for personal use only - australian securities exchange · from its initial offering of ip transit...

H1/13 Results Presentation 28th February 2013

For

per

sona

l use

onl

y

©2013 Vocus Communications Limited 2

Vocus Communications Overview

A leading independent provider of integrated wholesale and corporate

telecommunications services in Australia and New Zealand

From its initial offering of IP Transit and Voice Services, Vocus has transformed

and now delivers high performance, high availability and highly scalable

communications solutions utilising its Fibre, Data Centre, Internet and Voice

infrastructure

Organic growth, strategic acquisitions and an expanded product offering has

resulted in customer growth from 96 in December 2009 to 804 in December 2012

– a 738% increase

Total capital expenditure to peak in FY13, signalling the completion of Vocus’

transformational investment phase with benefits to be realised in FY14 and

beyond

For

per

sona

l use

onl

y

©2013 Vocus Communications Limited

Strong underlying growth H1/13 revenue growth of 40% over H1/12

H1/13 underlying* EBITDA growth of 29% over H1/12

Fibre and Ethernet growth Services delivered on Vocus fibre up 316% since December 2011

Fibre and Ethernet revenue up 152% over H1/12

Direct/Corporate sales growth Direct/Corporate sales have more than doubled over H1/12

Investments / Expansion Capacity on Southern Cross quadrupled

Build commenced on a 2nd Melbourne CBD Data Centre

Expansion of the existing Auckland Data Centre

178% increase in fibre network kilometres since December 2011

Ipera acquisition Completed the acquisition of Ipera Communications, a Newcastle-based

data centre and fibre operator in January 2013

Maiden dividend declared Interim dividend of 0.4 cents per share declared, fully franked

3

Highlights

* Excludes the effect of foreign exchange

For

per

sona

l use

onl

y


Source: Half-year accounts

Notes: 1) Underlying EBITDA excludes FX gains and losses 4

Consistent Revenue and EBITDA Growth

7.2

13.9

21.9

30.6

H1/10 H1/11 H1/12 H1/13

40% growth

over H1/12

Revenue ($m)

Underlying EBITDA1 ($m)

2.6

4.6

7.6

9.8

H1/10 H1/11 H1/12 H1/13

29% growth

over H1/12

• Revenue growth of 40%, driven by

Internet, Fibre and Data Centres

• Underlying EBITDA up 29%

Growth

• Number of Fibre services up 316%

over H1/12

• Fibre revenue up 152% over H1/12

• Data Centre revenue up 88% over

H1/12

• Internet revenue up 31% over H1/12

For

per

sona

l use

onl

y



Notes: 1) Underlying NPAT excludes FX gains and losses 5

BAU NPAT strong Underlying Net Profit after Tax1 ($m)

0.9

2.4

4.0

3.7

H1/10 H1/11 H1/12 H1/13

8% decline

over H1/12

• Business As Usual (BAU) NPAT for

H1/13 is $4.5m up 13% over H1/12

• BAU NPAT excludes new expenses in

FY13 which are not accretive until FY14

• Effective tax rate increased to 28% from

19% in H1/12 (not included in BAU)

BAU

4.5

0.6 0.2

3.7 4.5

- 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

H1/13 UnderlyingNPAT

Increased SXAmort

Leases on 'inbuild' DCs

H1/13 BAU NPAT

For

per

sona

l use

onl

y


4.69 4.62

6.30

4.91

H1/10 H1/11 H1/12 H1/13

22% decline over

H1/12 resulting

mostly from

22% increase in

issued equity


Notes: 1) Underlying NPAT excludes FX gains and losses; 2) Diluted EPS calculated on

underlying NPAT 3) H1/10 is approximated using listing share base at FY10 6

Earnings Per Share Diluted Underlying Earnings Per Share1,2,3 (cps) • EPS impacted by

• Capital raising in July 2012 to fund

growth strategies – primarily fibre

network expansion and data centre

builds

• New expenses in FY13 related to the

above growth initiatives not accretive

until FY14

• Increased effective tax rate from 19% to

28%

For

per

sona

l use

onl

y


Internet

• 31% revenue growth over H1/12

• 61% traffic growth over H1/12

• New Southern Cross IRU increases transit capacity and

potential for new sales

Data

Centres


• New Melbourne DC in build, on former ASX data centre

site

• Auckland DC expansion in build, on adjacent site

Fibre and

Ethernet


• Network expanded 180% in the past 12 months to

262km

• 316% increase in new services over December 2011

Voice

• Voice GM employed August 2012

• Voice volumes and profitability improving over H2/12

• H1/13 result up 6.5% over H2/12

7

Growth in Integrated Services

9.7 10.7 12.7

H1/12 H2/12 H1/13

Revenue by Service ($m)

H1/11 revenue figures based on product segmentation performed subsequent to the release of the H1/11 financial report.

