Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated 2 November 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  ☒            Form 40-F  ☐

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

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

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

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

 

 

 


This report contains Interxion Holding N.V.’s interim report as at and for the three-month and nine-month periods ended 30 September 2016 (the “Interim Report”).

The Interim Report was prepared in accordance with the indenture (the “Indenture”) dated as of 3 July 2013, as amended and/or supplemented from time to time, among Interxion Holding N.V., as Issuer, the guarantors named therein, The Bank of New York Mellon, London Branch, as trustee, principal paying agent and transfer agent, The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent and registrar, and Barclays Bank PLC, as security trustee.

This Report on Form 6-K is incorporated by reference into 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. Interim Report as at and for the three-month and nine-month periods ended 30 September 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: 2 November 2016

Q3 Interim Report

Exhibit 99.1

 

 

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Interxion Holding NV

Interim Report

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

30 September 2016

Schiphol-Rijk, 2 November 2016


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Financial Highlights

 

    Revenue increased by 7% to €105.3 million (3Q 2015: €98.0 million).

 

    Recurring revenue1 increased by 8% to €100.0 million (3Q 2015: €92.8 million).

 

    Net income increased to €10.5 million (3Q 2015: €10.4 million).

 

    Adjusted net income2 decreased by 1% to €8.6 million (3Q 2015: €8.7 million).

 

    Earnings per diluted share were €0.15 (3Q 2015: €0.15).

 

    Adjusted earnings per diluted share decreased by 2% to €0.12 (3Q 2015: €0.12).

 

    Adjusted EBITDA2 increased by 11% to €48.3 million (3Q 2015: €43.7 million).

 

    Adjusted EBITDA margin increased to 45.9% (3Q 2015: 44.6%).

 

    Capital expenditures3, including intangible assets, were €64.5 million (3Q 2015: €35.3 million).

Operating Highlights

 

    Equipped space increased by 3,600 square metres in the quarter to 107,800 square metres.

 

    Revenue generating space increased by 2,500 square metres in the quarter to 84,100 square metres.

 

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

 

    During the third quarter, Interxion completed a 2,400 sqm expansion in FRA10 in Frankfurt, an 800 sqm expansion at MRS1 in Marseille, and a 300 sqm expansion at VIE2 in Vienna.

Quarterly Review

Revenue in the third quarter of 2016 was €105.3 million, a 7% increase over the third quarter of 2015 and a 1% increase over the second quarter of 2016. Recurring revenue was €100.0 million, an 8% increase over the third quarter of 2015 and a 1% increase over the second quarter of 2016. Recurring revenue in the third quarter was 95% of total revenue. On a constant currency basis4, revenue and recurring revenue in the third quarter 2016 were both 10% higher than the third quarter of 2015.

Cost of sales in the third quarter of 2016 was €40.8 million, a 6% increase over the third quarter of 2015 and a 3% increase over the second quarter of 2016.

Gross profit was €64.5 million in the third quarter of 2016, an 8% increase over the third quarter of 2015 and a slight increase over the second quarter of 2016. Gross profit margin was 61.3% in the third quarter of 2016 compared with 60.7% in the third quarter of 2015 and 61.9% in the second quarter of 2016.

Sales and marketing costs in the third quarter of 2016 were €7.3 million, a 5% increase over the third quarter of 2015 and a slight increase from the second quarter of 2016.

Other general and administrative costs, which exclude depreciation, amortisation, impairments, share-based payments, M&A transaction costs and provision for onerous lease contracts, were €8.9 million in the third quarter of 2016, a 1% increase over the third quarter of 2015 and a 9% decrease from the second quarter of 2016.

Depreciation, amortisation, and impairments in the third quarter of 2016 was €22.1 million, an increase of 9% from the third quarter of 2015 and a slight increase from the second quarter of 2016.

Operating income in the third quarter of 2016 was €23.6 million, an increase of 10% from the third quarter of 2015 and a slight increase from the second quarter of 2016.

Net finance expense for the third quarter of 2016 was €8.6 million, a 35% increase over the third quarter of 2015 and a 15% decrease over the second quarter of 2016. Included in third quarter 2016 net finance expense was a €1.3 million positive adjustment on finance lease obligations, lowering net finance expense. A sale of a financial asset was completed in the third quarter 2016, resulting in a €0.3 million gain compared to €2.3 million gain in the third quarter 2015.

