For the quarter and year ended 31 December 2014:
- continued recurring revenue growth in the quarter following strong sales and installation performance
- strong growth in gross profit and adjusted ebitda for the year, with an improved cash flow position while increasing capital expenditure
London, UNITED KINGDOM – 18 February 2015 – euNetworks Group Limited, a unique Western European provider of bandwidth infrastructure services, announced results for the three months ended 31 December 2014 and for the full year 2014. New sales increased in Q4 2014, up 31% from Q4 2013 and 24% from Q3 2014. Service installations grew 7% from Q3 2014 and 13% from Q4 2013. Adjusted EBITDA performance was flat quarter over quarter, largely due to the impact of one off costs incurred in Q4 2014 relating to corporate activity.
For the full year, the Group delivered strong growth performance in recurring revenue and adjusted EBITDA, with new sales up 50% from 2013 and installations growing 26%. The Group’s cash flow position improved, while capital expenditure increased by 3%.
| (€k) |
Q4 2014 |
Q4 2013 |
% change |
Q3 2014 |
% change |
Year 2014 |
Year 2013 |
% change |
| New Sales |
783.7 |
600.4 |
31 |
630.8 |
24 |
2,940.0 |
1,965.5 |
50 |
| Installations |
734.8 |
650.9 |
13 |
688.9 |
7 |
2,729.0 |
2,162.1 |
26 |
| Monthly Incremental Service Revenue |
123.9 |
153.8 |
(19) |
254.2 |
(51) |
759.1 |
195.5 |
288 |
| (€m) |
Q4 2014 |
Q4 2013 |
% change |
Q3 2014 |
% change |
Year 2014 |
Year 2013 |
% change |
| Total Revenue Recurring Revenue |
27.227.2 |
24.024.0 |
1313 |
25.725.7 |
66 |
103.4102.5 |
97.497.1 |
66 |
| Gross Profit |
20.8 |
17.7 |
18 |
19.6 |
6 |
77.9 |
71.0 |
10 |
| Gross Profit Margin % |
76.6% |
74.4% |
3 |
76.1% |
1 |
75.4% |
72.9% |
3 |
| Adjusted EBITDA(1)&(3) |
7.4 |
7.4 |
0 |
7.5 |
(1) |
28.3 |
25.4 |
11 |
| Capital Expenditure |
6.1 |
10.7 |
(43) |
8.8 |
(31) |
28.7 |
27.9 |
3 |
| Proxy Cash Flow(2) |
1.3 |
(3.3) |
n/a |
(1.3) |
n/a |
(0.4) |
(2.5) |
84 |
- Adjusted EBITDA means EBITDA before the deduction of share option expense.
- Proxy cash flow is calculated as Adjusted EBITDA less capital expenditure.
- 4Q 2013 includes €0.9m one off benefit from a reduction in provisions for the costs of returning properties to their original condition at the end of the lease terms
Recurring revenue was €27.2m in Q4 2014, improving 13% from Q4 2013 and 6% from Q3 2014. €23.1m of total revenue was from network services, growing 16% from Q4 2013 and 6% from Q3 2014. euNetworks continues to grow network revenues at above the upper end of the forecast market growth rate of 3-5%. Network service revenue grew 9% in 2014. These results reflect the continued sales and marketing focus on Dark Fibre, Wavelengths, Ethernet and the euTrade service portfolio.
Gross profit was €20.8m, up 18% from Q4 2013 and 6% from Q3 2014. Core network gross profit was €17.8m, up from €16.5m in Q3 2014. Gross margin continued to improve, reaching 76.6% in the quarter, up from 74.4% in Q4 2013 and 76.1% in Q3 2014. euNetworks’ focus on selling on-net bandwidth services continues to drive an improved product mix, delivering higher gross margins.
Adjusted EBITDA reduced by 1% from Q3 2014 and was in line with Q4 2013, at €7.4m. One off costs relating to corporate activity impacted the growth of adjusted EBITDA in the quarter. In addition, Q4 2013 adjusted EBITDA included €0.9m one off benefit from a reduction in provisions for the costs of returning properties to their original condition at the end of the lease terms. If this was taken into account then Adjusted EBITDA would have increased by 12%. In 2014 Adjusted EBITDA was €28.3m, growing 11% from 2013. This growth reflects the continued scaling of the business and successful focus on achieving operational efficiencies while increasing sales performance.
Capital expenditure was €6.1m in Q4 2014, 43% lower than in Q4 2013 and down 31% from Q3 2014. euNetworks continues to invest in growth and network development projects to create value for the business. Capital expenditure was again largely success based in the quarter in support of key customer projects and for 2014, these drove 67% of capital expenditure.
Proxy cash flow was €1.3m, improving from €(3.3)m in Q4 2013 and from €(1.3)m in Q3 2014. For the year, proxy cash flow was €(0.4)m, improving from €(2.5)m in 2013.
“The results reported today reflect the continued momentum we see in the business,” said Brady Rafuse, Chief Executive Officer of euNetworks. “Our operating capability has supported our recurring revenue growth, with very strong service installations performance. Recurring revenue, gross profit, adjusted EBITDA and our cash flow positon all improved in 2014.”
“We invested in growth and network development projects to create value in 2014 and will continue with this approach in 2015. The debt funding commitment secured in October provides us with further opportunity to invest and also add growth inorganically. The integration of the Fibrelac business that we acquired in October has progressed well and we are now offering the combined customer base the benefits of our pan European footprint. We are excited by the opportunities all these activities bring and as ever thank our stakeholders for their ongoing support.”
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