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 3 August 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.

 

 

 


This report contains Interxion Holding N.V.’s Condensed Consolidated Interim Financial Statements as at and for the three-month and six-month periods ended 30 June 2016.

The interim report was prepared in accordance with the indenture (the “Indenture”) dated as of 3 July 2013 among Interxion Holding N.V., as Issuer, the guarantors named therein, The Bank of New York Mellon, London Branch, as Trustee, principal paying agent and transfer agent, The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent and registrar, and Barclays Bank PLC, as Security Trustee.

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

 

Exhibit

    
99.1    The Interxion Holding N.V. Condensed Consolidated Interim Financial Statements as at and for the three-month and six-month periods ended 30 June 2016.


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: 3 August 2016

Condensed Consolidated Interim Financial Statements

Exhibit 99.1

 

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Interxion Holding NV

Condensed Consolidated Interim Financial Statements

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

30 June 2016

Schiphol-Rijk, 3 August 2016


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Financial Highlights

 

    Revenue increased by 9% to €104.0 million (2Q 2015: €95.4 million).

 

    Recurring revenue1 increased by 10% to €99.3 million (2Q 2015: €90.3 million).

 

    Net profit was €9.2 million (2Q 2015: €21.6 million, which included net M&A transaction income of €17.0 million).

 

    Adjusted net profit2 increased by 8% to €9.0 million (2Q 2015: €8.3 million).

 

    Earnings per diluted share were €0.13 (2Q 2015: €0.31, which included the aforementioned net M&A transaction income).

 

    Adjusted earnings per diluted share were €0.13 (2Q 2015: €0.12).

 

    Adjusted EBITDA2 increased by 13% to €47.3 million (2Q 2015: €42.0 million).

 

    Adjusted EBITDA margin increased to 45.5% (2Q 2015: 44.0%).

 

    Capital expenditures, including intangible assets3, were €62.6 million (2Q 2015: €47.8 million).

 

    During the second quarter, Interxion issued €150 million aggregate principal amount of 6.00% Senior Secured Notes due 2020 at an issue price of 104.50%.

Operating Highlights

 

    Equipped Space increased by 2,600 square metres in the quarter to 104,200 square metres.

 

    Revenue Generating Space increased by 1,200 square metres in the quarter to 81,600 square metres.

 

    Utilisation Rate at the end of the quarter was 78%.

 

    During the second quarter, Interxion completed expansions in Germany, opening the second phases of FRA10 in Frankfurt and DUS2 in Dusseldorf, as well as opening the first phase of its second data centre in Copenhagen (CPH2).

Quarterly Review

Revenue in the second quarter of 2016 was €104.0 million, a 9% increase over the second quarter of 2015 and a 2% increase over the first quarter of 2016. Recurring revenue was €99.3 million, a 10% increase over the second quarter of 2015 and a 2% increase over the first quarter of 2016. Recurring revenue in the second quarter was 95% of total revenue.

Cost of sales in the second quarter of 2016 was €39.7 million, a 5% increase over the second quarter of 2015 and a 1% increase over the first quarter of 2016.

Gross profit was €64.4 million in the second quarter of 2016, an 11% increase over the second quarter of 2015 and a 2% increase over the first quarter of 2016. Gross profit margin was 61.9% in the second quarter of 2016 compared to 60.5% in the second quarter of 2015 and 61.6% in the first quarter of 2016.

Sales and marketing costs in the second quarter of 2016 were €7.3 million, a 1% increase over the second quarter of 2015 and a 6% decrease from the first quarter of 2016.

Other general and administrative costs were €9.7 million in the second quarter of 2016, a 14% increase over the second quarter of 2015 and a 5% increase from the first quarter of 2016. Other general and administrative costs exclude depreciation, amortisation, impairments, share-based payments, M&A transaction costs and provision for onerous lease contracts.

Depreciation, amortisation, and impairments in the second quarter of 2016 was €22.0 million, an increase of 12% from the second quarter of 2015 and a 3% increase from the first quarter of 2016.

Operating profit in the second quarter of 2016 was €23.5 million, a decrease of 38% from the second quarter of 2015 and 3% increase from the first quarter of 2016. Quarterly results in the second quarter 2015, first quarter 2016, and second quarter 2016 were impacted by M&A transaction related items. Excluding these items, underlying operating profit increased 16% over the second quarter of 2015.

Net finance costs for the second quarter of 2016 were €10.2 million, a 28% increase over both the second quarter of 2015 and the first quarter of 2016. On 14 April 2016, Interxion issued €150 million principal amount of 6.00% Senior Secured Notes due 2020 at an issue price of 104.50%.

Income tax expense for the second quarter of 2016 was €4.2 million, a 49% decrease compared to the second quarter of 2015 and a 10% decrease from the first quarter of 2016.

