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6-K
INTERXION HOLDING N.V. filed this Form 6-K on 08/02/2018
Entire Document
 
Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated 2 August 2018

(Commission File No. 001-35053)

 

 

INTERXION HOLDING N.V.

(Translation of Registrant’s Name into English)

 

 

Scorpius 30, 2132 LR Hoofddorp, The Netherlands, +31 20 880 7600

(Address of Principal Executive Office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) ):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 


This report contains Interxion Holding N.V.’s interim report as at and for the three-month and six-month periods ended 30 June 2018 (the “Interim Report”).

The Interim Report was prepared in accordance with the indenture (the “Indenture”) dated as of 18 June 2018, as may be amended, modified and/or supplemented from time to time, among Interxion Holding N.V., as Issuer, the guarantors named therein, The Bank of New York Mellon, London Branch, as trustee and paying agent, and The Bank of New York Mellon SA/NV, Luxembourg Branch, as transfer agent and registrar.

This Report on Form 6-K is incorporated by reference into (i) the Registration Statement on Form S-8 of the Registrant originally filed with the Securities and Exchange Commission on 23 June 2011 (File No. 333-175099), (ii) the Registration Statement on Form S-8 of the Registrant originally filed with the Securities and Exchange Commission on 2 June 2014 (File No. 333-196447) and (iii) the Registration Statement on Form S-8 of the Registrant originally filed with the Securities and Exchange Commission on 31 May 2017 (File No. 333-218364).

 

Exhibit

    
99.1    The Interxion Holding N.V. Interim Report as at and for the three-month and six-month periods ended 30 June 2018.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

INTERXION HOLDING N.V.

By:   /s/ David C. Ruberg
Name:   David C. Ruberg
Title:   Chief Executive Officer

Date: 2 August 2018

EX-99.1

Exhibit 99.1

 

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InterXion Holding NV

Interim Report

as at and for the three-month and the six-month periods

ended

30 June 2018

Hoofddorp, 2 August 2018


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Financial Highlights*

 

    Revenue increased 15% to €138.8 million (2Q 2017: €120.8 million).

 

    Recurring revenue1 increased 16% to €131.7 million (2Q 2017: €113.4 million).

 

    Net income decreased 94% to €0.6 million (2Q 2017: €9.7 million) and was impacted by €11.2 million (pre-tax) of one-off charges related to the recently completed refinancing.

 

    Adjusted EBITDA2 increased by 17% to €63.4 million (2Q 2017: €54.3 million).

 

    Adjusted EBITDA margin increased to 45.7% (2Q 2017: 45.0%).

 

    Adjusted net income2 decreased by 6% to €8.9 million (2Q 2017: €9.4 million), which includes higher share based payment charges.

 

    Earnings per diluted share decreased by 94% to €0.01 (2Q 2017: €0.13) and was impacted by one-off charges related to the recently completed refinancing.

 

    Adjusted earnings2 per diluted share decreased by 6% to €0.12 (2Q 2017: €0.13).

 

    Capital expenditures, including intangible assets3, were €120.5 million (2Q 2017: €56.4 million).

 

    Refinanced €875 million of secured debt with €1 billion in unsecured Senior Notes due 2025 and a new €200 million unsecured revolving credit facility.

Operating Highlights

 

    Equipped space increased by 3,700 square metres in the second quarter to 132,600 square metres.

 

    Revenue generating space increased by 2,100 square metres in the second quarter to 106,200 square metres.

 

    Utilisation rate at the end of the second quarter was 80%.

 

    During the second quarter, Interxion completed the following capacity additions:

 

    1,200 sqm expansion in Dublin;

 

    900 sqm data centre in Copenhagen;

 

    500 sqm expansion in Paris;

 

    400 sqm expansion in Vienna;

 

    400 sqm expansion in Marseille; and

 

    300 sqm expansion in Stockholm.

 

*  Certain comparative figures for the three months and six months ended 30 June 2017 have been restated. For further details, see Note 2 and Note 29 of our 2017 Consolidated Financial Statements included on Form 20-F, filed with the SEC on 30 April 2018, and note 12 of these Condensed Consolidated Interim Financial Statements.

 

2   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Quarterly Review

Revenue in the second quarter of 2018 was €138.8 million, a 15% increase over the second quarter of 2017 and a 4% increase over the first quarter of 2018. Recurring revenue was €131.7 million, a 16% increase over the second quarter of 2017 and a 4% increase over the first quarter of 2018. Recurring revenue in the second quarter represented 95% of total revenue. On a constant currency4 basis, revenue in the second quarter of 2018 was 16% higher than in the second quarter of 2017.

Cost of sales in the second quarter of 2018 was €53.7 million, a 12% increase over the second quarter of 2017 and a 2% increase over the first quarter of 2018.

Gross profit was €85.1 million in the second quarter of 2018, a 17% increase over the second quarter of 2017 and a 5% increase over the first quarter of 2018. Gross profit margin was 61.3% in the second quarter of 2018, compared with 60.3% in the second quarter of 2017 and 60.6% in the first quarter of 2018.

Sales and marketing costs in the second quarter of 2018 were €9.6 million, a 16% increase over the second quarter of 2017 and a 10% increase from the first quarter of 2018.

Other general and administrative costs (excluding depreciation and amortisation, share-based payments and M&A transaction costs) were €12.1 million in the second quarter of 2018, a 17% increase over the second quarter of 2017 and a 5% increase from the first quarter of 2018.

Depreciation and amortisation in the second quarter of 2018 was €32.2 million, an increase of 18% from the second quarter of 2017 and a 9% increase from the first quarter of 2018.

Operating income in the second quarter of 2018 was €26.3 million, an increase of 8% from the second quarter of 2017 and a 2% decrease from the first quarter of 2018.

Net finance expense in the second quarter of 2018 was €22.9 million. On 18 June 2018, Interxion completed a refinancing transaction, issuing €1,000.0 million of 4.75% Senior Notes due 2025 and entering into a €200.0 million unsecured multi-currency revolving credit facility. The proceeds of the notes issue were used to redeem the €625.0 million 6.00% Senior Secured Notes due 2020 and repay €250 million drawn under Interxion’s revolving credit facilities. Interxion recognized €11.2 million of one-time charges related to these transactions. Excluding the finance expense associated with the refinancing transactions, net finance expense in the second quarter was €11.7 million, an increase of 7% over the second quarter of 2017 and an increase of 3% over the first quarter of 2018.

