telecitygroup plc · q1 ims highlights telecitygroup has enjoyed a good start to 2013...

TelecityGroup plc Q1 2013 Interim Management Statement

www.telecitygroup.com

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.

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Q1 2013 INTERIM MANAGEMENT STATEMENT

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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

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The Turkish market opportunity

● Macro-dynamics are compelling − Expected to be the fastest growing OECD economy1

− Strong government support for ICT sector − Emerging international business centre with major

international investment

● Rapid growth of domestic internet economy − 36 million internet users, 15th highest globally2

− 5th largest online population in Europe after Germany, UK, Russia and France2

− High levels of online engagement, with internet users spending 39.1 hours online (May 2012), 3rd behind the Netherlands and the UK3

● Developing global internet hub − International bandwidth usage highest in the ‘near east’

region (1,907 Gbps in 2012), an increase of 46% from 20114

− Istanbul is the 6th largest internet hub in Europe by traffic with the highest rate of growth and is located at a strategic geographic crossroads for international fibre routes4

− Close proximity to all EMEA regions, making it an ideal global internet hub TelecityGroup 5 / Source: 1IMF, 2BMI, 3ComScore, 4Telegeography

29% 34% 35%

26%

35%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

1,000

2,000

3,000

4,000

London Frankfurt Amsterdam Paris Stockholm Istanbul

2012 2010 CAGR

Europe’s largest internet hubs by traffic(3)


An overview of Sadece

TelecityGroup 6 /

● 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”


BUSINESS OVERVIEW

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TelecityGroup is at the heart of the digital economy

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Five year track record

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Internet traffic growth remains strong

10 /

Source: Euro-IX

Growth is being driven by both increasing consumer and business on-line activity

TelecityGroup

Aggregated peak European IXP traffic (2003 – 2013)


● 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

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80

Rest of Europe

UK

Current Announced additions

Our growth platform

TelecityGroup 11 /

Total customer power (MW)

www.telecitygroup.com TelecityGroup 12 /

15MW additional capacity at London Powergate 5MW expansion of Harbour Exchange site LONDON

5MW additional capacity at AMS 5 AMSTERDAM

4MW expansion of Frankfurt 1 & 2 FRANKFURT

8MW expansion of Dublin 3 DUBLIN

2MW additional capacity at Manchester 3 MANCHESTER

6MW expansion across three sites HELSINKI

PHASED OPENINGS

Growth capacity roadmap: Our build programme by market

1MW expansion at existing site ISTANBUL


FULL YEAR 2012 RESULTS

TelecityGroup 13 /


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)

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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%

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122.2 145.5

117.6137.5

FY 11 FY 12

UK

RoE

By geography (£’m)

239.8 283.0


Significant growth in EBITDA

● FY 12 EBITDA up 22.0% to £129.5m

– Responsible pricing

– Continuous focus on cost control

● FY 12 EBITDA margin up to 45.8% – Expected to remain strong whilst continuing to

deliver significant capacity growth

TelecityGroup 16 /

106.2129.5

FY 11 FY 12

EBITDA (£’m)

44.3% 45.8%

FY 11 FY 12

EBITDA margin (%)


63.383.5

129.5

40.5

36.9

43.4

32.7

38.5

91.0 7.5 20.2

FY 11Revenue

Power Property Staff Other Adj.EBITDA

Dep'n Adj. EBITA Adj. NetFinance

Cost

Adj. PBT Adj. Tax Adj. PAT

The above results are adjusted (see appendix for a full reconciliation to statutory results)

283.0

Revenue translates into profit

27% 24% 28% 21% Cost

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£’m


Strong cash flow generation and working capital performance

EBITDA

Working capital

Net interest paid

Tax paid

Other

Operating cash flow

Operational capex

Operating free cash flow

(£’m)

129.5

2.6

(4.4)

(14.6)

3.4

● Debtor days stable at 33 (FY 11: 31)

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● Includes sales capex i.e. customer install capex of £8.1m (FY 11: £8.5m)

93.7

116.5

(22.8)

● Group transitioning to full cash tax paying position in FY 13

● Other includes share based payments and FX


50.470.1

59.5

61.4

FY 11 FY 12

UK

RoE

● Investment capex of £131.5m

– Investment in demand driven expansion – Further £15.0m of landlord funded capex

Capex

TelecityGroup 19 /

Investment capex (£’m)

131.5

109.9

Operational capex of £22.8m

– Of which maintenance capex £9.9m (FY 11: £8.6m)


APPENDIX

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www.telecitygroup.com 21 /

● 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

● 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

The customer’s requirements

● “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”

Why TelecityGroup?

TelecityGroup

Appendix – Winning new business: A case study

Source: Interview with Trader Media Group’s CIO, computing.co.uk, March 2013

Presenter

Presentation Notes


Appendix – Adjusted results

TelecityGroup 22 /

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)


The importance of AMS-IX

240

137

102

48

44

41 19 9

AMS-IX data centre operators 640 connections

TelecityGroupNIKHEFSARAGlobal SwitchInterxionEquinixeuNetworksEvoSwitch

66 13

12

7 7 4

2012 growth 109 new connections

TelecityGroupNIKHEFInterxionEquinixSARAEvoSwitch

23 / TelecityGroup


Outstanding data centres. Expertise you can trust. Europe’s leading provider of premium carrier-neutral data centres.


TelecityGroup 24 /

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