Net profit was €9.2 million in the second quarter of 2016, a 58% decrease over the second quarter of 2015 and a 10% decrease from the first quarter of 2016.

Adjusted net profit was €9.0 million in the second quarter of 2016, an 8% increase over the second quarter of 2015, and a 10% decrease from the first quarter of 2016.

Adjusted EBITDA for the second quarter of 2016 was €47.3 million, a 13% increase over the second quarter of 2015 and a 3% increase over the first quarter of 2016. Adjusted EBITDA margin was 45.5% in the second quarter of 2016 compared to 44.0% in the second quarter of 2015 and 45.0% in the first quarter of 2016.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €39.3 million in the second quarter of 2016, compared to €54.1 million in the second quarter of 2015, and €50.4 million in the first quarter of 2016.

Capital expenditures, including intangible assets3, were €62.6 million in the second quarter of 2016 compared to €47.8 million in the second quarter of 2015 and €50.0 million in the first quarter of 2016.

Cash and cash equivalents were €193.5 million at 30 June 2016, compared to €58.6 million at year end 2015. Total borrowings, net of deferred revolving facility financing fees, were €739.1 million at 30 June 2016 compared to €555.1 million at year end 2015. As of 30 June 2016, the Company’s revolving credit facility was undrawn. Cash balances at 30 June 2016 reflect the receipt of net proceeds of approximately €155 million related to the Senior Secured Notes issuance completed on 14 April 2016.

Equipped space at the end of the second quarter of 2016 was 104,200 square metres compared to 98,300 square metres at the end of the second quarter of 2015 and 101,600 square metres at the end of the first quarter of 2016. Utilisation rate, the ratio of revenue-generating space to equipped space, was 78% at the end of the second quarter of 2016, compared with 78% at the end of the second quarter of 2015 and 79% at the end of the first quarter of 2016.

 

1  Recurring revenue comprises revenue that is incurred monthly from colocation, connectivity and associated power charges, office space, amortized set-up fees and certain recurring managed services (but excluding any ad hoc managed services) provided by us directly or through third parties. Rents received for the sublease of unused sites are excluded.

 

2  Adjusted net profit and Adjusted EBITDA are non-IFRS figures intended to adjust for certain items and are not measures of financial performance under IFRS. Full definitions can be found in the “Non-IFRS Financial Measures” section later in this press release. Reconciliations of net profit to adjusted EBITDA and net profit to adjusted net profit can be found in the financial tables later in this press release.

 

3  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.

 

2   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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Further Information for Noteholders

These Condensed Consolidated Interim Financial Statements were prepared in accordance with IAS 34 and intended to comply with the requirements in the indenture (the “Indenture”) dated as of 3 July 2013 among Interxion Holding NV, as Issuer, the guarantors named therein, The Bank of New York Mellon, London Branch, as Trustee, principal paying agent and transfer agent; The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent and registrar, and Barclays Bank PLC, as Security Trustee.

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

Non-IFRS Financial Measures

Included in these materials are certain non-IFRS financial measures, which are measures of our financial performance that are not calculated and presented in accordance with IFRS, within the meaning of applicable SEC rules. These measures are as follows: (i) EBITDA; (ii) adjusted EBITDA; (iii) recurring revenue, (iv) adjusted net profit; (v) adjusted basic earnings per share and (vi) adjusted diluted earnings per share.

Other companies may present EBITDA, adjusted EBITDA, recurring revenue, adjusted net profit, adjusted basic earnings per share and adjusted diluted earnings per share differently than we do. Each of these measures are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit or as a measure of liquidity or an alternative to Profit for the period attributable to shareholders (“net profit”) as indicators of our operating performance or any other measure of performance implemented in accordance with IFRS.

EBITDA, Adjusted EBITDA and Recurring revenue

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

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

 

    Share-based payments – the fair value at the date of grant to employees of share options, is recognised as an employee expense over the vesting period. We believe that this expense does not represent our operating performance.

 

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

 

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

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    3


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In certain circumstances, we may also adjust for gains or losses that management believes are not representative of our current ongoing performance. Examples of this would include: adjusting for the cumulative effect of a change in accounting principle or estimate, impairment losses, litigation gains and losses or windfall gains and losses.

Recurring revenue comprises revenue that is incurred monthly from colocation, connectivity and associated power charges, office space, amortized set-up fees and certain recurring managed services (but excluding any ad hoc managed services) provided by us directly or through third parties. Rents received for the sublease of unused sites are excluded.