Income tax expense for the third quarter of 2016 was €4.5 million, a 5% decrease compared with the third quarter of 2015 and a 7% increase from the second quarter of 2016.

Net income was €10.5 million in the third quarter of 2016, a slight increase over the third quarter of 2015 and a 14% increase from the second quarter of 2016.

Adjusted net income was €8.6 million in the third quarter of 2016, a 1% decrease over the third quarter of 2015, and a 5% decrease from the second quarter of 2016.

Adjusted EBITDA for the third quarter of 2016 was €48.3 million, an 11% increase over the third quarter of 2015 and a 2% increase over the second quarter of 2016. Adjusted EBITDA margin was 45.9% in the third quarter of 2016 compared to 44.6% in the third quarter of 2015 and 45.5% in the second quarter of 2016.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €41.5 million in the third quarter of 2016, compared to €43.0 million in the third quarter of 2015, and €39.3 million in the second quarter of 2016.

Capital expenditures, including intangible assets, were €64.5 million in the third quarter of 2016 compared to €35.3 million in the third quarter of 2015 and €62.6 million in the second quarter of 2016.

Cash and cash equivalents were €149.8 million at 30 September 2016, compared to €58.6 million at year end 2015. Total borrowings, net of deferred revolving facility financing fees, were €737.2 million at 30 September 2016 compared to €555.1 million at year end 2015. As of 30 September 2016, the Company’s revolving credit facility was undrawn.

Equipped space at the end of the third quarter of 2016 was 107,800 square metres compared to 100,200 square metres at the end of the third quarter of 2015 and 104,200 square metres at the end of the second quarter of 2016. Utilisation rate, the ratio of revenue-generating space to equipped space, was 78% at the end of the third quarter of 2016, compared with 78% at the end of the third quarter of 2015 and 78% at the end of the second quarter of 2016.

 

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

 

2  Adjusted net income 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 income to adjusted EBITDA and net income to adjusted net income can be found in the notes to the Condensed Consolidated Interim Financial Statements.

 

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.

 

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

 

2   

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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Further Information for Noteholders

This Interim Report is intended to comply with the requirements in the indenture (the “Indenture”) dated as of 3 July 2013, as amended and/or supplemented from time to time, among Interxion Holding NV, as Issuer, the guarantors named therein, The Bank of New York Mellon, London Branch, as trustee, principal paying agent and transfer agent, The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent and registrar, and Barclays Bank PLC, as security trustee, and the Condensed Consolidated Interim Financial Statements included herein were prepared in accordance with IAS 34.

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

Non-IFRS Financial Measures

Included in 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) revenue on a constant currency basis, (iv) recurring revenue; (v) recurring revenue on a constant currency basis (vi) adjusted net income; (vii) adjusted basic earnings per share and (viii) adjusted diluted earnings per share.

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

EBITDA, Adjusted EBITDA, revenue on a constant currency basis, recurring revenue and recurring revenue on a constant currency basis

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

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

 

    Share-based payments – primarily the fair value at the date of grant to employees of equity awards, 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 datacentre sites – these gains and losses relate to historical leases entered into for certain brownfield sites, with the intention of developing datacentres, 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 datacentres are not reflective of our business activities and our ongoing operating performance.

In certain circumstances, we may also adjust for items 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.

 

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

   3


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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 income provides a more complete analysis of our operating performance. Management also believes the use of EBITDA and adjusted EBITDA facilitates comparisons between us and other data centre operators 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.

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

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 present recurring revenue as we believe it assists investors understand our operating performance.

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

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

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

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

 

    Income or expense related to the evaluation and execution of potential mergers or acquisitions (“M&A”) – under IFRS, gains and losses associated with M&A activity are recognised in the period 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 income. We believe that reversing the impact of capitalised interest provides information about the impact of the total interest costs and facilitates comparisons with other data centre operators.

In certain circumstances, we may also adjust for items that management believes are not representative of our current 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 income 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 income, when combined with net income (loss) prepared in accordance with IFRS is beneficial to a complete understanding of our performance.

