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 1 November 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 nine-month periods ended 30 September 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 nine-month periods ended 30 September 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: 1 November 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 nine-month periods

ended

30 September 2018

 

 

 

 

 

Hoofddorp, 1 November 2018


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Financial Highlights1    

 

   

Revenue increased 14% to €142.2 million (3Q 2017: €124.6 million).

 

   

Recurring revenue1 increased 15% to €134.8 million (3Q 2017: €117.4 million).

 

   

Net income increased 16% to €10.9 million (3Q 2017: €9.4 million).

 

   

Adjusted net income2 increased by 16% to €11.6 million (3Q 2017: €10.0 million).

 

   

Earnings per diluted share increased by 15% to €0.15 (3Q 2017: €0.13).

 

   

Adjusted earnings2 per diluted share increased by 16% to €0.16 (3Q 2017: €0.14).

 

   

Adjusted EBITDA2 increased by 17% to €65.8 million (3Q 2017: €56.2 million).

 

   

Adjusted EBITDA margin increased to 46.3% (3Q 2017: 45.1%).

 

   

Capital expenditures, including intangible assets3, were €103.2 million (3Q 2017: €75.2 million).

 

   

Issued €200 million aggregate principal amount of additional 4.75% Senior Notes due 2025 at an issue price of 103.00%.

Operating Highlights

 

   

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

 

   

3,300 sqm expansion across two data centres in Amsterdam;

 

   

2,400 sqm expansion across two data centres in Frankfurt, including the opening of FRA13;

  

 

1 

Certain comparative figures for the three months and nine months ended 30 September 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 our Condensed Consolidated Interim Financial Statements included on Form 6-K, filed with the SEC on 1 November 2018.

 

                                2   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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600 sqm expansion in Marseille;

 

   

1,200 sqm expansion in Vienna; and

 

   

200 sqm expansion in Zurich.

 

   

Equipped space increased by 7,700 square metres in the third quarter to 140,300 square metres.

 

   

Revenue generating space increased by 5,000 square metres in the third quarter to 111,200 square metres.

 

   

Utilisation rate at the end of the third quarter was 79%.

Quarterly Review

Revenue in the third quarter of 2018 was €142.2 million, a 14% increase over the third quarter of 2017 and a 2% increase over the second quarter of 2018. Recurring revenue was €134.8 million, a 15% increase over the third quarter of 2017 and a 2% increase over the second quarter of 2018. Recurring revenue in the third quarter represented 95% of total revenue. On a constant currency4 basis, revenue in the third quarter of 2018 was 14% higher than in the third quarter of 2017.

Cost of sales in the third quarter of 2018 was €55.9 million, a 13% increase over the third quarter of 2017 and a 4% increase over the second quarter of 2018.

Gross profit was €86.3 million in the third quarter of 2018, a 15% increase over the third quarter of 2017 and a 1% increase over the second quarter of 2018. Gross profit margin was 60.7% in the third quarter of 2018, compared with 60.2% in the third quarter of 2017 and 61.3% in the second quarter of 2018.

Sales and marketing costs in the third quarter of 2018 were €8.7 million, a 6% increase over the third quarter of 2017 and a 9% decrease from the second quarter of 2018.

Other general and administrative costs (excluding depreciation and amortisation, share-based payments, M&A transaction costs and other adjusting items) were €11.8 million in the third quarter of 2018, a 12% increase over the third quarter of 2017 and a 2% decrease from the second quarter of 2018.

 

                                3   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Depreciation and amortisation in the third quarter of 2018 was €32.9 million, an 18% increase from the third quarter of 2017 and a 2% increase from the second quarter of 2018.

Operating income in the third quarter of 2018 was €27.1 million, an 11% increase from the third quarter of 2017 and a 3% increase from the second quarter of 2018.

Net finance expense in the third quarter of 2018 was €11.7 million, an 8% increase from the third quarter of 2017 and a 49% decrease from the second quarter of 2018 (no change from the second quarter of 2018 when excluding €11.2 million of one-time financing charges related to the refinancing of our capital structure that occurred in the second quarter of 2018).

On 20 September 2018, Interxion completed the issuance of €200 million principal amount of additional 4.75% Senior Notes due 2025 at an issue price of 103.00%, resulting in net proceeds of €203.8 million.

Income tax expense for the third quarter of 2018 was €4.4 million, an 8% increase compared with the third quarter of 2017 and a 59% increase from the second quarter of 2018. The sequential increase in the quarterly income tax expense reflects the impact on taxable income of the one-time refinancing charges in the second quarter of 2018.