We believe EBITDA and adjusted EBITDA provide useful supplemental information to investors regarding our ongoing operational performance because it helps us and our investors evaluate the ongoing operating performance of the business after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortisation). Management believes that the presentation of adjusted EBITDA, when combined with the primary IFRS presentation of net profit, provides a more complete analysis of our operating performance. Management also believes the use of EBITDA and adjusted EBITDA facilitates comparisons between us and other data centre operators and other data centre operators that are REITs and other infrastructure based businesses. EBITDA and adjusted EBITDA are also relevant measures used in the financial covenants of our €100 million revolving facility and our 6.00% Senior Secured Notes due 2020. We also present recurring revenue as we believe it assists investors understand our operating performance.

A reconciliation from net profit to EBITDA and EBITDA to adjusted EBITDA is provided in the notes to our condensed consolidated interim financial statements.

Adjusted net profit, adjusted basic earnings per share and adjusted diluted earnings per share

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

 

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

 

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

 

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

In certain circumstances, we may also adjust for gains or losses that management believes are not representative of our current ongoing performance. Examples of this would include: adjusting for the cumulative effect of a change in accounting principle or estimate, impairment losses, litigation gains and losses or windfall gains and losses.

Management believe that the exclusion of certain items listed above, provides useful supplemental information to net profit to aid investors in evaluating the operating performance of our business and to aid investors compare our operating performance with other data centre operators and infrastructure companies. We believe the presentation of adjusted net profit, when combined with net profit prepared in accordance with IFRS is beneficial to a complete understanding of our performance.

 

4   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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Adjusted basic earnings per share and adjusted diluted earnings per share amounts are determined on adjusted net profit. A reconciliation from net profit to adjusted net profit is provided in the notes to our condensed consolidated interim financial statements.

 

     For the three months ended      For the six months ended  
    

30 Jun

2016

    

30 Jun

2015

    

30 Jun

2016

    

30 Jun

2015

 
Consolidated    €’000      €’000      €’000      €’000  

Net profit

     9,165         21,587         19,384         26,012   

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

           

M&A transaction costs

     492         3,911         721         10,798   

M&A transaction break fee income

     —           (20,923      —           (20,923

Adjustments related to provisions:

           

Increase/(decrease) in provision for onerous lease contracts

     —           —           —           (100

Adjustments related to capitalised interest:

     (701      (700      (1,166      (1,600
  

 

 

    

 

 

    

 

 

    

 

 

 
     (209      (17,712      (445      (11,825

Tax effect of above add backs and reversals

     52         4,428         111         3,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net profit

     9,008         8,303         19,050         17,187   
  

 

 

    

 

 

    

 

 

    

 

 

 

Reported basic EPS: (€)

     0.13         0.31         0.28         0.37   

Reported diluted EPS: (€)

     0.13         0.31         0.27         0.37   

Adjusted basic EPS: (€)

     0.13         0.12         0.27         0.25   

Adjusted diluted EPS: (€)

     0.13         0.12         0.27         0.24   

About Interxion

Interxion (NYSE: INXN) is a leading provider of carrier and cloud-neutral colocation data centre services in Europe, serving a wide range of customers through 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 over 600 connectivity providers, 21 European Internet exchanges, and most leading cloud and digital media platforms across its footprint, Interxion has created connectivity, cloud, content and finance hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    5


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Condensed Consolidated Interim Income Statements

 

            For the three months ended     For the six months ended  
            30 Jun 2016     30 Jun 2015     30 Jun 2016     30 Jun 2015  
     Note      €’000     €’000     €’000     €’000  

Revenue

     5         104,026        95,449        206,026        187,931   

Cost of sales

     5         (39,663     (37,663     (78,782     (73,945
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        64,363        57,786        127,244        113,986   

Other income

     5         33        20,997        130        21,060   

Sales and marketing costs

     5         (7,284     (7,210     (15,008     (13,889

General and administrative costs

     5         (33,568     (33,824     (65,953     (69,983
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

        23,544        37,749        46,413        51,174   

Finance income

     6         266        147        269        1,357   

Finance expense

     6         (10,436     (8,093     (18,397     (15,888
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit before taxation

        13,374        29,803        28,285        36,643   

Income tax expense

     7         (4,209     (8,216     (8,901     (10,631
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period attributable to shareholders

        9,165        21,587        19,384        26,012   
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share

           

Basic earnings per share: (€)

        0.13        0.31        0.28        0.37   

Diluted earnings per share: (€)

        0.13        0.31        0.27        0.37   

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

 

6   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Comprehensive Income

 

     For the three months ended     For the six months ended  
     30 Jun 2016     30 Jun 2015     30 Jun 2016     30 Jun 2015  
     €’000     €’000     €’000     €’000  

Profit for the period attributable to shareholders

     9,165        21,587        19,384        26,012   

Other comprehensive income

        

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

        

