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 2017

(Commission File No. 001-35053)

 

 

INTERXION HOLDING N.V.

(Translation of Registrant’s Name into English)

 

 

Tupolevlaan 24, 1119 NX Schiphol-Rijk, 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 2017 (the “Interim Report”).

This report was prepared in accordance with the indenture (the “Indenture”) dated as of 3 July 2013, as amended 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, principal paying agent and transfer agent, The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent and registrar, and Barclays Bank PLC, as security trustee.

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 2017.


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 2017

Exhibit 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 2017

Schiphol-Rijk, 2 August 2017


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Financial Highlights

 

    Revenue increased by 16% to €120.8 million (2Q 2016: €104.0 million).

 

    Recurring revenue1 increased by 14% to €113.4 million (2Q 2016: €99.3 million).

 

    Net income increased by 13% to €10.3 million (2Q 2016: €9.2 million).

 

    Adjusted net income2 increased by 12% to €10.1 million (2Q 2016: €9.0 million).

 

    Earnings per diluted share increased by 11% to €0.14 (2Q 2016: €0.13).

 

    Adjusted earnings2 per diluted share increased by 12% to €0.14 (2Q 2016: €0.13).

 

    Adjusted EBITDA2 increased by 15% to €54.3 million (2Q 2016: €47.3 million).

 

    Adjusted EBITDA margin decreased to 45.0% (2Q 2016: 45.5%).

 

    Capital expenditures, including intangible assets3, were €56.4 million (2Q 2016: €62.6 million).

Operating Highlights

 

    Equipped space4 increased by 2,900 square metres in the quarter to 117,000 square metres.

 

    Revenue generating space4 increased by 5,200 square metres in the quarter to 95,000 square metres.

 

    Utilisation rate at the end of the quarter was 81%.

 

    During the second quarter, Interxion completed the following expansions:

 

    300 sqm expansion in Copenhagen,

 

    900 sqm expansion in Marseille,

 

    600 sqm expansion in Paris, and

 

    1,100 sqm expansion in Vienna.

 

2   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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Quarterly Review

Revenue in the second quarter of 2017 was €120.8 million, a 16% increase over the second quarter of 2016 and a 6% increase over the first quarter of 2017. Recurring revenue was €113.4 million, a 14% increase over the second quarter of 2016 and a 5% increase over the first quarter of 2017. Recurring revenue in the second quarter represented 94% of total revenue. On an organic constant currency5 basis, revenue in the second quarter of 2017 was 16% higher than in the second quarter of 2016 and 5% higher than in the first quarter of 2017.

Cost of sales in the second quarter of 2017 was €47.9 million, a 21% increase over the second quarter of 2016 and a 9% increase over the first quarter of 2017.

Gross profit was €72.9 million in the second quarter of 2017, a 13% increase over the second quarter of 2016 and a 4% increase over the first quarter of 2017. Gross profit margin was 60.3% in the second quarter of 2017, compared with 61.9% in the second quarter of 2016 and 61.3% in the first quarter of 2017.

Sales and marketing costs in the second quarter of 2017 were €8.3 million, a 14% increase over the second quarter of 2016 and a 5% increase from the first quarter of 2017.

Other general and administrative costs, which exclude depreciation, amortisation, impairments, share-based payments, and M&A transaction costs, were €10.3 million in the second quarter of 2017, a 6% increase over the second quarter of 2016 and a 3% decrease from the first quarter of 2017.

Depreciation, amortisation, and impairments in the second quarter of 2017 was €27.2 million, an increase of 24% from the second quarter of 2016 and a 13% increase from the first quarter of 2017.

Operating income in the second quarter of 2017 was €25.0 million, an increase of 6% from the second quarter of 2016 and a 2% increase from the first quarter of 2017.

Net finance expense for the second quarter of 2017 was €10.9 million, a 7% increase over the second quarter of 2016 and an 6% increase over the first quarter of 2017. Comparisons to prior periods are impacted by the issuance of €150.0 million of additional 6.00% senior secured notes due 2020 in April 2016 and drawings under our €75.0 million senior secured revolving facility that we entered into in March 2017.

Income tax expense for the second quarter of 2017 was €3.7 million, an 11% decrease compared with the second quarter of 2016 and a 13% increase from the first quarter of 2017.