5.8 4.0 4.3

H1/12 H2/12 H1/13

35% decline

over H1/12

4.0 5.4

7.5

H1/12 H2/12 H1/13

88% growth

over H1/12

31% growth

over H1/12

2.3 3.1

5.8

H1/12 H2/12 H1/13

152% growth

over H1/12

For

per

sona

l use

onl

y


• Capital expenditure totalled $8.3m in

H1/13, primarily as a result of

building out the fibre network in

response to customer demand

• Total capital expenditure is expected

to peak in FY13, signalling the

expected completion of Vocus’

transformational investment phase

• Other capex includes incremental

improvements to the core network

and data centre operations

• Maintenance capex estimated to be

$1-2m in FY13

8

Capital Expenditure

0.41 1.21

0.76 0.33

0.75 0.50

1.45

0.98 1.56

3.91

1.96

1.31

3.24

5.86 5.99

4.73

4.22

2.81

-

1

2

3

4

5

6

7

8

9

10

H1/12 H2/12 H1/13 H2/13F H1/14F H2/14F$

Milli

ons

Capex spend by Type

Networks and Other Data Centre Fibre

Forecast capex

For

per

sona

l use

onl

y


• Weighted average remaining contract

duration is 25.11 months,

representing over two years of

committed revenues, providing

quality earnings and cash flows

• Provides a strong base to fund

ongoing operations and provide

returns to shareholders including the

maiden dividend of 0.4c per share

9

Cash Flows

5.03

7.97

H1/12 H1/13

58% growth in

Operating CF

before Working

Capital

31 Dec 2012 31 Dec 2011

EBITDA $10.26m $6.86m

Tax and other payments ($2.29m) ($1.83m)

Operating Cash Flow before Working

Capital $7.97m $5.03m

Working capital movements* ($2.27m) $1.46m

Operating Cash Flow $5.69m $6.49m

* Movements in relation to timing of receipts, payments and prepaid revenue

For

per

sona

l use

onl

y


• Milestone achieved - a maiden interim dividend declared of 0.4 cents per share,

fully franked

• Represents confidence in underlying operating strength and future cash flow

• Returns to shareholders while still providing a platform for strong growth

• Payable on 26 March 2013 to shareholders registered on 12 March 2013

10

Maiden dividend declared F

or p

erso

nal u

se o

nly


• Gearing has increased as part of the

additional vendor financed Southern

Cross capacity taken up in

September 2012

• Excluding Southern Cross vendor

finance, Vocus at 31 December 2012

had net cash of $5.1m

• Gearing reduces quickly as

repayments total $10m annually

• Repaid $7m of bank debt, finance

leases and vendor finance in H1/13

11

Gearing and Leverage 31 Dec 2012 31 Dec 2011

Cash $13.3m $4.8m

IRU liability ($54.0m) ($30.5m)

Finance leases ($1.5m) ($1.0m)

Bank debt ($6.7m) nil

Net debt incl. SX vendor finance ($48.9m) ($26.7m)

Net (debt)/cash excl. SX vendor finance $5.1m $3.8m

Interest cover1 24.6x 83.4x

Net leverage2

- incl. SX

- excl. SX

2.66x

(0.29x)

2.01x

(0.29x)

Gearing3

- incl. SX

- excl. SX

42%

(8%)

41%

(11%)

Notes:

1) Underlying EBITDA/Net Interest Expense for the period

2) Annualised Underlying EBITDA/Net Debt

3) Net Debt/Net Debt plus Equity

For

per

sona

l use

onl

y


• Signed term sheet with bankers in relation to new total financing facilities of

$21.8m, an increase of $15m over its existing facilities, subject to final

documentation

• The new facilities include $13m of acquisition funding facilities

• The new facilities provide flexibility in funding current and future acquisitions and

reduce the requirement for additional equity capital

12

New Financing Facilities F

or p

erso

nal u

se o

nly


• Liability in relation to the Southern Cross IRU is $54.0m at December 2012, up

from $26.4m at June 2012 following a quadrupling in transit capacity in

September 2012

• FY13 repayments are hedged in full

• $5.21m of repayments in H1/13 and will be fully paid by August 2018

13

IRU and FX Hedging

78.5m 54.0m 10.2m

$10m $20m $30m $40m $50m $60m $70m $80m $90m

Total original IRU borrowing (AUD)Current IRU borrowing (AUD)Hedged amount at spot (AUD)