Foreign currency translation differences

     (3,277     2,309        (9,983     16,252   

Effective portion of changes in fair value of cash flow hedge

     (38     146        (135     110   

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

     489        (292     1,334        (1,470
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     (2,826     2,163        (8,784     14,892   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income attributable to shareholders

     6,339        23,750        10,600        40,904   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

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

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    7


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Condensed Consolidated Interim Statements of Financial Position

 

As at           30 Jun 2016     31 Dec 2015  
     Note      €’000     €’000  

Non-current assets

       

Property, plant and equipment

     8         1,087,585        999,072   

Intangible assets

        25,585        23,194   

Deferred tax assets

        20,895        23,024   

Financial assets

        947        —     

Other non-current assets

        7,165        6,686   
     

 

 

   

 

 

 
        1,142,177        1,051,976   

Current assets

       

Trade receivables and other current assets

        137,448        141,534   

Cash and cash equivalents

        193,474        58,554   
     

 

 

   

 

 

 
        330,922        200,088   
     

 

 

   

 

 

 

Total assets

        1,473,099        1,252,064   
     

 

 

   

 

 

 

Shareholders’ equity

       

Share capital

        7,048        6,992   

Share premium

        515,974        507,296   

Foreign currency translation reserve

        12,172        20,865   

Hedging reserve, net of tax

        (304     (213

Accumulated deficit

        (8,139     (27,523
     

 

 

   

 

 

 
        526,751        507,417   

Non-current liabilities

       

Trade payables and other liabilities

        11,459        12,049   

Deferred tax liabilities

        9,224        9,951   

Borrowings

     10         735,455        550,812   
     

 

 

   

 

 

 
        756,138        572,812   

Current liabilites

       

Trade payables and other liabilities

        180,910        162,629   

Income tax liabilities

        4,782        2,738   

Provision for onerous lease contracts

        260        1,517   

Borrowings

     10         4,258        4,951   
     

 

 

   

 

 

 
        190,210        171,835   
     

 

 

   

 

 

 

Total liabilities

        946,348        744,647   
     

 

 

   

 

 

 

Total liabilities and shareholders’ equity

        1,473,099        1,252,064   
     

 

 

   

 

 

 

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

 

8   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

 

     Share
capital
     Share
premium
     Foreign
currency
translation
reserve
    Hedging
reserve
   

Accumulated

deficit

    Total equity  
     €’000      €’000      €’000     €’000     €’000     €’000  

Balance at 1 January 2016

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

Profit for the period

     —           —           —          —          19,384        19,384   

Other comprehensive income, net of tax

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

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

Exercise of options

     56         6,120         —          —          —          6,176   

Share-based payments

     —           2,558         —          —          —          2,558   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     56         8,678         —          —          —          8,734   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2016

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 January 2015

     6,932         495,109         10,440        (247     (76,089     436,145   

Profit for the period

     —           —           —          —          26,012        26,012   

Other comprehensive income, net of tax

     —           —           14,819        73        —          14,892   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —           —           14,819        73        26,012        40,904   

Exercise of options

     25         2,383         —          —          —          2,408   

Share-based payments

     —           3,492         —          —          —          3,492   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     25         5,875         —          —          —          5,900   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2015

     6,957         500,984         25,259        (174     (50,077     482,949   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    9


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Condensed Consolidated Interim Statements of Cash Flows

 

     For the three months ended     For the six months ended  
     30 Jun 2016     30 Jun 2015     30 Jun 2016     30 Jun 2015  
     €’000     €’000     €’000     €’000  

Profit for the period

     9,165        21,587        19,384        26,012   

Depreciation, amortisation and impairments

     22,021        19,577        43,498        37,792   

Provision for onerous lease contracts

     (392     (849     (1,271     (1,774

Share-based payments

     1,158        1,789        2,558        4,030   

Net finance expense

     10,170        7,946        18,128        14,531   

Income tax expense

     4,209        8,216        8,901        10,631   
  

 

 

   

 

 

   

 

 

   

 

 

 
     46,331        58,266        91,198        91,222   
  

 

 

   

 

 

   

 

 

   

 

 

 

Movements in trade and other current assets

     (3,732     (7,734     1,310        (9,365

Movements in trade and other liabilities

     (3,264     3,609        (2,758     6,483   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated from operations

     39,335        54,141        89,750        88,340   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest and fees paid (a)

     (1,060     (1,448     (15,422     (15,022

Interest received

     18        31        25        80   

Income tax paid

     (2,484     (2,740     (3,538     (5,060
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from operating activities

     35,809        49,984        70,815        68,338   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities

        

Purchase of property, plant and equipment

     (60,729     (46,911     (108,176     (112,229

Disposals of property, plant and equipment

        

