The Nationwide Builder of Gigabit Cities 2015 Financial Results

Transcription

1 The Nationwide Builder of Gigabit Cities 2015 Financial Results April 2016

2 CityFibre organic project: Edinburgh Metro Network

3 2015 Results Overview Financials Sales of 1,110 connections for TCV of 23.2m (+109%) Turnover up +67% Year on Year to 6.4m Gross margin further expanded to 86% Turned the corner on EBITDA, - 2.9m vs m in 2014 KPIs Connected customer premises +36%, to 1,200 (2014: 885) Route KMs of ducted metro fibre +37%, to 743 (2014: 543) Service provider relationships expanded to 41, from 25 in 2014 Three new city wins Edinburgh, Glasgow and Newport Post period highlights Closed 90m acquisition of KCOM s 24 city metro duct/fibre network and 1,100 km national network Closed 180m financing ( 80m placing, 100m debt) connections and 37.5m TCV added YTD ( 12.5m organic) EBITDA positive in Q and continuing upward trajectory - Former KCOM Metro City - LDN interconnect POPs - CityFibre Metro City 3

4 Acquired footprint: Bristol Metro Network

5 Transformational Acquisition KCOM acquisition established scale: 90m acquisition of 2,200 km of national fibre assets 21 new cities KCOM anchor contract, 15 year term, 5m per annum Financial resources to drive growth: January 2016 closed 80m equity and 100m debt facility Fully funded for a 50 city metro footprint c.20% coverage of the UK Leveraging our position as a national infrastructure: Accelerated rollout: Footprint expansion accelerated by 5 to 7 years Our wholesale model is now available across 37 cities CityFibre now in 24 of the top 30 cites outside of London A large scale alternative to BT Openreach: Estimated reinstatement value of combined assets > 200m Attractive to national providers with expanded footprint Potential for FTTP rollout to business parks across expanded footprint Enabler for larger scale mobile FTTT and consumer FTTH rollouts Quickly commercialising assets: Focus on launching new Gigabit Cities on acquired assets 450 circuits added in first 90 days since close First capacity sale on the LDN CityFibre: York - KCOM Metro City, total route length 1,100km - 1,100 km LDN is interconnected to major data centres KCOM: Leeds 5

6 Market Backdrop Ofcom regulatory reviews Ofcom s Strategic Review of Digital Communications (DCR), published February 2016, sets a new path for regulation: Greater investment in pure fibre networks Competition to BT Openreach, and the encouragement of third party infrastructure (in addition to BT and Virgin) Greater access to BT s ducts and poles (DPA, PIA) BCMR mandating Dark Fibre from BT, pricing under review, with potential appeal or challenge possible Supportive market dynamics Global IP traffic: 23% CAGR between Exabytes per month Source: CityFibre, Cisco VNI F 2016F 2017F 2018F 2019F Global IP traffic will increase 3x in the next 5 years Global mobile data will grow 3x faster than fixed IP traffic Metro traffic will account for 66% of total IP traffic by 2019 The UK s fibre infrastructure lags behind other countries As a specialist fibre infrastructure builder and integrator, we are ideally placed to take advantage of DPA, using BT s ducts to supplement CityFibre s own ducted infrastructure, potentially lowering deployment costs BT s acquisition of EE will motivate its competitors to seek alternative infrastructure solutions The Gigabit City phenomenon is building momentum worldwide in the UK, CityFibre is the recognised leader Source Ofcom 2015 UK fibre connectivity continues to lag behind BT has limited desire to invest in fibre to the premises Problem is magnified outside London 6

7 Recapping Our Model Low Risk Deployment Strategy, Well-Planned City Design Principle Sites connected at maturity Public Sector Core network, Public Sector anchor client, schools, colleges, universities, public health Business SME with Gbps site to site and internet services Mobile 3G, LTE, 4G backhaul, data centres Total Metro area 950 1,200 Consumer FTTH Consumers with 100Mbps+ symmetrical internet access Network gross margin >90% Payback on incremental capex c.2 years Model to drive high recurring revenue yield 7

