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 June 3, 2016

(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  x            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.

 

 

 


Information contained in this Form 6-K Report

This report contains Interxion Holding N.V ’s (1) press release “Interxion files 2015 Dutch Statutory Annual Report” and (2) 2015 Dutch Statutory Annual Report.

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

 

Exhibit

    
99.1    The press release “Interxion files 2015 Dutch Statutory Annual Report”, dated June 3, 2016.
99.2    2015 Dutch Statutory Annual Report.


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: June 3, 2016

Press Release

Exhibit 99.1

 

LOGO

Press release 3 June 2016

Interxion Files 2015 Dutch Statutory Annual Report

AMSTERDAM 3 June 2016. INTERXION HOLDING N.V. (NYSE: INXN), a leading European provider of carrier and cloud neutral colocation data centre services, today announced that it has filed its 2015 Dutch Statutory Annual Report with the Securities and Exchange Commission. The 2015 Dutch Statutory Annual Report can be found under the “Annual Reports” link on the company’s website at investors.interxion.com as well as on the SEC website at www.sec.gov. In addition, shareholders may request a hard copy of the 2015 Dutch Statutory Annual Report, which includes the company’s complete audited financial statements, free of charge by contacting Interxion Investor Relations at Tupolevlaan 24, 1119 NX Schiphol-Rijk, The Netherlands, Attention: Investor Relations or by email at IR@interxion.com.

About Interxion

Interxion (NYSE: INXN) is a leading provider of cloud and carrier-neutral colocation data centre services in Europe, serving a wide range of customers through 42 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 more than 600 Connectivity Providers and 21 European Internet Exchanges, Interxion has created cloud, content, finance and connectivity hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.

Contact:

Jim Huseby

Investor Relations

Interxion

Tel: +1-813-644-9399

IR@interxion.com

2015 Dutch Statutory Annual Report

Exhibit 99.2

 

LOGO


 

 

 

CARRIER AND CLOUD-NEUTRAL

DATA CENTRE SERVICES

 

 

Interxion is a leading pan-European provider of carrier and cloud-neutral data centre services. We deliver value to our customers by being responsive to their needs, and by building communities of interest that enable our customers to add value to their service offerings. Established in 1998, we have expanded rapidly to create 41 data centres in 13 cities across 11 countries, giving us the largest reach across Europe and providing our customers with access to more than 78% of EU GDP.

 

 

 

FORWARD-LOOKING STATEMENTS

This annual report contains 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, with respect to all statements other than statements of historical fact regarding our business, financial condition, results of operations and certain of our plans, objectives, assumptions, projections, expectations or beliefs with respect to these items and statements regarding other future events or prospects. These statements include, without limitation, those concerning: our strategy and our ability to achieve it; expectations regarding sales, profitability and growth; plans for the construction of new data centres; our possible or assumed future results of operations; research and development, capital expenditure and investment plans; adequacy of capital; and financing plans. The words “aim,” “may,” “will,” “expect,” “anticipate,” “believe,” “future,” “continue,” “help,” “estimate,” “plan,” “schedule,” “intend,” “should,” “shall” or the negative or other variations thereof as well as other statements regarding matters that are not historical fact, are or may constitute forward-looking statements.

In addition, this annual report includes forward-looking statements relating to our potential exposure to various types of market risks, such as foreign exchange rate risk, interest rate risks and other risks related to financial assets and liabilities. We have based these forward-looking statements on our management’s current view with respect to future events and financial performance. These views reflect the best judgment of our management but involve a number of risks and uncertainties which could cause actual results to differ materially from those predicted in our forward-looking statements and from past results, performance or achievements. Although we believe that the estimates reflected in the forward-looking statements are reasonable, those estimates may prove to be incorrect.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from these expressed or implied by these forward-looking statements. These factors include, among other things:

 

  operating expenses cannot be easily reduced in the short term;

 

  inability to utilise the capacity of newly planned data centres and data centre expansions;

 

  significant competition;

 

  cost and supply of electrical power;

 

  data centre industry over-capacity;

 

  and performance under service level agreements.

These risks and others described under “Risk Factors” (page 28) are not exhaustive. Other sections of this annual report describe additional factors that could adversely affect our business, financial condition or results of operations. Additionally, new risk factors can emerge from time to time, and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results.

All forward-looking statements included in this annual report are based on information available to us on the date of this annual report. We undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this annual report.

 

 

2    /    INTERXION ANNUAL REPORT 2015


 

 

 

IN THIS REPORT

 

 

 

OPERATIONAL REVIEW

 

   
  6   Our 2015 performance at a glance   10   Our commitment to sustainability

 

  7

 

 

Selected financial data

 

 

11

 

 

Organisational Structure

 

  7

 

 

Information on the Company

 

 

12

 

 

Our people

 

  10

 

 

Innovation and technical excellence

 

       

 

FINANCIAL REVIEW

   

 

 16

 

 

Income statement highlights

 

 

20

 

 

Significant event

 

 18

 

 

Balance sheet highlights

 

 

20

 

 

Significant risk and uncertainties

 

 19

 

 

 

Cash flow highlights

       

 

REPORT OF THE BOARD OF DIRECTORS

   

 

 22

 

 

Structure

 

 

28

 

 

Shares beneficially owned

 

 22

 

 

Board of Directors

 

 

28

 

 

Risk management

 

 25

 

 

Director’s insurance and indemnification

 

 

28

 

 

Risk factors

 

 26

 

 

Board committees

 

 

30

 

 

Controls and procedures

 

 27

 

 

 

Compensation

 

 

30

 

 

Dutch Corporate Governance Code

 

CONSOLIDATED FINANCIAL STATEMENTS

   

 

 34

 

 34

 

 

Consolidated income statements

 

Consolidated statements of comprehensive
income

 

 

36

 

 

Consolidated statements of changes in shareholders’ equity

   

 

37

 

 

Consolidated statements of cash flows

 

 35

 

 

 

Consolidated statements of financial position

 

 

38

 

 

Notes to the 2015 consolidated financial statements

 

 

COMPANY FINANCIAL STATEMENTS

   

 

 82

 

 

Company statement of financial position

 

 

83

 

 

Notes to the 2015 company financial statements

 

 83

 

 

Company income statement

 

       

 

OTHER INFORMATION

 

 

 90

 

 

Appropriation of result

   

 

 91

 

 

Independent auditor’s report

 

       

 

FIND OUT MORE

 

 

 94

 

 

Find out more

 

       

 

INTERXION ANNUAL REPORT 2015    /    3


 

4    /    INTERXION ANNUAL REPORT 2015


        

 

 

 

 

OPERATIONAL

REVIEW

  

 

 

 

 

INTERXION ANNUAL REPORT 2015    /    5


 

  Operational review

 

 

 

 

OUR 2015 PERFORMANCE AT A GLANCE

 

LOGO

During 2015, Interxion continued to focus on its customers while, at the same time, improving and growing its business. This not only resulted in revenue growth of more than 13%, but also delivered increased margins. Our results are proof of the continued confidence our customers have in our operation, and of the value they derive from participating in our Communities of Interest strategy. During 2015, we made significant progress in developing this strategy further by strengthening our ability to attract cloud magnets to our data centres across our wide Western European footprint.

 

We also continued to expand capacity across Europe to meet ongoing customer demand: the opening of two new data centres and the expansion of six others resulted in an 8% increase in equipped space. In addition, we announced plans for a further 12% expansion in capacity, most of which is scheduled to become operational in 2016. Our expansion has been matched by customer demand, which increased our utilisation rate from 76% to 78% over 2015, and also generated strong returns on our invested capital.

Our industry is at the centre of a massive shift in the computing paradigm: over the next few years we believe that billions of IT dollars will shift from legacy deployments to the cloud. While this migration is still in its early stages – and the installations we have seen to date are largely driven by the initial deployment of infrastructure platforms – the continuing shift towards the cloud is likely to create an unprecedented demand for data centre services.

 

LOGO

The business and personal interactions that are being digitised and delivered from the cloud create the need for increased data centre capacity.

We expect this shift to be the principal driver of growth in our business over the next few years. We are working closely with our customer cloud providers and are allocating capital to meet their needs, and to continue to generate strong returns for our shareholders.

Finally, I thank all our employees for their dedication and commitment. Their contribution is fundamental to Interxion’s continuing success.

David Ruberg, Chief Executive Officer

31 March 2016

 

 

 

6    /    INTERXION ANNUAL REPORT 2015


 

 

Operational review   

 

 

 

SELECTED FINANCIAL DATA

 

 

 

     

2011

 

    

2012

 

    

2013

 

    

2014

 

    

2015

 

 

 

Recurring revenue

     228.3         259.2         291.3         319.2         365.2   

 

Non-recurring revenue

     16.0         17.9         15.8         21.4         21.4   

 

Revenue

     244.3         277.1         307.1         340.6         386.6   

 

Adjusted EBITDA

     97.6         115.0         131.8         146.4         171.3   

 

Adjusted EBITDA margin

     40.0%         41.5%         42.9%         43.0%         44.3%   

 

Capital expenditures (including intangibles)

     (162.0)                     (178.3)                     (143.4)                     (216.3)                     (192.6)   

 

Cash generated from operations

     90.0         111.7         102.7         135.4         169.4   

 

Revenue-generating space

     47.1         56.2         59.7         71.0         79.1   

 

Equipped space

     62.8         74.0         80.1         93.5         101.2   

 

Utilisation rate

     75%         76%         75%         76%         78%   

Financial figures are expressed as millions of euros; space figures in ‘000 sqm.

 

 

INFORMATION ON THE COMPANY

We are a leading provider of carrier and cloud-neutral colocation data centre services in Europe. We support approximately 1,600 customers through 41 data centres in 11 countries enabling them to physically protect, connect, process and distribute their most valuable information. Within our data centres, we enable our customers to connect to a broad range of telecommunications carriers, Internet service providers and other customers. Our data centres act as content, cloud and connectivity hubs that facilitate the processing, storage, sharing and distribution of data, content, applications and media between carriers and customers, creating an environment that we refer to as a community of interest.

Our core offering of carrier and cloud-neutral colocation services includes space, power, cooling and a physically secure environment in which to house our customers’ computing, network, storage and IT infrastructure. We enable our customers to reduce operational and capital costs while improving application performance and flexibility. We supplement our core colocation offering with a number of additional services, including network monitoring, remote monitoring of customer equipment, systems management, engineering support services, cross connects, data backup and storage.

We are headquartered near Amsterdam, The Netherlands, and we operate in major metropolitan areas, including Amsterdam, Frankfurt, Paris and London, the main data centre markets in Europe. Our data centres are located in close proximity to the intersection of telecommunications fibre routes, and we house more than 600 individual carriers and Internet service providers, 20 European Internet exchanges and all the leading cloud platforms. Our data centres allow our customers to lower their telecommunications costs and reduce latency, thereby improving the response time of their applications. This high level of connectivity fosters the development of communities of interest.

STRATEGY

TARGET NEW CUSTOMERS IN HIGH GROWTH INDUSTRY SEGMENTS TO FURTHER DEVELOP OUR COMMUNITIES OF INTEREST

We categorise our customers into industry segments, and we will continue to target new customers in high growth industry segments, including financial services, cloud and managed services providers, digital media and carriers. Winning new customers in these target industries enables us to expand existing, and build new, high value communities of interest within our data centres. For example, customers in the digital media segment benefit from the close proximity to content delivery network providers and Internet exchanges in order to rapidly deliver content to consumers. We expect the high value and reduced cost benefits of our communities of interest to continue to attract new customers, which will lead to decreased customer acquisition costs for us.

INCREASE SHARE OF SPEND FROM EXISTING CUSTOMERS

We focus on increasing revenue from our existing customers in our target market segments. New revenue from our existing customers comprises a substantial portion of our new business, generating the majority of our new bookings. Our sales and marketing teams focus on proactively working with customers to identify expansion opportunities in new or existing markets.

 

 

INTERXION ANNUAL REPORT 2015    /    7


 

  Operational review

 

 

 

 

LOGO

LOGO

 

MAINTAIN CONNECTIVITY LEADERSHIP

We seek to increase the number of carriers in each of our data centres by expanding the presence of our existing carriers into additional data centres and targeting new carriers. We also will continue to develop our relationships with Internet exchanges and work to increase the number of Internet service providers in these exchanges. In countries where there is no significant Internet exchange, we will work with Internet service providers and other parties to create the appropriate Internet exchange. Our carrier sales and business development team will continue to work with our existing carriers and Internet service providers, and target new carriers and Internet service providers, to maximise our share of their data centre spend, and to achieve the highest level of connectivity in each of our data centres, with the right carriers to support the requirements of each of our communities of interest.

CONTINUE TO DELIVER BEST-IN-CLASS CUSTOMER SERVICE

We will continue to provide a high level of customer service in order to maximise customer satisfaction and minimise churn. Our European Customer Service Centre operates 24 hours a day, 365 days a year, providing continuous monitoring and troubleshooting and giving our customers one call access to full, multilingual technical support, thereby reducing our customers’ internal support costs. In addition, we will continue to develop our customer tools, which include an online customer portal to provide our customers with real-time access to information. We will continue to invest in our local service delivery and assurance teams, which provide flexibility and responsiveness to customer needs.

DISCIPLINED EXPANSION AND CONSERVATIVE FINANCIAL MANAGEMENT

We plan to invest in our data centre capacity, while maintaining our disciplined investment approach and prudent financial policy. We will continue to determine the size of our expansions based on selling patterns, pipeline and trends in existing demand as well as working with our customers to identify future capacity requirements. We only

begin new expansions once we have identified customers and we have the capital to fully fund the build out, with the goal of selling 25% of a data centre’s space by its opening. Our expansions are done in phases in order to manage the timing and scale of our capital expenditure obligations, reduce risk and improve our return on capital, with a target internal rate of return in excess of 30%. Finally, we will continue to manage our capital deployment and financial management decisions based on adherence to our target internal rate of return on new expansions and target leverage ratios.

OUR SERVICES

We offer carrier and cloud-neutral colocation data centre and managed services to our customers.

COLOCATION

Our colocation services provide clients with the space and power to deploy IT infrastructure in our world-class data centres. Through a number of redundant subsystems, including power, fibre and cooling, we are able to provide our customers with highly reliable services. Our colocation services are scalable, allowing our customers to upgrade space, connectivity and services as their requirements evolve. Our data centres employ a wide range of physical security features, including biometric scanners, man traps, smoke detection, fire suppression systems, and secure access. We provide colocation services including:

Space

Each of our data centres houses our customers’ IT infrastructure in a highly connected facility, designed and outfitted to ensure a high level of network reliability. This service provides space and power to our clients to deploy their own IT infrastructure. Customers can choose individual cabinets or a secure cage or an individual room depending on their space and security requirements.

 

 

8    /    INTERXION ANNUAL REPORT 2015


 

 

Operational review   

 

 

 

Power

Each of our data centres is equipped to offer our customers high power availability. Since the availability of power is essential to the operation of our data centres, we provide power backup in case of outage. The majority of our data centres have redundant grid connections and all of our data centres have a power backup installation in case of outage. Generators in combination with uninterrupted power supply, or UPS, system, endeavour to ensure maximum availability. We provide a full range of output voltages and currents and we offer our customers a choice of guaranteed levels of availability between 99.9% and 99.999%.

Connectivity

We provide connectivity services that allow our customers to connect their IT infrastructure. These services offer connectivity with more than 600 telecommunications carriers and allow our customers to reduce costs while enhancing the reliability and performance associated with the exchange of Internet and other data traffic. Our connectivity options offer our customers a key strategic advantage by providing direct, high-speed connections to peers, partners, customers and some of the most important sources of IP data, content, cloud platforms and distribution in the world.

Cross Connect

We install and manage physical connections running from our customers’ equipment to the equipment of our telecommunications carrier, Internet service providers and Internet exchange customers as well as other customers. Cross connects are physically secured in dedicated areas called Meet-Me rooms. Our staff test and install cables and patches and maintain cable trays and patch panels according to industry best practice.

MANAGED SERVICES

In addition to providing colocation services, we provide a number of additional managed services, including systems monitoring, systems management, engineering support services, data back-up and storage. Some managed services are only performed on an ad hoc basis, as and when requested by the customer, while others are more recurring in nature. These services are provided either by us directly, or in conjunction with third parties.

CUSTOMERS

We categorise our customers into industry segments including: digital media and distribution, enterprises, financial services, managed services providers and network providers. We have approximately 1,600 customers. The majority of our customers have entered into contracts with us for an initial three to five year term, which are typically renewed perpetually and automatically for successive one year periods.

In the year ended 31 December 2015, 35% of our Recurring Revenue came from our top 20 customers, 25% of our Recurring Revenue came from our top 10 customers and 11% of our Recurring Revenue came from one customer, which is a Fortune 50 company.

Customer service is provided locally by our in-country teams and centrally via our European Customer Service Centre located in London. The European Customer Service Centre supports five European languages (Dutch, English, French, German and Spanish) and is run by technical support staff and operates 24 hours a day, 365 days a year, in order to provide rapid and cost-effective technical

and business support to all of our clients. In addition to its service desk functions, the European Customer Service Centre monitors and manages the performance of our data centres and takes care of network monitoring and other network operations centre functions. The European Customer Service Centre arranges, as necessary, local engineering support, rapid response (out of hours emergency assistance), “backup and restore” and other managed services. There is also a customer relationship management system in place to electronically log each issue that the European Customer Service Centre is requested to address to ensure efficient and timely support.

CUSTOMER CONTRACTS

Our customers typically sign contracts for the provision of colocation space together with basic service level agreements that provide for support services and other managed services. Unless customers notify us of their intention to terminate, which is typically 90 days in advance of the end of the contract period, contracts (a majority of which have an initial term of three to five years) typically renew constantly and automatically for successive one year periods. However, where beneficial to us we will (prior to the expiry of a customer contract) seek to re-negotiate and re-sign with a customer (generally for a minimum one-year period). Our contracts generally allow us the option to increase prices in accordance with local price indices in each jurisdiction and we are able to adjust the amount charged for power at any time and as frequently as necessary during the life of the contract to account for any increases in power costs we are charged by our suppliers or government surcharges.

Contracts for colocation services are priced on the basis of a monthly recurring fee reflecting charges for space, power used in the common parts of the data centre, power “plugs” and metered power usage, with related infrastructure and implementation costs included in an initial set-up fee. Clients have two options with respect to power usage: either (i) to pay for power usage in “plugs” in advance (typically included in the total cabinet price), which are contractually defined amounts of power per month, for which the customer must pay in full, regardless of how much power is actually used; or (ii) to pay for their actual power usage in arrears on a metered basis. The first option (power plugs) is usually sold in shared areas of our data centres where customers pay per cabinet. The second option (metered power usage) is usually sold to customers taking dedicated space such as a cage, suite or private room where they are charged on a per square meter basis.

As with colocation services, our managed services are typically contracted on the basis of an annual contract (or longer where appropriate) and the fee generally consists of monthly recurring charges and usage based charges as appropriate, and may also include an initial set-up fee. If managed services are ad hoc in nature, they are invoiced on completion of the service.