Purchase of intangible assets

     (1,863     (924     (4,419     (3,176

Redemption of short-term investments

     —          1,650        —          1,650   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from investing activities

     (62,592     (46,185     (112,595     (113,755
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities

        

Proceeds from exercised options

     4,250        230        6,176        2,408   

Proceeds from mortgages

     14,625        —          14,625        —     

Repayment of mortgages

     (948     (720     (1,268     (1,040

Proceeds 6.00% Senior Secured Notes due 2020

     155,346        —          155,346        —     

Interest received at issuance Additional Notes

     2,225        —          2,225        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from financing activities

     175,498        (490     177,104        1,368   

Effect of exchange rate changes on cash

     147        (193     (404     1,224   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net movement in cash and cash equivalents

     148,862        3,116        134,920        (42,825

Cash and cash equivalents, beginning of period

     44,612        53,982        58,554        99,923   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

     193,474        57,098        193,474        57,098   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Interest paid is reported net of cash interest capitalised, which is reported as part of “Purchase of property, plant and equipment.”

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

 

10   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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Notes to the Condensed Consolidated Interim Financial Statements

 

1 The Company

Interxion Holding NV (the “Company”) is domiciled in The Netherlands. The address of the Company’s registered office is Tupolevlaan 24, 1119 NX, Schiphol-Rijk, The Netherlands. The Condensed Consolidated Interim Financial Statements of the Company as at and for the three month and six month periods ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the “Group”). The Group is a leading pan-European operator of carrier neutral Internet data centres.

 

2 Basis of preparation

a) Statement of compliance

The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting. They do not include all the information required for full annual financial statements, and should be read in conjunction with the audited Consolidated Financial Statements of the Group as at and for the year ended 31 December 2015; these are contained in the 2015 Annual Report (Form 20-F) as filed with the Securities and Exchange Commission on 31 March 2016, which is publicly available on the company’s website – www.interxion.com, or from the SEC website – www.sec.gov.

b) Estimates, judgment and seasonality

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

In preparing these Condensed Consolidated Interim Financial Statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the Consolidated Financial Statements as at and for the year ended 31 December 2015 in the 2015 Annual Report (Form 20-F).

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

 

3 Significant accounting policies

The accounting policies applied by the Group in these Condensed Consolidated Interim Financial Statements are the same as those applied by the Group in its Consolidated Financial Statements as at and for the year ended 31 December 2015 in the 2015 Annual Report (Form 20-F), if necessary amended to include new Standards and Interpretations effective as of 1 January 2016. Compared with the accounting principles as applied in the 2015 financial statements these new Standards and Interpretations did not have a significant impact on the financial position or performance of the Group.

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    11


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4 Financial risk management

The Group’s financial risk management objectives and policies are consistent with those disclosed in the audited Consolidated Financial Statements in the 2015 Annual Report (Form 20-F).

 

5 Information by segment

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

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

 

12   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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The performance of the operating segments is primarily assessed based on the measures of revenue (including recurring and non-recurring revenue components), 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.

 

For the three months ended 30 June 2016    FR, DE
NL and UK
    Rest of
Europe
    Subtotal     Corporate
and other
    Total  
     €’000     €’000     €’000     €’000     €’000  

Recurring revenue

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

Non-recurring revenue

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

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

Cost of sales

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

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

Other income

     33        —          33        —          33   

Sales and marketing costs

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

General and administrative costs

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

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

Net finance expense

             (10,170
          

 

 

 

Profit before tax

             13,374   
          

 

 

 

Total assets

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

Total liabilities

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

Capital expenditure, including intangible assets*

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

Depreciation, amortisation, impairments

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

Adjusted EBITDA

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
For the three months ended 30 June 2015   

FR, DE

NL and UK

    Rest of
Europe
    Subtotal     Corporate
and other
    Total  
     €’000     €’000     €’000     €’000     €’000  

Recurring revenue

     57,321        32,976        90,297        —          90,297   

Non-recurring revenue

     2,995        2,157        5,152        —          5,152   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     60,316        35,133        95,449        —          95,449   

Cost of sales

     (22,551     (12,804     (35,355     (2,308     (37,663
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

     37,765        22,329        60,094        (2,308     57,786   

Other income

     74        —          74        20,923        20,997   

Sales and marketing costs

     (1,918     (1,368     (3,286     (3,924     (7,210

General and administrative costs

     (15,602     (7,755     (23,357     (10,467     (33,824
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit/(loss)

     20,319        13,206        33,525        4,224        37,749   

Net finance expense

             (7,946
          

 

 

 

Profit before tax

             29,803   
          

 

 

 

