|By Business Wire||
|February 24, 2014 05:08 AM EST||
euNetworks Group Limited (SGX: 5VT.SI), a unique Western European provider of bandwidth infrastructure services, announced results for the three months ended and full year ending 31 December 2013. The Group reported a strong financial performance for the year, doubling adjusted EBITDA1 and significantly improving gross profit and proxy cash flow. For the 4Q 2013 compared to 4Q 2012, the Group delivered improved gross profit and adjusted EBITDA on continued flat revenue performance. As with 2Q 2013 and 3Q 2013, churn offset new sales.
Gross margin for the year was 72.9%, increasing from 68.0% in 2012 and improved from 71.2% in 4Q 2012 to 74.4% in 4Q 2013. Adjusted EBITDA for the full year was €25.4m, growing 97% from 2012. For 4Q 2013, adjusted EBITDA reached €7.4m, growing 48% from €5.0m in 4Q 2012 and 17% from 3Q 2013. For 4Q 2013, adjusted EBITDA included a one-off benefit of €0.9m from a reduction in provisions for the costs of returning properties to their original condition at the end of their lease terms. Excluding this one-off benefit, adjusted EBITDA was €24.5m for the full year and €6.4m in 4Q 2013. Continued focus on high gross margin sales and cost management will result in further performance improvement over time.
“These full year and fourth quarter results are indicative of the improving operating performance of the business and steady increase in demand for bandwidth services from our customers,” said Brady Rafuse, Chief Executive Officer of euNetworks. “Churn impacted revenue performance through the year, but remained steady at 2.3% in 4Q 2013, similar to 3Q 2013 and improved from 2.8% in 2Q 2013. We implemented a targeted customer account strategy in 2H 2013 to work to lower churn and this remains a priority moving into 2014.”
“While managing our key financial metrics, we also invested in network development in 2013 to compound our growth,” said Rafuse. “Discretionary capital expenditure in 2013 was in line with our investment in 2012, but allocated more heavily in 3Q 2013 and 4Q 2013. This investment enabled additional connections to high bandwidth consuming data centres. In addition, a number of strategic network development projects were launched. These included the new fibre based London to Stockholm ultra low latency network route for euTrade, the addition of a London to Moscow route, and the London metropolitan fibre expansion. These and other projects will deliver more bandwidth infrastructure services to grow in-place and new customers in the future.”
“The capital spending increase in 3Q 2013 and 4Q 2013 was reflected in our proxy cash flow performance in 2H 2013, reducing proxy cash flow to €(2.4)m in 3Q 2013 and €(3.3)m in 4Q 2013. Overall our proxy cash flow position has significantly improved over the last year, reflecting the benefits of continued scaling and progress towards our goal of having a lean production system. Also, the drawdown of €15m for investment following securing debt funding in May.”
On corporate matters, the Group undertook activity it deemed beneficial to the Group and shareholders in 2013. The 2013 Convertible bonds matured on 1 April 2013 and 98.4% of the Convertible bonds issued in 2010 were converted or tendered for shares. No convertible bonds remain outstanding at this time. A Share Consolidation was completed on 31 May 2013 and was the first step to be taken in simplifying the Company’s capital structure. Debt funding commitment was secured and announced on 8 May 2013, with funds being used for organic growth and also available to support inorganic growth opportunities. Finally on 11 October 2013 the Group announced it had undertaken a share buyback. At the time the Company did not believe that euNetworks’ market value was fully reflective of the intrinsic value of the business.
(1) Adjusted EBITDA means EBITDA before the deduction of share option expense.
Performance Highlights for 2013
- Sales performance in 2013 increased slightly, with 4% growth in the total value of new contracts secured in 2013 compared to 2012. Through 2013, the majority of new sales came from the Company’s existing customer base in line with its commercial focus, with 94% of these new sales for the core product portfolio of Fibre, Wavelengths, Ethernet, Colocation and Internet.