Each new customer contract we enter into provides that in the event of a power outage or other equivalent service level agreement breach (e.g. for repeatedly crossing a temperature or humidity benchmark), the customer will receive a service credit in the form of a reduction in its next service fee payment, the credit being on a sliding scale to reflect the seriousness of the breach. Our customer contracts typically exclude liability for consequential or indirect loss suffered as a result of a service level agreement breach and for force majeure. Historically, our penalty payments under our service level agreements have been minimal.

 

 

INTERXION ANNUAL REPORT 2015    /    9


 

  Operational review

 

 

 

 

CUSTOMER ACCOUNTS

Fees are typically invoiced quarterly in advance, with the exception of metered power usage which is invoiced monthly in arrears. On new contracts, we generally require deposits, which we are able to use to cover any non-payment of invoices. If accounts are not paid on time, we ultimately seek recovery through the court system.

SALES AND MARKETING

Our sales and marketing teams focus on proactively identifying and converting opportunities for both existing customers and prospects within our target segments, to expand customers’ space within our data centre portfolio.

SALES

We sell our products and services through local direct sales forces and a centralised International Accounts Team and by attending tradeshows, networking events and industry seminars. Our International Accounts Team focuses on maximising revenues across our European footprint from our largest customers and on identifying and developing new major accounts. We utilise a number of indirect channel partners in the United States to secure both referrals and orders from companies based out of the United States.

MARKETING

Our marketing organisation is responsible for identifying target customer segments, development of the value proposition that will enable us to succeed in our chosen segments, building and communicating a distinct brand, driving qualified leads into the sales pipeline and ensuring strategic alignment with key partners. Our marketing team supports our strategic priorities through the following primary objectives:

Customer Segmentation

Our marketing organisation is responsible for the identification of high-growth customer segments and associated companies therein that we wish to target in order to build the community of interest and develop our value proposition to enable success in our chosen markets. Our marketing organisation is also responsible for business development of key magnetic and strategic accounts in each segment working with sales in order to build our communities of interest. Magnetic companies when present in our data centres, attract other interested members to join the community. The magnetic effect can be a consequence of the application, data or capability that they place in our data centres. A company in one of our segments is considered “strategic” if its presence adds value to the community of interest by increasing the magnetism of the community. This can be achieved by virtue of its brand and the associated added value to Interxion and the community.

Brand Management and Positioning

This includes brand identity unification, positioning at the corporate and country levels, the development of methodology, marketing assets and brand awareness programs for all of our business units.

Lead Generation

Utilising online marketing, targeted advertising, direct marketing, event marketing and public relations programs and strategies to design and execute successful lead-generation campaigns leveraging telemarketing and direct sales to grow our pipeline and deliver our revenue goals.

INNOVATION AND TECHNICAL EXCELLENCE

For well over a decade we have been at the forefront of data centre design and management, and we continue to focus strongly on innovation and energy efficiency improvements. Whether it is evaluating the latest energy-efficiency techniques, options for green power, or new design practices, Interxion leads the way.

Our dedicated Digital, Technology and Engineering Group (DTEG) pioneered many of today’s key data centre design approaches, such as modular design and build, designing for power usage effectiveness (PUE), cold aisle containment, seawater and ground water cooling and other energy efficient design innovations.

Because we have grown by organic expansion, the data centres that we have built are designed, operated and maintained in a consistent way, which contributes to high levels of technical excellence, reliability and performance.

OUR COMMITMENT TO SUSTAINABILITY

We are committed to environmental responsibility. We deliver efficient, cost-effective services by minimising waste and energy use, without compromising reliability and performance. Our modular data centre design – which lets us build large systems from smaller subsystems – optimises our use of space, power and cooling and helps us continue to improve PUE.

In 2015 we reaffirmed our commitment to sustainability with the formation of our Energy Strategy Group which works across Interxion countries to develop, implement and govern the energy strategy of the company.

This year we reached a milestone with more than 75% of power coming from sustainable sources. We implement free cooling wherever we can and recycle waste heat for other purposes.

Our Germany operations and our largest France data centre have led the way, receiving ISO 50001 certification for energy efficiency through the development of an energy management system.

As part of our sustainability commitment we contribute to recognised industry bodies. For example, we have a Vice Chair position at the Governmental Engagement Committee and we have a seat at the Advisory Council of The Green Grid (the leading energy efficiency and sustainability association for the data centre industry), and contribute to the EC Joint Research Centre on sustainability.

EMPLOYEES

As of 31 December, 2015 we had a total of 533 employees (full time equivalents, excluding contractors and interim staff) of which 323 employees worked in operations and support, 105 employees worked in sales and marketing and 105 employees served general and administrative roles. Of our employees, 400 were based in countries where we have operations and 133 employees worked from our headquarters near Amsterdam and corporate offices in London as of 31 December, 2015. We believe that relations with our employees are good. Except for collective rights granted by local law, none of our employees are subject to collective bargaining agreements.

 

 

10    /    INTERXION ANNUAL REPORT 2015


 

 

Operational review   

 

 

 

ORGANISATIONAL STRUCTURE

European Telecom Exchange BV was incorporated on 6 April 1998, which (after being renamed InterXion Holding B.V. on 12 June, 1998) was converted into InterXion Holding N.V. on 11 January, 2000. For further information on the history and development of the Company, see Item 10 “Additional Information – General.” From inception onwards we have grown our colocation business organically. Since 2001, we have developed our geographic footprint in 13 cities where we have established data centre campuses. The only changes to our geographic footprint have been very recent – we added Marseille in 2014 and exited Hilversum at the end of 2014. Following the industry

downturn beginning in 2001 as a result of a sharp decline in demand for Internet-based businesses, we restructured within our geographic base to refocus on a broader and more stable customer base. We have since focused on shifting our customer base from primarily emerging Internet companies and carriers to a wide variety of established businesses seeking to house their IT infrastructure.

Our subsidiaries perform various tasks, such as servicing our clients, operating our data centres, customers support, and providing management, sales and marketing support to the Group. The following table sets forth the name, country of incorporation and (direct and indirect) ownership interest of our subsidiaries:

 

 

   Entity    Country of incorporation       

Ownership   

%   

 

   Activity
     

InterXion HeadQuarters B.V.

 

   The Netherlands    100%    Management
     

Interxion Europe Ltd

 

   United Kingdom    100%    Management
     

InterXion Operational B.V.

 

   The Netherlands    100%    Management/Holding
     

InterXion Participation 1 B.V.

 

   The Netherlands    100%    Holding
     

InterXion Nederland B.V.

 

   The Netherlands    100%    Provision of co-location services
     

InterXion Datacenters B.V.

 

   The Netherlands    100%    Data centre sales & marketing
     

InterXion Real Estate Holding B.V.

 

   The Netherlands    100%    Real estate management/Holding
     

InterXion Real Estate I B.V.

 

   The Netherlands    100%    Real estate
     

InterXion Real Estate IV B.V.

 

   The Netherlands    100%    Real estate
     

InterXion Real Estate V B.V.

 

   The Netherlands    100%    Real estate
     

InterXion Real Estate X B.V.

 

   The Netherlands    100%    Real estate
     

InterXion Österreich GmbH

 

   Austria    100%    Provision of co-location services
     

InterXion Real Estate VII GmbH

 

   Austria    100%    Real estate
     

InterXion Belgium N.V.

 

   Belgium    100%    Provision of co-location services
     

InterXion Real Estate IX N.V.

 

   Belgium    100%    Real estate
     

InterXion Danmark ApS

 

   Denmark    100%    Provision of co-location services
     

InterXion Real Estate VI ApS

 

   Denmark    100%    Real estate
     

Interxion France SAS

 

   France    100%    Provision of co-location services
     

Interxion Real Estate II SARL

 

   France    100%    Real estate
     

Interxion Real Estate III SARL

 

   France    100%    Real estate
     

Interxion Real Estate XI SARL

 

   France    100%    Real estate
     

InterXion Deutschland GmbH

 

   Germany    100%    Provision of co-location services
     

InterXion Ireland Ltd

 

   Ireland    100%    Provision of co-location services
     

Interxion España SA

 

   Spain    100%    Provision of co-location services
     

InterXion Sverige AB

 

   Sweden    100%    Provision of co-location services
     

InterXion (Schweiz) AG

 

   Switzerland    100%    Provision of co-location services
     

InterXion Real Estate VIII AG

 

   Switzerland    100%    Real estate
     

InterXion Carrier Hotel Ltd.

 

   United Kingdom    100%    Provision of co-location services

 

INTERXION ANNUAL REPORT 2015    /    11


 

  Operational review

 

 

 

 

OUR PEOPLE

OUR SENIOR TEAM

 

 

Our people are a key part of what differentiates us, led by a management team with considerable experience in the technology sector. The team focus on customers and on driving Interxion towards the heart of the digital economy, adding value and making it easier for our customers to do business.

 

DAVID RUBERG       

 

LOGO

    

David Ruberg, Chief Executive Officer

 

After serving for five years as Chairman of the Supervisory Board of Interxion, David became CEO in 2007 and continues to develop our business as one of Europe’s leading providers of carrier and cloud -neutral data centres. In his role as CEO, he combines valuable insights into the needs of our customers with his knowledge of how colocation technology can add value to such companies and help them further develop their business.

 

Prior to this, David was CEO and Chairman of Intermedia Communications, a broadband communications services provider, as well as Chairman of Digex, a webhosting company. He has also held posts at Data General and AT&T Bell Labs, and has served on the boards of multiple private and public businesses in the TMT space.

 

He holds a Masters degree from the University of Michigan in Computer and Communications Science.

   

 

JOSH JOSHI       

 

LOGO

    

Josh Joshi, Chief Financial Officer

 

Josh joined Interxion in 2007 and is responsible for our financial policy, funding strategy, financial and treasury planning, reporting and control, and investor relations. Josh has held senior executive roles in data centre, network and infrastructure businesses for over 15 years.

 

Before joining Interxion, Josh worked as CFO at two publicly traded companies – Leisure and Gaming plc and Telecity Group plc. He was one of the founders of the private equity-backed alternative network, Storm Telecommunications. Josh is a Chartered Accountant and worked in professional practice for eight years, latterly with Arthur Andersen.

 

He holds a degree in Civil Engineering from Imperial College, London and is a fellow of the Institute of Chartered Accountants in England and Wales.

   

 

12    /    INTERXION ANNUAL REPORT 2015


 

 

Operational review   

 

 

 

 

 

GIULIANO DI

VITANTONIO

 

LOGO

    

 

Giuliano Di Vitantonio, Chief Marketing and Strategy Officer

 

Giuliano joined Interxion in 2015 and is responsible for our market and product strategies including product management, product marketing, segment strategy, commercial strategy and business development. He joined from Cisco Systems where he held the position of Vice President Marketing, Data Center & Cloud.

 

Giuliano has over 20 years of experience in the IT industry, including 17 years at Hewlett-Packard, where he held a broad range of positions in R&D, strategy, consulting, business development and marketing. Giuliano’s areas of expertise include IT management software, enterprise applications, data centre infrastructure and business intelligence solutions.

 

Giuliano has lived in five different countries and is fluent in four languages.

 

He has a Masters degree in EE/ Telecommunications from the University of Bologna and an MBA from the London Business School.

   
           

JAN-PIETER ANTEN

 

LOGO

    

 

Jan-Pieter Anten, Vice President Human Resources

 

Jan-Pieter joined Interxion as VP Human Resources in 2011 and is responsible for the development and implementation of our HR strategy. His experience in human resources enables him to oversee the recruitment, development and retention of the experienced and dedicated staff who are key to our business across Europe.

 

He joined Interxion from global management consulting firm Hay Group, where he held the position of Director, International Strategic Clients Europe. In previous posts, he has worked as VP Human Resources for other international organisations such as Synthon and as a senior consultant within Hay Group.

 

Jan-Pieter holds a degree in Pharmaceutical Sciences from the University of Utrecht.

   
           

JAAP CAMMAN

 

LOGO

    

 

Jaap Camman, Senior Vice President, Legal

 

Jaap joined Interxion in 1999 and is responsible for all legal and corporate affairs across the group. Jaap provides strategic legal direction, drawing on his extensive experience in corporate financing, finance restructuring, corporate governance and business design.

 

He joined Interxion after working in a number of roles within the Dutch government during which time he was responsible for the development of financial sector legislation and represented The Netherlands both at European Union and United Nations level. In his latest role he served as Deputy Head of the Insurance Division at the Netherlands Ministry of Finance.

 

Jaap holds a Masters degree in Law from the University of Utrecht.

   

 

INTERXION ANNUAL REPORT 2015    /    13


 

14    /    INTERXION ANNUAL REPORT 2015


        

 

 

 

FINANCIAL         

 

        
REVIEW         

 

 

 

 

INTERXION ANNUAL REPORT 2015    /    15


 

  Financial review

 

  

 

 

FINANCIAL REVIEW

 

 

LOGO

Interxion delivered a year of strong financial performance. Total revenue increased by 13% to €386.6 million while recurring revenue was up 14% to €365.2 million, year-on-year. Non-recurring revenue, which remained stable year-on-year, was driven by continuing strong customer installations. Adjusted EBITDA increased by 17%, to €171.3 million, and Adjusted EBITDA margin was up to 44.3%, from 43.0% in 2014.

Net finance expense for the year was 29.0 million (2014: 27.9 million); the underlying combined interest cost of the business was 6.0%, a 10 basis points improvement compared with 2014. Net profit for the year was 48.6 million (2014: 35.1 million), a 38% increase. Net profit was principally affected by the positive pre-tax impact of M&A-related income net of cost, of 9.1 million and profit on the sales of a financial asset of 2.3 million, resulting in a 17% increase in underlying adjusted net profit for the year.

The Company continued to generate significant cash from its operations: 169.4 million in 2015, a 25% increase on 2014. We continued to deploy these resources in a disciplined manner to fund further customer-driven data centre expansion: 175.7 million of the 192.6 million capital expenditure in 2015 was invested in expansion and upgrade projects to create the foundation for future growth and to meet customers’ needs.

During the year, we added 7,700 square metres of data-centre equipped space, and 8,100 square metres of revenue generating space, resulting in a 78% utilisation.

Josh Joshi

Chief Financial Officer

31 March 2016

 

INCOME STATEMENT HIGHLIGHTS

 

( millions)    2015        2014      2013    
Total revenue      386.6           340.6         307.1     
Recurring revenue      94%           94%         95%     
Gross profit      234.9               201.5         183.0     
Gross profit margin      61%           59%         60%     
Adjusted EBITDA      171.3           146.4         131.8     
Adjusted EBITDA margin      44%           43%         43%     
Operating profit      95.5           78.4         70.4     
Operating profit margin      25%           23%         23%     
Profit for the year      48.6           35.1         6.8     

REVENUE

Interxion benefits from a business model that has a high proportion of recurring revenue: of the year’s 386.6 million total revenue, 365.2 million, 94%, was recurring. This compares with 340.6 million in revenue for 2014, of which 319.2 million, or 94%, was recurring. The percentage of non-recurring revenue was driven by a continuing strong number of customer installations during the year, particularly in The Netherlands, Germany, France and Austria. In the Big4 countries – France, Germany, The Netherlands and the UK – 232.6 million (94%), of 246.9 million total revenue was recurring, compared with 200.6 million (94%) of 214.2 million total revenue in 2014. Recurring revenue in the Big4 segment grew 13% organically on a constant-currency basis.

In the Rest of Europe countries, 132.6 million (95%) of 139.6 million total revenue was recurring, compared with 118.6 million (94%) of 126.4 million total revenue in 2014. Recurring revenue in the Rest of Europe segment grew 10% organically on a constant-currency basis.

 

 

16    /    INTERXION ANNUAL REPORT 2015


 

 

Financial review   

 

 

 

Revenue growth was particularly strong in Germany and The Netherlands in 2015; Austria and Sweden performed very well within the Rest of Europe.

 

 

LOGO

OTHER INCOME

Other income represents income that we do not consider part of our core business. It includes transaction break-fee income (20.9 million; 2014: nil) and income from the subleases on unused data centre sites (0.4 million; 2014: 0.3 million).

COST OF SALES

Cost of sales increased by 9% in 2015, to 151.6 million (2014: 139.1 million). Interxion’s business model not only results in a high percentage of recurring revenue, but also delivers significant operating benefits: once data centres are in operation, the number of relatively fixed costs contribute to operating leverage. Conversely, newly opened data centres generate comparatively higher non-recurring installation revenues at a relatively higher cost of sales, combined with nearly full operating costs at lower utilisation levels. After experiencing an evident “expansion drag” in 2014, 2015’s gross margin percentage increased to 60.8% (2014: 59.2%). The underlying inherent operating leverage of the business model remains intact.

SALES AND MARKETING COSTS

Sales and marketing costs increased by 15%, to 28.2 million (2014: 24.6 million), but were maintained at 7% of revenue. Our marketing department continued to invest resources in understanding our customers’ needs and how best to meet them. The department continues to develop its expertise to support our strategy of developing communities of interest around magnetic customers.

These communities of interest will continue to result in a high-quality customer base that benefits and grows from the businesses that our magnetic customers attract to our data centres. They lead to better customer satisfaction, lower churn and attractive investment returns.

GENERAL AND ADMINISTRATIVE COSTS

General and administrative costs increased by 34% in 2015, to 132.5 million (2014: 98.9 million), and to 34% of revenue (2014: 29%). The higher costs were primarily the result of a 16.1 million increase, to 78.2 million (2014: 62.2 million), in depreciation and amortisation and a 11.5 million increase in one-off M&A transaction costs (2014: 0.3 million). The higher depreciation and amortisation costs were consistent with the Company’s year-on-year increase in equipped data centre space.

LOGO

General and administrative costs, excluding depreciation, amortisation, impairments, share-based payments, M&A transaction costs and increase/(decrease) in provision for onerous lease contracts, increased by 16% to 35.5 million compared with 2014. The increase was due to both an increase in salary and compensation costs driven by higher headcount, higher external hires and increased costs for professional advisory services.

ADJUSTED EBITDA

Adjusted EBITDA increased 17% during the year to 171.3 million (2014: 146.4 million). Adjusted EBITDA margin expanded by 130 basis points, to 44.3% (2014: 43.0%). Adjusted EBITDA in the Big4 countries – France, Germany, The Netherlands and the UK – totalled 134.3 million (2014: 113.4 million), a 54.4% margin (2014: 52.9%).

The increase in the Big4 Adjusted EBITDA margin was the result of improved operating leverage due to expansion drag and relatively higher sales commissions in 2014, partially offset by a positive Adjusted EBITDA performance in France. Adjusted EBITDA in the Rest of Europe totalled 78.9 million (2014: 67.3 million), a 56.5% margin (2014: 53.2%). Growth in Adjusted EBITDA and Adjusted EBITDA margin was particularly strong in Austria and Sweden.

The operating leverage in the Company’s business model and cost control is manifested in its Adjusted EBITDA results, which grew faster than recurring revenue and resulted in stable-to-expanding margins. Over the period 2013–2015, Interxion’s recurring revenue increased by 25%, while Adjusted EBITDA grew by 30%.