Net income was €10.3 million in the second quarter of 2017, a 13% increase over the second quarter of 2016 and a 4% decrease from the first quarter of 2017.

Adjusted net income was €10.1 million in the second quarter of 2017, a 12% increase over the second quarter of 2016 and a 6% decrease from the first quarter of 2017.

Adjusted EBITDA for the second quarter of 2017 was €54.3 million, a 15% increase over the second quarter of 2016 and a 6% increase over the first quarter of 2017. Adjusted EBITDA margin was 45.0% in the second quarter of 2017, compared with 45.5% in the second quarter of 2016 and 45.1% in the first quarter of 2017.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €40.6 million in the second quarter of 2017, compared with €39.3 million in the second quarter of 2016 and €63.0 million in the first quarter of 2017.

Capital expenditures, including intangible assets, were €56.4 million in the second quarter of 2017, compared with €62.6 million in the second quarter of 2016 and €54.8 million in the first quarter of 2017.

Cash and cash equivalents were €49.2 million at 30 June 2017, compared with €115.9 million at year end 2016. Total borrowings, net of deferred revolving facility financing fees, were €777.7 million at 30 June 2017, compared with €735.0 million at year end 2016. On 9 March 2017, we entered into a €75.0 million senior secured revolving facility. As of 30 June 2017, €45.0 million was drawn. On 28 July 2017, we increased the aggregate capacity of this facility to €100.0 million.

The following capacity metrics do not include Science Park. Equipped space at the end of the second quarter of 2017 was 117,000 square metres, compared with 104,200 square metres at the end of the second quarter of 2016 and 114,100 square metres at the end of the first quarter of 2017. Revenue generating space at the end of the second quarter of 2017 was 95,000 square metres, compared with 81,600 square metres at the end of the second quarter of 2016 and 89,800 square metres at the end of the first quarter of 2017. Utilisation rate, the ratio of revenue-generating space to equipped space, was 81% at the end of the second quarter of 2017, compared with 78% at the end of the second quarter of 2016 and 79% at the end of the first quarter of 2017.

 

3   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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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  Equipped space and Revenue generating space (and other metrics derived from these measures) exclude Interxion Science Park, which was acquired on 24 February 2017.

 

5  We present organic constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of acquisitions and foreign currency rate fluctuations. For purposes of calculating Revenue on an organic constant currency basis, results from entities acquired during the current and comparison period are excluded. Also, 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 an organic constant currency basis, is as follows:

 

Three Months Ended 30 June 2017

   Year-on-year     Sequential  

Reported total revenue growth

     16     6

Add back: impact of foreign currency translation

     1     0

Reverse: impact of acquired ISP business

     (2 %)      (1 %) 
  

 

 

   

 

 

 

Total revenue growth on an organic constant currency basis

     16     5
  

 

 

   

 

 

 

Percentages may not add due to rounding

 

4   

Interim Report: Three-month and six-month periods ended 30 June 2017

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 as of 3 July 2013, 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, principal paying agent and transfer agent, The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent and registrar, and Barclays Bank PLC, as security trustee, and 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, 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 this Interim Report 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) EBITDA; (ii) Adjusted EBITDA; (iii) Recurring revenue; (iv) Revenue on an organic constant currency basis; (v) Adjusted net income; (vi) Adjusted basic earnings per share and (vii) Adjusted diluted earnings per share.

Other companies may present EBITDA, Adjusted EBITDA, Recurring revenue, Revenue on an organic constant currency basis, Adjusted net income, Adjusted basic earnings per share and Adjusted diluted earnings per share 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.

EBITDA, Adjusted EBITDA, Recurring revenue and Revenue on an organic constant currency basis

We define EBITDA as net income plus income tax expense, net finance expense, depreciation, amortisation and impairment of assets.

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

 

    Share-based payments – primarily the fair value at the date of grant to employees of equity awards, are recognised as an employee expense over the vesting period. 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 ongoing operating performance.

