2016 Final Results Meeting UK demand for full fibre connectivity - - PowerPoint PPT Presentation

2016 Final Results

Meeting UK demand for full fibre connectivity

Greg Mesch

Chief Executive Officer

Delivering innovative scalable solutions to

• ur customers across the public sector,

business, mobile and consumer broadband markets

About us

Design, build, operate and own full fibre networks

UK’s largest wholesale alternative provider

• f full fibre infrastructure

Building a new generation of future-proof digital infrastructure for the UK Legacy infrastructure cannot meet digital demands due to growth across all markets CityFibre is ensuring the UK can benefit from a full fibre future

Driving economic growth Unleashing business potential Transforming public sector services Enabling 5G & IoT innovation

Why

we do it

Who

we are

What

we do

3

Commercial footprint supports

• pportunity
• Total connections 3,962 (2015 = 1,200)
• Route kilometres of ducted fibre 3,383km

(2015 = 743km)

• Service provider relationships 54 (2015 = 41)

Financial highlights

• Revenue increased 140% to £15.4m
• Gross margin increased to 88%
• Turned EBITDA positive on full year basis
• Successful integration of acquired

national network

• 42 metro networks now open for business
• Conclusion of Ofcom review removes

regulatory uncertainty over market

Significant

• perational

progress

2,762

2016 connections

54

service providers

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Gigabit Cities launched in 2016

Results overview

Met or exceeded our targets for the year

4

January 2016 Acquisition

• f KCOM

assets April 2016 Leeds and Bradford Gigabit cities launched September 2016 Acquisition of Redcentric assets October 2016 Onecom expands Coventry / Leicester / Nottingham December 2016 Milton Keynes Gigabit City launched / Gamma national capacity contract March 2016 Southend Gigabit city launched September 2016 Northampton Gigabit city launched September 2016 Reading Gigabit city launched November 2016 Business Parks initiative launched

• Integrated acquired national network assets
• 24 cities now equipped with active platforms
• Enhanced delivery capability:

– Back end systems in place – Partner portal built and operating – Headcount bolstered to support increased

customer base and planning capability

– New partners being on-boarded

Our 3,400km network today

CityFibre is ready for business

5

Ofcom shifts strategy to fibre infrastructure competition

• Ofcom seeks a reduction in

the UK’s dependency on Openreach and promotes a competitive full fibre build to >40% of UK premises

• Duct and Pole Access

consultation

Openreach separation debate is over

• BT retains control of

Openreach capex envelope and assets

• No forced fibre roll out

UK fibre connectivity lags behind global peers

• At the end of 2016, the UK

remained bottom of the OECD league table

• Government recognises the

critical nature of fibre investment

UK’s digital strategy supports fibre roll out

• To invest in UK’s digital

infrastructure and in “full fibre” networks

• Digital Infrastructure

Investment Fund

• DCMS Public Sector

stimulus

• 100% business rate relief for

5 years on new fibre infrastructure

Full-fibre is the future of broadband, helping people to share digital content faster.

Philip Hammond, Chancellor

The best driver for investment and innovation is network based competition.

Sharon White, Ofcom

When it comes to digital infrastructure, we all want to be world leaders, right? I certainly want that for Britain. Fibre and 5G are the future.

Matt Hancock, Minister DCMS

Market backdrop and regulation

Shift in Government policy and Ofcom review improves the opportunity

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Estimated & cumulative Actual

Metro cities

shared infrastructure

Public sector sites Businesses Mobile cell sites Macro [small] Homes 42 cities 29,400 294,000 8,400 [42,000] 4,200,000 50 cities 35,000 350,000 10,000 [50,000] 5,000,000 Partners Growth

Cross-selling across verticals

CityFibre has national scale

1,189 sites up 39% YoY 2,738 sites up 292% YoY 380% increase in data traffic Penetration in excess of 26% to date

7

Terry Hart

Chief Financial Officer

Market Connections ICV (£m) Term (yrs) Project net capex1 ARR2 Yield Incremental (off acquired assets) Bristol