During this period, Adjusted EBITDA margins expanded by 140 basis points, from 42.9% in 2013 to 44.3% in 2015 (2014: 43.0%). The drivers behind this performance can be understood by looking at the trends in the nature of the operating costs.

The costs of data centre installation and energy directly correlate to the growth in revenue, whereas property and other general and administrative costs generally grew at a slower pace.

In 2015, the Company employed an average of 515 full-time equivalent employees, compared with 478 in 2014. We expect this number to increase moderately in 2016, in line with new data centre capacity becoming available and with our desire to fulfil our customers’ requirements.

OPERATING PROFIT

Operating profit increased by 22%, to 95.5 million in 2015 (2014: 78.4 million), primarily as a result of the increased scale of the business and the positive impact of a one-off M&A-related break-fee income, net of cost, of 9.1 million.

 

 

INTERXION ANNUAL REPORT 2015    /    17


 

  Financial review

 

  

 

 

NET FINANCE EXPENSE

Net finance expense increased to 29.0 million (2014: 27.9 million), as a result of the full-year impact of the bond tap issued in April 2014, partly offset by the profit realised on the sale of our financial asset (2.3 million) and profitable foreign exchange results.

INCOME TAX EXPENSE

Income tax expense increased by 16% in 2015 to 17.9 million (2014: 15.4 million). Our effective tax rate, which decreased from 31% in 2014 to 27% in 2015, was positively affected by the revaluation of deferred tax balances in the UK and Sweden, and the net positive income on the terminated M&A transaction, partly offset by the negative impact of non-deductible share-based payments.

NET PROFIT

Net profit, which increased to 48.6 million (2014: 35.1 million), was also affected by the positive net impact of M&A transaction costs and break-fee income. The net profit margin increased to 12.6% in 2015 (2014: 10.3%). Net profit, adjusted for M&A transaction costs and break-fee income of 9,1 million, profit on the sale of a financial asset, capitalised interest and other items, increased by 16.8% to 37.9 million. Adjusted net profit margin increased by 30 bps to 9.8%.

EARNINGS PER SHARE

Diluted earnings per share (EPS) increased to 0.69 per share in 2015 (2014: 0.50), principally as a result of improved operational results, one-off items in corporate income tax, and the net impact of M&A transaction costs and break-fee income. Adjusted net profit for the year increased by 17% on an earnings-per-share basis.

NET PROFIT HIGHLIGHTS

 

( millions)    2015        2014      2013    
Net profit - as reported      48.6           35.1         6.8     
Add back                           

+ Refinancing charges

     —           0.6         31.0     

+ M&A transaction costs

     11.8           0.3         —     

+ Deferred tax asset adjustment

     —                   0.6     

+ Dutch crisis wage tax

     —                   0.4     
       11.8           0.9         32.0     
Reverse                           

– Adjustments to onerous lease

     (0.2)           (0.8)         —     

– Interest Capitalised

     (2.6)           (3.6)         (1.7)     

M&A transaction break fee income

     (20.9)                   —     

Profit on sale of financial asset

     (2.3)                   —     
       (26.0)           (4.4)         (1.7)     
Tax effect of above add backs & reversals         3.5           0.9         (7.5)     
Adjusted Net profit      37.9           32.5         29.6     

    

                          

Reported Basic EPS: ()

     0.70           0.51         0.10     

Reported Diluted EPS: ()

     0.69           0.50         0.10     

Adjusted Basic EPS: ()

     0.55           0.47         0.43     

Adjusted Diluted EPS: ()

     0.54           0.46         0.43     

BALANCE SHEET HIGHLIGHTS

 

( millions)    2015        2014        2013    
PP&E and intangible assets      1,022.3           914.2           716.6     
Cash and cash equivalents      58.6           99.9           45.7     
Other current and non-current assets      171.2           159.0           148.5     
Total assets      1,252.1           1,173.1           910.8     

    

                          
Borrowings      555.8           561.6           364.0     
Other current and non-current liabilities      188.9           175.4           158.9     
Total liabilities      744.7           737.0            522.9     
Shareholders’ equity      507.4           436.1           387.9     
Total liabilities and shareholders’ equity      1,252.1            1,173.1           910.8     

BALANCE SHEET

The Company’s balance sheet at financial year-end 2015 was strong and well capitalised, with growing assets, declining costs of capital, and increasing shareholders’ equity.

During 2015, we invested 192.6 million in capital expenditure of which 175.7 million was for discretionary expansion and upgrade projects and 18.7 million for the purchase of the Vienna property. We opened two new data centres and expanded six others, and increased equipped space by 7,700 square metres. Net of depreciation, this resulted in a 103.9 million increase in property, plant and equipment. At 31 December 2015, the total book value of the Company’s property, plant and equipment was 999.1 million.

Intangible assets, which primarily represent power-grid rights and software development expenditure, increased on a net basis by 4.2 million to end the year at 23.2 million.

The Company’s deferred tax assets represent the temporary timing differences between the carrying amounts of assets for financial reporting purposes and the amounts for taxation purposes, and are primarily the result of tax loss carry-forwards. At 31 December 2015, the balance of these deferred tax assets was 23.0 million. Cash and cash equivalents decreased to 58.6 million at year-end 2015 (year-end 2014: 99.9 million), primarily as a result of capital expenditure partially offset by cash generated from operations, and additional mortgage financing.

Trade and other current assets increased by 17% to 141.5 million. The Company’s contracts typically require that, with the exception of metered power usage which is invoiced in arrears, monthly recurring fees are invoiced quarterly in advance. Total trade payables and other liabilities increased 10% to 174.7 million (2014: 158.7 million). Of this, 93%, or 162.6 million (2014: 146.5 million), were current liabilities. Other liabilities included deferred revenue, customer deposits, tax and social security liabilities, and accrued expenses.

Borrowings at year-end 2015 decreased to 555.8 million (2014: 561.6 million), which was primarily the net effect of repayment of the Vienna lease liability and regular mortgage repayments, partly offset by the new 15.0 million mortgage on Frankfurt property.

 

 

18    /    INTERXION ANNUAL REPORT 2015


 

 

Financial review   

 

 

 

The 100.0 million revolving credit facility remained undrawn during the year and provided a healthy liquidity cushion as of 31 December 2015.

Interxion continued to be in full compliance with its debt covenants. Our net debt leverage ratio stood at 2.9 compared with a covenant of less than 4.00.

The Company had no significant near-term debt maturities: 92% of its debt matures in 2019 or beyond. The 475 million 6.00% Senior Secured Notes will mature in July 2020.

Shareholders’ equity increased by 71.3 million in 2015 to 507.4 million, primarily as a result of retained net profit in 2015 and foreign currency translation differences, leading to a total comprehensive income of 59.0 million, and 12.2 million relating to new shares issued in respect of share options exercised.

CASH FLOW HIGHLIGHTS

 

( millions)   

 

2015  

     2014      2013    
Cash generated from operations      169.4           135.4         102.7     
Net cash flows from operating activities      127.1           104.4         72.6     
Capital expenditures, including intangible assets      (192.6)           (216.3)         (143.4)     
Net cash flows used in investing activities      (187.9)           (217.9)         (143.4)     
Net cash flows from financing activities      18.2           167.6         47.9     
Net movement in cash and cash equivalents      (41.4)           54.2         (23.0)     
Cash and cash equivalents at the end of the year      58.6           99.9         45.7     

CASH FLOW

During 2015, cash generated from operations was 25% higher, at 169.4 million (2014: 135.4 million), principally as a result of a higher operating profit, and the net impact of M&A transaction costs and break-fee income.

Reported cash interest paid in 2015 was 30.5 million (2014: 25.2 million). In accordance with IFRS, Interxion is required to capitalise interest costs during construction.

The related cash interest paid reported in “purchase of property, plant and equipment” in 2015 was 3.6 million (2014: 2.5 million).

LOGO

Cash income taxes increased to 11.9 million (2014: 6.3 million) and partially offset the increase in cash generated from operations. As a result, net cash flow from operating activities increased by 22%, to 127.1 million (2014: 104.4 million). Capital expenditure for 2015, which included the purchase of property, plant and equipment, plus the purchase of intangible assets, totalled 192.6 million. These investments were financed through the cash generated from operations and incremental financing; of this capital expenditure, 175.7 million was invested in expansion and upgrade projects to fuel future growth.

Net cash flow from financing activities was 18.2 million (2014: 167.6 million). In 2015, we acquired additional capital at attractive rates when we secured a mortgage on our FRA8/10 data centre property; net proceeds amounted to 14.9 million. As a result, the combined net effective interest rate improved to approximately 6.0%. In 2014, net proceeds from the 150 million bond tap at a premium of 106.75 amounted to 157.9 million.

Scheduled repayments for our mortgages amounted to 2.3 million in 2015. The Company also received 5.7 million from the exercise of stock options. While the Company does not currently hedge its foreign exchange exposure, exchange rates had a small positive impact on cash balances during the year. In 2015, the Company’s cash and cash equivalents decreased by 41.3 million – from 99.9 million at the beginning of the year to 58.6 million at the year-end.

 

 

LOGO

 

 

INTERXION ANNUAL REPORT 2015    /    19


 

  Financial review

 

  

 

 

SIGNIFICANT EVENT

SHARE DISTRIBUTION BY BAKER CAPITAL

On 2 June 2015, Lamont Finance N.V. and Baker Communications Fund II, L.P. requested that we instruct our Transfer Agent, American Stock Transfer & Trust Company, to remove the restrictive legend on all of the 18,657,592 ordinary shares held by Lamont Finance N.V. and Baker Communications Fund II, L.P.

Baker Capital (“Baker”) made a pro rata distribution-in-kind of these shares immediately to the partners of Baker Communications Fund II (Cayman) L.P. and Baker Communications Fund II L.P., which funds initially acquired Interxion shares in 2000. Under the terms of the undertaking executed by Baker in support of the proposed transaction between Interxion and Telecity Group plc, it was contemplated that Baker would make a full distribution of its shares to its partners upon the closing of the transaction. The distribution was made following the termination of the proposed transaction with Telecity Group plc and the related undertaking executed by Baker. Following the distribution, Baker owns shares constituting less than 1% of our outstanding ordinary shares.

This distribution did not have any effect upon the total number of ordinary shares outstanding.

As a result of the 18.6 million ordinary share distribution by funds affiliated with Baker, Mr. John Baker (on 5 June 2015) and Mr. Rob Manning (on 7 June 2015), tendered their resignations as Directors, effective immediately. Mr. Jean F.H.P. Mandeville was appointed as the new Chairman of the Board replacing Mr. Baker, effective 8 June 2015.

On 8 June 2015, our Board adopted amendments to the Company’s Bylaws to eliminate references to the shareholders agreement of 2 February 2011 between the Company and affiliates of Baker Capital, which is no longer in place, and to related provisions.

SIGNIFICANT RISK AND UNCERTAINTIES

In December 2015, we became aware that we suffered a breach in our IT security. This resulted in a temporary and localised compromise of the credentials to our customer relationship management system (“CRM”) which allowed unauthorised access to some customer and prospective customer contact details. No financial, personal or other sensitive customer data was accessed, or is stored within this system. This incident only affected our CRM system and did not impact or involve any of the data centres or services that we provide. Upon learning of this incident, we collaborated with our CRM supplier and have worked closely with our security team to ensure that all CRM information is secure.

On 13 December 2013, we were awarded a permit by the Seine-St-Denis authorities to operate our PAR7 data centre. On 15 October 2015, a French administrative court ruled that local authorities failed to perform a sufficiently extensive study of the potential noise impact that operating the PAR7 data centre could have on local residents and consequently the French administrative court annulled the permit we received on 13 December 2013. We have appealed this ruling. The Seine-St-Denis authorities have requested that we re-apply for a new permit and on 2 March 2016 we submitted an application for a new permit with the relevant administrative authorities. We have worked with the Seine-St-Denis authorities and we obtained formal approval to continue to operate the PAR7 data centre during the application process, which we expect to conclude by the end of 2016.

 

 

20    /    INTERXION ANNUAL REPORT 2015


        

 

 

 

REPORT

OF THE BOARD OF DIRECTORS

  

 

 

 

 

 

 

 

INTERXION ANNUAL REPORT 2015    /    21


 

  Report of the Board of Directors    

 

 

 

REPORT OF THE BOARD OF DIRECTORS

 

 

 

STRUCTURE

InterXion Holding N.V. (the “Company”) is a public limited liability company incorporated under the laws of The Netherlands and is the direct or indirect parent company of all companies forming the Interxion group of companies (the “Group”). Our corporate seat is in Amsterdam, The Netherlands. Our principal office is at Tupolevlaan 24, 1119 NX, Schiphol-Rijk, The Netherlands. The Company was incorporated on 6 April 1998 as European Telecom Exchange B.V. and was renamed InterXion Holding B.V. on 12 June 1998. On 11 January 2000 the Company was converted into a Naamloze Vennootschap. Since 28 January 2011 the Company’s shares have been listed on the New York Stock Exchange (“NYSE”).

The Company has one class of shares of which 69,919,244 had been issued and paid-up as of 31 December 2015. Of these shares 20,375,252 were issued by the Company in 2011 as part of its initial public offering.

BOARD OF DIRECTORS

BOARD POWERS AND FUNCTION

The Company has a one-tier management structure with one board of directors, currently consisting of one Executive Director and four Non-executive Directors. Our Board is responsible for the overall conduct of our business and has the powers, authorities and duties vested in it by and pursuant to the relevant laws of The Netherlands and our Articles of Association. In all its dealings, our Board shall be guided by the interests of our Group as a whole, including our shareholders and other stakeholders. Our Board has the final responsibility for the management, direction and performance of us and our Group. Our Executive Director is responsible for the day-to-day management of the Company. Our Non-executive Directors supervise the Executive Director and our general affairs, and provide general advice to the Executive Director.

Our Chief Executive Officer (“CEO”), the Executive Director, is the general manager of our business, subject to the control of our Board, and is entrusted with all of our Board’s powers, authorities and discretions (including the power to sub-delegate) delegated by the full Board from time to time by a resolution of our Board. Matters expressly delegated to our CEO are validly resolved upon by our CEO and no further resolutions, approvals or other involvement of our Board is required. Our Board may also delegate authorities to its committees. Upon any such delegation our Board supervises the execution of its responsibilities by our CEO and/or our Board committees. The Board remains ultimately responsible

for the fulfilment of its duties. Moreover, its members remain accountable for the actions and decision of the Board and have ultimate responsibility for the Company’s management and the external reporting. The Board’s members are accountable to the shareholders of the Company at its Annual General Meeting.

BOARD MEETINGS AND DECISIONS

All resolutions of our Board are adopted by a simple majority of votes cast in a meeting at which at least the majority of the Directors are present or represented. A member of the Board may authorise another member of the Board to represent him/ her at the Board meeting and vote on his/her behalf. Each Director is entitled to one vote (provided that, for the avoidance of doubt, a member representing one or more absent members of the Board by written power of attorney will be entitled to cast the vote of each such absent member). If there is a tie, the Chairman has the casting vote.

Our Board meets as often as it deems necessary or appropriate or upon the request of any member of our Board. During 2015 our Board met 25 times. Our Board has adopted rules, which contain additional requirements for our decision-making process, the convening of meetings and, through separate resolution by our Board, details on the assignment of duties and a division of responsibilities between Executive Directors and Non-executive Directors. Our Board has appointed one of the Directors as Chairman and one of the Directors as Vice-Chairman of the Board. Our Board is further assisted by a Corporate Secretary. The Corporate Secretary may be a member of our Board or of our Senior Management and is appointed by our Board.

 

 

22    /    INTERXION ANNUAL REPORT 2015


 

 

    Report of the Board of Directors   

 

 

 

 

 

 

COMPOSITION OF THE BOARD

Our Board consists of a minimum of one Executive Director and a minimum of three Non-executive Directors, provided that our Board is comprised of a maximum of seven members. The number of Executive Directors and Non-executive Directors is determined by our General Meeting, with the proviso that the majority of our Board must consist of Non-executive Directors. Only natural persons can be Non-executive Directors. The Executive Directors and Non-executive Directors are appointed by our General Meeting, provided that our Board is classified, with respect to the term for which each member of our Board will severally be appointed and serve as a member of our Board, into three classes, as nearly equal in number as reasonably possible.

Our Directors are appointed for a period of three years. The class I Directors serve for a term expiring at the Annual General Meeting to be held in 2017; the class II Directors serve for a term expiring at the Annual General Meeting to be held in 2018; and the class III Directors are serving for a term expiring at the Annual General Meeting to be held in 2016. At each Annual General Meeting, Directors appointed to succeed those Directors whose terms expire are appointed to serve for a term of office to expire at the third succeeding Annual General Meeting after their appointment. Notwithstanding the foregoing, the Directors appointed to each class continue to serve their term in office until their successors are duly appointed and qualified or until their earlier resignation, death or removal. If a vacancy occurs, any Director so appointed to fill that vacancy serves its term in office for the remainder of the full term of the class of Directors in which the vacancy occurred.

Our Board has nomination rights with respect to the appointment of a Director. Any nomination by our Board may consist of one or more candidates per vacant seat. If a nomination consists of a list of two or more candidates, it is binding, and the appointment to the vacant seat concerned will be from the persons placed on the binding list of candidates, and will be effected through election. Notwithstanding the foregoing, our General Meeting may, at all times, by a resolution passed with a two-thirds majority of the votes cast representing more than half of our issued and outstanding capital, resolve that such list of candidates will not be binding.

The majority of our Directors are independent as required by the NYSE Manual. Our Non-executive Directors are all independent.

Directors may be suspended or dismissed at any time by our General Meeting. A resolution to suspend or dismiss a Director must be adopted by at least a two-thirds majority of the votes cast, provided such majority represents more than half of our issued and outstanding share capital. Executive Directors may also be suspended by the Board.

On 1 January 2013 the Act on Management and Supervision became effective. Until 31 December 2015 this Act contained the consideration that a board is well balanced if it consists of at least 30% women and 30% men. As the Dutch Government has expressed the intention to reintroduce this consideration in this Act, the Company will continue to report on this topic. “Large” companies must take this into account:

  Upon appointment and, where applicable, recommendation for nomination or nomination for appointment of Directors; and

 

  When drawing up the profile for the size and composition of the Board.

A company is considered “large” if, on two consecutive balance sheet dates, at least two of the following three criteria are met:

 

  The value of the company’s assets according to its balance sheet, based on the acquisition and manufacturing price, exceeds 17,500,000;

 

  The net turnover exceeds 35,000,000; and

 

  The average number of employees is at least 250.

The Company is committed to making an effort to increase the number of women on our Board of Directors, which it will primarily do by focusing on female candidates for Director positions. The main focus of the Company will continue to be on ensuring that those persons best qualified for a position on our Board of Directors are nominated, irrespective of their gender.

