Vocus Communications · This presentation contains forward looking statements that involve risks and uncertainties. These forward looking statements are not guarantees of Vocus' future

Vocus Communications

FY14 Results Presentation 28 August 2014

©2014 Vocus Communications Limited 2

Key highlights

Revenue $92.3m 38%

Underlying EBITDA $33.1m 48%

Underlying NPAT $13.6m 53%

Operating cash flows $30.6m 100%

©2014 Vocus Communications Limited

FY13 FY14 % Chg

Revenue ($'000) 66,910 92,302 37.9%

Underlying EBITDA1 ($'000) 22,425 33,073 47.5%

Underlying NPAT1 ($'000) 8,882 13,629 53.4%

Statutory NPAT ($'000) 5,098 12,925 153.5%

Underlyling diluted EPS1 (cps) 11.45 16.14 41.0%

Financial Results

Commentary Strong contributions from both Internet and Fibre / Ethernet products

New data centre facilities in Auckland and Melbourne

Final dividend declared of 1.0 cps, fully franked, total dividends for FY14 - 1.8 cps (FY13: 1.0 cps)

Two new acquisitions in FY15, FX Networks and Bentley (Perth) Data Centre announced

3

Financial Overview

1. Excludes the effects of foreign exchange, gains from IRU prepayment and acquisition costs

Continued strong growth


• Leading provider of telecommunications services across Australia and New Zealand

• Provides Internet, Fibre & Ethernet and Data Centres

• Revenue and Underlying EBITDA1 CAGR of 44% and 50%, respectively

4

Company Overview

1. Underlying EBITDA excludes the effects of foreign exchange, gains on IRU prepayment and acquisition costs (previously foreign exchange only) 2. Compound annual growth rate (“CAGR”) from FY10 – FY14

6.9 9.8

16.7

22.4

33.1

FY10 FY11 FY12 FY13 FY14

17.5

31.0

45.3

66.9

92.3


Revenue ($m) Underlying EBITDA1 ($m)

+77%

+46%

+48%

+38%

+42%

+69%

+33%

+48%


5.05

9.91

13.28 11.45

16.14


41% increase over

FY13

1. Diluted EPS calculated on underlying NPAT 2. Underlying NPAT excludes FX gains and losses, IRU prepayment gains and acquisition costs; 5

Earnings per Share and Dividends

Diluted Underlying Earnings Per Share1,2 (cps)

• Accelerating returns from infrastructure

investments

• EPS growth net of dilution from capital

raisings

• Increasing returns to shareholders as business

matures

1.00

1.80

FY13 FY14

80% increase over

FY13

Dividends declared (cps)


2.4 3.0

0.6

(1.4)

9.2


747% growth

over FY13

• Operating leverage continues to strengthen

• Strong base to fund ongoing operations and

future expansion

• Free cash flow emerging

6

Cash Flows

5.8

11.4 12.4 15.3

30.6


100% growth

over FY13

Operating Cash Flow ($m)

1. Free Cash Flow = Operating Cash Flow less payments for property, plant and equipment and intangibles

Free Cash Flow ($m)


1.48

3.64

11.80

19.27

17.62


Core Capital Expenditure ($m) • Customer demand driving capital

expenditure

• FY15 expected to be in line with current

levels based on strong opportunity pipeline

• Maintenance capex in line with prior periods

7

Core Capital Expenditure

Capital expenditure represents additions to property, plant and equipment, measured on an accrued basis


• Significant reduction in leverage following

capital raising in March 2014

• Remaining IRU liability settled in July 2014

with prepayment benefit

• Net leverage following FY15 announced

acquisitions expected to be 2.6x and

gearing of 40%

Leverage

30 June 2013 30 June 2014

IRU liability $55.9m $22.1m

Bank debt $12.8m $25.0m

Finance leases $2.1m $2.7m

less Cash ($14.2m) ($44.6m)

Net debt $56.6m $5.2m

Gearing1 44% 4%

Interest cover2 15.5x 14.0x

Net leverage3 2.52x 0.16x

Notes: 1) Net Debt / Net Debt + Equity 2) Underlying LTM EBITDA/Net LTM Interest Expense 3) Net Debt/Underlying LTM EBITDA LTM – Last Twelve Months

Product Review


• Yield decline offset by volume growth

• 77% Southern Cross traffic growth in

FY14

• Growth in wholesale DSL product

provided through relationship with iiNet

• Increased focus on provision of Internet

to corporate sector

10

Internet

Internet Revenue ($m)