 

5   

Interim Report: Three-month and six-month periods ended 30 June 2017

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 for 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 monthly from colocation, connectivity and associated power charges, office space, amortized set-up fees 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 EBITDA and 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 EBITDA and Adjusted EBITDA facilitates comparisons between us and other data centre operators (including other data centre operators that are REITs) and other infrastructure based businesses. EBITDA and Adjusted EBITDA are also relevant measures used in the financial covenants of our €100.0 million revolving credit facility, our €100.0 million senior secured revolving facility and our 6.00% Senior Secured Notes due 2020.

A reconciliation from net income to EBITDA and from EBITDA to Adjusted EBITDA is provided in the notes to the Condensed Consolidated Interim Financial Statements. EBITDA, 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 believe that revenue growth is a key indicator of how a company is progressing from period to period and presenting organic 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 of currency exchange rates.

 

6   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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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.

 

    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, litigation gains and losses or windfall gains and losses.

Management believe 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 (loss) 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 the tables attached to this Interim Report.

Adjusted basic earnings per share and Adjusted diluted earnings per share amounts are determined on Adjusted net income. A reconciliation from reported Net Income to Adjusted Net Income is provided herein.

 

7   

Interim Report: Three-month and six-month periods ended 30 June 2017

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  
Consolidated    30 Jun
2017
     30 Jun
2016
     30 Jun
2017
     30 Jun
2016
 

Net income

     10,342        9,165        21,154        19,384  

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

           

M&A transaction costs

     556        492        1,329        721  

Adjustments related to capitalised interest

     (853      (701      (1,765      (1,166
  

 

 

    

 

 

    

 

 

    

 

 

 
     (297      (209      (436      (445

Tax effect of above add backs and reversals

     74        52        109        111  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

     10,119        9,008        20,827        19,050  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reported basic EPS: (€)

     0.15        0.13        0.30        0.28  

Reported diluted EPS: (€)

     0.14        0.13        0.30        0.27  

Adjusted basic EPS: (€)

     0.14        0.13        0.29        0.27  

Adjusted diluted EPS: (€)

     0.14        0.13        0.29        0.27  

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 45 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 600 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 periods ended 30 June 2017

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 2017     30 Jun 2016     30 Jun 2017     30 Jun 2016  

Revenue

     5        120,823       104,026       234,773       206,026  

Cost of sales

     5        (47,926     (39,663     (92,021     (78,782
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        72,897       64,363       142,752       127,244  

Other income

     5        —         33       27       130  

Sales and marketing costs

     5        (8,285     (7,284     (16,210     (15,008

General and administrative costs

     5        (39,623     (33,568     (77,181     (65,953
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

        24,989       23,544       49,388       46,413  

Finance income

     6        373       266       682       269  

Finance expense

     6        (11,293     (10,436     (21,889     (18,397
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit before taxation

        14,069       13,374       28,181       28,285  

Income tax expense

     7        (3,727     (4,209     (7,027     (8,901
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income

        10,342       9,165       21,154       19,384  
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share

           

Basic earnings per share: (€)

        0.15       0.13       0.30       0.28  

Diluted earnings per share: (€)

        0.14       0.13       0.30       0.27  

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

 

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Interim Report: Three-month and six-month periods ended 30 June 2017

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 2017      30 Jun 2016      30 Jun 2017      30 Jun 2016  

Net income

     10,342        9,165        21,154        19,384  

Other comprehensive income

           

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

           

Foreign currency translation differences(a)

     (3,133      (3,277      (2,669      (9,983

Effective portion of changes in fair value of cash flow hedge

     27        (38      65        (135

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

           

Foreign currency translation differences

     193        476        154        1,289  

Effective portion of changes in fair value of cash flow hedge

     (7      13        (16      45  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

     (2,920      (2,826      (2,466      (8,784
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income attributable to shareholders

     7,422        6,339        18,688        10,600  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) The foreign currency translation differences are primarily related to exchange rate differences on equities and permanent loans in GBP.

