Connected. Always. Arqiva Broadcast Parent Limited Registered number 08085823 Annual Report For the year ended 30 June 2020 Annual Report for the year ended 30 June 2020 Corporate information As at the date of this report Group website: Company secretary: (21 September 2020): www.arqiva.com Jeremy Mavor Group Board of Directors: Independent Auditors Registered Office: Mark Braithwaite PricewaterhouseCoopers LLP, 1 Embankment Crawley Court, Winchester, Hampshire, United Frank Dangeard Place, Charing Cross, London, WC2N 6RH Kingdom SO21 2QA Mike Darcey Sally Davis Company1 Directors: Company registration number: Paul Donovan (Chief Executive Officer) Peter Adams 08085823 Martin Healey Mark Braithwaite Neil King Frank Dangeard Peter Adams (alternate) Mike Darcey Mike Parton (Chairman) Sally Davis Christian Seymour Max Fieguth Max Fieguth (alternate) Martin Healey Sean West (Chief Financial Officer) Neil King Mike Parton Christian Seymour 1 In respect of Arqiva Broadcast Parent Limited, the parent company of the Group Arqiva Broadcast Parent Limited Annual Report for the year ended 30 June 2020 Cautionary statement This annual report contains various The risks and uncertainties referred the ability of the Group to develop, forward-looking statements regarding to above include: expand and maintain its broadcast and events and trends that are subject to risks actions or decisions by governmental machine-to-machine infrastructure; and uncertainties that could cause the and regulatory bodies, or changes in the ability of the Group to obtain actual results and financial position of the the regulatory framework in which the external financing or maintain sufficient Group to differ materially from the Group operates, which may impact capital to fund its existing and future information presented herein. When used in the ability of the Group to carry on its investments and projects; this report, the words “estimate”, “project”, businesses; “intend”, “anticipate”, “believe”, “expect”, the Group’s dependency on only a “should” and similar expressions, as they changes or advances in technology, limited number of key customers for a relate to the Group, are intended to identify and availability of resources such large percentage of its revenue; and such forwardlooking statements. Readers as spectrum, necessary to use new are cautioned not to place undue reliance or existing technology, or customer expectations as to revenues not under on these forwardlooking statements, which and consumer preferences regarding contract. speak only as of the date hereof. Save as technology; otherwise required by any rules or regulations, the Group does not undertake the performance of the markets in the any obligations publicly to release the result UK, the EU and the wider region in of any revisions to these forward-looking which the Group operates; statements to reflect events or the ability of the Group to realise circumstances after the date hereof or the benefits it expects from existing to reflect the occurrence of and future projects and investments unanticipated events. it is undertaking or plans to or may undertake; Guidance note to the annual report: In this document, references to ‘Arqiva’ and ‘the Group’ refer to Arqiva Broadcast Parent Limited (‘ABPL’) and its subsidiaries and business units as the context may require. References to the ‘Company’ refer to the results and performance of Arqiva Broadcast Parent Limited as a standalone entity. Arqiva Smart Metering Limited (‘ASML’) is the legal entity that won the contract for smart energy metering and, whilst it sits within the ultimate parent group, it is external to the ABPL financing group. ASML has contracted with Arqiva Limited (a company within the ABPL financing group) for the provision of the core network, sites and spectrum that will support the delivery of this contract. The procurement and financing of the communications hubs (which allow information to be sent to and from the network) will be performed by ASML. Accordingly, the ABPL group is expected to benefit from the substantial majority, but not all, of the smart metering contract revenue through charges levied to ASML. A reference to a year expressed as 2020 is to the financial year ended 30 June 2020. This convention applies similarly to any reference to a previous or subsequent financial year. Additionally, references to ‘current year’, ‘this year’ and ‘the year’ are in respect of the financial year ended 30 June 2020. References to the ‘prior year’ and ‘last year’ are to the financial year ended 30 June 2019. Arqiva Broadcast Parent Limited Annual Report for the year ended 30 June 2020 Arqiva Broadcast Parent Limited Annual Report for the year ended 30 June 2020 Contents Arqiva in 2020 01 Highlights 03 Chairman’s