2017 Half Year Results

Transcription

1 2017 Half Year Results Focus on densification and commercialisation 28 September 2017

2 Greg Mesch Chief Executive Officer

3 Progress to date Leveraging a unique asset platform Completed 5 acquisitions & 9 anchor metro builds Strategic consolidation of most metro core duct infrastructure outside London. Now the largest alternative wholesale infrastructure provider across 42 cities Addressing 4,383,000 homes, 349,400 businesses, 43,820 public sector sites and over 7,300 macro mobile base stations Well-positioned to drive large-scale fibrebased transition across the footprint Now focused on densification and commercialisation of this unique asset base Cities enabled for Entanet s national Ethernet services (cumulative) Aug-17 Oct-17 Nov-17 Dec-17 Feb-18 Apr-18 May-18 3

4 H1 overview Focusing on enabling and densifying our cities Key financial highlights Strong organic revenue growth of 36% YoY Further expansion of gross margin, to 88%, reflecting improving operating leverage Trebling of Adjusted EBITDA, reflecting underlying admin cost increase of only 18% YoY Operational highlights Key focus on operational and commercial activation of 24 cities acquired in 2016 Halfway into an enablement programme using key launch partner contracts as anchors Currently delivering incremental cabling, PoP/COLO, and active layers Market dynamics Regulatory developments and public policy shifts both supportive of alternative fibre builders Snap election (purdah) and LFFN introduced market pause in PSN contracting Launch partner contracts have slowed as we finished commercialising large acquisition cites Post-period highlights Successfully closed 201.8m equity raise to fund the next phase of growth Acquired Entanet significantly expanding our business channel and Ethernet solution On track with readiness and planning for targeted FTTH/P rollout to 5 to 10 cities 4

5 Operating and financial highlights Connections, footprint, revenues & margins showing steady expansion KPI H H YoY% Connected sites 4,235 3,490 21% Metro fibre km 2,417 2,011 20% Turnover 9.0m 6.6m 36% Gross margin 88% 86% +200bps Adj. EBITDA 1.7m 0.4m 302% Cumulative ICV 136m 104m ( 79m ex-kcom) 31% 5

6 Significant positive regulatory developments A tailwind in regulation and public policy BCMR CAT ruled against Ofcom on the Business Connectivity Market Review. Ofcom now has to re-consult the industry and the dark fibre remedy will not be implemented in 2017 CityFibre is the only major provider of dark fibre services across our footprint DIIF & LFFN DIIF launched with 400m of HM Treasury funds, matched by other institutions ( 800m) LFFN launched with 740m (first wave of 200m) stimulus programmes Provides incentives to both investors and customers of full fibre OTHER 4 July 2017 Telecommunications Infrastructure Bill introduced 100% relief on business rates on new fibre investments 10 July 2017 Advertising Standards Authority announced in-depth review into advertising of fibre services Brings greater clarity to the market and associated economics DIIF: Digital Infrastructure Investment Fund LFFN: Local Full Fibre Networks 6

7 Integrating our verticals through densification Metro infrastructure FTTH expansion Public Sector Business Mobile Consumer 50 towns & cities (Planned Addressable) 52,100 sites 420,000 sites 8,700 cells (43,500 small cells) 5,200,000 homes New city & incremental connection drivers (1) : 42 towns & cities (Current Addressable) Sold connections (Penetration % of current) Example channel partners (Current and potential partners) 740m stimulus Public sector anchors Gov t target 100 towns and cities Entanet acquisition Full fibre business vouchers Business parks rollout 43,820 sites 349,400 sites 1,946 sites (3) (4.5%) 6,010 sites (3) (1.7%) Entanet service providers Transition to dark fibre 5G & small cells Discussions with MNOs 7,300 cells (2) (36,500 small cells (2) ) 37 cells (3) (Trial city) Natural expansion to FTTH using metro infrastructure Ofcom 3 rd network to 40% of premises HM Treasury 800m DIIF for competitive full fibre 4,383,000 homes (within metro footprints) 3,758 homes (4) (Trial) Sources: Company information and public information. Notes: (1) Subject to government policy changes. (2) Estimated. (3) Sold connections as at 30 th June (4) York FTTH trial connections sold as at 30 June