4Q 2013 sales were strong, with a 58% increase in the value of new contracts secured compared to 4Q 2012 and up 12% from 3Q 2013. Average contract term for new customer contracts was 29 months in 4Q 2013, down from 31 months in 3Q 2013 and in line with the 4Q 2102 average.
Revenue in the year was driven by steady demand for Fibre and Wavelengths products. Metro Wavelengths continued to perform well, and the Company anticipates demand for transport services to continue through 2014. euTrade and Ethernet also steadily contributed to growth, while there was continued decline from non-core SDH and VPN businesses, now a much smaller percentage of euNetworks’ base.
Through the year the Company saw steady competition in its markets for fibre and high bandwidth services, but with a focus on connecting more data centres, demand for euNetworks Fibre remained strong. Additionally, data centre operators have been increasingly looking for enhanced network capabilities, either director or indirectly, to provide a full service solution for their target customers. euNetworks is actively working with data centre operators on both fibre and transport based bandwidth solutions, connecting multiples sites in cities for them.
Demand for high volume Long Haul Wavelengths, in particular from online content providers and Internet Service Providers (ISPs), remained strong, with the first customer for Terabit level capacity installed in 3Q 2013. euNetworks’ market share continues to grow. The Metro Wavelengths product line was strengthened in 2013 with the London metro expansion announced in November, and with Frankfurt metro wavelengths deployment commencing in 4Q 2013. These developments provide further opportunity for sales growth in 2014.
euNetworks’ euTrade service portfolio delivered strong growth through 2013, with fibre and wireless solutions co-mingled as part of customers’ trading strategies. euTrade performance picked up in 4Q 2013 following the launch of new routes to Stockholm and Moscow on 30 October 2013. With market leading latencies on offer, euNetworks anticipates strong growth for euTrade to continue through 1Q 2014 and will continue to monitor this market, investing to meet customer demand.
Following a slight decline in Ethernet and Internet performance in 3Q 2013, largely due to pricing pressures in local markets and also related to legacy services with off-net tails where the Company was looking to maintain gross profit targets, Ethernet and Internet performance was strong in 4Q 2013. This followed response to these pressures, with euNetworks delivering more tailored solutions and commercials to target customers.
euNetworks continues to monitor and adjust its commercial and product approach across its portfolio in line with market pressures and customer demand. Its ability to deliver services directly to enterprise customers or bundled together with partners’ and wholesale providers’ offerings has remained euNetworks’ core sales methodology through the year and will continue in 2014.
- Churn: The primary sources of churn for euNetworks have been the end of term customer contracts for non-core SDH and IP VPN services in Germany, as well as expired euTrade customer contracts coupled with competition from microwave and the consolidation of several smaller exchanges. Colocation churn increased in 2Q 2013 and 4Q 2013 due to known disconnections as some customers move to self-built facilities; a trend that tier 1 data centre operators are also experiencing. Churn in core Fibre and Wavelengths businesses however remained low and new sales gross margins were consistently high through 2013, meaning replacement revenue continued to deliver an improved gross margin profile for the Company.
- Network investment included the addition of 134 new buildings to the Company’s network in 2013, exiting the year with 1,046 on-net buildings and an additional 58 buildings in the process of being connected. Through the year growth in new on-net buildings slowed compared to 2012. This was due to sales focus on growing revenue from existing customer accounts and subsequently focusing on connecting the data centres where many of the Company’s customers need to be located. These are valuable sites to euNetworks, with high bandwidth demands. Enterprise buildings will also continue to be connected, where the payback is appropriate.
As well as connecting more data centres, there were a number of strategic network development projects undertaken in the year which will drive growth into 2014. Most notable was the developments in the Company’s ultra low latency dedicated network and significant expansion of its London duct and fibre infrastructure. euNetworks is also developing its metro network in Frankfurt, rolling out a dense wave division multiplexing (DWDM) transport platform running between key data centres. This positions euNetworks as the key data centre to data centre (Dc) connectivity provider in Frankfurt and also delivers increased support for encryption to address growing security concerns by businesses today.