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

 

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Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Financial Position

 

As at           30 Jun 2017     31 Dec 2016  
All amounts in €’000    Note               

Non-current assets

       

Property, plant and equipment

     8        1,235,319       1,156,031  

Intangible assets

     12        59,650       28,694  

Goodwill

     12        39,364       —    

Deferred tax assets

        24,713       20,370  

Other investments

        3,281       1,942  

Other non-current assets

        14,442       11,914  
     

 

 

   

 

 

 
            1,376,769     1,218,951  

Current assets

       

Trade receivables and other current assets

        163,199       147,821  

Cash and cash equivalents

        49,243       115,893  
     

 

 

   

 

 

 
            212,442     263,714  
     

 

 

   

 

 

 

Total assets

        1,589,211       1,482,665  
     

 

 

   

 

 

 

Shareholders’ equity

       

Share capital

        7,106       7,060  

Share premium

        526,176       519,604  

Foreign currency translation reserve

        7,473       9,988  

Hedging reserve, net of tax

        (194     (243

Accumulated profit

        33,514       12,360  
     

 

 

   

 

 

 
            574,075     548,769  

Non-current liabilities

       

Other non-current liabilities

        13,505       11,718  

Deferred tax liabilities

        20,888       9,628  

Borrowings

     10        717,732       723,975  
     

 

 

   

 

 

 
            752,125     745,321  

Current liabilities

       

Trade payables and other current liabilities

        196,336       171,399  

Income tax liabilities

        6,406       5,694  

Borrowings

     10        60,269       11,482  
     

 

 

   

 

 

 
            263,011     188,575  
     

 

 

   

 

 

 

Total liabilities

        1,015,136       933,896  
     

 

 

   

 

 

 

Total liabilities and shareholders’ equity

        1,589,211       1,482,665  
     

 

 

   

 

 

 

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

 

11   

Interim Report: Three-month and six-month periods ended 30 June 2017

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 2017

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

Net income

     —          —          —         —         21,154       21,154  

Other comprehensive income, net of tax

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —          —          (2,515     49       21,154       18,688  

Exercise of options

     46        4,006        —         —         —         4,052  

Share-based payments

     —          2,566        —         —         —         2,566  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     46        6,572        —         —         —         6,618  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2017

     7,106        526,176        7,473       (194     33,514       574,075  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 January 2016

     6,992        507,296        20,865       (213     (27,523     507,417  

Profit for the period

     —          —          —         —         19,384       19,384  

Other comprehensive income, net of tax

     —          —          (8,693     (91     —         (8,784
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —          —          (8,693     (91     19,384       10,600  

Exercise of options

     56        6,120        —         —         —         6,176  

Share-based payments

     —          2,558        —         —         —         2,558  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     56        8,678        —         —         —         8,734  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2016

     7,048        515,974        12,172       (304     (8,139     526,751  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

 

12   

Interim Report: Three-month and six-month periods ended 30 June 2017

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 June

2017

   

30 June

2016(a)

   

30 June

2017

   

30 June

2016(a)

 

Net income

     10,342       9,165       21,154       19,384  

Depreciation, amortisation and impairments

     27,209       22,021       51,392       43,498  

Provision for onerous lease contracts

     —         (392     —         (1,271

Share-based payments

     1,528       1,158       2,569       2,558  

Net finance expense

     10,920       10,170       21,207       18,128  

Income tax expense

     3,727       4,209       7,027       8,901  
  

 

 

   

 

 

   

 

 

   

 

 

 
     53,726       46,331       103,349       91,198  
  

 

 

   

 

 

   

 

 

   

 

 

 

Movements in trade receivables and other assets

     (16,191     (3,732     (13,388     1,310  

Movements in trade payables and other liabilities

     3,051       (3,264     13,581       (2,758
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated from / (used in) operations

     40,586       39,335       103,542       89,750  
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest and fees paid(b)

     (2,462     (1,060     (20,912     (15,422

Interest received

     8       18       (53     25  

Income tax paid

     (2,474     (2,484     (5,305     (3,538
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from / (used in) operating activities

     35,658       35,809       77,272       70,815  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from / (used in) investing activities

        

Purchase of property, plant and equipment

     (53,399     (60,729     (106,322     (108,176

Financial investments—deposits

     (148     —         (366     748  

Acquisition Interxion Science Park B.V.