Income tax expense for the second quarter of 2018 was €2.8 million, a 25% decrease compared with the second quarter of 2017 and a 27% decrease from the first quarter of 2018.

Net income was €0.6 million in the second quarter of 2018, a 94% decrease over the second quarter of 2017 and a 95% decrease from the first quarter of 2018, reflecting the impact of the finance expense relating to the refinancing transactions discussed above.

Adjusted net income was €8.9 million in the second quarter of 2018, a 6% decrease over the second quarter of 2017 and a 26% decrease from the first quarter of 2018.

Adjusted EBITDA for the second quarter of 2018 was €63.4 million, a 17% increase over the second quarter of 2017 and a 4% increase over the first quarter of 2018. Adjusted EBITDA margin was 45.7% in the second quarter of 2018, compared with 45.0% in the second quarter of 2017 and 45.5% in the first quarter of 2018.

Net cash flows from operating activities were €31.6 million in the second quarter of 2018, compared with €35.7 million in the second quarter of 2017 and €34.6 million in the first quarter of 2018.

Cash generated from operations5 was €55.1 million in the second quarter of 2018, compared with €40.6 million in the second quarter of 2017 and €58.1 million in the first quarter of 2018.

Capital expenditures, including intangible assets, were €120.5 million in the second quarter of 2018, compared with €56.4 million in the second quarter of 2017 and €96.2 million in the first quarter of 2018.

Cash and cash equivalents were €133.6 million at 30 June 2018, compared with €38.5 million at year end 2017.

 

3   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Total borrowings, net of deferred financing fees, were €1,079.8 million at 30 June 2018, compared with €832.6 million at year end 2017.

Equipped space at the end of the second quarter of 2018 was 132,600 square metres, compared with 117,000 square metres at the end of the second quarter of 20176 and 128,900 square metres at the end of the first quarter of 2018. Revenue generating space at the end of the second quarter of 2018 was 106,200 square metres, compared with 95,000 square metres at the end of the second quarter of 2017 and 104,100 square metres at the end of the first quarter of 2018. Utilisation rate, the ratio of revenue-generating space to equipped space, was 80% at the end of the second quarter of 2018, compared with 81% at the end of the second quarter of 2017 and 81% at the end of the first quarter of 2018.

 

1  Recurring revenue is revenue incurred from colocation and associated power charges, office space, amortised set-up fees, cross-connects and certain recurring managed services (but excluding any ad hoc managed services) provided by us directly or through third parties, excluding rents received for the sublease of unused sites.
2  Adjusted net income (or ‘Adjusted earnings’) and Adjusted EBITDA are non-IFRS figures intended to adjust for certain items and are not measures of financial performance under IFRS. Complete definitions can be found in the “Non-IFRS Financial Measures” section in this Interim Report. Reconciliations of net income to Adjusted EBITDA and net income to Adjusted net income can be found in the financial tables later in this Interim Report.
3  Capital expenditures, including intangible assets, represent payments to acquire property, plant, equipment and intangible assets, as recorded in the consolidated statement of cash flows as “Purchase of property, plant and equipment” and “Purchase of intangible assets”, respectively.
4  We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. For purposes of calculating Revenue on a constant currency basis, current and comparative prior period results for entities reporting in currencies other than Euro are converted into Euro using the average exchange rates from the prior period rather than the actual exchange rates in effect during the current period. The reconciliation of total revenue growth to total revenue growth on a constant currency basis, is as follows:

 

Three months ended 30 June 2018

   Year-on-year     Sequential  

Reported total revenue growth

     14.9     3.7

Add back: impact of foreign currency translation

     0.9     0.1
  

 

 

   

 

 

 

Total revenue growth on a constant currency basis

     15.8     3.8
  

 

 

   

 

 

 

 

5 We define Cash generated from operations as net cash flows from operating activities, excluding interest and corporate income tax payments and receipts.
6 Totals from the end of 1Q 2018 include 2,300 sqm of equipped space and 1,300 sqm of revenue generating space from Interxion Science Park. 2Q 2017 excludes the impact of Interxion Science Park.

 

4   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Further Information for Noteholders

This Interim Report is intended to comply with the requirements in the indenture (the “Indenture”) dated 18 June 2018, as amended and/or supplemented from time to time, among InterXion Holding NV, as Issuer, the guarantors named therein, The Bank of New York Mellon, London Branch, as trustee and paying agent and The Bank of New York Mellon SA/NV, Luxembourg Branch, as transfer agent and registrar. The Condensed Consolidated Interim Financial Statements included herein were prepared in accordance with IAS 34.

The information in this Interim Report may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “believes”, “anticipates”, “plans”, “expects”, “intends”, and similar expressions are intended to identify forward-looking statements. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, the difficulty of reducing operating expenses in the short term, inability to utilise the capacity of newly planned data centres and data centre expansions, significant competition, the cost and supply of electrical power, data centre industry over-capacity, performance under service-level agreements, delays in remediating the material weakness in internal control over financial reporting and/or making disclosure controls and procedures effective, certain other risks detailed herein and other risks described from time to time in Interxion’s filings with the Securities and Exchange Commission. All forward-looking statements in this document are based on information available to us as of the date of this Interim Report and we assume no obligation to update any such forward-looking statements.

Non-IFRS Financial Measures

Included in these materials are certain non-IFRS financial measures, which are measures of our financial performance that are not calculated and presented in accordance with IFRS, within the meaning of applicable SEC rules. These measures are as follows: (i) Adjusted EBITDA; (ii) Recurring revenue; (iii) Revenue on a constant currency basis; (iv) Adjusted net income; (v) Adjusted basic earnings per share; (vi) Adjusted diluted earnings per share; and (vii) Cash generated from operations.

Other companies may present Adjusted EBITDA, Recurring revenue, Revenue on a constant currency basis, Adjusted net income, Adjusted basic earnings per share, Adjusted diluted earnings per share and Cash generated from operations differently than we do. Each of these measures are not measures of financial performance under IFRS and should not be considered as an alternative to operating income or as a measure of liquidity or an alternative to Profit for the period attributable to shareholders (“net income”) as indicators of our operating performance or any other measure of performance implemented in accordance with IFRS.