 

 

INTERXION ANNUAL REPORT 2015    /    23


 

  Report of the Board of Directors    

 

 

 

DIRECTORS

 

 

   Name

 

 

  

Age

 

 

  

Gender

 

 

  

Nationality

 

 

  

Position

 

 

  

Term
Expiration        

 

 

David C. Ruberg

  

 

70        

  

 

Male            

  

 

American        

  

 

President,

Chief Executive Officer

Vice-Chairman and

Executive Director

 

 

  

 

2016            

 

Frank Esser

  

 

57

  

 

Male

  

 

German

  

 

Non-executive Director

 

  

 

2017

 

Mark Heraghty

  

 

52

  

 

Male

  

 

Irish

  

 

Non-executive Director

 

  

 

2017

 

Jean F.H.P. Mandeville

  

 

56

  

 

Male

  

 

Belgian

  

 

Chairman and Non-executive Director

 

  

 

2016

 

Rob Ruijter

  

 

64

  

 

Male

  

 

Dutch

  

 

Non-executive Director

 

  

 

2018

 

David Ruberg, President, Chief Executive Officer,

Vice-Chairman and Executive Director

Mr. Ruberg joined Interxion as President and Chief Executive Officer in November 2007 and became Vice-Chairman of the Board of Directors when it became a one-tier board in 2011. Mr. Ruberg served as Chairman of the Supervisory Board from 2002 to 2007 and on the Management Board from 2007 until the conversion into a one-tier board. Mr. Ruberg was affiliated with Baker Capital, a private equity firm from January 2002 until October 2007. From April 1993 until October 2001 he was Chairman, President and CEO of Intermedia Communications,

 

a NASDAQ-listed broadband communications services provider, as well as Chairman of its majority-owned subsidiary, Digex, Inc., a NASDAQ-listed managed web hosting company. He began his career as a scientist at AT&T Bell Labs, contributing to the development of operating systems and computer languages. He holds a Bachelor’s Degree from Middlebury College and a Masters in Computer and Communication Sciences from the University of Michigan.

 

 

24    /    INTERXION ANNUAL REPORT 2015


 

 

    Report of the Board of Directors   

 

 

Mark Heraghty, Non-executive Director

Mr. Heraghty serves on our Board of Directors, to which he was appointed in June 2014. His most recent position is Managing Director of Virgin Media Business. From 2006 to 2009, he was President EMEA for Reliance Globalcom with regional responsibility for the former FLAG Telecom and Vanco businesses which Reliance acquired. From 2000 to 2003, he was the CEO Europe for Cable & Wireless. Mr. Heraghty graduated from Trinity College Dublin with a degree in Mechanical Engineering (1985) and holds an MBA awarded by Warwick University (1992).

Rob Ruijter, Non-executive Director

Mr. Ruijter serves on our Board of Directors, to which he was appointed in November 2014. Mr. Ruijter was the Chief Financial Officer of KLM Royal Dutch Airlines from 2001 until its merger with Air France in 2004 and the Chief Financial Officer of VNU N.V. (a publicly listed marketing and publishing company, now the Nielsen Company) between 2004 and 2007. In 2009 and 2010 he served as the CFO of ASM International N.V. (a publicly listed manufacturer of electronic components) and in 2013 as the interim CEO of Vion Food Group N.V.

Mr. Ruijter currently serves on the Supervisory Board and as Chairman of the Audit Committee of Wavin N.V. (a manufacturer of piping), as well as on the Supervisory Board of Ziggo N.V. (a cable company). Mr. Ruijter is a non-executive director of Inmarsat Plc and the Chairman of its Audit Committee. He also serves as the Chairman of the Supervisory Board of Delta Lloyd N.V. and as member of the Remuneration Committee, the Audit Committee, the Compensation Committee and the Risk Committee of that company. Mr. Ruijter is a Certified Public Accountant in the United States and in The Netherlands and a member of the ACT in the UK.

Frank Esser, Non-executive Director

Mr. Esser serves on our Board of Directors, to which he was appointed in June 2014. From 2000 onwards, he has held various positions with the French telecom operator SFR, where, from 2002 to 2012, he was President and CEO. From 2005 to 2012, he was a member of the board of Vivendi Management. Prior to that he was a Senior Vice President of Mannesmann International Operations until 2000. Mr. Esser serves on the board of AVG N.V., Dalensys S.A. and Swisscom AG. He is a Business Administration graduate from Cologne University and he holds a Doctorate in Business Administration from the Cologne University.

Jean F.H.P. Mandeville, Chairman and Non-executive Director

Mr. Mandeville serves on our Board of Directors, to which he was appointed in January 2011. Since 8 June 2015 Mr. Mandeville has served as the Chairman of our Board of Directors. From October 2008 to December 2010, Mr. Mandeville served as Chief Financial Officer and board member of MACH S.à. r.l. He served as an Executive Vice President and Chief Financial Officer of Global Crossing Holdings Ltd/Global Crossing Ltd. from February 2005 to September 2008. Mr. Mandeville joined Global Crossing in February 2005, where he was responsible for all of its financial operations. He served as Chief Financial Officer of Singapore Technologies Telemedia Pte. Ltd./ST Telemedia from July 2002 to January 2005. In 1992, he joined British Telecom and served in various capacities covering all sectors of the telecommunications market (including wireline, wireless and multi-media) in Europe, Asia and the Americas. From 1992 to June 2002, Mr. Mandeville served in various capacities at British Telecom PLC, including President of Asia Pacific from July 2000 to June 2002, Director of International Development Asia Pacific from June 1999 to July 2000 and General Manager, Special Projects from

January 1998 to July 1999. Mr. Mandeville was a Senior Consultant with Coopers & Lybrand, Belgium from 1989 to 1992. He graduated from the University Saint-Ignatius Antwerp with a Masters in Applied Economics in 1982 and a Special degree in Sea Law in 1985.

DIRECTORS’ INSURANCE AND INDEMNIFICATION

In order to attract and retain qualified and talented persons to serve as members of our Board or of our Senior Management, we currently provide such persons with protection through a directors’ and officers’ insurance policy, and expect to continue to do so. Under this policy, any of our past, present or future Directors and members of our Senior Management will be insured against any claim made against any one of them for any wrongful act in their respective capacities.

Under our Articles of Association, we are required to indemnify each current and former member of our Board who was or is involved in that capacity as a party to any actions or proceedings, against all conceivable financial loss or harm suffered in connection with those actions or proceedings, unless it is ultimately determined by a court having jurisdiction that the damage was caused by intent (opzet), wilful recklessness (bewuste roekeloosheid) or serious culpability (ernstige verwijtbaarheid) on the part of such member.

Insofar as indemnification of liabilities arising under the Securities Act may be permitted to members of our Board, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

 

INTERXION ANNUAL REPORT 2015    /    25


 

  Report of the Board of Directors    

 

 

 

BOARD COMMITTEES

Our Board has established an audit committee, a compensation committee and a nominating committee. Each committee evaluates its performance annually to determine whether it is functioning effectively.

AUDIT COMMITTEE

Our audit committee consists of three independent Directors, Rob Ruijter, Frank Esser and Mark Heraghty. Rob Ruijter serves as the chair of the audit committee. The audit committee is independent as defined under and required by rule 10A-3 under the US Securities Exchange Act of 1934, as amended (“rule 10A-3”) and the NYSE Manual. The audit committee is responsible for the appointment (subject to Board and shareholders’ approval) of independent registered public accounting firm KPMG Accountants N.V. as our statutory auditors, for its compensation and retention, and for oversight of its work. In addition, approval of the audit committee is required prior to our entering into any related-party transaction. It is also responsible for “whistleblowing” procedures, certain other compliance matters, and the evaluation of the Company’s policies with respect to risk assessment and risk management. The audit committee met five times during 2015. Most of its time was dedicated to reviewing, with management and with the independent auditor, the unaudited quarterly interim reports and the audited annual Dutch statutory financial statements as well as the 20-F. This included reviewing the effectiveness of the internal controls and of the Company’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), and overseeing the Company’s compliance with its legal and regulatory requirements.

COMPENSATION COMMITTEE

Our compensation committee consists of three independent Directors, Rob Ruijter, Frank Esser and Mark Heraghty. Until 5 June 2015 John Baker served as the chair of the compensation committee. Since 8 June Mark Heraghty serves as the chair of the compensation committee. Among other things, the compensation committee reviews, and makes recommendations to the Board regarding the compensation and benefits of our CEO and our Board. The compensation committee also administers the issuance of shares and stock options and other awards under our equity incentive plan, and evaluates and reviews policies relating to the compensation and benefits of our employees and consultants. The compensation committee met five times during 2015, with a focus on approving the 2014 Senior Management bonus pay-out, reviewing the long-term compensation philosophy of the Company, and reviewing and approving the Company’s share and option grants and reviewing and approving Senior Management’s short-term and long-term compensation.

NOMINATING COMMITTEE

Our nominating committee consists of three independent Directors, Frank Esser, Jean Mandeville and Mark Heraghty. Until 5 June 2015 John Baker served as the chair of the nominating committee. Since 8 June Frank Esser serves as the chair of the nominating committee. The nominating committee is responsible for, among other things, developing and recommending to our Board our corporate governance guidelines, identifying individuals qualified to become Directors, overseeing the evaluation of the performance of the Board, selecting the Director nominees for the next annual meeting of shareholders, and selecting Director candidates to fill any vacancies on the Board. The nominating committee met once during 2015. The main focus of this meeting was to discuss the nomination of Non-executive Directors.

GENERAL MEETINGS OF SHAREHOLDERS AND VOTING RIGHTS

Our Annual General Meeting must be held within six months of the end of the previous financial year. It must be held in The Netherlands in Amsterdam, Haarlemmermeer (Schiphol Airport) or Hoofddorp. Our financial year coincides with the calendar year. The notice convening the Annual General Meeting, together with the agenda for the meeting, shall be sent to the addresses of the shareholders shown in the register of shareholders. An extraordinary General Meeting may be convened whenever our Board or CEO deems it necessary.

In addition, shareholders and/or persons having the rights conferred by the laws of The Netherlands upon holders of depositary receipts issued with a company’s cooperation for shares in its capital representing in the aggregate at least one-tenth of the Company’s issued capital, may request the Board to convene a General Meeting, stating specifically the business to be discussed. If the Board has not given proper notice of a General Meeting within the four weeks following receipt of the request, the applicants shall be authorised to convene a meeting themselves. Each of the shares confers the right to cast one vote. Each shareholder entitled to participate in a General Meeting, either in person or through a written proxy, is entitled to attend and address the meeting and, to the extent that the voting rights accrue to him or her, to exercise his or her voting rights in accordance with our Articles. The voting rights attached to any shares, or shares for which depositary receipts have been issued, are suspended as long as they are held in treasury.

At the Annual General Meeting the following items are discussed and/or approved as a minimum:

 

  The adoption of the annual accounts;

 

  The appointment of the auditor to audit the annual accounts;

 

  The discharge of the Directors from certain liabilities;

 

  The appointment of Directors; and

 

  The allocation of profits.

The Board of Directors requires the approval of the General Meeting for resolutions of the Board that entail a significant change in the identity or character of the Company or the business connected with it, which significant changes in any case include:

 

  The transfer of (nearly) the entire business of the Company to a third party;

 

  The entering into or termination of a long-term co-operation of the Company or one of its subsidiaries with another legal entity or company or as fully liable partner in a limited or general partnership, if this co-operation or termination is of major significance for the Company; and

 

  The acquisition or disposal by the Company or by one of its subsidiaries of participating interests in the capital of a company representing at least one-third of the sum of the assets of the Company as shown on its balance sheet according to the last adopted annual account of the Company.

Shareholders holding at least 3% of our issued share capital may submit agenda proposals for the General Meeting, provided we receive such proposals no later than 60 days before the date of the General Meeting.

Pursuant to the provisions in our Articles of Association, the General Meeting may only upon a proposal of the Board resolve to amend the Company’s Articles of Association, change the Company’s corporate form, enter into a Dutch statutory (de)merger or dissolve and liquidate the Company. Moreover these decisions require a resolution passed with a two-thirds majority of the votes cast representing at least one-half of the Company’s issued share capital.

 

 

26    /    INTERXION ANNUAL REPORT 2015


 

 

    Report of the Board of Directors   

 

 

ANTI-TAKEOVER MEASURES

The Company has no anti-takeover measures in place. Although we do not envisage adopting any specific anti-takeover measures, the Board of Directors, pursuant to the Articles of Association as adopted by the General Meeting on 26 January 2011 and as amended by the General Meeting on 20 January 2012, was designated for a period of 5 years, which terminated on 28 January 2016, as the corporate body of the Company authorised to issue shares and grant rights to subscribe for shares up to the amount of our authorised share capital with the power to limit or exclude the rights of pre-emption thereto. On 30 June 2015, the General Meeting designated the Board of Directors for a period of 18 months, which will terminate on 30 December 2016, as the corporate body of the Company authorised to issue shares or grant rights to subscribe for shares, up to 10% of the authorised share capital of the Company as it stands at the date of the resolution.

ISSUANCE OF SHARES

The General Meeting is authorised to decide on the issue of new shares or to designate another body of the Company to issue shares for a fixed period of a maximum of five years. On such designation, the number of shares which may be issued must be specified. The designation may be extended for a period not exceeding five years. A resolution of the General Meeting to issue shares or to designate another body of the Company as the competent body to issue shares can only be adopted at the proposal of the Board. The General Meeting designated the Board as the body of the Company authorised to issue shares with the power to limit or exclude the rights of pre-emption relating thereto for a period that ended on 28 January 2016.

On 30 June 2015, the General Meeting designated the Board of Directors for a period of 18 months, which will terminate on 31 December 2016, as the corporate body of the Company authorised to (i) issue shares or grant rights to subscribe for up to 4,352,281 shares without pre-emption rights accruing to the shareholders for the purpose of the Company’s employee incentive schemes, and in addition (ii) issue shares or grant rights to subscribe for shares, up to 10% of the authorised share capital of the Company as it stands at the date of the resolution, in order to allow the Company to be sufficiently flexible in relation to its funding requirements.

ACQUISITION BY THE COMPANY OF SHARES IN ITS ISSUED CAPITAL

The Company may acquire shares in its issued capital only if all of the following requirements are met:

 

1. The distributable equity of the Company must be at least equal to the purchase price;

 

2. The aggregate nominal value of the shares already held by the Company and its subsidiaries and of the shares held in pledge by the Company does not exceed one-half of the Company’s issued capital; and

 

3. The Board has been authorised by the General Meeting thereto. Such authorisation shall be valid for not more than 18 months and the General Meeting must specify in the authorisation the number of shares which may be acquired, the manner in which they may be acquired and the limits within which the price must be set. This authorisation is not required insofar as shares in the Company’s issued share capital are acquired in order to transfer them to employees of the Company or of its subsidiaries as referred to in section 2:24b of the Dutch Civil Code pursuant to a plan applicable to such employees.

COMPENSATION

PROCESS

In compliance with Dutch law, the General Meeting has adopted a directors’ remuneration policy for the Board of Directors. The remuneration of Executive Directors shall be determined by the Board within the framework of this remuneration policy, which determination will be on the basis of recommendations made by the Board’s compensation committee. The remuneration of our Non-executive Directors shall be determined by the General Meeting based on a proposal of the Board.

POLICY GOAL

The goal of the Company’s remuneration policy is to provide remuneration to its Directors in a form that will attract, retain and motivate qualified industry professionals in an international labour market, and to align the remuneration of the Directors with the short- and long-term elements of the tasks of the Directors as well as with interests of the stakeholders of the Company. The compensation of our Directors will be reviewed regularly.

Our Executive Director has a management agreement that terminates on 30 June 2016.

COMPENSATION

The annual cash compensation to our Executive Director for the year ended 31 December 2015, was 590,000 and consisted of annual base salary 550,000 and allowances of 40,000. Our Executive Director is eligible for an annual cash incentive, which is set at an on-target cash incentive percentage of 100% of his annual base salary. Over 2015 he earned 693,000 for achievements during 2015. In 2015, performance shares were awarded to the Executive Director (reference is made to note 22). Upon termination, the Executive Director is entitled to a contractually agreed compensation equal to 12 months’ base salary.

The annual compensation to our Non-executive Directors for the year ended 31 December 2015 was 40,000. Each Non-executive Director who was member of the Company’s audit committee in addition received 20,000 gross per annum, and the chairman of the Company’s audit committee received a further 10,000 gross per annum. Each Non-executive Director who was a member of the Company’s compensation committee in addition received 5,000 gross per annum, and the chairman of the Company’s compensation committee received a further 5,000 gross per annum. No other cash incentives are paid to our Non-executive Directors. An overview of the annual compensation of our Non-executive Directors is disclosed in note 35.

In 2011 our Non-executive Director Mr. Jean F.H.P. Mandeville was granted 15,000 options with an exercise price of $13.00. These options vested over a two-and-a-half- and a three-year period respectively, with the first 33.33% vesting six months and 12 months after the award date respectively, and the remainder vesting in equal annual instalments thereafter.

In 2013 each of our Non-executive Directors was awarded restricted shares equivalent to a value of 40,000. The number of restricted shares was set on the basis of the Company’s share value at the closing of the New York Stock Exchange on the day of the 2013 Annual General Meeting. For each Non-executive Director all of these restricted shares vested at the General Meeting held at 30 June 2014. All of these restricted shares will be locked up for a period ending three years after the date of award (with the exception of a cash settlement to cover taxes due) or the date the Non-executive Director ceases to be a director of the Company, whichever is sooner.

 

 

INTERXION ANNUAL REPORT 2015    /    27


 

  Report of the Board of Directors    

 

 

 

In 2014 each of our Non-executive Directors was awarded restricted shares equivalent to a value of 40,000. The number of restricted shares was set on the basis of the Company’s share value at the closing of the New York Stock Exchange on the day of the 2014 General Meeting. For each Non-executive Director who served for the entire period from the day of the 2014 General Meeting until the day of the 2015 General Meeting these restricted shares vested at the General Meeting held at 30 June 2015. All of these restricted shares will be locked up for a period ending three years after the date of award (with the exception of a cash settlement to cover taxes due) or the date the Non-executive Director ceases to be a director of the Company, whichever is sooner.

In 2015 each of our Non-executive Directors were awarded restricted shares equivalent to a value of 40,000. The number of restricted shares was set on the basis of the Company’s share value at the closing of the New York Stock Exchange on the day of the 2015 Annual General Meeting. For each Non-executive Director all of these restricted shares vest on the day of the next Annual General Meeting, subject to such Non-executive Director having served the entire period. All of these restricted shares will be locked up for a period ending three years after the date of award (with the exception of a cash settlement to cover taxes due) or the date the Non-executive Director ceases to be a director of the Company, whichever is sooner.

The Company does not contribute to any pension scheme for its Directors. None of the Non-executive Directors is entitled to any contractually agreed benefit upon termination.

SHARES BENEFICIALLY OWNED

In the table below, beneficial ownership includes any shares over which a person exercises sole voting and/or investment power. Shares subject to options and/or restricted shares exercisable, as at 31 December 2015, are deemed outstanding and have therefore been included in the number of shares beneficially owned.