     —         —         (77,517     —    

Purchase of intangible assets

     (3,042     (1,863     (4,876     (4,419

Loans provided

     (1,341     —         (1,341     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from / (used in) investing activities

     (57,930     (62,592     (190,422     (111,847
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from / (used in) financing activities

        

Proceeds from exercised options

     541       4,250       4,088       6,176  

Proceeds from mortgages

     —         14,625       —         14,625  

Repayment of mortgages

     (872     (948     (1,420     (1,268

Proceeds from revolving credit facilities

     —         —         74,775       —    

Repayments revolving facilities

     —         —         (30,000     —    

Proceeds 6.00% Senior Secured Notes due 2020

     —         155,346       —         155,346  

Interest received at issuance Additional Notes

     —         2,225       —         2,225  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from / (used in) financing activities

     (331     175,498       47,443       177,104  

Effect of exchange rate changes on cash

     (695     147       (943     (404
  

 

 

   

 

 

   

 

 

   

 

 

 

Net movement in cash and cash equivalents

     (23,298     148,862       (66,650     135,668  

Cash and cash equivalents, beginning of period

     72,541       40,492       115,893       53,686  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

     49,243       189,354       49,243       189,354  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Collaterised cash has been reclassified from “Cash and cash equivalents” to “Other current assets” and “Other non-current assets”. The impact on the consolidated statement of cash flows has been presented in investing cash flows. Comparative figures have been adjusted accordingly.
(b) 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 periods ended 30 June 2017

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 Tupolevlaan 24, 1119 NX, Schiphol-Rijk, 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 2017 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 2016; these are contained in the 2016 Annual Report (Form 20-F) as filed with the Securities and Exchange Commission on 30 March 2017, 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 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 2016 in the 2016 Annual Report (Form 20-F).

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

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 2016 in the 2016 Annual Report (Form 20-F), if necessary amended to include new Standards and Interpretations effective as of 1 January 2017.

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 2016 Annual Report (Form 20-F).

 

14   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO

 

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 periods ended 30 June 2017

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 2017

          

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

     (21,566     (9,490     (31,056     (8,567     (39,623
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     24,784       16,445       41,229       (16,240     24,989  

Net finance expense

             (10,920
          

 

 

 

Profit before tax

             14,069  
          

 

 

 

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*

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

Depreciation, amortisation, impairments

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

Adjusted EBITDA

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts x €’000

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

For the three months ended 30 June 2016

          

Recurring revenue

     63,773       35,558       99,331       —         99,331  

Non-recurring revenue

     2,608       2,087       4,695       —         4,695  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     66,381       37,645       104,026       —         104,026  

Cost of sales

     (24,264     (12,876     (37,140     (2,523     (39,663
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     42,117       24,769       66,886       (2,523     64,363  

Other income

     33       —         33       —         33  

Sales and marketing costs

     (1,993     (1,357     (3,350     (3,934     (7,284

General and administrative costs

     (17,783     (8,329     (26,112     (7,456     (33,568
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     22,374       15,083       37,457       (13,913     23,544  

Net finance expense

             (10,170
          

 

 

 

Profit before tax

             13,374  
          

 

 

 

Total assets

     954,598       340,529       1,295,127       177,972       1,473,099  

Total liabilities

     205,333       81,711       287,044       659,304       946,348  

Capital expenditure, including intangible assets*

     (43,627     (16,389     (60,016     (2,576     (62,592

Depreciation, amortisation, impairments

     (14,543     (6,387     (20,930     (1,091     (22,021

Adjusted EBITDA

     37,012       21,574       58,586       (11,240     47,346  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* 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 periods ended 30 June 2017

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 2017

          

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

     (41,087 )      (18,340     (59,427     (17,754     (77,181
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     48,770       33,155       81,925       (32,537     49,388  

Net finance expense

             (21,207
          

 

 

 

Profit before tax

             28,181  
          

 

 

 

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*

     (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  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts x €’000

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

For the six months ended 30 June 2016

          

Recurring revenue

     126,039       70,503       196,542       —         196,542  

Non-recurring revenue

     5,884       3,600       9,484       —         9,484  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     131,923       74,103       206,026       —         206,026  

Cost of sales

     (48,908 )      (24,954     (73,862     (4,920     (78,782
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     83,015       49,149       132,164       (4,920     127,244  

Other income

     130       —         130       —         130  

Sales and marketing costs

     (3,766 )      (2,732     (6,498     (8,510     (15,008

General and administrative costs

     (35,323 )      (16,065     (51,388     (14,565     (65,953
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     44,056       30,352       74,408       (27,995     46,413  

Net finance expense

             (18,128
          

 