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

 

4   

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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Adjusted net income reconciliation

 

     For the three months ended     For the nine months ended  
     30 Sep
2016
    30 Sep
2015
    30 Sep
2016
    30 Sep
2015
 
     €’000     €’000     €’000     €’000  

Consolidated

        

Net income

     10,461        10,415        29,845        36,427   

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

        

M&A transaction costs

     887        484        1,608        11,282   

M&A transaction break fee income

     —          —          —          (20,923

Adjustments related to provisions:

        

Increase/(decrease) in provision for onerous lease contracts

     —          (84     —          (184

Profit on sale of financial asset

     (281     (2,289     (281     (2,289

Adjustment of financial lease obligation

     (1,410     —          (1,410     —     

Adjustments related to capitalised interest

     (1,255     (426     (2,421     (2,026
  

 

 

   

 

 

   

 

 

   

 

 

 
     (2,059     (2,315     (2,504     (14,140

Tax effect of above add backs and reversals

     162        579        274        3,535   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

     8,564        8,679        27,615        25,822   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reported basic EPS: (€)

     0.15        0.15        0.42        0.52   

Reported diluted EPS: (€)

     0.15        0.15        0.42        0.52   

Adjusted basic EPS: (€)

     0.12        0.12        0.39        0.37   

Adjusted diluted EPS: (€)

     0.12        0.12        0.39        0.37   

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 nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

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Condensed Consolidated Interim Income Statements

 

            For the three months ended     For the nine months ended  
            30 Sep 2016     30 Sep 2015     30 Sep 2016     30 Sep 2015  
     Note      €’000     €’000     €’000     €’000  

Revenue

     5         105,275        97,976        311,301        285,907   

Cost of sales

     5         (40,765     (38,464     (119,547     (112,409
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        64,510        59,512        191,754        173,498   

Other income

     5         12        142        142        21,202   

Sales and marketing costs

     5         (7,293     (6,943     (22,301     (20,832

General and administrative costs

     5         (33,619     (31,152     (99,572     (101,135
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

        23,610        21,559        70,023        72,733   

Finance income

     6         606        2,304        875        3,286   

Finance expense

     6         (9,234     (8,711     (27,631     (24,224
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit before taxation

        14,982        15,152        43,267        51,795   

Income tax expense

     7         (4,521     (4,737     (13,422     (15,368
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period attributable to shareholders

        10,461        10,415        29,845        36,427   
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share

           

Basic earnings per share: (€)

        0.15        0.15        0.42        0.52   

Diluted earnings per share: (€)

        0.15        0.15        0.42        0.52   

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

 

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Interim Report: Three-month and nine-month periods ended 30 September 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 nine months ended  
     30 Sep 2016     30 Sep 2015     30 Sep 2016     30 Sep 2015  
     €’000     €’000     €’000     €’000  

Profit for the period attributable to shareholders

     10,461        10,415        29,845        36,427   

Other comprehensive income

        

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

        

Foreign currency translation differences (a)

     (3,889     (7,145     (13,872     9,107   

Effective portion of changes in fair value of cash flow hedge

     4        (59     (131     51   

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

     570        725        1,904        (745
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     (3,315     (6,479     (12,099     8,413   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income attributable to shareholders

     7,146        3,936        17,746        44,840   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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

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

 

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

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Condensed Consolidated Interim Statements of Financial Position

 

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

Non-current assets

       

Property, plant and equipment

     8         1,108,458        999,072   

Intangible assets

        28,203        23,194   

Deferred tax assets

        19,668        23,024   

Financial assets

        1,890        —     

Other non-current assets

        7,125        6,686   
     

 

 

   

 

 

 
        1,165,344        1,051,976   

Current assets

       

Trade receivables and other current assets

        141,909        141,534   

Cash and cash equivalents

        149,802        58,554   
     

 

 

   

 

 

 
        291,711        200,088   
     

 

 

   

 

 

 

Total assets

        1,457,055        1,252,064   
     

 

 

   

 

 

 

Shareholders’ equity

       

Share capital

        7,053        6,992   

Share premium

        517,858        507,296   

Foreign currency translation reserve

        8,854        20,865   

Hedging reserve, net of tax

        (301     (213

Accumulated income / (deficit)

        2,322        (27,523
     

 

 

   

 

 

 
        535,786        507,417   

Non-current liabilities

       

Trade payables and other liabilities

        11,514        12,049   

Deferred tax liabilities

        8,871        9,951   

Borrowings

     10         733,027        550,812   
     

 

 

   

 

 

 
        753,412        572,812   

Current liabilites

       

Trade payables and other liabilities

        157,701        162,629   

Income tax liabilities

        5,465        2,738   

Provision for onerous lease contracts

        —          1,517   

Borrowings

     10         4,691        4,951   
     

 