Net income was €10.9 million in the third quarter of 2018, a 16% increase over the third quarter of 2017 and a €10.3 million increase from the second quarter of 2018, which was impacted by €11.2 million of one-time charges relating to the refinancing in the second quarter of 2018.

Adjusted net income was €11.6 million in the third quarter of 2018, a 16% increase over the third quarter of 2017 and a 31% increase from the second quarter of 2018.

Adjusted EBITDA for the third quarter of 2018 was €65.8 million, a 17% increase over the third quarter of 2017 and a 4% increase over the second quarter of 2018. Adjusted EBITDA margin was 46.3% in the third quarter of 2018, compared with 45.1% in the third quarter of 2017 and 45.7% in the second quarter of 2018.

 

                                4   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Net cash flows from operating activities were €53.9 million in the third quarter of 2018, compared with €32.5 million in the third quarter of 2017 and €31.6 million in the second quarter of 2018.

Cash generated from operations5 was €60.9 million in the third quarter of 2018, compared with €55.2 million in the third quarter of 2017 and €55.1 million in the second quarter of 2018.

Capital expenditures, including intangible assets, were €103.2 million in the third quarter of 2018, compared with €75.2 million in the third quarter of 2017 and €120.5 million in the second quarter of 2018.

Cash and cash equivalents were €289.9 million at 30 September 2018, compared with €38.5 million at year end 2017.

Total borrowings, net of deferred financing fees, were €1,289.7 million at 30 September 2018, compared with €832.6 million at year end 2017.

Equipped space at the end of the third quarter of 2018 was 140,300 square metres, compared with 118,900 square metres at the end of the third quarter of 20176 and 132,600 square metres at the end of the second quarter of 2018. Revenue generating space at the end of the third quarter of 2018 was 111,200 square metres, compared with 97,100 square metres at the end of the third quarter of 20176 and 106,200 square metres at the end of the second quarter of 2018. Utilisation rate, the ratio of revenue-generating space to equipped space, was 79% at the end of the third quarter of 2018, compared with 82% at the end of the third quarter of 2017 and 80% at the end of the second quarter of 2018.

 

                                5   

Interim Report: Three-month and nine-month periods ended 30 September 2018

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 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 September 2018

   Year-on-year     Sequential  

Reported total revenue growth

     14.1     2.4

Add back: impact of foreign currency translation

     0.4     0.1
  

 

 

   

 

 

 

Total revenue growth on a constant currency basis

     14.5     2.5
  

 

 

   

 

 

 

Percentages may not sum due to rounding.

5 We define Cash generated from operations as net cash flows from operating activities, excluding interest and corporate income tax payments and receipts.

6 Starting from the end of 1Q 2018, the number of square metres includes 2,300 sqm of equipped space and 1,300 sqm of revenue generating space from Interxion Science Park. The number of square metres in 3Q 2017 excludes the impact of Interxion Science Park.

 

                                6   

Interim Report: Three-month and nine-month periods ended 30 September 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.

 

                                7   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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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 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 under IFRS, nor are they meant to be predictive of future results under IFRS.

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 on-going operational performance because it helps us and our investors evaluate the on-going operating performance of the business after removing the impact of acquisitions and currency exchange rates.

 

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Interim Report: Three-month and nine-month periods ended 30 September 2018

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 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.

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 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.

 

                                9   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Adjusted Net Income Reconciliation

 

€’000

   Three Months ended      Nine Months ended  
     30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

Consolidated

           

Net income

     10,900        9,409        23,138        29,322  

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

           

M&A transaction costs

     689        1,633        2,937        2,961  

Charges related to termination of financing arrangements(2)

     —          —          11,171        —    

Re-assessment of indirect taxes(3)

     1,734        —          1,734        —    

Adjustments related to capitalised interest

     (1,541      (840      (3,606      (2,605
  

 

 

    

 

 

    

 

 

    

 

 

 
     882        793        12,236        356  

Tax effect of above add backs and reversals

     (168      (198      (3,007      (89
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

     11,614        10,004        32,367        29,589  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reported basic EPS: (€)

     0.15        0.13        0.32        0.41  

Reported diluted EPS: (€)

     0.15        0.13        0.32        0.41  

Adjusted basic EPS: (€)

     0.16        0.14        0.45        0.42  

Adjusted diluted EPS: (€)

     0.16        0.14        0.45        0.41  

 

(1)

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

(2)

These charges relate to the repayment of our 6.00% Senior Secured Notes due 2020 and the termination of our revolving credit facility agreements in 2Q18.