For

per

sona

l use

onl

y


• Strong organic customer growth –

7% in H1/13 and 32% over the past

12 months

• Leads the industry in customer

retention

• Weighted average remaining

contract duration 25.11 months

14

Strong Customer Growth Customer Growth

Source: Billing Data, does not include Ipera and Maxnet retail ISP customers

13 28

45 54 67 81

96 103 111 112 133 145

301 309 337

363

755 779

804

Ju

n 0

8

Se

p 0

8

Dec 0

8

Ma

r 09

Ju

n 0

9

Se

p 0

9

Dec 0

9

Ma

r 10

Ju

n 1

0

Se

p 1

0

Dec 1

0

Ma

r 11

Ju

n 1

1

Se

p 1

1

Dec 1

1

Ma

r 12

Ju

n 1

2

Se

p 1

2

Dec 1

2

Perth data centre

and dark fibre

acquisition

E3 data centre

acquisition

Maxnet

acquisition

For

per

sona

l use

onl

y


32 86

301

600

H1/10 H1/11 H1/12 H1/13

• Strong growth in sales – result of

investment in sales and marketing

teams

• Pipeline is robust and benefits from

new focus on the corporate market

• Realising benefits of Maxnet

acquisition through cross sales of

NZ co-location and data services to

Australian customers and vice versa

15

Sales Order Growth Sales Order Growth

Source: Billing Data

99% Sales order

growth in 12

months

For

per

sona

l use

onl

y


• New sales predominantly coming

from Fibre/Ethernet

• New / expanded DC facilities in

Auckland and Melbourne along with

Newcastle DCs acquired via Ipera will

contribute to growth in FY14

• Profitability of Fibre and Ethernet

sales increasing as more sales are

on-net and do not require significant

build out costs

16

Evolving Sales Mix

Source: Billing Data

89%

36% 29%

2%

30% 60%

9% 16%

8%

H1/11 H1/12 H1/13

Internet Fibre/Ethernet Data Centre

Proportion of new monthly recurring revenue by product

For

per

sona

l use

onl

y


• Increasing success in bundled sales

to existing customers over the past 12

months

• Bundled services represents a

winning value proposition in the

market

• Significant opportunity to cross sell

services, and existing customers

present a strong source of sales leads

17

Cross Sales Potential 47.4%

36.6%

14.2%

1.7%

40.0% 39.3%

17.1%

3.6%

1 Service 2 Services 3 Services 4 Services

Cross Sales Analysis

Dec-11 Dec-12Source: Customer Data, excludes Maxnet customers

For

per

sona

l use

onl

y


• The business and enterprise data

market represents a significant new

market

• New sales (total contract value) to

corporate customers increased by

116% over H1/12

• Corporate sales are expected to

grow strongly in FY13 following

significant investment in expanding

the direct sales team

18

Increased Corporate Sales Focus

2,985 3,164 3,389 3,648 3,960

4,298

FY12 FY13F FY14F FY15F FY16F FY17F

Australian Business and Enterprise Data market, $m

Source: Yankee Global ConnectedView Forecast 2012

3,409

7,376

H1/12 H1/13

Corporate Sales Growth (signed contracts $'000)

For

per

sona

l use

onl

y


Product Updates

For

per

sona

l use

onl

y


• Long-term contracts (durations of 12-

36 months, current weighted average

remaining duration ~19 months)

• Significant capacity available following

new IRU arrangements signed in

September 2012 which will drive future

sales growth

• Data usage is forecast to increase

more than 3-fold between 2012 and

2016*, driven mainly by demand from

video.

• Increased data demand leads to

increased requirements for internet

transit which Vocus can supply using

its IRU

20

Internet

100

184

295

100

68

47

-

50

100

150

200

250

300

350

-

20

40

60

80

100

120

Dec-10 Dec-11 Dec-12

Vocus Internet Traffic and Yield, indexed (Dec-10 = 100)

SX Traffic SX Yield per Mbps

1,916 2,609

3,479

4,670

6,126

2012F 2013F 2014F 2015F 2016F

Australian Data Usage Forecast*, PB

34% CAGR

2012-2016

* ABS, CISCO Visual Networking Index 2011-2016

For

per

sona

l use

onl

y


• Operates 7 facilities across 5 sites,

totalling 2,471m2 at December 2012

• New flagship data centre build in

Melbourne on the site of the previous

ASX data centre, with Phase 1

complete in July 2013

• Auckland data centre expansion in

progress, with Phase 1 complete in

July 2013

• Ipera acquisition in January 2013 adds

two data centres in Newcastle

• Cloud computing positioned to be

strong driver of demand for data

centre space

21

Data Centres

Location Area Utilisation

Sydney (SYD1, SYD2, SYD3a) 897m2 72%

Melbourne (MEL1) 490m2 100%

Perth (PER1) 536m2 98%

Auckland (AKL1) 420m2 76%

Christchurch (CHC1) 128m2 32%

Total current DCs 2,471m2 79%

Melbourne (MEL2) – in build 685m2 n/a

Auckland (AKL2) – in build 144m2 n/a

Total area incl. in build DCs 3,300m2

Data Centre Summary – December 2012

Does not include Ipera acquisition in January 2013 which adds 370m2 across two data centres in

