our Telecoms & M2M business grew 4.4% to £174.7m from £167.4m in the same period last year. Revenue growth on a like-for-like basis in the Telecoms & M2M business was 9.1%. This was driven by increased revenue from our telecoms towers business and the smart energy metering contract.
- Revenue in our Satellite and Media business decreased 9.6% to £67.9m from £75.1m in the same period last year. This was a result of Arqiva exiting low-margin contracts and is also partly due to the negative impact of foreign exchange movements.
EBITDA, a key measure of the Group’s financial performance, increased 11.0% during the period to £256.1m (1H 2017: £230.7m). This strong performance can be attributed in part to an improvement in gross profit as a result of the revenue increase and shift in product mix, as well as improved operating efficiency and effective management cost-control through our FutureFit programme.
Net Cash inflow from operating activities during the period was £259.6m, up 19.4% from £217.4m in the same period last year.
Net capital expenditure during the period was £85.4m, up 10.1% from £77.6m in the same period last year
“These results show that Arqiva continues to make excellent progress. We are a highly Operating Cash-generative business and our strong operating performance indicates improved efficiency across the entire Group. The strength of our financial performance reflects our vital role in delivering the technology that will ensure Britain’s digital future. From the delivery of new TV content to the clearance of the airwaves over which 5G will come to life, and the overall increasing demand for connectivity over the airwaves, we are a key enabler of a coming change. These results give us greater courage than ever in our convictions and we look forward to a strong second half across all of these areas.”
1H Developments by business area
700MHz Clearance and DTT Spectrum
Arqiva continues to make excellent progress in its work to clear the 700MHz spectrum band for use in future 5G wireless technology for mobile network providers. All planned clearance events in this critical infrastructure project have so far been completed on time and on plan.
Digital Radio (DAB) Rollout
Having completed the DAB rollout programme for the BBC in September 2017, the Group is progressing well with the delivery of Commercial local DAB. The project involves Arqiva delivering new transmitters or upgrades at 221 sites and will take local DAB coverage to over 91%.
Telecoms & M2M
Smart Metering Rollout
Arqiva’s smart energy metering network in the North of England and Scotland has continued to roll out to plan and currently covers 93% of premises. Within smart water metering, the Group is making particular progress in the Thames Water London region, where there are now over 255,000 meters installed.
The UK’s four Mobile Network Operators (MNOs) continue to increase their 4G network coverage using Arqiva infrastructure. Since rollout began in 2014, Arqiva has completed 7,585 4G equipment upgrades to support customers’ growing coverage requirements.
Since the period end Arqiva appointed Jeremy Mavor as Group General Counsel and David Crawford as Managing Director of the Telecoms & M2M business unit. Jeremy and David replace Michael Giles and Nicolas Ott respectively, who have decided to step down from their positions after a number of years of distinguished service. The Board thanks them for their contributions and wishes them well for the future.
Jeremy moves to the General Counsel role from his position as Head of Legal for finance and corporate matters, while David Crawford will formally move from his post as Managing Director of Satellite & Media on 01 April. Alex Pannell (previously the Commercial Director of Satellite & Media) will take up leadership of the Satellite & Media business unit on an interim basis.
The Group will continue to invest in its core telecoms and broadcast infrastructure markets with a continued focus on operating these businesses more efficiently in order to deliver sustained growth in earnings. Net Capital Investment is anticipated to reduce in line with the phasing of expenditure on the Group’s major capital programmes.
Figures quoted within this release are for the Arqiva Broadcast Parent Limited Consolidated Group