 

 

Profit before tax

             28,285  
          

 

 

 

Total assets

     954,598       340,529       1,295,127       177,972       1,473,099  

Total liabilities

     205,333       81,711       287,044       659,304       946,348  

Capital expenditure, including intangible assets*

     (80,383     (26,671     (107,054     (5,540     (112,594

Depreciation, amortisation, impairments

     (28,835     (12,529     (41,364     (2,134     (43,498

Adjusted EBITDA

     73,193       43,089       116,282       (23,017     93,265  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* 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 periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO

 

Reconciliation to adjusted EBITDA

 

Amounts x €’000

   Three Months Ended      Six Months Ended  
    

30 Jun

2017

     30 Jun
2016
     30 Jun
2017
     30 Jun
2016
 

Consolidated

           

Net income

     10,342        9,165        21,154        19,384  

Income tax expense

     3,727        4,209        7,027        8,901  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit before taxation

     14,069        13,374        28,181        28,285  

Finance income

     (373      (266      (682      (269

Finance expense

     11,293        10,436        21,889        18,397  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     24,989        23,544        49,388        46,413  

Depreciation, amortisation and impairments

     27,209        22,021        51,392        43,498  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     52,198        45,565        100,780        89,911  

Share-based payments

     1,559        1,322        3,568        2,763  

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

           

M&A transaction costs(2)

     556        492        1,329        721  

Adjustments related to terminated or unused datacenter sites:

           

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

     —          (33      (27      (130
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     54,313        47,346        105,650        93,265  
  

 

 

    

 

 

    

 

 

    

 

 

 

Amounts x €’000

   Three Months Ended      Six Months Ended  
    

30 Jun

2017

    

30 Jun

2016

    

30 Jun

2017

    

30 Jun

2016

 

FR, DE, NL and UK

           

Operating income

     24,784        22,374        48,770        44,056  

Depreciation, amortisation and impairments

     18,097        14,543        33,996        28,835  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     42,881        36,917        82,766        72,891  

Share-based payments

     234        128        545        432  

Adjustments related to terminated or unused datacenter sites:

           

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

     —          (33      (27      (130
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     43,115        37,012        83,284        73,193  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) “EBITDA” and “Adjusted EBITDA” are non-IFRS financial measures. See “Non-IFRS Financial Measures” for more information on these measures, including why we believe that these supplemental measures are useful, and the limitations on the use of these supplemental measures.
(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”. In the quarter ended 30 June 2017, M&A transaction costs included €0.6 million related to other activity including the evaluation of potential asset acquisitions.
(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’.

 

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Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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Amounts x €’000

   Three Months Ended      Six Months Ended  
     30 Jun
2017
     30 Jun
2016
     30 Jun
2017
     30 Jun
2016
 

Rest of Europe

           

Operating income

     16,445        15,083        33,155        30,352  

Depreciation, amortisation and impairments

     7,382        6,387        14,340        12,529  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     23,827        21,470        47,495        42,881  

Share-based payments

     214        104        200        208  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     24,041        21,574        47,695        43,089  
  

 

 

    

 

 

    

 

 

    

 

 

 

Amounts x €’000

   Three Months Ended      Three Months Ended  
     30 Jun
2017
     30 Jun
2016
     30 Jun
2017
     30 Jun
2016
 

Corporate and other

           

Operating income

     (16,240      (13,913      (32,537      (27,995

Depreciation, amortisation and impairments

     1,730        1,091        3,056        2,134  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     (14,510      (12,822      (29,481      (25,861

Share-based payments

     1,111        1,090        2,823        2,123  

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

           

M&A transaction costs(2)

     556        492        1,329        721  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     (12,843      (11,240      (25,329      (23,017
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) “EBITDA” and “Adjusted EBITDA” are non-IFRS financial measures. See “Non-IFRS Financial Measures” for more information on these measures, including why we believe that these supplemental measures are useful, and the limitations on the use of these supplemental measures.
(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”. In the quarter ended 30 June 2017, M&A transaction costs included €0.6 million related to other activity including the evaluation of potential asset acquisitions.

