Rural Broadband Sltn - Half-year Report

Rural Broadband Solutions Plc

('RBBS' or the 'Company')

Interim Results

Continued strong operational performance focusing on the installation of fibre network and growth of Cadence Networks.

Rural Broadband Solutions Plc (AQSE: RBBS), a significant provider of high speed broadband to rural areas of Great Britain, announces its unaudited half year results for the six months ended 30 June 2022.

Financial Highlights

•       Group revenue for the 6 months to 30 June 2022 (H1) increased to £688k versus £395k for the same period in 2021 (74% increase year on year)

•       Cadence's revenue was £197k, including a £30.8k charged to SWS and was up by 2.5x from £80k in H1 2021

•       Gross margin for the group was at 60% (64% in 2021). This includes SWS gross margin which was 72% (up from previous year) and Cadence with gross margin at 50% (there is no previous year comparative, but the gross margin is in line with expectation)

•       All other group costs for H1 came to £1.13m (£672k in H1 2021) resulting in a loss after tax of £652k (versus a loss of £401k in 2021). This loss includes a one off cost in connection with the proposed fundraising (£130k)

•       The main reason for the year on year increase in costs continues to be staff related expenses, marketing costs and additional depreciation. This reflects the fact that SWS continues to strengthen its management team as it continues to build an operational and management infrastructure capable of both building and running a much larger network

•       Group net assets as at 30 June 2022 were £3.9m (£4.5m as at 31 December 2021)

Operational Highlights:

•       SWS has completed deployment of the first two villages in our 10Gbps capable XGS-PON fibre network with the first 60 customers live on the service already

•       The rest of our initial voucher project submission (5 villages and 3 towns) are to go live by the end of the 2022

•       A further 12 villages and 4 towns are being reviewed by Building Digital UK (BDUK) as voucher projects

•       Progress continues to be made on upgrading Fixed Wireless customers to ultrafast services based on LTU technology (i.e., 30Mbps to 90Mbps)

•       Soft launch of the new "SWS Voice" VoIP product. Replacing customers' existing landline phone or third party products has been successful with 24 customers on the service now. 

Chairman's Statement:

In the Chairman's statement to shareholders in December 2021, I wrote that, since our Initial Public Offering in October 2020, we had invested the proceeds thereof and those of a subsequent secondary equity offering in December 2021, to build the foundations for a larger and stronger operating entity.  I discussed in that statement the opportunities your board identified as a result of the continuing trend towards fast connectivity in even the most remote areas of the UK becoming an increasingly essential utility.  In November 2021, the All-Party Parliamentary Group on the Rural Powerhouse warned that "Rural Britain is not a museum" and is being "held back" by, among other things, "slow" broadband connectivity.  Your company is one of those at the forefront of providing the information highways that can level up the great divide. 

The investment we have made in our dark fibre ring and backhaul capability, provided by the December 2021 acquisition of Cadence (CNL), gave RBBS a significant foundation upon which to build its own national data network and efficiently provide innovative connectivity to a wide range of rural towns and villages.  We have also invested in an experienced and enlarged executive management and board capability to provide the expertise to facilitate a step change in customer numbers.  The fund raising in December 2021 helped RBBS in achieving its strategic objective of becoming a major presence in the provision of broadband services to rural areas in the UK.  The acquisition of CNL has allowed RBBS to create its own national network to enable us to build our own fibre network.

Whilst implementing our growth strategy, it became clear that the rural broadband market was likely to develop more quickly and to a larger extent than anticipated when we embarked on this enterprise.  From our discussions with Analysys Mason, an experienced specialist consultancy in the field of digital infrastructure planning, it was apparent that there was an ever increasing demand within the UK for nationwide fast and reliable broadband. It was equally apparent the strategy on which we were embarked would require a further considerable deployment of capital.   

At this stage, the vision was clear, but the opportunity was immediate.  We had strengthened our executive team and Board and had developed our technology and accreditation relationships and were therefore well placed to capitalise on Project Gigabit, which was on the horizon, to pass 4,500 homes by the end of 2022. It was apparent that, with the opportunity ahead, we should seek to partner with an infrastructure fund with proven expertise, strong capital backing and a shared belief in our vision. 

In June 2022, we announced our Final Results for the year ended 31 December 2021.  In that announcement Chris New, our Chief Executive Officer, commented that we were looking forward to closing our infrastructure funding in support of our wider growth strategy.  This process is now at a very advanced stage.

Keith Harris

Chairman

29 September 2022

For further information, please contact:

Keith Harris

Executive Chairman

Rural Broadband Solutions Plc

Email: info@ruralbroadbandsolutions.com

www.ruralbroadbandsolutions.com

Jon Isaacs

AQSE Stock Exchange Corporate Adviser 

Alfred Henry Corporate Finance Limited

Tel: +44 (0) 203 772 0021

Email: jisaacs@alfredhenry.com

www.alfredhenry.com

Claire Louise Noyce

AQSE Stock Exchange Corporate Broker         

Hybridan LLP  

Tel: +44 20 3764 2341

Email: claire.noyce@hybridan.com

www.hybridan.com

Media contact:

Rachel Corner, sales director

Tel: 0333 700 0227

Email: rachel@swsbroadband.net

Facebook: https://www.facebook.com/swsbroadband

Twitter: @swsbroadband

https://www.swsbroadband.net

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

1              General Information

These interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group (RBBS and its subsidiary) as at and for the year ended 31 December 2021 which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The interim financial statements for the six months ended 30 June 2022 are unaudited and have not been reviewed by the Company's auditors Jeffreys Henry LLP. The comparative interim figures for the six months ended 30 June 2021 are also unaudited.

2              Basis of preparation

The accounting policies applied by the Group in the preparation of these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2021.

3              Basic and diluted loss per share

(a)           Basic

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of shares in issue during the period.

(b)           Diluted

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has two categories of dilutive potential ordinary shares: warrants and share options.

As the Group is reporting a loss from continuing operations for the period, in accordance with IAS 33, the warrants and share options are not considered dilutive because the exercise of the warrants or share options would have an anti-dilutive effect. The basic and diluted loss per share as presented on the face of the Consolidated Income Statement are therefore identical.