Adjusted EBITDA, Recurring revenue and Revenue on a constant currency basis

We define Adjusted EBITDA as Operating income adjusted for the following items, which may occur in any period, and which management believes are not representative of our operating performance:

 

    Depreciation and amortisation – property, plant and equipment and intangible assets (except goodwill) are depreciated on a straight-line basis over the estimated useful life. We believe that these costs do not represent our operating performance.

 

    Share-based payments – represents primarily the fair value at the date of grant of employee equity awards, which is recognised as an expense over the vesting period. In certain cases, the fair value is redetermined for market conditions at each reporting date, until the final date of grant is achieved. We believe that this expense does not represent our operating performance.

 

    Income or expense related to the evaluation and execution of potential mergers or acquisitions (“M&A”) – under IFRS, gains and losses associated with M&A activity are recognised in the period in which such gains or losses are incurred. We exclude these effects because we believe they are not reflective of our on-going operating performance.

 

5   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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    Adjustments related to terminated and unused data centre sites – these gains and losses relate to historical leases entered into for certain brownfield sites, with the intention of developing data centres, which were never developed, and which management has no intention of developing into data centres. We believe the impact of gains and losses related to unused data centres are not reflective of our business activities and our on-going operating performance.

In certain circumstances, we may also adjust for other items that management believes are not representative of our current on-going performance. Examples include: adjustments for the cumulative effect of a change in accounting principle or estimate, impairment losses, litigation gains and losses or windfall gains and losses.

We define Recurring revenue as revenue incurred from colocation and associated power charges, office space, amortised set-up fees, cross-connects and certain recurring managed services (but excluding any ad hoc managed services) provided by us directly or through third parties, excluding rents received for the sublease of unused sites.

We believe Adjusted EBITDA and Recurring revenue provide useful supplemental information to investors regarding our on-going operational performance. These measures help us and our investors evaluate the on-going operating performance of the business after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortisation). Management believes that the presentation of Adjusted EBITDA, when combined with the primary IFRS presentation of net income, provides a more complete analysis of our operating performance. Management also believes the use of Adjusted EBITDA facilitates comparisons between us and other data center operators (including other data center operators that are REITs) and other infrastructure based businesses. Adjusted EBITDA is also a relevant measure used in the financial covenants of our revolving credit facility and our 4.75% Senior Notes due 2025.

A reconciliation of net income to Adjusted EBITDA is provided in the notes to the Condensed Consolidated Interim Financial Statements. Adjusted EBITDA and other key performance indicators may not be indicative of our historical results of operations, nor are they meant to be predictive of future results.

We present constant currency information for revenue to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than Euro are converted into Euro using the average exchange rates from the prior period rather than the actual exchange rates in effect during the current period.

We believe that revenue growth is a key indicator of how a company is progressing from period to period and presenting constant currency information for revenue provides useful supplemental information to investors regarding our ongoing operational performance because it helps us and our investors evaluate the ongoing operating performance of the business after removing the impact of acquisitions and currency exchange rates.

Adjusted net income, Adjusted basic earnings per share and Adjusted diluted earnings per share

We define Adjusted net income as net income adjusted for the following items and the related income tax effect, which may occur in any period, and which management believes are not reflective of our operating performance:

 

    Income or expense related to the evaluation and execution of potential mergers or acquisitions (“M&A”) – under IFRS, gains and losses associated with M&A activity are recognised in the period in which such gains or losses are incurred. We exclude these effects because we believe they are not reflective of our on-going operating performance.

 

6   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Adjustments related to provisions – these adjustments are made for adjustments in provisions that are not reflective of the on-going operating performance of Interxion. These adjustments may include changes in provisions for onerous lease contracts.

 

   

Adjustments related to capitalised interest – Under IFRS we are required to calculate and capitalise interest allocated to the investment in data centres and exclude it from net income. We believe that reversing the impact of capitalised interest provides information about the impact of the total interest costs and facilitates comparisons with other data centre operators.

In certain circumstances, we may also adjust for items that management believes are not representative of our current on-going performance. Examples include: adjustments for the cumulative effect of a change in accounting principle or estimate, impairment losses, costs related to refinancing, litigation gains and losses or windfall gains and losses.

Management believes that the exclusion of certain items listed above provides useful supplemental information to net income to aid investors in evaluating the operating performance of our business and comparing our operating performance with other data centre operators and infrastructure companies. We believe the presentation of adjusted net income, when combined with net income prepared in accordance with IFRS, is beneficial to a complete understanding of our performance. A reconciliation from reported net income to Adjusted net income is provided in this Interim Report.

Adjusted basic earnings per share and Adjusted diluted earnings per share amounts are determined based on adjusted net income.

Cash generated from operations

Cash generated from operations is defined as net cash flows from operating activities, excluding interest and corporate income tax payments and receipts. Management believes that the exclusion of these items provides useful supplemental information to net cash flows from operating activities to aid investors in evaluating the cash generating performance of our business.

 

7   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Adjusted Net Income Reconciliation

 

Amounts x €’000

   Three Months Ended     Six Months Ended  
     30 Jun
2018
    30 Jun
2017(1)
    30 Jun
2018
    30 Jun
2017(1)
 

Consolidated

        

Net income

     582       9,655       12,238       19,914  

Income or expense related to the evaluation and execution of potential mergers or acquisitions:

        

M&A transaction costs

     1,041       556       2,248       1,329  

Charges related to termination of financing arrangements

     11,171       —         11,171       —    

Adjustments related to capitalised interest

     (1,181     (853     (2,065     (1,765
  

 

 

   

 

 

   

 

 

   

 

 

 
     11,031       (297     11,354       (436

Tax effect of above add backs and reversals

     (2,758     74       (2,839     109  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

     8,855       9,432       20,753       19,587  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reported basic EPS: (€)

     0.01       0.14       0.17       0.28  

Reported diluted EPS: (€)

     0.01       0.13       0.17       0.28  

Adjusted basic EPS: (€)

     0.12       0.13       0.29       0.28  

Adjusted diluted EPS: (€)

     0.12       0.13       0.29       0.27  

 

(1)

Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.