Total assets

     836,429        314,422        1,150,851        61,117        1,211,968   

Total liabilities

     177,916        57,932        235,848        493,171        729,019   

Capital expenditure, including intangible assets*

     (36,545     (10,289     (46,834     (1,001     (47,835

Depreciation, amortisation, impairments

     (12,544     (5,927     (18,471     (1,106     (19,577

Adjusted EBITDA

     33,248        19,342        52,590        (10,561     42,029   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    13


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For the six months ended 30 June 2016    FR, DE
NL and UK
    Rest of
Europe
    Subtotal     Corporate
and other
    Total  
     €’000     €’000     €’000     €’000     €’000  

Recurring revenue

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

Non-recurring revenue

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

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

Cost of sales

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

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

Other income

     130        —          130          130   

Sales and marketing costs

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

General and administrative costs

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit/(loss)

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

Net finance expense

             (18,128
          

 

 

 

Profit before tax

             28,285   
          

 

 

 

Total assets

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

Total liabilities

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

Capital expenditure, including intangible assets*

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

Depreciation, amortisation, impairments

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

Adjusted EBITDA

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
For the six months ended 30 June 2015   

FR, DE

NL and UK

    Rest of
Europe
    Subtotal     Corporate
and other
    Total  
     €’000     €’000     €’000     €’000     €’000  

Recurring revenue

     112,304        65,044        177,348        —          177,348   

Non-recurring revenue

     6,622        3,961        10,583        —          10,583   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     118,926        69,005        187,931        —          187,931   

Cost of sales

     (44,845     (24,793     (69,638     (4,307     (73,945
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

     74,081        44,212        118,293        (4,307     113,986   

Other income

     137        —          137        20,923        21,060   

Sales and marketing costs

     (3,724     (2,725     (6,449     (7,440     (13,889

General and administrative costs

     (30,692     (14,934     (45,626     (24,357     (69,983
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit/(loss)

     39,802        26,553        66,355        (15,181     51,174   

Net finance expense

             (14,531
          

 

 

 

Profit before tax

             36,643   
          

 

 

 

Total assets

     836,429        314,422        1,150,851        61,117        1,211,968   

Total liabilities

     177,916        57,932        235,848        493,172        729,020   

Capital expenditure, including intangible assets*

     (70,311     (43,414     (113,725     (1,680     (115,405

Depreciation, amortisation, impairments

     (24,261     (11,362     (35,623     (2,169     (37,792

Adjusted EBITDA

     64,618        38,320        102,938        (20,304     82,634   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

14   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO

 

Reconciliation to adjusted EBITDA

 

     For the three months ended      For the six months ended  
    

30 Jun

2016

    

30 Jun

2015

     30 Jun
2016
     30 Jun
2015
 
Consolidated    €’000      €’000      €’000      €’000  

Profit for the period attributable to shareholders

     9,165         21,587         19,384         26,012   

Income tax expense

     4,209         8,216         8,901         10,631   
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit before taxation

     13,374         29,803         28,285         36,643   

Finance income

     (266      (147      (269      (1,357

Finance expense

     10,436         8,093         18,397         15,888   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating profit

     23,544         37,749         46,413         51,174   

Depreciation, amortisation and impairments

     22,021         19,577         43,498         37,792   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     45,565         57,326         89,911         88,966   

Share-based payments

     1,322         1,789         2,763         4,030   

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

           

M&A transaction break fee income(2)

     —           (20,923      —           (20,923

M&A transaction costs(3)

     492         3,911         721         10,798   

Adjustments related to terminated or unused datacenter sites:

           

Increase/(decrease) in provision for onerous lease contracts(4)

     —           —           —           (100

Income from sub-leases of unused data centre sites(5)

     (33      (74      (130      (137
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     47,346         42,029         93,265         82,634   
  

 

 

    

 

 

    

 

 

    

 

 

 
     For the three months ended      For the six months ended  
    

30 Jun

2016

    

30 Jun

2015

     30 Jun
2016
     30 Jun
2015
 
FR, DE, NL and UK    €’000      €’000      €’000      €’000  

Operating profit

     22,374         20,319         44,056         39,802   

Depreciation, amortisation and impairments

     14,543         12,544         28,835         24,261   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     36,917         32,863         72,891         64,063   

Share-based payments

     128         459         432         792   

Adjustments related to terminated or unused datacenter sites:

           

Increase/(decrease) in provision for onerous lease contracts(4)

     —           —           —           (100

Income from sub-leases of unused data centre sites(5)

     (33      (74      (130      (137
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     37,012         33,248         73,193         64,618   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    15


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     For the three months ended      For the six months ended  
     30 Jun 2016      30 Jun 2015      30 Jun 2016      30 Jun 2015  
Rest of Europe    €’000      €’000      €’000      €’000  