 

   

 

 

 
        167,857        171,835   
     

 

 

   

 

 

 

Total liabilities

        921,269        744,647   
     

 

 

   

 

 

 

Total liabilities and shareholders’ equity

        1,457,055        1,252,064   
     

 

 

   

 

 

 

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

 

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

Accumu-
lated income

/(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

     —           —           —          —          29,845        29,845   

Other comprehensive income, net of tax

     —           —           (12,011     (88     —          (12,099
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —           —           (12,011     (88     29,845        17,746   

Exercise of options

     61         6,159         —          —          —          6,220   

Share-based payments

        4,403         —          —          —          4,403   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     61         10,562         —          —          —          10,623   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2016

     7,053         517,858         8,854        (301     2,322        535,786   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 January 2015

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

Profit for the period

     —           —           —          —          36,427        36,427   

Other comprehensive income, net of tax

     —           —           8,379        34        —          8,413   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —           —           8,379        34        36,427        44,840   

Exercise of options

     25         2,415         —          —          —          2,440   

Share-based payments

     —           5,097         —          —          —          5,097   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

     25         7,512         —          —          —          7,537   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2015

     6,957         502,621         18,819        (213     (39,662     488,522   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

 

Interim Report: Three-month and nine-month periods ended 30 September 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 nine months ended  
     30 Sep
2016
    30 Sep
2015
    30 Sep
2016
    30 Sep
2015
 
     €’000     €’000     €’000     €’000  

Net income

     10,461        10,415        29,845        36,427   

Depreciation, amortisation and impairments

     22,094        20,251        65,592        58,043   

Provision for onerous lease contracts

     (261     (879     (1,532     (2,653

Share-based payments

     1,845        1,664        4,403        5,694   

Net finance expense

     8,628        6,407        26,756        20,938   

Income tax expense

     4,521        4,737        13,422        15,368   
  

 

 

   

 

 

   

 

 

   

 

 

 
     47,288        42,595        138,486        133,817   
  

 

 

   

 

 

   

 

 

   

 

 

 

Movements in trade and other current assets

     (6,898     (216     (5,588     (9,581

Movements in trade and other liabilities

     1,135        584        (1,623     7,067   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated from operations

     41,525        42,963        131,275        131,303   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest and fees paid (a)

     (18,357     (14,107     (33,779     (29,129

Interest received

     44        37        69        117   

Income tax paid

     (1,948     (4,107     (5,486     (9,167
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from operating activities

     21,264        24,786        92,079        93,124   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities

        

Purchase of property, plant and equipment

     (61,041     (33,399     (169,217     (145,628

Purchase of intangible assets

     (3,485     (1,871     (7,903     (5,047

Proceeds from sale of financial asset

     281        3,063        281        3,063   

Redemption of short-term investments

     —          —          —          1,650   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from investing activities

     (64,245     (32,207     (176,839     (145,962
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities

        

Proceeds from exercised options

     44        12        6,220        2,420   

Proceeds from mortgages

     —          —          14,625        —     

Repayment of mortgages

     (548     (320     (1,816     (1,360

Proceeds 6.00% Senior Secured Notes due 2020

     —          —          155,346        —     

Interest received at issuance Additional Notes

     —          —          2,225        —     

Repayment of other borrowings

     —          (31     —          (31
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from financing activities

     (504     (339     176,600        1,029   

Effect of exchange rate changes on cash

     (187     692        (592     1,916   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net movement in cash and cash equivalents

     (43,672     (7,068     91,248        (49,893

Cash and cash equivalents, beginning of period

     193,474        57,098        58,554        99,923   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

     149,802        50,030        149,802        50,030   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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

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

 

10   

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO         

 

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 nine month periods ended 30 September 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. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

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

 

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).

 

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

   11


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5 Information by segment

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

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

The performance of the operating segments is primarily assessed based on the measures of revenue, EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are non-GAAP measures for which the nearest comparable GAAP measure in relation to segment reporting is Operating Income. Other information provided, except as noted below, to the Board of Directors is measured in a manner consistent with that in the financial statements.