About Interxion

Interxion (NYSE: INXN) is a leading provider of carrier and cloud-neutral colocation data centre services in Europe, serving a wide range of customers through 50 data centres in 11 European countries. Interxion’s uniformly designed, energy efficient data centres offer customers extensive security and uptime for their mission-critical applications.

With over 700 connectivity providers, 21 European Internet exchanges, and most leading cloud and digital media platforms across its footprint, Interxion has created connectivity, cloud, content and finance hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.

 

8   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Income Statements

 

Amounts x €’000

          Three Months Ended     Six Months Ended  
     Note      30 Jun
2018
    30 Jun
2017(1)
    30 Jun
2018
    30 Jun
2017(1)
 

Revenue

     5        138,824       120,823       272,660       234,773  

Cost of sales

     5        (53,701     (47,926     (106,398     (92,021
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        85,123       72,897       166,262       142,752  

Other income

     5        —         —         86       27  

Sales and marketing costs

     5        (9,601     (8,285     (18,309     (16,210

General and administrative costs

     5        (49,250     (40,310     (94,894     (78,421
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

        26,272       24,302       53,145       48,148  

Finance income

     6        3,386       373       3,497       682  

Finance expense

     6        (26,281     (11,293     (37,796     (21,889
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit before taxation

        3,377       13,382       18,846       26,941  

Income tax expense

     7        (2,795     (3,727     (6,608     (7,027
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income

        582       9,655       12,238       19,914  
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share

           

Basic earnings per share: (€)

        0.01       0.14       0.17       0.28  

Diluted earnings per share: (€)

        0.01       0.13       0.17       0.28  

 

(1)

Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

 

9   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Comprehensive Income

 

Amounts x €’000

   Three Months Ended     Six Months Ended  
     30 Jun 2018     30 Jun 2017(1)     30 Jun 2018     30 Jun 2017(1)  

Net income

     582       9,655       12,238       19,914  

Other comprehensive income

        

Items that are, or may be, reclassified subsequently to profit or loss:

        

Foreign currency translation differences

     (853     (3,133     (2,548     (2,669

Effective portion of changes in fair value of cash flow hedges

     (3     27       (4     65  

Initial recognition of pension provision(2)

     (1,154     —         (1,154     —    

Tax on items that are, or may be, reclassified subsequently to profit or loss:

        

Foreign currency translation differences

     242       193       584       154  

Effective portion of changes in fair value of cash flow hedges

     —         (7     —         (16
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income/(loss) for the period, net of tax

     (1,768     (2,920     (3,122     (2,466
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income attributable to shareholders

     (1,186     6,735       9,116       17,448  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.

(2)

The “Initial recognition of pension provision” relates to a pension plan that qualifies as a defined benefit plan in accordance with IAS 19, but was previously accounted for as a defined contribution plan for which the impact to the (interim) financial statements of previous periods and the current period is immaterial. This has been corrected in these condensed consolidated interim financial statements by recognizing a corresponding entry in “Other comprehensive income” based on IAS 8.8.

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

 

10   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Financial Position

 

As at           30 Jun 2018     31 Dec 2017  
Amounts x €’000    Note               

Non-current assets

       

Property, plant and equipment

     8        1,492,495       1,342,471  

Intangible assets

        61,872       60,593  

Goodwill

        38,900       38,900  

Deferred tax assets

        29,439       24,470  

Other investments

        4,731       3,693  

Other non-current assets

        18,338       13,674  
     

 

 

   

 

 

 
        1,645,775       1,483,801  

Current assets

       

Trade receivables and other current assets

        195,775       179,786  

Cash and cash equivalents

        133,563       38,484  
     

 

 

   

 

 

 
        329,338       218,270  
     

 

 

   

 

 

 

Total assets

        1,975,113       1,702,071  
     

 

 

   

 

 

 

Shareholders’ equity

       

Share capital

        7,160       7,141  

Share premium

        547,549       539,448  

Foreign currency translation reserve

        984       2,948  

Hedging reserve, net of tax

        (173     (169

Accumulated profit

        58,444       47,360  
     

 

 

   

 

 

 
        613,964       596,728  

Non-current liabilities

       

Other non-current liabilities

        19,536       15,080  

Deferred tax liabilities

        23,192       21,336  

Borrowings

     10        1,077,900       724,052  
     

 

 

   

 

 

 
        1,120,628       760,468  

Current liabilites

       

Trade payables and other current liabilities

        228,677       229,878  

Income tax liabilities

        7,371       6,237  

Borrowings

     10        4,473       108,760  
     

 

 

   

 

 

 
        240,521       344,875  
     

 

 

   

 

 

 

Total liabilities

        1,361,149       1,105,343  
     

 

 

   

 

 

 

Total liabilities and shareholders’ equity

        1,975,113       1,702,071  
     

 

 

   

 

 

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

 

11   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

 

Amounts x €’000

   Share
capital
     Share
premium
     Foreign
currency
translation
reserve
    Hedging
reserve, net
of tax
    Accumu-
lated
income /
(deficit)
    Total equity  

Balance at 1 January 2018

     7,141        539,448        2,948       (169     47,360       596,728  

Net income

     —          —          —         —         12,238       12,238  

Other comprehensive income, net of tax

     —          —          (1,964     (4     (1,154     (3,122
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —          —          (1,964     (4     11,084       9,116  

Exercise of options and issue of restricted shares / performance shares

     19        1,238        —         —         —         1,257  

Share-based payments

     —          6,863        —         —         —         6,863  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total contribution by, and distributions to, owners of the Company

     19        8,101        —         —         —         8,120  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2018

     7,160        547,549        984       (173     58,444       613,964  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 January 2017(1)

     7,060        519,604        9,988       (243     12,360       548,769  

Profit for the period

     —          —          —         —         19,914       19,914  

Other comprehensive income, net of tax

     —          —          (2,515     49       —         (2,466
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —          —          (2,515     49       19,914       17,448  

Exercise of options and issue of restricted shares / performance shares

     46        4,006        —         —         —         4,052  

Share-based payments

     —          3,807        —         —         —         3,807  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total contribution by, and distributions to, owners of the Company

     46        7,813        —         —         —         7,859  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2017(1)

     7,106        527,417        7,473       (194     32,274       574,076  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