(3)

This re-assessment relates to years prior to 2018 and is therefore not representative of our current on-going business.

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 more than 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.

 

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Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Income Statements

 

Amounts x €’000

          Three Months ended      Nine Months ended  
     Note      30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

Revenue

     5        142,191        124,647        414,851        359,420  

Cost of sales

     5        (55,852      (49,608      (162,250      (141,628
     

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

        86,339        75,039        252,601        217,792  

Other income

     5        —          —          86        27  

Sales and marketing costs

     5        (8,710      (8,247      (27,019      (24,458

General and administrative costs

     5        (50,552      (42,419      (145,447      (120,841
     

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

        27,077        24,373        80,221        72,520  

Finance income

     6        1,096        367        3,586        1,050  

Finance expense

     6        (12,828      (11,200      (49,617      (33,090
     

 

 

    

 

 

    

 

 

    

 

 

 

Profit before taxation

        15,345        13,540        34,190        40,480  

Income tax expense

     7        (4,445      (4,131      (11,052      (11,158
     

 

 

    

 

 

    

 

 

    

 

 

 

Net income

        10,900        9,409        23,138        29,322  
     

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share

              

Basic earnings per share: (€)

        0.15        0.13        0.32        0.41  

Diluted earnings per share: (€)

        0.15        0.13        0.32        0.41  

 

(1)

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

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

 

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Interim Report: Three-month and nine-month periods ended 30 September 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      Nine Months ended  
     30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

Net income

     10,900        9,409        23,138        29,322  

Other comprehensive income

           

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

           

Foreign currency translation differences

     1,234        (2,186      (1,314      (4,855

Effective portion of changes in fair value of cash flow hedges

     23        9        19        74  

Initial recognition of pension provision(2)

     —          —          (1,154      —    

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

           

Foreign currency translation differences

     (24      (124      560        30  

Effective portion of changes in fair value of cash flow hedges

     (6      (2      (7      (18
  

 

 

    

 

 

    

 

 

    

 

 

 

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

     1,227        (2,303      (1,896      (4,769
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income attributable to shareholders

     12,127        7,106        21,242        24,553  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Certain comparative figures for the three-month and nine-month periods ended 30 September 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 the second quarter of 2018 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.

 

                                12   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Financial Position

 

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

Non-current assets

       

Property, plant and equipment

     8        1,580,002       1,342,471  

Intangible assets

        61,018       60,593  

Goodwill

        38,900       38,900  

Deferred tax assets

        30,362       24,470  

Other investments

        6,689       3,693  

Other non-current assets

        19,248       13,674  
     

 

 

   

 

 

 
        1,736,219       1,483,801  

Current assets

       

Trade receivables and other current assets

        197,884       179,786  

Cash and cash equivalents

        289,860       38,484  
     

 

 

   

 

 

 
        487,744       218,270  
     

 

 

   

 

 

 

Total assets

        2,223,963       1,702,071  
     

 

 

   

 

 

 

Shareholders’ equity

       

Share capital

        7,167       7,141  

Share premium

        551,424       539,448  

Foreign currency translation reserve

        2,194       2,948  

Hedging reserve, net of tax

        (156     (169

Accumulated profit

        69,343       47,360  
     

 

 

   

 

 

 
        629,972       596,728  

Non-current liabilities

       

Other non-current liabilities

        23,879       15,080  

Deferred tax liabilities

        24,765       21,336  

Borrowings

     10        1,287,192       724,052  
     

 

 

   

 

 

 
        1,335,836       760,468  

Current liabilities

       

Trade payables and other current liabilities

        245,995       229,878  

Income tax liabilities

        7,281       6,237  

Borrowings

     10        4,879       108,760  
     

 

 

   

 

 

 
        258,155       344,875  
     

 

 

   

 

 

 

Total liabilities

        1,593,991       1,105,343  
     

 

 

   

 

 

 

Total liabilities and shareholders’ equity

        2,223,963       1,702,071  
     

 

 

   

 

 

 

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

 

                                13   

Interim Report: Three-month and nine-month periods ended 30 September 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 profit
    Total equity  