 

12   

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO         

 

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

Recurring revenue

     63,809        36,178        99,987        —          99,987   

Non-recurring revenue

     3,073        2,215        5,288        —          5,288   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     66,882        38,393        105,275        —          105,275   

Cost of sales

     (25,043     (13,358     (38,401     (2,364     (40,765
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

     41,839        25,035        66,874        (2,364     64,510   

Other income

     12        —          12        —          12   

Sales and marketing costs

     (2,185     (1,126     (3,311     (3,982     (7,293

General and administrative costs

     (17,729     (7,935     (25,664     (7,955     (33,619
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     21,937        15,974        37,911        (14,301     23,610   

Net finance expense

             (8,628
          

 

 

 

Profit before tax

             14,982   
          

 

 

 

Total assets

     949,085        348,314        1,297,399        159,656        1,457,055   

Total liabilities

     194,390        77,799        272,189        649,080        921,269   

Capital expenditure, including intangible assets*

     (43,489     (18,514     (62,003     (2,523     (64,526

Depreciation, amortisation, impairments

     (14,782     (6,288     (21,070     (1,024     (22,094

Adjusted EBITDA

     36,776        22,366        59,142        (10,811     48,331   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
For the three months ended 30 September 2015   

FR, DE

NL and UK

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

Recurring revenue

     59,461        33,292        92,753        —          92,753   

Non-recurring revenue

     3,758        1,465        5,223        —          5,223   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     63,219        34,757        97,976        —          97,976   

Cost of sales

     (23,835     (12,406     (36,241     (2,223     (38,464
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

     39,384        22,351        61,735        (2,223     59,512   

Other income

     142        —          142        —          142   

Sales and marketing costs

     (1,755     (1,129     (2,884     (4,059     (6,943

General and administrative costs

     (16,057     (7,758     (23,815     (7,337     (31,152
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     21,714        13,464        35,178        (13,619     21,559   

Net finance expense

             (6,407
          

 

 

 

Profit before tax

             15,152   
          

 

 

 

Total assets

     852,020        308,934        1,160,954        47,531        1,208,485   

Total liabilities

     175,537        57,150        232,687        487,276        719,963   

Capital expenditure, including intangible assets*

     (26,624     (6,022     (32,646     (2,624     (35,270

Depreciation, amortisation, impairments

     (13,066     (6,113     (19,179     (1,072     (20,251

Adjusted EBITDA

     34,907        19,784        54,691        (10,959     43,732   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

   13


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

Recurring revenue

     189,847        106,681        296,528        —          296,528   

Non-recurring revenue

     8,958        5,815        14,773        —          14,773   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     198,805        112,496        311,301        —          311,301   

Cost of sales

     (73,952     (38,313     (112,265     (7,282     (119,547
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

     124,853        74,183        199,036        (7,282     191,754   

Other income

     142        —          142        —          142   

Sales and marketing costs

     (5,950     (3,859     (9,809     (12,492     (22,301

General and administrative costs

     (53,052     (23,999     (77,051     (22,521     (99,572
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     65,993        46,325        112,318        (42,295     70,023   

Net finance expense

             (26,756
          

 

 

 

Profit before tax

             43,267   
          

 

 

 

Total assets

     949,085        348,314        1,297,399        159,656        1,457,055   

Total liabilities

     194,390        77,799        272,189        649,080        921,269   

Capital expenditure, including intangible assets*

     (123,873     (45,185     (169,058     (8,062     (177,120

Depreciation, amortisation, impairments

     (43,617     (18,818     (62,435     (3,157     (65,592

Adjusted EBITDA

     109,969        65,455        175,424        (33,828     141,596   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
For the nine months ended 30 September 2015   

FR, DE

NL and UK

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

Recurring revenue

     171,765        98,336        270,101        —          270,101   

Non-recurring revenue

     10,380        5,426        15,806        —          15,806   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     182,145        103,762        285,907        —          285,907   

Cost of sales

     (68,679     (37,199     (105,878     (6,531     (112,409
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit/(loss)

     113,466        66,563        180,029        (6,531     173,498   

Other income

     279        —          279        20,923        21,202   

Sales and marketing costs

     (5,479     (3,854     (9,333     (11,499     (20,832

General and administrative costs

     (46,750     (22,692     (69,442     (31,693     (101,135
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     61,516        40,017        101,533        (28,800     72,733   

Net finance expense

             (20,938
          

 

 

 

Profit before tax

             51,795   
          

 

 

 