 

Directors

    

 

Shares Beneficially Owned

as at 31 December 2015

  

  

David Ruberg

     1,411,621   

Jean F.H.P. Mandeville

     19,043   

Frank Esser

     1,996   

Mark Heraghty

     1,996   

Rob Ruijter

     1,996   

RISK MANAGEMENT

RISK MANAGEMENT AND THE INTERNAL CONTROL STRUCTURE

The aim of our risk management and internal control structure is to find the right balance between an effective, professional enterprise and the risk profile that we are aiming for as a business. Our risk management and internal controls, based on the Committee of Sponsoring Organizations (COSO) of the Treadway Commission Enterprise Risk Management Framework (2013), make a significant contribution to the prompt identification and adequate management of strategic and market risks. They also support us in achieving our operational and financial targets and in complying with the applicable laws and regulations. The risk management and internal control structure have been designed to meet the Sarbanes-Oxley 404 requirements.

RISK MANAGEMENT APPROACH

The Board has the ultimate responsibility for the risk management and internal control structure. Local subsidiary management teams are responsible for implementing the strategy, achieving results, identifying underlying opportunities and risks, and ensuring effective operations. They have to act in accordance with the policy and standards set by the Board, in which they are supported by corporate departments. Compliance to standards and policies is discussed regularly between subsidiary management and representatives of the Board, and is subject to review by corporate departments.

INTERNAL AUDIT FUNCTION

In 2015, a formal internal audit function was not in place.

FINANCIAL INSTRUMENTS

For the Company’s risk management procedures related to financial instruments we refer to the Group’s accounting policies and note 21, as included in these financial statements.

INTERXION’S CODE OF CONDUCT

Our Code of Conduct and Business Ethics is a reflection of our commitment to act as a responsible social partner and of the way we try to interact with all of our stakeholders.

It is noted that all transactions in which there are conflicts of interest with one or more Directors shall be agreed on terms that are customary in the sector concerned. Such transactions must be published in the annual report, together with a statement of the conflict of interest and a declaration that the relevant best practice provisions of the Dutch Corporate Governance Code have been complied with. A director may not take part in any discussion or decision making with regard to topics where such director is conflicted.

RISK FACTORS

RISKS RELATED TO OUR BUSINESS

 

  We cannot easily reduce our operating expenses in the short term, which could have a material adverse effect on our business in the event of a slowdown in demand for our services or a decrease in revenue for any reason.

 

  Our inability to utilise the capacity of newly planned data centres and data centre expansions in line with our business plan would have a material adverse effect on our business, financial condition and results of operations.

 

  If we are unable to expand our existing data centres or locate and secure suitable sites for additional data centres on commercially acceptable terms, our ability to grow our business may be limited.

 

  Failure to renew or maintain real estate leases for our existing data centres on commercially acceptable terms, or at all, could harm our business.

 

  Our leases may obligate us to make payments beyond our use of the property.

 

  We may experience unforeseen delays and expenses when fitting out and upgrading data centres, and the costs could be greater than anticipated.

 

  We may incur non-cash impairment charges to our assets, in particular to our property, plant and equipment, which could result in a reduction to our earnings.

 

  We face significant competition and we may not be able to compete successfully against current and future competitors.
 

 

28    /    INTERXION ANNUAL REPORT 2015


 

 

    Report of the Board of Directors   

 

 

  Our services may have a long sales cycle that may materially adversely affect our business, financial condition and results of operations.

 

  Our business is dependent on the adequate supply of electrical power and could be harmed by prolonged electrical power outages or increases in the cost of power.

 

  A general lack of electrical power resources sufficient to meet our customers’ demands may impair our ability to utilise fully the available space at our existing data centres or our plans to open new data centres.

 

  A significant percentage of our Monthly Recurring Revenue is generated by contracts with terms of one year or less remaining. If those contracts are not renewed, or if their pricing terms are negotiated downwards, our business, financial condition and results of operations would be materially adversely affected.

 

  Our inability to use all or part of our net deferred tax assets could cause us to pay taxes at an earlier date and in greater amounts than expected.

 

  Our operating results have fluctuated in the past and may fluctuate in the future, which may make it difficult to evaluate our business and prospects.

 

  We are dependent on third-party suppliers for equipment, technology and other services.

 

  We depend on the ongoing service of our personnel and senior management team and may not be able to attract, train and retain a sufficient number of qualified personnel to maintain and grow our business.

 

  Disruptions to our physical infrastructure could lead to significant costs, reduce our revenues, and harm our business reputation and financial results.

 

  Our insurance may not be adequate to cover all losses.

 

  Our failure to meet the performance standards under our service level agreements may subject us to liability to our customers, which could have a material adverse effect on our reputation, business, financial condition or results of operations.

 

  We could be subject to costs, as well as claims, litigation or other potential liability, in connection with risks associated with the security of our data centres and our Information technology systems. We may also be subject to information technology systems failures, network disruptions and breaches of data security, which could have an adverse effect on our reputation and material adverse impact on our business.

 

  We face risks relating to foreign currency exchange rate fluctuations.

 

  The slowdown in global economies and their delayed recovery may have an impact on our business and financial condition in ways that we cannot currently predict.

 

  Acquisitions, business combinations and other transactions present many risks, and we may not realise the financial or strategic goals that were contemplated at the time of any transaction and such transactions may alter our financial or strategic goals.

 

  We focus on the development of communities of interest within customer segments and the attraction of magnetic customers. Our failure to attract, grow and retain these communities of interest could harm our business and operating results.

 

  Consolidation may have a negative impact on our business model.
  Our operations are highly dependent on the proper functioning of our information technology systems. We are in the process of upgrading these systems. The failure or unavailability of such systems during or after the upgrade process could result in the loss of existing or potential customers and harm our reputation, business and operating results.

 

  Substantial indebtedness could adversely affect our financial condition and our ability to operate our business, and we may not be able to generate sufficient cash flows to meet our debt service obligations.

 

  We require a significant amount of cash to service our debt, which may limit available cash to fund working capital and capital expenditures. Our ability to generate sufficient cash depends on many factors beyond our control.

 

  We may need to refinance our outstanding debt.

 

  We are subject to significant restrictive debt covenants, which limit our operating flexibility.

RISKS RELATED TO OUR INDUSTRY

 

  The European data centre industry has suffered from over-capacity in the past, and a substantial increase in the supply of new data centre capacity and/or a general decrease in demand for data centre services could have an adverse impact on industry pricing and profit margins.

 

  If we do not keep pace with technological changes, evolving industry standards and customer requirements, our competitive position will suffer.

 

  Terrorist activity throughout the world and military action to counter terrorism could adversely impact our business.

 

  Our carrier-neutral business model depends on the presence of numerous telecommunications carrier networks in our data centres.

 

  We may be subject to reputational damage and legal action in connection with the information disseminated by our customers.

RISKS RELATED TO REGULATION

 

  Laws and government regulations governing Internet-related services, related communication services and information technology and electronic commerce across the European countries in which we operate, continue to evolve and, depending on the evolution of such regulations, may adversely affect our business.

 

  The industry in which we operate is subject to environmental and health and safety laws and regulations and may be subject to more stringent efficiency, environmental and health and safety laws and regulations in the future.

 

  Changes in Dutch or foreign tax laws and regulations, or interpretations thereof may adversely affect our financial position.

RISKS RELATED TO OUR SHARES

 

  The market price for our shares may continue to be volatile.

 

  A substantial portion of our total outstanding shares may be sold into the market at any time. Such future sales or issuances, or perceived future sales or issuances, could adversely affect the price of our shares.

 

  You may not be able to exercise pre-emptive rights.

 

  We may need additional capital and may sell additional shares or other equity securities or incur indebtedness, which could result in additional dilution to our shareholders or increase our debt service obligations.

 

  We have never paid, do not currently intend to pay, and may not be able to pay any dividends on our shares.
 

 

INTERXION ANNUAL REPORT 2015    /    29


 

  Report of the Board of Directors    

 

 

 

  Your rights and responsibilities as a shareholder will be governed by Dutch law and will differ in some respects from the rights and responsibilities of shareholders under US law, and shareholder rights under Dutch law may not be as clearly established as shareholder rights are established under the laws of some US jurisdictions.

 

  We are a foreign private issuer and, as a result, and as permitted by the listing requirements of the New York Stock Exchange, we may rely on certain home country governance practices rather than the corporate governance requirements of the New York Stock exchange.

 

  You may be unable to enforce judgments obtained in US courts against us.

 

  We incur increased costs as a result of being a public company.

 

  If our internal controls over financial reporting are found to be ineffective, our financial results or our stock price may be adversely affected.

CONTROLS AND PROCEDURES

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) and for the assessment of the effectiveness of internal control over financial reporting. Internal control over financial reporting includes maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorisation; and providing reasonable assurance that unauthorised acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. The Company’s internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

In connection with the preparation of the Company’s annual consolidated financial statements, management has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of 31 December 2015, based on criteria established in the ‘Internal Control Integrated Framework (2013)’ issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO Framework).

Under the supervision and with the participation of the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the Company’s disclosure controls and procedure (as defined in rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) have been evaluated as of 31 December 2015. Based upon the evaluation, the CEO and CFO, concluded that as of 31 December 2015, the Company’s disclosure controls and procedures were effective and designed to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarised and reported within the time periods specified in the

SEC’s rules and forms and to ensure that material information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management’s report is subject to attestation by the Company’s independent registered public accounting firm. Our consolidated financial statements as of 31 December 2015, 2014 and 2013 have been audited by KPMG Accountants N.V., as an independent registered public accounting firm, which has issued an attestation report on the Company’s internal control over financial reporting included in the 2015 annual report on Form 20-F.

CHANGES IN INTERNAL CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING

Enhancements have been made during the period. There were no changes that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

DUTCH CORPORATE GOVERNANCE CODE

In addition to the “Structure” section of this report on page 22, below is a further description of our corporate governance.

Since our initial public offering on 28 January 2011, we are required to comply with the Dutch Corporate Governance Code. The revised Dutch Corporate Governance Code (the Code) became effective on 1 January 2009 and applies to all Dutch companies listed in a government-recognised stock exchange, whether in The Netherlands or elsewhere. Because the Company is listed on the New York Stock Exchange (NYSE) it is also required to comply with the US Sarbanes-Oxley Act of 2002, as well as with NYSE listing rules, and the rules and regulations promulgated by the US Securities and Exchange Commission (SEC).

The full text of the Dutch Corporate Governance Code can be found at the website of the Monitoring Commission Corporate Governance Code (www.commissiecorporategovernance.nl).

The Code is based on a ‘comply or explain’ principle. Material changes in the corporate governance structure of the Company and in its compliance with the Code will be discussed at the Annual General Meeting as a separate agenda item. The discussion below summarises the deviations from the best practice provisions of the Code:

 

  Best practice provision II.2.4 states among others that if options are granted, they shall, in any event, not be exercised in the first three years following the date of granting. The Company has granted options to some of its Directors which vest starting within three years of the date of granting. Although not in accordance with the Code, the Company considers that it is in the best interest of the Company and its stakeholders to align the vesting of the options with the term of their appointment as Director.

 

  Best practice provision II.2.5 states that shares granted without financial consideration shall be retained for a period of five years or the end of employment if this period is shorter. The Company is operating a long-term incentive plan whereby currently the beneficiary of the shares can either (i) start trading 25% of the shares after the first, second, third and fourth anniversary, (ii) (in case of performance shares) start trading 50% of the shares after the first year, and 25% after the second and third anniversary, or (iii) (in case of shares awarded to Non-executive Directors) can trade all shares after the fourth anniversary.
 

 

30    /    INTERXION ANNUAL REPORT 2015


 

 

    Report of the Board of Directors   

 

 

  Best practice provision II.2.6 states that the option price may not be fixed at a level lower than a verifiable price or a verifiable price average in accordance with the trading in a regulated market on one or more predetermined days during a period of not more than five trading days prior to and including the day on which the option is granted. On 29 June 2011 Mr. Mandeville was awarded 15,000 options to acquire shares in the capital of the Company at an exercise price of $13.00 per share, while the shares on that day traded at $14.74. In accordance with the decision of the Annual General Meeting held on 29 June 2011, Non-executive directors who were not affiliated with a shareholder of the Company at the time they became a Non-executive Director were entitled to receive a one-time grant of 15,000 options to acquire shares in the capital of the Company at an exercise price equal to the price per share on the date such person became a Non-executive Director. Mr. Mandeville joined our Board on 26 January 2011 and the Company considers that on that day $13.00 was fair value per share.

 

  Best practice provision III.7.1 states that a Non-executive Director may not be granted any shares and/or rights to shares by way of remuneration. The Company has granted shares to all and options to some of its Non-executive Directors as it believes that this is a valuable instrument to align the interests of the Non-executive Directors concerned with those of the Company.

 

  Best practice provision IV.1.1 states that the General Meeting may pass a resolution to cancel the binding nature of a nomination for the appointment of an Executive Director or a Non-executive Director, by an absolute majority which may have to represent at most one-third of the issued capital. To cancel the binding nature of such a nomination, the Company’s Articles require a two-thirds majority representing more than 50% of the issued capital.

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. For management’s internal control statement we refer to “Management’s report on internal control over financial reporting” on page 30.

OUTLOOK FOR 2016

The outlook for 2016 is discussed each quarter as part of the Company’s quarterly earnings process.

 

The Board of Directors

31 March 2016

 

 

INTERXION ANNUAL REPORT 2015    /    31


 

32    /    INTERXION ANNUAL REPORT 2015


        

 

 

 

CONSOLIDATED

  
FINANCIAL STATEMENTS   

 

 

 

 

 

 

 

INTERXION ANNUAL REPORT 2015    /    33


 

  Consolidated Financial Statements    

 

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

CONSOLIDATED INCOME STATEMENTS

 

    

For the year ended 31 December    

 

    

 

Note          

 

 

2015 

   

 

2014 

(€’000)

 

  

 

2013 

 

Revenue

 

 

5,6          

 

   

 

386,560 

 

  

 

 

    340,624 

 

  

    307,111 

 

 

Cost of sales

 

 

5,8          

 

   

 

(151,613)

 

  

 

 

(139,075)

 

  

(124,141)

 

 

Gross profit

 

       

 

234,947 

 

  

 

 

201,549 

 

  

182,970 

 

 

Other income

 

 

5          

 

   

 

21,288 

 

  

 

 

271 

 

  

341 

 

 

Sales and marketing costs

 

 

5,8          

 

   

 

(28,217)

 

  

 

 

(24,551)

 

  

(22,818)

 

 

General and administrative costs

 

 

5,8,11          

 

   

 

(132,505)

 

  

 

 

(98,884)

 

  

(90,134)

 

 

Operating profit

 

 

5          

 

   

 

95,513 

 

  

 

 

78,385 

 

  

70,359 

 

 

Finance income

 

 

9          

 

   

 

3,294 

 

  

 

 

890 

 

  

484 

 

 

Finance expense

 

 

9          

 

   

 

(32,316)

 

  

 

 

(28,766)

 

  

(57,937)

 

 

Profit before taxation

 

       

 

66,491 

 

  

 

 

50,509 

 

  

12,906 

 

 

Income tax expense

 

 

10          

 

   

 

(17,925)

 

  

 

 

(15,449)

 

  

(6,082)

 

 

Profit for the year attributable to shareholders

 

       

 

48,566 

 

  

 

 

35,060 

 

  

6,824 

 

 

Earnings per share attributable to shareholders:

 

                    

 

Basic earnings per share: ()

 

 

17          

 

   

 

0.70 

 

  

 

 

0.51 

 

  

0.10 

 

 

Diluted earnings per share: ()

 

 

17          

 

   

 

0.69 

 

  

 

 

0.50 

 

  

0.10 

 

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

        
         

For the year ended 31 December    

 

         

 

2015 

   

 

2014 
(€’000)

 

  

 

2013 

 

Profit for the year attributable to shareholders

 

       

 

48,566 

 

  

 

 

35,060 

 

  

6,824 

 

 

Other comprehensive income

 

                    

 

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

 

                    

 

Foreign currency translation differences

 

       

 

11,633 

 

  

 

 

4,201 

 

  

(3,220)

 

 

Effective portion of changes in fair value of cash flow hedge

 

       

 

50 

 

  

 

 

(458)

 

  

90 

 

 

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

 

       

 

(1,224)

 

  

 

 

(367)

 

  

544 

 

 

Other comprehensive income/(loss), net of tax

 

       

 

10,459 

 

  

 

 

3,376 

 

  

(2,586)

 

 

Total comprehensive income attributable to shareholders

 

       

 

59,025 

 

  

 

 

38,436 

 

  

4,238 

 

 

Note: The accompanying notes form an integral part of these consolidated financial statements.

 

34    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

           

As at 31 December

 

    

 

Note          

   

 

2015 

    

 

2014 
(€’000)

    

 

2013 

 

Non-current assets

 

                             

 

Property, plant and equipment

 

   

 

11          

 

  

 

   

 

999,072 

 

  

 

    

 

    895,184 

 

  

 

  

    698,748 

 

 

Intangible assets

 

   

 

12          

 

  

 

   

 

23,194 

 

  

 

    

 

18,996 

 

  

 

  

17,878 

 

 

Deferred tax assets

 

   

 

10          

 

  

 

   

 

23,024 

 

  

 

    

 

30,064 

 

  

 

  

34,446 

 

 

Financial asset

 

   

 

13          

 

  

 

   

 

– 

 

  

 

    

 

774 

 

  

 

  

774 

 

 

Other non-current assets

 

   

 

14          

 

  

 

   

 

6,686 

 

  

 

    

 

5,750 

 

  

 

  

16,536 

 

           

 

 

 

 

1,051,976 

 

 

  

 

    

 

950,768 

 

  

 

  

768,382 

 

 

Current assets

 

                             

 

Trade and other current assets

 

 

 

 

 

 

14          

 

 

  

 

   

 

141,534 

 

  

 

    

 

120,762 

 

  

 

  

96,703 

 

 

Short term investments

 

   

 

15          

 

  

 

   

 

– 

 

  

 

    

 

1,650 

 

  

 

  

– 

 

 

Cash and cash equivalents

 

    15                 

 

58,554 

 

  

 

    

 

99,923 

 

  

 

  

45,690 

 

           

 

 

 

 

200,088 

 

 

  

 

  

 

 

 

 

222,335 

 

 

  

 

  

 

142,393 

 

 

Total assets

         

 

 

 

 

1,252,064 

 

 

  

 

    

 

1,173,103 

 

  

 

  

910,775 

 

 

Shareholders’ equity

 

                             

 

Share capital

 

   

 

16          

 

  

 

   

 

6,992 

 

  

 

    

 

6,932 

 

  

 

  

6,887 

 

 

Share premium

 

   

 

16          

 

  

 

   

 

507,296 

 

  

 

    

 

495,109 

 

  

 

  

485,347 

 

 

Foreign currency translation reserve

 

   

 

16          

 

  

 

   

 

20,865 

 

  

 

    

 

10,440 

 

  

 

  

6,757 

 

 

Hedging reserve, net of tax

 

   

 

16          

 

  

 

   

 

(213)

 

  

 

    

 

(247)

 

  

 

  

60 

 

 

Accumulated deficit

 

   

 

16          

 

  

 

   

 

(27,523)

 

  

 

    

 

(76,089)

 

  

 

  

(111,149)

 

           

 

 

 

 

507,417 

 

 

  

 

    

 

436,145 

 

  

 

  

387,902 

 

 

Non-current liabilities

 

                             

 

Trade payables and other liabilities

 

   

 

18          

 

  

 

   

 

12,049 

 

  

 

    

 

12,211 

 

  

 

  

11,537 

 

 

Deferred tax liability

 

   

 

10          

 

  

 

   

 

9,951 

 

  

 

    

 

7,029 

 

  

 

  

4,147 

 

 

Provision for onerous lease contracts

 

   

 

19          

 

  

 

   

 

– 

 

  

 

    

 

1,491 

 

  

 

  

4,855 

 

 

Borrowings

 

   

 

20          

 

  

 

   

 

550,812 

 

  

 

    

 

540,530 

 

  

 

  

362,209 

 

           

 

 

 

 

572,812 

 

 

  

 

    

 

561,261 

 

  

 

  

382,748 

 

 

Current liabilities

 

                             

 

Trade payables and other liabilities

 

   

 

18          

 

  

 

   

 

162,629 

 

  

 

    

 

146,502 

 

  

 

  

132,093 

 

 

Income tax liabilities

 

           

 

2,738 

 

  

 

    

 

4,690 

 

  

 

  

2,229 

 

 

Provision for onerous lease contracts

 

   

 

19          

 

  

 

   

 

1,517 

 

  

 

    

 

3,443 

 

  

 

  

4,020 

 

 

Borrowings

 

   

 

20          

 

  

 

   

 

4,951 

 

  

 

    

 

21,062 

 

  

 

  

1,783 

 

           

 

 

 

 

171,835 

 

 

  

 

    

 

175,697 

 

  

 

  

140,125 

 

 

Total liabilities

 

           

 

744,647 

 

  

 

    

 

736,958 

 

  

 

  

522,873 

 

 

Total liabilities and shareholders’ equity

 

           

 

1,252,064 

 

  

 

    

 

1,173,103 

 

  

 

  

910,775 

 

Note: The accompanying notes form an integral part of these consolidated financial statements.