Balance at 1 January 2018

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

Net income

     —          —          —         —         23,138       23,138  

Other comprehensive income, net of tax

     —          —          (754     13       (1,155     (1,896
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —          —          (754     13       21,983       21,242  

Exercise of options and issue of restricted shares / performance shares

     26        1,494        —         —         —         1,520  

Share-based payments

     —          10,482        —         —         —         10,482  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     26        11,976        —         —         —         12,002  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2018

     7,167        551,424        2,194       (156     69,343       629,972  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 January 2017(1)

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

Net income(1)

     —          —          —         —         29,322       29,322  

Other comprehensive income, net of tax

     —          —          (4,825     56       —         (4,769
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —          —          (4,825     56       29,322       24,553  

Exercise of options and issue of restricted shares / performance shares

     72        6,699        —         —         —         6,771  

Share-based payments(1)

     —          5,906        —         —         —         5,906  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     72        12,605        —         —         —         12,677  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2017(1)

     7,132        532,209        5,163       (187     41,682       585,999  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Certain comparative figures for 1 January 2017 and for the three-month and nine-month periods ended 30 September 2017 have been restated. For further details, see note 12.

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

 

                                14   

Interim Report: Three-month and nine-month periods ended 30 September 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      Nine Months ended  
     30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

Net income

     10,900        9,409        23,138        29,322  

Depreciation and amortisation

     32,885        27,790        94,635        79,183  

Share-based payments

     3,620        2,096        10,482        5,906  

Net finance expense

     11,732        10,833        46,031        32,040  

Income tax expense

     4,445        4,131        11,052        11,158  
  

 

 

    

 

 

    

 

 

    

 

 

 
     63,582        54,259        185,338        157,609  
  

 

 

    

 

 

    

 

 

    

 

 

 

Movements in trade receivables and other assets

     (193      (266      (20,246      (13,654

Movements in trade payables and other liabilities

     (2,510      1,212        8,976        14,793  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash generated from / (used in) operations

     60,879        55,205        174,068        158,748  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest and fees paid(2)

     (3,014      (19,476      (41,846      (40,389

Interest received

     2        193        2        140  

Income tax paid

     (4,005      (3,439      (12,171      (8,744
  

 

 

    

 

 

    

 

 

    

 

 

 

Net cash flows from / (used in) operating activities

     53,862        32,483        120,053        109,755  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flows from / (used in) investing activities

           

Purchase of property, plant and equipment

     (102,143      (73,708      (313,894      (180,030

Financial investments - deposits

     (13      30        267        (336

Acquisition InterXion Science Park B.V.

     —          —          —          (77,517

Purchase of intangible assets

     (1,042      (1,450      (6,000      (6,326

Loans provided

     (857      —          (2,108      (1,341

Proceeds from sale of financial asset

     —          —          —          —    

Redemption of short-term investments

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Net cash flows from / (used in) investing activities

     (104,055      (75,128      (321,735      (265,550
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flows from / (used in) financing activities

           

Proceeds from exercised options

     262        2,682        1,520        6,771  

Proceeds from mortgages

     5,970        —          5,969        —    

Repayment of mortgages

     (548      (624      (6,044      (2,045

Proceeds from revolving credit facilities

     —          30,000        148,814        104,775  

Repayments revolving credit facilities

     —          —          (250,724      (30,000

Proceeds 4.75% Senior Notes

     204,800        —          1,194,800        —    

Repayment 6.00% Senior Secured Notes

     —          —          (634,375      —    

Interest received at issuance of additional notes

     2,428        —          2,428        —    

Transaction costs 4.75% Senior Notes

     (5,504      —          (6,696      —    

Transaction costs 2018 revolving credit facility

     (926      —          (2,562      —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Net cash flows from / (used in) financing activities

     206,482        32,058        453,130        79,501  

Effect of exchange rate changes on cash

     8        (452      (72      (1,395
  

 

 

    

 

 

    

 

 

    

 

 

 

Net movement in cash and cash equivalents

     156,297        (11,039      251,376        (77,689

Cash and cash equivalents, beginning of period

     133,563        49,243        38,484        115,893  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash and cash equivalents, end of period

     289,860        38,204        289,860        38,204  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Certain comparative figures for the three-month and nine-month periods ended 30 September 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.

 

                                15   

Interim Report: Three-month and nine-month periods ended 30 September 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 nine-month periods ended 30 September 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 on-going 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)’.

 

                                16   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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3

Significant accounting policies

a) Accounting policies applied

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.