Newcastle, NSW

For

per

sona

l use

onl

y


Melbourne (M2) Data Centre Project

• Located on Collins St, Melbourne on the site of

the previous ASX data centre

• Central Melbourne CBD location provides low-

latency solutions for Melbourne customers

• Includes new Sales Office, customer staging

area and breakout room

• Phase 1 will deploy 105 racks and ready for

launch July 2013

Auckland (AKL02) Data Centre Expansion

• Phase 1 expansion of existing Auckland Data

Centre

• Additional 61 high availability racks to be

deployed as existing HA rack inventory is sold

out

• Potential to expand to adjacent unit in Phase 2,

dependent on customer demand

• Ready for launch in July 2013

22

Data Centres: Expanding Footprint F

or p

erso

nal u

se o

nly


Fibre and Ethernet

Vocus Dark Fibre Network Key Statistics

Geographic location Sydney, Melbourne, Brisbane, Adelaide and

Perth CBDs

Fibre length

59km (at acquisition)

94km (at December 2011)

173km (at June 2012)

262km (at December 2012)

On-Net Buildings

50 (at acquisition)

79 (at December 2011)

147 (at June 2012)

219 (at December 2012)

Major Data Centres

connected 59

Cable Capacity

Type 1 – 624 fibre strands

Type 2 – 312 fibre strands

Building Lead-in – 72 fibre strands

Current utilisation 5.6%

23

Does not include Ipera acquistion in January 2013 which adds 55km of fibre and 81 on-net buildings in

Newcastle, NSW For

per

sona

l use

onl

y


• Capex required per new contracted

$revenue to continue to decrease

generating more yield from the

network

• Network utilisation is currently 5.6%

Large potential to extract more

revenue from existing infrastructure

• For example, a 1% increase in

utilisation on the current network

would potentially deliver an additional

$0.54m in annualised EBITDA

24

Fibre: Increased efficiency Fibre Capex Growth Efficiency

Notes: 1) Digital River capex efficiency is calculated using the

purchase price of Digital River and contracted revenue arising from

the acquisition

Fibre capex $ for each new $1 of contracted revenue

3.29

1.23 1.04

0.80

DigitalRiver

H1/12 H2/12 H1/13

For

per

sona

l use

onl

y


• New General Manager - Voice in

August 2012 recruited to provide

renewed focus on this segment and

generating results

• Developing products strategically

positioned to capitalise on NBN voice

opportunities

25

Voice: Revenues and volumes recovering

Voice Revenue ($m)

5.0

5.8

4.0 4.3

H2/11 H1/12 H2/12 H1/13

7% growth

over

H2/12

For

per

sona

l use

onl

y


• The acquisition provides an increased national footprint with high quality fibre

and data centre assets in Newcastle, NSW

• Complementary to existing fibre and data centre infrastructure

• Minimal contribution to FY13 earnings after transaction costs

Forecast EBITDA contribution of $2.3m - $2.5m in FY14

26

Ipera Communications Acquisition

• Ipera acquisition announced in December 2012 and

completed in January 2013

For

per

sona

l use

onl

y


Contacts

James Spenceley

CEO

Mark de Kock

Executive Director, Strategy

Rick Correll

CFO

Level 1, Vocus House

189 Miller Street

North Sydney

P: +61 2 8999 8999

F: +61 2 9959 4348

E: [email protected]

www.vocus.com.au

For

per

sona

l use

onl

y


Disclaimer

This presentation contains forward looking statements that involve risks and uncertainties.

These forward looking statements are not guarantees of Vocus' future performance and

involve a number of risks and uncertainties that may cause actual results to differ

materially from the results discussed in these statements.

This presentation only contains information required for a preliminary evaluation of the

company and in particular only discloses information by way of summary within the

knowledge of the company and its directors. An investor should seek its own independent

professional advice in relation to the technical, financial, taxation, legal and commercial

matters relating to any investment in Vocus Communications Limited.

Other than to the extent required by law (and only to that extent) the company and its

officers, employees and professional advisors make no representation, guarantee or

warranty (expressed or implied) as to, and assume no responsibility or liability for, the

contents of this presentation.

For

per

sona

l use

onl

y

for personal use only - australian securities exchange · from its initial offering of ip transit...

Documents