Arqiva announces another successive year of record results

UK, London, 12 September 2017: Arqiva*, the UK's largest independent towers provider and communications infrastructure group, announces excellent results for the year ended 30 June 2017, with another year of record revenues and earnings.

Arqiva provides communications infrastructure used by mobile telecoms network operators, TV and radio broadcasters, and satellite TV broadcasters. The company has taken a leading role in the deployment of machine-to-machine (M2M) connectivity devices, including smart meters for energy and water. As a 5G pioneer, Arqiva launched and is currently operating Europe's first fixed wireless access (FWA) trial in London in partnership with Samsung.

Financial Highlights

Year to 30 June 2017

£m

Year to 30 June 2016

£m

Change

%

Revenue

944

885

7

EBITDA

467

424

10

Net Cashflow after capital and financial investment

333

227

47

Strong organic earnings and cashflow growth delivered by all business units

Revenue for the group up 7% on a reported basis and 9% on a like for like basis (after disposal of non-core businesses)

Corporate costs have remained flat over the past two years supporting strong earnings growth

FutureFit, the transformation programme to deliver efficient ways of working and cost savings, has delivered over £20m of gross savings in the year and is driving further efficiencies

Successful completion of £1.1bn senior debt refinancing in November 2016 (investment grade ratings reaffirmed)

Reduction of EBITDA to senior net debt from 5.7x to 5.1x

Operational Highlights

Good progress during reporting year on operational delivery of major projects included:

700 MHz spectrum clearance on schedule

Digital Audio Broadcasting (DAB) network coverage achieved 97% of the population for BBC and is expected to reach 91% for commercial local DAB by December 2017

In M2M, smart energy communications network now live for Data and Communications Company (DCC) in the North of England and Scotland. Accelerating roll out of smart water meter network for Thames Water, and trial for Anglian Water underway.

In Telecoms, there was strong delivery in 4G installation services. The 5G FWA (Fixed Wireless Access) trial launched in July 2017 and is demonstrating exciting future capabilities

Simon Beresford-Wylie, CEO, said: It has been an excellent year for Arqiva, with another year of record results driven by strong operating performances in each of our core business areas.

The strength of our financial performance reflects the capital investment decisions made over recent years and is driven by the success of major programme rollouts, including 700MHz clearance, DAB, 4G and smart metering. Combined with our growth strategy, we continue to see the benefits of our FutureFit' transformation programme, which is reducing our cost base and helping us to better meet the needs of our customers. In addition, Arqiva has long term contracts in place with a number of significant blue chip customers which support our long term financial stability.

Whilst we continue to focus on our critical national infrastructure, we are also looking to the future with our successful 5G FWA trial, in partnership with Samsung. The trial is a great example of Arqiva's focus on market opportunities and our commitment to helping the UK become a vibrant digital economy.

Outlook

Connectivity is key to the UK's productivity. All three business areas; Terrestrial Broadcast, Telecoms and Satellite & Media are delivering strong results. The order book stands at £5.7 billion as at 30 June 2017 and we see opportunities in each of our businesses to continue to deliver profitable growth.

As announced earlier this year, Arqiva's shareholders are jointly undertaking a strategic review of their investment which may lead to a transaction involving their interests in Arqiva. There is no certainty that the strategic review will result in any transaction. A further announcement will be made as and when appropriate.

Business Review

Terrestrial Broadcast revenues increased 6.3%

Terrestrial Broadcast includes our TV and radio broadcast and infrastructure services and our digital platforms business where we are the leading provider of Freeview channels for broadcasters.

Year to 30 June 2017

Revenue

£449 m

Terrestrial Broadcast

£273 m

Digital Platforms

£176 m

EBITDA

£329 m

Orderbook

£3.9 bn

The growth is driven by several factors including recurring revenues from new channels on the digital terrestrial television (DTT) multiplexes, new video streams on our multiplexes, radio contracts resulting from the DAB rollout, and increased activity related to the continuing clearance of the 700 MHz spectrum.

We are responsible for developing the technical solution for the Freeview Play service. The Freeview DTT platform is important to broadcasters with sales of Freeview Play TVs and set-top boxes continuing to increase. This highlights the attractiveness of hybrid DTT/IP TV services in the UK where DTT is the underlying delivery mechanism supplemented by a variety of OTT services on top. Arqiva had capacity of 31 videostreams on its main multiplexes, all of which were utilised.

As part of the BBC New Radio Agreement, Arqiva is delivering the DAB rollout programme for the BBC. Arqiva has built 162 of the 163 new transmitters and is helping the BBC to reach the UK national DAB network coverage target of more than 97% of the population.

Arqiva is progressing with the delivery of commercial local DAB. This is part of an initiative to meet the local DAB coverage threshold of 90%, set by the UK Government which was achieved in September 2016 with the completion of 185 new sites. As at 30 June 2017, Arqiva had completed upgrades at 215 of the 221 sites required. The remainder are expected to be completed by December 2017, taking local DAB coverage to over 91%.

Arqiva

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