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.

b) Implementation IFRS 16

In January 2016, the International Accounting Standards Board (IASB) issued IFRS 16 Leases, the new accounting standard for leases. The new standard is effective for annual periods beginning on or after 1 January 2019 and will replace IAS 17 Leases and IFRIC 4 Determining whether an Arrangement contains a Lease.

We are in the process of assessing the impact of IFRS 16 on the consolidated financial statements. We are not yet in the position to conclude on this.

These new principles will be applied by Interxion from the annual reporting period starting on 1 January 2019. The Group has elected to apply the recognition exemptions that are allowed under the modified retrospective transition method.

We will disclose the impact of this new standard in our 2018 consolidated financial statements.

 

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.

 

                                17   

Interim Report: Three-month and nine-month periods ended 30 September 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 September 2018

          

Recurring revenue

     89,178       45,576       134,754       —         134,754  

Non-recurring revenue

     4,409       3,028       7,437       —         7,437  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     93,587       48,604       142,191       —         142,191  

Cost of sales

     (35,668     (16,351     (52,019     (3,833     (55,852
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     57,919       32,253       90,172       (3,833     86,339  

Sales and marketing costs

     (2,394     (1,506     (3,900     (4,810     (8,710

General and administrative costs

     (25,158     (12,754     (37,912     (12,640     (50,552
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     30,367       17,993       48,360       (21,283     27,077  

Net finance expense

             (11,732
          

 

 

 

Profit before tax

             15,345  
          

 

 

 

Total assets

     1,425,769       464,250       1,890,019       333,944       2,223,963  

Total liabilities

     282,129       92,088       374,217       1,219,774       1,593,991  

Capital expenditure, including intangible assets(2)

     (80,066     (20,726     (100,792     (2,393     (103,185

Depreciation and amortisation

     (21,173     (9,252     (30,425     (2,460     (32,885

Adjusted EBITDA

     51,847       28,690       80,537       (14,754     65,783  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts x €’000

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

For the three months ended 30 September 2017(1)

          

Recurring revenue

     76,554       40,838       117,392       —         117,392  

Non-recurring revenue

     4,279       2,976       7,255       —         7,255  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     80,833       43,814       124,647       —         124,647  

Cost of sales

     (31,494     (14,996     (46,490     (3,118     (49,608
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     49,339       28,818       78,157       (3,118     75,039  

Sales and marketing costs

     (2,518     (1,391     (3,909     (4,338     (8,247

General and administrative costs(1)

     (22,635     (9,112     (31,747     (10,672     (42,419
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     24,186       18,315       42,501       (18,128     24,373  

Net finance expense

             (10,833
          

 

 

 

Profit before tax

             13,540  
          

 

 

 

Total assets

     1,156,329       388,447       1,544,776       75,260       1,620,036  

Total liabilities

     242,646       79,875       322,521       711,516       1,034,037  

Capital expenditure, including intangible assets(2)

     (51,593     (21,243     (72,836     (2,322     (75,158

Depreciation and amortisation

     (18,788     (7,475     (26,263     (1,527     (27,790

Adjusted EBITDA

     43,414       25,914       69,328       (13,128     56,200  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Certain comparative figures for the three-month and nine-month periods ended 30 September 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.

 

                                18   

Interim Report: Three-month and nine-month periods ended 30 September 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 nine months ended 30 September 2018

          

Recurring revenue

     259,949       133,476       393,425       —         393,425  

Non-recurring revenue

     13,062       8,364       21,426       —         21,426  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     273,011       141,840       414,851       —         414,851  

Cost of sales

     (103,551     (47,799     (151,350     (10,900     (162,250
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     169,460       94,041       263,501       (10,900     252,601  

Other income

     86       —         86             86  

Sales and marketing costs

     (7,521     (4,683     (12,204     (14,815     (27,019

General and administrative costs

     (73,711     (33,127     (106,838     (38,609     (145,447
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     88,314       56,231       144,545       (64,324     80,221  

Net finance expense

             (46,031
          

 

 

 

Profit before tax

             34,190  
          

 

 

 

Total assets

     1,425,769       464,250       1,890,019       333,944       2,223,963  

Total liabilities

     282,129       92,088       374,217       1,219,774       1,593,991  

Capital expenditure, including intangible assets(2)

     (233,196     (73,198     (306,394     (13,500     (319,894

Depreciation, amortisation, impairments

     (62,075     (25,227     (87,302     (7,333     (94,635

Adjusted EBITDA

     151,214       83,432       234,646       (44,557     190,089  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts x €’000