 

INTERXION ANNUAL REPORT 2015    /    35


 

  Consolidated Financial Statements    

 

 

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

 

 

    

Note

 

 

Share
capital

 

 

Share
premium

 

 

Foreign
currency
translation
reserve

 

 

Hedging
reserve

 

 

Accumulated
deficit

 

 

Total
equity

 

    

 

(€’000)

 

 

Balance at 1 January 2015

 

         

 

6,932

 

 

 

     

 

495,109 

 

 

 

     

 

10,440 

 

 

 

     

 

(247)

 

 

 

     

 

(76,089)

 

 

 

     

 

436,145 

 

 

 

 

Profit for the year

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

48,566 

 

 

 

     

 

48,566 

 

 

 

 

Hedging result, net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

34 

 

 

 

     

 

— 

 

 

 

     

 

34 

 

 

 

 

Total other comprehensive income/(loss), net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

10,425 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

10,425 

 

 

 

 

Total comprehensive income/(loss), net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

10,425 

 

 

 

     

 

34 

 

 

 

     

 

48,566 

 

 

 

     

 

59,025 

 

 

 

 

Exercise of options

 

         

 

43

 

 

 

     

 

5,686 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

5,729 

 

 

 

 

Issuance of performance shares

 

         

 

17

 

 

 

     

 

(17)

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

Share-based payments

 

 

22

 

     

 

 

 

 

     

 

6,518 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

6,518 

 

 

 

 

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

 

         

 

60

 

 

 

     

 

12,187 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

12,247 

 

 

 

 

Balance at 31 December 2015

 

         

 

6,992

 

 

 

     

 

507,296 

 

 

 

     

 

20,865 

 

 

 

     

 

(213)

 

 

 

     

 

(27,523)

 

 

 

     

 

507,417 

 

 

 

 

    

 

                                                               

 

Balance at 1 January 2014

 

         

 

6,887

 

 

 

     

 

485,347 

 

 

 

     

 

6,757 

 

 

 

     

 

60 

 

 

 

     

 

(111,149)

 

 

 

     

 

387,902 

 

 

 

 

Profit for the year

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

35,060 

 

 

 

     

 

35,060 

 

 

 

 

Hedging result, net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

(307)

 

 

 

     

 

— 

 

 

 

     

 

(307)

 

 

 

 

Total other comprehensive income/(loss), net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

3,683 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

3,683 

 

 

 

 

Total comprehensive income/(loss), net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

3,683 

 

 

 

     

 

(307)

 

 

 

     

 

35,060 

 

 

 

     

 

38,436 

 

 

 

 

Exercise of options

 

         

 

45

 

 

 

     

 

3,278 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

3,323 

 

 

 

 

Share-based payments

 

 

22

 

     

 

 

 

 

     

 

6,484 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

6,484 

 

 

 

 

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

 

         

 

45

 

 

 

     

 

9,762 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

9,807 

 

 

 

 

Balance at 31 December 2014

 

         

 

6,932

 

 

 

     

 

495,109 

 

 

 

     

 

10,440 

 

 

 

     

 

(247)

 

 

 

     

 

(76,089)

 

 

 

     

 

436,145 

 

 

 

 

    

 

                                                               

 

Balance at 1 January 2013

 

         

 

6,818

 

 

 

     

 

477,326 

 

 

 

     

 

9,403 

 

 

 

     

 

— 

 

 

 

     

 

(117,973)

 

 

 

     

 

375,574 

 

 

 

 

Profit for the year

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

6,824 

 

 

 

     

 

6,824 

 

 

 

 

Hedging result, net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

60 

 

 

 

     

 

— 

 

 

 

     

 

60 

 

 

 

 

Total other comprehensive income/(loss), net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

(2,646)

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

(2,646)

 

 

 

 

Total comprehensive income/(loss), net of tax

 

         

 

 

 

 

     

 

— 

 

 

 

     

 

(2,646)

 

 

 

     

 

60 

 

 

 

     

 

6,824 

 

 

 

     

 

4,238 

 

 

 

 

Exercise of options

 

         

 

69

 

 

 

     

 

4,431 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

4,500 

 

 

 

 

Share-based payments

 

 

22

 

     

 

 

 

 

     

 

3,590 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

3,590 

 

 

 

 

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

 

         

 

69

 

 

 

     

 

8,021 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

— 

 

 

 

     

 

8,090 

 

 

 

 

Balance at 31 December 2013

 

         

 

6,887

 

 

 

     

 

485,347 

 

 

 

     

 

6,757 

 

 

 

     

 

60 

 

 

 

     

 

(111,149)

 

 

 

     

 

387,902 

 

 

 

Notes: Since no minority shareholders in Group equity exist, the Group equity is entirely attributable to the parent’s shareholders.

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

 

36    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

            

For the years ended 31 December  

 

      Note               2015      

2014 
(€’000)

 

     2013   

 

Profit for the year

 

            

 

48,566 

 

  

 

    

 

35,060 

 

  

 

  

    6,824 

 

 

Depreciation, amortisation and impairments

 

    

 

11, 12          

 

  

 

   

 

78,229 

 

  

 

    

 

62,177 

 

  

 

  

57,670 

 

 

Provision for onerous lease contracts

 

    

 

19          

 

  

 

   

 

(3,532)

 

  

 

    

 

(4,172)

 

  

 

  

(3,285)

 

 

Share-based payments

 

    

 

22          

 

  

 

   

 

6,518 

 

  

 

    

 

6,576 

 

  

 

  

4,149 

 

 

Net finance expense

 

    

 

9          

 

  

 

   

 

29,022 

 

  

 

    

 

27,876 

 

  

 

  

57,453 

 

 

Income tax expense

 

    

 

10          

 

  

 

   

 

17,925 

 

  

 

    

 

15,449 

 

  

 

  

6,082 

 

            

 

 

 

 

176,728 

 

 

  

 

    

 

142,966 

 

  

 

  

128,893 

 

 

Movements in trade receivables and other current assets

 

            

 

(19,380)

 

  

 

    

 

(24,026)

 

  

 

  

(22,712)

 

 

Movements in trade payables and other liabilities

 

            

 

12,040 

 

  

 

    

 

16,478 

 

  

 

  

(3,510)

 

 

Cash generated from operations

 

            

 

169,388 

 

  

 

    

 

135,418 

 

  

 

  

102,671 

 

 

Interest and fees paid

 

            

 

(30,522)

 

  

 

    

 

(25,166)

 

  

 

  

(22,747)

 

 

Interest received

 

            

 

152 

 

  

 

    

 

471 

 

  

 

  

569 

 

 

Income tax paid

 

            

 

(11,948)

 

  

 

    

 

(6,305)

 

  

 

  

(7,930)

 

 

Net cash flow from operating activities

 

            

 

127,070 

 

  

 

    

 

104,418 

 

  

 

  

72,563 

 

 

Cash flows from investing activities

 

                              

 

Purchase of property, plant and equipment

 

            

 

(186,115)

 

  

 

    

 

(212,938)

 

  

 

  

(140,251)

 

 

Purchase of intangible assets

 

            

 

6,521 

 

  

 

    

 

(3,339)

 

  

 

  

(3,130)

 

 

Proceeds from sale of financial asset

 

            

 

3,063 

 

  

 

    

 

— 

 

  

 

  

— 

 

 

Acquisition of short-term investments

 

    

 

15          

 

  

 

   

 

— 

 

  

 

    

 

(1,650)

 

  

 

  

— 

 

 

Redemption of short-term investments

 

    

 

15          

 

  

 

   

 

1,650 

 

  

 

    

 

— 

 

  

 

  

— 

 

 

Net cash flow used in investing activities

 

            

 

(187,923)

 

  

 

    

 

(217,927)

 

  

 

  

(143,381)

 

 

Cash flows from financing activities

 

                              

 

Proceeds from exercised options

 

            

 

5,686 

 

  

 

    

 

3,324 

 

  

 

  

4,500 

 

 

Proceeds from mortgages

 

            

 

14,850 

 

  

 

    

 

9,185 

 

  

 

  

15,490 

 

 

Repayment of mortgages

 

            

 

(2,346)

 

  

 

    

 

(2,041)

 

  

 

  

(1,167)

 

 

Proceeds from revolving facility

 

            

 

— 

 

  

 

    

 

30,000 

 

  

 

  

— 

 

 

Repayments of revolving facility

 

            

 

— 

 

  

 

    

 

(30,000)

 

  

 

  

— 

 

 

Proceeds 6% Senior Secured Notes due 2020

 

            

 

— 

 

  

 

    

 

157,878 

 

  

 

  

317,045 

 

 

Repayment 9.50% Senior Secured Notes due 2017

 

            

 

— 

 

  

 

    

 

— 

 

  

 

  

(286,478)

 

 

Payments for revolving facility agreement

 

            

 

— 

 

  

 

    

 

— 

 

  

 

  

(1,398)

 

 

Interest received at issuance of Additional Notes

 

            

 

— 

 

  

 

    

 

2,600 

 

  

 

  

— 

 

 

Interest paid related to interest received at issuance of Additional Notes

 

            

 

— 

 

  

 

    

 

(2,600)

 

  

 

  

— 

 

 

Transaction costs related to senior secured facility

 

            

 

— 

 

  

 

    

 

(646)

 

  

 

  

— 

 

 

Repayment of other borrowings

 

            

 

— 

 

  

 

    

 

(72)

 

  

 

  

(81)

 

 

Net cash flow from financing activities

 

            

 

18,190 

 

  

 

    

 

167,628 

 

  

 

  

47,911 

 

 

Effect of exchange rate changes on cash

 

            

 

1,294 

 

  

 

    

 

114 

 

  

 

  

(95)

 

 

Net movement in cash and cash equivalents

 

            

 

(41,369)

 

  

 

    

 

54,233 

 

  

 

  

(23,002)

 

 

Cash and cash equivalents, beginning of year

 

            

 

99,923 

 

  

 

    

 

45,690 

 

  

 

  

68,692 

 

 

Cash and cash equivalents, end of year

 

    

 

15          

 

  

 

   

 

58,554 

 

  

 

    

 

99,923 

 

  

 

  

45,690 

 

Note: The accompanying notes form an integral part of these consolidated financial statements.

 

INTERXION ANNUAL REPORT 2015    /    37


 

  Consolidated Financial Statements    

 

 

    

 

NOTES TO THE 2015 CONSOLIDATED FINANCIAL STATEMENTS

 

1 THE COMPANY

Interxion Holding N.V. (the “Company”) is domiciled in The Netherlands. The Company’s registered office is at Tupolevlaan 24, 1119 NX Schiphol-Rijk, The Netherlands. The consolidated financial statements of the Company for the year ended 31 December 2015 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.

The financial statements, which were approved and authorised for issue by the Board of Directors on 31 March 2016, are subject to adoption by the General Meeting of Shareholders.

 

2 BASIS OF PREPARATION

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”), effective as at 31 December 2015, as issued by the International Accounting Standards Board (“IASB”), and IFRS as adopted by the European Union, and also comply with the financial reporting requirements included in Part 9 of Book 2 of the Netherlands Civil Code.

Basis of measurement

The Group prepared its consolidated financial statements on a going-concern basis and under the historical cost convention except for certain financial instruments that have been measured at fair value.

Change in accounting policies

The Group has consistently applied the accounting policies set out below to all periods presented in these consolidated financial statements. The standards below are applicable for financial statements as prepared after 1 January 2014 for IFRS as issued by the International Accounting Standards Board, and are effective for IFRS as endorsed by the European Union for periods ending after 1 January 2015. For preparation of these financial statements, these standards have been early adopted under IFRS as endorsed by European Union.

Amendment to IAS 32 – Financial instruments: Presentation

This amendment clarifies some of the requirements for offsetting financial assets and financial liabilities on the statement of financial position. The amendment clarifies that the right of set-off must be available today, and is not contingent on a future event. Furthermore it clarifies that gross settlements with features that (i) eliminate credit and liquidity risk and (ii) process receivables and payables in a single settlement process, are effectively equivalent to net settlements, and therefore satisfy the IAS 32 criterion. The amendment has no impact on the Group’s assets and liabilities.

Amendment to IAS 36 – Impairment of assets

This amendment has made small changes to the disclosures required by this standard when the recoverable amount is determined based on fair value less costs of disposal. The amendment has impact when an impairment loss on non-financial assets is recognised or reversed. The amendment has no impact on the disclosure on the Group’s assets and liabilities.

Amendment to IAS 39 – Financial instruments: Recognition and measurement

The amendment relates to the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to ‘over-the-counter’ derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The Group has applied the amendment and there has been no significant impact on the Group financial statements as a result.

IFRIC 21 – Levies

The Group has adopted IFRIC 21 – Levies with a date of 1 January 2014. IFRIC 21 sets out the accounting for an obligation to pay a levy when that liability is within the scope of IAS 37 ‘Provisions’. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The Group is not currently subject to significant levies so the impact on the Group is not significant.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates, which together with 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.

Judgements, estimates and assumptions applied by management in preparing these financial statements are based on circumstances as at 31 December 2015 and Interxion operating as a stand-alone company.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on amounts recognised in the financial statements are discussed below:

Property, plant and equipment depreciation (see also Note 11)

Estimated remaining useful lives and residual values are reviewed annually. The carrying values of property, plant and equipment are also reviewed for impairment, where there has been a triggering event, by assessing the present value of estimated future cash flows and net realisable value compared with net book value. The calculation of estimated future cash flows and residual values is based on the Group’s best estimates of future prices, output and costs and is, therefore, subjective. Furthermore, the valuation of some of the assets under construction requires judgments which are related to the probability of signing lease contracts and obtaining planning permits.

In the fourth quarter of 2013, as part of the annual review of the estimated useful lives, we concluded that certain of our existing assets are used longer than originally anticipated. The estimated useful lives of certain of our property, plant and equipment have, therefore, been extended. This change was accounted for as a change in accounting estimate on a prospective basis effective

 

 

38    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

    

 

1 October 2013 under IAS 8 “Change in Accounting Estimates”. In the fourth quarter of 2013, depreciation expenses were approximately 2.0 million less than the prior quarter as a result of the changes in the estimated useful lives of certain of our property, plant and equipment. On an annualised basis for the year ended 31 December 2013, the depreciation charges would have been approximately 8.0 million lower.

On 13 December 2013, we were awarded a permit by the Seine-St-Denis authorities to operate our PAR7 data centre. On 15 October 2015, a French administrative court ruled that local authorities failed to perform a sufficiently extensive study of the potential noise impact that operating the PAR7 data centre could have on local residents and consequently the French administrative court annulled the permit we received on 13 December 2013. The Seine-St-Denis authorities have since requested that we re-apply for a new permit. We have worked with the Seine-St-Denis authorities and we have obtained formal approval to continue to operate the PAR7 data centre during the application process, which we expect to conclude by the end of 2016. However, the lack of a permanent permit is not considered an impairment triggering event.

Intangible fixed assets amortisation (see also Note 12)

Estimated remaining useful lives and residual values are reviewed annually. The carrying values of intangible fixed assets are also reviewed for impairment where there has been a triggering event by assessing the present value of estimated future cash flows and net realisable value compared with net book value. The calculation of estimated future cash flows and residual values is based on the Group’s best estimates of future prices, output and costs and is, therefore, subjective.

Lease accounting (see also Note 23)

At inception or modification of an arrangement, the Group determines whether such an arrangement is, or contains, a lease. Classification of a lease contract is based on the extent to which risks and rewards incidental to ownership of a leased asset lie with the lessor or the lessee. The classification of lease contracts includes the use of judgements and estimates.

Provision for onerous lease contracts (see also Note 19)

A provision is made for the discounted amount of future losses that are expected to be incurred in respect of unused data centre sites over the term of the leases. Where unused sites have been sublet, or partly sublet, management has taken account of the contracted sublease income expected to be received over the minimum sublease term, which meets the Group’s revenue recognition criteria in arriving at the amount of future losses.

Costs of site restoration (see also Note 25)

Liabilities in respect of obligations to restore premises to their original condition are estimated at the commencement of the lease and reviewed yearly, based on the rent period, contracted extension possibilities and possibilities of lease terminations.

Deferred tax (see also Note 10)

Provision is made for deferred tax at the rates of tax prevailing at the period-end dates unless future rates have been substantively enacted. Deferred tax assets are recognised where it is probable that they will be recovered based on estimates of future taxable profits for each tax jurisdiction. The actual profitability may be different depending on local financial performance in each tax jurisdiction.

Share-based payments (see also Note 22)

The Group issues equity-settled share-based payments to certain employees under the terms of the long-term incentive plans. The charges related to equity-settled share-based payments, options to purchase ordinary shares and restricted and performance shares, are measured at fair value at the date of grant. The fair value at the grant date of options is determined using the Black Scholes model and is expensed over the vesting period. The fair value at grant date of the performance shares is determined using the Monte Carlo model and is expensed over the vesting period. The value of the expense is dependent upon certain assumptions including the expected future volatility of the Group’s share price at the date of grant and, for the performance shares, the relative performance of the Group’s share price compared to a group of peer companies.

