The Nationwide Builder of Gigabit Cities 2015 Financial ......Focus on commercialization - growing...
Transcript of The Nationwide Builder of Gigabit Cities 2015 Financial ......Focus on commercialization - growing...
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The Nationwide Builder of Gigabit Cities
2015 Financial Results
April 2016
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CityFibre organic project: Edinburgh Metro Network
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Financials
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
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2015 Results Overview
- Former KCOM Metro City
- LDN interconnect POPs- CityFibre Metro City
• 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. -£3.6m in 2014
• 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)
• 2500+ connections and £37.5m TCV added YTD (£12.5m organic)
• EBITDA positive in Q1 2016 and continuing upward trajectory
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Acquired footprint: Bristol Metro Network
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Transformational Acquisition
CityFibre: York KCOM: Leeds
- KCOM Metro City, total route length 1,100km- 1,100 km LDN is interconnected to major data centres
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
Leveraging our position as a national infrastructure:
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
• 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
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• 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
Ofcom regulatory reviews
Supportive market dynamics
Market Backdrop
• 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
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Global IP traffic: 23% CAGR between 2014 – 2019
The UK’s fibre infrastructure lags behind other countries
Source: CityFibre, Cisco VNI
Source Ofcom 2015
• 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
• UK fibre connectivity continues to lag behind
• BT has limited desire to invest in fibre to the premises
• Problem is magnified outside London
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Recapping Our Model
Low Risk Deployment Strategy, Well-Planned City Design Principle
Network gross margin >90%Model to drive high recurring
revenue yield
Payback on incremental capex
c.2 years
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Consumer
FTTHConsumers with 100Mbps+symmetrical internet access
Sites connected
at maturity
950 – 1,200
Mobile
Total Metro area
75 – 1003G, LTE, 4G backhaul,data centres
Business 575 – 700SME with Gbps site to siteand internet services
Public Sector 300 – 400Core network, Public Sector anchor client, schools, colleges, universities, public health
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Metro Cities
Shared Infrastructure
Addressable Public
Sector Sites
(Cumulative)
Addressable
Businesses
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Addressable Mobile
Sites (Cumulative)
Macro Cells [Small Cells]
Addressable Homes
(Cumulative)
37 Cities 26,000 260,000 7,400 [22,000] 3,700,000
50 Cities 35,000 350,000 10,000 [30,000] 5,000,000
Partners
Accelerating the ‘Gigabit City’ Rollout
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Focus on commercialization - growing partners and revenues across metro assetsPlatform for FTTH
expansion
• 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
Gigabit City commercialisation underway: ISP partner expansion underway:
- New Partner Targets- Current Partners
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Aiming to grow to 100 service provider
relationships by 2018
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Commercialisation of KCOM Assets and Greenfield Build
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Bristol – 100 connections committed
Reading to Slough – first sale on the national core
• Gigabit City launch partner Triangle Networks committing to a minimum of 100 connections
• Six-year contract, TCV £1.5m, limited incremental build required
• 15-year IRU, first capacity sale on the national long distance network
• TCV of £2.3m, limited incremental capex
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
• 10-year contract covering 120 connections over a 50km network build
• Direct procurement by the council, £3.2m TCV, high capex coverage
Southend-on-Sea (greenfield build)
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2015 Financial Results
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(Year to 31 December) 2015 2014 YoY
Turnover 6.4 3.8 67%
Cost of sales (0.9) (0.6) 56%
Gross profit 5.5 3.3 68%
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%
2015 Financial Review
Profit and loss (£m)
(As at 31 December) 2015 2014 YoY
Net PP&E 44.0 31.8 38%
Trade and other receivables 6.0 3.7 61%
Cash, equivalents and deposits 9.7 33.2 -71%
Total assets 61.4 70.1 -12%
Total liabilities 17.6 20.3 -13%
Total equity 43.8 49.9 -12%
Network capex (13.8) (4.5) 207%
Operating cash outflow (5.4) (3.6) 51%
Balance sheet and cash flow (£m)
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
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Revenue Adj. EBITDA
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Key Performance Indicators
Contract value added (£m) and connections sold (RHS) per year
Service provider relationships
Total route fibre and duct kilometres* Connected customer premises**
• 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
• 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
• 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
• 36% organic growth in 2015, 8% sequential growth in Q1 2016
• Pro forma connections more than 10x greater than at IPO
• Average 2.4 connections per kilometre across expanded metro footprint
Cumulative contract value trend (£m)
• 109% 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
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*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
Metro
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Longer term accelerators
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Leeds Network
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Continued Strategic Focus on Mobile and FTTH
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
- Cornerstone- MBNLMobile sites overlaid on Leeds metro network
Mobile backhaul remains a strategic focus
Leeds Network
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
• 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)
FTTH rollout can scale based on our metro footprint
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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 1900+
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
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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
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