Total assets

     852,020        308,934        1,160,954        47,531        1,208,485   

Total liabilities

     175,537        57,150        232,687        487,276        719,963   

Capital expenditure, including intangible assets*

     (96,935     (49,436     (146,371     (4,304     (150,675

Depreciation, amortisation, impairments

     (37,327     (17,475     (54,802     (3,241     (58,043

Adjusted EBITDA

     99,525        58,104        157,629        (31,263     126,366   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

14   

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited


LOGO         

 

Reconciliation to adjusted EBITDA

 

     For the three months ended      For the nine months ended  
    

30 Sep

2016

    

30 Sep

2015

     30 Sep
2016
     30 Sep
2015
 
     €’000      €’000      €’000      €’000  

Consolidated

           

Profit for the period attributable to shareholders

     10,461         10,415         29,845         36,427   

Income tax expense

     4,521         4,737         13,422         15,368   
  

 

 

    

 

 

    

 

 

    

 

 

 

Profit before taxation

     14,982         15,152         43,267         51,795   

Finance income

     (606      (2,304      (875      (3,286

Finance expense

     9,234         8,711         27,631         24,224   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     23,610         21,559         70,023         72,733   

Depreciation, amortisation and impairments

     22,094         20,251         65,592         58,043   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     45,704         41,810         135,615         130,776   

Share-based payments

     1,752         1,664         4,515         5,694   

Income or expense related to the evaluation and execution of potential Mergers or Acquisitions:

           

M&A transaction break fee income(2)

     —           —           —           (20,923

M&A transaction costs(3)

     887         484         1,608         11,282   

Adjustments related to terminated or unused datacenter sites:

           

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

     —           (84      —           (184

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

     (12      (142      (142      (279
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     48,331         43,732         141,596         126,366   
  

 

 

    

 

 

    

 

 

    

 

 

 
     For the three months ended      For the nine months ended  
    

30 Sep

2016

    

30 Sep

2015

     30 Sep
2016
     30 Sep
2015
 
     €’000      €’000      €’000      €’000  

FR, DE, NL and UK

           

Operating income

     21,937         21,714         65,993         61,516   

Depreciation, amortisation and impairments

     14,782         13,066         43,617         37,327   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA(1)

     36,719         34,780         109,610         98,843   

Share-based payments

     69         353         501         1,145   

Adjustments related to terminated or unused datacenter sites:

           

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

     —           (84      —           (184

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

     (12      (142      (142      (279
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA(1)

     36,776         34,907         109,969         99,525   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

   15


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     For the three months ended     For the nine months ended  
     30 Sep 2016     30 Sep 2015     30 Sep 2016     30 Sep 2015  
     €’000     €’000     €’000     €’000  

Rest of Europe

        

Operating income

     15,974        13,464        46,325        40,017   

Depreciation, amortisation and impairments

     6,288        6,113        18,818        17,475   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA(1)

     22,262        19,577        65,143        57,492   

Share-based payments

     104        207        312        612   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA(1)

     22,366        19,784        65,455        58,104   
  

 

 

   

 

 

   

 

 

   

 

 

 
     For the three months ended     For the nine months ended  
     30 Sep 2016     30 Sep 2015     30 Sep 2016     30 Sep 2015  
     €’000     €’000     €’000     €’000  

Corporate and other

        

Operating income

     (14,301     (13,619     (42,295     (28,800

Depreciation, amortisation and impairments

     1,024        1,072        3,157        3,241   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA(1)

     (13,277     (12,547     (39,138     (25,559

Share-based payments

     1,579        1,104        3,702        3,937   

Income or expense related to the evaluation and execution of potential Mergers or Acquisitions:

        

M&A transaction break fee income(2)

     —          —          —          (20,923

M&A transaction costs(3)

     887        484        1,608        11,282   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA(1)

     (10,811     (10,959     (33,828     (31,263
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 September 2016, M&A transaction costs included €0.9 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-leases of unused data centre sites” represents the income on sub-lease of portions of unused data centre sites to third parties. This income is treated as ‘Other income’.