16.8 20.5

27.1

37.6

FY11 FY12 FY13 FY14

39% growth

over FY13

100 119 176

205 270

413

575

731 100

92

67 62

51

36 30 30

-

200

400

600

800

-

20

40

60

80

100

120

Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14

Vocus SX Traffic and Yield, indexed

(Dec-10 = 100)

SX Traffic Yield


Fibre and Ethernet

11

Fibre and Ethernet Revenue ($m)

1.8

5.4

15.1

28.2

FY11 FY12 FY13 FY14

87% growth

over FY13

• Key driver of growth

• Current utilisation 13.5%

• Focus on customers in on-net buildings

• 16% of revenue growth from Ipera

acquisition

59

173

363

585

FY11 FY12 FY13 FY14

61% growth

over FY13

Fibre network kilometres

50 147

651

1,048

FY11 FY12 FY13 FY14

61% growth

over FY13

On-net buildings


• Capex required per dollar of new

revenue deceasing

• Capex efficiency continues to improve as

network reach increases

• FY14 includes proactive capex to

increase efficiency of future builds

12

Fibre increased capex efficiency

Fibre capex $ for each new $1 of contracted revenue

3.29

1.23

0.83 0.80 0.66 0.61 0.58

On

acquisition

1H12 2H12 1H13 2H13 1H14 2H14


• 12 facilities across 8 sites, totalling

3,670m2

• Auckland expansion and new Melbourne

facility opened in Q2/14 will provide

revenue growth

• Melbourne expansion planned for FY15

• Bentley (Perth) DC acquired in FY15 - 552m2

- 171 racks (91% utilised)

• 8% of revenue growth from Ipera

acquisition

13

Data Centres

Data Centre Summary – June 2014

Data Centre Revenue ($m)

3.1

9.4

15.6

18.6

FY11 FY12 FY13 FY14

19% growth over

FY13

Location Area Uti l isation

Sydney - Doody St 897m2 88%

Melbourne – Crockford St 490m2 100%

Melbourne – 530 Collins St 685m2 19%

Perth - William St 536m2 94%

Auckland - Albany 564m2 68%

Christchurch 128m2 40%

Newcastle – Denison 90m2 97%

Newcastle – Steel River 280m2 59%

Total 3,670m2 78%


• Revenue impacted by regulatory rate

reductions of 25% and strong wholesale

competition

• Valuable bundled product for other

services

14

Voice revenues lower

Voice Revenue ($m)

9.0 9.8

8.7

7.4

FY11 FY12 FY13 FY14

16% lower over

FY14

FY15 – Integration, Leverage and Scale


• Clear growth strategy, aligned to ever increasing data demand coupled with cloud

computing and IT outsourcing trends

• Focus on sales and building the brand in the corporate market

• Increasing operational leverage and asset utilisation

• Emphasis on automation and workflow to reduce service delivery costs

• Strategic acquisitions where complementary to current business

• Bentley (Perth) DC – acquisition to complete in September 2014

• FX Networks – acquisition to complete in October 2014

16

The Way Forward


Customer and Internal Portals Self-service quoting for Vocus services and internal workflow management


• []

18

Marketing initiatives Focus on corporate customers in on-net buildings


Contacts

James Spenceley

CEO

Rick Correll

CFO

Level 1, Vocus House

189 Miller Street

North Sydney

P: +61 2 8999 8999

F: +61 2 9959 4348

E: [email protected]

www.vocus.com.au


Disclaimer

This presentation contains forward looking statements that involve risks and uncertainties. These

forward looking statements are not guarantees of Vocus' future performance and involve a

number of risks and uncertainties that may cause actual results to differ materially from the

results discussed in these statements.

This presentation only contains information required for a preliminary evaluation of the

company and in particular only discloses information by way of summary within the knowledge

of the company and its directors. An investor should seek its own independent professional

advice in relation to the technical, financial, taxation, legal and commercial matters relating to

any investment in Vocus Communications Limited.

Other than to the extent required by law (and only to that extent) the company and its officers,

employees and professional advisors make no representation, guarantee or warranty (expressed

or implied) as to, and assume no responsibility or liability for, the contents of this presentation.

Documents

Vocus Communications · This presentation contains forward looking statements that involve risks and uncertainties. These forward looking statements are not guarantees of Vocus' future