introduction 05 Strategic report 08 Chief Executive’s Statement 09 Business overview 11 Business model and business units 13 Strategic overview 17 Business update 19 Financial review 23 Key performance indicators 29 Spotlight: Media Networks 31 Spotlight: Telecoms & M2M 33 Corporate responsibility 35 Modern Slavery Act: Slavery and Human Trafficking Statement 43 Governance 45 Board of Directors and Senior Executive Management 46 Principal risks and uncertainties 50 Directors’ report 55 Statement of Directors’ responsibilities 67 Group financial statements 68 Independent Auditors’ report to the members of Arqiva Broadcast Parent Limited 69 Consolidated income statement 78 Consolidated statement of comprehensive income 79 Consolidated statement of financial position 80 Consolidated statement of changes in equity 81 Consolidated cash flow statement 82 Notes to the Group financial statements 83 Company financial statements 135 Directors’ report for Arqiva Broadcast Parent Limited (‘the Company’) 135 Company statement of financial position 136 Company statement of changes in equity 137 Notes to the Company financial statements 138 Cover Image: Built in 1965, the mast at Sandy Heath, Bedfordshire stands 244m/801ft tall and provides TV and radio services to the surrounding area, serving almost 1 million homes for TV services. Any group images used in this report were taken prior to March 2020. Arqiva Broadcast Parent Limited Annual Report for the year ended 30 June 2020 Arqiva in 2020 During 2020 Arqiva was the leading independent telecom towers operator and sole terrestrial broadcast network provider in the United Kingdom, holding significant investments in essential communications infrastructure and a non-replicable asset base to support Arqiva’s future position in the market. Market leader for commercial DTT spectrum owning two of the three c.1,150 main national commercial multiplexes2, TV transmission sites covering with video stream capacity of 32 98.5% of the UK population with channels that were 90% utilised the DTT1 platform c.1,500 745 broadcast transmission sites radio sites with >2,480 radio transmitters 700MHz Clearance activities completed satellite dishes accessing... on 1,149 sites, now over 93% through c.80 the programme ...40+ satellites from 5 teleports distributing 1,100 TV channels internationally Smart networks targeting 99.5% coverage across the North of England and Scotland and c.8,000 over 600,000 meters installed to date active licensed macro cellular sites3 The Group successfully signed a sale and purchase agreement for the disposal of this business line during the year 1 Refers to the Digital Terrestrial Television platform, best known for supporting Freeview. 2 Main national commercial multiplexes refers to those considered to be most established. 3 Reference to 8,000 sites includes contractual options on the assignment of sites; hereafter referred to as ‘circa 8,000 active licensed macro sites’. These sites have been sold post year end. 01 Arqiva Broadcast Parent Limited Annual Report for the year ended 30 June 2020 Key activities in the execution of Arqiva’s strategy include: Driving the development and Being the partner of choice for UK Having a focus on continuous competitiveness of hybrid DTT so it water meter connectivity improvement that helps improve remains the most popular TV platform Investing in a product portfolio that productivity in the UK directly enhances customer value Maintaining our investment grade Investing to maintain our market Growing the satellite data ratings for corporate debt leading position in DTT, DTH and radio communications offer and identify Continuing to reduce leverage by Successfully renewing and extending other adjacent opportunities that paying down debt our multiplex licences utilise our core infrastructure Facilitating the radio industry’s transition from analogue to digital See also See also Strategic Overview: Business Model and Business Units: Pages 17 Pages 13-14 Arqiva Broadcast Parent Limited 02 Annual Report for the year ended 30 June 2020 Highlights 2020During has been2020 a year Arqiva of change was for the Arqiva leading following independent peak project rollout telecom activity towers in 2019. Theoperator end of some and legacy sole contracts, major programmes nearing completion, and exit from certain markets as well as some challenges including lowerterrestrial utilisation broadcast of DTT multiplexes network have provider led to downward in the pressures United on Kingdom,revenues, operating holding profit significant and EBITDA. Despiteinvestments this, growth in hasessential been achieved communications in operating cash infrastructureflows due to working and capital a non-replicable inflows. asset Duringbase tothe supportyear,