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

For the nine months ended 30 September 2017(1)

          

Recurring revenue

     220,736       118,358       339,094       —         339,094  

Non-recurring revenue

     12,348       7,978       20,326       —         20,326  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     233,084       126,336       359,420       —         359,420  

Cost of sales

     (89,445     (43,065     (132,510     (9,118     (141,628

Gross profit

     143,639       83,271       226,910       (9,118     217,792  

Other income

     27       —         27       —         27  

Sales and marketing costs

     (6,988     (4,347     (11,335     (13,123     (24,458

General and administrative costs(1)

     (63,722     (27,457     (91,179     (29,662     (120,841

Operating income

     72,956       51,467       124,423       (51,903     72,520  

Net finance expense

             (32,040
          

 

 

 

Profit before tax

             40,480  
          

 

 

 

Total assets

     1,156,329       388,447       1,544,776       75,260       1,620,036  

Total liabilities

     242,646       79,875       322,521       711,516       1,034,037  

Capital expenditure, including intangible assets(2)

     (127,412     (51,095     (178,507     (7,849     (186,356

Depreciation, amortisation, impairments

     (52,783     (21,819     (74,602     (4,581     (79,183

Adjusted EBITDA

     126,697       73,610       200,307       (38,457     161,850  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Certain comparative figures for the three-month and nine-month periods ended 30 September 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.

 

                                19   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Reconciliation to adjusted EBITDA

 

Amounts x €’000

   Three Months ended      Nine Months ended  
     30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

Consolidated

           

Net income

     10,900        9,409        23,138        29,322  

Income tax expense

     4,445        4,131        11,052        11,158  
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit before taxation

     15,345        13,540        34,190        40,480  

Finance income

     (1,096      (367      (3,586      (1,050

Finance expense

     12,828        11,200        49,617        33,090  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     27,077        24,373        80,221        72,520  

Depreciation and amortisation

     32,885        27,790        94,635        79,183  

Share-based payments

     3,942        2,404        11,192        7,213  

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

           

M&A transaction costs(2)

     689        1,633        2,937        2,961  

Re-assessment of indirect taxes(3)

     1,190        —          1,190        —    

Adjustments related to terminated or unused datacenter sites:

           

Income from sub-leases of unused data centre sites(4)

     —          —          (86      (27
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(5)

     65,783        56,200        190,089        161,850  
  

 

 

    

 

 

    

 

 

    

 

 

 

Amounts x €’000

   Three Months ended      Nine Months ended  
     30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

FR, DE, NL and UK

           

Operating income

     30,367        24,186        88,314        72,956  

Depreciation and amortisation

     21,173        18,788        62,075        52,783  

Share-based payments

     307        440        911        985  

Adjustments related to terminated or unused datacenter sites:

           

Income from sub-leases of unused data centre sites(4)

     —          —          (86      (27
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(5)

     51,847        43,414        151,214        126,697  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Certain comparative figures for the three-month and nine-month periods ended 30 September 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)

This re-assessment relates to years prior to 2018 and is therefore not representative of our current on-going business.

(4)

“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”.

(5)

“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.

 

                                20   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Amounts x €’000

   Three Months ended      Nine Months ended  
     30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

Rest of Europe

           

Operating income

     17,993        18,315        56,231        51,467  

Depreciation and amortisation

     9,252        7,475        25,227        21,819  

Share-based payments

     255        124        784        324  

Re-assessment of indirect taxes(2)

     1,190        —          1,190        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(3)

     28,690        25,914        83,432        73,610  
  

 

 

    

 

 

    

 

 

    

 

 

 

Amounts x €’000

   Three Months ended      Nine Months ended  
     30 Sep 2018      30 Sep 2017(1)      30 Sep 2018      30 Sep 2017(1)  

Corporate and other

           

Operating income

     (21,283      (18,128      (64,324      (51,903

Depreciation and amortisation

     2,460        1,527        7,333        4,581  

Share-based payments

     3,380        1,840        9,497        5,904  

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

           

M&A transaction costs(4)

     689        1,633        2,937        2,961  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(3)

     (14,754      (13,128      (44,557      (38,457
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

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

(2)

This re-assessment relates to years prior to 2018 and is therefore not representative of our current on-going business.

(3)

“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.

(4)

“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”.