 

19   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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6 Finance income and expense

 

Amounts x €’000

   Three Months Ended      Six Months Ended  
     30 Jun 2017      30 Jun 2016      30 Jun 2017      30 Jun 2016  

Bank and other interest

     74        28        87        31  

Bond premium and fees in income

     299        238        595        238  
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance income

     373        266        682        269  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense on Senior Secured Notes, bank and other loans

     (9,207      (8,716      (18,169      (15,633

Interest expense on finance leases

     (796      (830      (1,583      (1,657

Interest expense on provision for onerous lease contracts

     —          (4      —          (15

Other financial expenses

     (673      (438      (1,210      (786

Foreign currency exchange losses

     (617      (448      (927      (306
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance expense

     (11,293      (10,436      (21,889      (18,397
  

 

 

    

 

 

    

 

 

    

 

 

 

Net finance expense

     (10,920      (10,170      (21,207      (18,128
  

 

 

    

 

 

    

 

 

    

 

 

 

 

7 Income tax expense

The Group’s consolidated effective tax rate in respect of continuing operations was 26% and 25% for the three-months and six-months periods ended 30 June 2017, respectively. These rates include the effect of non-deductible share-based payments (both during the three-month and six-month periods) and an energy tax credit received in The Netherlands (only the six-month period).

 

8 Property, plant and equipment

During the three and six months periods ended 30 June 2017, the Group purchased tangible fixed assets (primarily data-centre-related assets) at a cost of €54.4 million and €117.4 million, respectively, (three and six months periods ended 30 June 2016: €93.5 million and €143.0 million, respectively). By acquiring Interxion Science Park, the Group added €15.3 million of property, plant and equipment in the first quarter of 2017. See note 12 for detailed information about this acquisition.

Capitalised interest relating to borrowing costs for the three and six months periods ended 30 June 2017 amounted to €0.9 million and €1.8 million, respectively (three and six months periods ended 30 June 2016: €0.7 million and €1.2 million, respectively). The cash effect of the interest capitalised for the three and six months periods ended 30 June 2017 amounted to nil and €2.2 million, respectively, which in the Consolidated Statements of Cash Flows is presented under “Purchase of property, plant and equipment” (three and six months periods ended 30 June 2016: nil and €1.0 million, respectively).

At 30 June 2017, the Group had outstanding capital commitments of €127.3 million. These commitments are expected to be substantially settled during the remainder of 2017.

 

20   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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9 Financial Instruments

Fair values versus carrying amounts

As of 30 June 2017, the market price of the 6.00% Senior Secured Notes due 2020 was 103.913 (30 June 2016: 105.146). Using this market price, the fair value of the Senior Secured Notes due 2020 would have been approximately €649 million (30 June 2016: €657 million), compared with their nominal value of €625 million (30 June 2016: €625 million).

At 30 June 2017, the Group had a cash flow hedge carried at a negative fair value, to hedge the interest rate risk of part of two mortgages.

As of 30 June 2017, the fair value of all mortgages approximated to their carrying amount of €53.1 million (30 June 2016: €57.1 million). As of 30 June 2017, the fair value of the financial lease liabilities was €54.3 million (30 June 2016: €55.2 million) compared with the carrying amount of €51.4 million (30 June 2016: €52.7 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.

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 periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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The values of the instruments are:

 

Amounts in €’000

   Carrying
value
     Level 1      Fair value
Level 2
     Level 3  

30 June 2017

           

Senior secured notes 6.00% due 2020

     (628,734      (649,000      —          —    

Finance leases

     (51,435      —          (54,346      —    

Mortgages

     (53,057      —          (53,057      —    

Convertible loan

     3,071        —          3,071        —    

Interest rate swap

     (292      —          (292      —    

Conversion option

     0        —          —          0  

31 December 2016

           

Senior secured notes 6.00% due 2020

     (629,327      (657,000      —          —    

Finance leases

     (51,718      —          (55,625      —    

Mortgages

     (54,412      —          (54,412      —    

Convertible loan

     1,895        —          1,895        —    

Interest rate swap

     (367      —          (367      —    

Conversion option

     0        —          —          0  

No changes in levels of hierarchy, or transfers between levels, occurred in the reporting period. 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.

The Level 3 financial asset represents the conversion option embedded in a USD 3.5 million convertible loan provided by Interxion Participation 1 B.V. Interxion has the option to convert the loan into equity on the maturity date or upon occurrence of an enforcement event. The embedded conversion option had a zero value as at 30 June 2017.