8 Accelerating the Gigabit City Rollout Metro Cities Shared Infrastructure Addressable Public Sector Sites (Cumulative) Addressable Businesses (Cumulative) Addressable Mobile Sites (Cumulative) Macro Cells [Small Cells] Addressable Homes (Cumulative) 37 Cities 26, ,000 7,400 [22,000] 3,700, Cities 35, ,000 10,000 [30,000] 5,000,000 Partners Focus on commercialization - growing partners and revenues across metro assets Platform for FTTH expansion Gigabit City commercialisation underway: ISP partner expansion underway: Up to 10 Gigabit City Launches on new assets in 2016 Bristol 100 connections sold Leeds/Bradford 350 connections sold Standard products and pricing to be released across entire footprint FTTP business park solution being reviewed Aiming to grow to 100 service provider relationships by Current Partners - New Partner Targets 8

9 Commercialisation of KCOM Assets and Greenfield Build Bristol 100 connections committed Gigabit City launch partner Triangle Networks committing to a minimum of 100 connections Six-year contract, TCV 1.5m, limited incremental build required Leeds-Bradford 350 connections committed Local ISPs Exa Networks and Diva Telecom committing 250 and 100 sites, respectively Six-year contracts, combined TCV 4.9m, good coverage and limited incremental capex Reading to Slough first sale on the national core 15-year IRU, first capacity sale on the national long distance network TCV of 2.3m, limited incremental capex Southend-on-Sea (greenfield build) 10-year contract covering 120 connections over a 50km network build Direct procurement by the council, 3.2m TCV, high capex coverage 9

10 2015 Financial Results

11 2015 Financial Review Profit and loss ( m) (Year to 31 December) YoY Turnover % Cost of sales (0.9) (0.6) 56% Gross profit % Gross margin 86.1% 85.2% 0.9% Administrative expenses (11.7) (10.7) 9% Operating loss (6.2) (7.5) -17% Net financials and associates (0.2) 0.4 n.m. Pre-tax loss (6.4) (7.1) -9% Adjusted EBITDA (2.9) (3.6) -20% Balance sheet and cash flow ( m) (As at 31 December) YoY Net PP&E % Trade and other receivables % Cash, equivalents and deposits % Total assets % Total liabilities % Total equity % Network capex (13.8) (4.5) 207% Operating cash outflow (5.4) (3.6) 51% Revenue growth driven by full year effect of a number of early projects and contributions from new anchor city projects. Revenues from the business vertical improved by 1.0m Gross margin expansion of 0.9% reflects profitability of new business Non-cash and non-recurring costs of 3.2m primarily relating to depreciation, share-based payments and KCOM transaction Normalised administrative costs +22%, reflecting business expansion Capex of 13.8m split 83% new Gigabit Cities/17% incremental business on existing assets Post transaction close added 90m in PP&E, Q1 cash position 23m Consensus 2016 Revenue Adj. EBITDA 11

12 Key Performance Indicators Contract value added ( m) and connections sold (RHS) per year FY 2013 FY 2014 FY2015 YTD Cumulative contract value trend ( m) % YoY growth in 2015 via new city wins and incremental sales Significant wins in Glasgow and Edinburgh 12.5m added YTD on existing footprint plus new Southend anchor Q1 added KCOM minimum commitment - 25m over five years FY 2013 FY 2014 FY2015 YTD 2015 including full lifetime value of Edinburgh PSN ( 16m) was 61.6m YTD 2016 including KCOM at full 15-year term ( 75m) is 139m Even on a conservative view, cumulative TCV now >5x larger than at IPO Very strong visibility on full year revenue expectations Service provider relationships FY 2013 FY 2014 FY2015 YTD Total route fibre and duct kilometres* Metro 37% organic footprint growth in 2015, further 14% in Q1 Pro forma metro footprint now 8.0x larger than at IPO Scale is now a key driver of incremental revenues FY 2013 FY 2014 FY2015 YTD Pro forma Expanding network of local and national service providers Call-offs under MSAs with Vodafone and MBNL Scope shifting toward large service providers covering multiple cities Connected customer premises** % organic growth in 2015, 8% sequential growth in Q Pro forma connections more than 10x greater than at IPO Average 2.4 connections per kilometre across expanded metro footprint FY 2013 FY 2014 FY2015 YTD Pro forma *YTD pro forma Includes 1,100km LDN and metro projects under construction **YTD pro forma Includes anchor contracts under construction, incremental sales and acquired KCOM sites 13

