TelecityGroup plc Q1 2013 Interim Management Statement
Cautionary note regarding forward-looking statements This presentation includes statements that are forward-looking in nature. All statements other than statements of historical facts could be deemed to be forward-looking statements. By their nature these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. Accordingly, the actual results, performance or achievements of the Company may be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, due to known and unknown risks, uncertainties and other factors. Except as required by the Listing Rules and applicable law, Telecity Group plc undertakes no obligation to update or change any forward-looking statements to reflect events occurring after the date such statements are published. This presentation is neither an offer to sell nor a solicitation of an offer to buy any securities in the United States, or any other jurisdiction. The Company's shares have not been registered in any U.S. jurisdiction and, in particular, will not be registered under the U.S. Securities Act of 1933, as amended, or any applicable state securities laws. 2 / TelecityGroup
Q1 2013 INTERIM MANAGEMENT STATEMENT 3 / TelecityGroup
Q1 IMS highlights TelecityGroup has enjoyed a good start to 2013 Year-to-date financial performance in-line with management s expectations Full year earnings outlook in-line with management s expectations Net debt remains below management s target upper limit of 2.5x EBITDA On-going customer driven expansion programme on-track Capacity has been brought on-line in London and Helsinki, taking total customer power to 90MW TelecityGroup s total announced capacity across Europe is now 137MW The majority of the Group s expansion capacity will come on-line progressively over the next three years, in response to customer demand, giving the Group significant medium-term growth potential Leading position established in the fast-developing Istanbul market Strategic acquisition of Sadece, the leading provider of data centre and hosted services in Turkey 1MW data centre, with a further 1MW of expansion potential Turkey is a fast-developing market, with the prospect of becoming a major internet hub, due both to its large and rapidly growing domestic digital economy and its unique strategic location between Europe and Asia Entry into the market enhances TelecityGroup's medium-term growth potential, bringing management expertise and a strong customer base in this exciting market 4 / TelecityGroup
The Turkish market opportunity Macro-dynamics are compelling Expected to be the fastest growing OECD economy 1 Strong government support for ICT sector Emerging international business centre with major international investment Rapid growth of domestic internet economy 36 million internet users, 15 th highest globally 2 5 th largest online population in Europe after Germany, UK, Russia and France 2 High levels of online engagement, with internet users spending 39.1 hours online (May 2012), 3 rd behind the Netherlands and the UK 3 Developing global internet hub International bandwidth usage highest in the near east region (1,907 Gbps in 2012), an increase of 46% from 2011 4 Istanbul is the 6 th largest internet hub in Europe by traffic with the highest rate of growth and is located at a strategic geographic crossroads for international fibre routes 4 Close proximity to all EMEA regions, making it an ideal global internet hub 4,000 3,000 2,000 1,000 0 Europe s largest internet hubs by traffic (3) 70% 34% 35% 35% 29% 26% London Frankfurt Amsterdam Paris Stockholm Istanbul 2012 2010 CAGR 80% 70% 60% 50% 40% 30% 20% 10% 0% 5 / TelecityGroup Source: 1 IMF, 2 BMI, 3 ComScore, 4 Telegeography
An overview of Sadece A leading independent data centre business in Turkey Largest independent colocation and hosting business in Turkey More than 70% of the business is colocation or dedicated hosting Operates an established site on the European side of Istanbul 1MW of operational capacity 1MW of expansion potential Customers include many well-known domestic internet brands, such as: Izlesene Turkish video-sharing website Joygame leading Turkish online social gaming company Markafoni Largest fashion flash sales site in Turkey NTT Game hosts popular Knight Online 6 / TelecityGroup
BUSINESS OVERVIEW 7 / TelecityGroup
TelecityGroup is at the heart of the digital economy 8 / TelecityGroup
Five year track record 9 / TelecityGroup
Internet traffic growth remains strong Aggregated peak European IXP traffic (2003 2013) Source: Euro-IX Growth is being driven by both increasing consumer and business on-line activity 10 / TelecityGroup
Our growth platform Multi-year announced capacity expansion programme 90MW of operational capacity 137MW of total announced capacity, which is being brought on-line in response to customer demand Organic growth strategy Focus on achieving strong returns on incremental capital expenditure Existing connectivity and customer ecosystems leveraged by opening new capacity close to established sites Acquisition strategy TelecityGroup aims to make acquisitions, either for the purpose of entering new markets or to provide growth capacity in existing markets This enables it to overcome barriers to market entry and shorten the time to market for growth capacity Total customer power (MW) UK Rest of Europe 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Current Announced additions 11 / TelecityGroup