8 Terry Hart Chief Financial Officer

9 Densification in action: York How a metro core can accelerate the build and save on capex York core metro network: Anchor contract with City of York for 105 council sites and schools Net incremental public sector and business connections of 175 Total connected sites 282 (as at 30 June 2017) 9 FTTH network employing York metro: 13,582 homes passed 3,758 sold connections representing c. 27% penetration (as at 30 June 2017) CoLo & POP quickly connected off metro Deep 2x110mm ducted metro core used to feed 36 fibre cabinets

10 FTTP demand and penetration proof-points Consumer take-up gathers momentum Months in service t1 t2 t3 t4 t5 t6 t7 t8 t9 t10 t11 t12 t13 t14 t15 t16 t17 t18 t19 t20 t21 t22 t23 t24 t25 0% 2% 3% 4% 6% 7% 8% 9% 12% 13% 14% 16% 16% 18% 19% 18% 20% 22% 23% 23% 23% 24% 24% 24% 25% 0% 2% 5% 7% 9% 11% 13% 18% 21% 22% 23% 25% 25% 28% 30% 30% 31% 32% 33% 34% 34% 35% 36% 36% 37% 0% 1% 6% 7% 8% 10% 14% 18% 18% 20% 22% 24% 25% 29% 29% 29% 31% 33% 36% 39% 40% 42% 42% 43% 44% 0% 1% 4% 5% 6% 6% 7% 9% 10% 12% 16% 18% 19% 20% 21% 22% 23% 26% 26% 26% 27% 28% 28% 28% 30% 0% 0% 3% 4% 6% 7% 9% 11% 13% 14% 14% 16% 16% 18% 19% 21% 22% 22% 24% 24% 25% 25% 26% 26% 28% 0% 0% 3% 4% 5% 6% 8% 9% 11% 13% 14% 16% 17% 19% 20% 21% 22% 24% 25% 25% 26% 26% 27% 27% 28% 0% 2% 2% 4% 4% 6% 8% 9% 10% 10% 12% 13% 16% 17% 18% 18% 21% 22% 23% 23% 24% 25% 25% 24% 0% 0% 0% 3% 5% 7% 9% 13% 15% 17% 18% 20% 23% 24% 25% 27% 28% 31% 31% 31% 32% 33% 35% 36% 0% 0% 1% 4% 5% 6% 8% 10% 12% 13% 14% 16% 18% 19% 20% 21% 22% 24% 25% 26% 26% 26% 26% 27% 0% 0% 0% 4% 6% 8% 8% 10% 12% 13% 14% 15% 18% 19% 20% 21% 22% 25% 27% 27% 27% 28% 29% 31% 0% 0% 1% 5% 6% 7% 9% 11% 11% 13% 14% 16% 19% 20% 21% 21% 23% 25% 27% 28% 28% 29% 30% 31% 0% 0% 0% 4% 6% 8% 9% 11% 12% 14% 16% 17% 20% 21% 21% 21% 24% 27% 27% 27% 28% 28% 29% 31% 0% 0% 0% 4% 5% 6% 8% 9% 10% 11% 12% 13% 16% 17% 18% 19% 21% 25% 25% 26% 26% 26% 27% 28% 0% 0% 3% 6% 11% 13% 16% 18% 20% 22% 23% 24% 25% 27% 30% 30% 30% 32% 32% 33% 33% 0% 6% 9% 13% 14% 18% 21% 23% 25% 27% 29% 29% 30% 33% 35% 35% 37% 38% 39% 40% 41% 0% 0% 2% 5% 6% 10% 14% 15% 17% 19% 20% 21% 22% 22% 26% 27% 27% 27% 28% 30% 31% 0% 6% 8% 12% 16% 18% 21% 22% 24% 25% 26% 27% 29% 32% 33% 33% 32% 33% 33% 34% 0% 0% 2% 8% 11% 12% 14% 16% 16% 18% 18% 19% 21% 24% 25% 26% 26% 26% 27% 29% 2% 4% 9% 12% 15% 18% 18% 19% 21% 22% 24% 28% 31% 32% 33% 33% 33% 33% 34% 0% 0% 4% 6% 10% 12% 16% 21% 23% 27% 27% 29% 30% 32% 32% 33% 33% 34% 35% 0% 0% 0% 1% 2% 5% 6% 8% 10% 10% 12% 12% 13% 13% 13% 13% 15% 16% 16% 0% 3% 12% 19% 21% 23% 25% 27% 27% 29% 31% 32% 33% 33% 32% 33% 35% 35% 0% 2% 4% 9% 11% 11% 13% 14% 15% 18% 21% 22% 25% 25% 26% 26% 28% 28% 0% 4% 14% 19% 23% 25% 27% 29% 30% 32% 35% 35% 36% 37% 38% 39% 39% 0% 5% 11% 15% 17% 18% 22% 23% 24% 28% 30% 31% 31% 32% 32% 32% 33% 0% 6% 14% 21% 24% 26% 28% 29% 29% 31% 32% 33% 33% 33% 34% 34% 35% 0% 5% 13% 17% 19% 21% 24% 25% 25% 28% 30% 30% 30% 31% 32% 32% 33% 0% 0% 6% 7% 7% 7% 9% 9% 9% 11% 12% 12% 13% 13% 14% 15% 2% 4% 7% 9% 10% 10% 11% 13% 14% 15% 15% 15% 17% 18% 20% 10% 26% 29% 30% 32% 33% 35% 37% 37% 38% 40% 40% 42% 43% 8% 14% 19% 23% 25% 25% 27% 30% 30% 30% 31% 31% 31% 34% 8% 19% 23% 24% 25% 26% 29% 33% 34% 35% 35% 36% 37% 38% 0% 6% 8% 11% 12% 13% 15% 16% 17% 17% 18% 19% 21% 22% 0% 4% 8% 12% 12% 12% 13% 16% 17% 17% 18% 19% 19% 20% 0% 4% 8% 9% 10% 12% 15% 16% 17% 17% 17% 18% 19% >20% penetration >30% penetration >40% penetration Blended penetration now over 30% 10 Cabinets can be released when built proving take-up rates and de-risking entire city builds Business Parks FTTP and Consumer FTTH share architecture and metro core All cabinets continue to grow at steady rates - 32 cabs at >20% - 21 cabs at >30% - 3 cabs at >40%