13 Longer term accelerators

14 Continued Strategic Focus on Mobile and FTTH Mobile backhaul remains a strategic focus Contracts are in place: Vodafone Master Services Agreement MBNL/3/EE National Framework Agreement 3/02 merger review nearing conclusion CityFibre have delivered first dark fibre to the tower solution ever for MBNL/3/EE in Hull a major success National coverage today: 37 cities with addressable footprint of >7,000 sites National long distance network unlocks more value Leeds Network FTTH rollout can scale based on our metro footprint Revolutionary FTTH trial via JV with Sky and TalkTalk: First commercial FTTH deployment with UK major ISPs Viable build economics have been proven by Using CityFibre s pre-built metro network in York as the backbone CityFibre s Reference Design, IPR developed over 5 years, is critical for efficient deployment Sky and TalkTalk actively marketing to consumers, UFO brand CityFibre an enabler and accelerant for scale FTTH rollout Current metro footprints covering nearly 4m homes have capacity and reach to support scale FTTH today Large percentage of non-virgin footprint covered Leeds Network 75 specialist staff plus supply chain of over 400 contractors dedicated to network design and construction across the UK 50 city plan gives coverage to c.5.0m addressable homes (c.20% of UK households) Mobile sites overlaid on Leeds metro network - MBNL - Cornerstone 14

15 Summary FY 2015 Strong organic growth in connections and long term contracts High revenue growth and turned the corner on EBITDA losses Acquisition establishes CityFibre across 37 cities in the UK Year-to-date 80m in equity raised plus 100m in committed debt facilities 450 connections sold on the acquired footprint in under 90 days First capacity deal on the national core network 37.5m TCV added across our expanded footprint including connections and a 25m minimum revenue commitment from KCOM Outlook Up to 10 Gigabit City launches on the acquired footprint this year 75 specialist staff and over 400 subcontractors for design and deployment High visibility on revenue expectations for the full year Fully funded for roll-out to 50 cities in the medium term EBITDA positive in Q1 and expected for the full year 16

16 Disclaimer Purpose The sole purpose ( the Purpose ) of this presentation (the Presentation ) is to provide information on CityFibre Infrastructure Holdings Plc ( CityFibre or the Company ) and its subsidiaries (together the Group ). This Presentation and the contents of it do not, and are not intended to, constitute an offer for sale, prospectus, invitation to subscribe for or purchase or otherwise acquire, shares or other securities in the Company. Verification of information The information contained in this Presentation is being supplied as a guide only and no reliance may be placed for any purpose whatsoever on the sufficiency, accuracy or completeness of the statements contained herein. No representation or warranty whatsoever is given by or on behalf of CityFibre or any directors, officers, employees or advisers or any other person and no responsibility or liability is accepted by any of them, in relation to the shares, business or prospects of the Company expressed or implied, or with respect to the adequacy, accuracy, completeness or reasonableness of the facts, opinions, estimates, forecasts, projections or other information set out in this Presentation or any further information, written or oral or other, supplied in connection with it. Nothing contained within this Presentation is or should be relied upon as a promise or representation as to the future. Any pro-forma and estimated financial information contained herein is prepared expressly for use herein and is based on certain assumptions and the Directors analysis of information available at the time this Presentation was prepared. There is no representation, warranty or other assurance that any of the projections will be realised. The information contained herein and any further information relating to the Company supplied by CityFibre or its advisers is, and will be, supplied on the condition that neither CityFibre nor its advisers accepts any responsibility and/or liability for any loss or damage of whatsoever nature that may result or occur by reliance on such information and howsoever arising. The information contained in this Presentation has not been legally verified. Forward Looking Statement Certain statements made in this presentation are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company s current expectations, estimates and projections about its industry, its beliefs and assumptions. Words such as anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the Company s control are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These factors include, amongst others, technology risks, including dependence on core technology, fluctuations in results, dependence on new product development, rapid technological and market change, reliance on sales by others, management of growth, dependence on key personnel; rapid expansion; financial risk management and future growth subject to risks. The Company cautions recipients of this presentation not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this presentation. The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.