100 1.5 6

£11.2m £4.5m 40% Leeds/Bradford

350 4.9 6

MK/Northants

500 7.0 5

Reading/Bracknell

250 3.1 5

Slough/Maidenhead

150 1.7 5

Leicester/Nottingham/Coventry

300 3.3 5

Sheffield/Rotherham/Doncaster

250 3.3 6 1,900 24.8

Incremental (off CityFibre built assets) Aberdeen (Public Sector)

109 2.0 6

£2.2m £0.6m 32% Peterborough (Public Sector)

220 2.0 20

Southend-on-Sea

150 1.7 5 479 5.7

Greenfield Southend-on-Sea (Public Sector)

120 3.2 10

Cambridge/Southampton/Portsmouth

188 4.5 10

£8.2m £1.0m 12% Stirling (Public Sector)

41 1.9 6 349 9.6

Carrier Long Distance Network

25 6.1

• £0.2m

nm Total added in 2016 (key contracts)

2,753 46.2

£21.6m £6.3m 29%

1 Project capex net of connection fees 2 Annual recurring revenue upon phased completion of committed connections (city activations and migrations)

Key contracts in 2016

Driving revenue yield across our assets

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KPIs

Continued commercialisation of network assets

2014 2015 2016 2015-16 % Growth Highlights CityFibre cities 12 16 42 ▲ 163% 24 inorganic (acquired from KCOM & Redcentric), 2 organic Orders Order book - Initial contract value (£m) 11 23 76 ▲ 225% £25m KCOM, £46m other key contracts Cumulative ICV 29 52 128 ▲ 144% Initial cash receivable for contract term, no account of renewals Unrealised ICV 22 42 106 ▲ 155% Visibility of future revenue at >90% GM Partners - Number of service providers 25 41 54 ▲ 29% Connections sold (cumulative) Public sector sites 941 1,429 1,888 ▲ 32% Top performing city: Coventry 354 connections Business 330 991 5,595 ▲ 465% Top performing city: Leeds 598 connections Mobile 37 37 37 ►

• Trial city with MBNL (Three & EE) - Hull

Total Connections sold 1,308 2,457 7,520 ▲ 206% Top performing city overall: Edinburgh 691 connections sold Total connected sites Public sector sites 735 857 1,189 ▲ 39% Completed Edinburgh anchor network build Businesses 150 327 2,738 ▲ 737% Added 2,108 from acquisitions during year Mobile sites

• 16

35 ▲ 131% Hull network completed, 37 sites now connected FTTH 208 2,852 ▲ n.m. 21.4% penetration at year end Total sites delivered (excluding FTTH) 885 1,200 3,962 ▲ 230% 2,762 new connections added Network assets Metro network length (km) at period end 543 743 2,244 ▲ 208% 150km in Edinburgh delivered on schedule despite challenges Long distance network length (km) at period end

• 1,139

▲ n.m. Acquired asset – in revenue production Connections sold per metro kilometre 2.4 3.3 3.4 ▲ 3% Top cities are approaching 5 connections per km Connections delivered per metro kilometre 1.6 1.6 1.8 ▲ 9% Human resources – employees at YE 76 105 143 ▲ 36% Growth primarily engineering and construction related

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5% 7% 9% 11% 13% 15% 17% 19% 21% 23% 25% 27%

Blended penetration rate

• Trial successfully completed
• All JV restrictions on CityFibre lifted
• Pre-built metro networks in 42 cities
• High coverage of non-cable territories

Highest cabinet penetration approaching

40%

Proof points: ü Build delivered to schedule ü Cost per home passed <£500 ü Using existing assets saved 20–25% and 12–18 months ü Consumer demand strong and continuing to grow ü Fault rates 1/10th of legacy networks Blended penetration rate

Update on York FTTH trial

Proof points and performance

At 31 December 2016

Homes passed: 13,309 Homes connected: 2,852

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(Year to 31 Dec) 2016 2015 YoY Turnover 15.4 6.4 140% Cost of sales (1.8) (0.9) 106% Gross profit 13.5 5.5 145% Gross margin 87.6% 85.9% 2% Administrative expenses 18.7 11.7 60% Operating loss (5.1) (6.2) (17%) Net financial expense (7.3) (0.1) n.m. Pre-tax loss (12.6) (6.4) 97% Adjusted EBITDA 2.5 (2.9) n.m.