11 Entanet acquisition Strategically complementary to CityFibre s asset base Extensively enhances CityFibre s wholesale fibre capability 1,500 Active Channel Partners in FY 2016, accelerating CityFibre s commercial relationships National Ethernet Capability accelerating the timescale and scope of CityFibre s Ethernet strategy Estate of >45,000 residential and business broadband connections, and >3,500 leased lines (25% on CityFibre s footprint) Acquired for 29m on a cash free debt free basis Synergies of > 3m per annum within three years Significantly greater synergies available from future potential revenues from cross selling and cost avoidance Already showing encouraging early signs of new business conversion on CityFibre network Mature sales channel Trading & support interfaces Products & development expertise Physical network + Established Channel Partners (c. 1,500) Automated order & billing portal/platforms & support systems Active Internet (FTTP, FTTH) Ethernet Services Metro & LDN Dark Fibre (FTTT) Independent full-fibre network 11

12 Financial highlights Strong growth and margin expansion continues Profit and Loss ( m) (6 months to 30 Jun) YoY Turnover % Cost of sales (1.1) (0.9) 19% Gross profit % Gross margin 87.6% 85.9% +170bps Administrative expenses (5%) Operating loss (1.5) (4.2) (64%) Net financial expense (4.3) (3.3) 30% Pre-tax loss (5.9) (7.5) (21%) Adjusted EBITDA % Balance sheet and cash flow extract ( m) (As at 30 Jun) YoY Fixed assets % Cash and equivalents (3%) Total assets % Interest-bearing loans and borrowings % Total equity (9%) Network capex (excluding acquisitions) (7.7) (10.8) (29%) Operating cash outflow (1.2) (3.8) (68%) Revenue growth driven by commercialisation of acquired assets, Edinburgh completion & addition of Redcentric assets 20% of revenues in the period from Ethernet services set to expand Gross margin expanded 170bps, reflecting high margin new business Underlying administrative expenses increased 18% to 6.3m (excluding non-cash and nonrecurring fees) Adjusted EBITDA increased 302% to 1.7m Network capex of 7.7m Cash position 7.9m, net debt 57.4m Gross proceeds of 201.8m from equity raise after the period end Focus in H2 2017/H on refinancing existing debt facilities and optimising capital structure * 5.5m of the debt facility drawn in the period; total facility drawn of 65.3m as at 30 June

13 Greg Mesch Chief Executive Officer

14 Summary and outlook Enabling the next stage Well-positioned and capitalised to increase densification and commercialisation efforts Continuing enablement of the 24 acquired cites in 2016 Enable the Entanet Ethernet (L2/L3) network across all CityFibre Cities Preparing select cities for FTTH/P rollouts

15 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. 15

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