1)

Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

 

12   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Cash Flows

 

Amounts x €’000

   Three Months Ended     Six Months Ended  
     30 Jun
2018
    30 Jun
2017(1)
    30 Jun
2018
    30 Jun
2017(1)
 

Net income

     582       9,655       12,238       19,914  

Depreciation and amortisation

     32,191       27,209       61,750       51,392  

Share-based payments

     3,646       2,215       6,863       3,809  

Net finance expense

     22,895       10,920       34,299       21,207  

Income tax expense

     2,795       3,727       6,608       7,027  
  

 

 

   

 

 

   

 

 

   

 

 

 
     62,109       53,726       121,758       103,349  
  

 

 

   

 

 

   

 

 

   

 

 

 

Movements in trade receivables and other assets

     (13,858     (16,191     (20,055     (13,388

Movements in trade payables and other liabilities

     6,858       3,051       11,486       13,581  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated from / (used in) operations

     55,109       40,586       113,189       103,542  
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest and fees paid(2)

     (18,600     (2,462     (38,831     (20,912

Interest received

     —         8       —         (53

Income tax paid

     (4,893     (2,474     (8,166     (5,305
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from / (used in) operating activities

     31,616       35,658       66,192       77,272  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from / (used in) investing activities

        

Purchase of property, plant and equipment

     (117,534     (53,399     (211,751     (106,322

Financial investments - deposits

     114       (148     280       (366

Acquisition InterXion Science Park B.V.

     —         —         —         (77,517

Purchase of intangible assets

     (2,981     (3,042     (4,958     (4,876

Loans provided

     (834     (1,341     (1,251     (1,341
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from / (used in) investing activities

     (121,235     (57,930     (217,680     (190,422
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from / (used in) financing activities

        

Proceeds from exercised options

     1,186       541       1,257       4,088  

Repayment of mortgages

     (4,948     (872     (5,496     (1,420

Proceeds from revolving credit facilities

     69,376       —         148,814       74,775  

Repayments revolving credit facilities

     (250,724     —         (250,724     (30,000

Proceeds 4.75% Senior Notes

     990,000       —         990,000       —    

Repayment 6.00% Senior Secured Notes

     (634,375     —         (634,375     —    

Transaction costs 4.75% Senior Notes

     (1,192     —         (1,192     —    

Transaction costs 2018 revolving credit facility

     (1,636     —         (1,636     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from / (used in) financing activities

     167,687       (331     246,648       47,443  

Effect of exchange rate changes on cash

     159       (695     (81     (943
  

 

 

   

 

 

   

 

 

   

 

 

 

Net movement in cash and cash equivalents

     78,227       (23,298     95,079       (66,650

Cash and cash equivalents, beginning of period

     55,336       72,541       38,484       115,893  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

     133,563       49,243       133,563       49,243  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.
(2) Interest and fees paid is reported net of cash interest capitalised, which is reported as part of “Purchase of property, plant and equipment”.

The accompanying notes form an integral part of these Condensed Consolidated Interim Financial Statements.

 

13   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Notes to the Condensed Consolidated Interim Financial Statements

 

1

The Company

InterXion Holding NV (the “Company”) is domiciled in The Netherlands. The address of the Company’s registered office is Scorpius 30, 2132 LR, Hoofddorp, The Netherlands. The Condensed Consolidated Interim Financial Statements of the Company as at and for the three month and six month periods ended 30 June 2018 comprise the Company and its subsidiaries (together referred to as the “Group”). The Group is a leading pan-European operator of carrier neutral Internet data centres.

 

2

Basis of preparation

a) Statement of compliance

The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting. They do not include all the information required for full annual financial statements, and should be read in conjunction with the audited Consolidated Financial Statements of the Group as at and for the year ended 31 December 2017; these are contained in the 2017 Annual Report (Form 20-F) as filed with the Securities and Exchange Commission on 30 April 2018, which is publicly available on the company’s website – www.interxion.com, or from the SEC website – www.sec.gov.

b) Estimates, judgment and seasonality

The preparation of the Condensed Consolidated Interim Financial Statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In preparing these Condensed Consolidated Interim Financial Statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the Consolidated Financial Statements as at and for the year ended 31 December 2017 in the 2017 Annual Report (Form 20-F).

The Group’s operations are not significantly exposed to seasonality.

c) Correction of errors

Certain comparative amounts in the consolidated income statements, consolidated statements of comprehensive income and consolidated statements of cash flows have been restated to correct for immaterial errors with respect to share-based payments. The impact of this restatement is disclosed in note 12 – Correction of errors. Throughout the condensed consolidated interim financial statements, columns including comparative figures that have been restated, are indicated with ‘(1)’.

 

3

Significant accounting policies

The accounting policies applied by the Group in these Condensed Consolidated Interim Financial Statements are the same as those applied by the Group in its Consolidated Financial Statements as at and for the year ended 31 December 2017 in the 2017 Annual Report (Form 20-F), if necessary amended to include new Standards and Interpretations effective as of 1 January 2018.

 

14   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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The Group has initially applied IFRS 15 and IFRS 9 at 1 January 2018. It has applied IFRS 15 using the cumulative effect method, under which the comparative information is not restated. It has also taken advantage of the exemption in paragraph 7.2.15 of IFRS 9 from restating prior periods in respect of IFRS 9’s classification and measurement (including impairment) requirements. Compared to the accounting principles as applied in the 2017 financial statements, these new Standards and Interpretations did not have a significant impact on the financial position or performance of the Group.

 

4

Financial risk management

The Group’s financial risk management objectives and policies are consistent with those disclosed in the audited Consolidated Financial Statements in the 2017 Annual Report (Form 20-F).

 

5

Information by segment

Operating segments are to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.

There are two segments: the first is the Big4 which comprises France, Germany, The Netherlands and the United Kingdom; the second is Rest of Europe, which comprises Austria, Belgium, Denmark, Ireland, Spain, Sweden and Switzerland. Shared expenses, such as corporate management, general and administrative expenses, loans and borrowings, and related expenses and income tax assets and liabilities, are stated in Corporate and other.

The performance of the operating segments is primarily assessed based on the measures of revenue and Adjusted EBITDA. Other information provided, except as noted below, to the Board of Directors is measured in a manner consistent with that in the financial statements.