• Strong turnover growth, £4.9m contribution from

KCOM and Redcentric, Organic revenue growth

• f 63% (£4.1m), driven by Edinburgh project

and increased incremental sales

• Gross margin expanded 170bps
• Underlying Admin costs increased only 31% to

£11.1m (excluding non-recurring fees £2.8m, D&A £3.9m and share-based payments £0.9m)

• EBITDA positive achieved and strengthening
• Acquisitions added £95m in network assets and

inventory

• Network capex of £22.9m reflects expanded

build programme

• Cash position £16.7m, net debt £43.1m*

(Year to 31 Dec) 2016 2015 YoY Fixed assets 155.2 44.0 253% Trade and other receivables 8.1 6.0 35% Cash and equivalents 16.7 9.7 72% Total assets 185.6 61.4 202% Interest-bearing loans and borrowings 55.3

• n.m.

Total equity 108.5 43.8 148% Network capex (excluding acquisitions) (22.9) (13.8) 59% Operating cash outflow (2.4) (5.4) (56%) Balance sheet and cash flow (£m)

*£59.8m of the debt facility drawn in the period, with £4.5m in transaction and arrangement fees netted off of the balance sheet entry

Profit and Loss (£m)

Financial highlights

Strong results for year ended 31 December 2016

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Greg Mesch

Chief Executive Officer

2017 is a pivotal year

• Focus on profitable commercialisation of
• ur core network
• Significant near term opportunities across

all segments

• Positive conclusion of Ofcom review

reduces regulatory uncertainty

• Government policy firmly

supports fibre investment

• Strong pipeline building

for 2017

Summary and outlook

Purpose The sole purpose (“the Purpose”) of this presentation (the “Presentation”) is to provide information on CityFibre Infrastructure Holdings Plc (“CityFibre” or “the Company”) and its subsidiaries (together “the Group”). This Presentation and the contents of it do not, and are not intended to, constitute an offer for sale, prospectus, invitation to subscribe for or purchase or otherwise acquire, shares or other securities in the Company. Verification of information The information contained in this Presentation is being supplied as a guide only and no reliance may be placed for any purpose whatsoever on the sufficiency, accuracy or completeness of the statements contained herein. No representation or warranty whatsoever is given by or on behalf of CityFibre or any directors, officers, employees or advisers or any other person and no responsibility or liability is accepted by any of them, in relation to the shares, business or prospects of the Company expressed or implied, or with respect to the adequacy, accuracy, completeness or reasonableness of the facts, opinions, estimates, forecasts, projections or other information set out in this Presentation or any further information, written or oral or other, supplied in connection with it. Nothing contained within this Presentation is or should be relied upon as a promise or representation as to the future. Any pro-forma and estimated financial information contained herein is prepared expressly for use herein and is based

• n certain assumptions and the Directors’ analysis of information available at the time this Presentation was prepared. There is no representation,

warranty or other assurance that any of the projections will be realised. The information contained herein and any further information relating to the Company supplied by CityFibre or its advisers is, and will be, supplied on the condition that neither CityFibre nor its advisers accepts any responsibility and/or liability for any loss or damage of whatsoever nature that may result or occur by reliance on such information and howsoever

• arising. The information contained in this Presentation has not been legally verified.

Forward Looking Statement Certain statements made in this presentation are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections about its industry, its beliefs and assumptions. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the Company’s control are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These factors include, amongst others, technology risks, including dependence on core technology, fluctuations in results, dependence on new product development, rapid technological and market change, reliance on sales by others, management of growth, dependence on key personnel; rapid expansion; financial risk management and future growth subject to risks. The Company cautions recipients of this presentation not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this

• presentation. The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. The

Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

Disclaimer

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