Operating profit

     15,083         13,206         30,352         26,553   

Depreciation, amortisation and impairments

     6,387         5,927         12,529         11,362   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     21,470         19,133         42,881         37,915   

Share-based payments

     104         209         208         405   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     21,574         19,342         43,089         38,320   
  

 

 

    

 

 

    

 

 

    

 

 

 
     For the three months ended      For the six months ended  
     30 Jun 2016      30 Jun 2015      30 Jun 2016      30 Jun 2015  
Corporate and other    €’000      €’000      €’000      €’000  

Operating profit/(loss)

     (13,913      4,224         (27,995      (15,181

Depreciation, amortisation and impairments

     1,091         1,106         2,134         2,169   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     (12,822      5,330         (25,861      (13,012

Share-based payments

     1,090         1,121         2,123         2,833   

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

           

M&A transaction break fee income(2)

     —           (20,923      —           (20,923

M&A transaction costs(3)

     492         3,911         721         10,798   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     (11,240      (10,561      (23,017      (20,304
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) “EBITDA” and “adjusted EBITDA” are non-IFRS financial measures within the meaning of the rules of the SEC. See “Non-IFRS Financial Measures” for more information on these measures, including why we believe that these supplemental measures are useful, and the limitations on the use of these supplemental measures.
(2) “M&A transaction break fee income” represents the cash break-up fee received following the termination of the Implementation Agreement in May 2015. This fee was included in “Other income”.
(3) “M&A transaction costs” are costs associated with the evaluation, diligence and conclusion or termination of merger or acquisition activity. These costs are included in “General and administrative costs”. In the quarter ended 30 June 2015, M&A transaction costs included €3.9 million related to the abandoned merger with TelecityGroup. In the quarter ended 30 June 2016, M&A transaction costs included €0.5 million related to other activity including the evaluation of potential asset acquisitions.
(4) “Increase/(decrease) in provision for onerous lease contracts” relates to those contracts in which we expect losses to be incurred in respect of unused data centre sites over the term of the lease contract.
(5) “Income from sub-lease of unused data centre sites” represents income from sub-letting unused data centre sites to third parties, which is treated as “Other Income”.

 

16   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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6 Finance income and expense

 

     For the three months ended      For the six months ended  
     30 Jun 2016      30 Jun 2015      30 Jun 2016      30 Jun 2015  
     €’000      €’000      €’000      €’000  

Bank and other interest

     28         18         31         47   

Bond premium and fees in income

     238         —           238         —     

Foreign currency exchange profits

     —           129         —           1,310   
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance income

     266         147         269         1,357   
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense on Senior Secured Notes, bank and other loans

     (8,716      (6,754      (15,633      (13,334

Interest expense on finance leases

     (830      (785      (1,657      (1,505

Interest expense on provision for onerous lease contracts

     (4      (32      (15      (72

Other financial expenses

     (438      (522      (786      (977

Foreign currency exchange losses

     (448      —           (306      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance expense

     (10,436      (8,093      (18,397      (15,888
  

 

 

    

 

 

    

 

 

    

 

 

 

Net finance expense

     (10,170      (7,946      (18,128      (14,531
  

 

 

    

 

 

    

 

 

    

 

 

 

The “Interest expense on provision for onerous lease contracts” relates to the unwinding of the discount rate used to calculate the “Provision for onerous lease contracts”.

 

7 Income tax expense

The Group’s consolidated effective tax rate of 31%, in respect of continuing operations for both the three months and six months periods ended 30 June 2016, was affected by the non-tax-deductible share-based payments. The effective tax rate for the three months and six months periods ended 30 June 2015 was impacted by the pre-tax net positive income on the terminated M&A transactions (taxable in The Netherlands at a below-average tax rate of 25%) and amounted to 28% and 29%, respectively.

 

8 Property, plant and equipment

Acquisitions

During the three and six months ended 30 June 2016, the Group acquired tangible fixed assets (primarily data-centre-related assets) at a cost of €93,540,000 and €143,000,000, respectively (three and six months ended 30 June 2015: €37,600,000 and €89,200,000, respectively).

Capitalised interest relating to borrowing costs for the three and six months ended 30 June 2016 amounted to €701,000 and €1,166,000, respectively (three and six months ended 30 June 2015: €678,000 and €1,598,000, respectively). The cash effect of the interest capitalised for the three and six months ended 30 June 2016 amounted to nil and €1,041,000, respectively, which in the Statement of Cash Flows is presented under “Purchase of property, plant and equipment” (three and six months ended 30 June 2015: nil and €1,969,000, respectively).

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    17


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Capital commitments

At 30 June 2016, the Group had outstanding capital commitments of €81,900,000. These commitments are expected to be substantially settled during the remainder of 2016.