 

                                21   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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6

Finance income and expense

 

     Three months ended      Nine Months ended  
     30 Sep 2018      30 Sep 2017      30 Sep 2018      30 Sep 2017  
     €’000      €’000      €’000      €’000  

Bank and other interest

     139        72        322        160  

Bond premium and fees in income

     —          295        2,581        890  

Foreign currency exchange profits

     29        —          310        —    

Fair value adjustment of convertible loan

     928        —          373        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance income

     1,096        367        3,586        1,050  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense on Senior Notes, bank and other loans

     (11,516      (9,482      (35,719      (27,652

Interest expense on finance leases

     (818      (796      (2,481      (2,379

Other financial expenses

     (494      (623      (11,417      (1,833

Foreign currency exchange losses

     —          (299      —          (1,226
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance expense

     (12,828      (11,200      (49,617      (33,090
  

 

 

    

 

 

    

 

 

    

 

 

 

Net finance expense

     (11,732      (10,833      (46,031      (32,040
  

 

 

    

 

 

    

 

 

    

 

 

 

Net finance expense for the nine-month period ended 30 September 2018 includes the impact of gains and losses 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 29% and 32% for the three-month and nine-month periods ended 30 September 2018, respectively. These rates include the impact of non-deductible share-based payments (both during the three-month and nine-month periods). In addition, the effective tax rate for the nine-month period ended 30 September 2018 includes the effect of a decrease in profit before taxation due to one-off costs associated with refinancing activities during the second quarter of 2018.

 

8

Property, plant and equipment

During the three-month and nine-month periods ended 30 September 2018, the Group purchased tangible fixed assets (primarily data-centre-related assets) at a cost of €112.1 million and €322.7 million, respectively (three-month and nine-month periods ended 30 September 2017: €69.5 million and €186.9 million, respectively).

Capitalised interest relating to borrowing costs for the three-month and nine-month periods ended 30 September 2018 amounted to €1.5 million and €3.6 million, respectively (three-month and nine-month periods ended 30 September 2017: €0.8 million and €2.6 million, respectively). The cash effect of the interest capitalised for the three-month and nine-month periods ended 30 September 2018 amounted to €nil and €3.4 million, respectively, which in the Consolidated Statements of Cash Flows is presented under “Purchase of property, plant and equipment” (three-month and nine-month periods ended 30 September 2017: €1.7 million and €3.9 million, respectively).

At 30 September 2018, the Group had outstanding capital commitments of €303.7 million.

 

                                22   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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9

Financial instruments

Fair values versus carrying amounts

At 30 September 2018, the market price of the 4.75% Senior Notes due 2025 was 104.895. Using this market price, the fair value of the Senior Notes due 2025 was approximately €1,259 million, compared with their nominal value of €1,200 million.

At 30 September 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 September 2018, the fair value of all mortgages approximated to their carrying amount of €53.6 million (30 September 2017: €52.5 million). As of 30 September 2018, the fair value of the financial lease liabilities was €54.5 million (30 September 2017: €54.0 million) compared with the carrying amount of €50.6 million (30 September 2017: €51.3 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.

 

                                23   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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The values of the instruments are:

 

            Fair value  
     Carrying value      Level 1      Level 2      Level 3  

30 September 2018

           

Senior Notes due 2025

     (1,187,805      (1,258,740      —          —    

Finance leases

     (50,631      —          (54,499      —    

Mortgages

     (53,635      —          (53,635      —    

Other investments

     6,689        —          —          6,689  

Interest rate swap

     (209      —          (209      —    

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 6.5 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 the 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 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 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.

 

                                24   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited


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Additional notes under the Indenture dated 18 June 2018

On 20 September 2018, the Company completed the issuance of an additional €200.0 million aggregate principal amount of its 4.75% Senior Notes due 2025 (the “Additional Notes”). The net proceeds of the offering amounted to approximately €203.8 million, net of estimated offering fees and expenses of €2.2 million. The net proceeds contain the nominal value of the Additional Notes, plus an issuance premium of 103.00%. The Additional Notes, which are guaranteed by certain subsidiaries of the Company, were issued under the Indenture.

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 September 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 the proposal 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 nine-month periods ended 30 September 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 €1.9 million in the three-month and nine-month periods ended 30 September 2017, respectively.

 

                                25   

Interim Report: Three-month and nine-month periods ended 30 September 2018

These Condensed Consolidated Interim Financial Statements are unaudited