 

15   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO

 

Amounts x €’000

   FR, DE
NL and UK
    Rest of
Europe
    Subtotal     Corporate
and other
    Total  

For the three months ended 30 June 2018

          

Recurring revenue

     87,317       44,392       131,709       —         131,709  

Non-recurring revenue

     4,196       2,919       7,115       —         7,115  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     91,513       47,311       138,824       —         138,824  

Cost of sales

     (33,646     (16,552     (50,198     (3,503     (53,701
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     57,867       30,759       88,626       (3,503     85,123  

Sales and marketing costs

     (2,890     (1,562     (4,452     (5,149     (9,601

General and administrative costs

     (24,666     (10,554     (35,220     (14,030     (49,250
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     30,311       18,643       48,954       (22,682     26,272  

Net finance expense

             (22,895
          

 

 

 

Profit before tax

             3,377  
          

 

 

 

Total assets

     1,360,299       443,999       1,804,298       170,815       1,975,113  

Total liabilities

     269,553       83,303       352,856       1,008,293       1,361,149  

Capital expenditure, including intangible assets(2)

     (82,556     (29,805     (112,361     (8,154     (120,515

Depreciation and amortisation

     (20,818     (8,223     (29,041     (3,150     (32,191

Adjusted EBITDA

     51,388       27,171       78,559       (15,128     63,431  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts x €’000

   FR, DE
NL and UK
    Rest of
Europe
    Subtotal     Corporate
and other
    Total  

For the three months ended 30 June 2017 (1)

          

Recurring revenue

     74,183       39,244       113,427       —         113,427  

Non-recurring revenue

     4,688       2,708       7,396       —         7,396  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     78,871       41,952       120,823       —         120,823  

Cost of sales

     (30,003     (14,591     (44,594     (3,332     (47,926
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     48,868       27,361       76,229       (3,332     72,897  

Sales and marketing costs

     (2,518     (1,426     (3,944     (4,341     (8,285

General and administrative costs(1)

     (21,566     (9,490     (31,056     (9,254     (40,310
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     24,784       16,445       41,229       (16,927     24,302  

Net finance expense

             (10,920
          

 

 

 

Profit before tax

             13,382  
          

 

 

 

Total assets

     1,130,979       379,372       1,510,351       78,860       1,589,211  

Total liabilities

     231,445       82,176       313,621       701,515       1,015,136  

Capital expenditure, including intangible assets(2)

     (40,753     (13,635     (54,388     (2,053     (56,441

Depreciation and amortisation

     (18,097     (7,382     (25,479     (1,730     (27,209

Adjusted EBITDA

     43,115       24,041       67,156       (12,843     54,313  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.

(2)

Capital expenditure, including intangible assets, represents payments to acquire property, plant and equipment and intangible assets, as recorded in the consolidated statement of cash flows as “Purchase of property, plant and equipment” and “Purchase of intangible assets,” respectively.

 

16   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO

 

Amounts x €’000

   FR, DE
NL and UK
    Rest of
Europe
    Subtotal     Corporate
and other
    Total  

For the six months ended 30 June 2018

          

Recurring revenue

     170,771       87,900       258,671       —         258,671  

Non-recurring revenue

     8,653       5,336       13,989       —         13,989  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     179,424       93,236       272,660       —         272,660  

Cost of sales

     (67,883     (31,448     (99,331     (7,067     (106,398
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     111,541       61,788       173,329       (7,067     166,262  

Other income

     86       —         86       —         86  

Sales and marketing costs

     (5,128     (3,177     (8,305     (10,004     (18,309

General and administrative costs

     (48,553     (20,369     (68,922     (25,972     (94,894
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     57,946       38,242       96,188       (43,043     53,145  

Net finance expense

             (34,299
          

 

 

 

Profit before tax

             18,846  
          

 

 

 

Total assets

     1,360,299       443,999       1,804,298       170,815       1,975,113  

Total liabilities

     269,553       83,303       352,856       1,008,293       1,361,149  

Capital expenditure, including intangible assets(2)

     (153,130     (52,472     (205,602     (11,107     (216,709

Depreciation, amortisation, impairments

     (40,903     (15,971     (56,874     (4,876     (61,750

Adjusted EBITDA

     99,366       54,742       154,108       (29,802     124,306  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts x €’000

   FR, DE
NL and UK
    Rest of
Europe
    Subtotal     Corporate
and other
    Total  

For the six months ended 30 June 2017 (1)

          

Recurring revenue

     144,181       77,521       221,702       —         221,702  

Non-recurring revenue

     8,070       5,001       13,071       —         13,071  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     152,251       82,522       234,773       —         234,773  

Cost of sales

     (57,951     (28,070     (86,021     (6,000     (92,021
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     94,300       54,452       148,752       (6,000     142,752  

Other income

     27       —         27       —         27  

Sales and marketing costs

     (4,470     (2,957     (7,427     (8,783     (16,210

General and administrative costs(1)

     (41,087     (18,340     (59,427     (18,994     (78,421
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     48,770       33,155       81,925       (33,777     48,148  

Net finance expense

             (21,207
          

 

 

 

Profit before tax

             26,941  
          

 

 

 

Total assets

     1,130,979       379,372       1,510,351       78,860       1,589,211  

Total liabilities

     231,445       82,176       313,621       701,515       1,015,136  

Capital expenditure, including intangible assets(2)

     (75,819     (29,852     (105,671     (5,527     (111,198

Depreciation, amortisation, impairments

     (33,996     (14,340     (48,336     (3,056     (51,392

Adjusted EBITDA

     83,284       47,695       130,979       (25,329     105,650  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.

(2)

Capital expenditure, including intangible assets, represents payments to acquire property, plant and equipment and intangible assets, as recorded in the consolidated statement of cash flows as “Purchase of property, plant and equipment” and “Purchase of intangible assets,” respectively.