 

9 Financial Instruments

Fair values versus carrying amounts

As of 30 June 2016, the market price of the 6.00% Senior Secured Notes due 2020 was 105.146 (30 June 2015: 106.427). Using this market price, the fair value of the Senior Secured Notes due 2020 would have been approximately €657 million (30 June 2015: €506 million), compared with their nominal value of €625 million (30 June 2015: €475 million).

At 30 June 2016, the Group had a cash flow hedge carried at a negative fair value, to hedge the interest rate risk of part of two mortgages.

As of 30 June 2016, the fair value of all mortgages were equal to their carrying amount of €57.1 million. As of 30 June 2016, the fair value of the financial lease liabilities was €67.8 million compared with the carrying amount of €52.7 million.

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

Fair values and hierarchy

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

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

 

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

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

 

18   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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The values of the instruments are:

 

     Carrying
value
     Fair value  
            Level 1      Level 2      Level 3  

30 June 2016

           

Senior secured notes 6.00% due 2020

     (629,904      (657,000      —           —     

Finance leases

     (52,700      —           (67,782      —     

Mortgages

     (57,109      —           (57,109      —     

Interest rate swap

     (456      —           (456      —     

Financial asset

     947         —           —           947   

31 December 2015

           

Senior secured notes 6.00% due 2020

     (475,503      (502,000      —           —     

Finance leases

     (34,582      —           (41,012      —     

Mortgages

     (44,073      —           (44,073      —     

Interest rate swap

     (321      —           (321      —     

No changes in levels of hierarchy, or transfers between levels, occurred in the reporting period. Fair values were obtained from quoted market prices in active markets or, where no active market exists, by using valuation techniques. Valuation techniques include discounted cash flow models using inputs as market interest rates and cash flows.

The Level 3 financial asset represents the USD 1.0 million part of a USD 2.0 million convertible loan given by Interxion Participation 1 B.V. This amount was paid in the first quarter of 2016, at that time as a bridge loan. Interxion has the option to convert the loan into equity on the maturity date or upon occurrence of an enforcement event. The embedded conversion option has a zero value per 30 June 2016.

 

10 Borrowings

As at 30 June 2016, our €100.0 million revolving facility was undrawn.

Additional notes under Indenture 3 July 2013

On 14 April 2016, the Company completed the issuance of an additional €150.0 million aggregate principal amount of its 6.00% Senior Secured Notes due 2020 (the “Additional Notes”). The net proceeds of the offering amounted to approximately €155 million, net of estimated offering fees and expenses of €2.1 million. The net proceeds contain the nominal value of the Additional Notes increased with a premium at 104.5%. The Additional Notes, which are guaranteed by certain subsidiaries of the Company, were issued under the indenture dated 3 July 2013 pursuant to which the Company has previously issued €475 million in aggregate principal amount of 6.00% Senior Secured Notes due 2020.

Mortgage

On 8 April 2016, the Group completed a €14.6 million financing. The facility is secured by a mortgage on the data centre property in Vienna (Austria), acquired by Interxion Real Estate VII GmbH in January 2015, a pledge on the lease agreement, and is guaranteed by Interxion Real Estate Holding B.V. The facility has a maturity of

 

Interim Report: Three-month and six-month periods ended 30 June 2016   
These Condensed Consolidated Interim Financial Statements are unaudited    19


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fourteen years and nine months, and has a variable interest rate based on EURIBOR plus 195 basis points. The principal amount is to be repaid in 177 monthly instalments, increasing from €76,000 to €91,750. The first monthly instalment of €76,000 was due on 30 April 2016, and a final repayment of €91,750 is due on 31 December 2030.

 

11 Related party transactions

In 2016, the Board of Directors approved a conditional award of 121,849 performance shares to certain members of key management, including the Executive Director. The conditional award of 61,469 performance shares to the Executive Director is subject to the approval of the Annual General Meeting of Shareholders, which is anticipated to be held in June 2017.

On 24 June 2016, the Annual General Meeting of Shareholders approved to award restricted shares equivalent to a value of €40,000 under the terms and conditions of the Company’s 2013 Amended International Equity Based Incentive Plan to each of our Non-executive Directors for their services to be provided for the period between the 2016 Annual General Meeting and the 2017 Annual General Meeting.

All of these restricted shares will vest on the day of the next Annual General Meeting subject to the Non-executive Director having served for the entire period and will be locked up for a period that will end three years from the date of award or on the date the Non-executive Director ceases to be a director of the Company, whichever is sooner. Upon change of control, these restricted shares will vest immediately and any lock up provisions will expire.

 

20   

Interim Report: Three-month and six-month periods ended 30 June 2016

These Condensed Consolidated Interim Financial Statements are unaudited