10 Borrowings

As at 30 June 2017, our €100.0 million revolving facility was undrawn.

Senior Secured Revolving Facility

On March 9, 2017, we entered into a €75.0 million senior secured revolving facility agreement (the “New Facility”) by and among InterXion Holding N.V., the guarantors thereunder, ABN AMRO Bank N.V., Bank of America Merrill Lynch International Limited and Citigroup Global Markets Limited as lenders thereunder, ABN AMRO Bank N.V., as agent and Barclays Bank PLC as security trustee. As of 30 June 2017, €45.0 million of this facility was drawn.

The New Facility has an initial maturity date of 12 months from the date of the New Facility with the Company having the option to extend the maturity date by a further six-month period in accordance with the terms of the

 

22   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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New Facility. The New Facility initially bears interest at a rate per annum equal to EURIBOR plus a margin of 2.25% per annum, subject to a margin ratchet, pursuant to which the margin may be increased to a maximum of 3.25% per annum if the New Facility is extended up to an additional six months after its initial maturity date.

11 Related party transactions

In the first quarter of 2017, the Board of Directors approved the actual initial award of 76,456 performance shares to certain members of key management, excluding the Executive Director, and the proposed actual initial award of 63,805 performance shares to the Executive Director, based on the level of the actual Company and individual performance from January 1, 2016 to December 31, 2016. On 30 June 2017, the Annual General Meeting of Shareholders approved the award to the Executive Director.

12 Acquisition Interxion Science Park

On February 24, 2017, the Group completed the acquisition of 100% of the share capital of Vancis B.V. (“Vancis”). Vancis operates colocation services from a data centre at Science Park, Amsterdam, The Netherlands, and a satellite facility in Almere, The Netherlands. After the acquisition, Vancis B.V. was renamed Interxion Science Park B.V. (“ISP”). Total consideration was €77.5 million of cash, which was paid immediately upon completion. The transaction was accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their respective fair values at the acquisition date.

The table below summarizes the preliminary purchase price allocation for the acquisition of ISP:

 

     €’000  

Property, plant and equipment

     15,341  

Trade receivables(1)

     1,165  

Other current assets

     1,369  

Trade payables and other liabilities

     (1,249

Provisions

     (280

Goodwill

     39,364  

Customer portfolio

     28,414  

Deferred taxes

     (6,607
  

 

 

 

Total purchase price

     77,517  

 

(1) Trade and other receivables represent contractual gross amounts less €30 thousand which was determined to be uncollectible at the date of acquisition.

Since the identified assets and liabilities are still being reviewed, the estimates used as of June 30, 2017, are subject to change, including the amounts allocated to the acquired property, plant and equipment, intangible assets, including goodwill and deferred taxes. Since the first quarter of 2017, changes in allocation of the purchase price resulted in an €0.9 million decrease of previously reported goodwill.

Goodwill is the excess consideration remaining after allocating the fair value of the other acquired assets and liabilities and represents expected future economic benefits, to be achieved by operating a data centre in close proximity to the virtual connectivity hub at Science Park, and is not expected to be deductible for tax purposes.

In connection with this acquisition, the Company recorded M&A transaction costs of approximately €1.2 million, which have been included in General and administrative costs as incurred.

Since the acquisition date, ISP contributed €2.6 million to total revenues and €0.2 million to the Group’s net income. If the acquisition had occurred on January 1, 2017, management estimates that consolidated revenue would have been €235.9 million, and net income for the period would have been €21.6 million. ISP is included in the Big4 segment.

 

23   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited


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13 Subsequent events

On 28 July 2017, we amended the terms of our €75.0 million senior secured revolving facility agreement dated 9 March 2017 to increase the amount available under the facility to €100.0 million and to add a second extension option enabling us to extend the maturity of this credit facility to 31 December 2018. Also, on 31 July 2017, we extended the maturity of our €100.0 million senior multicurrency revolving facility agreement dated 17 June 2013 from 3 July 2018 to 31 December 2018.

 

24   

Interim Report: Three-month and six-month periods ended 30 June 2017

These Condensed Consolidated Interim Financial Statements are unaudited