 

17   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Reconciliation to adjusted EBITDA

 

Amounts x €’000

   Three Months Ended     Six Months Ended  
Consolidated   

30 Jun

2018

   

30 Jun

2017 (1)

   

30 Jun

2018

   

30 Jun

2017 (1)

 

Net income

     582       9,655       12,238       19,914  

Income tax expense

     2,795       3,727       6,608       7,027  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit before taxation

     3,377       13,382       18,846       26,941  

Finance income

     (3,386     (373     (3,497     (682

Finance expense

     26,281       11,293       37,796       21,889  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     26,272       24,302       53,145       48,148  

Depreciation and amortisation

     32,191       27,209       61,750       51,392  

Share-based payments

     3,927       2,246       7,249       4,808  

Income or expense related to the evaluation and execution of potential mergers or acquisitions:

        

M&A transaction costs(2)

     1,041       556       2,248       1,329  

Adjustments related to terminated or unused datacenter sites:

        

Income from sub-leases of unused data centre sites(3)

     —         —         (86     (27
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA(4)

     63,431       54,313       124,306       105,650  
  

 

 

   

 

 

   

 

 

   

 

 

 

Amounts x €’000

   Three Months Ended     Six Months Ended  
FR, DE, NL and UK    30 Jun
2018
    30 Jun
2017 (1)
    30 Jun
2018
    30 Jun
2017 (1)
 

Operating income

     30,311       24,784       57,946       48,770  

Depreciation and amortisation

     20,818       18,097       40,903       33,996  

Share-based payments

     259       234       603       545  

Adjustments related to terminated or unused datacenter sites:

        

Income from sub-leases of unused data centre sites(3)

     —         —         (86     (27
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA(4)

     51,388       43,115       99,366       83,284  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.
(2) “M&A transaction costs” are costs associated with the evaluation, diligence and conclusion or termination of merger or acquisition activity. These costs are included in “General and administrative costs”.
(3) “Income from sub-leases of unused data centre sites” represents the income on sub-lease of portions of unused data centre sites to third parties. This income is treated as “Other income”.
(4) “Adjusted EBITDA” is a non-IFRS financial measure. See “Non-IFRS Financial Measures” for more information, including why we believe Adjusted EBITDA is useful, and the limitations on the use of Adjusted EBITDA.

 

18   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Amounts x €’000

   Three Months Ended      Six Months Ended  
Rest of Europe    30 Jun
2018
     30 Jun
2017 (1)
     30 Jun
2018
     30 Jun
2017 (1)
 

Operating income

     18,643        16,445        38,242        33,155  

Depreciation and amortisation

     8,223        7,382        15,971        14,340  

Share-based payments

     305        214        529        200  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(2)

     27,171        24,041        54,742        47,695  
  

 

 

    

 

 

    

 

 

    

 

 

 

Amounts x €’000

   Three Months Ended      Six Months Ended  
Corporate and other   

30 Jun

2018

    

30 Jun

2017 (1)

    

30 Jun

2018

    

30 Jun

2017 (1)

 

Operating income

     (22,682      (16,927      (43,043      (33,777

Depreciation and amortisation

     3,150        1,730        4,876        3,056  

Share-based payments

     3,363        1,798        6,117        4,063  

Income or expense related to the evaluation and execution of potential mergers or acquisitions:

           

M&A transaction costs(3)

     1,041        556        2,248        1,329  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(2)

     (15,128      (12,843      (29,802      (25,329
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Certain comparative figures for the three month and six month periods ended 30 June 2017 have been restated. For further details, see note 12.
(2) “Adjusted EBITDA” is a non-IFRS financial measure. See “Non-IFRS Financial Measures” for more information, including why we believe Adjusted EBITDA is useful, and the limitations on the use of Adjusted EBITDA.
(3) “M&A transaction costs” are costs associated with the evaluation, diligence and conclusion or termination of merger or acquisition activity. These costs are included in “General and administrative costs”.

 

19   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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6

Finance income and expense

 

     Three months ended      Six Months Ended  
     30 Jun
2018
     30 Jun
2017
     30 Jun
2018
     30 Jun
2017
 
     €’000      €’000      €’000      €’000  

Bank and other interest

     100        74        183        87  

Bond premium and fees in income

     2,725        299        3,033        595  

Foreign currency exchange profits

     561        —          281        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance income

     3,386        373        3,497        682  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense on Senior Secured Notes, bank and other loans

     (14,702      (9,207      (24,655      (18,169

Interest expense on finance leases

     (801      (796      (1,663      (1,583

Other financial expenses

     (10,778      (673      (11,478      (1,210

Foreign currency exchange losses

     —          (617      —          (927
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance expense

     (26,281      (11,293      (37,796      (21,889
  

 

 

    

 

 

    

 

 

    

 

 

 

Net finance expense

     (22,895      (10,920      (34,299      (21,207
  

 

 

    

 

 

    

 

 

    

 

 

 

Net finance expense for the three-months and six-months periods ended 30 June 2018 includes the impact of gains and lossed recognised with respect to the redemption of the Senior Secured Notes due 2020 and the termination of three revolving credit facility agreements.

 

7

Income tax expense

The Group’s consolidated effective tax rate in respect of continuing operations was 83% and 35% for the three-months and six-months periods ended 30 June 2018, respectively. These rates include the effect of a decrease in profit before taxation due to one-off costs associated with refinancing activities, and the impact of non-deductible share-based payments (both during the three-months and six-months periods).

 

8

Property, plant and equipment

During the three and six month periods ended 30 June 2018, the Group purchased tangible fixed assets (primarily data-centre-related assets) at a cost of €121.7 million and €210.6 million, respectively (three and six month periods ended 30 June 2017: €54.4 million and €117.4 million, respectively).

Capitalised interest relating to borrowing costs for the three and six month periods ended 30 June 2018 amounted to €1.2 million and €2.1 million, respectively (three and six month periods ended 30 June 2017: €0.9 million and €1.8 million, respectively). The cash effect of the interest capitalised for the three and six month periods ended 30 June 2018 amounted to €2.1 million and €3.4 million, respectively, which in the Consolidated Statements of Cash Flows is presented under “Purchase of property, plant and equipment” (three and six month periods ended 30 June 2017: nil and €2.2 million, respectively).

At 30 June 2018, the Group had outstanding capital commitments of €241.4 million. These commitments are expected to be substantially settled during the remainder of 2018.

 

20   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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9

Financial instruments

Fair values versus carrying amounts

At 30 June 2018, the market price of the 4.75% Senior Notes due 2025 was 100.360. Using this market price, the fair value of the Senior Notes due 2025 was approximately €1,004 million, compared with their nominal value of €1,000 million.

