Yahsat has announced that its momentum continued in Q4 2021 with revenue of AED 452.7m ($123.3m) exceeding the prior year by 7.9%, leading to full-year revenue of AED 1.50bn ($408m), marginally up year-on-year.
During the year, contracted future revenues rose more than 35% to close at over AED 7.3bn ($2bn), underpinned by the 15-year T4-NGS Managed Capacity Services Agreement signed in June 2021, which added more than AED 2.57bn ($700m), equivalent to additional annualised revenues of AED 172.6m ($47m) from mid-2024 onwards.
A significant number of contracts were also signed in the Data Solutions and Mobility Solutions businesses, with particularly strong momentum in Q4. Over this period, the aggregate value of contracted future revenues in respect of these two segments more than doubled. Together with an extensive pipeline of new business opportunities, Yahsat aims to grow in 2022, with approximately 70% of the Group’s 2022 projected revenues contracted as of December 31, 2021.
In 2021, Yahsat achieved an Adjusted EBITDA margin of 59% with Adjusted EBITDA of AED 883.2m ($240.5m). Normalised Adjusted EBITDA of AED 898.5m ($244.6m) grew by 5.0% year-on-year, generating a margin of 60.0% versus 57.2% in the prior-year period, reflecting a significant reduction in “other operating expenses” which were down 26.1%.
The full-year results were not only underpinned by a strong Q4 2021 revenue performance but also by an improvement in Adjusted EBITDA and Net Income. Q4 2021 Adjusted EBITDA increased by more than 12% to AED 254.9m ($69.4m), whilst Net Income rose more than 54% to AED 97.2m ($26.5m).
Full-year Net Income (profit attributable to shareholders) of AED 256.2m ($69.8m) was up 1.2% year-on-year. After adjusting for one-off items, Normalised Net Income2 of AED 297.3m ($80.9m) increased by 47.4%, generating a margin of 19.9% for the year, significantly higher than the previous year at 13.5%. This was due to both a stronger performance of the group’s equity partnerships and lower recurring net finance costs. The financing exercise completed in June 2021 reduced recurring net finance costs from AED 63.8m ($17.4m) in 2020 to AED 37.8m ($10.3m) in 2021.
At December 31, 2021, the group’s net debt stood at AED 547.6m ($149.1m), with cash and short-term deposits of over AED 1.47bn ($400m), up 78% year-on-year and a leverage ratio (Net debt to EBITDA) of 0.6x. Together with Discretionary Free Cash Flow for the period of AED 659.2m ($179.5m) and a cash conversion ratio of 97%, the group is well-positioned to meet its future dividend and capital expenditure commitments.
Speaking about the growth, Musabbeh Al Kaabi, Chairman of Yahsat, said: “In 2021, Yahsat demonstrated sustained strength and resilience amidst continued economic disruption, laying strong foundations for growth in 2022 and beyond, as it continues to provide critical connectivity to government and commercial customers in the UAE and beyond.”
Ali Al Hashemi, Group Chief Executive Officer of Yahsat, added: “2021 has been a landmark year for the group. After a successful listing on ADX in July 2021, Yahsat continued to deliver on its promises, driven by a remarkable performance in 4Q21. Throughout the year, we maintained significant momentum across the business, growing our contracted future revenues by more than 35%. We were able to leverage the resurgence in government projects supported by the economic recovery and establish a raft of new partnerships with key national stakeholders. Importantly, we also continued to diversify our customer base, in both government and commercial segments, including penetration into key industrial verticals. This momentum positions us well for success in 2022, with approximately 70% of our projected revenues for the year already secured.
“Going forward, we will maintain our strong culture of partnership that has proven so successful over the years, reinforcing our position as the UAE’s flagship satellite operator and the UAE Government’s preferred partner for satellite solutions, while further expanding our commercial business lines. The satellite industry is set for growth both nationally and internationally and we are well-positioned to capture an increasing share of this growing market. We are on track to grow in 2022, to achieve our strategic objectives and to increase value for our customers, our shareholders and the global space industry.”
In October 2021, Yahsat was formally appointed by the UAE Government to conduct a detailed assessment and recommendation for two new satellites targeted for launch in 2026. These anticipated new missions would add capacity, coverage and capabilities to enable next-generation applications.
Later the same month, Yahsat’s Mobility Solutions business (Thuraya) signed a three-year distribution agreement worth approximately AED 316m ($86m), adding to the group’s contracted future revenues.
Meanwhile, the construction of the Thuraya 4 Next Generation Satellite (T4-NGS) remains on track to commence commercial services in H2 2024. T4-NGS will support both the long-term managed capacity services agreement with the UAE Government and the next generation of Mobility Solutions services with a strong focus on the fast-growing mobile data, maritime and IoT segments.
Revenue from Yahsat’s largest segment, accounting for 58% of group revenue, remained broadly stable at AED 866.8m ($236m), with a slight decline of 1.0% attributable to a reallocation of C-band contracts and their corresponding revenues to other Yahsat business segments in Q4 2021, namely from Infrastructure to Managed Solutions and Data Solutions.
Managed Solutions contributes 16% to overall group revenue. Q4 revenues were up 15.7% year-on-year and 73% quarter-on-quarter bringing full-year revenues to AED 235.9m ($64.2m), 1.6% higher than the prior year, recovering from a deficit in Q1 2021 of more than 23% resulting from project delays due to Covid-19.
Accounting for 20% of the group’s overall revenue, the Mobility segment recorded fourth-quarter revenue of AED 126.5m ($34.4m), up 21.2% year-on-year and more than double quarter-on-quarter. Full-year revenue of AED 295m (80.3m) was 1.6% higher than the prior year, recovering from a Q1 2021 shortfall of 18.3%, with growth across its Voice, Maritime and Government businesses.
YahClick, accounting for 6% of the group’s revenue, recorded a strong set of results despite Covid-19 related challenges in several of its core markets during the first half of the year and the wind-down in July 2021 of a multi-year, opportunistic capacity deal with Eutelsat. Q4 2021 revenue of AED 35.8m ($9.7m) exceeded the prior year by 63% and was 80% higher quarter-on-quarter, bringing full-year revenue to AED 99.1m ($27m), in line with the same period in the prior year.
The subscriber base of the Consumer Broadband business grew by 20%, underpinned by the rapid expansion of the Direct-to-Market (‘D2M’) model in South Africa and Nigeria, with corresponding revenues rising by 24%. Meanwhile, the pipeline of Enterprise and cellular backhaul deals continued to grow with a further 5 new deals signed in 4Q21 (to complement the 5 deals signed in 3Q21), adding more than AED 40m ($10.9m) to contracted future revenues. Since the beginning of 2021, the business has doubled its contracted future revenues to more than AED 80m($22m) and, together with a healthy pipeline and an upward trajectory in subscriber base, the business is well-positioned to grow in 2022.
Yahsat expects continued momentum in 2022 whilst maintaining a solid balance sheet and cash flow to support dividend payments and capital expenditure requirements.
Approximately 85% of 2022 projected Capex and Investments, circa AED 698m ($190m), is expected to relate to the T4-NGS programme. This will be fully funded by existing debt facilities and an advance payment of AED 551m ($150m) in June 2022 from the end customer of the 15 years T4-NGS Managed Capacity Services Agreement.
In February 2022, Yahsat was awarded an AED 909.5m ($247.5m) mandate to provide enhanced managed services to the UAE Government for its satellite communications capabilities.
This award increases, as a percentage of the low end of FY2022 revenue guidance, the group’s already high level of contracted revenue to approximately 84% from 70% at 31 December 2021.