Growth capacity roadmap: Our build programme by market PHASED OPENINGS LONDON AMSTERDAM 15MW additional capacity at London Powergate 5MW expansion of Harbour Exchange site 5MW additional capacity at AMS 5 FRANKFURT 4MW expansion of Frankfurt 1 & 2 DUBLIN 8MW expansion of Dublin 3 MANCHESTER 2MW additional capacity at Manchester 3 HELSINKI 6MW expansion across three sites ISTANBUL 1MW expansion at existing site 12 / TelecityGroup
FULL YEAR 2012 RESULTS 13 / TelecityGroup
Income statement FY 11 ( m) FY 12 ( m) Growth (%) Revenue 239.8 283.0 18.0% Operating costs (133.6) (153.5) Adjusted EBITDA 106.2 129.5 22.0% Depreciation (33.0) (38.5) Adjusted EBITA 73.2 91.0 24.4% Net finance costs (6.2) (7.5) Adjusted profit before tax 67.0 83.5 Adjusted tax charge (18.4) (20.2) Adjusted profit after tax 48.6 63.3 Adjusted diluted EPS 24.1p 31.0p 28.6% Adjusted EBITDA margin 44.3% 45.8% Total proposed 2012 DPS - 7.5p The above results are adjusted (see appendix for a full reconciliation to statutory results) 14 / TelecityGroup
Strong revenue growth Total revenue up 18.0% Significant order wins during period Over 90% of revenues are recurring Geographies UK revenue up 16.9% Rest of Europe revenue up 19.0% By geography ( m) 283.0 239.8 137.5 117.6 122.2 145.5 FY 11 FY 12 UK RoE 15 / TelecityGroup
Significant growth in EBITDA FY 12 EBITDA up 22.0% to 129.5m EBITDA ( m) Responsible pricing Continuous focus on cost control 106.2 129.5 FY 11 FY 12 FY 12 EBITDA margin up to 45.8% EBITDA margin (%) Expected to remain strong whilst continuing to deliver significant capacity growth 44.3% 45.8% FY 11 FY 12 16 / TelecityGroup
Revenue translates into profit Cost 27% 24% 28% 21% 283.0 40.5 36.9 43.4 32.7 m 129.5 38.5 91.0 7.5 83.5 20.2 63.3 FY 11 Revenue Power Property Staff Other Adj. EBITDA Dep'n Adj. EBITA Adj. Net Finance Cost Adj. PBT Adj. Tax Adj. PAT The above results are adjusted (see appendix for a full reconciliation to statutory results) 17 / TelecityGroup
Strong cash flow generation and working capital performance ( m) EBITDA 129.5 Working capital 2.6 Debtor days stable at 33 (FY 11: 31) Net interest paid (4.4) Tax paid Other (14.6) 3.4 Group transitioning to full cash tax paying position in FY 13 Other includes share based payments and FX Operating cash flow 116.5 Operational capex (22.8) Includes sales capex i.e. customer install capex of 8.1m (FY 11: 8.5m) Operating free cash flow 93.7 18 / TelecityGroup
Capex Investment capex of 131.5m Investment capex ( m) Investment in demand driven expansion Further 15.0m of landlord funded capex 109.9 131.5 61.4 59.5 UK 50.4 70.1 RoE FY 11 FY 12 Operational capex of 22.8m Of which maintenance capex 9.9m (FY 11: 8.6m) 19 / TelecityGroup
APPENDIX 20 / TelecityGroup
Appendix Winning new business: A case study The customer Trader Media Group, the owner of Auto Trader, the UK s largest new and used car marketplace 10 million on-line users Accessed by consumers on a variety of platforms The customer s requirements Consolidate data centre requirements from multiple locations into one primary site Ability to have direct connections to trading partners, including ISPs A data centre provider with a strong reputation and financial strength Why TelecityGroup? We realised it would be better to work with the leaders in the industry who deal with this every day and, almost outsource the responsibility for being innovative around datacentres to someone else. It is the Internet connectivity that they provide with the ability to peer That reduced latency is very important They are not a small company whose capital is constrained, so we can have a high level of confidence in their sites Source: Interview with Trader Media Group s CIO, computing.co.uk, March 2013 21 / TelecityGroup
Appendix Adjusted results FY 11 Result ( m) FY 12 Result ( m) FY 11 EPS Pence FY 12 EPS Pence Adjusted profit after tax/adjusted diluted EPS 48.6 63.3 24.1 31.0 (Less)/add other finance items 0.3 (0.5) 0.2 (0.2) Less exceptional items (5.3) (3.1) (2.6) (1.5) Less amortisation (2.6) (3.7) (1.3) (1.8) Add tax effect of above 1.6 2.1 0.7 1.0 Statutory profit after tax/diluted EPS 42.6 58.1 21.1 28.5 Other finance items relates to FX on financing items Weighted average diluted shares in issue for the period were 204.1m (FY 11: 201.9m) 22 / TelecityGroup
The importance of AMS-IX AMS-IX data centre operators 640 connections 2012 growth 109 new connections 48 44 41 19 9 240 TelecityGroup NIKHEF SARA Global Switch Interxion Equinix 12 13 7 7 4 66 TelecityGroup NIKHEF Interxion Equinix SARA EvoSwitch 102 eunetworks EvoSwitch 137 23 / TelecityGroup
Outstanding data centres. Expertise you can trust. Europe s leading provider of premium carrier-neutral data centres. 24 / TelecityGroup