 

16   

Interim Report: Three-month and nine-month periods ended 30 September 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 nine months ended  
     30 Sep 2016      30 Sep 2015      30 Sep 2016      30 Sep 2015  
     €’000      €’000      €’000      €’000  

Bank and other interest

     47         15         78         63   

Bond premium and fees in income

     278         —           516         —     

Foreign currency exchange profits

     —           —           —           934   

Profit from sale of financial asset (a)

     281         2,289         281         2,289   
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance income

     606         2,304         875         3,286   
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense on Senior Secured Notes, bank and other loans

     (8,568      (6,957      (24,201      (20,292

Interest expense on finance leases (b)

     657         (829      (1,000      (2,334

Interest expense on provision for onerous lease contracts

     (1      (25      (16      (97

Other financial expenses

     (493      (524      (1,279      (1,501

Foreign currency exchange losses

     (829      (376      (1,135      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance expense

     (9,234      (8,711      (27,631      (24,224
  

 

 

    

 

 

    

 

 

    

 

 

 

Net finance expense

     (8,628      (6,407      (26,756      (20,938
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) The “Profit from sale of financial asset” reflects the profit realised on the sale of the Group’s shares in iStreamPlanet Co. The second payment related to this sale was received during the third quarter of 2016.
(b) The “Interest expense on finance leases” in 2016 includes EUR 1.3 million adjustment reducing the finance lease obligations.

 

7 Income tax expense

The Group’s consolidated effective tax rate of 30% and 31%, in respect of continuing operations for the three and nine months periods ended 30 September 2016, respectively, was affected by the non-tax-deductible share-based payments. The effective tax rate for the nine months periods ended 30 September 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 30%. The effective tax rate of 31% for the three months ended 30 September 2015 was affected by non-deductible share-based payments and the profit realised on the sale of the shares in iStreamPlanet Co.

 

8 Property, plant and equipment

Acquisitions

During the three and nine months ended 30 September 2016, the Group acquired tangible fixed assets (primarily data-centre-related assets) at a cost of €49.1 million and €192.1 million, respectively (three and nine months ended 30 September 2015: €35.5 million and €124.7 million, respectively).

Capitalised interest relating to borrowing costs for the three and nine months ended 30 September 2016 amounted to €1.3 million and €2.4 million, respectively (three and nine months ended 30 September 2015: €0.4 million and €2.0 million, respectively). The cash effect of the interest capitalised for the three and nine months ended 30 September 2016 amounted to €1.2 million and €2.2 million, respectively, which in the Statement of Cash Flows is presented under “Purchase of property, plant and equipment” (three and nine months ended 30 September 2015: €1.6 million and €3.6 million, respectively).

 

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

   17


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Capital commitments

At 30 September 2016, the Group had outstanding capital commitments of €91.6 million. These commitments are expected to be substantially settled during the remainder of 2016.

 

9 Financial Instruments

Fair values versus carrying amounts

As of 30 September 2016, the market price of the 6.00% Senior Secured Notes due 2020 was 105.142 (30 September 2015: 105.520). Using this market price, the fair value of the Senior Secured Notes due 2020 would have been approximately €657 million (30 September 2015: €501 million), compared with their nominal value of €625 million (30 September 2015: €475 million).

At 30 September 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 September 2016, the fair value of all mortgages approximated to their carrying amount of €56.6 million (30 September 2015: €30.2 million). As of 30 September 2016, the fair value of the financial lease liabilities was €55.3 million (30 September 2015: €41.9 million) compared with the carrying amount of €51.5 million (30 September 2015: €34.5 million).

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

Fair values and hierarchy

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

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

 

Level 1:

   quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

   inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3:

   inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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

 

18   

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited


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The values of the instruments are:

 

     Carrying
value
     Level 1      Fair value
Level 2
     Level 3  

30 September 2016

           

Senior secured notes 6.00% due 2020

     (629,600      (657,166      —           —     

Finance leases

     (51,522      —           (55,252      —     

Mortgages

     (56,594      —           (56,594      —     

Interest rate swap

     (452      —           (452      —     

Financial asset

     1,890         —           —           1,890   

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 a USD 2.0 million convertible loan given by Interxion Participation 1 B.V. Interxion has the option to convert the loan into equity on the maturity date or upon occurrence of an enforcement event. The embedded conversion option has a zero value as at 30 September 2016.

 

10 Borrowings

As at 30 September 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 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.

 

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited

   19


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11 Related party transactions

In 2016, the Board of Directors approved a conditional award of 134,655 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. During the third quarter of 2016 12,806 performance shares were awarded. In the first nine months of 2016, 4,936 restricted shares have been granted to members of the Board of Directors.

 

20   

Interim Report: Three-month and nine-month periods ended 30 September 2016

These Condensed Consolidated Interim Financial Statements are unaudited