- Capital expenditure was €10.7m in 4Q 2013, up from €5.0m in 4Q 2012, and up from €8.7m in 3Q 2103. Capital expenditure was €27.9m in 2013, compared to €27.8m in 2012. With strategic network development projects driving capital expenditure in 3Q and 4Q 2013, the allocation of capital to success based investment was 48% for 2013, down from 66% in 2012. Correspondingly, 34% of capital was allocated to network development in the year, up from 7% in 2012. On average, incremental committed sales enjoyed payback periods ranging between 4.6 and 6 months in the year, demonstrating the continued efficient use of capital by the Company.
- Proxy cash flow for the quarter reflected the increased investment in the network assets, at €(3.3)m in 4Q 2013, down from €(2.4)m in 3Q 2013 and from €0.0m in 4Q 2012. As previously mentioned, proxy cash flow for the year improved significantly.
- Share buyback: On 11 October 2013, the Company announced it had undertaken a share buyback. euNetworks repurchased 12,932,000 shares at a price of S$0.60 per share for a total of approximately €4.6m. The Board for euNetworks proceeded opportunistically and with these shares available, considered the repurchase appropriate and beneficial to the Group and shareholders. This transaction was reflected in the figures reported today.
euNetworks Group Limited (SGX: 5VT:SI) is a bandwidth infrastructure provider, owning and operating 13 fibre based metropolitan networks across Europe connected with a high capacity intercity backbone covering 38 cities in 9 countries. The Company offers a portfolio of metropolitan and long haul services including Colocation, Dark Fibre, Metro Wavelengths, Wavelengths, Ethernet, and Internet. Enterprise and carrier customers benefit from euNetworks’ unique inventory of fibre and duct based assets that are tailored to fulfil their high bandwidth needs.
euNetworks Group Limited is headquartered in London and publicly listed on the Singapore Stock Exchange. For further information please visit www.eunetworks.com.
As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the a...
Oct. 1, 2016 01:15 AM EDT Reads: 714
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
Oct. 1, 2016 01:15 AM EDT Reads: 3,039
DevOps and microservices are permeating software engineering teams broadly, whether these teams are in pure software shops but happen to run a business, such Uber and Airbnb, or in companies that rely heavily on software to run more traditional business, such as financial firms or high-end manufacturers. Microservices and DevOps have created software development and therefore business speed and agility benefits, but they have also created problems; specifically, they have created software sec...
Oct. 1, 2016 12:15 AM EDT Reads: 1,423
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
Sep. 30, 2016 11:45 PM EDT Reads: 5,438
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
Sep. 30, 2016 11:30 PM EDT Reads: 486
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
Sep. 30, 2016 11:30 PM EDT Reads: 759
24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to connect your brand strategy with the right consumer. 24Notion ranked #12 on Corporate Social Responsibility - Book of List.
Sep. 30, 2016 10:45 PM EDT Reads: 507
SYS-CON Events announced today that Roundee / LinearHub will exhibit at the WebRTC Summit at @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LinearHub provides Roundee Service, a smart platform for enterprise video conferencing with enhanced features such as automatic recording and transcription service. Slack users can integrate Roundee to their team via Slack’s App Directory, and '/roundee' command lets your video conference ...
Sep. 30, 2016 10:45 PM EDT Reads: 1,537
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
Sep. 30, 2016 10:00 PM EDT Reads: 1,261
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
Sep. 30, 2016 09:45 PM EDT Reads: 2,848
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Sep. 30, 2016 09:30 PM EDT Reads: 4,121
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Sep. 30, 2016 09:00 PM EDT Reads: 4,062
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
Sep. 30, 2016 09:00 PM EDT Reads: 2,834
Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide-from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on its established design leadership, Adobe enables customers not o...
Sep. 30, 2016 08:45 PM EDT Reads: 497
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera M...
Sep. 30, 2016 08:30 PM EDT Reads: 3,199