At 30 June 2018, the Group had a cash flow hedge carried at a negative fair value, to hedge the interest rate risk of part of two mortgages.

At 30 June 2018, the fair value of all mortgages approximated to their carrying amount of €48.2 million (30 June 2017: €53.1 million). As of 30 June 2018, the fair value of the financial lease liabilities was €56.3 million (30 June 2017: €54.3 million) compared with the carrying amount of €50.8 million (30 June 2017: €51.4 million).

The carrying amounts of other financial assets and liabilities approximate to their fair value.

Fair values and hierarchy

The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified. Significant valuation issues are reported to the Company’s Audit Committee.

When measuring the fair value of an asset or a liability, the Company uses observable market data to the extent possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

 

Level 1:    quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:    inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3:    inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

 

21   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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The values of the instruments are:

 

     Carrying      Fair value  
     value      Level 1      Level 2      Level 3  

30 June 2018

           

Senior Notes due 2025

     (983,368      (1,003,600      —          —    

Finance leases

     (50,806      —          (54,246      —    

Mortgages

     (48,199      —          (48,199      —    

Other investments

     4,731        —          —          4,731  

Interest rate swap

     (241      —          (241      —    

31 December 2017

           

Senior Secured Notes due 2020

     (628,141      (647,000      —          —    

2017 Senior Secured Revolving Facility

     (99,904      —          (99,904      —    

Finance leases

     (51,127      —          (54,282      —    

Mortgages

     (53,640      —          (53,640      —    

Other investments

     3,693        —          3,693        —    

Interest rate swap

     (255      —          (255      —    

Conversion option

     0        —          —          0  

The Level 3 financial asset represents the convertible loan of USD 5.5 million (excluding accrued interest) provided by Interxion Participation 1 BV. Interxion has the option to convert the loan into equity on the maturity date or upon occurrence of an enforcement event. Upon implementation of IFRS 9 – Financial Instruments, the convertible loan is considered a single instrument, to be carried at fair value through profit and loss. Accordingly, since 1 January 2018, it has been presented in Level 3. There have been no further transfers between levels of hierarchy.

Fair values were obtained from quoted market prices in active markets or, where no active market exists, by using valuation techniques. Valuation techniques include discounted cash flow models using inputs as market interest rates and cash flows.

10 Borrowings

Senior notes due 2025

On 18 June 2018, the Company issued an aggregate principal amount of €1,000 million 4.75% Senior Notes due 2025 (the “Senior Notes due 2025”). The proceeds of the Senior Notes due 2025 were used to satisfy and discharge the €625.0 million Senior Secured Notes due 2020 (the “Senior Secured Notes”) and indenture related thereto prior to 30 June 2018, to fully redeem the Senior Secured Notes and to repay the June 2013 super senior revolving facility (the “Super Senior Revolving Facility”), the March 2017 senior secured revolving facility (the “Senior Secured Revolving Facility”) and the March 2018 subordinated revolving facility (the “Subordinated Revolving Facility”). Furthermore, the proceeds were and will be used to pay all related fees and expenses, and for general corporate purposes.

The Senior Notes due 2025 are governed by an indenture dated 18 June 2018, between the Company, as issuer, the guarantors party thereto, The Bank of New York Mellon, London Branch, as trustee and paying agent, and The Bank of New York Mellon SA/NV, Luxembourg Branch, as transfer agent and registrar (the “Indenture”). The indenture

 

22   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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contains restrictive covenants including, but not limited to, limitations or restrictions on our ability to incur or guarantee debt, create certain liens, transfer or sell certain assets and merge or consolidate with other entities. The restrictive covenants are subject to customary exceptions.

Revolving credit facility

On 18 June 2018, the Company entered into an unsecured multicurrency revolving loan facility agreement (the “Revolving Facility Agreement”) between, among others, ABN AMRO Bank N.V., Bank of America Merrill Lynch International Limited, Barclays Bank PLC, Citigroup Global Markets Limited and Crédit Agricole CIB S.A. as arrangers, and ABN AMRO Bank N.V. as agent, pursuant to which a €200.0 million revolving loan facility (the “Facility”) was made available to the Company.

The Facility has an initial maturity date of 18 June 2023. The Facility initially bears interest at an annual rate equal to EURIBOR (subject to a 0% floor) plus a margin of 2.00% per annum from the date of the Revolving Facility Agreement, subject to a margin ratchet pursuant to which the margin may increase thereafter on certain specified dates and subject to a maximum margin of 3.50% per annum. In addition, the Company is required to pay a commitment fee computed at the rate of 30% of the applicable margin on any available amount under the Facility.

As of 30 June 2018, the Facility was undrawn.

 

11

Related party transactions

In the second quarter of 2018, the Board of Directors approved the initial award of 39,311 performance shares to certain members of key management, excluding the Executive Director. Furthermore, both the Board of Directors and the Annual General Meeting of Shareholders approved the final performance share award of 60,060 performance shares to the Executive Director, related to the performance period from 1 January 2015 to 31 December 2015.

On 29 June 2018, the Annual General Meeting of Shareholders approved to award restricted shares equivalent to a value of EUR 40,000 to each of the Company’s Non-Executive Directors.

 

12

Correction of errors

During the preparation of the 2017 annual consolidated financial statements, the Company became aware that the share-based payment expenses have not been properly recognised in accordance with IFRS 2, resulting in an understatement of such expenses in its Consolidated Financial Statements over 2014-2016, which corrections have been assessed to be immaterial to each of those prior periods. The errors have been corrected in the 2017 20-F, as filed with the SEC on 30 April 2018, by restating each of the affected financial statement line items for prior periods.

Certain of the comparative financial information for each of the three-month and six-months periods ended 30 June 2017 included in the Condensed Consolidated Interim Income Statements and Condensed Consolidated Interim Statements of Comprehensive Income within these condensed consolidated interim financial statements have been restated to correct for the error, which amounted to €0.7 million and €1.2 million in the three-month and six-months periods ended 30 June 2017, respectively.

 

23   

Interim Report: Three-month and six-month period ended 30 June 2018

These Condensed Consolidated Interim Financial Statements are unaudited