Senior Secured Notes due 2020 (see also Note 20)

The Senior Secured Notes due 2020 are valued at amortised cost. The Senior Secured Notes due 2020 indenture includes specific early redemption clauses. As part of the initial measurement of the amortised costs value of the Senior Secured Notes due 2020 it is assumed that the Notes will be held to maturity. If an early redemption of all or part of the Notes is expected, the liability will be re-measured based on the original effective interest rate. The difference between the liability, excluding a change in assumed early redemption and the liability, including a change in assumed early redemption, will go through the profit and loss.

Functional and presentation currency

These consolidated financial statements are presented in euro, the Company’s functional and presentation currency. All information presented in euros has been rounded to the nearest thousand, except when stated otherwise.

 

3 SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all entities that are directly or indirectly controlled by the Company. Subsidiaries are entities that are controlled by the Group. The Group controls an entity when it is exposed to, or has the right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

The accounting policies set out below have been applied consistently by all subsidiaries to all periods presented in these consolidated financial statements.

 

 

INTERXION ANNUAL REPORT 2015    /    39


 

  Consolidated Financial Statements    

 

 

    

 

Loss of control

When the Group loses control over a subsidiary, the Company de-recognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss.

Transactions eliminated on consolidation

Intercompany balances and transactions, and any unrealised income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.

Subsidiaries

With the exception of Stichting Administratiekantoor Management Interxion, all the subsidiary undertakings of the Group as set out below are wholly owned. Stichting Administratiekantoor is part of the consolidation based on the Group’s control over the entity.

 

  Interxion HeadQuarters B.V., Amsterdam, The Netherlands;

 

  Interxion Nederland B.V., Amsterdam, The Netherlands;

 

  Interxion Trademarks B.V., Amsterdam, The Netherlands;

 

  Interxion Österreich GmbH, Vienna, Austria;

 

  Interxion Real Estate VII GmbH, Vienna, Austria;

 

  Interxion Belgium N.V., Brussels, Belgium;

 

  Interxion Real Estate IX N.V., Brussels, Belgium;

 

  Interxion Denmark ApS, Copenhagen, Denmark;

 

  Interxion Real Estate VI ApS, Copenhagen, Denmark;

 

  Interxion France SAS, Paris, France;

 

  Interxion Real Estate II SARL, Paris, France;

 

  Interxion Real Estate III SARL, Paris, France;

 

  Interxion Real Estate XI SARL, Paris, France;

 

  Interxion Deutschland GmbH, Frankfurt, Germany;

 

  Interxion Ireland Ltd, Dublin, Ireland;

 

  Interxion Telecom SRL, Milan, Italy;

 

  Interxion España SA, Madrid, Spain;

 

  Interxion Sverige AB, Stockholm, Sweden;

 

  Interxion (Schweiz) AG, Zurich, Switzerland;

 

  Interxion Real Estate VIII AG, Zurich, Switzerland;

 

  Interxion Carrier Hotel Ltd., London, United Kingdom;

 

  Interxion Europe Ltd., London, United Kingdom;

 

  Interxion Real Estate Holding B.V., Amsterdam, The Netherlands;

 

  Interxion Real Estate I B.V., Amsterdam, The Netherlands;

 

  Interxion Real Estate IV B.V., Amsterdam, The Netherlands;

 

  Interxion Real Estate V B.V., Amsterdam, The Netherlands;

 

  Interxion Real Estate X B.V., Amsterdam, The Netherlands;

 

  Interxion Operational B.V., Amsterdam, The Netherlands;

 

  InterXion Participation 1 B.V., Amsterdam, The Netherlands;

 

  Interxion Datacenters B.V., The Hague, The Netherlands (formerly Centennium Detachering B.V.);

 

  Interxion Consultancy Services B.V., Amsterdam, The Netherlands (dormant);

 

  Interxion Telecom B.V., Amsterdam, The Netherlands (dormant);

 

  Interxion Trading B.V., Amsterdam, The Netherlands (dormant);

 

  Interxion B.V., Amsterdam, The Netherlands (dormant);

 

  Interxion Telecom Ltd., London, United Kingdom (dormant);

 

  Stichting Administratiekantoor Management Interxion, Amsterdam, The Netherlands.

Foreign currency

Foreign currency transactions

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and the financial position of each entity are expressed in euros, which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in foreign currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liabilities denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. The income and expenses of foreign operations are translated to euros at average exchange rates.

Foreign operations

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are expressed in euros using exchange rates prevailing at the balance sheet date. Income and expense items are translated at average exchange rates for the period. Exchange differences, if any, arising on net investments including receivables from or payables to a foreign operation for which settlement is neither planned nor likely to occur, are recognised directly in the foreign currency translation reserve (FCTR) within equity. When control over a foreign operation is lost, in part or in full, the relevant amount in the FCTR is transferred to profit or loss.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Borrowing costs are capitalised based on the effective interest rate of the Senior Secured Notes.

Statement of cash flows

The consolidated statement of cash flows is prepared using the indirect method. The cash flow statement distinguishes between operating, investing and financing activities.

Cash flows in foreign currencies are converted at the exchange rate at the dates of the transactions. Currency exchange differences on cash held are separately shown. Payments and receipts of corporate income taxes and interest paid are included as cash flow from operating activities.

Financial instruments

Derivative financial instruments

Derivatives are initially recognised at fair value; any attributable transaction costs are recognised in profit and loss as they are incurred. Subsequent to initial recognition, derivatives are measured at their fair value, and changes therein are generally recognised in profit and loss.

 

 

40    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

    

 

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

The amount accumulated in equity is retained in other comprehensive income and reclassified to the profit or loss in the same period, or periods, during which the hedged item affects profit or loss.

If the hedging instrument no longer meets the criteria for hedge accounting, expires, is sold, terminated or exercised, or the designation is revoked, hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, the amount accumulated in equity is reclassified to profit or loss.

Fair values are obtained from quoted market prices in active markets or, where an active market does not exist, by using valuation techniques. Valuation techniques include discounted cash flow models.

Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value, net of any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

The Group de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the right to receive the contractual cash flows in a transaction in which substantially all the risk and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Financial assets are designated as at fair value through profit and loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s risk management or investment strategy. Attributable transaction costs are recognised in profit and loss as incurred. Financial assets at fair value through profit and loss are measured at fair value and changes therein, which takes into account any dividend income, are recognised in profit and loss.

The fair values of investments in equity are determined with reference to their quoted closing bid price at the measurement date or, if unquoted, using a valuation technique.

Trade receivables and other current assets

Trade receivables and other current assets are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

A provision for impairment of trade receivables and other current assets is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement.

When a trade receivable and other current asset is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents, including short-term investments, is valued at face value, which equals its fair value.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Trade payables and other current liabilities

Trade payables and other current liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition or construction of the asset and comprises purchase cost, together with the incidental costs of installation and commissioning. These costs include external consultancy fees, capitalised borrowing costs, rent and associated costs attributable to bringing the assets to a working condition for their intended use and internal employment costs that are directly and exclusively related to the underlying asset. In case of operating leases where it is probable that the lease contract will not be renewed, the cost of self-constructed assets includes the estimated costs of dismantling and removing the items and restoring the site on which they are located.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised within income.

 

 

INTERXION ANNUAL REPORT 2015    /    41


 

  Consolidated Financial Statements    

 

 

    

 

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is de-recognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Depreciation is calculated from the date an asset becomes available for use and is depreciated on a straight-line basis over the estimated useful life of each part of an item of property, plant and equipment. Leased assets are depreciated on the same basis as owned assets over the shorter of the lease term and their useful lives. The principal periods used for this purpose are:

 

 

Data centre freehold land

 

      

 

Not depreciated

 

 

Data centre buildings

 

      

 

15–30 years

 

 

Data centre infrastructure and equipment

 

      

 

5–20 years

 

 

Office equipment and other

 

      

 

3–15 years

 

Depreciation methods, useful lives and residual values are reviewed annually.

In the fourth quarter of 2013, as part of the annual review of the estimated useful lives, we concluded that certain of our existing assets are used longer than originally anticipated. The estimated useful lives of certain of our property, plant and equipment have, therefore, been extended. This change was accounted for as a change in accounting estimate on a prospective basis effective 1 October 2013 under IAS 8 “Change in Accounting Estimates”. In the fourth quarter of 2013, depreciation expenses were approximately 2.0 million less than the prior quarter as a result of the changes in the estimated useful lives of certain of our property, plant and equipment. On an annualised basis for the year ended 31 December 2013, the depreciation charges would have been approximately 8.0 million lower.

Data centre freehold land consists of the land owned by the Company and land leased by the Company under finance lease agreements. The data centre buildings consist of the core and shell in which we have constructed a data centre. Data centre infrastructure and equipment comprises of data centre structures, leasehold improvements, data centre cooling and power infrastructure, including infrastructure for advanced environmental controls such as ventilation and air conditioning, specialised heating, fire detection and suppression equipment and monitoring equipment. Office equipment and other comprised of office leasehold improvements and office equipment consisting of furniture, computer equipment and software.

Intangible assets

Intangible assets represent power grid rights, software and other intangible assets, and are recognised at cost less accumulated amortisation and accumulated impairment losses. Other intangible assets principally consist of lease premiums (paid in addition to obtain rental contracts).

Software includes development expenditure, which is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use the asset. The expenditure capitalised includes the cost of material, services and direct labour costs that are directly attributable to preparing the asset for its intended use.

Amortisation is calculated on a straight-line basis over the estimated useful lives of the intangible asset. Amortisation methods, useful lives and residual values are reviewed annually.

   The estimated useful lives are:

 

 

Power grid rights

 

  

 

10–15 years

 

 

Software

 

  

 

3–5 years

 

 

Other

 

  

 

3–12 years

 

Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that are not yet available for use, the recoverable amount is estimated at each reporting date.

The recoverable amount of an asset or cash-generating unit is the greater of either its value in use or its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).

Considering the Company manages its data centres by country, and, given the data centre campus structures, the financial performance of data centres within a country is highly interdependent, the Company has determined that the cash-generating unit for impairment-testing purposes should be the group of data centres per country, unless specific circumstances would indicate that a single data centre is a cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are to reduce the carrying amount of the assets in the unit (group of units) on a pro-rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; with any difference between the proceeds (net of transaction costs) and the redemption value recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. The Group de-recognises a borrowing when its contractual obligations are discharged, cancelled or expired.

 

 

42    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

    

 

As part of the initial measurement of the amortised costs value of the Senior Secured Notes due 2020 it is assumed that the Notes will be held to maturity. If an early redemption of all or part of the Notes is expected the liability will be re-measured based on the original effective interest rate. The difference between the liability, excluding a change in assumed early redemption and the liability, including a change in assumed early redemption, will be recognised in profit and loss.

Provisions

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event; it is probable that an outflow of economic benefits will be required to settle the obligation and the amount can be estimated reliably. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The discount rate arising on the provision is amortised in future years through interest. A provision for site restoration is recognised when costs for restoring leasehold premises to their original condition at the end of the lease are probable to be incurred and it is possible to make an accurate estimate of these costs. The discounted cost of the liability is included in the related assets and is depreciated over the remaining estimated term of the lease. If the likelihood of this liability is estimated to be possible, rather than probable, it is disclosed as a contingent liability in Note 25.

A provision for onerous lease contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the discounted amount of future losses expected to be incurred in respect of unused data centre sites over the term of the leases. Where unused sites have been sublet or partly sublet, management has taken account of the contracted sublease income expected to be received over the minimum sublease term, which meets the Group’s revenue recognition criteria in arriving at the amount of future losses. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

Leases

Leases, in which the Group assumes substantially all the risks and rewards of ownership, are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of either its fair value or the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. The finance lease obligations are presented as part of the long term liabilities and, as far as amounts need to be repaid within one year, as part of current liabilities.

Other leases are operating leases and the leased assets are not recognised on the Group’s statement of financial position. Payments made under operating leases are recognised in the income statement, or capitalised during construction, on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum finance lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The

finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

At inception or modification of an arrangement, the Group determines whether such an arrangement is, or contains, a lease. This will be the case if the following two criteria are met:

 

  the fulfilment of the arrangement is dependent on the use of a specific asset or assets; and

 

  the arrangement contains the right to use an asset.

For leased properties on which our data centres are located, we generally seek to secure property leases for terms of 20 to 25 years. Where possible, we try to mitigate the long-term financial commitment by contracting for initial lease terms for a minimum period of 10 to 15 years with the option for us to either (i) extend the leases for additional five-year terms or (ii) terminate the leases upon expiration of the initial 10 to 15 year term. Our leases generally have consumer price index based annual rent increases over the full term of the lease. Certain of our leases contain options to purchase the asset.

Segment reporting

The segments are reported in a manner consistent with internal reporting provided to the chief operating decision-maker, identified as the Board of Directors. There are two segments: the first segment is France, Germany, The Netherlands and the United Kingdom (the “Big4”), the second segment 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 Big4 and Rest of Europe are different segments as management believes that the Big4 Countries represent the largest opportunities for Interxion, from market trends and growth perspective to drive the development of its communities of interest strategy within customer segments and the attraction of magnetic customers. As a result over the past three years we have invested between 65-69% of our capital expenditures in the Big4 segment while revenues constituted an average of 63% of total over the same period.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items presented as Corporate and other principally comprise loans and borrowings and related expenses; corporate assets and expenses (primarily the Company’s headquarters); and income tax assets and liabilities.

Segment capital expenditure is defined as the net cash outflow during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

EBITDA and Adjusted EBITDA, as well as recurring revenue, are additional indicators of our operating performance, and are not required by or presented in accordance with, IFRS. EBITDA is defined as operating profit plus depreciation, amortisation and impairment of assets. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based payments, M&A transaction costs, increase/decrease in provision for onerous lease contracts, M&A transaction break fee income, and income from sub-leases of unused data centre sites. We present EBITDA and Adjusted EBITDA as additional information because we understand that they are

 

 

INTERXION ANNUAL REPORT 2015    /    43


 

  Consolidated Financial Statements    

 

 

    

 

measures used by certain investors and because they are used in our financial covenants in our 100 million Revolving Facility Agreement and 475 million 6.00% Senior Secured Notes due 2020. Other companies may, however, present EBITDA and Adjusted EBITDA differently than we do. EBITDA and Adjusted EBITDA are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measure of performance derived in accordance with IFRS.

This information, provided to the chief operating decision-maker, is disclosed to permit a more complete analysis of our operating performance. Exceptional items are those significant items that are separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Group’s financial performance.

Revenue recognition

Revenue is recognised when it is probable that future economic benefits will flow to the Group and that these benefits, together with their related costs, can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable taking into account any discounts or volume rebates.

The Group reviews transactions for separately identifiable components and, if necessary, applies individual recognition treatment, revenues are allocated to separately identifiable components based on their relative fair values.

The Group earns colocation revenue as a result of providing data centre services to customers at its data centres. Colocation revenue and lease income are recognised in profit or loss on a straight-line basis over the term of the customer contract. Incentives granted are recognised as an integral part of the total income, over the term of the customer contract. Customers are usually invoiced quarterly in advance and income is recognised on a straight-line basis over the quarter. Initial setup fees payable at the beginning of customer contracts are deferred at inception and recognised in the income statement on a straight-line basis over the initial term of the customer contract. Power revenue is recognised based on customers’ usage.

Other services revenue, including managed services, connectivity and customer installation services including equipment sales are recognised when the services are rendered. Certain installation services and equipment sales, which by their nature have a non-recurring character, are presented as non-recurring revenues and are recognised on delivery of service.

Deferred revenues relating to invoicing in advance and initial setup fees are carried on the statement of financial position as part of trade payables and other liabilities. Deferred revenues due to be recognised after more than one year are held in non-current liabilities.

Cost of sales

Cost of sales consists mainly of rental costs for the data centres and offices, power costs, maintenance costs relating to the data centre equipment, operation and support personnel costs and costs related to installations and other customer requirements. In general, maintenance and repairs are expensed as incurred. In cases where maintenance contracts are in place, the costs are recorded on a straight-line basis over the contractual period.

Sales and marketing costs

The operating expenses related to sales and marketing consist of costs for personnel (including sales commissions), marketing and other costs directly related to the sales process. Costs of advertising and promotion are expensed as incurred.

General and administrative costs

General and administrative costs include depreciation expenses and are expensed as incurred.

Employee benefits

Defined contribution pension plans

A defined contribution pension plan is a post-employment plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the income statement in the periods during which the related services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

Termination benefits

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting date, they are discounted to their present value.

Share-based payments

The long-term incentive programme enables Group employees to earn and/or acquire shares of the Group. The fair value at the date of grant to employees of share options, as determined using the Black Scholes model for options and the Monte Carlo model for the performance shares, is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options and/or shares. The amount recognised as an expense is adjusted to reflect the actual number of share options, restricted and performance shares that vest. Restricted shares are valued based on the market value at grant date.

Finance income and expense

Finance expense comprises interest payable on borrowings calculated using the effective interest rate method, gains on financial assets recognised at fair value through profit and loss and foreign exchange gains and losses. Borrowing costs directly attributable to the acquisition or construction of data centre assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the costs of those assets, until such time as the assets are ready for their intended use.

 

 

44    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

    

 

Interest income is recognised in the income statement as it accrues, using the effective interest method. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.

Foreign currency gains and losses are reported on a net basis, as either finance income or expenses, depending on whether the foreign currency movements are in a net gain or a net loss position.

Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date that are expected to be applied to temporary differences when they reverse or loss carry forwards when they are utilised.

A deferred tax asset is also recognised for unused tax losses and tax credits. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.

In determining the amount of current and deferred tax the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will have an impact on tax expense in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis of their tax assets and liabilities will be realised simultaneously.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary and preference shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary outstanding for the effects of all dilutive potential ordinary shares, which comprise the share options granted.

New standards and interpretations not yet adopted

The new standards, amendments to standards and interpretations listed below are available for early adoption in the annual period beginning 1 January 2015, although they are not mandatory until a later period. The Group has decided not to adopt these new standards standards or interpretations until a later point in time.

 

 

  Effective date

  

 

New standard or amendments

 

  1 January 2016

  

 

IFRS 14 – Regulatory deferral accounts;

 

  1 January 2018

  

 

IFRS 15 – Revenue from contract with customer;

 

  1 January 2018

  

 

IFRS 9 – Financial instruments;

In January 2016 the IASB issued IFRS 16 – Leases. This standard is effective as from 1 January 2019. The Company has not yet assessed the impact of the aforementioned new standards and interpretations.

 

4 FINANCIAL RISK MANAGEMENT

Overview

The Group has exposure to the following risks from its use of financial instruments:

 

  Credit risk
  Liquidity risk
  Market risk
  Other risks

This note presents information about the Group’s exposure to each of the above risks, the Group’s goals, policies and processes for measuring and managing risk, and its management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The Board of Directors has overall responsibility for the oversight of the Group’s risk management framework.

The Group continues developing and evaluating the Group’s risk management policies with a view to identifying and analysing the risks faced, to setting appropriate risk limits and controls, and to monitoring risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board of Directors oversees the way management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks the Group faces.

 

 

INTERXION ANNUAL REPORT 2015    /    45


 

  Consolidated Financial Statements    

 

 

    

 

Credit risk

Credit risk is the risk of financial loss to the Group if a customer, bank or other counterparty to a financial instrument were to fail to meet its contractual obligations. It principally arises from the Group’s receivables from customers. The Group’s most significant customer, which is serviced from multiple locations and under a number of service contracts, accounted for 11% of recurring revenues in 2015, and for less than 10% in 2014 and 2013. In 2015 this customer accounted for 15% of recurring revenues in the Big4 segment, and for 5% of recurring revenues in the Rest of Europe segment.

Trade and other receivables

The Group’s exposure to credit risk is mainly influenced by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and the country in which customers operate, has less of an influence on credit risk.

The Group has an established credit policy under which each new customer is analysed individually for creditworthiness before it begins to trade with the Group. If customers are independently rated, these ratings are used. If there is no independent rating, the credit quality of the customer is analysed taking its financial position, past experience and other factors into account.

The Group’s standard terms require contracted services to be paid in advance of these services being delivered. Next to the standard terms the Group provided service fee holidays in relation to our long-term customer contracts, for which an accrued revenue balance is accounted for. In the event that a customer fails to pay amounts that are due, the Group has a clearly defined escalation policy that can result in a customer’s access to their equipment being denied or service to the customer being suspended.

In 2015, 94% (2014: 94% and 2013: 95%) of the Group’s revenue was derived from contracts under which customers paid an agreed contracted amount, including power on a regular basis (usually monthly or quarterly) or from deferred initial setup fees paid at the outset of the customer contract.

As a result of the Group’s credit policy and the contracted nature of the revenues, losses have occurred infrequently (see Note 21). The Group establishes an allowance that represents its estimate of potential incurred losses in respect of trade and other receivables. This allowance is entirely composed of a specific loss component relating to individually significant exposures.

Bank counterparties

The Group has certain obligations under the terms of its revolving loan agreement and Senior Secured Notes which limit disposal with surplus cash balances. The Group monitors its cash position, including counterparty and term risk, daily.

Guarantees

Certain of our subsidiaries have granted guarantees to our lending banks in relation to our facilities. The Company grants rent guarantees to landlords of certain of the Group’s property leases (see Note 25).

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the its reputation or jeopardising its future.

The majority of the Group’s revenues and operating costs are contracted, which assists it in monitoring cash flow requirements, which is done on a daily and weekly basis. Typically, the Group ensures that it has sufficient cash on demand to meet expected normal operational expenses, including the servicing of financial obligations, for a period of 60 days; this excludes the potential impact of extreme circumstances, such as natural disasters, that cannot reasonably be predicted.

All significant capital expansion projects are subject to formal approval by the Board of Directors, and material expenditure or customer commitments are only made once the management is satisfied that the Group has adequate committed funding to cover the anticipated expenditure (see Note 23).

Senior Secured Notes

On 3 July 2013, the Company issued an aggregate principal amount of 325 million 6.00% Senior Secured Notes due 2020 (the “Senior Secured Notes due 2020”). The net proceeds of the offering were used to purchase all of the 260 million Senior Secured Notes due 2017, which were tendered in the offer for those notes and to redeem the 260 million Senior Secured Notes due 2017 which remained outstanding following the expiration and settlement of the tender offer and consent solicitation, to pay all related fees, expenses and premiums and for other general corporate purposes.

The Senior Secured Notes due 2020 are governed by an indenture dated 3 July 2013, between the Company, as issuer, and The Bank of New York Mellon, London Branch as Trustee. The indenture contains customary restrictive covenants, including but not limited to limitations or restrictions on our ability to incur debt, grant liens, make restricted payments and sell assets. The restrictive covenants are subject to customary exceptions and are governed by a consolidated fixed charge ratio (Adjusted EBITDA to Finance Charges) to exceed 2.00 and a consolidated senior leverage ratio (Total Net Debt to Pro-forma EBITDA) not to exceed 4.00. In addition, the aggregate of any outstanding debt senior to our Senior Secured Notes should not exceed 100 million.

The obligations under the Senior Secured Notes due 2020 are guaranteed by certain of the Company’s subsidiaries.

On 29 April 2014, the Company completed the issuance of 150.0 million aggregate principal amount of 6.00% Senior Secured Notes due 2020 (the “Additional Notes”). The net proceeds of the offering amount to 157.9 million, net of offering fees and expenses of 2.3 million. The net proceeds reflect the issuance of the Additional Notes at a premium at 106.75 and net of offering fees and expenses. The Additional Notes, which are guaranteed by certain subsidiaries of the Company, were issued under the indenture pursuant to which, on 3 July 2013, the Company issued 325.0 million in aggregate principal amount of 6.00% Senior Secured Notes due 2020.

 

 

46    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

    

 

Senior Secured Facility

On 14 April 2014, the Company entered into a senior secured facility agreement (the “Senior Secured Facility Agreement”) between, among others, the Issuer, Barclays Bank PLC and ABN AMRO Bank N.V. as lenders and Barclays Bank PLC as agent (the “Agent”) and security trustee, pursuant to which a 100.0 million senior secured term facility (the “Senior Secured Facility”) was made available to the Company.

Following the successful closing of the offering of Additional Notes (as defined and described in the preceding paragraph), the Company terminated the 100.0 million Senior Secured Facility Agreement. No amounts had been drawn under the Senior Secured Facility Agreement. However, the deferred financing fees amounting to 0.6 million were written off in April 2014 in connection with the termination of the Secured Senior Facility Agreement.

Revolving Facility

On 17 June 2013, the Company entered into a new 100 million Revolving Facility Agreement with ABN AMRO Bank N.V., Barclays Bank PLC, Citigroup Global Markets Limited, Credit Suisse AG, Banc of America Securities Limited, as arrangers, the lenders thereunder, Barclays Bank PLC, as agent and Barclays Bank PLC as security trustee. This new 100 million Revolving Facility Agreement replaced the 60 million revolving facility agreement.

On 3 July 2013, in connection with the issuance of the 325 million Senior Secured Notes due 2020, all conditions precedent to the utilisation of this Revolving Facility Agreement were satisfied.

On 28 July 2014, Interxion Holding N.V. received consent from the lenders under its 100 million revolving facility to decrease the net assets guarantor coverage from 70% to 65% for a one-year period with effect from 30 June 2014. The Company has not been in breach of any covenants during the year.

As of December 2014, following the addition of Interxion Österreich GmbH as obligor to the group of guarantors, the net assets guarantor coverage exceeded 70%.

The net asset guarantor coverage is calculated as the aggregate net assets of the guarantors under the revolving facility (calculated on an unconsolidated basis and excluding all intragroup items and investments in subsidiaries of any member of the Group) to consolidated net assets of the Group.

The Revolving Facility Agreement also requires the Company to maintain a specified financial ratio. The restrictive covenants are subject to customary exceptions including, in relation to the incurrence of additional debt, a consolidated fixed charge ratio (calculated as a ratio of adjusted EBITDA to consolidated interest expense) to exceed 2.00 to 1.00 on a pro forma basis for the four full fiscal quarters (taken as one period) for which financial statements are available immediately preceding the incurrence of such debt and, if such debt is senior debt, a consolidated senior leverage ratio (calculated as a ratio of outstanding senior debt net of cash and cash equivalents of the Company and its restricted subsidiaries (on a consolidated basis) to pro forma adjusted EBITDA) to be less than 4.00 to 1.00 on a pro forma basis for the four full fiscal quarters (taken as one period) for which financial statements are available immediately preceding the incurrence of such debt.

The Revolving Facility Agreement also includes a leverage ratio financial covenant (tested on a quarterly basis) requiring total net

debt (calculated as a ratio to pro forma EBITDA) not to exceed a leverage ratio of 4.00 to 1.00. In addition, the Company must ensure, under the Revolving Facility Agreement, that the guarantors represent a certain percentage of adjusted EBITDA of the Group as a whole and a certain percentage of the consolidated net assets of the Group as a whole. Our ability to meet these covenants may be affected by events beyond our control and, as a result, we cannot assure you that we will be able to meet the covenants. In the event of a default under the Revolving Facility Agreement, the lenders could terminate their commitments and declare all amounts owed to them to be due and payable. Borrowings under other debt instruments that contain cross acceleration or cross default provisions, including the Senior Secured Notes, may as a result also be accelerated and become due and payable.

The breach of any of these covenants by the Company or the failure by the Company to maintain its leverage ratio could result in a default under the Revolving Facility Agreement. As of 31 December 2015, the Company was in compliance with all covenants in the Revolving Facility Agreement. In addition, the Company does not anticipate any such breach or failure and believes that its ability to borrow funds under the Revolving Facility Agreement will not be adversely affected by the covenants in the next 12 months.

As at 31 December 2015, the revolving facility agreement remained undrawn. The Company’s consolidated fixed charge ratio stood at 5.14 and the net debt ratio/consolidated senior leverage ratio stood at 2.94.

Mortgages

On 5 November 2012, the Company secured a five-year mortgage bank loan of 10 million, which is secured by mortgages on the AMS6 property, owned by Interxion Real Estate IV B.V. The loan is subject to a floating interest rate of EURIBOR plus an individual margin of 275 basis points. Interest is due quarterly in arrears. No financial covenants apply to this loan next to the repayment schedule.

On 18 January 2013, the Group completed two mortgage financings totalling 10 million. The loans are secured by mortgages on the PAR3 land, owned by Interxion Real Estate II Sarl and the PAR5 land, owned by Interxion Real Estate III Sarl, pledges on the lease agreements, and are guaranteed by Interxion France SAS. The principal amounts on the two loans are to be repaid in quarterly instalments in an aggregate amount of 167,000 commencing on 18 April 2013. The mortgages have a maturity of fifteen years and have a variable interest rate based on EURIBOR plus an individual margin ranging from 240 to 280 basis points. The interest rates have been fixed through an interest rate swap for 75% of the principal outstanding amount for a period of ten years. No financial covenants apply to this loan next to the repayment schedule.

On 26 June 2013, the Group completed a 6 million mortgage financing. The loan is secured by a mortgage on the AMS3 property, owned by Interxion Real Estate V B.V. and a pledge on the lease agreement. The principal is to be repaid in annual instalments of 400,000 commencing 1 May 2014 and a final repayment of 4,400,000 due on 1 May 2018. The mortgage has a variable interest rate based on EURIBOR plus 275 basis points. The loan contains a minimum of 1.1 debt service capacity covenant ratio based on the operations of Interxion Real Estate V B.V.

 

 

INTERXION ANNUAL REPORT 2015    /    47


 

  Consolidated Financial Statements    

 

 

    

 

On 1 April 2014, the Group completed a 9.2 million mortgage financing. The facility is secured by a mortgage on the data centre property in Zaventem (Belgium), which was acquired by Interxion Real Estate IX N.V. on 9 January 2014, a pledge on the lease agreement, and is guaranteed by Interxion Real Estate Holding B.V. The facility has a maturity of fifteen years and has a variable interest rate based on EURIBOR plus 200 basis points. The principal amount is to be repaid in 59 quarterly instalments of 153,330 of which the first quarterly instalment was paid on 31 July 2014 and a final repayment of 153,330 is due on 30 April 2029. No financial covenants apply to this loan next to the repayment schedule.

On 13 October 2015, the Group completed a 15.0 million mortgage financing. The facility is secured by a mortgage on the German real estate property owned by Interxion Real Estate I B.V. and a pledge on the lease agreement. The facility has a maturity of five years and has a variable interest rate based on EURIBOR plus 225 basis points. The principal amount is to be repaid in four annual instalments of 1,000,000 of which the first quarterly instalment is due on 30 September 2016, and a final repayment of 11,000,000 which is due on 30 September 2020. No financial covenants apply to this loan next to the repayment schedule.

Further details are in the Borrowing section (see Note 20).

Market risk

Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities, primarily the euro, but also pounds sterling (GBP), Swiss francs (CHF), Danish kroner (DKK) and Swedish kronor (SEK). The currencies in which these transactions are primarily denominated are EUR, GBP, CHF, DKK, SEK and USD.

Historically, the revenues and operating costs of each of the Group’s entities have provided an economic hedge against foreign currency exposure and have not required foreign currency hedging.

It is anticipated that a number of capital expansion projects will be funded in a currency that is not the functional currency of the entity in which the associated expenditure will be incurred. In the event that this occurs and is material to the Group, the Group will seek to implement an appropriate hedging strategy.

The majority of the Group’s borrowings are euro denominated and the Company believes that the Interest on these borrowings will be serviced from the cash flows generated by the underlying operations of the Group, the functional currency of which is the euro. The Group’s investments in subsidiaries are not hedged.

Interest rate risk

Following the issue of 6.00% Senior Secured Notes due 2020, the Group is not exposed to significant variable interest rate expense for borrowings.

On 5 November 2012, the Company secured a five-year mortgage 10 million on the AMS6 data centre property. The loan is subject to a floating interest rate of EURIBOR plus an individual margin of 275 basis points per annum. Interest is due quarterly in arrears.

On 18 January 2013, the Group completed two mortgage financings totalling 10 million. The loans are secured by mortgages, on the PAR3 land owned by Interxion Real Estate II Sarl, and the PAR5 land owned by Interxion Real Estate III Sarl, pledges on the lease agreements, and are guaranteed by Interxion France SAS. The mortgages have a maturity of fifteen years and have a variable interest rate based on EURIBOR plus an individual margin ranging from 240 to 280 basis points. The interest rates have been fixed through an interest rate swap for 75% of the principal outstanding amount for a period of 10 years.

On 26 June 2013, the Group completed a 6 million mortgage financing. The loan is secured by a mortgage on the AMS3 property owned by Interxion Real Estate V B.V. and a pledge on the lease agreement. The mortgage loan has a variable interest rate based on EURIBOR plus 275 basis points.

On 1 April 2014, the Group completed a 9.2 million mortgage financing. The facility is secured by a mortgage on the data centre property in Zaventem (Belgium), which was acquired by Interxion Real Estate IX N.V. on 9 January 2014, a pledge on the lease agreement, and is guaranteed by Interxion Real Estate Holding B.V. The mortgage loan has a variable interest rate based on EURIBOR plus 200 basis points.

On 13 October 2015, the Group completed a 15.0 million mortgage financing. The facility is secured by a mortgage on the real estate property in Germany, which is owned by Interxion Real Estate I B.V. and a pledge on the lease agreement. The facility has a maturity of five years and has a variable interest rate based on EURIBOR plus 225 basis points.

As at 31 December 2015, on the Revolving Facility Agreement the interest payable on EUR amounts drawn would be at the rate of EURIBOR plus 350 basis points and for GBP amounts drawn the interest payable would be LIBOR plus 350 basis points. The Revolving Facility Agreement was fully undrawn as at 31 December 2015.

Further details are in the Financial Instruments section (see Note 21).

Other risks

Price risk

There is a risk that changes in market circumstances, such as strong unanticipated increases in operational costs, construction of new data centres or churn in customer contracts, will negatively affect the Group’s income. Customers individually have medium-term contracts that require notice prior to termination. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Group is a significant user of power and has exposure to increases in power prices. It uses independent consultants to monitor price changes in electricity and seeks to negotiate fixed-price term agreements with the power supply companies, not more than for own use, where possible. The risk to the Group is mitigated by the contracted ability to recover power price increases through adjustments in the pricing for power services.

 

 

48    /    INTERXION ANNUAL REPORT 2015


 

 

    Consolidated Financial Statements   

 

 

Capital management

The Group has a capital base comprising its equity, including reserves, Senior Secured Notes, mortgage loan, finance leases and committed debt facilities. It monitors its solvency ratio, financial leverage, funds from operations and net debt with reference to multiples of its previous twelve months’ Adjusted EBITDA levels. The Company’s policy is to maintain a strong capital base and access to capital in order to sustain the future development of the business and maintain shareholders’, creditors’ and customers’ confidence.

The principal use of capital in the development of the business is through capital expansion projects for the deployment of further equipped space in new and existing data centres. Major capital expansion projects are not started unless the Company has access to adequate capital resources at the start of the project to complete the project, and they are evaluated against target internal rates of return before approval. Capital expansion projects are continually monitored before and after completion.

There were no changes in the Group’s approach to capital management during the year.

 

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. Management monitors the operating results of its business units separately for the purpose of making decisions about performance assessments. There are two segments: the first is The Big4 which comprise of 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 based on the measures of revenue, EBITDA 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.

The geographic information analyses the Group’s revenues and non-current assets by the Company’s country of domicile and other countries. In presenting the geographic information both revenue and assets have been based on their geographic location. The Netherlands is the country of domicile which reported revenues amounting to 65,225,000 (2014: 57,834,000; 2013: 50,569,000) and non-current assets (excluding DTA) amounting to 235,270,000 (2014: 230,404,000; 2013: 180,409,000).

 

 

INFORMATION BY SEGMENT, 2015    FR, DE, NL        Rest of Europe         Subtotal         Corporate   Total 
     and UK            and other    
                 (€’000)           

Recurring revenue

       232,624             132,551         365,175             365,175     

Non-recurring revenue

       14,290             7,095         21,385             21,385     

Total revenue

       246,914             139,646         386,560             386,560     

Cost of sales

       (93,311)            (49,440 )       (142,751 )       (8,862 )   (151,613)    

Gross profit/(loss)

       153,603             90,206         243,809         (8,862 )   234,947     

Other income

       365                     365         20,923     21,288     

Sales and marketing costs

       (7,925)            (5,145 )       (13,070 )       (15,147 )   (28,217)    

General and administrative costs

       (62,828)            (30,687 )       (93,515 )       (38,990 )   (132,505)    

Operating profit/(loss)

       83,215             54,374         137,589         (42,076 )   95,513     

Net finance expense

                                            (29,022)    

Profit before taxation

                                            66,491     

    

                                             

Total assets

       878,568             309,218         1,187,786         64,278       1,252,064     

Total liabilities

       196,996             54,396         251,392         493,255     744,647     
Capital expenditures, including intangible assets*        (131,812)            (55,004 )       (186,816 )       (5,820 )   (192,636)    
Depreciation, amortisation and impairments        50,317            23,688         74,005         4,224     78,229     

    

                                             

Adjusted EBITDA

       134,328             78,868         213,196         (41,920 )   171,276     

Note: *Capital expenditures, including intangible assets, represent 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.

 

 

INTERXION ANNUAL REPORT 2015    /    49


 

  Consolidated Financial Statements    

 

 

 

INFORMATION BY SEGMENT, 2014    FR, DE, NL        Rest of Europe            Subtotal           Corporate        Total   
     and UK             and other     
                  (€’000)             

Recurring revenue

       200,603             118,581                 319,184         —            319,184     

Non-recurring revenue

       13,608             7,832                 21,440         —            21,440     

Total revenue

       214,211             126,413                 340,624         —            340,624     

Cost of sales

       (83,844)            (47,947)                (131,791 )       (7,284)           (139,075)    

Gross profit/(loss)

       130,367             78,466                 208,833         (7,284)           201,549     

Other income

       271             —                 271